July 2006 Plain Language Regulations


Exclusion of Employees of 501(c)(3) Organizations in 401(k) and 401(m) Plans
An employer's qualified plan must cover a minimum number of the employees. The final regulations permit, in certain circumstances, employees of tax-exempt organizations described in section 501(c)(3) to be excluded for the purpose of testing whether a sections 401(k)or 401(m) plan meets these minimum coverage requirements.
TD 9275.  Published July 21, 2006.
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United States Dollar Approximate Separate Transactions Method
Generally, a taxpayer and any of its business units must make all determinations under the Internal Revenue Code in the functional currency of such taxpayer or unit. A taxpayer’s functional currency is, depending on the circumstances, either the U.S. dollar, or in the case of a qualified business unit, the currency of the economic environment in which it conducts a significant amount of activities and in which it keeps its books and records. A taxpayer’s qualified business unit which would otherwise use a functional currency that is hyperinflationary must use the dollar as its functional currency and must compute its income and loss under a method of accounting known as the dollar approximate separate transactions method.  This method is intended to correct for the effects of hyperinflation on the calculation of exchange gain or loss.  This regulation provides translation rates that must be used when translating into dollars amounts transferred by a business unit to its home office or parent corporation for computing dollar approximate separate transactions method gain or loss. 
REG-118897-06.  Published July 13, 2006.
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Reporting of Gross Proceeds Payments to Attorneys
These final regulations relate to information reporting under section 6045(f) of the Internal Revenue Code, relating to payments of gross proceeds to attorneys in connection with legal services. The regulations reflect changes to the law made by the Taxpayer Relief Act of 1997.    The regulations will affect attorneys who receive payments of gross proceeds on behalf of their clients, and certain payors (for example, defendants in lawsuits and their insurance companies and agents) that in the course of their trades or businesses make payments to these attorneys.  These regulations also include amendments to the regulations under section 6041, with respect to payments for legal services.
TD 9270.  Published July 13, 2006.
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Disclosure of Return Information by Certain Officers and Employees for Investigative Purposes
This document contains final regulations relating to the disclosure of return information pursuant to section 6103(k)(6) of the Internal Revenue Code (Code). The final regulations describe the circumstances under which internal revenue and Office of Treasury Inspector General for Tax Administration (TIGTA) employees may disclose return information to the extent necessary to obtain information or to accomplish properly any activity connected with certain official duties.  These regulations clarify and elaborate on the facts and circumstances in which disclosure pursuant to section 6103(k)(6) is authorized.
TD 9274.  Published July 11, 2006.
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Effect of Elections in Certain Multi-Step Transactions
These final regulations involve the use of an election to suspend the step transaction doctrine in certain multi-step transactions involving a first step qualified stock purchase. These final regulations are necessary in order to provide taxpayers with guidance regarding the validity of certain elections made under section 338(h)(10). 
TD 9271.  Published July 5, 2006.
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