Internal Revenue Bulletin: 2005-12

March 21, 2005


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. 2005-14

Fringe benefits aircraft valuation formula. The Standard Industry Fare Level (SIFL) cents-per-mile rates and terminal charges in effect for the first half of 2005 are set forth for purposes of determining the value of noncommercial flights on employer-provided aircraft under section 1.61-21(g) of the regulations.

T.D. 9183

Final regulations under section 7701 of the Code clarify that a disregarded entity (an entity that is not treated as separate from its owner) is treated as a separate entity for purposes of any federal tax liability for which it is liable.

T.D. 9184

Final regulations under section 860F of the Code relate to the application of the unified partnership audit procedures to disputes regarding the ownership of residual interests in a Real Estate Mortgage Investment Conduit (REMIC).

T.D. 9185

Final regulations under section 817 of the Code remove provisions of the regulations that apply a look-through rule to assets of a nonregistered partnership for purposes of satisfying the diversification requirements of section 817(h).

Notice 2005-22

This notice clarifies and modifies Notice 2004-80 to provide additional guidance for material advisors who are required to comply with sections 6111 and 6112 of the Code, as amended, and to grant an extension of time for material advisors to comply with the new filing requirements under section 6111 as previously provided in Notice 2004-80 and Notice 2005-17. Notices 2004-80 and 2005-17 clarified and modified.

EMPLOYEE PLANS

Notice 2005-26

Weighted average interest rate update; corporate bond indices; 30-year Treasury securities. The weighted average interest rate for March 2005 and the resulting permissible range of interest rates used to calculate current liability and to determine the required contribution are set forth.

EXEMPT ORGANIZATIONS

Announcement 2005-20

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

Announcement 2005-21 Announcement 2005-21

Little League Baseball, Inc. 2321213 Schenectady LL of Schenectady, NY, and Jane Withers Wonderful World of Dolls and Teddy Bears of Studio City, CA, no longer qualify as organizations to which contributions are deductible under section 170 of the Code.

EXCISE TAX

Notice 2005-24

This notice modifies Notice 2005-4, 2005-2 I.R.B. 289, by extending the transitional rule related to sales of gasoline on oil company credit cards and by making several corrections to Notice 2005-4. Notice 2005-4 provides guidance on certain excise tax provisions in the Code that were added or affected by the American Jobs Creation Act of 2004, Pub. L. 108-357. Notice 2005-4 modified.

ADMINISTRATIVE

Rev. Proc. 2005-13

Automobile owners and lessees. This procedure provides owners and lessees of passenger automobiles (including trucks, vans, and electric automobiles) with tables detailing the limitations on depreciation deductions for passenger automobiles first placed in service during calendar year 2005 and the amounts to be included in income for passenger automobiles first leased during calendar year 2005.

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

Rev. Rul. 2005-14

Fringe benefits aircraft valuation formula. The Standard Industry Fare Level (SIFL) cents-per-mile rates and terminal charges in effect for the first half of 2005 are set forth for purposes of determining the value of noncommercial flights on employer-provided aircraft under section 1.61-21(g) of the regulations.

For purposes of the taxation of fringe benefits under section 61 of the Internal Revenue Code, section 1.61-21(g) of the Income Tax Regulations provides a rule for valuing noncommercial flights on employer-provided aircraft. Section 1.61-21(g)(5) provides an aircraft valuation formula to determine the value of such flights. The value of a flight is determined under the base aircraft valuation formula (also known as the Standard Industry Fare Level formula or SIFL) by multiplying the SIFL cents-per-mile rates applicable for the period during which the flight was taken by the appropriate aircraft multiple provided in section 1.61-21(g)(7) and then adding the applicable terminal charge. The SIFL cents-per-mile rates in the formula and the terminal charge are calculated by the Department of Transportation and are reviewed semi-annually.

The following chart sets forth the terminal charges and SIFL mileage rates:

Period During Which the Flight Is Taken Terminal Charge SIFL Mileage Rates
1/1/05 - 6/30/05 $35.49 Up to 500 miles = $.1942 per mile
    501-1500 miles = $.1480 per mile
    Over 1500 miles = $.1423 per mile

DRAFTING INFORMATION

The principal author of this revenue ruling is Kathleen Edmondson of the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). For further information regarding this revenue ruling, contact Ms. Edmondson at (202) 622-0047 (not a toll-free call).

T.D. 9185

Diversification Requirements for Variable Annuity, Endowment, and Life Insurance Contracts

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1

AGENCY:

Internal Revenue Service (IRS), Treasury.

ACTION:

Final regulations.

SUMMARY:

This document contains final regulations removing provisions of the Income Tax Regulations that apply a look-through rule to assets of a nonregistered partnership for purposes of satisfying the diversification requirements of section 817(h) of the Internal Revenue Code.

DATES:

Effective Date: These regulations are effective as of March 1, 2005. However, arrangements in existence on March 1, 2005, will be considered to be adequately diversified if: (i) those arrangements were adequately diversified within the meaning of section 817(h) prior to March 1, 2005, and (ii) by December 31, 2005, the arrangements are brought into compliance with the final regulations.

Applicability Date: For dates of applicability, see §1.817-5(i).

FOR FURTHER INFORMATION CONTACT:

James Polfer, (202) 622-3970 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

Under section 817(h), a variable contract based on a segregated asset account is not treated as an annuity, endowment, or life insurance contract unless the segregated asset account is adequately diversified. For purposes of testing diversification, section 817(h)(4) and §1.817-5(f) of the regulations provide a look-through rule for assets held through certain investment companies, partnerships, or trusts. Section 1.817-5(f)(2)(i) provides that look-through treatment is available with respect to any investment company, partnership, or trust only if all the beneficial interests in the investment company, partnership, or trust are held by one or more segregated asset accounts of one or more insurance companies, and public access to such investment company, partnership, or trust is available exclusively (except as otherwise permitted by section 1.817-5(f)(3)) through the purchase of a variable contract. Under §1.817-5(f)(2)(ii), the look-through rule applies to a partnership interest that is not registered under a Federal or state law regulating the offering or sale of securities. Unlike §1.817-5(f)(2)(i), satisfaction of the nonregistered partnership look-through rule of §1.817-5(f)(2)(ii) is not explicitly conditioned on limiting the ownership of interests in the partnership to certain specified holders.

On July 30, 2003, the Treasury Department and the IRS published a notice of proposed rulemaking (REG-163974-02, 2003-2 C.B. 595) under section 817 in the Federal Register (68 FR 44689). The proposed regulations would remove the rule that applies specifically to nonregistered partnerships for purposes of testing diversification. The proposed regulations also would remove an example that illustrates that rule.

The application of §1.817-5(f)(2)(i) to interests in nonregistered partnerships will be unchanged by the removal of §1.817-5(f)(2)(ii). Thus, look-through treatment will be available for interests in a nonregistered partnership if all the beneficial interests in the partnership are held by one or more segregated asset accounts of one or more insurance companies and public access to the partnership is available exclusively (except as otherwise permitted by §1.817-5(f)(3)) through the purchase of a variable contract.

Written comments were received in response to the notice of proposed rulemaking. A public hearing on the notice of proposed rulemaking was held on April 1, 2004. After consideration of all the comments and the hearing testimony, the proposed regulations are adopted as amended by this Treasury decision.

Explanation and Summary of Comments and Public Hearing

In addition to requesting comments on the clarity of the proposed rule and how the rule could be made easier to understand, the Treasury Department and the IRS specifically requested comments on: (1) whether revocation of §1.817-5(f)(2)(ii) necessitates other changes to the look-through rules of §1.817-5(f), in particular whether the list of holders permitted by §1.817-5(f)(3) should be amended or expanded, and whether a non-pro-rata distribution of the investment returns of a segregated asset account should be permitted to take account of certain bonus payments to investment managers commonly referred to as incentive payments, (2) whether §1.817-5 should be updated to take account of changes to variable contracts since the final regulations were published in 1986, and (3) whether regulations are needed to address when a holder of a variable contract will be treated as the owner of assets held in a segregated asset account and, therefore, required to include earnings on those assets in income.

1. Comments on the Proposed Regulations

Two comments on the proposed regulation concerned the definition of “security” in §1.817-5(h)(6). Under §1.817-5(b)(1)(ii)(A), all securities of the same issuer are treated as one investment for the purposes of satisfying the diversification requirements. Section 1.817-5(h)(6) provides that the term security includes “a cash item and any partnership interest registered under a Federal or State law regulating the offering or sale of securities,” but does not include “any other partnership interest.” The commentators stated that the definition of “security” that applies to §1.817-5 should be amended to include an interest in a non-registered partnership. The Treasury Department and the IRS agree that, in light of the revocation of former §1.817-5(f)(2)(ii), the definition of security should be modified to remove the distinction between registered and nonregistered partnership interests. The final regulations reflect this change.

A number of commentators also suggested that the regulation should be clarified by adding to or otherwise revising the examples contained in §1.817-5(g). In response to these comments, the final regulations revise §1.817-5(g) Example 1 to remove the reference to partnership P as a publicly registered partnership. The Treasury Department and the IRS believe that, with this change, the examples contained in §1.817-5(g) adequately explain the application of §1.817-5 to partnership interests. Any questions concerning the application of §1.817-5 to more specific factual scenarios may be addressed by the letter ruling process or by subsequent published guidance.

Two commentators urged that existing arrangements either should be grandfathered in some fashion or should be given additional time to be brought into compliance with the final regulations. The notice of proposed rulemaking provided that arrangements in existence on the effective date of the revocation of §1.817-5(f)(2)(ii) will be considered to be adequately diversified if: (i) those arrangements were adequately diversified within the meaning of section 817(h) prior to the revocation of §1.817-5(f)(2)(ii), and (ii) by the end of the last day of the second calendar quarter ending after the effective date of the regulation, the arrangements are brought into compliance with the final regulations. The Treasury Department and the IRS do not believe it is appropriate to grandfather existing arrangements indefinitely. In response to these comments, however, the transition period for existing arrangements to be brought into compliance with the regulations is two calendar quarters longer than the period provided in the proposed regulations.

Finally, one commentator questioned the authority of the Treasury Department and the IRS to enact this final regulation because “the only substantive impetus for the regulation is a general statement in the legislative history.” Congress enacted the diversification requirements of section 817(h) to “discourage the use of tax-preferred variable annuity and variable life insurance primarily as investment vehicles,” H.R. Conf. Rep. No. 98-861, at 1055 (1984), and granted the Secretary broad regulatory authority to develop rules to carry out this intent. The Treasury Department and the IRS have determined that this final regulation and the rest of the regulations contained in §1.817-5 were prescribed within the delegation of authority provided by Congress.

2. Comments on §1.817-5 More Generally

Many comments concerned the list of permitted investors under §1.817-5(f)(3). Notwithstanding the limitations on public access to an investment company, partnership, or trust that is subject to look-through treatment under §1.817-5(f), §1.817-5(f)(3) permits look-through treatment if the beneficial interests of the investment company, partnership, or trust are held by certain other “permitted investors,” including the general account of a life insurance company (if certain requirements are met), the manager or a corporation related to the manager (if certain requirements are met), or the trustee of a qualified plan. Commentators suggested that the list of permitted investors be expanded to include, for example, qualified tuition programs described in section 529; segregated asset accounts of foreign insurance companies; foreign pension plans; persons or entities related to the manager of an investment company, partnership, or trust in a manner specified in section 707(b); certain investment professionals operating as service providers; or persons who receive interests in a partnership as a result of inadvertent transfers, such as by bankruptcy or death of the permitted investor. The sole speaker at the public hearing on the notice of proposed rulemaking testified that the list of investors permitted by §1.817-5(f)(3) should be expanded to include “floor specialists” as that term is defined in section 1236(d)(2).

Other comments suggested guidance on non-pro-rata manager compensation. In order for the manager (or a corporation related in a manner specified in section 267(b) to the manager) of an investment company, partnership, or trust, to be a permitted investor under §1.817-5(f)(3)(ii), (1) its interest must be held in connection with the creation or management of the investment company, partnership, or trust; (2) the return on such interest must be computed in the same manner as the return on an interest held by a segregated asset account is computed (determined without regard to expenses attributable to variable contracts); and (3) there must be no intent to sell such interest to the public. A number of commentators stated that the requirement that the return on a manager’s interest be computed in the same manner as the return on a segregated asset account’s interest — essentially a pro-rata distribution requirement — is inconsistent with prevailing market practices concerning manager bonuses, discourages the creation of insurance dedicated funds, and is not necessary to prevent abuse of the look-through rules contained in §1.817-5(f).

Some comments stated there is a need to clarify the consequences to a variable contract and variable contract holder when the contract’s segregated asset account contains an asset in which beneficial interests are held by investors (such as qualified plans) that qualified as permitted investors in §1.817-5(f)(2) or (3) at the time of initial investment, but subsequently lose their status. Similarly, one commentator urged that if an insurance company has a reasonable basis to believe that an investment company, partnership, or trust satisfies the requirements of §1.817-5(f)(2), a variable contract of that insurance company should be permitted to look-through that entity for purposes of testing a segregated asset account on which that contract is based, even if the investment company, partnership, or trust has investors not described in §1.817-5(f)(2) or (3). The commentator suggested that this standard would be consistent with the standard of determination often used in the Federal securities laws.

Other comments included a request for clarification of the treatment of fund-of-funds and master-feeder arrangements for purposes of testing diversification; the desirability of an updated correction procedure for failure to satisfy the diversification requirements of section 817(h) and §1.817-5; guidance concerning the use of independent investment advisors; and extension of the special diversification rules for United States Treasury securities under section 817(h)(3) and §1.817-5(b)(3) to variable annuity contracts. (The latter comment presumably would require a change to section 817(h)(3), as well as to the regulations.)

Although the comments on §1.817-5 generally are not adopted in this Treasury decision, the Treasury Department and IRS will consider these comments in the event of future published guidance. For example, Rev. Rul. 2005-7, 2005-6 I.R.B. 464 (see §601.601(d)(2)(ii)(b) of this chapter) provides guidance on the application of the diversification look-through rule to tiered investment companies.

3. Comments on Investor Control

Finally, some comments concerned the need for additional guidance addressing circumstances under which the holder of a variable contract will be treated as the owner of assets held by a segregated asset account by virtue of the control the contract holder has over those assets. Under Rev. Rul. 81-225, 1981-2 C.B. 12 (see §601.601(d)(2)(ii)(b) of this chapter), the owner of a variable annuity contract funded by publicly available mutual fund shares is treated as the owner of those shares. Rev. Rul. 2003-92, 2003-2 C.B. 350 (see §601.601(d)(2)(ii)(b) of this chapter), clarified and amplified Rev. Rul. 81-225 by applying the same rule to variable life insurance contracts, and by treating as publicly available a nonregistered partnership, interests in which are sold only to qualified purchasers that are accredited investors or to no more than one hundred accredited investors. See also Rev. Rul. 2003-91, 2003-2 C.B. 347; Rev. Rul. 82-54, 1982-1 C.B. 11; Rev. Rul. 80-274, 1980-2 C.B. 27; Rev. Rul. 77-85, 1977-1 C.B. 12.; Christoffersen v. U.S., 749 F.2d 513 (8th Cir. 1984), rev’g 578 F. Supp. 398 (N.D. Iowa 1984). See §601.601(d)(2)(ii)(b) of this chapter.

One commentator urged that Rev. Rul. 2003-92 should not be applied retroactively to treat certain investors as the “general public” as that term is used in Rev. Rul. 81-225. Specifically, the commentator requested relief for investments in real estate partnerships, interests in which are held directly by (1) organizations described in section 501(c)(3), and (2) such partnerships’ investment managers, if those managers are not described in §1.817-5(f)(3)(ii) because of bonus payment arrangements. The commentator believed such relief is warranted because of uncertainty concerning the meaning of “general public” as that term is used in Rev. Rul. 81-225. Several other commentators suggested that regulations under section 817 should clarify that the permitted investors under §1.817-5(f)(3) do not constitute the “general” public as that term is used in Rev. Rul. 2003-92 and Rev. Rul. 81-225. According to these commentators, it would be anomalous for ownership by a permitted investor under §1.817-5(f)(3) to result in a variable contract holder being treated as the owner of an investment company, partnership, or trust, when the look-through rule itself appears to endorse ownership by that same investor for purposes of testing diversification. Still another commentator noted that when determining whether a contract holder is treated as the owner of segregated account assets, communications between investment advisors or officers and variable contract holders should be permitted if the communications are consistent with Federal securities and commodities laws.

One commentator suggested that the preamble to this Treasury decision should confirm the intended scope of Rev. Proc. 99-44, 1999-2 C.B. 598. Under Rev. Proc. 99-44, a contract is treated as an annuity contract described in sections 403(a), 403(b), or 408(b), notwithstanding that contract premiums are invested at the direction of the contract holder in publicly available securities, so long as certain requirements are met. Those requirements include a limitation that no additional Federal tax liability would have been incurred if the employer of the contract holder had instead paid amounts into a custodial account in an arrangement that satisfied the requirements of section 403(b)(7)(A) or no additional Federal tax liability would have been incurred if the consideration for the contract had instead been held as part of a trust that would satisfy the requirements of section 408(a), as applicable. The commentator urged that the preamble to this Treasury decision clarify that the “no additional Federal tax liability” limitation was intended to apply only to tax on unrelated business income. Finally, one commentator noted that, given the inherent factual nature of the determination whether a contract holder is treated as the owner of segregated account assets, the issue is better addressed by letter ruling or revenue ruling, rather than by regulations.

Although the comments on investor control are not adopted in this Treasury decision, they are responsive to the request for comments in the July 30, 2003, notice of proposed rulemaking and will receive careful attention in the event of further guidance on investor control.

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 also has 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, the notice of proposed rulemaking preceding these regulations was submitted to the Small Business Administration for comment on its impact on small business.

Adoption of Amendment to the Regulations

Accordingly, 26 CFR part 1 is amended as follows:

PART 1—INCOME TAX

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

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

Section 1.817-5 also issued under 26 U.S.C. 817(h). * * *

Par. 2. Section 1.817-5 is amended as follows:

1. Paragraphs (f)(2)(ii) and (g) Example 3 are removed.

2. Paragraph (f)(2)(iii) is redesignated as paragraph (f)(2)(ii).

3. The first sentence of paragraph (g) Example 1 is revised.

4. Paragraph (g) Example 4 is redesignated as paragraph (g) Example 3.

5. Paragraph (h)(6) is revised.

6. New paragraph (i)(2)(v) is added.

The revisions read as follows:

§ 1.817-5 Diversification requirements for variable annuity, endowment, and life insurance contracts.

* * * * *

(g) * * *

Example 1. (i) The assets underlying variable contracts issued by a life insurance company consist of two groups of assets: (a) a diversified portfolio of debt securities and (b) interests in P, a partnership. * * *

(h) * * *

(6) Security. The term security shall include a cash item and any partnership interest, whether or not registered under a Federal or State law regulating the offering or sale of securities. The term shall not include any interest in real property, or any interest in a commodity.

* * * * *

(i) * * *

(2) * * *

(v) A segregated asset account in existence before March 1, 2005, will be considered to be adequately diversified if—

(A) As of March 1, 2005, the account was adequately diversified within the meaning of section 817(h) and this regulation as in effect prior to that date; and

(B) By December 31, 2005, the account is adequately diversified within the meaning of section 817(h) and this regulation.

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

Approved February 15, 2005.

Eric Solomon,
Acting Deputy Assistant Secretary of the Treasury.

Note

(Filed by the Office of the Federal Register on February 28, 2005, 8:45 a.m., and published in the issue of the Federal Register for March 1, 2005, 70 F.R. 9869)

Drafting Information

The principal author of these regulations is James Polfer, Office of the Associate Chief Counsel (Financial Institutions and Products), Office of Chief Counsel, Internal Revenue Service. However, personnel from other offices of the Treasury Department and the IRS participated in their development.

* * * * *

T.D. 9184

Real Estate Mortgage Investment Conduits

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 relating to the application of the unified partnership audit procedures to disputes regarding the ownership of residual interests in a Real Estate Mortgage Investment Conduit (REMIC). These regulations will affect taxpayers that invest in REMIC residual interests.

DATES:

These regulations apply after December 31, 1986.

FOR FURTHER INFORMATION CONTACT:

Arturo Estrada, (202) 622-3900 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

This regulation amends 26 CFR Part 1 under section 860F of the Internal Revenue Code (Code) relating to the application of the unified partnership audit procedures of subchapter C of chapter 63 of the Code to REMICs and the holders of residual interests. Section 860F(e) provides that a REMIC is treated as a partnership (and holders of residual interests in that REMIC shall be treated as partners) for purposes of subtitle F of the Code, which includes the unified partnership audit procedures. The taxable income of a holder of a REMIC residual interest is determined under the REMIC provisions of part IV of subchapter M, which require the holder to take into account its daily portion of the REMIC’s taxable income or net loss for each day during the taxable year on which the holder holds its interest. Section 860C(a)(1). The provisions of subchapter K relating to the determination of the taxable income of a partnership and its partners do not apply to REMICs or the holders of REMIC residual interests. Section 860A(a).

Questions have arisen regarding whether the identity of the holder of a REMIC residual interest is treated as a partnership item for purposes of the unified partnership audit procedures. Questions also have arisen regarding the applicability of the unified partnership audit procedures when a determination is made under the REMIC regulations to disregard certain transfers of REMIC residual interests and continue to treat the transferor as the holder of the transferred REMIC residual interests. See §§1.860E-1(c) and 1.860G-3.

The IRS and Treasury Department have determined that the identity of a holder of a REMIC residual interest is more appropriately determined at the residual interest holder level than at the REMIC entity level.

Explanation of Provisions

The regulations provide that the determination of the identity of a holder of a REMIC residual interest is not a partnership item for purposes of the unified partnership audit procedures as applied to REMICs, whether or not such determination involves the application of a disregarded transfer rule. Unlike the identity of a partner in a partnership subject to subchapter K, the identity of the holder of a REMIC residual interest does not affect the calculation of the REMIC’s taxable income or net loss.

Effective Date

These regulations apply after December 31, 1986. See §1.860A-1(b)(1)(ii).

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 also has 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 these regulations do not impose a collection requirement on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Therefore, a Regulatory Flexibility Analysis is not required. Pursuant to section 7805(f) of the Code, this Treasury decision has been submitted to the Chief Counsel for 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 part 1 is amended by adding an entry in numerical order to read, in part, as follows:

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

Section 860F-4 issued under 26 U.S.C. 860G(e) and 26 U.S.C. 6230(k).* * *

Par. 2. In §1.860F-4, paragraph (a) is amended by adding a sentence at the end of the paragraph to read as follows:

§1.860F-4 REMIC reporting requirements and other administrative rules.

(a) * * * The identity of a holder of a residual interest in a REMIC is not treated as a partnership item with respect to the REMIC for purposes of subchapter C of chapter 63.

* * * * *

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

Approved February 15, 2005.

Eric Solomon,
Acting Deputy Assistant Secretary of the Treasury (Tax Policy).

Note

(Filed by the Office of the Federal Register on February 24, 2005, 8:45 a.m., and published in the issue of the Federal Register for February 25, 2005, 70 F.R. 9218)

Drafting Information

The principal author of these regulations is Arturo Estrada, Office of the Associate Chief Counsel (Financial Institutions and Products). However, other personnel from the IRS and Treasury Department participated in their development.

* * * * *

T.D. 9183

Modification of Check the Box

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1 and 301

AGENCY:

Internal Revenue Service (IRS), Treasury.

ACTION:

Final regulation.

SUMMARY:

This document contains final regulations that clarify that qualified REIT subsidiaries, qualified subchapter S subsidiaries, and single owner eligible entities that are disregarded as entities separate from their owners are treated as separate entities for purposes of any Federal tax liability for which the entity is liable. These regulations affect disregarded entities that are liable for Federal taxes with respect to tax periods during which they were not disregarded or because they are successors or transferees of taxable entities.

DATES:

Effective Date: These regulations are effective April 1, 2004.

Applicability Dates: For dates of applicability, see §§1.856-9(c), 1.1361-4(a)(6)(iii), and 301.7701-2(e).

FOR FURTHER INFORMATION CONTACT:

Martin Schäffer, (202) 622-3070 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

This document contains amendments to 26 CFR parts 1 and 301. The amendments to 26 CFR part 1 are under sections 856 and 1361 of the Internal Revenue Code (Code). Section 856(i) was added by the Tax Reform Act of 1986 (Public Law 99-514, 100 Stat. 2085). Section 1361(b)(3) was added by the Small Business Job Protection Act of 1996 (Public Law 104-188, 110 Stat. 1755). The amendments to 26 CFR part 301 are to §301.7701-2, first promulgated by T.D. 8697, 1997-1 C.B. 215 [61 FR 66584] (December 18, 1996). On April 1, 2004, a notice of proposed rulemaking (REG-106681-02, 2004-18 I.R.B. 852) relating to the taxation of disregarded entities was published in the Federal Register (69 FR 17117). A notice of correction was published in the Federal Register (69 FR 22463) on April 26, 2004. No comments were received from the public in response to the notice of proposed rulemaking. No public hearing was requested, and accordingly, no hearing was held. This Treasury decision adopts the language of the proposed regulations with only minor clarifying changes.

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 also has 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 Code, the proposed regulations preceding these regulations were submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

Adoption of Amendments to the Regulations

Accordingly, 26 CFR parts 1 and 301 are amended as follows:

PART 1—INCOME TAX

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

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

Par. 2. Section 1.856-9 is added to read as follows:

§1.856-9 Treatment of certain qualified REIT subsidiaries.

(a) In general. A qualified REIT subsidiary, even though it is otherwise not treated as a corporation separate from the REIT, is treated as a separate corporation for purposes of:

(1) Federal tax liabilities of the qualified REIT subsidiary with respect to any taxable period for which the qualified REIT subsidiary was treated as a separate corporation.

(2) Federal tax liabilities of any other entity for which the qualified REIT subsidiary is liable.

(3) Refunds or credits of Federal tax.

(b) Examples. The following examples illustrate the application of paragraph (a) of this section:

Example 1. X, a calendar year taxpayer, is a domestic corporation 100 percent of the stock of which is acquired by Y, a real estate investment trust, in 2002. X was not a member of a consolidated group at any time during its taxable year ending in December 2001. Consequently, X is treated as a qualified REIT subsidiary under the provisions of section 856(i) for 2002 and later periods. In 2004, the Internal Revenue Service (“IRS”) seeks to extend the period of limitations on assessment for X’s 2001 taxable year. Because X was treated as a separate corporation for its 2001 taxable year, X is the proper party to sign the consent to extend the period of limitations.

Example 2. The facts are the same as in Example 1, except that upon Y’s acquisition of X, Y and X jointly elect under section 856(l) to treat X as a taxable REIT subsidiary of Y. In 2003, Y and X jointly revoke that election. Consequently, X is treated as a qualified REIT subsidiary under the provisions of section 856(i) for 2003 and later periods. In 2004, the IRS determines that X miscalculated and underreported its income tax liability for 2001. Because X was treated as a separate corporation for its 2001 taxable year, the deficiency may be assessed against X and, in the event that X fails to pay the liability after notice and demand, a general tax lien will arise against all of X’s property and rights to property.

Example 3. X is a qualified REIT subsidiary of Y under the provisions of section 856(i). In 2001, Z, a domestic corporation that reports its taxes on a calendar year basis, merges into X in a state law merger. Z was not a member of a consolidated group at any time during its taxable year ending in December 2000. Under the applicable state law, X is the successor to Z and is liable for all of Z’s debts. In 2004, the IRS seeks to extend the period of limitations on assessment for Z’s 2000 taxable year. Because X is the successor to Z and is liable for Z’s 2000 taxes that remain unpaid, X is the proper party to sign the consent to extend the period of limitations.

(c) Effective date. This section applies on or after April 1, 2004.

Par. 3. Section 1.1361-4 is amended as follows:

1. In paragraph (a)(1) introductory text, the first sentence is amended by removing the language “paragraph (a)(3)” and adding “paragraphs (a)(3) and (a)(6)” in its place.

2. Paragraph (a)(6) is added.

The additions read as follows:

§1.1361-4 Effect of Qsub election.

(a) * * *

(6) Treatment of certain QSubs—(i) In general. A QSub, even though it is generally not treated as a corporation separate from the S corporation, is treated as a separate corporation for purposes of:

(A) Federal tax liabilities of the QSub with respect to any taxable period for which the QSub was treated as a separate corporation.

(B) Federal tax liabilities of any other entity for which the QSub is liable.

(C) Refunds or credits of Federal tax.

(ii) Examples. The following examples illustrate the application of paragraph (a)(6)(i) of this section:

Example 1. X has owned all of the outstanding stock of Y, a domestic corporation that reports its taxes on a calendar year basis, since 2001. X and Y do not report their taxes on a consolidated basis. For 2003, X makes a timely S election and simultaneously makes a QSub election for Y. In 2004, the Internal Revenue Service (“IRS”) seeks to extend the period of limitations on assessment for Y’s 2001 taxable year. Because Y was treated as a separate corporation for its 2001 taxable year, Y is the proper party to sign the consent to extend the period of limitations.

Example 2. The facts are the same as in Example 1, except that in 2004, the IRS determines that Y miscalculated and underreported its income tax liability for 2001. Because Y was treated as a separate corporation for its 2001 taxable year, the deficiency for Y’s 2001 taxable year may be assessed against Y and, in the event that Y fails to pay the liability after notice and demand, a general tax lien will arise against all of Y’s property and rights to property.

Example 3. X is a QSub of Y. In 2001, Z, a domestic corporation that reports its taxes on a calendar year basis, merges into X in a state law merger. Z was not a member of a consolidated group at any time during its taxable year ending in December 2000. Under the applicable state law, X is the successor to Z and is liable for all of Z’s debts. In 2003, the IRS seeks to extend the period of limitations on assessment for Z’s 2000 taxable year. Because X is the successor to Z and is liable for Z’s 2000 taxes that remain unpaid, X is the proper party to execute the consent to extend the period of limitations on assessment.

(iii) Effective date. This paragraph (a)(6) applies on or after April 1, 2004.

PART 301—PROCEDURE AND ADMINISTRATION

Par. 4. The authority citation for part 301 continues to read, in part, as follows:

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

Par. 5. Section 301.7701-2 is amended as follows:

1. Paragraph (c)(2)(iii) is added.

2. Paragraph (e) is revised.

The addition and revision read as follows:

§301.7701-2 Business entities; definitions.

* * * * *

(c) * * *

(2) * * *

(iii) Tax liabilities of certain disregarded entities—(A) In general. An entity that is otherwise disregarded as separate from its owner is treated as an entity separate from its owner for purposes of:

(1) Federal tax liabilities of the entity with respect to any taxable period for which the entity was not disregarded.

(2) Federal tax liabilities of any other entity for which the entity is liable.

(3) Refunds or credits of Federal tax.

(B) Examples. The following examples illustrate the application of paragraph (c)(2)(iii)(A) of this section:

Example 1. In 2001, X, a domestic corporation that reports its taxes on a calendar year basis, merges into Z, a domestic LLC wholly owned by Y that is disregarded as an entity separate from Y, in a state law merger. X was not a member of a consolidated group at any time during its taxable year ending in December 2000. Under the applicable state law, Z is the successor to X and is liable for all of X’s debts. In 2004, the Internal Revenue Service (“IRS”) seeks to extend the period of limitations on assessment for X’s 2000 taxable year. Because Z is the successor to X and is liable for X’s 2000 taxes that remain unpaid, Z is the proper party to sign the consent to extend the period of limitations.

Example 2. The facts are the same as in Example 1, except that in 2002, the IRS determines that X miscalculated and underreported its income tax liability for 2000. Because Z is the successor to X and is liable for X’s 2000 taxes that remain unpaid, the deficiency may be assessed against Z and, in the event that Z fails to pay the liability after notice and demand, a general tax lien will arise against all of Z’s property and rights to property.

* * * * *

(e) Effective date. (1) Except as otherwise provided in this paragraph (e), the rules of this section apply as of January 1, 1997, except that paragraph (b)(6) of this section applies on or after January 14, 2002, to a business entity wholly owned by a foreign government regardless of any prior entity classification, and paragraph (c)(2)(ii) of this section applies to taxable years beginning after January 12, 2001. The reference to the Finnish, Maltese, and Norwegian entities in paragraph (b)(8)(i) of this section is applicable on November 29, 1999. The reference to the Trinidadian entity in paragraph (b)(8)(i) of this section applies to entities formed on or after November 29, 1999. Any Maltese or Norwegian entity that becomes an eligible entity as a result of paragraph (b)(8)(i) of this section in effect on November 29, 1999, may elect by February 14, 2000, to be classified for Federal tax purposes as an entity other than a corporation retroactive to any period from and including January 1, 1997. Any Finnish entity that becomes an eligible entity as a result of paragraph (b)(8)(i) of this section in effect on November 29, 1999, may elect by February 14, 2000, to be classified for Federal tax purposes as an entity other than a corporation retroactive to any period from and including September 1, 1997.

(2) Paragraph (c)(2)(iii) of this section applies on or after April 1, 2004.

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

Approved February 15, 2005.

Eric Solomon,
Acting Deputy Assistant Secretary of the Treasury.

Note

(Filed by the Office of the Federal Register on February 24, 2005, 8:45 a.m., and published in the issue of the Federal Register for February 25, 2005, 70 F.R. 9220)

Drafting Information

The principal author of these regulations is James M. Gergurich of the Office of the Associate Chief Counsel (Passthroughs & Special Industries). However, other personnel from the IRS and Treasury Department participated in their development.

* * * * *

Part III. Administrative, Procedural, and Miscellaneous

Notice 2005-22

Temporary Rules Under Sections 6111 and 6112

The purpose of this notice is to clarify and modify Notice 2004-80, 2004-50 I.R.B. 963, to provide additional guidance for material advisors who are required to comply with §§ 6111 and 6112 of the Internal Revenue Code, as amended, and to grant an extension of time for material advisors to comply with the new filing requirements under § 6111.

BACKGROUND

Section 6111, as amended by the American Jobs Creation Act of 2004, P.L. 108-357, 118 Stat. 1418 (the Act), requires that each material advisor with respect to any reportable transaction make a return setting forth information identifying and describing the transaction and any potential tax benefits expected to result from the transaction no later than the date specified by the Secretary. Notice 2004-80 announced that the Internal Revenue Service and the Treasury Department intend to issue regulations providing rules under § 6111.

Notice 2004-80 also provides interim rules implementing the requirements of § 6111 until the Secretary prescribes regulations. Under Notice 2004-80, each material advisor with respect to a reportable transaction must file a return on Form 8264, Application for Registration of a Tax Shelter, within 30 days after the date on which the person becomes a material advisor. Notice 2004-80 also provides transitional relief in the case of a person who becomes a material advisor after October 22, 2004, and on or before December 31, 2004, that allows the material advisor to file the return before February 1, 2005. Notice 2005-17, 2005-8 I.R.B. 606, released on January 28, 2005, grants additional transitional relief allowing a person who becomes a material advisor after October 22, 2004, and on or before January 29, 2005, to file the return before March 1, 2005.

Since the issuance of Notice 2004-80, questions have arisen regarding the application of the interim rules to material advisors. In addition, Notice 2005-17 states that the Service and Treasury intend to provide further guidance on the issue of the date on which a person becomes a material advisor with respect to a reportable transaction (including whether the obligation of a material advisor arises only when a reportable transaction is entered into by a taxpayer). This notice provides additional interim rules that will apply until further guidance is issued and grants additional transitional relief.

ADDITIONAL INTERIM PROVISIONS

1. Completion of Form 8264

Notice 2004-80 provides that each material advisor required under § 6111, as amended, to file a return with respect to a reportable transaction must complete Parts I (except item 1(b)), IV, and V of Form 8264. In completing Form 8264, the form and instructions are to be read to apply, by substituting: (1) “reportable transaction” each place “tax shelter” or “confidential corporate tax shelter” appears; (2) “material advisor” each place “organizer” or “principal organizer” appears; and (3) “Date the material advisor became a material advisor with respect to the reportable transaction” in place of “Date an interest in the tax shelter was first offered for sale” in Part I, line 7, of the form.

Questions have arisen whether a material advisor is required to modify the Form 8264 by striking or replacing lines or fields. A material advisor may not make modifications to the Form 8264. A material advisor must simply complete the form as if it had been modified to read as described in Notice 2004-80.

2. Material Advisors and Transitional Relief

Notice 2004-80 provides that a material advisor who is required to file a return under § 6111 must file the return within 30 days after the date on which the person becomes a material advisor. Notice 2004-80 provides that a material advisor is defined in § 301.6112-1(c)(2). Notice 2004-80 also provides that a material advisor may file a single Form 8264 for substantially similar transactions. A material advisor is required to supplement information disclosed on Form 8264 if the information provided is no longer accurate, or if additional information that was not disclosed on Form 8264 becomes available.

Questions have arisen regarding when a person becomes a material advisor. Section 301.6112-1(c)(2) defines a material advisor as a person who makes a tax statement and receives or expects to receive a minimum fee with respect to a reportable transaction. Section 301.6112-1(c)(2)(B) provides that a material advisor includes a person who makes a tax statement to or for the benefit of a taxpayer who the potential material advisor (at the time the transaction is entered into) knows is or reasonably expects to be required to disclose the transaction under § 1.6011-4.

Until further guidance is issued, a material advisor will be treated as becoming a material advisor under § 6111 when all of the following events have occurred: (1) the material advisor makes a tax statement, (2) the material advisor receives (or expects to receive) the minimum fees, and (3) the transaction is entered into by the taxpayer. Material advisors, including those who cease providing services prior to the time the transaction is entered into, must make reasonable and good faith efforts to determine whether the taxpayer entered into the transaction.

Moreover, the time for providing disclosure as provided in Notice 2004-80 is amended by this notice. Until further guidance is issued, a material advisor will meet its return filing obligation under § 6111 if the Form 8264 is filed by the last day of the month that follows the end of the calendar quarter in which the advisor became a material advisor. Also, the transitional relief provided in Notice 2004-80 and Notice 2005-17 for disclosure of a transaction under § 6111 is extended. Accordingly, if a person becomes a material advisor after October 22, 2004, and on or before March 31, 2005, that material advisor must file the return on or before April 30, 2005.

Once a material advisor has filed a Form 8264 with respect to a transaction, the material advisor is not required to file an additional Form 8264 for each additional taxpayer that subsequently enters into the same transaction or to file a Form 8264 for a separate transaction that is the same as or substantially similar to the transaction for which the material advisor has filed a Form 8264.

Questions also have arisen regarding whether the tolling provisions of § 1.6011-4(f) would apply to requests from a potential material advisor for a letter ruling. Until further guidance is issued, if the advisor submits a request for a letter ruling on or before the date the return under § 6111 is due and fully discloses all relevant facts relating to the transaction, the obligation of the potential material advisor to disclose the transaction will be suspended as provided in § 1.6011-4(f). However, a request for a letter ruling by a potential material advisor will not toll the disclosure provisions of § 1.6011-4 for taxpayers who participate in the transaction. See § 1.6011-4(f) for tolling provisions applicable to material advisors and taxpayers.

Finally, questions have arisen regarding the nature of the statement relating to the financial accounting treatment of the item(s) giving rise to a significant book-tax difference described in § 1.6011-4(b)(6). In addition, some practitioners have erroneously concluded that Notice 2004-80 was intended to exclude persons who do not provide accounting advice. The financial accounting statement described in Notice 2004-80 includes statements made by any material advisor, including accountants, lawyers, or investment advisors.

3. Effective Date of Notice 2004-80

Notice 2004-80 is effective for transactions with respect to which material aid, assistance, or advice is provided after October 22, 2004. Questions have arisen regarding the definition of material aid, assistance, or advice provided after October 22, 2004. For purposes of the disclosure required by § 6111, disclosure is required for reportable transactions with respect to which a material advisor makes a tax statement (other than post-filing advice described in § 301.6112-1(c)(2)(iv)(A)) after October 22, 2004, regardless of whether any portion of the fee was received before October 22, 2004, or whether the transaction was entered into before October 22, 2004. (For the timing of the disclosure, see Section 2 of this notice, above.)

EFFECTIVE DATE

This notice is effective February 24, 2005, the date this notice was released to the public.

EFFECT ON OTHER DOCUMENTS

This document clarifies and modifies Notice 2004-80 and Notice 2005-17.

DRAFTING INFORMATION

The principal author of this notice is Tara P. Volungis of the Office of the Associate Chief Counsel (Passthroughs & Special Industries). For further information regarding this notice, contact Ms. Volungis at (202) 622-3080 (not a toll-free call).

Notice 2005-24

Modification of Notice 2005-4

Section 1. PURPOSE

This notice modifies Notice 2005-4, 2005-2 I.R.B. 289, by extending the transitional rule related to sales of gasoline on oil company credit cards and by making several corrections to Notice 2005-4. Notice 2005-4 provides guidance on certain excise tax provisions in the Internal Revenue Code that were added or affected by the American Jobs Creation Act of 2004 (Pub. L. 108-357) (Act).

Section 2. GASOLINE; SALES ON OIL COMPANY CREDIT CARDS

Section 7 of Notice 2005-4 provides guidance on § 6416(a)(4), as amended by the Act. Section 7(a)(1)(ii) provides that the pre-2005 rules relating to sales of gasoline to state and local governments and nonprofit educational organizations on oil company credit cards issued to those entities will generally apply to sales before March 1, 2005. The notice also states that Congress may wish to address this issue before March 1, 2005, and that Treasury and the Service would assist Congress in designing an administrable alternative.

In a February 25, 2005, letter to Treasury, the chairman and ranking member of the Finance Committee and the chairman of the Ways and Means Committee noted that the conferees to the Act removed language from the bill that would have changed the administration of refund claims for gasoline sales charged on a credit card. They further noted that the intent of the conferees in removing this language was “to retain the pre-JOBS Act treatment of these claims and not to effect any changes with respect to sales on oil company credit cards.” The letter also notes that, if Treasury concludes that a technical correction is needed to preserve the rules in effect prior to 2005, the signatories “will facilitate the enactment of such technical legislation at the earliest opportunity.”

Treasury and the Service believe that it would be appropriate to continue to apply the oil company credit card rule until Congress has had an opportunity to address the issue. Accordingly, the oil company credit card rule will remain in effect until modified by a statutory change or by future guidance on this issue.

Section 3. CORRECTIONS TO NOTICE 2005-4

(a) Aviation-grade kerosene; certificate for commercial aviation and exempt use. In § 4(g)(2), which contains a model certificate for persons buying aviation-grade kerosene for commercial aviation or nontaxable use, “ for export;” is removed from the list in the certificate of possible uses of the aviation-grade kerosene to which the certificate relates.

(b) Aviation-grade kerosene; claims by registered ultimate vendors (nontaxable uses)—(i) In § 4(h)(6)(ii), which contains a model waiver for ultimate purchasers of aviation-grade kerosene used in nontaxable uses, “ for use on a farm for farming purposes;” and “ for the exclusive use of a state;” are removed from the list in the waiver of possible uses of the aviation-grade kerosene to which the waiver relates. For rules relating to claims by registered ultimate vendors of kerosene (including aviation-grade kerosene) for farming and state use, see § 48.6427-9 of the Manufacturers and Retailers Excise Tax Regulations.

(ii) In § 4(h)(6)(ii), “ other nontaxable use (Describe nontaxable use) ;” is added to the waiver immediately before the last item in the list of possible uses of the aviation-grade kerosene to which the waiver relates.

(c) Gasoline; claims by registered ultimate vendors. In § 7(a)(1)(ii), first sentence, the language “based on a price that excludes the tax” is removed and “based on a price that includes the tax” is added in its place.

Section 4. EFFECT ON OTHER DOCUMENTS

Notice 2005-4 is modified as described in §§ 2 and 3 of this notice.

Section 5. EFFECTIVE DATE

This notice is effective January 1, 2005, the effective date of Notice 2005-4.

Section 6. DRAFTING INFORMATION

The principal authors of this notice are Susan Athy and Deborah Karet of the Office of the Associate Chief Counsel (Passthroughs and Special Industries). For further information regarding this notice, please contact Ms. Karet (concerning aviation-grade kerosene) or Ms. Athy (concerning all other issues) at (202) 622-3130 (not a toll-free call).

Notice 2005-26

Weighted Average Interest Rates Update

This notice provides guidance as to the corporate bond weighted average interest rate and the permissible range of interest rates specified under § 412(b)(5)(B)(ii)(II) of the Internal Revenue Code. In addition, it provides guidance as to the interest rate on 30-year Treasury securities under § 417(e)(3)(A)(ii)(II), and the weighted average interest rate and permissible ranges of interest rates based on the 30-year Treasury securities rate.

CORPORATE BOND WEIGHTED AVERAGE INTEREST RATE

Sections 412(b)(5)(B)(ii) and 412(l) (7)(C)(i), as amended by the Pension Funding Equity Act of 2004, provide that the interest rates used to calculate current liability and to determine the required contribution under § 412(l) for plan years beginning in 2004 or 2005 must be within a permissible range based on the weighted average of the rates of interest on amounts invested conservatively in long term investment grade corporate bonds during the 4-year period ending on the last day before the beginning of the plan year.

Notice 2004-34, 2004-18 I.R.B. 848, provides guidelines for determining the corporate bond weighted average interest rate and the resulting permissible range of interest rates used to calculate current liability. That notice establishes that the corporate bond weighted average is based on the monthly composite corporate bond rate derived from designated corporate bond indices.

The composite corporate bond rate for February 2005 is 5.36 percent. Pursuant to Notice 2004-34, the Service has determined this rate as the average of the monthly yields for the included corporate bond indices for that month.

The following corporate bond weighted average interest rate was determined for plan years beginning in the month shown below.

For Plan Years Corporate Bond 90% to 100%
Beginning in: Weighted Permissible
Month Year Average Range
March 2005 6.03 5.43 to 6.03

30-YEAR TREASURY SECURITIES WEIGHTED AVERAGE INTEREST RATE

Section 417(e)(3)(A)(ii)(II) defines the applicable interest rate, which must be used for purposes of determining the minimum present value of a participant’s benefit under § 417(e)(1) and (2), as the annual rate of interest on 30-year Treasury securities for the month before the date of distribution or such other time as the Secretary may by regulations prescribe. Section 1.417(e)-1(d)(3) of the Income Tax Regulations provides that the applicable interest rate for a month is the annual interest rate on 30-year Treasury securities as specified by the Commissioner for that month in revenue rulings, notices or other guidance published in the Internal Revenue Bulletin.

Section 404(a)(1) of the Code, as amended by the Pension Funding Equity Act of 2004, permits an employer to elect to disregard subclause (II) of § 412(b)(5)(B)(ii) to determine the maximum amount of the deduction allowed under § 404(a)(1).

The rate of interest on 30-year Treasury securities for February 2005 is 4.55 percent. Pursuant to Notice 2002-26, 2002-1 C.B. 743, the Service has determined this rate as the monthly average of the daily determination of yield on the 30-year Treasury bond maturing in February 2031.

The following 30-year Treasury rates were determined for the plan years beginning in the month shown below.

For Plan Years 30-Year Treasury 90% to 105% 90% to 110%
Beginning in: Weighted Permissible Permissible
Month Year Average Range Range
March 2005 5.06 4.55 to 5.31 4.55 to 5.57

Drafting Information

The principal authors of this notice are Paul Stern and Tony Montanaro of the Employee Plans, Tax Exempt and Government Entities Division. For further information regarding this notice, please contact the Employee Plans’ taxpayer assistance telephone service at 1-877-829-5500 (a toll-free number), between the hours of 8:00 a.m. and 6:30 p.m. Eastern time, Monday through Friday. Mr. Stern may be reached at 1-202-283-9703. Mr. Montanaro may be reached at 1-202-283-9714. The telephone numbers in the preceding sentences are not toll-free.

Rev. Proc. 2005-13

SECTION 1. PURPOSE

01. This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2005, including special tables of limitations on depreciation deductions for trucks and vans, and for passenger automobiles designed to be propelled primarily by electricity and built by an original equipment manufacturer (electric automobiles); and (2) the amounts to be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2005, including a separate table of inclusion amounts for lessees of trucks and vans, and a separate table for lessees of electric automobiles.

02. The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by § 280F(d)(7).

SECTION 2. BACKGROUND

01. For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year that the passenger automobile is placed in service by the taxpayer and each succeeding year. In the case of electric automobiles placed in service after August 5, 1997, and before January 1, 2007, § 280F(a)(1)(C) requires tripling of these limitation amounts. Section 280F(d)(7) requires the amounts allowable as depreciation deductions to be increased by a price inflation adjustment amount for passenger automobiles placed in service after 1988. The method of calculating this price inflation amount for trucks and vans placed in service in or after calendar year 2003 uses a different CPI “automobile component” (the “new trucks” component) than that used in the price inflation amount calculation for other passenger automobiles (the “new cars” component), resulting in somewhat higher depreciation deductions for trucks and vans. This change reflects the higher rate of price inflation that trucks and vans have been subject to since 1988. For purposes of this revenue procedure, the term “trucks and vans” refers to passenger automobiles that are built on a truck chassis, including minivans and sport utility vehicles (SUVs) that are built on a truck chassis.

02. For leased passenger automobiles, § 280F(c) requires a reduction in the deduction allowed to the lessee of the passenger automobile. The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. Under § 1.280F-7(a), this reduction requires the lessees to include in gross income an inclusion amount determined by applying a formula to the amount obtained from a table. There is a table for lessees of electric automobiles, a table for lessees of trucks and vans, and a table for all other passenger automobiles. Each table shows inclusion amounts for a range of fair market values for each tax year after the passenger automobile is first leased.

SECTION 3. SCOPE

01. The limitations on depreciation deductions in section 4.02(2) of this revenue procedure apply to passenger automobiles (other than leased passenger automobiles) that are placed in service by the taxpayer in calendar year 2005, and continue to apply for each tax year that the passenger automobile remains in service.

02. The tables in section 4.03 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2005. Lessees of such passenger automobiles must use these tables to determine the inclusion amount for each tax year during which the passenger automobile is leased. See Rev. Proc. 2002-14, 2002-1 C.B. 450, for passenger automobiles first leased before January 1, 2003, Rev. Proc. 2003-75, 2003-2 C.B. 1018, for passenger automobiles first leased during calendar year 2003, and Rev. Proc. 2004-20, 2004-1 C.B. 642, for passenger automobiles first leased during calendar year 2004.

SECTION 4. APPLICATION

01. In General.

(1) Limitations on Depreciation Deductions for Certain Automobiles. The limitations on depreciation deductions for passenger automobiles placed in service by the taxpayer for the first time during calendar year 2005 are found in Tables 1 through 3 in section 4.02(2) of this revenue procedure. Table 1 of this revenue procedure provides limitations on depreciation deductions for a passenger automobile. Table 2 of this revenue procedure provides limitations on depreciation deductions for a truck or van. Table 3 of this revenue procedure provides limitations on depreciation deductions for an electric automobile.

(2) Inclusions in Income of Lessees of Passenger Automobiles. A taxpayer first leasing a passenger automobile during calendar year 2005 must determine the inclusion amount that is added to gross income using the tables in section 4.03 of this revenue procedure. The inclusion amount is determined using Table 4 in the case of a passenger automobile (other than a truck, van, or electric automobile), Table 5 in the case of a truck or van, and Table 6 in the case of an electric automobile. In addition, the procedures of § 1.280F-7(a) must be followed.

02. Limitations on Depreciation Deductions for Certain Automobiles.

(1) Amount of the Inflation Adjustment. Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the CPI automobile component for October of the preceding calendar year exceeds the CPI automobile component for October 1987. The term “CPI automobile component” is defined in § 280F(d)(7)(B)(ii) as the “automobile component” of the Consumer Price Index for all Urban Consumers published by the Department of Labor (the CPI). The new car component of the CPI was 115.2 for October 1987 and 133.0 for October 2004. The October 2004 index exceeded the October 1987 index by 17.8. The Service has, therefore, determined that the automobile price inflation adjustment for 2005 for passenger automobiles (other than trucks and vans) is 15.45 percent (17.8/115.2 x 100%). This adjustment is applicable to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2005. The dollar limitations in § 280F(a) must therefore be multiplied by a factor of 0.1545, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to passenger automobiles (other than trucks, vans, and electric automobiles) for calendar year 2005. To determine the dollar limitations applicable to an electric automobile first placed in service during calendar year 2005, the dollar limitations in § 280F(a) are tripled in accordance with § 280F(a)(1)(C) and are then multiplied by a factor of 0.1545; the resulting increases, after rounding to the nearest $100, are added to the tripled 1988 limitations to give the depreciation limitations for calendar year 2005. To determine the dollar limitations applicable to trucks and vans first placed in service during calendar year 2005, the new truck component of the CPI is used instead of the new car component. The new truck component of the CPI was 112.4 for October 1987 and 143.1 for October 2004. The October 2004 index exceeded the October 1987 index by 30.7. The Service has, therefore, determined that the automobile price inflation adjustment for 2005 for trucks and vans is 27.31 percent (30.7/112.4 x 100%). This adjustment is applicable to all trucks and vans that are first placed in service in calendar year 2005. The dollar limitations in § 280F(a) must therefore be multiplied by a factor of 0.2731, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to trucks and vans.

(2) Amount of the Limitation. For passenger automobiles placed in service by the taxpayer in calendar year 2005, Tables 1 through 3 contain the dollar amount of the depreciation limitation for each tax year. Use Table 1 for passenger automobiles placed in service by the taxpayer in calendar year 2005. Use Table 2 for trucks and vans placed in service by the taxpayer in calendar year 2005. Use Table 3 for electric automobiles placed in service by the taxpayer in calendar year 2005.

REV. PROC. 2005-13 TABLE 1
DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES PLACED IN SERVICE BY THE TAXPAYER DURING CALENDAR YEAR 2005
Tax Year Amount
1st Tax Year $2,960
2nd Tax Year $4,700
3rd Tax Year $2,850
Each Succeeding Year $1,675
REV. PROC. 2005-13 TABLE 2
DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE BY THE TAXPAYER DURING CALENDAR YEAR 2005
Tax Year Amount
1st Tax Year $3,260
2nd Tax Year $5,200
3rd Tax Year $3,150
Each Succeeding Year $1,875
REV. PROC. 2005-13 TABLE 3
DEPRECIATION LIMITATIONS FOR ELECTRIC AUTOMOBILES PLACED IN SERVICE BY THE TAXPAYER DURING CALENDAR YEAR 2005
Tax Year Amount
1st Tax Year $8,880
2nd Tax Year $14,200
3rd Tax Year $8,450
Each Succeeding Year $5,125

03. Inclusions in Income of Lessees of Passenger Automobiles.

The inclusion amounts for passenger automobiles first leased in calendar year 2005 are calculated under the procedures described in § 1.280F-7(a). Lessees of passenger automobiles other than trucks, vans, and electric automobiles should use Table 4 of this revenue procedure in applying these procedures, while lessees of trucks and vans should use Table 5 of this revenue procedure and lessees of electric automobiles should use Table 6 of this revenue procedure.

REV. PROC. 2005-13 TABLE 4
DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS, VANS, OR ELECTRIC AUTOMOBILES) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2005
Fair Market Value of Passenger Automobile Tax Year During Lease
Over Not Over 1st 2nd 3rd 4th 5th & Later
$15,200 $15,500 3 6 9 11 13
15,500 15,800 4 9 13 17 19
15,800 16,100 5 12 18 22 26
16,100 16,400 7 15 22 27 32
16,400 16,700 8 18 27 32 39
16,700 17,000 9 21 32 38 44
17,000 17,500 11 25 38 45 52
17,500 18,000 14 30 45 54 63
18,000 18,500 16 35 52 63 73
18,500 19,000 18 40 60 72 83
19,000 19,500 20 46 67 80 94
19,500 20,000 23 50 75 90 104
20,000 20,500 25 55 82 99 115
20,500 21,000 27 61 89 108 125
21,000 21,500 30 65 97 117 135
21,500 22,000 32 70 105 125 146
22,000 23,000 35 78 116 139 161
23,000 24,000 40 88 131 156 182
24,000 25,000 44 98 146 175 202
25,000 26,000 49 108 161 192 223
26,000 27,000 54 118 175 211 244
27,000 28,000 58 128 191 228 265
28,000 29,000 63 138 205 247 285
29,000 30,000 67 149 220 264 306
30,000 31,000 72 159 234 283 326
31,000 32,000 77 168 250 300 348
32,000 33,000 81 179 265 318 367
33,000 34,000 86 189 279 336 389
34,000 35,000 90 199 295 354 409
35,000 36,000 95 209 309 372 430
36,000 37,000 99 219 325 389 451
37,000 38,000 104 229 339 408 471
38,000 39,000 109 239 354 426 491
39,000 40,000 113 249 370 443 512
40,000 41,000 118 259 384 462 533
41,000 42,000 122 269 400 479 554
42,000 43,000 127 279 414 497 575
43,000 44,000 132 289 429 515 595
44,000 45,000 136 299 444 533 616
45,000 46,000 141 309 459 551 636
46,000 47,000 145 320 473 569 657
47,000 48,000 150 329 489 587 678
48,000 49,000 154 340 504 604 699
49,000 50,000 159 350 518 623 719
50,000 51,000 164 360 533 640 740
51,000 52,000 168 370 548 659 760
52,000 53,000 173 380 563 676 781
53,000 54,000 177 390 578 694 802
54,000 55,000 182 400 593 712 823
55,000 56,000 186 410 609 729 844
56,000 57,000 191 420 623 748 864
57,000 58,000 196 430 638 766 884
58,000 59,000 200 440 653 784 905
59,000 60,000 205 450 668 802 925
60,000 62,000 212 465 691 828 957
62,000 64,000 221 485 721 864 998
64,000 66,000 230 506 750 900 1,039
66,000 68,000 239 526 780 935 1,081
68,000 70,000 248 546 810 971 1,123
70,000 72,000 258 566 839 1,008 1,163
72,000 74,000 267 586 869 1,044 1,204
74,000 76,000 276 606 899 1,079 1,247
76,000 78,000 285 626 930 1,114 1,288
78,000 80,000 294 646 960 1,150 1,329
80,000 85,000 310 682 1,011 1,213 1,402
85,000 90,000 333 732 1,086 1,303 1,504
90,000 95,000 356 782 1,161 1,392 1,608
95,000 100,000 379 832 1,236 1,481 1,712
100,000 110,000 413 908 1,347 1,616 1,867
110,000 120,000 459 1,009 1,496 1,795 2,073
120,000 130,000 505 1,109 1,646 1,974 2,280
130,000 140,000 551 1,210 1,795 2,153 2,486
140,000 150,000 597 1,310 1,945 2,332 2,693
150,000 160,000 642 1,411 2,094 2,511 2,900
160,000 170,000 688 1,512 2,243 2,690 3,106
170,000 180,000 734 1,612 2,392 2,870 3,313
180,000 190,000 780 1,713 2,541 3,048 3,520
190,000 200,000 826 1,813 2,691 3,227 3,727
200,000 210,000 871 1,914 2,840 3,407 3,933
210,000 220,000 917 2,015 2,989 3,585 4,141
220,000 230,000 963 2,115 3,139 3,764 4,347
230,000 240,000 1,009 2,216 3,288 3,943 4,554
240,000 and up 1,055 2,316 3,437 4,123 4,760
REV. PROC. 2005-13 TABLE 5
DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2005
Fair Market Value of Truck or Van Tax Year During Lease
Over Not Over 1st 2nd 3rd 4th 5th and Later
$16,700 $17,000 3 6 8 10 11
17,000 17,500 4 10 14 17 20
17,500 18,000 7 15 21 26 30
18,000 18,500 9 20 29 35 40
18,500 19,000 11 25 37 43 51
19,000 19,500 14 30 44 52 61
19,500 20,000 16 35 51 62 71
20,000 20,500 18 40 59 71 81
20,500 21,000 20 45 67 79 92
21,000 21,500 23 50 74 88 103
21,500 22,000 25 55 81 98 113
22,000 23,000 28 63 92 111 129
23,000 24,000 33 73 107 129 149
24,000 25,000 38 83 122 147 169
25,000 26,000 42 93 137 165 190
26,000 27,000 47 103 152 183 210
27,000 28,000 51 113 167 201 231
28,000 29,000 56 123 182 218 253
29,000 30,000 60 133 197 237 272
30,000 31,000 65 143 212 254 294
31,000 32,000 70 153 227 272 314
32,000 33,000 74 163 242 290 335
33,000 34,000 79 173 257 308 355
34,000 35,000 83 184 271 326 376
35,000 36,000 88 193 287 344 397
36,000 37,000 93 203 302 361 418
37,000 38,000 97 214 316 380 438
38,000 39,000 102 223 332 397 459
39,000 40,000 106 234 346 415 480
40,000 41,000 111 244 361 433 500
41,000 42,000 115 254 376 451 521
42,000 43,000 120 264 391 469 542
43,000 44,000 125 274 406 487 562
44,000 45,000 129 284 421 505 583
45,000 46,000 134 294 436 523 603
46,000 47,000 138 304 451 541 624
47,000 48,000 143 314 466 558 645
48,000 49,000 148 324 481 576 666
49,000 50,000 152 334 496 594 687
50,000 51,000 157 344 511 612 707
51,000 52,000 161 355 525 630 728
52,000 53,000 166 364 541 648 748
53,000 54,000 170 375 555 666 769
54,000 55,000 175 385 570 684 789
55,000 56,000 180 394 586 701 811
56,000 57,000 184 405 600 720 830
57,000 58,000 189 415 615 737 852
58,000 59,000 193 425 630 755 873
59,000 60,000 198 435 645 773 893
60,000 62,000 205 450 667 800 924
62,000 64,000 214 470 697 836 966
64,000 66,000 223 490 727 872 1,007
66,000 68,000 232 510 757 908 1,048
68,000 70,000 241 531 786 944 1,089
70,000 72,000 251 550 817 979 1,131
72,000 74,000 260 571 846 1,015 1,172
74,000 76,000 269 591 876 1,051 1,213
76,000 78,000 278 611 906 1,087 1,254
78,000 80,000 287 631 936 1,123 1,296
80,000 85,000 303 666 989 1,185 1,368
85,000 90,000 326 717 1,063 1,274 1,472
90,000 95,000 349 767 1,137 1,365 1,575
95,000 100,000 372 817 1,212 1,454 1,678
100,000 110,000 406 893 1,324 1,588 1,833
110,000 120,000 452 993 1,474 1,767 2,040
120,000 130,000 498 1,094 1,623 1,945 2,247
130,000 140,000 544 1,194 1,772 2,125 2,454
140,000 150,000 590 1,295 1,921 2,304 2,660
150,000 160,000 636 1,395 2,071 2,483 2,867
160,000 170,000 681 1,496 2,220 2,662 3,074
170,000 180,000 727 1,597 2,369 2,841 3,281
180,000 190,000 773 1,697 2,519 3,020 3,487
190,000 200,000 819 1,798 2,668 3,199 3,694
200,000 210,000 865 1,898 2,817 3,379 3,900
210,000 220,000 910 1,999 2,967 3,557 4,107
220,000 230,000 956 2,100 3,115 3,737 4,314
230,000 240,000 1,002 2,200 3,265 3,916 4,520
240,000 and up 1,048 2,301 3,414 4,094 4,728
REV. PROC. 2005-13 TABLE 6
DOLLAR AMOUNTS FOR ELECTRIC AUTOMOBILES WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2005
Fair Market Value of Electric Automobile Tax Year During Lease
Over Not Over 1st 2nd 3rd 4th 5th and Later
$45,000 $46,000 5 11 18 21 25
46,000 47,000 10 21 33 39 45
47,000 48,000 14 31 48 57 66
48,000 49,000 19 41 63 75 86
49,000 50,000 23 52 77 93 107
50,000 51,000 28 61 93 111 127
51,000 52,000 33 71 108 129 148
52,000 53,000 37 82 122 147 169
53,000 54,000 42 92 137 164 190
54,000 55,000 46 102 152 183 210
55,000 56,000 51 112 167 200 231
56,000 57,000 55 122 182 218 252
57,000 58,000 60 132 197 236 272
58,000 59,000 65 142 212 254 293
59,000 60,000 69 152 227 272 314
60,000 62,000 76 167 250 298 345
62,000 64,000 85 187 280 334 386
64,000 66,000 94 208 309 370 427
66,000 68,000 104 227 339 406 469
68,000 70,000 113 247 369 442 510
70,000 72,000 122 268 398 478 551
72,000 74,000 131 288 428 514 593
74,000 76,000 140 308 458 550 634
76,000 78,000 149 328 489 585 675
78,000 80,000 159 348 518 621 717
80,000 85,000 175 383 571 683 789
85,000 90,000 197 434 645 773 892
90,000 95,000 220 484 720 863 995
95,000 100,000 243 534 795 952 1,099
100,000 110,000 278 610 906 1,086 1,254
110,000 120,000 323 711 1,055 1,266 1,460
120,000 130,000 369 811 1,205 1,444 1,668
130,000 140,000 415 912 1,354 1,623 1,874
140,000 150,000 461 1,012 1,504 1,802 2,081
150,000 160,000 507 1,113 1,652 1,982 2,287
160,000 170,000 553 1,213 1,802 2,161 2,494
170,000 180,000 598 1,314 1,951 2,340 2,701
180,000 190,000 644 1,415 2,100 2,519 2,908
190,000 200,000 690 1,515 2,250 2,698 3,114
200,000 210,000 736 1,616 2,399 2,877 3,321
210,000 220,000 782 1,716 2,549 3,055 3,528
220,000 230,000 827 1,817 2,698 3,235 3,734
230,000 240,000 873 1,918 2,847 3,413 3,942
240,000 and up 919 2,018 2,997 3,592 4,148

SECTION 5. EFFECTIVE DATE

This revenue procedure applies to passenger automobiles (other than leased passenger automobiles) that are first placed in service by the taxpayer during calendar year 2005, and to leased passenger automobiles that are first leased by the taxpayer during calendar year 2005.

SECTION 6. DRAFTING INFORMATION

The principal author of this revenue procedure is Bernard P. Harvey of the Office of Associate Chief Counsel (Passthroughs & Special Industries). For further information regarding the depreciation limitations and lessee inclusion amounts in this revenue procedure, contact Bernard P. Harvey at (202) 622-3110 (not a toll-free call).

Part IV. Items of General Interest

Announcement 2005-15

Announcement of Disciplinary Actions Involving Attorneys, Certified Public Accountants, Enrolled Agents, and Enrolled Actuaries — Suspensions, Censures, Disbarments, and Resignations

Under Title 31, Code of Federal Regulations, Part 10, attorneys, certified public accountants, enrolled agents, and enrolled actuaries may not accept assistance from, or assist, any person who is under disbarment or suspension from practice before the Internal Revenue Service if the assistance relates to a matter constituting practice before the Internal Revenue Service and may not knowingly aid or abet another person to practice before the Internal Revenue Service during a period of suspension, disbarment, or ineligibility of such other person.

To enable attorneys, certified public accountants, enrolled agents, and enrolled actuaries to identify persons to whom these restrictions apply, the Director, Office of Professional Responsibility, will announce in the Internal Revenue Bulletin their names, their city and state, their professional designation, the effective date of disciplinary action, and the period of suspension. This announcement will appear in the weekly Bulletin at the earliest practicable date after such action and will continue to appear in the weekly Bulletins for five successive weeks.

Consent Disbarments From Practice Before the Internal Revenue Service

Under Title 31, Code of Federal Regulations, Part 10, an attorney, certified public accountant, enrolled agent, or enrolled actuary, in order to avoid institution or conclusion of a proceeding for his or her disbarment or suspension from practice before the Internal Revenue Service, may offer his or her consent to disbarment from such practice. The Director, Office of Professional Responsibility, in his discretion, may disbar an attorney, certified public accountant, enrolled agent or enrolled actuary in accordance with the consent offered.

The following individuals have been placed under consent disbarment from practice before the Internal Revenue Service:

Name Location Designation Date
O'Connell, Anthony G. Revere, MA CPA Indefinite from January 5, 2005

Suspensions From Practice Before the Internal Revenue Service After Notice and an Opportunity for a Proceeding

Under Title 31, Code of Federal Regulations, Part 10, after notice and an opportunity for a proceeding before an administrative law judge, the following individuals have been placed under suspension from practice before the Internal Revenue Service:

Name Location Designation Date
McCarthy III, William P. Sacramento, CA Enrolled Agent September 12, 2004 to March 10, 2006
Deen, Mae T. Salinas, CA Enrolled Agent October 18, 2004 to April 16, 2006
Adams Jr., Joseph T. Philadelphia, PA Enrolled Agent December 1, 2004 to May 29, 2006

Consent Suspensions From Practice Before the Internal Revenue Service

Under Title 31, Code of Federal Regulations, Part 10, an attorney, certified public accountant, enrolled agent, or enrolled actuary, in order to avoid institution or conclusion of a proceeding for his or her disbarment or suspension from practice before the Internal Revenue Service, may offer his or her consent to suspension from such practice. The Director, Office of Professional Responsibility, in his discretion, may suspend an attorney, certified public accountant, enrolled agent or enrolled actuary in accordance with the consent offered.

The following individuals have been placed under consent suspension from practice before the Internal Revenue Service:

Name Location Designation Date
Cornelius, Gerald K. Ventura, CA Enrolled Agent Indefinite from September 15, 2004
Janus, Stephen E. Michigan City, IN CPA Indefinite from October 25, 2004
Arotsky, Marvin A. New Haven, CT CPA Indefinite from December 1, 2004
Penta, Richard Hamilton, MA CPA Indefinite from January 1, 2005
Bedell, Michael F. Ridge, NY CPA Indefinite from January 7, 2005
Nussbaum, Jerrold Annapolis, MD Attorney Indefinite from April 15, 2005

Expedited Suspensions From Practice Before the Internal Revenue Service

Under Title 31, Code of Federal Regulations, Part 10, the Director, Office of Professional Responsibility, is authorized to immediately suspend from practice before the Internal Revenue Service any practitioner who, within five years from the date the expedited proceeding is instituted (1) has had a license to practice as an attorney, certified public accountant, or actuary suspended or revoked for cause or (2) has been convicted of certain crimes.

The following individuals have been placed under suspension from practice before the Internal Revenue Service by virtue of the expedited proceeding provisions:

Name Location Designation Date
Whitworth, Douglas D. Houston, TX CPA Indefinite from October 28, 2004
Lindberg, William D. Costa Mesa, CA CPA Indefinite from November 4, 2004
Tompkins, Thomas M. Chickasaw, AL Attorney Indefinite from November 4, 2004
Peterson Jr., Theodore E Charlotte, NC CPA Indefinite from November 4, 2004
Gassiott, William E. Cypress, TX CPA Indefinite from November 4, 2004
Wagar Jr., John E. Lafayette, LA Attorney Indefinite from November 9, 2004
Fiore, Owen G. Kooskia, ID Attorney Indefinite from November 30, 2004
O’Keefe, Michael H. Beaumont, TX Attorney Indefinite from November 30, 2004
Ivker, Richard N. Waltham, MA Attorney Indefinite from November 30, 2004
Jones, Edwin A. Robards, KY Attorney Indefinite from November 30, 2004
Landis, John C. Drexel Hill, PA Attorney Indefinite from November 30, 2004
Cushman, Christopher A. Kansas City, MO Attorney Indefinite from November 30, 2004
Weiner, Alan S. Rockville, MD Attorney Indefinite from November 30, 2004
Virdone, Peter P. Kailua, HI CPA Indefinite from November 30, 2004
Doherty, Paul M. N. Billerica, MA Attorney Indefinite from December 3, 2004
Carney, Kevin F. Woburn, MA Attorney Indefinite from December 3, 2004
Greiner, Thomas Cleveland, OH Attorney Indefinite from December 8, 2004
Wertis, Richard L. Garden City, NY Attorney Indefinite from December 10, 2004
Southerland, Harry L. Raeford, NC Attorney Indefinite from December 10, 2004
Chestnutt, A. Johnson Fayetteville, NC CPA Indefinite from December 13, 2004
Heald, Arthur A. Saint Albans, VT Attorney Indefinite from December 10, 2004
Culliton, James M. Santa Clarita, CA Attorney Indefinite from December 15, 2004
Juarez, Michael G. Douglas, AZ Attorney Indefinite from December 15, 2004
Clark, Carroll A. Mesa, AZ Attorney Indefinite from December 15, 2004
Creque, George A Willow Springs, CA Attorney Indefinite from December 15, 2004
Younts, Roger W. Lexington, NC CPA Indefinite from December 15, 2004
Kluge, David R. Sheridan, OR Attorney Indefinite from December 15, 2004
Fanaras, Andrew R. Haverhill, MA Attorney Indefinite from December 15, 2004
Murphy, Patrick B. Alhambra, CA Attorney Indefinite from December 20, 2004
Mills, Stuart B. Pender, NE Attorney Indefinite from December 20, 2004
North, Gerald D.W. Chicago, IL Attorney Indefinite from December 20, 2004
Nickel, Warren J. Tinley Park, IL Attorney Indefinite from December 20, 2004
Gray, Douglas C. Dover, NH Attorney Indefinite from December 20, 2004
Emmons, Kyle D. Columbia, MO Attorney Indefinite from December 20, 2004
Velella, Guy J. Bronx, NY Attorney Indefinite from December 30, 2004
Ginn, Jeffrey S. Lexington, KY CPA Indefinite from January 25, 2005
Grenrood Jr., Bernard West Monroe, LA Attorney Indefinite from January 25, 2005
Tehin Jr., Nikolai San Francisco, CA Attorney Indefinite from January 25, 2005
Kemper, Morris B. Alameda, CA Attorney Indefinite from January 25, 2005
Harrison, John S. Oakland, CA Attorney Indefinite from January 25, 2005
Mangurten, Irvin B. Buffalo Grove, IL CPA Indefinite from January 27, 2005
Zivin, Mitchell W. Long Grove, IL Attorney Indefinite from February 7, 2005
Zdon, John N. Chicago, IL Attorney Indefinite from February 7, 2005
Lokietz, David S. Mount Dora, FL CPA Indefinite from February 7, 2005
Heldrich Jr., Gerard C. Lincolnshire, IL Attorney Indefinite from February 7, 2005
Whitaker, Paul M. Albany, NY Attorney Indefinite from February 18, 2005
Blake, Linda D. Bellvale, NY Attorney Indefinite from February 18, 2005
Smith, H. Paul San Antonio, TX Attorney Indefinite from February 18, 2005
Atwood, Adina A. Ardmore, OK Attorney Indefinite from February 18, 2005
Sablone Jr., Francis R. Old Lyme, CT Attorney Indefinite from February 18, 2005
Phelps, S. Don Olympia, WA Attorney Indefinite from February 18, 2005
Davidson, Frazier Bronx, NY Attorney Indefinite from February 18, 2005

Censure Issued by Consent

Under Title 31, Code of Federal Regulations, Part 10, in lieu of a proceeding being instituted or continued, an attorney, certified public accountant, enrolled agent, or enrolled actuary, may offer his or her consent to the issuance of a censure. Censure is a public reprimand.

The following individuals have consented to the issuance of a Censure:

Name Location Designation Date
Dorris, Virginia A. Bradenton, FL Enrolled Agent December 14, 2004
Mackey, Glen N. Roanoke, VA Attorney December 21, 2004
 

Announcement 2005-20

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
11th Hour Dance Company, Napa CA
223 Freedom and Mutual Aid Center, Portland OR
5400 Justine Block Club, Chicago IL
14000 Environmental Management Foundation, Los Angeles CA
Academics Through Athletics Foundation, Westlake Village CA
Actors Theatre of Minneapolis Foundation, Fort Myers FL
Aesthetica Community Services, Inc., Honolulu HI
African American Communiversal Project, Country Club Hills IL
African American Women Against Aids, Duncanville TX
Agape Care Foundation, Inc., Los Angeles CA
Agricultural Access, Ventura CA
All-For-One JHD Public Advocates of Florida, Inc., Cape Coral FL
Aloha Lokahi Association, Pahoa HI
American Armenian Cultural Foundation, Glendale CA
American Bobsled Club, Salt Lake City UT
American Budget and Credit Counseling, Inc., New Orleans LA
American Health Awareness Team, Inc., Santa Monica CA
American Health Ministries, Los Angeles CA
American Paddlesport Association, Inc., New York NY
Angels of Mercy, Las Vegas NV
Annete M. Cutter Aviation Scholarship Fund, La Verne CA
Anomalous Phenomena Research Center, Ltd., New York NY
Anthropology Channel, Inc., Los Angeles CA
Apple of His Eye, Los Angeles CA
Arbor Lakes Senior Housing, St. Paul MN
Arizona Family Assistance Fund, Scottsdale AZ
Arroyo Vista Resident Council, Inc., Dublin CA
Asialink Foundation, Oakland CA
Association of Latinos With Asthma and Allergy Symptoms, Los Angeles CA
AWAA-TE Productions, San Francisco CA
Axios Institute, Mount Jackson VA
Basic Instructions in Building Living & Empowerment, Los Angeles CA
Bay Area Genesis Company, Fremont CA
Bay Area Youth Sports, Inc., Castro Valley CA
Bell Gardens Youth Football and Cheer Association, Bell Gardens CA
Benefits Management Corporation, Citrus Heights CA
Benevolent & Protective Order of Elks Scholarship Assn. 317, Port Townsend WA
Beulah Hubbard Community and Development Club, Inc., Union MS
Beverly Hills Pact, Los Angeles CA
Biblical Arts Masterworks, Torrance CA
Birch Community Service, Inc., Gardena CA
Bircher Community Service, Inc., Inglewood CA
Birthwright Foundation, Palmdale CA
Blessed Enterprises, Inc., Spring TX
Brian K. Shaw Foundation, Los Angeles CA
Bridge Street Development Corporation, Paterson NJ
Broken Angel Animal Rescue, Beverly Hills CA
Building A Better World Foundation, Inc., Warner Robins GA
California Association of Drug Court Professionals, Los Angeles CA
California Basketball Officials Association - South Bay Unit, Redondo Beach CA
California-Beijing International Cultural Study Society, Alhambra CA
California Co-Housing Corporation, Oakland CA
California Conductive Education Foundation, Beverly Hills CA
California Overeaters Annonymous — How Intergroup, Los Angeles CA
Carrington Foundation for Public Art, Fairfield CA
Caspers Park Preservation Foundation, Irvine CA
Celebration of Texas Independence Day, Inc., Austin TX
Center for Academic Research and Programs for International Universities in Germany, Westerville OH
Center for Achievement Motivation and Physical Development, Inc., Woodland Hills CA
Center for Adolescent Stress On-Line, Inc., Santa Monica CA
Center for Caring Education, Portland ME
Center for Family Life at Spiritwind, Inc., Rochester NY
Children Center for Creative Development, Diamond Bar CA
Childrens Cancer Awareness Projects, Chino Hills CA
Childrens Cast a Line Foundation, Woodland Hills CA
Chinese American Bilingual Education Alliance, Incorporated, San Francisco CA
Chinese American Civil Rights Organization, Monterey CA
Christian Leadership Exchange, Inc., Arcadia CA
Christian Research Child Care Association, Lancaster CA
Come and Dine Ministries, Inc., Adelphi MD
Comite De Beneficencia Guatemalteco, Los Angeles CA
Community Education Resources for Handicapped MR MI, Dayton OH
Community Housing Assistance and Management Project, Houston TX
Community Housing Restoration, Los Angeles CA
Comnec, Incorporated, Inglewood CA
Consortium on Renewing Education, Inc., Sacramento CA
Cora L. Jacobs Hospice, Long Beach CA
Cornerstone Christian Counseling Ministries, Blaine WA
Creating Hopeful Opportunities Increases Children's Educational Success, Inc., Inglewood CA
Crest Ministries, Inc., Pensacola FL
Crimefight USA, Baldwin, Park CA
Cultural Learning Educational Organization, Los Angeles CA
Cumberland Housing Alliance, Inc., Cumberland MD
Cyber Kids Corp., Huntington Park CA
Daddy Loves His Girls, Inc., Memphis TN
Dade County Community Theater Co., Greenfield MO
Ddang-Keut Gospel Mission Center, Temple City CA
Delphic Games, Berlin Germany
Doin the Stuff, Yorba CA
Dollar Bay-Tamarack City Area Schools Foundation, Inc., Dollar Bay MI
Door of Hope Foundation, Whittier CA
Doris & Francis White Lyons Club Community Center, Woodlake CA
Earth Vision Foundation, Inc., Makawao HI
East Bay Cambodian Council, Oakland CA
Eastern Tradition Research Institute, Cotopaxi CO
Ebisoa Scholarship Fund, Inc., San Francisco CA
ECO Bolivia USA, Coral Gables FL
Edgewood Transitional Living Center, Los Angeles CA
Educational Center for the Prevention of Drug & Alcohol Abuse, Santa Clarita CA
E K T Community Development Corporation, Rocky Mount NC
El Shaddai Enterprises, Inc./Lamb of God Productions, Inc., Jonesboro GA
Eli Meleki Community Services, Inc., Houston TX
Elisabeth Leustig Memorial Fund, Inc., Los Angeles CA
Empowering, Inc., Spokane WA
Environmental Justice Resource Network, Los Angeles CA
Ephesus Outreach Ministries, Inc., Oklahoma City OK
Evans Community Service, Inc., Gardena CA
Excelsior Youth Club, Inc., San Francisco CA
Fair Housing Institute, Los Angeles CA
Faithworks of Newton County, Inc., Morocco IN
Families of National Tragedies, Issaquah WA
Father Francis Homeless Project, San Francisco CA
Fatow Ministries, Inc., Knoxville TN
Floyd County Child Abuse Prevention Council, Charles City IA
FM Families for Effective Autism Treatment, Fargo ND
Focus Institute of Film, Beverly Hills CA
Follow Your Heart Foundation, Malibu CA
Foundation for Disaster Relief, Los Angeles CA
Foundation for Underprivileged Youth, Oakland CA
Foundation for Urban Living, Altadena CA
Foundation of Creative Art, Culver City CA
Fresh Start Foundation, Inc., Hawthorne CA
Friends of Animal Care, Inc., Plantation FL
Friends of John Durkan Leukaemia Trust Fund, Inc., Boston MA
Friends of the Democratic Republic of Congo, Naperville IL
Friends of the Nature Center, Farmington NM
Fun Times of Lane County, Inc., Eugene OR
Future Opportunities, Inc., San Antonio TX
Gag Taggers, Inc., Los Angeles CA
Garland Appeal, Pittsburgh PA
Gift From Gabi Foundation, Inc., Hicksville NY
Glades Youth Panthers, Inc., Belle Glades FL
Global Environment Clean-up, Oakland CA
Global Outreach Ministries, Orange CA
Global Spectrum the Urban Group, La Puente CA
Godfrey B. Johnson Foundation, Granada Hills CA
Good News for You, Honolulu HI
Grace Christian College & Theological Seminary, Los Angeles CA
Grand Vision Foundation, San Pedro CA
Grandville's Care Home, Gainesville FL
Greater Austin International Coalition, Austin TX
Greater Los Angeles Valley Arts Council, Winnetka CA
H Drew Childrens Center, Inc., Oakland CA
H-M and E Residential Homes, Los Angeles CA
HA Mifgash Corporation, Los Angeles CA
Hanmi Christian Life, Arleta CA
Hanmi Jonah Mission, Los Angeles CA
Harmony Matters Collective, Los Angeles CA
Hawaii Gymnastics Foundation, Inc., Los Gatos CA
Hawaiian Reforestation Program, Kula HI
Help for Tomorrow, Studio City CA
Herstory Project, Los Angeles CA
Higher Calling Ministry, Inc., Dallas TX
Hilo Residency Training Program, Inc., Hilo HI
Historic Core Community Development Corporation, Los Angeles CA
Hollywood Education & Literacy Project Boston, Inc., Dorchester MA
Hollywood Westside Film Commission, Los Angeles CA
Home International School, Fullerton CA
Hoomana Iowi, Honolulu HI
Hoover Seniors, Inglewood CA
Hope in Christ Ministries, Inc., Jacksonville FL
Hunter Institute for the Preservation of Native Culture & Art, Honolulu HI
Imagine Tomorrow Education Foundation, Inc., Basking Ridge NJ
Imani House, Berkley CA
Immanuel Grace Mission Crusade, Garden Grove CA
Indian Nation Film Council, Los Angeles CA
Infrastructure Development for Education, Los Angeles CA
Inglewood Boys & Girls Club, Inc., Inglewood CA
Insights to Success, Inc., Honolulu HI
Institute for Integrative and Energy Medicine, Cambridge MA
Intercontinental Transplant Center Foundation, Lake Forest IL
Interfaith Peace Fellowship, Los Angeles CA
International Consortium for Business and Education, Inc., Los Angeles CA
International Donations Foundation, Incorporated, Azusa CA
International Entrepreneur Network, Inc., Lima OH
International Foundation of Education and Performing Arts, Los Angeles CA
International Law Foundation, Honolulu HI
International Life Saving, Sacramento CA
International Network for Cancer Treatment and Research USA, Inc., New York NY
International Pain Research and Treatment Foundation, Inc., Brooklyn NY
Invictors W E D Corporation, Los Angeles CA
Ironworkers Local 25 Retirees Club Scholarship Fund, Novi MI
It's a Kids World, San Francisco CA
Jons Community Service, Inc., Compton CA
Jubiliee House, Riverside CA
Justice for Athletes, Los Angeles CA
Kahekili Terrace Resident Association, Wailuku HI
Kailua Senior Citizens Club, Kailua HI
Kalama Boards & Blades Association, Paia Maui HI
Kankakee Valley Park Foundation, Kankakee IL
Kapuna Laau Lapaau O Hawaii, Hilo HI
Kaw Valley Bluebird Association, Lawrence KS
Keauea Foundation, Kamuela HI
Kids International Communication Foundation, Valencia CA
Kin Awareness Foundation, Long Beach CA
King County EOC Support Team, Redmond CA
Korean American Education Foundation, Los Angeles CA
KTS Management Consultants, Inc., Casselberry FL
Kun Shin Dancers, Saratoga CA
L A Youth Academy of Performing Arts, Culver City CA
La Canada Field Sports Coalition, La Canada CA
La Taillede-USA, Durham NH
Labor Defense Network, Los Angeles CA
Lake Oswego International Equestrian Center, Incorporated, Lake Oswego OR
Landfill Alternatives Save Environmental Resources, Newhall CA
Lao Senior Association, Inc., Richmond CA
League of African American Voters, Oakland CA
Life Changes Development Corporation, Detroit MI
Life Enrichment Services, Beckley WV
Life Paradigms, Inc., Phoenix AZ
Liga Contra El Cancer USA, Los Angeles CA
Link Youth Alliance, Newport RI
Living Independently Through Education, La Crescenta CA
Living Ocean Foundation, Daly City CA
Logos Interactive, Fremont CA
Los Angeles Dental Society Foundation, Tustin CA
Love is for Everyone, Inc., Los Angeles CA
Loyola State University Foundation, Itasca IL
LSE International, Inc., South Pasadena CA
Lyre Association of North America, Inc., Copake NY
Main Street Inglewood, Inglewood CA
Marcella L. Hamar Scholarship, Dollar Bay MI
Maui Music Festival, Wailuku HI
Maywood Lions Bob Smith Memorial Foundation, Anaheim CA
Medfly Brigade Basenji Rescue, Inc., Los Angeles CA
Meherrin Development Corp., Inc., Petersburg VA
Mennonite Disaster Services of Florida, Inc., Sarasota FL
Menorah Foundation, Los Angeles CA
Messiah Integrated Health Care, Inc., Los Angeles CA
Metropolitan Community Charities, W. Hollywood CA
Mexican-American National Organization, El Macero CA
Mill Valley Music Festival, Inc., Mill Valley CA
Millennium Foundation, Inc., Baton Rouge LA
Mindmender, Inc., Douglasville GA
Mission Media Ministries, Willow Grove PA
Missionary Work to China Mission, Mar Vista CA
Mitchell Butler Foundation, Los Angeles CA
Moose Project, Chicago IL
Mountcliff Community Association, Los Angeles CA
Multicultural Education Network, Sherman Oaks CA
Multicultural Organization for Neighborhood Arts, Santa Monica CA
Na Pali Coast Ohana, Lihue Kauai HI
Namesail, Hilo HI
National Council for Taekwondo Masters Certification, Los Angeles CA
National Football League Retired Players Foundation, Laguna Hills CA
National Historic Aircraft Foundation, McLean VA
Native Hawaiian Fishermans Association, Honolulu HI
Native Resources Developer, Inc., Pago Pago AS
Nayong Pilipinas, Los Angeles CA
Neighborhood Foundation, Inc., Inglewood CA
Never Forgotten, Incorporated, Fairfield CA
New Life Family & Community Service, Los Angeles CA
New Life Full Gospel Ministries, North Hollywood CA
Ngina Associates, Lynwood CA
Nippon Bunka Jyuku Shikibu, Honolulu HI
NOMA Foundation, Los Angeles CA
North Carolina State Museum of Exhibits, Durham NC
Northern California Cancer Pain Initiative, San Francisco CA
Novel Approach, Inc., Arlington VA
Oak Park Community Arts Groups, Sacramento CA
Oakland Point Historic Interpretive Center, Oakland CA
Omega M Corporation, Pelsor AR
Omega Psi Phi Fraternities Phi Beta Beta Charities, Inglewood CA
Opportunities, Inc., Milford CT
Organ Transplant Headquarter of California, Van Nuys CA
Papa's Ark of Safety, Inc., Atoka OK
Parents Union, San Dimas CA
Patterson Family Enrichment and Community Awareness Association, Patterson CA
Paul Armas Memorial, Duarte CA
Pedro Zamora Foundation, Los Angeles CA
Pekin Area Swim Team, Pekin IL
Penns Grove Historical Society, Penns Grove NJ
Peoples Legal Front, Inc., Springfield MO
Pomona Valley Soccer League, Pomona CA
Predators Hockey Booster Club, Bound Brook NJ
Proactive Patient, Inc., Beverly Hills CA
Project Renewal, Honolulu HI
Proverbs Housing Development, Inc., New Orleans LA
Pulaski Enterprise Community Alliance, Inc., Little Rock AR
R W McQuarters N I T T Foundation, Inc., Tulsa OK
Ragin-Cajun Amateur Boxing Club, Lafayette LA
Reap Worldwide Ministries, Whitties CA
Renaisance Track Club, San Francisco CA
Resurrection of the Lord Group, Waipahu HI
Robert Gilchrist Foundation, Irvine CA
Robertson Boulevard Community Residence, Los Angeles CA
Rock & Roll Library, Inc., Allston MA
Roosevelt Park Parents Association, Los Angeles CA
Royal Hawaiian Institute for Land Mine Removal & Reform, Honolulu HI
S & S Payees, Wichita KS
Sacramento International Gay and Lesbian Film Festival, Sacramento CA
Samahang Silang, Los Angeles CA
Samaran Outreach Home for Families With Children, Los Angeles CA
San Francisco Wind Orchestras, Incorporated, San Francisco CA
Saroyan Social Services, Los Angeles CA
Scenic Hawaii, Inc., Honolulu HI
S C O P E Residential Treatment Facility for Abused Girls, Glendale CA
Second District Education & Policy Foundation, Burbank CA
Share-A-Chair, Inc., St. Cloud MN
Shepherds Flock, Inc., Austin TX
Silicon Valley Football Classic, Inc., San Jose CA
Silicon Valley Soccer Association, Redwood City CA
Silver Creek Glider Club, Ltd., New Douglas IL
Single Parent Family Resource Center, Renton WA
Sisters to Sisters Women's Prayer Ministry, Inc., St. Petersburg FL
Skippy Foundation, Lake View Terrace CA
S L I McLaughlin, House, Inc., Woburn MA
South Gate Boys Basketball Association, Southgate CA
Southern Wake Community Outreach Ct, Raleigh NC
Sovereign Nations Cultural Preservation Center, Sawyer MN
St. Clair County Toys for Kids, Inc., Pell City AL
Sunnyvale Alliance Youth Soccer League, Sunnyvale CA
Sustainable Communities, Honolulu HI
TCP-110, Honolulu HI
Technical Advancement and Development, Inc., El Ceritto CA
Themus Spencer Learning Center, Oakland CA
Three Rivers Wind Symphony, Incorporated, Fort Wayne IN
T J Striders Youth Track and Field Club, San Bernardino CA
T.J's Shelter Services & Beyond, Los Angeles CA
Troy Main Street, Maryville IL
T R U S T Teens Recognizing the Urgency of Structured Training, Desoto TX
Ultimate Lee Magazine, Inc., Fort Myers FL
Unicentro Corporation, Los Angeles CA
United for Youth Corporation, Arkadelphia AR
United States Little League Volleyball Association, Santa Monica CA
Universal Education Center for the Visual and Performing Arts, Inc., Sherman Oaks CA
Upward Mobility Association, Oakland CA
Urban Housing Program, Inc., Los Angeles CA
Varian Fry Institute, Burbank CA
Vegan Aloha, Inc., Haiku HI
Venture West Theater Company, Los Angeles CA
Vietnamese Cultural House, Pomona CA
Villa Aurora Institute, Inc., Pacific Palisades CA
Voluntary Committee of Lawyers, Inc., New York NY
Volunteer Center of Alliance, Burlington NC
Waikoloa Recreation Association, Waikoloa HI
Waismann Foundation, Beverly Hills CA
Waldorf Institute of Los Angeles, N. Hollywood CA
War Prevention Institute, San Mateo CA
Wave Riders Against Drugs, Keaha HI
Waysata Boys Basketball Association, Plymouth MN
We Dream Too, Inc., Mt. Pleasant SC
Wellness Institute, Los Angeles CA
Wesley Comprehensive Health Specialists, Hermosa Beach CA
Westminster Services, Inc., Orlando FL
Westview Services, Anaheim CA
Willow Brook Institute of International Relations, Inc., Bethesda MD
Womens Community Development Coalition, Inc., San Francisco CA
Womens World Cup 1999 Organizing Committee, Inc., Sierra Madre CA
Word of Life Family Outreach Center, Inc., Baltimore MD
Working Together, Seattle WA
World Without Litter Alliance, Athens OH
Worlds Light, Downey CA
Worldwide Campus for Kids, Brentwood CA
Yang-Na Institute, Studio City CA
Young Minds in Motion, San Francisco CA
Youth Re-Entry Program, Rodeo CA
Youth to Youth, Freeport ME
Yuma Orchestra Association, Yuma AZ
Zealous Academic Computing Organization, Pasadena CA

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.

Announcement 2005-21

Deletions From Cumulative List of Organizations Contributions to Which are Deductible Under Section 170 of the Code

The names of organizations that no longer qualify as organizations described in section 170(c)(2) of the Internal Revenue Code of 1986 are listed below.

Generally, the Service will not disallow deductions for contributions made to a listed organization on or before the date of announcement in the Internal Revenue Bulletin that an organization no longer qualifies. However, the Service is not precluded from disallowing a deduction for any contributions made after an organization ceases to qualify under section 170(c)(2) if the organization has not timely filed a suit for declaratory judgment under section 7428 and if the contributor (1) had knowledge of the revocation of the ruling or determination letter, (2) was aware that such revocation was imminent, or (3) was in part responsible for or was aware of the activities or omissions of the organization that brought about this revocation.

If on the other hand a suit for declaratory judgment has been timely filed, contributions from individuals and organizations described in section 170(c)(2) that are otherwise allowable will continue to be deductible. Protection under section 7428(c) would begin on January 24, 2005, and would end on the date the court first determines that the organization is not described in section 170(c)(2) as more particularly set forth in section 7428(c)(1). For individual contributors, the maximum deduction protected is $1,000, with a husband and wife treated as one contributor. This benefit is not extended to any individual, in whole or in part, for the acts or omissions of the organization that were the basis for revocation.

Org. Name City State
Little League Baseball, Inc. 2321213 Schenectady LL Schenectady NY
Org. Name City State
Jane Withers Wonderful World of Dolls and Teddy Bears Studio City CA

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 2004-27 through 2004-52 is in Internal Revenue Bulletin 2004-52, dated December 27, 2004.

Bulletins 2005-1 through 2005-12

 

Announcements

Article Issue Link Page
2005-1 2005-1 I.R.B. 2005-1 257
2005-2 2005-2 I.R.B. 2005-2 319
2005-3 2005-2 I.R.B. 2005-2 270
2005-4 2005-2 I.R.B. 2005-2 319
2005-5 2005-3 I.R.B. 2005-3 353
2005-6 2005-4 I.R.B. 2005-4 377
2005-7 2005-4 I.R.B. 2005-4 377
2005-8 2005-4 I.R.B. 2005-4 380
2005-9 2005-4 I.R.B. 2005-4 380
2005-10 2005-5 I.R.B. 2005-5 450
2005-11 2005-5 I.R.B. 2005-5 451
2005-12 2005-7 I.R.B. 2005-7 555
2005-13 2005-8 I.R.B. 2005-8 627
2005-14 2005-9 I.R.B. 2005-9 653
2005-15 2005-9 I.R.B. 2005-9 654
2005-16 2005-10 I.R.B. 2005-10 702
2005-17 2005-10 I.R.B. 2005-10 673
2005-18 2005-9 I.R.B. 2005-9 660
2005-19 2005-11 I.R.B. 2005-11 744
2005-20 2005-12 I.R.B. 2005-12  
2005-21 2005-12 I.R.B. 2005-12  

 

 

Notices

Article Issue Link Page
2005-1 2005-2 I.R.B. 2005-2 274
2005-2 2005-3 I.R.B. 2005-3 337
2005-3 2005-5 I.R.B. 2005-5 447
2005-4 2005-2 I.R.B. 2005-2 289
2005-5 2005-3 I.R.B. 2005-3 337
2005-6 2005-5 I.R.B. 2005-5 448
2005-7 2005-3 I.R.B. 2005-3 340
2005-8 2005-4 I.R.B. 2005-4 368
2005-9 2005-4 I.R.B. 2005-4 369
2005-10 2005-6 I.R.B. 2005-6 474
2005-11 2005-7 I.R.B. 2005-7 493
2005-12 2005-7 I.R.B. 2005-7 494
2005-13 2005-9 I.R.B. 2005-9 630
2005-14 2005-7 I.R.B. 2005-7 498
2005-15 2005-7 I.R.B. 2005-7 527
2005-16 2005-8 I.R.B. 2005-8 605
2005-17 2005-8 I.R.B. 2005-8 606
2005-18 2005-9 I.R.B. 2005-9 634
2005-19 2005-9 I.R.B. 2005-9 634
2005-20 2005-9 I.R.B. 2005-9 635
2005-21 2005-11 I.R.B. 2005-11 727
2005-22 2005-12 I.R.B. 2005-12  
2005-23 2005-11 I.R.B. 2005-11 732
2005-24 2005-12 I.R.B. 2005-12  
2005-26 2005-12 I.R.B. 2005-12  

 

 

Proposed Regulations

Article Issue Link Page
117969-00 2005-7 I.R.B. 2005-7 533
125628-01 2005-7 I.R.B. 2005-7 536
129709-03 2005-3 I.R.B. 2005-3 351
148867-03 2005-9 I.R.B. 2005-9 646
130370-04 2005-8 I.R.B. 2005-8 608
130671-04 2005-10 I.R.B. 2005-10 694
131128-04 2005-11 I.R.B. 2005-11 733
139683-04 2005-4 I.R.B. 2005-4 371
152914-04 2005-9 I.R.B. 2005-9 650
152945-04 2005-6 I.R.B. 2005-6 484
159824-04 2005-4 I.R.B. 2005-4 372

 

 

Revenue Procedures

Article Issue Link Page
2005-1 2005-1 I.R.B. 2005-1 1
2005-2 2005-1 I.R.B. 2005-1 86
2005-3 2005-1 I.R.B. 2005-1 118
2005-4 2005-1 I.R.B. 2005-1 128
2005-5 2005-1 I.R.B. 2005-1 170
2005-6 2005-1 I.R.B. 2005-1 200
2005-7 2005-1 I.R.B. 2005-1 240
2005-8 2005-1 I.R.B. 2005-1 243
2005-9 2005-2 I.R.B. 2005-2 303
2005-10 2005-3 I.R.B. 2005-3 341
2005-11 2005-2 I.R.B. 2005-2 307
2005-12 2005-2 I.R.B. 2005-2 311
2005-13 2005-12 I.R.B. 2005-12  
2005-14 2005-7 I.R.B. 2005-7 528
2005-15 2005-9 I.R.B. 2005-9 638
2005-16 2005-10 I.R.B. 2005-10 674

 

 

Revenue Rulings

Article Issue Link Page
2005-1 2005-2 I.R.B. 2005-2 258
2005-2 2005-2 I.R.B. 2005-2 259
2005-3 2005-3 I.R.B. 2005-3 334
2005-4 2005-4 I.R.B. 2005-4 366
2005-5 2005-5 I.R.B. 2005-5 445
2005-6 2005-6 I.R.B. 2005-6 471
2005-7 2005-6 I.R.B. 2005-6 464
2005-8 2005-6 I.R.B. 2005-6 466
2005-9 2005-6 I.R.B. 2005-6 470
2005-10 2005-7 I.R.B. 2005-7 492
2005-12 2005-9 I.R.B. 2005-9 628
2005-13 2005-10 I.R.B. 2005-10 664
2005-14 2005-12 I.R.B. 2005-12  
2005-15 2005-11 I.R.B. 2005-11 720

 

 

Tax Conventions

Article Issue Link Page
2005-3 2005-2 I.R.B. 2005-2 270
2005-17 2005-10 I.R.B. 2005-10 673

 

 

Treasury Decisions

Article Issue Link Page
9164 2005-3 I.R.B. 2005-3 320
9165 2005-4 I.R.B. 2005-4 357
9166 2005-8 I.R.B. 2005-8 558
9167 2005-2 I.R.B. 2005-2 261
9168 2005-4 I.R.B. 2005-4 354
9169 2005-5 I.R.B. 2005-5 381
9170 2005-4 I.R.B. 2005-4 363
9171 2005-6 I.R.B. 2005-6 452
9172 2005-6 I.R.B. 2005-6 468
9173 2005-8 I.R.B. 2005-8 557
9174 2005-9 I.R.B. 2005-9 629
9175 2005-10 I.R.B. 2005-10 665
9176 2005-10 I.R.B. 2005-10 661
9177 2005-10 I.R.B. 2005-10 671
9178 2005-11 I.R.B. 2005-11 708
9179 2005-11 I.R.B. 2005-11 707
9180 2005-11 I.R.B. 2005-11 714
9181 2005-11 I.R.B. 2005-11 717
9182 2005-11 I.R.B. 2005-11 713
9183 2005-12 I.R.B. 2005-12  
9184 2005-12 I.R.B. 2005-12  
9185 2005-12 I.R.B. 2005-12  

 

Effect of Current Actions on Previously Published Items

Finding List of Current Actions on Previously Published Items

A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2004-27 through 2004-52 is in Internal Revenue Bulletin 2004-52, dated December 27, 2004.

Bulletins 2005-1 through 2005-12

 

Announcements

Old Article Action New Article Issue Link Page
2001-77 Modified by Rev. Proc. 2005-16 2005-10 I.R.B. 2005-10 674

 

 

Notices

Old Article Action New Article Issue Link Page
88-30 Obsoleted by Notice 2005-4 2005-2 I.R.B. 2005-2 289
88-132 Obsoleted by Notice 2005-4 2005-2 I.R.B. 2005-2 289
89-29 Obsoleted by Notice 2005-4 2005-2 I.R.B. 2005-2 289
89-38 Obsoleted by Notice 2005-4 2005-2 I.R.B. 2005-2 289
2004-80 Clarified and modified by Notice 2005-22 2005-12 I.R.B. 2005-12  
2004-80 Updated by Notice 2005-17 2005-8 I.R.B. 2005-8 606
2005-4 Modified by Notice 2005-24 2005-12 I.R.B. 2005-12  
2005-17 Clarified and modified by Notice 2005-22 2005-12 I.R.B. 2005-12  

 

 

Proposed Regulations

Old Article Action New Article Issue Link Page
REG-149519-03 Corrected by Ann. 2005-11 2005-5 I.R.B. 2005-5 451
REG-114726-04 Corrected by Ann. 2005-10 2005-5 I.R.B. 2005-5 450

 

 

Revenue Procedures

Old Article Action New Article Issue Link Page
98-16 Modified and superseded by Rev. Proc. 2005-11 2005-2 I.R.B. 2005-2 307
2000-20 Modified and superseded by Rev. Proc. 2005-16 2005-10 I.R.B. 2005-10 674
2001-22 Superseded by Rev. Proc. 2005-12 2005-2 I.R.B. 2005-2 311
2002-9 Modified and amplified by Rev. Proc. 2005-9 2005-2 I.R.B. 2005-2 303
2004-1 Superseded by Rev. Proc. 2005-1 2005-1 I.R.B. 2005-1 1
2004-2 Superseded by Rev. Proc. 2005-2 2005-1 I.R.B. 2005-1 86
2004-3 Superseded by Rev. Proc. 2005-3 2005-1 I.R.B. 2005-1 118
2004-4 Superseded by Rev. Proc. 2005-4 2005-1 I.R.B. 2005-1 128
2004-5 Superseded by Rev. Proc. 2005-5 2005-1 I.R.B. 2005-1 170
2004-6 Superseded by Rev. Proc. 2005-6 2005-1 I.R.B. 2005-1 200
2004-7 Superseded by Rev. Proc. 2005-7 2005-1 I.R.B. 2005-1 240
2004-8 Superseded by Rev. Proc. 2005-8 2005-1 I.R.B. 2005-1 243
2004-18 Obsoleted in part by Rev. Proc. 2005-15 2005-9 I.R.B. 2005-9 638
2004-35 Corrected by Ann. 2005-4 2005-2 I.R.B. 2005-2 319
2004-60 Superseded by Rev. Proc. 2005-10 2005-3 I.R.B. 2005-3 341
2005-6 Modified by Rev. Proc. 2005-16 2005-10 I.R.B. 2005-10 674
2005-8 Modified by Rev. Proc. 2005-16 2005-10 I.R.B. 2005-10 674

 

 

Revenue Rulings

Old Article Action New Article Issue Link Page
69-516 Obsoleted by T.D. 9182 2005-11 I.R.B. 2005-11 713
77-415 Obsoleted by T.D. 9182 2005-11 I.R.B. 2005-11 713
77-479 Obsoleted by T.D. 9182 2005-11 I.R.B. 2005-11 713
82-34 Obsoleted by T.D. 9182 2005-11 I.R.B. 2005-11 713
92-63 Modified and superseded by Rev. Rul. 2005-3 2005-3 I.R.B. 2005-3 334
95-63 Modified and superseded by Rev. Rul. 2005-3 2005-3 I.R.B. 2005-3 334
2004-43 Revoked by Rev. Rul. 2005-10 2005-7 I.R.B. 2005-7 492
2004-103 Superseded by Rev. Rul. 2005-3 2005-3 I.R.B. 2005-3 334

 

 

Treasury Decisions

Old Article Action New Article Issue Link Page
9170 Corrected by Ann. 2005-13 2005-8 I.R.B. 2005-8 627

 

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