Internal Revenue Bulletin: 2004-19

May 10, 2004


Highlights of This Issue

 

These synopses are intended only as aids to the reader in identifying the subject matter covered. They may not be relied upon as authoritative interpretations.

INCOME TAX

Rev. Rul. 2004-44 Rev. Rul. 2004-44

Federal rates; adjusted federal rates; adjusted federal long-term rate and the long-term exempt rate. For purposes of sections 382, 642, 1274, 1288, and other sections of the Code, tables set forth the rates for May 2004.

T.D. 9120 T.D. 9120

Final, temporary, and proposed regulations under section 861 of the Code provide an alternative method for valuing assets for purposes of apportioning interest expense under the tax book value method contained in temporary regulations section 1.861-9T(g). For that limited purpose, the alternative method allows taxpayers to determine the adjusted basis of all tangible property under the alternative depreciation system of section 168(g). The regulations also provide guidance on electing the alternative method. The alternative method provides taxpayers with the option of determining the adjusted bases of both foreign and domestic assets under one consistent depreciation regime for temporary regulations section 1.861-9T(g) apportionment purposes and helps reduce the basis disparity between foreign and domestic assets which can occur under the current regulations. A public hearing on the proposed regulations is scheduled for July 19, 2004.

REG-129447-01 REG-129447-01

Final, temporary, and proposed regulations under section 861 of the Code provide an alternative method for valuing assets for purposes of apportioning interest expense under the tax book value method contained in temporary regulations section 1.861-9T(g). For that limited purpose, the alternative method allows taxpayers to determine the adjusted basis of all tangible property under the alternative depreciation system of section 168(g). The regulations also provide guidance on electing the alternative method. The alternative method provides taxpayers with the option of determining the adjusted bases of both foreign and domestic assets under one consistent depreciation regime for temporary regulations section 1.861-9T(g) apportionment purposes and helps reduce the basis disparity between foreign and domestic assets which can occur under the current regulations. A public hearing on the proposed regulations is scheduled for July 19, 2004.

T.D. 9122 T.D. 9122

Final regulations under section 1502 of the Code relate to the determination of the basis of the stock of the common parent of a consolidated group when such stock is acquired in a transaction that qualifies as a group structure change. These regulations amend current regulations section 1.1502-31 modifying the application of the net asset basis rule in group structure changes.

EXEMPT ORGANIZATIONS

Notice 2004-35 Notice 2004-35

Net investment income of private foundation. This notice announces that the Treasury Department and the Service intend to propose regulations modifying regulations section 53.4940-1(d)(2) to provide that a private foundation’s net investment income for purposes of section 4940 of the Code does not include distributions from trusts and estates and that until further guidance is promulgated, income distributions from trusts and estates will not retain their character in the hands of a distributee private foundation for purposes of determining the foundation’s net investment income under section 4940(c). This notice also provides instructions on how a private foundation should fill out its applicable returns and how to claim refunds.

Notice 2004-36 Notice 2004-36

Distributable amount of a private foundation. This notice states that the Treasury Department and the Service intend to propose regulations modifying regulations under section 4942 of the Code in a manner consistent with the holding of the Tax Court and the Ninth Circuit in Ann Jackson Family Foundation. It also states that until further guidance is promulgated, private foundations should compute the distributable amount under section 4942(d) without regard to regulations section 53.4942(a)-2(b)(2). Accordingly, income distributions received from section 4947(a)(2) trusts are not included in a private foundation’s distributable amount for purposes of section 4942. The notice also includes instructions for filling out the private foundation’s applicable information and excise tax returns and how to claim a refund pursuant to this notice.

Announcement 2004-34 Announcement 2004-34

A list is provided of organizations now classified as private foundations.

ADMINISTRATIVE

Rev. Proc. 2004-26 Rev. Proc. 2004-26

This procedure provides guidance for representatives of certain military or civilian employees of the United States who die as a result of injuries incurred in a terrorist or military action. It provides guidance for having tax forgiven or for claiming refunds of tax under section 692(c) of the Code, as amended by the Victims of Terrorism Tax Relief Act of 2001, Pub. L. No. 107-134. It also provides procedures by which the Secretary will determine whether a terrorist or military action has occurred. Rev. Proc. 85-35 obsoleted.

Preface

The IRS Mission

Provide America's taxpayers top quality service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all.

Introduction

The Internal Revenue Bulletin is the authoritative instrument of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service and for publishing Treasury Decisions, Executive Orders, Tax Conventions, legislation, court decisions, and other items of general interest. It is published weekly and may be obtained from the Superintendent of Documents on a subscription basis. Bulletin contents are compiled semiannually into Cumulative Bulletins, which are sold on a single-copy basis.

It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application of the tax laws, including all rulings that supersede, revoke, modify, or amend any of those previously published in the Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements of internal practices and procedures that affect the rights and duties of taxpayers are published.

Revenue rulings represent the conclusions of the Service on the application of the law to the pivotal facts stated in the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices, identifying details and information of a confidential nature are deleted to prevent unwarranted invasions of privacy and to comply with statutory requirements.

Rulings and procedures reported in the Bulletin do not have the force and effect of Treasury Department Regulations, but they may be used as precedents. Unpublished rulings will not be relied on, used, or cited as precedents by Service personnel in the disposition of other cases. In applying published rulings and procedures, the effect of subsequent legislation, regulations, court decisions, rulings, and procedures must be considered, and Service personnel and others concerned are cautioned against reaching the same conclusions in other cases unless the facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code. This part includes rulings and decisions based on provisions of the Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation. This part is divided into two subparts as follows: Subpart A, Tax Conventions and Other Related Items, and Subpart B, Legislation and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous. To the extent practicable, pertinent cross references to these subjects are contained in the other Parts and Subparts. Also included in this part are Bank Secrecy Act Administrative Rulings. Bank Secrecy Act Administrative Rulings are issued by the Department of the Treasury's Office of the Assistant Secretary (Enforcement).

Part IV.—Items of General Interest. This part includes notices of proposed rulemakings, disbarment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative index for the matters published during the preceding months. These monthly indexes are cumulated on a semiannual basis, and are published in the last Bulletin of each semiannual period.

Part I. Rulings and Decisions Under the Internal Revenue Code of 1986

T.D. 9120

Allocation and Apportionment of Expenses; Alternative Method for Determining Tax Book Value of Assets

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1

AGENCY:

Internal Revenue Service (IRS), Treasury.

ACTION:

Final and temporary regulation.

SUMMARY:

This document contains temporary regulations providing an alternative method of valuing assets for purposes of apportioning expenses under the tax book value method of §1.861-9T. The alternative tax book value method, which is elective, allows taxpayers to determine, for purposes of apportioning expenses, the tax book value of all tangible property that is subject to a depreciation deduction under section 168 by using the straight line method, conventions, and recovery periods of the alternative depreciation system under section 168(g)(2). The alternative method provided in the temporary regulations is intended to minimize basis disparities between foreign and domestic assets of taxpayers that may arise when taxpayers use adjusted tax basis to value assets under the tax book value method of expense apportionment. The text of these temporary regulations also serves as the text of the proposed regulations (REG-129447-01) set forth in this issue of the Bulletin.

DATES:

Effective Date: These regulations are effective on March 26, 2004.

Applicability Date: For dates of applicability, see §§1.861-9(h)(5)(iii) and 1.861-9T(i)(3).

FOR FURTHER INFORMATION CONTACT:

Margaret A. Hogan, (202) 622-3850 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

This document contains amendments to regulations under section 864(e) of the Internal Revenue Code (Code). Section 864(e) was enacted by the Tax Reform Act of 1986 (Public Law 99-514, 100 Stat. 2121) to address concerns regarding the allocation and apportionment of interest expense. On September 14, 1988, the IRS published temporary regulations (T.D. 8228, 1988-2 C.B. 136 [53 FR 35467]) under §1.861 implementing section 864(e) of the Code. The temporary regulations contained in this document amend §1.861-9T and make conforming amendments to §§1.861-9 and 1.861-9T(g)(1)(ii).

Section 864(e)(2) of the Code provides that allocations and apportionments of interest expense shall be made on the basis of assets rather than gross income. For this purpose, the regulations permit a taxpayer to choose to compute the value of its assets under either the tax book value method or the fair market value method. Sections 1.861-8T(c)(2) and 1.861-9T(g)(1)(ii). Taxpayers using the tax book value method may elect to change to the fair market value method at any time. Rev. Proc. 2003-37, 2003-1 C.B. 950 (May 27, 2003). Taxpayers that elect to use the fair market value method must continue to use that method unless expressly authorized by the Commissioner to change methods. Section 1.861-8T(c)(2). Section 1.861-8T(c)(2) also permits taxpayers to apportion certain other expenses based on the comparative value of assets provided that such apportionment is made in accordance with the rules of §1.861-9T(g).

The use of adjusted tax basis for purposes of apportioning expenses under the tax book value method may result in disparities between the bases of domestic and foreign assets of a taxpayer because of the differences in depreciation methods applicable to those assets. For example, the tax book value of tangible property used in the United States generally reflects depreciation of that property pursuant to the modified accelerated cost recovery system (MACRS) under section 168. MACRS generally permits a taxpayer to depreciate tangible property (other than real property) under the 200-percent declining balance method, or the 150-percent declining balance method in the case of certain property. Section 168(b). MACRS also permits taxpayers to depreciate property over shorter recovery periods than a property’s class life.

In contrast, tangible property used predominantly outside the United States generally must be depreciated pursuant to the alternative depreciation system (ADS) under section 168(g). Section 168(g)(1)(A). ADS requires a taxpayer to depreciate tangible property using the straight line method of depreciation. Additionally, ADS generally requires taxpayers to use recovery periods equal to the property’s class life and therefore longer periods than those used under MACRS.

As a result of accelerated depreciation under MACRS as compared to slower depreciation under ADS, an asset used in the United States generally will have a lower adjusted tax basis (i.e., tax book value) than if the same asset were used predominantly outside of the United States. The relatively higher tax book value for assets used predominantly outside the United States results in an increased apportionment of interest expense to foreign source income and a corresponding reduction in the taxpayer’s foreign tax credit limitation.

A disparity in the apportionment of expenses between domestic and foreign assets also may result when a U.S. corporation owns a 10-percent or greater interest in a foreign subsidiary that holds tangible property. Section 864(e)(4) provides that for purposes of allocating and apportioning expenses on the basis of assets, the tax basis of stock in a nonaffiliated 10-percent owned corporation will be adjusted to reflect the earnings and profits of the corporation that are attributable to the stock held by the taxpayer. See also §1.861-12T(c)(2). Accordingly, the adjusted tax basis of stock in a foreign corporation for purposes of apportioning expenses generally will reflect the foreign corporation’s earnings and profits, the computation of which reflects the depreciation of tangible property. Under section 312(k), tangible property generally is depreciated under ADS for purposes of determining earnings and profits. Accordingly, a taxpayer that owns a 10-percent or greater interest in a foreign corporation that holds tangible property may be subject to a disparity similar to the one that arises where the taxpayer holds foreign assets directly.

Explanation of Provisions

The temporary regulations provide an alternative method of determining the tax book value of assets (the “alternative tax book value method”). The alternative tax book value method allows a taxpayer to elect to determine the tax book value of its tangible property that is subject to depreciation under section 168 as though all such property had been depreciated using ADS under section 168(g)(2) during the entire period in which it has been in service. The temporary regulations further provide that tax book value will be determined without regard to the election to expense certain depreciable assets under section 179. Because tax book value will be computed under ADS, the rules permitting a special allowance for property acquired after September 10, 2001, and before January 1, 2005, will not apply. See section 168(k)(2)(C)(ii). Application of section 168(g)(2) as prescribed by these temporary regulations applies solely for determining an asset’s tax book value for purposes of apportioning expenses (including the calculation of the alternative minimum tax foreign tax credit pursuant to section 59(a)) under the asset method described in §1.861-9T(g). Application of section 168(g)(2) pursuant to these regulations does not otherwise affect the result under other provisions of the Code, including the amount of any deduction claimed under sections 167, 168, 169, 263(a), 617, or any other capital cost recovery provision.

The elective alternative to the existing tax book valuation method provides taxpayers with the option of determining the adjusted bases of both foreign and domestic assets under one consistent depreciation method for purposes of apportioning expenses under the asset method described in §1.861-9T(g). A uniform depreciation methodology will help reduce the basis disparity between foreign and domestic assets that can occur under the existing tax book value method.

The temporary regulations generally provide that, for a taxpayer that elects the alternative tax book value method, the tax book value of tangible property that is depreciated under section 168 is determined as though such property were subject to the alternative depreciation system under section 168(g) for the entire period that such property has been in service. Thus, if a taxpayer elects the alternative tax book value method effective for the 2005 taxable year, the tax book value of tangible property placed in service in 2006 is determined each year using the rules of section 168(g) that apply to property placed in service in 2006. However, in the case of tangible property placed in service in a taxable year prior to the first taxable year to which the election to use the alternative method applies, the tax book value of such property is determined using the alternative depreciation system rules that apply to property placed in service in the taxable year to which the election first applies. Thus, if a taxpayer elects the alternative tax book value method effective for the 2005 taxable year, the tax book value of tangible property placed in service in 2004 and prior years is determined each year using the rules of section 168(g) that apply to property placed in service in 2005. A special rule also applies in determining tax book value in cases where a taxpayer makes an election to use the alternative tax book value method after recently (within three years) revoking a prior election to use that method.

The temporary regulations do not modify the rules for determining when property is placed in service for purposes of section 168. If a taxpayer acquires property with a carryover or substituted basis, the determination of the tax book value of that property using the alternative tax book value method will reflect that carryover or substituted basis, determined using the general rule for property placed in service during or after the year of election and using the special rule for property placed in service before the year of election. The Treasury Department and the IRS recognize that acquisitions, mergers, and similar transactions involving taxpayers that use different methods of interest expense apportionment may raise particular issues in applying these rules. The Treasury Department and the IRS request comments regarding the use of the alternative tax book value method with respect to tangible property acquired pursuant to an acquisition, merger, or similar transaction and placed in service in a taxable year prior to such transaction.

The temporary regulations set forth rules for electing the alternative tax book value method. Generally, taxpayers may elect to value their assets using the alternative tax book value method with respect to any taxable year beginning on or after March 26, 2004. Once made, the election applies to all members of an affiliated group of corporations (as defined in §§1.861-11(d) and 1.861-11T(d)). Taxpayers electing the alternative tax book value method may change from that method to the fair market value method at any time for any open year. However, taxpayers using the fair market value method must obtain the consent of the Commissioner to change methods, including a change to the alternative tax book value method.

In conjunction with the issuance of these regulations, the Treasury Department and the IRS intend to issue a revenue procedure to provide temporary rules granting taxpayers automatic consent to change from the fair market value method to the alternative tax book value method. It is anticipated that the revenue procedure will apply to changes in method of apportionment made during a two-year period after March 26, 2004, with the automatic consent applying to taxable years that begin on or after March 26, 2004, and for which the taxpayer has not filed its income tax return. Comments are requested concerning such an automatic consent procedure, including the appropriateness of a two-year period of time for these purposes.

The Treasury Department and the IRS are aware that application of the existing tax book value method may result in other similar disparities between the valuation of domestic and foreign assets. Accordingly, comments are requested regarding whether additional modifications to the tax book value method may be appropriate to address potential disparities arising from other cost recovery provisions, such as the treatment of intangible drilling costs, that distinguish between assets based on place of use.

These temporary regulations are intended to improve the operation of the rules relating to the allocation and apportionment of interest expense. The Treasury Department and the IRS also are considering additional guidance with respect to interest expense allocation and apportionment for purposes of §1.861-9T(h). In particular, to prevent overvaluation of tangible assets under the fair market value method, the Treasury Department and the IRS intend to address situations in which a taxpayer that uses the fair market value method of apportionment takes the position that the value of its tangible assets pursuant to §1.861-9T(h)(1)(ii) exceeds the aggregate value of its assets pursuant to §1.861-9T(h)(1)(i). Comments are requested regarding modifications to the current regulations to address this situation.

Special Analyses

It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations. For the applicability of the Regulatory Flexibility Act (5 U.S.C. chapter 6), refer to the Special Analyses section of the preamble to the cross-reference notice of proposed rulemaking published in this issue of the Bulletin. Pursuant to section 7805(f) of the Internal Revenue Code, these regulations will be submitted to the Chief Counsel of Advocacy of the Small Business Administration for comment on its impact on small businesses.

Amendments to the Regulations

Accordingly, 26 CFR Part 1 is amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation for §1.861-9 is amended by adding entries in numerical order to read in part as follows:

Authority: 26 U.S.C. 7805.

Sections 1.861-9 and 1.861-9T also issued under 26 U.S.C. 863(a), 26 U.S.C. 864(e), 26 U.S.C. 865(i), and 26 U.S.C. 7701(f). * * *

Par. 2. Section 1.861-9 is amended by:

1. Revising paragraphs (a) through (g)(1)(i).

2. Adding paragraphs (g)(1)(ii) through (h)(4), (h)(6), (i), and (j).

The revisions and additions read as follows:

§1.861-9 Allocation and apportionment of interest expense.

(a) through (g)(1)(i) [Reserved]. For further guidance, see §1.861-9T(a) through (g)(1)(i).

(g)(1)(ii) [Reserved]. For further guidance, see the second sentence in §1.861-9T(g)(1)(ii).

(g)(1)(iii) through (h)(4) [Reserved]. For further guidance, see §1.861-9T(g)(1)(iii) through (h)(4).

(h)(5) * * *

(h)(6) through (j) [Reserved]. For further guidance, see §1.861-9T(h)(6) through (j).

Par. 3. Section 1.861-9T is amended by:

1. Revising the section heading.

2. Adding a new sentence after the first sentence in paragraph (g)(1)(ii) introductory text.

3. Adding paragraph (i).

The revisions and addition read as follows:

§1.861-9T Allocation and apportionment of interest expense (temporary).

* * * * *

(g) * * * (1) * * * (i) * * *

(ii) * * * For rules concerning the application of an alternative method of valuing assets for purposes of the tax book value method, see paragraph (i) of this section.

* * *

* * * * *

(i) Alternative tax book value method—(1) Alternative value for certain tangible property. A taxpayer may elect to determine the tax book value of its tangible property that is depreciated under section 168 (section 168 property) using the rules provided in this paragraph (the alternative tax book value method). The alternative tax book value method applies solely for purposes of apportioning expenses (including the calculation of the alternative minimum tax foreign tax credit pursuant to section 59(a)) under the asset method described in paragraph (g) of this section.

(i) The tax book value of section 168 property placed in service during or after the first taxable year to which the election to use the alternative tax book value method applies shall be determined as though such property were subject to the alternative depreciation system under section 168(g) for the entire period that such property has been in service.

(ii) In the case of section 168 property placed in service prior to the first taxable year to which the election to use the alternative tax book value method applies, the tax book value of such property shall be determined under the depreciation method, convention, and recovery period provided for under section 168(g) for the first taxable year to which the election applies.

(iii) If a taxpayer revokes an election to use the alternative tax book value method (“the prior election”) and later makes another election to use the alternative tax book value method (the “subsequent election”) that is effective for a taxable year that begins within 3 years of the end of the last taxable year to which the prior election applied, the taxpayer shall determine the tax book value of its section 168 property as though the prior election has remained in effect.

(iv) The tax book value of section 168 property shall be determined without regard to the election to expense certain depreciable assets under section 179.

(v) Examples. The provisions of this paragraph (i)(1) are illustrated in the following examples:

Example 1. In 2000, a taxpayer purchases and places in service section 168 property used solely in the United States. In 2005, the taxpayer elects to use the alternative tax book value method, effective for the current taxable year. For purposes of determining the tax book value of its section 168 property, the taxpayer’s depreciation deduction is determined by applying the method, convention, and recovery period rules of the alternative depreciation system under section 168(g)(2) as in effect in 2005 to the taxpayer’s original cost basis in such property. In 2006, the taxpayer acquires and places in service in the United States new section 168 property. The tax book value of this section 168 property is determined under the rules of section 168(g)(2) applicable to property placed in service in 2006.

Example 2. Assume the same facts as in Example 1, except that the taxpayer revokes the alternative tax book value method election effective for taxable year 2010. Additionally, in 2011, the taxpayer acquires new section 168 property and places it in service in the United States. If the taxpayer elects to use the alternative tax book value method effective for taxable year 2012, the taxpayer must determine the tax book value of its section 168 property as though the prior election still applied. Thus, the tax book value of property placed in service prior to 2005 would be determined by applying the method, convention, and recovery period rules of the alternative depreciation system under section 168(g)(2) applicable to property placed in service in 2005. The tax book value of section 168 property placed in service during any taxable year after 2004 would be determined by applying the method, convention, and recovery period rules of the alternative depreciation system under section 168(g)(2) applicable to property placed in service in such taxable year.

(2) Timing and scope of election. (i) Except as provided in this paragraph (i)(2), a taxpayer may elect to use the alternative tax book value method with respect to any taxable year beginning on or after March 26, 2004. However, pursuant to §1.861-8T(c)(2), a taxpayer that has elected the fair market value method must obtain the consent of the Commissioner prior to electing the alternative tax book value method. Any election made pursuant to this paragraph (i)(2) shall apply to all members of an affiliated group of corporations as defined in §§1.861-11(d) and 1.861-11T(d). Any election made pursuant to this paragraph (i)(2) shall apply to all subsequent taxable years of the taxpayer unless revoked by the taxpayer. Revocation of such an election, other than in conjunction with an election to use the fair market value method, for a taxable year prior to the sixth taxable year for which the election applies requires the consent of the Commissioner.

(ii) Example. The provisions of this paragraph (i)(2) are illustrated in the following example:

Example. Corporation X, a calendar year taxpayer, elects on its original, timely filed tax return for the taxable year ending December 31, 2007, to use the alternative tax book value method for its 2007 year. The alternative tax book value method applies to X’s 2007 year and all subsequent taxable years. X may not, without the consent of the Commissioner, revoke its election and determine tax book value using a method other than the alternative tax book value method with respect to any taxable year beginning before January 1, 2012. However, X may automatically elect to change from the alternative tax book value method to the fair market value method for any open year.

(3) Effective date. (i) Paragraph (i) of this section applies to taxable years beginning on or after March 26, 2004.

(ii) The applicability of this paragraph (i) expires on or before March 26, 2007.

* * * * *

Mark E. Matthews,
Deputy Commissioner for
Services and Enforcement
.

Approved March 16, 2004.

Gregory Jenner,
Assistant Secretary of the Treasury.

Note

(Filed by the Office of the Federal Register on March 25, 2004, 8:45 a.m., and published in the issue of the Federal Register for March 26, 2004, 69 F.R. 15673)

Drafting Information

The principal author of these regulations is Margaret A. Hogan, Office of Associate Chief Counsel (International). However, other personnel from the IRS and Treasury Department participated in their development.

* * * * *

Rev. Rul. 2004-44

Federal rates; adjusted federal rates; adjusted federal long-term rate and the long-term exempt rate. For purposes of sections 382, 642, 1274, 1288, and other sections of the Code, tables set forth the rates for May 2004.

This revenue ruling provides various prescribed rates for federal income tax purposes for May 2004 (the current month). Table 1 contains the short-term, mid-term, and long-term applicable federal rates (AFR) for the current month for purposes of section 1274(d) of the Internal Revenue Code. Table 2 contains the short-term, mid-term, and long-term adjusted applicable federal rates (adjusted AFR) for the current month for purposes of section 1288(b). Table 3 sets forth the adjusted federal long-term rate and the long-term tax-exempt rate described in section 382(f). Table 4 contains the appropriate percentages for determining the low-income housing credit described in section 42(b)(2) for buildings placed in service during the current month. Finally, Table 5 contains the federal rate for determining the present value of annuity, an interest for life or for a term of years, or a remainder or a reversionary interest for purposes of section 7520.

REV. RUL. 2004-44 TABLE 1
Applicable Federal Rates (AFR) for May 2004
Period for Compounding
    Annual   Semiannual   Quarterly   Monthly
Short-Term              
AFR   1.50%   1.49%   1.49%   1.49%
110% AFR   1.65%   1.64%   1.64%   1.63%
120% AFR   1.80%   1.79%   1.79%   1.78%
130% AFR   1.95%   1.94%   1.94%   1.93%
                 
Mid-Term                
AFR   3.16%   3.14%   3.13%   3.12%
110% AFR   3.48%   3.45%   3.44%   3.43%
120% AFR   3.81%   3.77%   3.75%   3.74%
130% AFR   4.12%   4.08%   4.06%   4.05%
150% AFR   4.77%   4.71%   4.68%   4.66%
175% AFR   5.58%   5.50%   5.46%   5.44%
                 
Long-Term                
AFR   4.65%   4.60%   4.57%   4.56%
110% AFR   5.12%   5.06%   5.03%   5.01%
120% AFR   5.60%   5.52%   5.48%   5.46%
130% AFR   6.07%   5.98%   5.94%   5.91%
                 
REV. RUL. 2004-44 TABLE 2
Rates Under Section 382 for May 2004
Period for Compounding
    Annual   Semiannual   Quarterly   Monthly
Short-term adjusted AFR   1.28%   1.28%   1.28%   1.28%
Mid-term adjusted AFR   2.52%   2.50%   2.49%   2.49%
Long-term adjusted AFR   4.19%   4.15%   4.13%   4.11%
REV. RUL. 2004-44 TABLE 3
Rates Under Section 382 for May 2004
Adjusted federal long-term rate for the current month 4.19%
Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted federal long-term rates for the current month and the prior two months.) 4.19%
REV. RUL. 2004-44 TABLE 4
Appropriate Percentages Under Section 42(b)(2) for May 2004
Appropriate percentage for the 70% present value low-income housing credit 7.91%
Appropriate percentage for the 30% present value low-income housing credit 3.39%
REV. RUL. 2004-44 TABLE 5
Rate Under Section 7520 for May 2004
Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years, or a remainder or reversionary interest 3.8%

T.D. 9122

Guidance Under Section 1502; Stock Basis After a Group Structure Change

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1

AGENCY:

Internal Revenue Service (IRS), Treasury.

ACTION:

Final regulation.

SUMMARY:

This document contains final regulations under section 1502 providing guidance regarding the determination of basis in the stock of the former common parent following a group structure change. These final regulations affect corporations filing consolidated returns.

DATES:

These regulations are effective April 26, 2004.

FOR FURTHER INFORMATION CONTACT:

Ross Poulsen, (202) 622-7770 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

This document contains amendments to the Income Tax Regulations (26 CFR part 1) under section 1502 of the Internal Revenue Code of 1986 (Code), specifically §1.1502-31, relating to the determination of the basis of stock in the former common parent after a group structure change. Section 1.1502-31 applies if one corporation (P) succeeds another corporation (T) under the principles of §1.1502-75(d)(2) or (3) as the common parent of a consolidated group in a group structure change. Section 1.1502-31 provides that if a corporation acquires stock of the former common parent in a group structure change, the basis of the members in the former common parent’s stock immediately after the group structure change is generally redetermined to reflect the former common parent’s net asset basis.

Because of a concern that the application of the net asset basis rule may produce inappropriate results on the disposition of stock acquired in a transaction in which, under generally applicable rules, the basis of the acquired stock would otherwise be determined by reference to the acquirer’s cost, the IRS and Treasury Department issued regulations proposing to except from the application of the net asset basis rule stock acquired in a transaction in which gain or loss was recognized in whole. Those regulations were included in a notice of proposed rulemaking (REG-130262-03, 2003-37 I.R.B. 553 [68 FR 40579]) published in the Federal Register [technical correction published in 68 FR 52545]) on July 8, 2003.

No public hearing was requested or held regarding the proposed regulations. One written comment, however, was received. That comment urged the expeditious promulgation of the proposed regulations as final regulations.

This Treasury decision adopts the proposed regulations without substantive changes as final regulations. The final regulations apply to group structure changes that occur after April 26, 2004. With respect to group structure changes that occur on or before April 26, 2004, and in a consolidated return year beginning on or after January 1, 1995, these regulations apply at the election of the group.

Special Analyses

It has been determined that these regulations are not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It is hereby certified that these regulations do not have a significant impact on a substantial number of small entities. This certification is based on the fact that these regulations primarily will affect affiliated groups of corporations, which tend to be larger businesses. Moreover, the number of taxpayers affected is minimal and the regulations will simplify basis determinations. Therefore, a Regulatory Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. Pursuant to section 7805(f) of the Code, the proposed regulations preceding these regulations were submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact.

Adoption of Amendments to the Regulations

Accordingly, 26 CFR part 1 is amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation for part 1 continues to read, in part, as follows:

Authority: 26 U.S.C. 7805 * * *

Par. 2. Section 1.1502-31 is amended by revising paragraphs (b)(2), (d)(2)(ii), (g), and (h) to read as follows:

§1.1502-31 Stock basis after a group structure change.

* * * * *

(b) * * *

(2) Stock acquisitions. If a corporation acquires stock of the former common parent in a group structure change, the basis of the members in the former common parent’s stock immediately after the group structure change (including any stock of the former common parent owned before the group structure change) that is, or would otherwise be, transferred basis property is redetermined in accordance with the results for an asset acquisition described in paragraph (b)(1) of this section. For example, if all of T’s stock is contributed to P in a group structure change to which section 351 applies, P’s basis in T’s stock is T’s net asset basis, rather than the amount determined under section 362. Similarly, if S merges into T in a group structure change described in section 368(a)(2)(E) and P acquires all of the T stock, P’s basis in T’s stock is the basis that P would have in S’s stock under paragraph (b)(1) of this section if T had merged into S in a group structure change described in section 368(a)(2)(D).

* * * * *

(d) * * *

(2) * * *

(ii) Stock acquisitions. If less than all of the former common parent’ stock is subject to the redetermination described in paragraph (b)(2) of this section, the percentage of the former common parent’s net asset basis taken into account in the redetermination equals the percentage (by fair market value) of the former common parent’s stock subject to the redetermination. For example, if P owns less than all of the former common parent’s stock immediately after the group structure change and such stock would otherwise be transferred basis property, only an allocable part of the basis determined under this section is reflected in the shares owned by P (and the amount allocable to shares owned by nonmembers has no effect on the basis of their shares). Alternatively, if P acquired 10 percent of the former common parent’s stock in a transaction in which the stock basis was determined by P’s cost, and P later acquires the remaining 90 percent of the former common parent’s stock in a separate transaction that is described in paragraph (b)(2) of this section, P retains its cost basis in its original stock and the basis of P’s newly acquired shares reflects only an allocable part of the former common parent’s net asset basis.

* * * * *

(g) Examples. For purposes of the examples in this section, unless otherwise stated, all corporations have only one class of stock outstanding, the tax year of all persons is the calendar year, all persons use the accrual method of accounting, the facts set forth the only corporate activity, all transactions are between unrelated persons, and tax liabilities are disregarded. The principles of this section are illustrated by the following examples:

Example 1. Forward triangular merger. (i) Facts. P is the common parent of one group and T is the common parent of another. T has assets with an aggregate basis of $60 and fair market value of $100 and no liabilities. T’s shareholders have an aggregate basis of $50 in T’s stock. In Year 1, pursuant to a plan, P forms S and T merges into S with the T shareholders receiving $100 of P stock in exchange for their T stock. The transaction is a reorganization described in section 368(a)(2)(D). The transaction is also a reverse acquisition under §1.1502-75(d)(3) because the T shareholders, as a result of owning T’s stock, own more than 50% of the value of P’s stock immediately after the transaction. Thus, the transaction is a group structure change under §1.1502-33(f)(1), and P’s earnings and profits are adjusted to reflect T’s earnings and profits immediately before T ceases to be the common parent of the T group.

(ii) Analysis. Under paragraph (b)(1) of this section, P’s basis in S’s stock is adjusted to reflect T’s net asset basis. Under paragraph (c) of this section, T’s net asset basis is $60, the basis T would have in the stock of a subsidiary under section 358 if T had transferred all of its assets and liabilities to the subsidiary in a transaction to which section 351 applies. Thus, P has a $60 basis in S’s stock.

(iii) Pre-existing S. The facts are the same as in paragraph (i) of this Example 1, except that P has owned the stock of S for several years and P has a $50 basis in the S stock before the merger with T. Under paragraph (b)(1) of this section, P’s $50 basis in S’s stock is adjusted to reflect T’s net asset basis. Thus, P’s basis in S’s stock is $110 ($50 plus $60).

(iv) Excess loss account included in former common parent’s net asset basis. The facts are the same as in paragraph (i) of this Example 1, except that T has two assets, an operating asset with an $80 basis and $90 fair market value, and stock of a subsidiary with a $20 excess loss account and $10 fair market value. Under paragraph (c) of this section, T’s net asset basis is $60 ($80 minus $20). See sections 351 and 358, and §1.1502-19. Consequently, P has a $60 basis in S’s stock. Under section 362 and §1.1502-19, S has an $80 basis in the operating asset and a $20 excess loss account in the stock of the subsidiary.

(v) Liabilities in excess of basis. The facts are the same as in paragraph (i) of this Example 1, except that T’s assets have a fair market value of $170 (and $60 basis) and are subject to $70 of liabilities. Under paragraph (c) of this section, T’s net asset basis is negative $10 ($60 minus $70). See sections 351 and 358, and §§1.1502-19 and 1.1502-80(d). Thus, P has a $10 excess loss account in S’s stock. Under section 362, S has a $60 basis in its assets (which are subject to $70 of liabilities). (Under paragraph (a)(2) of this section, because the liabilities are taken into account in determining net asset basis under paragraph (c) of this section, the liabilities are not also taken into account as consideration not provided by P under paragraph (d)(1) of this section.)

(vi) Consideration provided by S. The facts are the same as in paragraph (i) of this Example 1, except that P forms S with a $100 contribution at the beginning of Year 1, and during Year 6, pursuant to a plan, S purchases $100 of P stock and T merges into S with the T shareholders receiving P stock in exchange for their T stock. Under paragraph (b)(1) of this section, P’s $100 basis in S’s stock is increased by $60 to reflect T’s net asset basis. Under paragraph (d)(1) of this section, P’s basis in S’s stock is decreased by $100 (the fair market value of the P stock) because the P stock purchased by S and used in the transaction is consideration not provided by P.

(vii) Appreciated asset provided by S. The facts are the same as in paragraph (i) of this Example 1, except that P has owned the stock of S for several years, and the shareholders of T receive $60 of P stock and an asset of S with a $30 adjusted basis and $40 fair market value. S recognizes a $10 gain from the asset under section 1001. Under paragraph (b)(1) of this section, P’s basis in S’s stock is increased by $60 to reflect T’s net asset basis. Under paragraph (d)(1) of this section, P’s basis in S’s stock is decreased by $40 (the fair market value of the asset provided by S). In addition, P’s basis in S’s stock is increased under §1.1502-32(b) by S’s $10 gain.

(viii) Depreciated asset provided by S. The facts are the same as in paragraph (i) of this Example 1, except that P has owned the stock of S for several years, and the shareholders of T receive $60 of P stock and an asset of S with a $50 adjusted basis and $40 fair market value. S recognizes a $10 loss from the asset under section 1001. Under paragraph (b)(1) of this section, P’s basis in S’s stock is increased by $60 to reflect T’s net asset basis. Under paragraph (d)(1) of this section, P’s basis in S’s stock is decreased by $40 (the fair market value of the asset provided by S). In addition, S’s $10 loss is taken into account under §1.1502-32(b) in determining P’s basis adjustments under that section.

Example 2. Stock acquisition. (i) Facts. P is the common parent of one group and T is the common parent of another. T has assets with an aggregate basis of $60 and fair market value of $100 and no liabilities. T’s shareholders have an aggregate basis of $50 in T’s stock. Pursuant to a plan, P forms S and S acquires all of T’s stock in exchange for P stock in a transaction described in section 368(a)(1)(B). The transaction is also a reverse acquisition under §1.1502-75(d)(3). Thus, the transaction is a group structure change under §1.1502-33(f)(1), and the earnings and profits of P and S are adjusted to reflect T’s earnings and profits immediately before T ceases to be the common parent of the T group.

(ii) Analysis. Under paragraph (d)(4) of this section, although S is not the new common parent of the T group, adjustments must be made to S’s basis in T’s stock in accordance with the principles of this section. Although S’s basis in T’s stock would ordinarily be determined under section 362 by reference to the basis of T’s shareholders in T’s stock immediately before the group structure change, under the principles of paragraph (b)(2) of this section, S’s basis in T’s stock is determined by reference to T’s net asset basis. Thus, S’s basis in T’s stock is $60.

(iii) Higher-tier adjustments. Under paragraph (d)(4) of this section, P’s basis in S’s stock is increased by $60 (to be consistent with the adjustment to S’s basis in T’s stock).

(iv) Cross ownership. The facts are the same as in paragraph (i) of this Example 2, except S purchased 10% of T’s stock from an unrelated person for cash. In an unrelated transaction, S acquires the remaining 90% of T’s stock in exchange for P stock. S’s basis in the initial 10% of T’s stock is not redetermined under this section. However, S’s basis in the additional 90% of T’s stock is redetermined under this section. S’s basis in that stock is adjusted to $54 (90% of T’s net asset basis).

(v) Allocable share. The facts are the same as in paragraph (i) of this Example 2, except that P owns only 90% of S’s stock immediately after the group structure change. S’s basis in T’s stock is the same as in paragraph (ii) of this Example 2. Under paragraph (d)(2) of this section, P’s basis in its S stock is increased by $54 (90% of S’s $60 adjustment).

Example 3. Taxable stock acquisition. (i) Facts. P is the common parent of one group and T is the common parent of another. T has assets with an aggregate basis of $60 and fair market value of $100 and no liabilities. T’s shareholders have an aggregate basis of $50 in T’s stock. Pursuant to a plan, P acquires all of T’s stock in exchange for $70 of P’s stock and $30 in a transaction that is a group structure change under §1.1502-33(f)(1). P’s acquired T stock is not transferred basis property. (Because of P’s use of cash, the acquisition is not a transaction described in section 368(a)(1)(B).)

(ii) Analysis. The rules of this section do not apply to determine P’s basis in T’s stock. Therefore, P’s basis in T’s stock is $100.

(h) Effective dates — (1) General rule. This section applies to group structure changes that occur after April 26, 2004. However, a group may apply this section to group structure changes that occurred on or before April 26, 2004, and in consolidated return years beginning on or after January 1, 1995.

(2) Prior law. For group structure changes that occur on or before April 26, 2004, and in consolidated return years beginning on or after January 1, 1995, with respect to which the group does not elect to apply the provisions of this section, see §1.1502-31 as contained in the 26 CFR part 1 edition revised as of April 1, 2003. For group structure changes that occur in consolidated return years beginning before January 1, 1995, see §1.1502-31T as contained in the 26 CFR part 1 edition revised as of April 1, 1994.

Mark E. Matthews,
Deputy Commissioner for
Services and Enforcement
.

Approved April 14, 2004.

Gregory F. Jenner,
Acting Assistant Secretary of the Treasury .

Note

(Filed by the Office of the Federal Register on April 23, 2004, 8:45 a.m., and published in the issue of the Federal Register for April 26, 2004, 69 F.R. 22399)

Drafting Information

The principal author of this regulation is Ross Poulsen, Office of Associate Chief Counsel (Corporate). However, other personnel from the IRS and Treasury Department participated in their development.

* * * * *

Part III. Administrative, Procedural, and Miscellaneous

Notice 2004-35

Distributions to Private Foundations From Trusts or Estates: Net Investment Income

PURPOSE

This notice announces that the Internal Revenue Service intends to propose regulations modifying the regulations under section 4940 of the Internal Revenue Code of 1986, as amended, with respect to distributions received by private foundations from trusts and estates.

BACKGROUND

Section 4940 imposes a tax on private foundations based on the foundation’s net investment income. Net investment income is defined in section 4940(c)(1) as the amount by which the sum of the gross investment income and the capital gain net income exceeds certain deductions. Net investment income is to be determined under the principles of subtitle A except to the extent inconsistent with the principles of section 4940.

Treas. Reg. § 53.4940-1(d)(2) states that a distribution from a trust described in section 4947(a)(1) or (2) or from an estate does not retain its character in the hands of the distributee private foundation. Thus, these distributions are not included in net investment income for purposes of section 4940. Treas. Reg. § 53.4940-1(d)(2) also states that a distribution from a section 4947(a)(2) trust that is attributable to transfers in trust after May 26, 1969, retains its character in the hands of the distributee private foundation unless the income is taken into account as a result of the application of section 671. The regulation is silent on the treatment of distributions from trusts other than trusts described in section 4947.

Because distributions of income received by a private foundation from some types of trusts, but not other types of trusts or estates, are included in the private foundation’s net investment income for purposes of section 4940, Treas. Reg. § 53.4940-1(d)(2) leads to inconsistent results. For example, a distribution of income made during the administration of an estate for which a deduction is claimed under section 642(c) does not retain its character in the hands of the distributee private foundation. However, a distribution of income from a non-grantor charitable lead trust described in section 4947(a)(2) for which the trust claims a section 642(c) deduction does retain its character in the hands of the distributee private foundation, if the income is attributable to amounts placed in trust after May 26, 1969.

After studying the application of section 4940 and Treas. Reg. § 53.4940-1(d)(2) to distributions from various types of trusts and estates, the Treasury Department and the Internal Revenue Service have concluded that the disparate treatment of distributions under section 4940 is no longer appropriate.

PROPOSED ACTION

The Treasury Department and the Internal Revenue Service intend to propose regulations modifying Treas. Reg. § 53.4940-1(d)(2) to provide that a private foundation’s net investment income for purposes of section 4940 does not include distributions from trusts and estates. Until further guidance is promulgated, income distributions from trusts and estates will not retain their character in the hands of a distributee private foundation for purposes of determining the foundation’s net investment income under section 4940(c).

CURRENT RETURN PROCESSING

For current tax returns, any private foundation to which this notice applies should mark, “Filed pursuant to Notice 2004-35” on the front page of its Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation. Returns should be completed in accordance with this notice pending corresponding changes to Form 990-PF and the accompanying instructions.

REFUND PROCESSING

For years in which the statute of limitations has not expired and for which a refund of section 4940 taxes paid is sought, the private foundation must file an amended Form 990-PF. The private foundation should mark the front page of the amended return (or returns) “Filed pursuant to Notice 2004-35.”

COMMENTS

The Service welcomes comments and suggestions relating to the amendment of the regulations on distributions from trusts and estates to private foundations. Written comments should be submitted by August 9, 2004, to CC:PA:LPD:RU (Notice 2004-35), Room 5203, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, D.C. 20044. Comments may be hand delivered between the hours of 8 a.m. and 5 p.m., Monday through Friday to CC:PA:LPD:RU (Notice 2004-35), Courier’s Desk, Internal Revenue Service, 1111 Constitution Ave., NW, Washington D.C. Alternatively, comments may be submitted electronically via e-mail to the following address: Notice.Comments@irscounsel.treas.gov. All comments will be available for public inspection.

DRAFTING INFORMATION

The principal author of this notice is Ronald B. Weinstock of the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). For further information regarding this notice, contact Mr. Weinstock at (202) 622-3094 or contact Oksana O. Xenos of the Office of the Commissioner (Tax Exempt and Government Entities) at 202-283-9469 (not a toll-free number).

Notice 2004-36

Split-Interest Trust Distributions to Private Foundations: Distributable Amount

PURPOSE

This notice provides guidance to private foundations on the treatment of certain distributions received from split-interest trusts described in section 4947(a)(2) of the Internal Revenue Code of 1986, as amended, in light of the courts’ decisions in Ann Jackson Family Foundation v. Commissioner, 97 T.C. 534 (1991), aff’d, 15 F.3d 917 (9th Cir. 1994).

BACKGROUND

Section 4942(a) imposes a tax on the amount of undistributed income of a private foundation for any taxable year that is not distributed by the first day of the second taxable year following such taxable year. Section 4942(c) defines undistributed income as the amount by which the distributable amount for the taxable year exceeds the qualifying distributions made out of the distributable amount. Section 4942(d) defines distributable amount as the minimum investment return (plus certain refunds of amounts previously taken into account as qualifying distributions), reduced by the taxes imposed on the private foundation under subtitle A and section 4940. Treas. Reg. § 53.4942(a)-2(b)(2), provides that the distributable amount of a private foundation shall be increased by the income portion of distributions from trusts described in section 4947(a)(2) with respect to amounts placed into trust after March 26, 1969. In Ann Jackson Family Foundation, the Tax Court held that Treas. Reg. § 53.4942(a)-2(b)(2) was invalid to the extent the regulation requires including in the private foundation’s distributable amount for the year the full amount of the income portion of distributions from split-interest trusts. The court determined that the language of section 4942 did not support this interpretative regulation.

PROPOSED ACTION

The Treasury Department and the Internal Revenue Service intend to propose regulations modifying the regulations under section 4942 in a manner consistent with the holdings of the Tax Court and the Ninth Circuit in Ann Jackson Family Foundation. Until further guidance is promulgated, private foundations should compute the distributable amount under section 4942(d) without regard to Treas. Reg. § 53.4942(a)-2(b)(2).

CURRENT RETURN PROCESSING

For current tax returns, any private foundation to which this notice applies should mark “Filed pursuant to Notice 2004-36” on the front page of its Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation. If a Form 4720, Return of Certain Excise Taxes on Charities and Other Persons Under Chapters 41 and 42 of the Internal Revenue Code, is filed, Schedule B (Initial Tax on Undistributed Income) should be computed disregarding distributions received from section 4947(a)(2) trusts. Returns should be completed in accordance with this notice pending corresponding changes to Form 990-PF and Form 4720 and the accompanying instructions.

Form 990-PF requires information with respect to not only the current tax year, but also prior tax years, particularly Parts XI and XIII. Private foundations may wish to complete these Parts as if prior year returns had been completed in accordance with this Notice rather than the Form instructions. Private foundations may include a schedule to show how the information provided on such return varies from prior year returns as filed. It is not necessary for a private foundation to file amended returns for prior years, but it will be expected to retain the supporting information and computations for the changes that would have been reflected had amended returns been filed.

REFUND PROCESSING

For years in which the statute of limitations has not expired and for which a refund of section 4942 taxes paid is sought, the private foundation must file an amended Form 990-PF and an amended Form 4720 for that year with a schedule showing the corrected amount of section 4942 liability pursuant to this Notice. The private foundation should mark the front page of the amended return (or returns) “Filed pursuant to Notice 2004-36.”

COMMENTS

The Service welcomes comments and suggestions relating to the amendment of the regulations on distributions from split-interest trusts to private foundations. Written comments should be submitted by August 9, 2004, to CC:PA:LPD:RU (Notice 2004-36), Room 5203, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, D.C. 20044. Comments may be hand delivered between the hours of 8 a.m. and 5 p.m., Monday through Friday to CC:PA:LPD:RU (Notice 2004-36), Courier’s Desk, Internal Revenue Service, 1111 Constitution Ave., NW, Washington D.C. Alternatively, comments may be submitted electronically via e-mail to the following address: Notice.Comments@irscounsel.treas.gov. All comments will be available for public inspection.

DRAFTING INFORMATION:

The principal author of this notice is Ronald B. Weinstock of the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). For further information regarding this notice, contact Mr. Weinstock at (202) 622-3094 or contact Oksana O. Xenos of the Office of the Commissioner (Tax Exempt and Government Entities) at 202-283-9469 (not a toll-free number).

Rev. Proc. 2004-26

SECTION 1. PURPOSE

This revenue procedure provides guidance for representatives of certain military or civilian employees of the United States who die as a result of injuries incurred in a terrorist or military action. It provides guidance for having tax forgiven or for claiming refunds of tax under section 692(c) of the Internal Revenue Code, as amended by the Victims of Terrorism Tax Relief Act of 2001, Pub. L. No. 107-134. It also provides procedures by which the Secretary will determine whether a terrorist or military action has occurred.

SECTION 2. BACKGROUND

.01 Prior to amendment by the Victims of Terrorism Tax Relief Act of 2001, Pub. L. No. 107-134 (the Act), section 692(c)(1) provided that, in the case of any individual military or civilian employee of the United States who died as a result of wounds or injury incurred in a terrorist or military action outside the United States while the individual was a military or civilian employee of the United States, any tax imposed by subtitle A of the Code (income tax) did not apply with respect to the taxable year in which fell the date of death and with respect to any prior taxable year in the period beginning with the last taxable year ending before the taxable year in which the wounds or injury were incurred.

.02 Section 113(b) of the Act amended section 692(c) to remove the requirement that the employee must have incurred the wounds or injuries outside the United States. This amendment applies to tax years ending on or after September 11, 2001. Section 692(c)(1), as amended, provides that, in the case of any individual military or civilian employee of the United States who dies as a result of wounds or injury incurred in a terrorist or military action while the individual was a military or civilian employee of the United States, any tax imposed by subtitle A of the Code (income tax) shall not apply with respect to the taxable year in which falls the date of death and with respect to any prior taxable year in the period beginning with the last taxable year ending before the taxable year in which the wounds or injury were incurred.

.03 Section 692(c)(2) defines “terroristic or military action” as any terrorist activity which a preponderance of the evidence indicates was directed against the United States or any of its allies and any military action involving the Armed Forces of the United States and resulting from violence or aggression against the United States or any of its allies (or threat thereof). Terrorist activity includes criminal offenses intended to coerce, intimidate, or retaliate against the government or civilian population. See, e.g., Homeland Security Act of 2002, Pub. L. No. 107-296, sec. 2(15), 116 Stat. 2135, 2141, 6 U.S.C. § 101(15).

.04 Section 111 of the Act added section 139 to the Code. Section 139 provides that gross income shall not include any amount received by an individual as a qualified disaster relief payment. A qualified disaster includes a disaster which results from a terrorist or military action, as defined in section 692(c)(2). I.R.C. § 139(c)(1).

.05 Section 112(a) of the Act grants the Secretary authority under section 7508A to disregard a period of time (up to one year) for determining: (a) the timeliness of acts under section 7508(a)(1), (b) the amount of any addition to tax, and (c) the amount of any credit or refund, in the event of a terrorist or military action, as defined in section 692(c)(2). Section 112(c) of the Act amends the Employee Retirement Income Security Act, 29 U.S.C. § 1148 and 29 U.S.C. § 1302(i) (ERISA), to authorize the Secretary of Labor to disregard a period of up to one year for determining the timeliness of actions required under ERISA, in the event of a terrorist or military action, as defined by section 692(c)(2).

.06 Section 113 of the Act amends section 104(a)(5) of the Code to include compensation received for injuries or sickness as a result of a terrorist or military action, as defined by section 692(c)(2).

SECTION 3. SCOPE

.01 A determination under this revenue procedure that an act qualifies as a terrorist or military action within the meaning of section 692(c)(2) will apply with respect to the following provisions of the Code:

(1) section 104(a)(5) — which excludes from gross income amounts received by an individual as disability income attributable to injuries incurred as a direct result of a terrorist or military action;

(2) section 139(c) — which defines qualified disasters to include disasters which result from a terrorist or military action;

(3) section 692(c)(1) — which provides tax relief for certain military or civilian employees of the United States dying as a result of injuries incurred in a terrorist or military action; and

(4) section 7508A — which authorizes the Secretary to postpone certain deadlines by reason of Presidentially declared disasters or terrorist or military actions.

SECTION 4. PROCEDURE

.01 Making a determination that a terrorist or military action has occurred under section 692(c)(2) —

(1) Prior to publishing a determination that an event that occurred outside the United States constituted a terrorist action within the meaning of section 692(c)(2), the Secretary will ascertain, allowing a reasonable time under the circumstances for response, from the Department of State and the Department of Justice whether those Departments believe that a preponderance of the evidence indicates that the event resulted from terrorist activity directed against the United States or its allies. The Secretary will follow the same procedures if an event that occurred within the United States has an international dimension, or if the perpetrators or cause of the event are unknown. An event within the United States has an “international dimension” if a preponderance of the evidence indicates that it involves: (a) an attack by a foreign perpetrator, or by a domestic perpetrator with links to a foreign principal (e.g., a foreign terrorist group, sponsor or financier); (b) an attack on a foreign national, family members in the United States of a foreign national, or a United States entity held by foreign owners; (c) an attack on a foreign diplomatic mission or on an international organization (including attacks on foreign diplomats and other internationally-protected persons in the United States); or (d) an attack on, or with its impact in, the United States, launched from across the border of the United States. See, generally, 22 U.S.C. § 2656f(d); 18 U.S.C. § 2331(1).

(2) Prior to publishing a determination that an event that occurred within the United States that does not have an international dimension constituted a terrorist action within the meaning of section 692(c)(2), the Secretary will ascertain, allowing a reasonable time under the circumstances for response, from the Department of Justice whether that Department believes that a preponderance of the evidence indicates that the event resulted from terrorist activity directed against the United States.

(3) Prior to publishing a determination that an event constituted a military action within the meaning of section 692(c)(2), the Secretary will consult the Department of Defense with respect to whether the event was a military action involving the Armed Forces of the United States resulting from violence or aggression against the United States or its allies.

(4) After determining that a terrorist or military action has occurred, the Secretary may exercise the authority under section 7508A to disregard a period of up to one year for determining: (a) the timeliness of acts under section 7508(a)(1); (b) the amount of any addition to tax; and (c) the amount of any credit or refund.

(5) Taxpayers may rely on the published guidance to establish that particular events were terrorist or military actions for purposes of sections 104(a)(5), 139(c), and 692(c).

.02 Filing claims for credit or refund under section 692(c) —

(1) Representatives of employees who qualify for the benefits of section 692(c), and for whom no Form 1040, U.S. Individual Income Tax Return, has been filed, may claim those benefits, or claim a refund of withholding or estimated tax payments, by filing a Form 1040. The representatives should file those forms at the address provided in Publication 3920, Tax Relief for Victims of Terrorist Attacks. (Also see Publication 3920 for more detailed procedures for claiming a refund.) On joint returns reporting taxable income of the surviving spouse, taxpayers must make an allocation of the tax liability between spouses. See section 1.692-1(b) of the Income Tax Regulations. If the surviving spouse or other person filing the joint return cannot determine the proper allocation, he or she should attach a statement of all income and deductions allocable to each spouse and the IRS will make the proper allocation. The representative must attach the employee’s Form W-2, Wage and Tax Statement.

(2) In the case of any employee for whom a Form 1040 already has been filed, claims for refund should be made by filing Form 1040X, Amended U.S. Individual Income Tax Return, with IRS at the address provided in Publication 3920. (Also see Publication 3920 for more detailed procedures for claiming a refund.) In cases where the previously filed return was a joint return that reported taxable income of the surviving spouse, the claim for refund must make an allocation of the tax liability between spouses. See section 1.692-1(b) of the Income Tax Regulations. If the surviving spouse or other person filing the claim for refund cannot determine the proper allocation, he or she should attach a statement of all income and deductions allocable to each spouse, and the IRS will make the proper allocation.

(3) All returns and claims for refund filed pursuant to this revenue procedure should be identified by writing “KITA” (or other designation as set forth in Publication 3920 or other guidance the Service issues) in bold letters on the top of page 1 of the return or claim for refund.

(4) Returns and claims for refunds must be accompanied by the following documents:

(a) Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer, unless: (i) the surviving spouse is filing an original or amended joint return, or (ii) the decedent’s personal representative is filing an original Form 1040, in which case the personal representative must attach a copy of the court certificate showing his or her appointment, and;

(b)(i) For military and civilian employees of the Department of Defense — A certification made by the Department of Defense on DD Form 1300 that includes the name and social security number of the individual, the date of injury, the date of death, and a statement that the individual died as the result of a military or terrorist action and was an employee of the United States on the date of injury and on the date of death.

(ii) For United States government employees killed in the United States (who are not employees of the Department of Defense) —

(A) A death certificate stating the nature of the injury causing death or, if the cause of death is not apparent from the death certificate, a letter from the treating physician, medical examiner, or hospital stating the cause of death, and

(B) A certification from the federal employer that includes the name and social security number of the decedent, the date of injury, the date of death, a statement that the decedent was an employee of the United States on the date of injury and the date of death and, if the death was associated with an event that the Secretary has identified as a military action or terrorist activity in published guidance, a statement identifying the action or activity associated with the death. This certificate may be a form or letter from the employing agency’s personnel department to the decedent’s representative.

(iii) For United States government employees killed overseas (who are not employees of the Department of Defense) — A certification from the Department of State that the death was the result of terrorist or military action outside the United States. The certification must be made in the form of a letter signed by the Director General of the Foreign Service, Department of State, or his or her delegate. The certification must include the name and social security number of the individual, the date of injury, the date of death, and a statement that the individual died as the result of a military or terrorist action outside the United States and was an employee of the United States on the date of injury and on the date of death.

(5) In a case in which a representative of a decedent who died as the result of terrorist or military action does not have enough tax information to file a timely claim for refund, the representative may stop the running of the period of limitations for making such a claim by filing Form 1040X with the IRS at the address provided in Publication 3920, attaching Form 1310, any other available documentation required by this revenue procedure, and a statement that an amended claim will be filed as soon as the additional requisite information is ascertained.

(6) If an event occurs in the United States that the representative of a decedent who was not an employee of the Department of Defense at the time of injury and death believes was a terrorist or military action, and the Secretary has not published a determination that the event was a terrorist or military action, the representative may submit a request for a determination with the return or claim for refund of the decedent’s estate and any other documentation required by this revenue procedure. Taxpayers should submit the following information with their determination requests:

  1. Date and location of incident,

  2. Type of incident (terrorist or military),

  3. Number of taxpayers thought to be affected,

  4. A description of the facts on which the representative bases the claim that a terrorist or military action has occurred, including the facts relating to any alleged international dimension of a terrorist action as set forth in section 4.01(2) of this revenue procedure, and

  5. A completed Form 8821, Tax Information Authorization, that will permit the IRS to disclose to the Department of Justice (for terrorist attacks), the Department of State (for terrorist attacks with an alleged international dimension), or the Department of Defense (for military actions) return information relating to the return or claim for refund. Taxpayers should complete the form as instructed, listing the Department of Justice as the appointee if the request relates to an alleged terrorist attack, the Department of State if the request relates to an alleged terrorist attack with an international dimension, or the Department of Defense if the request relates to an alleged military action. The appointee’s address is not required in this instance. Taxpayers should check the box on the line of Form 8821 that indicates that the tax information authorization is for a specific use and not recorded on the Centralized Authorization File (CAF).

SECTION 5. EFFECT ON OTHER DOCUMENTS

This revenue procedure obsoletes Rev. Proc. 85-35, 1985-2 C.B. 433.

SECTION 6. EFFECTIVE DATE

This revenue procedure is effective as of the date of publication of this revenue procedure in the Internal Revenue Bulletin, May 10, 2004.

SECTION 7. DRAFTING INFORMATION

The principal author of this revenue procedure is Emly B. Berndt of the Associate Chief Counsel (Procedure and Administration), Administrative Provisions and Judicial Practice. For further information regarding this revenue procedure, contact Emly Berndt at (202) 622-4940 (not a toll-free call).

Part IV. Items of General Interest

REG-129447-01

Notice of Proposed Rulemaking by Cross-Reference to Temporary Regulations and Notice of Public Hearing Allocation and Apportionment of Expenses; Alternative Method for Determining Tax Book Value of Assets

AGENCY:

Internal Revenue Service (IRS), Treasury.

ACTION:

Notice of proposed rulemaking by cross-reference to temporary regulations and notice of public hearing.

SUMMARY:

In this issue of the Bulletin, the IRS is issuing temporary regulations (T.D. 9120) providing an alternative method of valuing assets for purposes of apportioning expenses under the tax book value method of §1.861-9T. The alternative tax book value method, which is elective, allows taxpayers to determine, for purposes of apportioning expenses, the tax book value of all tangible property that is subject to a depreciation deduction under section 168 by using the straight line method, conventions, and recovery periods of the alternative depreciation system under section 168(g)(2). The alternative method provided in the temporary regulations is intended to minimize basis disparities between foreign and domestic assets of taxpayers that may arise when taxpayers use adjusted tax basis to value assets under the tax book value method of expense apportionment. The text of those temporary regulations also serves as the text of these proposed regulations. This document also provides a notice of public hearing on these proposed regulations.

DATES:

Written or electronic comments must be received by June 24, 2004. Outlines of topics to be discussed at the public hearing scheduled for July 19, 2004, at 10 a.m. must be received by June 28, 2004.

ADDRESSES:

Send submissions to: CC:PA:LPD:PR (REG-129447-01), Room 5203, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-129447-01), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC, or sent electronically, via the IRS internet site at www.irs.gov/regs. The public hearing will be held in the IRS Auditorium, Internal Revenue Building, 1111 Constitution Avenue, NW, Washington, DC.

FOR FURTHER INFORMATION CONTACT:

Concerning the proposed regulations, Margaret A. Hogan, (202) 622-3850; concerning submissions of comments, the hearing, and/or to be placed on the building access list to attend the hearing, Robin Jones, (202) 622-7180 (not a toll-free number).

 

SUPPLEMENTARY INFORMATION:

Background and Explanation of Provisions

The temporary regulations in this issue of the Bulletin amend 26 CFR Part 1. The temporary regulations provide an alternative method of valuing assets for purposes of apportioning expenses under the tax book value method of §1.861-9T. The text of the temporary regulations also serves as the text of these regulations. The preamble of the temporary regulations explains the temporary regulations and these proposed regulations.

Special Analyses

It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and because the regulations do not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Internal Revenue Code, this notice of proposed rulemaking will be submitted to the Chief Counsel of Advocacy of the Small Business Administration for comment on its impact on small businesses.

Comments and Public Hearing

Before these proposed regulations are adopted as final regulations, consideration will be given to any written (a signed original and eight (8) copies) or electronic comments that are submitted timely to the IRS. The IRS and the Treasury Department request comments on the clarity of the proposed rule and how it can be made easier to understand. All comments will be available for public inspection and copying.

A public hearing has been scheduled for July 19, 2004, beginning at 10 a.m. in the IRS Auditorium of the Internal Revenue Building, 1111 Constitution Avenue, NW, Washington, DC. Due to building security procedures, visitors must enter at the Constitution Avenue entrance. In addition, all visitors must present photo identification to enter the building. Because of access restrictions, visitors will not be admitted beyond the immediate entrance area more than 30 minutes before the hearing starts. For more information about having your name placed on the building access list to attend the hearing, see the “FOR FURTHER INFORMATION CONTACT” section of this preamble.

The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who wish to present oral comments at the hearing must submit electronic or written comments by June 24, 2004, and an outline of the topics to be discussed and the time to be devoted to each topic (signed original and eight (8) copies) by June 28, 2004. A period of 10 minutes will be allotted to each person for making comments. An agenda showing the scheduling of the speakers will be prepared after the deadline for receiving outlines has passed. Copies of the agenda will be available free of charge at the hearing.

Proposed Amendments to the Regulations

Accordingly, 26 CFR Part 1 is proposed to be amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation for §1.861-9 is amended by adding entries in numerical order to read in part as follows:

Authority: 26 U.S.C. 7805.

Sections 1.861-9 and 1.861-9T also issued under 26 U.S.C. 863(a), 26 U.S.C. 864(e), 26 U.S.C. 865(i), and 26 U.S.C. 7701(f). * * *

Par. 2. Section 1.861-9 is amended by revising paragraph (g)(1)(ii) introductory text, and adding paragraphs (h)(6), (i) and (j) to read as follows:

§1.861-9 Allocation and apportionment of interest expense.

* * * * *

(g) * * * (1) * * * (i) * * *

(ii) * * * [The text of the proposed revision of §1.861-9(g)(1)(ii) is the same as the second sentence of §1.861-9T(g)(1)(ii) published elsewhere in this issue of the Bulletin.] * * *

* * * * *

(h)(6) [Reserved]. For further guidance see, §1.861-9T(h)(6).

(i) [The text of the proposed addition of §1.861-9(i) is the same as §1.861-9T(i)(1) through (i)(3)(i) published elsewhere in this issue of the Bulletin.]

(j) [Reserved]. For further guidance, see §1.861-9T(j).

Mark E. Matthews,
Deputy Commissioner for
Services and Enforcement.

Note

(Filed by the Office of the Federal Register on March 25, 2004, 8:45 a.m., and published in the issue of the Federal Register for March 26, 2004, 69 F.R. 15753)

Drafting Information

The principal author of these proposed regulations is Margaret A. Hogan, Office of Associate Chief Counsel (International). However, other personnel from the IRS and Treasury Department participated in their development.

* * * * *

Announcement 2004-34

Foundations Status of Certain Organizations

The following organizations have failed to establish or have been unable to maintain their status as public charities or as operating foundations. Accordingly, grantors and contributors may not, after this date, rely on previous rulings or designations in the Cumulative List of Organizations (Publication 78), or on the presumption arising from the filing of notices under section 508(b) of the Code. This listing does not indicate that the organizations have lost their status as organizations described in section 501(c)(3), eligible to receive deductible contributions.

Former Public Charities. The following organizations (which have been treated as organizations that are not private foundations described in section 509(a) of the Code) are now classified as private foundations:

Org. Name City State
1st Chance Productions, Inc., Sylmar CA
7-H Foundation, Los Angeles CA
70 Plus, Valley Village CA
73rd Ave.Community Awareness Program, Oakland CA
77th Street Boosters, Inc., Los Angeles CA
A One Kids, West Palm Beach FL
Accesscare, Morrisville NC
Acts of Compassion, Inc., Deadwood OR
Advocates for Technological Opportunity, Larkspur CA
Afterschool Educational Enrichment Foundation, Beverly Hills CA
Africa-USA, New York NY
AFWA IBOM State Association of Nigeria USA, Inc., Los Angeles, Los Angeles CA
Ahepa Hellenic Heritage Foundation, Pasadena CA
Alameda Naval Air & Western Aerospace Museum, Oakland CA
Alaska Tradeswomen Network, Anchorage AK
Albany Rescue Mission Association, Albany OR
Alethos Foundation, Calabasas CA
Alliance for Animal Hope of Louisiana, Inc., New Orleans LA
Alpha and Omega Project, Inc., Inglewood CA
Altemus, Inc., Gravenhurst Ontario Canada
America Theological Seminary, Los Angeles CA
American Anglican Council-Los Angeles, Los Angeles CA
American Center for Political Communities of Meaning, Portland OR
American Humanitarian Landmine Disposal Foundation, Santa Monica CA
American Museum of Beat Art, Pasadena CA
American Safety Training Foundation, Santa Clarita CA
Anew Birth Christian Ministries, Los Angeles CA
Anfall, Inc., Bell Gardens CA
Angels Plight, Inc., New York NY
Antelope Valley Child Abuse Prevention Council, Inc., Lancaster CA
Antelope Valley Chinese Educational Center, Inc., Palmdale CA
Antelope Valley Team Sheriff Racing, Lancaster CA
Antioch Baptist Church Community Development Corporation, Douglas NE
Apartment A, Venice CA
APR Southern California Construction Career Project, Los Angeles CA
Arabic Christian Medical Association, Inc., Downey CA
Arikat Charitable Association, San Francisco CA
Arts Broadcasting L A, Santa Monica CA
Asian Pacific Counseling & Consultant Group, Los Angeles CA
Asifa-Hollywood Animation Aid Foundation, Burbank CA
Asociacion Esfuerzo Unido Por Piedra Blanca Bonao, Inc., Bronx NY
Aspiring Communities Institute, St. Louis MO
Assemblies in Motion, Sherman Oaks CA
Association of Betterers Intervention Programs, Encino CA
Association of Korean Adoptees, Los Angeles CA
Atlas Foundation, Los Angeles CA
Aua Fisheries Development Projects, Inc., Pago Pago AS
Baby DJ Childrens Charities a Nonprofit Corporation, Seattle WA
Baker-Conway Foundation, Shoreline WA
Bay Area Dragon Boat Foundation, Redwood City CA
Bayanihan Senior Citizens Association, Inc., Los Angeles CA
Beach Cities Hockey Foundation, Inc., Rancho Santa Margari CA
Beat Eddie Brown Center for the Arts, Berkeley CA
Because Its Right, Inc., Memphis TN
Benchwear Athletic Consulting, Pasadena CA
Benton County Water Conservancy Board, Patersen WA
Bicycle Friendly Berkeley Coalition, Inc., Berkeley CA
Boys-to-Men Club, Los Angeles CA
Brain Injury Association of Alaska, Anchorage AK
Brexton Renaissance, Inc., Laurel MD
Bridge A NonProfit Corporation, Seattle WA
Bridgeport Buyers Association, Bridgeport TX
Brighter Future, Carson CA
Bristol Bay Elders Action Group, Naknek AK
Bromont Housing Corporation, Studio City CA
Building Community Links, San Francisco CA
Bulgarian Americans United, Sacramento CA
Bunn Community Outreach, Bunn NC
Business Boutique, Inc., Huntington NY
Buying With Vision, San Francisco CA
Cadet Youth Foundation, Burbank CA
California Association of Batterers Intervention Programs, Encino CA
California Cowboy Benefit, Dublin CA
California Cruisers, Tustin CA
Camoes Players, Honolulu HI
Capistrano Cornerstone, Inc., Costa Mesa CA
Caring Heart Foster Family Agency, Inc., Los Angeles CA
Carter G. Woodson Alumni Association, Normangee TX
Casa Nicaragua & Educational Project for Central American, S. Gate CA
Casa Rivas, San Fernando CA
Cascadia Weekend, Wilsonville OR
Catchum Young Foundation, Los Angeles CA
Celebrazione Italiana Festival Association, Oakdale MN
Center for Entrepreneurial Development for the Pacific, Kailua HI
Center for New Americans, Portland OR
Center for Sustainable Urban Design at Playa Vista, Playa Vista CA
Center for the Arts of the African Diaspora, Inc., Los Angeles CA
Chameleon Theatre Group, Inc., Walden NY
Champaign Rottweiller Rescue, Champaign IL
Chance to Begin, Inc., Richmond CA
Chapman Child and Family Foundation, Santa Monica CA
Charities, Inc., Newark DE
Chico Dharma Study Group, Chico CA
Children First, Oakland CA
Childrens at Risk in Developing Countries, Inc., St. Louis Park MN
Childrens Funeral Assistance, Los Angeles CA
Childrens Prime Time Sports Club, Inc., Inglewood CA
Chinatown Community Housing Corporation, Honolulu HI
Chinese Church Music Institute of Northern California, San Francisco CA
Chinese Lantern Cultural Foundation, Belmont CA
Chris Catering Institute, Los Angeles CA
City Streets Foundation, Walnut Creek CA
Claire Lilienthal Learning Academy, San Francisco CA
Classic Aircraft Aviation Museum, Inc., Portland OR
Clean & Sober, Portland OR
Clean Belmont Project, Inc., Portland OR
Clinicalcircle, Inc., Los Angeles CA
Coalition for Fire Rescue Technology, Inc., Anchorage AK
Coastal Public Benefit Corporation, El Granada CA
Community Alliances of Interdependent Agriculture, Amherst MA
Community Home Neighborhood Maintenance & Development, Spring Valley CA
Community Life, Springfield OR
Community Outreach and Education Center, Walnut CA
Compassionate Heart Ministries, Inc., Inglewood CA
Connecting, Incorporated, Washington DC
Conservation Alliance of Palm Beach County, Inc., West Palm Beach FL
Construction Systems Scholarship Fund, Inc., Houston TX
Consumer Credit Center, Los Angeles CA
Cook Inlet Wrestling Club, Anchorage AK
Cory Jill Rovin Memorial Foundation, Island Park NY
Council of KPC of Northern California, San Francisco CA
Cowgirl Way Equestrian Drill Team, Norco CA
Creative Technical Science Study Foundation, San Francisco CA
Cultural Restoration Tourism Project, Pacifica CA
Daniel Dru Native American Traditional Organization, Incorporated, Miami OK
Deafwax, Los Angeles CA
Denali Institute, Anchorage AK
Dennis Spaight Choreography Trust, Portland OR
Dolphin Odyssey Foundation, Kapaa HI
Don Lavy Dance Company, Sherman Oaks CA
Donny Cowgill Memorial Scholarship Fund, Highland Park IL
Dream Industries, Los Angeles CA
Dreams Can Come True Foundation, Inc., Roseville CA
Earth Angels Foundation, New York NY
Earth Studies, Inc., Palm Desert CA
Earthman Project, Inc., Davie FL
East Fishkill Challenge Softball Association, Inc., Hopewell Junction NY
Eastlake Child Development Center, Oakland CA
Easy English Times, Inc., Napa CA
Ecuadorian Association for Muscular Filial F E O M, Houston TX
Education and Literacy Resource Connection, Inc., Sacramento CA
El Ritmo Flamenco Dance Troop, Columbus OH
Emerald Chariot Foundation, Marina Del Rey CA
Emerald Regiment Drill Team, Mountlake Terrace WA
Emeryville Performing Arts, Inc., Emeryville CA
English Opera Seattle, Seattle WA
Enrichment Plus North, Inc., Oakland CA
Environmental Education Resources, Portola Valley CA
Envisage, Seattle WA
Epiphany Theatre Co., Los Angeles CA
Excellent House Services, Inc., West Palm Beach FL
Eyapaha Institute, Marina Del Rey CA
Faith & Hope Ministries, Emerado ND
Families of Hope, Stanwood WA
Family Unity Network, Inc., Oakland CA
Fathers Project, Berkeley CA
Federal Way High School Choral Booster Club, Federal Way WA
Fil-Am Center for Community Health and Development, Inc., San Pablo CA
Financial Pacific C A P, Auburn WA
First Star Scholarship Foundation, S. Gate CA
Flint Cuts Glass Music, Ltd., Oregon City OR
Florida College Booster Club of Southern California, Inc., Winnetka CA
Food for Thought Productions, Toluca Lake CA
For a Better Future Foundation, Costa Mesa CA
Foundation for Advancement in Music Education, Hollywood CA
Foundation for African Arts & Culture, Oakdale CA
Foundation for Honduran Development, Los Angeles CA
Free Speech Movement Archives, Palo Alto CA
Fresh Start, Seattle WA
Friends of Fleet Park, Montesano WA
Friends of Marie Reed School and Recreation Center, Silver Spring MD
Friends of Our Lady of Hope, San Francisco CA
Friends of the Lockport Public Library, Inc., Lockport NY
Friends of VGH & UBC Hospital Foundation,   Canada
Frontier Ice Alliance, Inc., Palmer AK
Full Circle Community Counseling and Support Services, Inc., San Francisco CA
Full Gospel Business Women Fellowship International, Inglewood CA
Fund of the Immaculate Heart, Beverly Hills CA
Fundaninas Foundation, Inc., Miami FL
G & L Connection, Lancaster CA
G. T. Brinson School in Lieu, Federal Way WA
Galt Area Swim Program, Galt CA
Generations and Partnerships, E. Wenatchee WA
Giant Steps of America, Novato CA
Girdwood Volunteer Fire and Rescue, Inc., Girdwood AK
Global Business Educational Institute, Inc., Warrensville OH
Global Charity Organization, Inc., San Leandro CA
Global Education & Cultural Opportunities, Inc., New Smyrna FL
Go and Tell Ministries, Inc., Dallas TX
Gods Image, Norwalk CA
Golden Carrot, Aguanga CA
Good Neighbors Old Fashioned Community Chest, Inc., Nashville TN
Goodnews River Lodge Educational Fund, Inc., Eagle River AK
Granite Regional Park Foundation, Sacramento CA
Great Basin Tree Foundation, Klamath Falls OR
Great Beginnings Childrens Fund, Inc., Kamuela HI
Great Mission, Los Angeles CA
Greater Community Outreach Service, Inc., Muskegon Heights MI
Greater Harvest Family Life Center, Baltimore MD
Greater Long Beach Youth Activities League, Los Angeles CA
GTB SEWA Mission, Inc., Union City CA
Guardian Community Services, Inc., Los Angeles CA
Guns Arent Fun, Portland OR
Halau Haloa the National Academy of Hawaiian Performing Arts, Pearl City HI
Hampton Roads Mexican American Club, Portsmouth VA
Handong International Foundation, Los Angeles CA
Hands-On Curriculum Concepts, Gardena CA
Hankook Korean American Senior Citizens Association, Los Angeles CA
Hans Einstein Community Medical Scholarship, Berkeley CA
Hanuri Korean Gay Community Network, Los Angeles CA
Harold Haughton Community Development Corporation, New Orleans LA
Harvest Outreach Hawaii, Haleiwa HI
Hawaii Academy of Audiology Foundation, Honolulu HI
Hawaii Museum of Flying, Honolulu HI
Hawaii Rhythmic Gymnastic Association, Haleiwa HI
Hawaii State Junior Golf Association, Inc., Honolulu HI
Hawaii Wushu Center, Cotati CA
Hawaiian Inter-Club Council of Southern California Health & Ed Fund, Los Angeles CA
Hayward Police Officers Benevolent Foundation, Hayward CA
Healthy Kids International, Seattle WA
Heart Healers, Inc., a Non-for-Profit Corp., Woodland Hills CA
Hecel Oyakapi, Inc., Studio City CA
Heir to the Throne, Tacoma WA
Help Heal Our Streets, Inc., San Fernando CA
Help Us Help You, Sacramento CA
Helping Hands for the Sorrowful, Inc., Palm Beach FL
Hemophilia Network, Incorporated, Los Angeles CA
Heritage Begins Within, Beverly Hills CA
Heritage Cemetary Group, Inc., Tigard OR
Heritage Society of Ethnic Arts, San Francisco CA
Hillsboro Soccer Club, Hillsboro OR
Hineni Ministries a Non Profit Montana Corporation, Seattle WA
HIV Complimentary Therapies of Sonoma County, Santa Rosa CA
Hollywood Access Program for Natives, Inc., Tarzana CA
Hollywood Air Corps Charitable Foundation, Santa Monica CA
Hollywood Renainnance Film Festival, Hayward CA
Hoop Dreams, Inc., Rodeo CA
Hope & Lite Foundation, Inc., Salt Lake City UT
Hope Life, Inc., Euless TX
Hope Through Opportunity, Inc., Oakland CA
Hopedale Youth Basketball League, Inc., Hopedale MA
Hopes Nest Limited, Los Angeles CA
Hospice Services in America Foundation, Culver City CA
Hospital Presbiteriano De Mainero, Inc., Houston TX
House of Change, Portland OR
House of Concern, Los Angeles CA
H R A, Inc., Kailua-Kona HI
Hui O Hilo, Inc., Hilo HI
Hungarian Christian Assembly, Stockton CA
IKF Booster Club, Grants Pass OR
Imagine Washington, Inc., Washington DC
Immunocytochemistry Research Institute-Seattle, Seattle WA
Inglewood Educational Foundation, Inglewood CA
Inland Empire AIDS Center, Inc., San Bernardino CA
Inland Empire Talent Production, Fontana CA
Instrumental Music Boosters, Inc., Alta Loma CA
Integrated Arts a Home for Creative Expression, Berkeley CA
International Christian Foundation, Inc., Gresham OR
International Health Medical Group, Inc., Los Angeles CA
International Medical Advocacy Group for Greater Health Care Information and Edu, Walpole MA
Internet Security Foundation International, La Honda CA
Iron Sharpening Iron Training Center, Altadena CA
J. D. Henderson Ministries, Inc., Portland OR
Jacobs Ladder, Inc., Oakland CA
Jesus Video Project Northwest, Salem OR
Jewish Association for All, Los Angeles CA
Joans Second Chance Home, North Hollywood CA
Joeys Feline Friends a Rescue Foundation, Kaneohe HI
Jonathans Christian Outreach, Inc., Chico CA
Joshuas House, Troutdale OR
Jump Strait, Houston TX
Junction City Soccer Club 01-01-98, Junction City OR
JWW Counseling Service, Compton CA
Ka Pa Hula O Leilehua, Mililani Oahu HI
Kidn Around of Eastern Oregon, Inc., Redmond OR
Kids Are Important in North Dakota, Grand Forks ND
Kids Campaign, Van Nuys CA
Kids Korner Preschool, Inc., Arleta CA
Kids Learning Center of South Florida, Inc., Miami FL
Kidz Eyes Foundation, Los Angeles CA
Kim Eung Hwa & Korean Dance Academy, Los Angeles CA
K L O 8240th Army Veterans Association U S A, Los Angeles CA
Korean-American Alliance for the Mentally Ill CA, Inc., Walnut CA
Korean American Christian Broadcasting, Los Angeles CA
Korean American Coalition Hawaii Chapter, Honolulu HI
Kyo-Youth Foundation, Everett WA
LA Diversified Theater Group, Venice CA
L A Evangelism College, Los Angeles CA
L A Jesus Love Mission Center, La Mirada CA
Lanakila Hockey Club, Ewa Beach HI
Laulima Kuhao, Lanai City HI
Lavender Alliance for Civic Action, Sacramento CA
League of Sacramento Theatres, Sacramento CA
Learning Tools for Kids, Inc., Portland OR
Life Training a California Nonprofit Public Benefit Corporation, Calabasas CA
Lifestyle & Education Institute, Los Angeles CA
Lighthouse of the Lord, Inc., Freeport FL
Lomita Womens Club, Lomita CA
Lorenz-Smeenge Foundation, Inc., Jacksonville FL
Los Angeles Chapter of the National Black MBA Association, Los Angeles CA
Los Angeles Fire Department Historical Society, Los Angeles CA
Los Angeles Korean Festival Committee, Los Angeles CA
Macedonia Community Development Corporation, Trenton NJ
Manthano Project, Inc., Antelope OR
Mapintee, San Francisco CA
Mariculture Research Institute, Cleveland TN
Maryland Society for Obesity Prevention, Inc., Rockville MD
Mayors Hunger and Homelessness Relief Program, Oakland CA
Medical International Rapid Response, Redmond WA
Melita, Inc., Vallejo CA
Merced Symphony Association, Merced CA
Mere Tuiasosopo Betham Financial Aid and Scholarship Fund, Pago Pago AS
Mid-Valley Girls Fastpitch Softball League, Inc., Encino CA
Mid-Wilshire Human Services, Los Angeles CA
Midway Village Resident Association, Inc., Daly City CA
Minnesota Entrepreneurs, Inc., Minneapolis MN
Mission TLC, Inc., of Northeast Florida, Ponte Verde Beach FL
Moores Meamorphosis, Inc., San Leandro CA
Mt.Everest Ministries, Newport Beach CA
Mukunghwa Korean School, Oakland CA
Music International Connection, N. Hollywood CA
Music Mission, Monroe WA
Muslim Community and Human Development Corporation, Portland OR
My Friends House, Inc., Bend OR
Na Koa Opio, Waianae HI
Nac Foundation, Oakland CA
Naja, Inc., American Cyn CA
Naranjo Family Homes, Inc., Inglewood CA
National Association of Collegiate Women Athletic Administrators, Wilmington NC
National Cervical Cancer Coalition, Van Nuys CA
National Council on Business Strategy, Inc., Washington DC
National High School Sports Foundation, La Mirada CA
National Paralegal Defense League Corp. a Nevada Corporation, Los Angeles CA
Nativity Club, Inc., Burbank CA
Near-National Endowment for Animal Rights, Los Angeles CA
Nedra Thurlow Horn Educational Tr., Seattle WA
Nehemiah Project-Oakland, Oakland CA
Nevada County Food & Toy Run, Nevada City CA
New Life in Christ Ministries, Landover Hills MD
New Mexico Sandplay Society, Albuquerque NM
New World Mission Center, Los Angeles CA
Newton Educational Center, Los Angeles CA
Nexus Dance Company, Portland OR
Nigerian Talking Drum Ensemble Foundation, Inc., Los Angeles CA
Nika Gallery, Inc., San Francisco CA
North Coast Symphony Orchestra, Wheeler OR
North Florida Screaming Eagles, Inc., MacClenny FL
North San Fernando Valley Community Foundation, Inc., Granada Hills CA
Northern California Earth Institute, Oakland CA
Northwest Classical Theatre Company, Portland OR
Northwest Sculling Association, Seattle WA
Northwest Tidal Waves, Marysville WA
Oakland Young Peoples Theatre, Oakland CA
Oasis Transitional Housing Program, Los Angeles CA
O C B Community Service, Inc., Los Angeles CA
October Sunday Festival, Inc., St. Thomas VI
Ohana Foundation, Cupertino CA
Olive Tree Literature Society, Tigard OR
One Voice Foundation, Los Angeles CA
One Way Mission, Redwood City CA
One World One Vision, Inc., Jersey City NJ
Onesimus Jail Ministry, Bellflower CA
Operation Ezekiel, Inc., Irvine CA
Oregon Premier Fastpitch Softball, Portland OR
Pacific Northwest Foundation,   Canada
Pacifica Ocean Discovery Center, Pacifica CA
Paramedics and EMTS Abroad, Inc., Silverton OR
Parker County Childrens Advocacy Center, Weatherford TX
Partnership for Children, Everett WA
Paul and Adell Lee Community Center, Inc., Oak Park MI
P A V E, Cranberry PA
Peaceful Streets, San Francisco CA
Peggy Cole Ministries International, Paso Robles CA
People Achieving Recreation & Community Services, Malibu CA
Peoples Helping Hands, Beatyville KY
Persian Cat Rescue of Northern California, Castro Valley CA
Personal Financial Management Services, Citrus Heights CA
Peter John Mission, Los Angeles CA
Phoenix and U Partners Homeownership, Van Nuys CA
Phoenix Resurrection Foundation, Seward AK
Pine Creek Assisted Living, Inc., Anchorage AK
P L A C E Educational Corporation, McMinnville OR
Playwrights Group and LA Writers Workshop, Inc., Los Angeles CA
Point Pleasant Foundation for Excellence in Education, Inc., Pt. Pleasant NJ
Polk District Renaissance, San Francisco CA
Portland-Tallinn Friendship City Association, Beaverton OR
Potential Unlimited, Inc., Burtonsville MD
Preserve Our Water Environment and Resources, Inc., Rome GA
Preserving Social Graces a Calif. Nonprofit Public Benefit Corp., Los Angeles CA
Professional Women of Colors, Oakland CA
Project Baby Love, Inc., Wenatchee WA
Project Restore, Inc., Gary IN
Protecting Americas Children, Inc., Lake Oswego OR
PSU Educational Foundation, Inc., Nanuet NY
Pulaski County Wrestling Club, Roanoke VA
Quest for Hearing, Lakewood WA
Rahus Institute, Pleasant Hill CA
Rainbow Atelier, Mercedes TX
Regional Organization of Oaxaca, Los Angeles CA
Revival Fire Ministries, Amarillo TX
Rinconada Ventures Foundation, San Francisco CA
Robin Hood Society a Humanitarian Foundation, Thousand Oaks CA
Rosalie Silva Poway Thunder Baseball, Poway CA
Rural Georgia Childrens League, Inc., Buena Vista GA
San Angeles Potbelly Pig Association, Wilmington DE
San Diego Blues Society, Inc., San Diego CA
San Francisco Black Chamber Community Alliance, San Francisco CA
Save Orcas Bay, Orcas WA
Save Our Brazilian Children, Grosse Pointe MI
Save Our Future, Shreveport LA
S E A Housing Corporation, Los Angeles CA
Seattle International Youth Soccer Club, Seattle WA
Second Mount Zion Community Development Corporation, Detroit MI
Servicio Educacional Caribe, Inc., New York NY
Seva International, Cerritos CA
Sheriff Boosters Palmdale, Inc., Palmdale CA
Shield of Faith Christian Center, Pomona CA
Shiloh Baptist Community Development Corporation, Port Norris NJ
Shortest Distance Foundation, Burbank CA
Sisu Foundation for the Arts, Inc., Honolulu HI
Soar Business Institute, San Francisco CA
Soaring Eagle Education Foundation, Pasadena CA
Soaring Solo, Issaquah WA
Sociedad Benefica Hondurena, Los Angeles CA
South Central Nursing Homes of Orlando, Inc., Orlando FL
South Central World Championship Entertainment & Association, Los Angeles CA
South Fulton Multi-Purpose Community Center of Hope, Inc., Union City GA
South Side OKC Boxing Club, Inc., Oklahoma City OK
Southern California Chevra Kadisha, Inc., N. Hollywood CA
Southern California Sanctuary for Children, Monrovia CA
Special Events for the Disabled, Inc., Findlay OH
St. Gregorys A and M Hovespian Child Care Center, Incorporated, Pasadena CA
Still People Limited, Oregon City OR
Stitches Technology Sewn Products Training Center, Inc., Los Angeles CA
Straight to God Ministries, Inc., Corvallis OR
Student Voices, Inc., Beaverton OR
Sustainable North Bay, Novato CA
Sustainable Policies Institute, Los Angeles CA
Swedish American Music Foundation, Minneapolis MN
T Rails Foundation, Seattle WA
Tacoma Guild for Independent Film, Tacoma WA
Te Mano O Te Ra, Walnut Creek CA
Teach Another Generation, Incorporated, Oakland CA
Teams to the Nations, Hudson OH
Techiah Foundation, San Francisco CA
Technology Math & Science for Our Youth, Inc., Marietta GA
Tee-Bros, Torrance CA
Teenage Pregnancy Prevention, Inc., Los Angeles CA
Teens Advocating Non Violence T A N, Los Angeles CA
Term Limits Leadership Foundation, West Redding CT
Texas Publishers Education and Art Institute, Inc., Dallas TX
Threatened Species Recovery Network, Corte Madera CA
Tibet Aid Foundation, Everett WA
Tinaa Services Association, Juneau AK
Tour of Unity, University Pl WA
Transcend International, Inc., Waianae HI
Triple HHH, Portland OR
TSC Strategic Ministries, Inc., Bakersfield CA
Ujima, Inc., San Bernardino CA
United Hmong Development, Inc., Sacramento CA
United Lebanese Christians, Palmdale CA
United Parents for Runaway and Homeless Youth, Eugene OR
United With Pride, Inc., San Francisco CA
Universal Football Conference, Inc., Inglewood CA
Up With Eagles, Altadena CA
Uplift Foundation, Pasadena CA
Urban Bankers and Financial Services Alliance, Inc., Foster City CA
Urban Focus Music Foundation, Hollywood CA
Urban Portland Interfaith Volunteer Caregivers Program, Portland OR
Utopa Pharmacutical Corp., Redwood City CA
Valley Bulldogs, Woodland Hills CA
Veritas Christian Research Ministries, Applegate CA
Victory Enterprises and Ministries, Reseda CA
Vietnamese Professional Womens Assoc., Portland OR
Villemin Dresser Music Foundation, Malibu CA
Visual Arts Hall of Fame, Shreveport LA
Voltaire Theatre, Chicago IL
W. J. Burns Childrens Preschool, Berkeley CA
Walnut Creek Library Foundation, Walnut Creek CA
Wave Community Development Corporation, Los Angeles CA
WCFA Survivors, Inc., Baileys Harbor WI
We Create Miracles, Durham NC
Wee Care Play & Learn Daycare, Inc., Ogallala NE
West Hollywood Retirement Assistance Center, Los Angeles CA
West Los Angeles Jeopardy Program, Los Angeles CA
Western Addition Drillettes and Majorettes, Inc., San Francisco CA
Western Instituer for Research and Medical Education, Inc., Bakersfield CA
Wheatfields, Inc., Columbus IN
White City Youth Boxing Foundation, White City OR
Whitestone Foundation, Bothell WA
Whittier Early Learning Center, Whittier CA
Wholistic Health & Healing Association, Roseville CA
Windward Friends for Adult Education, Kailua HI
Wings That Soar, Seattle WA
WL-Central Asia Business Education Partners, San Leandro CA
W M F, Inc., Kamuela HI
Women of the Cross, Pacoima CA
World Blessing Foundation, Claremont CA
WTL Communications, Merlin OR
Wyland Institute for Civic Education, Del Mar CA
Youth & Elderly Together Making a Difference, Inc., Lakeland FL
Youth for Understanding, San Francisco CA
Youth in Arts Achievement Program, Inc., Portland OR
Youth-Musician Actor Singer and Stage Performers Foundation, Inc., New Bedford MA

If an organization listed above submits information that warrants the renewal of its classification as a public charity or as a private operating foundation, the Internal Revenue Service will issue a ruling or determination letter with the revised classification as to foundation status. Grantors and contributors may thereafter rely upon such ruling or determination letter as provided in section 1.509(a)-7 of the Income Tax Regulations. It is not the practice of the Service to announce such revised classification of foundation status in the Internal Revenue Bulletin.

Definition of Terms and Abbreviations

Definition of Terms

Amplified describes a situation where no change is being made in a prior published position, but the prior position is being extended to apply to a variation of the fact situation set forth therein. Thus, if an earlier ruling held that a principle applied to A, and the new ruling holds that the same principle also applies to B, the earlier ruling is amplified. (Compare with modified, below).

Clarified is used in those instances where the language in a prior ruling is being made clear because the language has caused, or may cause, some confusion. It is not used where a position in a prior ruling is being changed.

Distinguished describes a situation where a ruling mentions a previously published ruling and points out an essential difference between them.

Modified is used where the substance of a previously published position is being changed. Thus, if a prior ruling held that a principle applied to A but not to B, and the new ruling holds that it applies to both A and B, the prior ruling is modified because it corrects a published position. (Compare with amplified and clarified, above).

Obsoleted describes a previously published ruling that is not considered determinative with respect to future transactions. This term is most commonly used in a ruling that lists previously published rulings that are obsoleted because of changes in laws or regulations. A ruling may also be obsoleted because the substance has been included in regulations subsequently adopted.

Revoked describes situations where the position in the previously published ruling is not correct and the correct position is being stated in a new ruling.

Superseded describes a situation where the new ruling does nothing more than restate the substance and situation of a previously published ruling (or rulings). Thus, the term is used to republish under the 1986 Code and regulations the same position published under the 1939 Code and regulations. The term is also used when it is desired to republish in a single ruling a series of situations, names, etc., that were previously published over a period of time in separate rulings. If the new ruling does more than restate the substance of a prior ruling, a combination of terms is used. For example, modified and superseded describes a situation where the substance of a previously published ruling is being changed in part and is continued without change in part and it is desired to restate the valid portion of the previously published ruling in a new ruling that is self contained. In this case, the previously published ruling is first modified and then, as modified, is superseded.

Supplemented is used in situations in which a list, such as a list of the names of countries, is published in a ruling and that list is expanded by adding further names in subsequent rulings. After the original ruling has been supplemented several times, a new ruling may be published that includes the list in the original ruling and the additions, and supersedes all prior rulings in the series.

Suspended is used in rare situations to show that the previous published rulings will not be applied pending some future action such as the issuance of new or amended regulations, the outcome of cases in litigation, or the outcome of a Service study.

Revenue rulings and revenue procedures (hereinafter referred to as “rulings”) that have an effect on previous rulings use the following defined terms to describe the effect:

Abbreviations

The following abbreviations in current use and formerly used will appear in material published in the Bulletin.

A—Individual.

Acq.—Acquiescence.

B—Individual.

BE—Beneficiary.

BK—Bank.

B.T.A.—Board of Tax Appeals.

C—Individual.

C.B.—Cumulative Bulletin.

CFR—Code of Federal Regulations.

CI—City.

COOP—Cooperative.

Ct.D.—Court Decision.

CY—County.

D—Decedent.

DC—Dummy Corporation.

DE—Donee.

Del. Order—Delegation Order.

DISC—Domestic International Sales Corporation.

DR—Donor.

E—Estate.

EE—Employee.

E.O.—Executive Order.

ER—Employer.

ERISA—Employee Retirement Income Security Act.

EX—Executor.

F—Fiduciary.

FC—Foreign Country.

FICA—Federal Insurance Contributions Act.

FISC—Foreign International Sales Company.

FPH—Foreign Personal Holding Company.

F.R.—Federal Register.

FUTA—Federal Unemployment Tax Act.

FX—Foreign corporation.

G.C.M.—Chief Counsel's Memorandum.

GE—Grantee.

GP—General Partner.

GR—Grantor.

IC—Insurance Company.

I.R.B.—Internal Revenue Bulletin.

LE—Lessee.

LP—Limited Partner.

LR—Lessor.

M—Minor.

Nonacq.—Nonacquiescence.

O—Organization.

P—Parent Corporation.

PHC—Personal Holding Company.

PO—Possession of the U.S.

PR—Partner.

PRS—Partnership.

PTE—Prohibited Transaction Exemption.

Pub. L.—Public Law.

REIT—Real Estate Investment Trust.

Rev. Proc.—Revenue Procedure.

Rev. Rul.—Revenue Ruling.

S—Subsidiary.

S.P.R.—Statement of Procedural Rules.

Stat.—Statutes at Large.

T—Target Corporation.

T.C.—Tax Court.

T.D. —Treasury Decision.

TFE—Transferee.

TFR—Transferor.

T.I.R.—Technical Information Release.

TP—Taxpayer.

TR—Trust.

TT—Trustee.

U.S.C.—United States Code.

X—Corporation.

Y—Corporation.

Z —Corporation.

Numerical Finding List

Numerical Finding List

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2003-27 through 2003-52 is in Internal Revenue Bulletin 2003-52, dated December 29, 2003.

Bulletins 2004-1 through 2004-19

 

Announcements

Article Issue Link Page
2004-1 2004-1 I.R.B. 2004-1 254
2004-2 2004-3 I.R.B. 2004-3 322
2004-3 2004-2 I.R.B. 2004-2 294
2004-4 2004-4 I.R.B. 2004-4 357
2004-5 2004-4 I.R.B. 2004-4 362
2004-6 2004-3 I.R.B. 2004-3 322
2004-7 2004-4 I.R.B. 2004-4 365
2004-8 2004-6 I.R.B. 2004-6 441
2004-9 2004-6 I.R.B. 2004-6 441
2004-10 2004-7 I.R.B. 2004-7 501
2004-11 2004-10 I.R.B. 2004-10 581
2004-12 2004-9 I.R.B. 2004-9 541
2004-13 2004-9 I.R.B. 2004-9 543
2004-14 2004-10 I.R.B. 2004-10 582
2004-15 2004-11 I.R.B. 2004-11 612
2004-16 2004-13 I.R.B. 2004-13 668
2004-17 2004-12 I.R.B. 2004-12 635
2004-18 2004-12 I.R.B. 2004-12 639
2004-19 2004-13 I.R.B. 2004-13 668
2004-20 2004-13 I.R.B. 2004-13 673
2004-21 2004-13 I.R.B. 2004-13 673
2004-22 2004-14 I.R.B. 2004-14 709
2004-23 2004-13 I.R.B. 2004-13 673
2004-24 2004-14 I.R.B. 2004-14 714
2004-25 2004-15 I.R.B. 2004-15 737
2004-26 2004-15 I.R.B. 2004-15 743
2004-27 2004-14 I.R.B. 2004-14 714
2004-28 2004-16 I.R.B. 2004-16 818
2004-29 2004-15 I.R.B. 2004-15 772
2004-30 2004-17 I.R.B. 2004-17 833
2004-31 2004-18 I.R.B. 2004-18 854
2004-32 2004-18 I.R.B. 2004-18 860
2004-33 2004-18 I.R.B. 2004-18 862
2004-34 2004-19 I.R.B. 2004-19  
2004-35 2004-17 I.R.B. 2004-17 839
2004-37 2004-17 I.R.B. 2004-17 839
2004-38 2004-18 I.R.B. 2004-18 878
2004-39 2004-17 I.R.B. 2004-17 840
2004-40 2004-17 I.R.B. 2004-17 840
2004-41 2004-18 I.R.B. 2004-18 879
2004-42 2004-17 I.R.B. 2004-17 840

 

 

Court Decisions

Article Issue Link Page
2078 2004-16 I.R.B. 2004-16 773

 

 

Notices

Article Issue Link Page
2004-1 2004-2 I.R.B. 2004-2 268
2004-2 2004-2 I.R.B. 2004-2 269
2004-3 2004-5 I.R.B. 2004-5 391
2004-4 2004-2 I.R.B. 2004-2 273
2004-5 2004-7 I.R.B. 2004-7 489
2004-6 2004-3 I.R.B. 2004-3 308
2004-7 2004-3 I.R.B. 2004-3 310
2004-8 2004-4 I.R.B. 2004-4 333
2004-9 2004-4 I.R.B. 2004-4 334
2004-10 2004-6 I.R.B. 2004-6 433
2004-11 2004-6 I.R.B. 2004-6 434
2004-12 2004-10 I.R.B. 2004-10 556
2004-13 2004-12 I.R.B. 2004-12 631
2004-14 2004-9 I.R.B. 2004-9 526
2004-15 2004-9 I.R.B. 2004-9 526
2004-16 2004-9 I.R.B. 2004-9 527
2004-17 2004-11 I.R.B. 2004-11 605
2004-18 2004-11 I.R.B. 2004-11 605
2004-19 2004-11 I.R.B. 2004-11 606
2004-20 2004-11 I.R.B. 2004-11 608
2004-21 2004-11 I.R.B. 2004-11 609
2004-22 2004-12 I.R.B. 2004-12 632
2004-23 2004-15 I.R.B. 2004-15 725
2004-24 2004-13 I.R.B. 2004-13 642
2004-25 2004-15 I.R.B. 2004-15 727
2004-26 2004-16 I.R.B. 2004-16 782
2004-27 2004-16 I.R.B. 2004-16 782
2004-28 2004-16 I.R.B. 2004-16 783
2004-29 2004-17 I.R.B. 2004-17 828
2004-30 2004-17 I.R.B. 2004-17 828
2004-31 2004-17 I.R.B. 2004-17 830
2004-32 2004-18 I.R.B. 2004-18 847
2004-33 2004-18 I.R.B. 2004-18 847
2004-34 2004-18 I.R.B. 2004-18 848
2004-35 2004-19 I.R.B. 2004-19  
2004-36 2004-19 I.R.B. 2004-19  

 

 

Proposed Regulations

Article Issue Link Page
106590-00 2004-14 I.R.B. 2004-14 704
116664-01 2004-3 I.R.B. 2004-3 319
129447-01 2004-19 I.R.B. 2004-19  
106681-02 2004-18 I.R.B. 2004-18 852
122379-02 2004-5 I.R.B. 2004-5 392
139845-02 2004-5 I.R.B. 2004-5 397
165579-02 2004-13 I.R.B. 2004-13 651
166012-02 2004-13 I.R.B. 2004-13 655
115471-03 2004-14 I.R.B. 2004-14 706
121475-03 2004-16 I.R.B. 2004-16 793
126459-03 2004-6 I.R.B. 2004-6 437
126967-03 2004-10 I.R.B. 2004-10 566
128309-03 2004-16 I.R.B. 2004-16 800
149752-03 2004-14 I.R.B. 2004-14 707
153172-03 2004-15 I.R.B. 2004-15 729
156232-03 2004-5 I.R.B. 2004-5 399
156421-03 2004-10 I.R.B. 2004-10 571
167217-03 2004-9 I.R.B. 2004-9 540
167265-03 2004-15 I.R.B. 2004-15 730

 

 

Revenue Procedures

Article Issue Link Page
2004-1 2004-1 I.R.B. 2004-1 1
2004-2 2004-1 I.R.B. 2004-1 83
2004-3 2004-1 I.R.B. 2004-1 114
2004-4 2004-1 I.R.B. 2004-1 125
2004-5 2004-1 I.R.B. 2004-1 167
2004-6 2004-1 I.R.B. 2004-1 197
2004-7 2004-1 I.R.B. 2004-1 237
2004-8 2004-1 I.R.B. 2004-1 240
2004-9 2004-2 I.R.B. 2004-2 275
2004-10 2004-2 I.R.B. 2004-2 288
2004-11 2004-3 I.R.B. 2004-3 311
2004-12 2004-9 I.R.B. 2004-9 528
2004-13 2004-4 I.R.B. 2004-4 335
2004-14 2004-7 I.R.B. 2004-7 489
2004-15 2004-7 I.R.B. 2004-7 490
2004-16 2004-10 I.R.B. 2004-10 559
2004-17 2004-10 I.R.B. 2004-10 562
2004-18 2004-9 I.R.B. 2004-9 529
2004-19 2004-10 I.R.B. 2004-10 563
2004-20 2004-13 I.R.B. 2004-13 642
2004-21 2004-14 I.R.B. 2004-14 702
2004-22 2004-15 I.R.B. 2004-15 727
2004-23 2004-16 I.R.B. 2004-16 785
2004-24 2004-16 I.R.B. 2004-16 790
2004-25 2004-16 I.R.B. 2004-16 791
2004-26 2004-19 I.R.B. 2004-19  
2004-27 2004-17 I.R.B. 2004-17 831

 

 

Revenue Rulings

Article Issue Link Page
2004-1 2004-4 I.R.B. 2004-4 325
2004-2 2004-2 I.R.B. 2004-2 265
2004-3 2004-7 I.R.B. 2004-7 486
2004-4 2004-6 I.R.B. 2004-6 414
2004-5 2004-3 I.R.B. 2004-3 295
2004-6 2004-4 I.R.B. 2004-4 328
2004-7 2004-4 I.R.B. 2004-4 327
2004-8 2004-10 I.R.B. 2004-10 544
2004-9 2004-6 I.R.B. 2004-6 428
2004-10 2004-7 I.R.B. 2004-7 484
2004-11 2004-7 I.R.B. 2004-7 480
2004-12 2004-7 I.R.B. 2004-7 478
2004-13 2004-7 I.R.B. 2004-7 485
2004-14 2004-8 I.R.B. 2004-8 511
2004-15 2004-8 I.R.B. 2004-8 515
2004-16 2004-8 I.R.B. 2004-8 503
2004-17 2004-8 I.R.B. 2004-8 516
2004-18 2004-8 I.R.B. 2004-8 509
2004-19 2004-8 I.R.B. 2004-8 510
2004-20 2004-10 I.R.B. 2004-10 546
2004-21 2004-10 I.R.B. 2004-10 544
2004-22 2004-10 I.R.B. 2004-10 553
2004-23 2004-11 I.R.B. 2004-11 585
2004-24 2004-10 I.R.B. 2004-10 550
2004-25 2004-11 I.R.B. 2004-11 587
2004-26 2004-11 I.R.B. 2004-11 598
2004-27 2004-12 I.R.B. 2004-12 625
2004-28 2004-12 I.R.B. 2004-12 624
2004-29 2004-12 I.R.B. 2004-12 627
2004-30 2004-12 I.R.B. 2004-12 622
2004-31 2004-12 I.R.B. 2004-12 617
2004-32 2004-12 I.R.B. 2004-12 621
2004-33 2004-12 I.R.B. 2004-12 628
2004-34 2004-12 I.R.B. 2004-12 619
2004-35 2004-13 I.R.B. 2004-13 640
2004-36 2004-12 I.R.B. 2004-12 620
2004-37 2004-11 I.R.B. 2004-11 583
2004-38 2004-15 I.R.B. 2004-15 717
2004-39 2004-14 I.R.B. 2004-14 700
2004-40 2004-15 I.R.B. 2004-15 716
2004-41 2004-18 I.R.B. 2004-18 845
2004-42 2004-17 I.R.B. 2004-17 824
2004-43 2004-18 I.R.B. 2004-18 842
2004-44 2004-19 I.R.B. 2004-19  

 

 

Tax Conventions

Old Article Action New Article Issue Link Page
2004-3   2004-3 2004-7 I.R.B. 2004-7 486

 

 

Treasury Decisions

Article Issue Link Page
9099 2004-2 I.R.B. 2004-2 255
9100 2004-3 I.R.B. 2004-3 297
9101 2004-5 I.R.B. 2004-5 376
9102 2004-5 I.R.B. 2004-5 366
9103 2004-3 I.R.B. 2004-3 306
9104 2004-6 I.R.B. 2004-6 406
9105 2004-6 I.R.B. 2004-6 419
9106 2004-5 I.R.B. 2004-5 384
9107 2004-7 I.R.B. 2004-7 447
9108 2004-6 I.R.B. 2004-6 429
9109 2004-8 I.R.B. 2004-8 519
9110 2004-8 I.R.B. 2004-8 504
9111 2004-8 I.R.B. 2004-8 518
9112 2004-9 I.R.B. 2004-9 523
9113 2004-9 I.R.B. 2004-9 524
9114 2004-11 I.R.B. 2004-11 589
9115 2004-14 I.R.B. 2004-14 680
9116 2004-14 I.R.B. 2004-14 674
9117 2004-15 I.R.B. 2004-15 721
9118 2004-15 I.R.B. 2004-15 718
9119 2004-17 I.R.B. 2004-17 825
9120 2004-19 I.R.B. 2004-19  
9122 2004-19 I.R.B. 2004-19  

 

Effect of Current Actions on Previously Published Items

Findings List of Current Actions on Previously Published Items

A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2003-27 through 2003-52 is in Internal Revenue Bulletin 2003-52, dated December 29, 2003.

Bulletins 2004-1 through 2004-19

 

Announcements

Old Article Action New Article Issue Link Page
93-60 Obsoleted by Rev. Proc. 2004-23 2004-16 I.R.B. 2004-16 785
2003-56 Modified by Ann. 2004-11 2004-10 I.R.B. 2004-10 581

 

 

Notices

Old Article Action New Article Issue Link Page
98-5 Withdrawn by Notice 2004-19 2004-11 I.R.B. 2004-11 606
2000-4 Obsoleted by T.D. 9115 2004-14 I.R.B. 2004-14 680
2003-76 Modified by Notice 2004-19 2004-11 I.R.B. 2004-11 606
2004-2 Modified by Notice 2004-25 2004-15 I.R.B. 2004-15 727

 

 

Proposed Regulations

Old Article Action New Article Issue Link Page
110896-98 Corrected by Ann. 2004-14 2004-10 I.R.B. 2004-10 582
115037-00 Corrected by Ann. 2004-7 2004-4 I.R.B. 2004-4 365
138499-02 Partially withdrawn by REG-106590-00 2004-14 I.R.B. 2004-14 704
143321-02 Withdrawn by REG-156232-03 2004-5 I.R.B. 2004-5 399
146893-02 Corrected by Ann. 2004-7 2004-4 I.R.B. 2004-4 365
163974-02 Corrected by Ann. 2004-13 2004-9 I.R.B. 2004-9 543
166012-02 Corrected by Ann. 2004-40 2004-17 I.R.B. 2004-17 840

 

 

Revenue Procedures

Old Article Action New Article Issue Link Page
85-35 Obsoleted by Rev. Proc. 2004-26 2004-19 I.R.B. 2004-19  
87-19 Obsoleted in part by Rev. Proc. 2004-18 2004-9 I.R.B. 2004-9 529
93-15 Obsoleted in part by Rev. Proc. 2004-18 2004-9 I.R.B. 2004-9 529
94-41 Superseded by Rev. Proc. 2004-15 2004-7 I.R.B. 2004-7 490
94-55 Obsoleted in part by Rev. Proc. 2004-18 2004-9 I.R.B. 2004-9 529
98-16 Suspended by Notice 2004-12 2004-10 I.R.B. 2004-10 556
2000-38 Modified by Rev. Proc. 2004-11 2004-3 I.R.B. 2004-3 311
2000-50 Modified by Rev. Proc. 2004-11 2004-3 I.R.B. 2004-3 311
2001-10 Modified by Ann. 2004-16 2004-13 I.R.B. 2004-13 668
2001-23 Modified by Ann. 2004-16 2004-13 I.R.B. 2004-13 668
2002-9 Modified and amplified by Rev. Rul. 2004-18 2004-8 I.R.B. 2004-8 509
2002-9 Modified and amplified by Rev. Proc. 2004-23 2004-16 I.R.B. 2004-16 785
2002-9 Modified by Rev. Proc. 2004-11 2004-3 I.R.B. 2004-3 311
2002-9 Modified by Ann. 2004-16 2004-13 I.R.B. 2004-13 668
2002-28 Modified by Ann. 2004-16 2004-13 I.R.B. 2004-13 668
2002-71 Superseded by Rev. Proc. 2004-13 2004-4 I.R.B. 2004-4 335
2003-1 Superseded by Rev. Proc. 2004-1 2004-1 I.R.B. 2004-1 1
2003-2 Superseded by Rev. Proc. 2004-2 2004-1 I.R.B. 2004-1 83
2003-3 As amplified by Rev. Proc. 2003-14, and as modified by Rev. Proc. 2003-48 superseded by Rev. Proc. 2004-3 2004-1 I.R.B. 2004-1 114
2003-4 Superseded by Rev. Proc. 2004-4 2004-1 I.R.B. 2004-1 125
2003-5 Superseded by Rev. Proc. 2004-5 2004-1 I.R.B. 2004-1 167
2003-6 Superseded by Rev. Proc. 2004-6 2004-1 I.R.B. 2004-1 197
2003-7 Superseded by Rev. Proc. 2004-7 2004-1 I.R.B. 2004-1 237
2003-8 Superseded by Rev. Proc. 2004-8 2004-1 I.R.B. 2004-1 240
2003-23 Modified and superseded by Rev. Proc. 2004-14 2004-7 I.R.B. 2004-7 489
2003-26 Supplemented by Rev. Proc. 2004-17 2004-10 I.R.B. 2004-10 562
2003-29 Obsoleted, except as provided in section 5.02, by Rev. Proc. 2004-24 2004-16 I.R.B. 2004-16 790
2003-64 Modified by Rev. Proc. 2004-21 2004-14 I.R.B. 2004-14 702
2004-1 Corrected by Ann. 2004-8 2004-6 I.R.B. 2004-6 441
2004-4 Modified by Rev. Proc. 2004-15 2004-7 I.R.B. 2004-7 490
2004-5 Modified by Rev. Proc. 2004-15 2004-7 I.R.B. 2004-7 490
2004-6 Modified by Rev. Proc. 2004-15 2004-7 I.R.B. 2004-7 490

 

 

Revenue Rulings

Old Article Action New Article Issue Link Page
55-748 Modified and superseded by Rev. Rul. 2004-20 2004-10 I.R.B. 2004-10 546
92-19 Supplemented in part by Rev. Rul. 2004-14 2004-8 I.R.B. 2004-8 511
94-38 Clarified by Rev. Rul. 2004-18 2004-8 I.R.B. 2004-8 509
98-25 Clarified by Rev. Rul. 2004-18 2004-8 I.R.B. 2004-8 509
2004-38 Modified by Rev. Proc. 2004-22 2004-15 I.R.B. 2004-15 727

 

 

Treasury Decisions

Old Article Action New Article Issue Link Page
9088 Corrected by Ann. 2004-39 2004-17 I.R.B. 2004-17 840

 

How to get the Internal Revenue Bulletin

INTERNAL REVENUE BULLETIN

The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue Bulletin is sold on a yearly subscription basis by the Superintendent of Documents. Current subscribers are notified by the Superintendent of Documents when their subscriptions must be renewed.

CUMULATIVE BULLETINS

The contents of this weekly Bulletin are consolidated semiannually into a permanent, indexed, Cumulative Bulletin. These are sold on a single copy basis and are not included as part of the subscription to the Internal Revenue Bulletin. Subscribers to the weekly Bulletin are notified when copies of the Cumulative Bulletin are available. Certain issues of Cumulative Bulletins are out of print and are not available. Persons desiring available Cumulative Bulletins, which are listed on the reverse, may purchase them from the Superintendent of Documents.

ACCESS THE INTERNAL REVENUE BULLETIN ON THE INTERNET

You may view the Internal Revenue Bulletin on the Internet at www.irs.gov. Under contents, select Businesses. Under topics, select More Topics. Then select Internal Revenue Bulletins.

INTERNAL REVENUE BULLETINS ON CD-ROM

Internal Revenue Bulletins are available annually as part of Publication 1976 (Tax Products CD-ROM). The CD-ROM can be purchased from National Technical Information Service (NTIS) on the Internet at www.irs.gov/cdorders (discount for online orders) or by calling 1-877-233-6767. The first release is available in mid-December and the final release is available in late January.

How to Order

Check the publications and/or subscription(s) desired on the reverse, complete the order blank, enclose the proper remittance, detach entire page, and mail to the

P.O. Box 371954, Pittsburgh PA, 15250-7954

. Please allow two to six weeks, plus mailing time, for delivery.

We Welcome Comments About the Internal Revenue Bulletin

If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it, we would be pleased to hear from you. You can e-mail us your suggestions or comments through the IRS Internet Home Page (www.irs.gov) or write to the

IRS Bulletin Unit, W:CAR:MP:T:T:SP, Washington, DC 20224