Internal Revenue Bulletin:  2006-39 

September 25, 2006 

INCOME TAX


Rev. Rul. 2006-46 Rev. Rul. 2006-46

Conservation Security Program (CSP). This ruling holds that the Conservation Security Program is substantially similar to the type of programs described in section 126(a)(1) through (8) of the Code within the meaning of section 126(a)(9). As a result, all or a portion of cost-share payments received under the CSP is eligible for exclusion from gross income to the extent permitted by section 126.

Rev. Rul. 2006-47 Rev. Rul. 2006-47

Fringe benefits aircraft valuation formula. The Standard Industry Fare Level (SIFL) cents-per-mile rates and terminal charge in effect for the second half of 2006 are set forth for purposes of determining the value of noncommercial flights on employer-provided aircraft under section 1.61-21(g) of the regulations.

Rev. Rul. 2006-48 Rev. Rul. 2006-48

LIFO; price indexes; department stores. The July 2006 Bureau of Labor Statistics price indexes are accepted for use by department stores employing the retail inventory and last-in, first-out inventory methods for valuing inventories for tax years ended on, or with reference to, July 31, 2006.

T.D. 9281 T.D. 9281

Final, temporary, and proposed regulations under sections 882 and 884 of the Code state that foreign corporations engaged in a trade or business within the United States are subject to tax on their income that is treated as effectively connected with the trade or business. Expenses related to that income are allocable and deductible against the effectively connected income to determine the foreign corporation’s net U.S. taxable income. Special rules apply to the allocable amount of interest expense allowed in determining the net U.S. taxable income. Additional rules for foreign banking corporations are also applicable. Certain clarifications and conforming updates are also made to the 1996 final regulations under section 1.882-5.

REG-120509-06 REG-120509-06

Final, temporary, and proposed regulations under sections 882 and 884 of the Code state that foreign corporations engaged in a trade or business within the United States are subject to tax on their income that is treated as effectively connected with the trade or business. Expenses related to that income are allocable and deductible against the effectively connected income to determine the foreign corporation’s net U.S. taxable income. Special rules apply to the allocable amount of interest expense allowed in determining the net U.S. taxable income. Additional rules for foreign banking corporations are also applicable. Certain clarifications and conforming updates are also made to the 1996 final regulations under section 1.882-5.

T.D. 9282 T.D. 9282

Final regulations under sections 162(k) and 404(k) of the Code provide that a payment in redemption of employer securities held by an employee stock ownership plan (ESOP) is not deductible.

REG-168745-03 REG-168745-03

Proposed regulations under section 263 of the Code explain how section 263(a) applies to amounts paid to acquire, produce, or improve tangible property. The proposed regulations clarify what amounts must be capitalized, rather than deducted currently, and how those capitalized amounts should be treated. A public hearing is scheduled for December 19, 2006.

Notice 2006-82 Notice 2006-82

Extension of replacement period for livestock sold on account of drought. This notice explains the circumstances under which the 4-year replacement period under section 1033(e)(2) of the Code is extended for livestock sold on account of drought. The notice informs taxpayers that the Service will publish an annual list of counties that experienced exceptional, extreme, or severe drought conditions, which a taxpayer can use to determine if an extension is available.


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