Bulletin No. 1998–25

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Internal Revenue

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Bulletin No. 1998–25

June 22, 1998

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. 98–31, page 4.

Low-income housing credit; satisfactory bond; “bond

factor” amounts for the period April through June

1998. This ruling announces the monthly bond factor

amounts to be used by taxpayers who dispose of qualified

low-income buildings or interests therein during the period

April through June 1998.

Rev. Rul. 98–32, page 4.

Interest rates; underpayments and overpayments. The

rate of interest determined under section 6621 of the Code

for the calendar quarter beginning July 1, 1998, will be 7

percent for overpayments, 8 percent for underpayments,

and 10 percent for large corporate underpayments. The rate

of interest paid on the portion of a corporate overpayment

exceeding $10,000 is 5.5 percent.

before an employee’s compensation can be contributed to

an employer’s section 401(k) plan in the absence of an affirmative election by the employee.

Notice 98–33, page 10.

Weighted average interest rate update. Guidelines are

set forth for determining for June 1998, the weighted average interest rate and the resulting permissible range of interest rates used to calculate current liability for purposes of

the full funding limitation of section 412(c)(7) of the Code as

amended by the Omnibus Budget Reconciliation Act of 1987

and by the Uruguay Round Agreements Act (GATT).

EXEMPT ORGANIZATIONS

Announcement 98–54, page 11.

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

EMPLOYEE PLANS

Rev. Rul. 98–30, page 8.

Qualified cash or deferred arrangement; participation. This ruling describes certain criteria that must be met

Finding Lists begin on page 17.

Announcement of the Expedited Suspension of Attorneys, Certified Public Accountants, Enrolled Agents, and Enrolled

Actuaries From Practice Before the Internal Revenue Service begins on page 14.

Department of the Treasury

Internal Revenue Service

Mission of the Service

ucts and services; and perform in a manner warranting

the highest degree of public confidence in our integrity, efficiency, and fairness.

The purpose of the Internal Revenue Service is to collect

the proper amount of tax revenue at the least cost; serve

the public by continually improving the quality of our prod-

Statement of Principles

of Internal Revenue

Tax Administration

The Service also has the responsibility of applying and

administering the law in a reasonable, practical manner.

Issues should only be raised by examining officers when

they have merit, never arbitrarily or for trading purposes.

At the same time, the examining officer should never hesitate to raise a meritorious issue. It is also important that

care be exercised not to raise an issue or to ask a court to

adopt a position inconsistent with an established Service

position.

The function of the Internal Revenue Service is to administer the Internal Revenue Code. Tax policy for raising revenue

is determined by Congress.

With this in mind, it is the duty of the Service to carry out that

policy by correctly applying the laws enacted by Congress;

to determine the reasonable meaning of various Code provisions in light of the Congressional purpose in enacting them;

and to perform this work in a fair and impartial manner, with

neither a government nor a taxpayer point of view.

Administration should be both reasonable and vigorous. It

should be conducted with as little delay as possible and

with great courtesy and considerateness. It should never

try to overreach, and should be reasonable within the

bounds of law and sound administration. It should, however, be vigorous in requiring compliance with law and it

should be relentless in its attack on unreal tax devices and

fraud.

At the heart of administration is interpretation of the Code. It

is the responsibility of each person in the Service, charged

with the duty of interpreting the law, to try to find the true

meaning of the statutory provision and not to adopt a

strained construction in the belief that he or she is “protecting the revenue.” The revenue is properly protected only

when we ascertain and apply the true meaning of the statute.

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 of a permanent nature are consolidated semiannually into Cumulative Bulletins, which are sold

on a single-copy basis.

dures 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.

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.

Part II.—Treaties and Tax Legislation.

This part is divided into two subparts as follows: Subpart A,

Tax Conventions, 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).

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.

Part IV.—Items of General Interest.

With the exception of the Notice of Proposed Rulemaking

and the disbarment and suspension list included in this part,

none of these announcements are consolidated in the Cumulative Bulletins.

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 proce-

The first 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 first Bulletin of the succeeding semiannual period, respectively.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402.

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

Section 42.—Low-Income

Housing Credit

Low-income housing credit; satisfactory

bond; “bond factor” amounts for the period

April through June 1998. This ruling announces

the monthly bond factor amounts to be used by taxpayers who dispose of qualified low-income buildings or interests therein during the period April

through June 1998.

Rev. Rul. 98–31

In Rev. Rul. 90–60, 1990–2 C.B. 3, the

Internal Revenue Service provided guidance to taxpayers concerning the general

methodology used by the Treasury Department in computing the bond factor

amounts used in calculating the amount of

bond considered satisfactory by the Secretary under § 42(j)(6) of the Internal

Revenue Code. It further announced that

the Secretary would publish in the Internal Revenue Bulletin a table of “bond factor” amounts for dispositions occurring

during each calendar month.

This revenue ruling provides in Table 1

the bond factor amounts for calculating

the amount of bond considered satisfactory under § 42(j)(6) for dispositions of

qualified low-income buildings or interests therein during the period April

through June 1998.

Table 1

Rev. Rul. 98–31

Monthly Bond Factor Amounts for Dispositions Expressed

As a Percentage of Total Credits

Calendar Year Building Placed in Service

or, if Section 42(f)(1) Election Was Made,

the Succeeding Calendar Year

Month of

Disposition

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

Apr ’98

May ’98

Jun ’98

61.09

75.25

75.96

75.75

75.54

77.87

77.65

77.44

80.16

79.93

79.71

82.79

82.55

82.31

85.46

85.20

84.95

87.97

87.69

87.43

90.41

90.12

89.85

93.03

92.74

92.46

95.60

95.31

95.05

97.21

For a list of bond factor amounts applicable to dispositions occurring during

other calendar years, see the following

revenue rulings: Rev. Rul. 95–83,

1995–2 C.B. 8, for dispositions occurring

during calendar year 1995; Rev. Rul. 983, 1998–2 I.R.B. 4, for dispositions occurring during the calendar years 1996 and

1997; and Rev. Rul. 98–13, 1998–11

I.R.B. 4, for dispositions occurring the

period January through March 1998.

DRAFTING INFORMATION

The principal author of this revenue

ruling is Jack Malgeri of the Office of Assistant Chief Counsel (Passthroughs and

Special Industries). For further information regarding this revenue ruling, contact

Mr. Malgeri at (202) 622-3040 (not a tollfree call).

Section 6621.— Determination

of Interest Rate

26 CFR 301.6621–1: Interest rate.

Interest rates; underpayments and overpay-

June 22, 1998

ments. The rate of interest determined under section

6621 of the Code for the calendar quarter beginning

July 1, 1998, will be 7 percent for overpayments, 8

percent for underpayments, and 10 percent for large

corporate underpayments. The rate of interest paid

on the portion of a corporate overpayment exceeding $10,000 is 5.5 percent.

Rev. Rul. 98–32

Section 6621 of the Internal Revenue

Code establishes different rates for interest on tax overpayments and interest on

tax underpayments. Under § 6621(a)(1),

the overpayment rate is the sum of the

federal short-term rate plus 2 percentage

points, except the rate for the portion of a

corporate overpayment of tax exceeding

$10,000 for a taxable period is the sum of

the federal short-term rate plus 0.5 of a

percentage point for interest computations

made after December 31, 1994. Under §

6621(a)(2), the underpayment rate is the

sum of the federal short-term rate plus 3

percentage points.

Section 6621(c) provides that for purposes of interest payable under § 6601 on

any large corporate underpayment, the

underpayment rate under § 6621(a)(2) is

determined by substituting “5 percentage

points” for “3 percentage points.” See

§ 6621(c) and § 301.6621–3 of the Regulations on Procedure and Administration

for the definition of a large corporate underpayment and for the rules for determining the applicable date. Section

6621(c) and § 301.6621–3 are generally

effective for periods after December 31,

1990.

Section 6621(b)(1) provides that the

Secretary will determine the federal shortterm rate for the first month in each calendar quarter.

Section 6621(b)(2)(A) provides that the

federal short-term rate determined under

§ 6621(b)(1) for any month applies during

the first calendar quarter beginning after

such month.

Section 6621(b)(3) provides that the

federal short-term rate for any month is

the federal short-term rate determined

during such month by the Secretary in accordance with § 1274(d), rounded to the

nearest full percent (or, if a multiple of

1/2 of 1 percent, the rate is increased to

the next highest full percent).

1998–25 I.R.B.

Notice 88–59, 1988–1 C.B. 546, announced that, in determining the quarterly

interest rates to be used for overpayments

and underpayments of tax under § 6621,

the Internal Revenue Service will use the

federal short-term rate based on daily

compounding because that rate is most

consistent with § 6621 which, pursuant to

§ 6622, is subject to daily compounding.

Rounded to the nearest full percent, the

federal short- term rate based on daily

compounding determined during the

month of April 1998 is 5 percent. Accordingly, an overpayment rate of 7 percent and an underpayment rate of 8 per-

cent are established for the calendar quarter beginning July 1, 1998. The overpayment rate for the portion of a corporate

overpayment exceeding $10,000 for the

calendar quarter beginning July 1, 1998,

is 5.5 percent. The underpayment rate for

large corporate underpayments for the

calendar quarter beginning July 1, 1998,

is 10 percent. These rates apply to

amounts bearing interest during that calendar quarter.

Interest factors for daily compound interest for annual rates of 5.5 percent, 7

percent, 8 percent, and 10 percent are

published in Tables 16, 19, 21, and 25 of

Rev. Proc. 95–17, 1995–1 C.B. 556, 570,

573, 575, and 579.

Annual interest rates to be compounded

daily pursuant to § 6622 that apply for

prior periods are set forth in the tables accompanying this revenue ruling.

DRAFTING INFORMATION

The principal author of this revenue

ruling is Raymond Bailey of the Office of

Assistant Chief Counsel (Income Tax and

Accounting). For further information regarding this revenue ruling, contact Mr.

Bailey on (202) 622-6226 (not a toll-free

call).

TABLE OF INTEREST RATES

PERIODS BEFORE JUL. 1, 1975 — PERIODS ENDING DEC. 31, 1986

OVERPAYMENTS AND UNDERPAYMENTS

PERIOD

RATE

DAILY RATE TABLE

IN 1995–1 C.B.

Before Jul. 1, 1975

Jul. 1, 1975—Jan. 31, 1976

Feb. 1, 1976—Jan. 31, 1978

Feb. 1, 1978—Jan. 31, 1980

Feb. 1, 1980—Jan. 31, 1982

Feb. 1, 1982—Dec. 31, 1982

Jan. 1, 1983—Jun. 30, 1983

Jul. 1, 1983—Dec. 31, 1983

Jan. 1, 1984—Jun. 30, 1984

Jul. 1, 1984—Dec. 31, 1984

Jan. 1, 1985—Jun. 30, 1985

Jul. 1, 1985—Dec. 31, 1985

Jan. 1, 1986—Jun. 30, 1986

Jul. 1, 1986—Dec. 31, 1986

12%

20%

16%

11%

13%

11%

10%

Table 2, pg. 557

Table 4, pg. 559

Table 3, pg. 558

Table 2, pg. 557

Table 5, pg. 560

Table 6, pg. 560

Table 37, pg. 591

Table 27, pg. 581

Table 75, pg. 629

Table 31, pg. 585

Table 27, pg. 581

Table 25 pg. 579

Table 23, pg. 577

1998–25 I.R.B.

June 22, 1998

TABLE OF INTEREST RATES

FROM JAN. 1, 1987 — PRESENT

OVERPAYMENTS

RATE

Jan. 1, 1987—Mar. 31, 1987

Apr. 1, 1987—Jun. 30, 1987

Jul. 1, 1987—Sep. 30, 1987

Oct. 1, 1987—Dec. 31, 1987

Jan. 1, 1988—Mar. 31, 1988

Apr. 1, 1988—Jun. 30, 1988

Jul. 1, 1988—Sep. 30, 1988

Oct. 1, 1988—Dec. 31, 1988

Jan. 1, 1989—Mar. 31, 1989

Apr. 1, 1989—Jun. 30, 1989

Jul. 1, 1989—Sep. 30, 1989

Oct. 1, 1989—Dec. 31, 1989

Jan. 1, 1990—Mar. 31, 1990

Apr. 1, 1990—Jun. 30, 1990

Jul. 1, 1990—Sep. 30, 1990

Oct. 1, 1990—Dec. 31, 1990

Jan. 1, 1991—Mar. 31, 1991

Apr. 1, 1991—Jun. 30, 1991

Jul. 1, 1991—Sep. 30, 1991

Oct. 1, 1991—Dec. 31, 1991

Jan. 1, 1992—Mar. 31, 1992

Apr. 1, 1992—Jun. 30, 1992

Jul. 1, 1992—Sep. 30, 1992

Oct. 1, 1992—Dec. 31, 1992

Jan. 1, 1993—Mar. 31, 1993

Apr. 1, 1993—Jun. 30, 1993

Jul. 1, 1993—Sep. 30, 1993

Oct. 1, 1993—Dec. 31, 1993

Jan. 1, 1994—Mar. 31, 1994

Apr. 1, 1994—Jun. 30, 1994

Jul. 1, 1994—Sep. 30, 1994

Oct. 1, 1994—Dec. 31, 1994

Jan. 1, 1995—Mar. 31, 1995

Apr. 1, 1995—Jun. 30, 1995

Jul. 1, 1995—Sep. 30, 1995

Oct. 1, 1995—Dec. 31, 1995

Jan. 1, 1996—Mar. 31, 1996

Apr. 1, 1996—Jun. 30, 1996

Jul. 1, 1996—Sep. 30, 1996

Oct. 1, 1996—Dec. 31, 1996

Jan. 1, 1997—Mar. 31, 1997

Apr. 1, 1997—Jun. 30, 1997

Jul. 1, 1997—Sep. 30, 1997

Oct. 1, 1997—Dec. 31, 1997

Jan. 1, 1998—Mar. 31, 1998

Apr. 1, 1998—Jun. 30, 1998

Jul. 1, 1998—Sep. 30, 1998

June 22, 1998

10%

11%

10%

TABLE

1995– C.B.

575

577

627

625

627

579

581

579

577

623

621

619

571

573

575

577

575

623

621

623

575

573

UNDERPAYMENTS

RATE

TABLE

1995–1 C.B.

10%

11%

10%

11%

12%

11%

10%

577

579

629

627

629

581

583

581

579

625

623

621

573

575

577

579

577

625

623

625

577

575

1998–25 I.R.B.

TABLE OF INTEREST RATES FOR LARGE CORPORATE UNDERPAYMENTS

FROM JANUARY 1, 1991 — PRESENT

Jan. 1, 1991—Mar. 31, 1991

Apr. 1, 1991—Jun. 30, 1991

Jul. 1, 1991—Sep. 30, 1991

Oct. 1, 1991—Dec. 31, 1991

Jan. 1, 1992—Mar. 31, 1992

Apr. 1, 1992—Jun. 30, 1992

Jul. 1, 1992—Sep. 30, 1992

Oct. 1, 1992—Dec. 31, 1992

Jan. 1, 1993—Mar. 31, 1993

Apr. 1, 1993—Jun. 30, 1993

Jul. 1, 1993—Sep. 30, 1993

Oct. 1, 1993—Dec. 31, 1993

Jan. 1, 1994—Mar. 31, 1994

Apr. 1, 1994—Jun. 30, 1994

Jul. 1, 1994—Sep. 30, 1994

Oct. 1, 1994—Dec. 31, 1994

Jan. 1, 1995—Mar. 31, 1995

Apr. 1, 1995—Jun. 30, 1995

Jul. 1, 1995—Sep. 30, 1995

Oct. 1, 1995—Dec. 31, 1995

Jan. 1, 1996—Mar. 31, 1996

Apr. 1, 1996—Jun. 30, 1996

Jul. 1, 1996—Sep. 30, 1996

Oct. 1, 1996—Dec. 31, 1996

Jan. 1, 1997—Mar. 31, 1997

Apr. 1, 1997—Jun. 30, 1997

Jul. 1, 1997—Sep. 30, 1997

Oct. 1, 1997—Dec. 31, 1997

Jan. 1, 1998—Mar. 31, 1998

Apr. 1, 1998—Jun. 30, 1998

Jul. 1, 1998—Sep. 30, 1998

RATE

TABLE

1995–1 C.B.

13%

12%

11%

10%

11%

12%

11%

10%

11%

10%

585

583

629

627

625

577

579

581

583

581

629

627

629

581

579

TABLE OF INTEREST RATES FOR CORPORATE

OVERPAYMENTS EXCEEDING $10,000

FROM JANUARY 1, 1995 — PRESENT

RATE

TABLE

1995–1 C.B.

6.5%

7.5%

6.5%

5.5%

6.5%

5.5%

Jan. 1, 1995—Mar. 31, 1995

Apr. 1, 1995—Jun. 30, 1995

Jul. 1, 1995—Sep. 30, 1995

Oct. 1, 1995—Dec. 31, 1995

Jan. 1, 1996—Mar. 31, 1996

Apr. 1, 1996—Jun. 30, 1996

Jul. 1, 1996—Sep. 30, 1996

Oct. 1, 1996—Dec. 31, 1996

Jan. 1, 1997—Mar. 31, 1997

Apr. 1, 1997—Jun. 30, 1997

Jul. 1, 1997—Sep. 30, 1997

Oct. 1, 1997—Dec. 31, 1997

Jan. 1, 1998—Mar. 31, 1998

Apr. 1, 1998—Jun. 30, 1998

Jul. 1. 1998—Sep. 30, 1998

1998–25 I.R.B.

572

574

572

620

618

620

572

570

June 22, 1998

Section 401.—Qualified

Pension, Profit-Sharing and

Stock Bonus Plans, etc.

26 CFR 1.401(k)–1: Certain cash or deferred

arrangements.

Qualified cash or deferred arrangement; participation. This revenue ruling describes certain criteria that must be met before an employee’s compensation can be contributed to an employer’s

section 401(k) plan in the absence of an affirmative

election by the employee.

Rev. Rul. 98–30

ISSUE

Will employer contributions to a profitsharing plan fail to be considered elective

contributions, within the meaning of

§ 1.401(k)–1(g)(3) of the Income Tax

Regulations, made under a qualified cash

or deferred arrangement, within the

meaning of § 401(k) of the Internal Revenue Code, merely because they are made

pursuant to an arrangement under which,

in any case in which an employee does

not affirmatively elect to receive cash, the

employee’s compensation is reduced by a

fixed percentage and that amount is contributed on the employee’s behalf to the

plan?

FACTS

Employer X maintains Plan A, a profitsharing plan intended to satisfy the requirements of § 401(a), including

§§ 401(k) and 401(m). Under Plan A, any

employee of Employer X, including an

employee with less than one year of service, may elect to have Employer X make

contributions on the employee’s behalf to

Plan A in lieu of receiving that amount as

cash compensation that would otherwise

be payable to the employee. The employee may designate the amount of these

compensation reduction contributions as a

percentage of the employee’s compensation, subject to certain limitations set

forth in the plan.

Under Plan A, a newly hired employee

is immediately eligible to participate in

Plan A. If the employee does not affirmatively elect to receive cash or have a specified amount contributed to Plan A, his or

her compensation is automatically reduced by 3 percent and this amount is

contributed to Plan A. An election not to

make compensation reduction contribu-

June 22, 1998

tions or to contribute a different percentage of compensation can be made at any

time. The election is effective for the first

pay period and subsequent pay periods

(until superseded by a subsequent election) if filed when the employee is hired

or if filed within a reasonable period

thereafter ending before the compensation

for the first pay period is currently available. Thus, if an employee files an election to receive cash in lieu of compensation reduction contributions and the

election is filed when the employee is

hired or within a reasonable period thereafter ending before the compensation is

currently available (and if the employee

does not later elect to have compensation

reduction contributions made), then no

compensation reduction contributions for

the first pay period are made on the employee’s behalf to Plan A. Elections filed

at a later date are effective for payroll periods beginning in the month next following the date the election is filed.

At the time an employee is hired, the

employee receives a notice that explains

the automatic compensation reduction

election and the employee’s right to elect

to have no such compensation reduction

contributions made to the plan or to alter

the amount of those contributions, including the procedure for exercising that right

and the timing for implementation of any

such election. The employee is subsequently notified annually of his or her

compensation reduction percentage and

the employee’s right to change the percentage.

Plan A provides that compensation reduction contributions are immediately

nonforfeitable and, if the employee has

not attained age 591⁄2, cannot be distributed prior to the employee’s retirement,

death, or separation from service except

in the case of hardship (as defined in the

plan). Plan A also provides that, for each

employee who has at least 1 year of service, Employer X will make matching

contributions to Plan A on account of the

employee’s compensation reduction contributions up to a specified percentage of

the employee’s compensation. Plan A

does not permit after-tax employee contributions.

Plan A provides that both matching

contributions and compensation reduction

contributions will be invested in accordance with the participant’s election

among a broad range of investment funds

held by the trustee or, if no investment

election is made by the participant, in the

trust’s balanced fund which includes both

diversified equity and fixed income investments.1

LAW AND ANALYSIS

Section 401(k) provides that a profitsharing or stock bonus plan, a pre-ERISA

money purchase plan, or a rural cooperative plan can meet the requirements of

§ 401(a) even if it includes a qualified

cash or deferred arrangement. Section

401(k) also sets forth the requirements

that a cash or deferred arrangement must

satisfy in order to be a qualified cash or

deferred arrangement.

Section 1.401(k)–1(a)(2)(i) defines a

cash or deferred arrangement as an

arrangement under which an eligible employee may make a cash or deferred election with respect to contributions to, or

accruals or other benefits under, a plan

that is intended to satisfy the requirements

of § 401(a). Section 1.401(k)–1(a)(2)(ii)

provides that a cash or deferred arrangement does not include an arrangement

under which amounts contributed under a

plan at an employee’s election are designated or treated at the time of contribution

as after-tax employee contributions.

Section 1.401(k)–1(a)(3)(i) defines a

cash or deferred election as any election

(or modification of an earlier election) by

an employee to have the employer either

provide an amount to the employee in the

form of cash (or some other taxable benefit) that is not currently available or contribute an amount to a trust (or provide an

accrual or other benefit) under a plan deferring the receipt of compensation. Section 1.401(k)–1(a)(3)(iv) provides that a

1The Department of Labor has advised Treasury

and the Service that, under Title I of the Employee

Retirement Income Security Act of 1974 (ERISA),

fiduciaries of a plan must ensure that the plan is administered prudently and solely in the interest of

plan participants and beneficiaries. While ERISA §

404(c) may serve to relieve certain fiduciaries from

liability when participants or beneficiaries exercise

control over the assets in their individual accounts,

the Department of Labor has taken the position that

a participant or beneficiary will not be considered to

have exercised control when the participant or beneficiary is merely apprised of investments that will be

made on his or her behalf in the absence of instructions to the contrary. See 29 CFR § 2550.404c–1

and 57 FR 46924.

1998–25 I.R.B.

cash or deferred election does not include

a one-time irrevocable election, made at

the time an employee commences employment with the employer or upon the

employee’s first becoming eligible under

any plan of the employer, to have contributions made by the employer on the employee’s behalf to the plan (or to any other

plan of the employer) equal to a specified

amount or percentage of the employee’s

compensation.

Section 1.401(k)–1(e)(2) provides generally that a qualified cash or deferred

arrangement must provide that the

amount that each eligible employee may

defer as an elective contribution is available to the employee in cash.

Section 1.401(k)–1(g)(3) defines elective contributions as employer contributions made to a plan that were subject to a

cash or deferred election under a cash or

deferred arrangement. Such contributions

are elective contributions without regard

to whether the cash or deferred arrangement is a qualified cash or deferred

arrangement.

The definition of a cash or deferred

election in § 1.401(k)–1(a)(3)(i) requires

that the employee have an election between the employer paying cash (or some

other taxable benefit) to the employee or

making a contribution to a trust on behalf

of the employee. The regulation does not

require that the employee receive an

amount in cash in any case in which the

employee does not make an affirmative

election to have that amount contributed

to the trust. Thus, a cash or deferred election will not fail to be made under a qualified cash or deferred arrangement merely

because, when an employee fails to make

an affirmative election with respect to an

amount of compensation, that amount is

contributed on the employee’s behalf to a

trust, provided that the employee had an

effective opportunity to elect to receive

that amount in cash. The employee has

an effective opportunity to elect to receive

an amount in cash as required under

§ 1.401(k)–1(a)(3)(i) if the employee receives notice of the availability of the

election and the employee has a reasonable period to make the election before

the date on which the cash is currently

available.

1998–25 I.R.B.

If Plan A were to permit after-tax employee contributions, then the amounts

contributed to the plan would have to be

designated or treated, at the time of the

contribution, as pre-tax compensation reduction contributions or after-tax employee contributions.

Compensation reduction contributions

made by Employer X to Plan A (including

those made if the employee has not filed

an election to the contrary) are amounts

contributed pursuant to a procedure under

which the employee receives a notice explaining his or her rights to have no compensation reduction contribution and,

after receiving the notice, the employee

has a reasonable period before the cash is

currently available in which to elect to receive the cash in lieu of having an employer contribution made to the plan in

that amount. Thus, an eligible employee

has an effective opportunity to elect to receive cash or have a contribution made to

the plan on the employee’s behalf. In addition, compensation reduction contributions made under the plan are not contributions made pursuant to a one-time

irrevocable election because the employee can change the election in the future. Consequently, the compensation reduction contributions under Plan A are

made pursuant to a cash or deferred election and satisfy the requirement in

§ 1.401(k)–1(a)(3)(i) that the amount that

each eligible employee may defer as an

elective contribution be available to the

employee in cash. The result would be

the same if the plan required a period of

service (permitted under § 401(k)(2)(D))

before an employee became eligible for

elective contributions.

HOLDING

Where, as in this case, an eligible employee has an effective opportunity to

elect to receive cash or have that amount

contributed by the employer to a profitsharing plan, those employer contributions made on the employee’s behalf to

the plan in lieu of receipt of cash compensation will not fail to be considered elective contributions within the meaning of

§ 1.401(k)–1(g)(3) made under a qualified cash or deferred arrangement within

the meaning of § 401(k) merely because

they are made pursuant to an arrangement

under which, in any case in which an employee does not affirmatively elect to receive cash, the employee’s compensation

is reduced by a fixed percentage and that

amount is contributed on the employee’s

behalf to the plan.

PAPERWORK REDUCTION ACT

The collection of information contained in this revenue ruling has been reviewed and approved by the Office of

Management and Budget (OMB) in accordance with the Paperwork Reduction

Act (44 U.S.C. 3507) under control number 1545-1605.

An agency may not conduct or sponsor,

and a person is not required to respond to,

a collection of information unless the collection of information displays a valid

OMB control number.

The collection of information in this

revenue ruling is in the sixth paragraph in

the section headed “LAW AND ANALYSIS.” This information is required in

order for certain employee elections to

meet the requirements of § 401(k). The

collection of information is required to

obtain a benefit. The likely respondents

are businesses or other for-profit institutions, and not-for-profit institutions.

The estimated total annual reporting

burden is 1,000 hours. The estimated annual burden per respondent is 1 hour. The

estimated number of respondents is 1,000.

Books or records relating to a collection of information must be retained as

long as their contents may become material in the administration of any Internal

Revenue law. Generally, tax returns and

tax return information are confidential, as

required by 26 U.S.C. 6103.

DRAFTING INFORMATION

The principal author of this revenue

ruling is Roger Kuehnle of the Employee

Plans Division. For further information

regarding this revenue ruling, call the

Employee Plans Division’s taxpayer assistance telephone service at (202) 6226074/6075 (not toll-free numbers) between 1:30 and 3:30 p.m. Eastern Time,

Monday through Thursday.

June 22, 1998

Part III. Administrative, Procedural, and Miscellaneous

Weighted Average Interest Rate

Update

Notice 98–33

Notice 88–73 provides guidelines for

determining the weighted average interest

rate and the resulting permissible range of

interest rates used to calculate current liability for the purpose of the full funding

limitation of § 412(c)(7) of the Internal

Revenue Code as amended by the Omnibus Budget Reconciliation Act of 1987

and as further amended by the Uruguay

Round Agreements Act, Pub. L. 103–465

(GATT).

Month

Year

Weighted

Average

June

1998

6.59

Drafting Information

The principal author of this notice is

Donna Prestia of the Employee Plans Division. For further information regarding

June 22, 1998

The average yield on the 30-year Treasury Constant Maturities for May 1998 is

5.93 percent.

The following rates were determined

for the plan years beginning in the month

shown below.

90% to 106%

Permissible

Range

90% to 110%

Permissible

Range

5.93 to 6.99

5.93 to 7.25

this notice, call (202) 622-6076 between

2:30 and 3:30 p.m. Eastern time (not a

toll-free number). Ms. Prestia’s number

is (202) 622-7473 (also not a toll-free

number).

1998–25 I.R.B.

Part IV. Items of General Interest

Foundations Status of Certain

Organizations

Announcement 98–54

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:

Acosta Garcia Foundation, Arlington, TX

Admiral Richard E. Byrd Monument

Restoration Fund, Midlothian, VA

Advocacy Group Tag, Waterford, MI

Aeromedical Training Institute Limited,

Alexandria, VA

Alliance for Ethics in Nursing, Tulsa,

Arkansas Society for Parenteral and

Enteral Nutrition, Little Rock, AR

Art of Living Wellness Institute,

Houston, TX

Ayehu Brehan Foundation Inc., Fort

Washington, MD

Bijela Foundation, Westfield, NJ

Black Achievers Voices of Cleveland,

Shaker Hts., OH

Bradford House, Harvey, IL

Brick Town Soccer Association Inc.,

Brick, NJ

Bruin Athletic Club Inc., Orem, UT

Campership Fund for Christian Scientists

in Georgia, Atlanta, GA

Caring Corner Inc., Dallas, TX

Center for Academic Excellence, Naples,

Center for Applied Environmental

Technology, Ashburn, VA

Center for Perinatal Research and Family

Support Corporation, Roseland, NJ

Church of New Beginnings in Christ,

Philadelphia, PA

1998–25 I.R.B.

Collegium Aesculapium Foundation, Inc.,

Provo, UT

Computer Recycling Center, Santa Clara,

Crafton Foundation, Pittsburgh, PA

Dave Tiberi Youth Center Inc.,

Wilmington, DE

Donna and Richard Fishel Foundation,

Inc., Dallas, TX

Dr. Martin Luther King Jr. Committee of

Las Vegas Nevada, Las Vegas, NV

Eastwind Community Development

Corporation, Baltimore, MD

Endeavor Project, Houston, TX

Evang Blessed Hope in Christ, Stockton,

Extended Hours Program, Washington,

Extra Mile Ministry Inc., Tavares, FL

Foundation for Real Estate Education of

the Ft. Myers-Association, Ft. Myers,

Good Music Society Inc., Tyler, TX

Good Shepherd Retreat Center Inc.,

Ashtabula, OH

Greenville Steering Non Profit Housing

Corporation, Jersey City, NJ

Gueydan Museum and Cultural Art

Society, Gueydan, LA

Hall of Fame Youth Foundation Inc.,

Augusta, GA

Harbor Foundation Inc., Decatur, GA

Hawk Voice Education Foundation Inc.,

College Park, MD

Heritage Foundation of Tennessee, Inc.,

Memphis, TN

Hispanic Century Fund, Philadelphia,

Homeless Organization, Akron, OH

Humboldt Historic Preservation Alliance

Incorporated, Humboldt, KS

Ilyssa Schwartz Leukemia Foundation,

Inc., Pine Brook, NJ

International Conference of Evangelicals

Alliance, Inc., Roswell, GA

International Creative Marquetry Society,

Denver, CO

International Dante Seminar Inc.,

Princeton, NJ

International Network for Education and

Technology, American Fork, UT

Iowa Shakespeare Project Inc.,

Des Moines, IA

Jack Trowell Scholarship Fund Inc.,

Washington, DC

Jimenez Sanctuary Inc., Arlington, VA

Joseph E. Mertz Memorial Educational

Foundation, Inc., Cleveland, TN

Key Knock Enter Yield Center Inc.,

Jacksonville, FL

Kidney Group, Washington, DC

Kuhiston Foundation, Boulder, CO

Lafayette Public Library Association,

Lafayette, LA

Leadership Project Inc., Athens, OH

Lemonade Opera Company, Alamo, TX

Lite Circle Inc., Baltimore, MD

Masterworks Choir A New Jersey

Nonprofit Corporation, Ocean City,

Miller Scholarship Foundation LTD.,

Baltimore, MD

Mission Gospel Train, Vernon, TX

Nashville Dance Project, Nashville, TN

National Autism and Communication

Research Institute, Eugene, OR

New American Stage Company Inc.,

Charleston, SC

New Generation Youth Foundation, Los

Angeles, CA

New Way A Helping Hand, Yardley, PA

90th Anniversary Celebration of Korean

Immigration to Hawaii, Honolulu, HI

North Carolina Chapter of the Health

Physics Society, Inc., Graham, NC

Ohio Center for Native American Affairs,

Columbus, OH

Omega Education Foundation

Incorporated, Gary, IN

O’Neil Hadnott Scholarship Fund Inc.,

Santa Monica, CA

Order of St. Markella of Chios Inc., New

Orleans, LA

Orders of Saint Francis of the Anglican

Catholic Church, Inc., Louisville, KY

Pacer Connection Inc., Indianapolis, IN

Parent Organization of Villa Angela-Saint

Joseph High School, Cleveland, OH

Parke County Veterans Council Inc.,

Rockville, IN

Performing Arts Foundation Inc.,

Memphis, TN

Pittsburg Community Foundation,

Pittsburg, KS

Playground, Brookings, SD

Princeton Tiger Lilies Ice Hockey

Association Inc., Princeton, NJ

Recovery Connection Inc., Joliet, IL

Reno Sparks Group Theatre, Sparks, NV

Richmond County Coalition of Substance

Abuse Project Reclaim, Inc.,

Hephzibah, GA

June 22, 1998

Sacramento Blues Society, Sacramento,

Scrub Land Trust Inc., Melbourne, FL

Self Help Organization Inc.-Sho,

Baltimore, MD

Spirit for a New Generation Foundation,

Palm Desert, CA

Stacey Ann Boe Memorial Fund Inc.,

Atlanta, GA

Student Theater Arts Group Experience

Inc., Glen Mills, PA

Students for Political Understanding Inc.,

Catonsville, MD

Students for the Prevention of Aids SPA

Inc., Tucson, AZ

Students Taking an Active Role Inc.,

Baltimore, MD

Stunts for Science Students Inc.,

Memphis, TN

Sue Carver Share and Care Group Inc.,

Robinson, IL

Sufficient Grace Foundation, Tulsa, OK

Sugar Land Community Orchestra, Sugar

Land, TX

Suited for Change, Washington, DC

Summer Creek Commons Gardens,

Tigard, OR

Summer Funner Theatre, Colorado

Springs, CO

Summertime Players Inc., Monon, IN

Summit Christian Academy Inc., Dallas,

Sundiata African-American Cultural

Association, Seattle, WA

Sunnyside Neighborhood Center,

Houston, TX

Sunnyside South Corridor Community

Coalition Inc., Houston, TX

Sunrise Childrens Foundation, Long

Beach, CA

Sunshine and Rainbows Inc., Hendrum,

Sunshine Fields Day Care Inc., Cedar

Springs, MI

Supa Inc., Los Angeles, CA

Support Our School Foundation, Attalla,

Sussex Whitetail Hunter Inc., Sussex, WI

Susquehanna Service Dogs, Harrisburg,

Suwanne County Friends of the Library

Inc., Live Oak, FL

Suwanne River Area Health Education

Center Inc., Alachua, FL

Sweet Auburn Area Improvement

Association Inc., Atlanta, GA

Sword of the Spirit-Minneapolis St. Paul,

Minneapolis, MN

June 22, 1998

Sydia Group Home Inc., Altadena, CA

Szyfra Institute for Artisan Training, Inc.,

Hollywood Beach, FL

T B E C C, Ogden, UT

T R S A, Kaufman, TX

Tahoe Truckee Housing Development

Corporation, Truckee, CA

Take A Stand Inc., Lakewood, OH

Talent Artistic Juvenile Inc., Hialeah, FL

Talladega Beautification Association,

Talladega, AL

Tallahatchie Housing Inc., Webb, MS

Tamar Inc., Lincoln, NE

Tampa Bay Total Quality Management

Network Inc., Tampa, FL

Tampa Theatre Inc., Tampa, FL

Tarrant County Emergency Nurses

Association, Granbury, TX

Tarrant County Homes Inc., Fort Worth,

Tarzana Hospital and Community

Foundation, Tarzana, CA

Tass Inc., Glenside, PA

Tate Baseball Booster Inc., Gonzalez, FL

Tautphaus Park Zoological Society Inc.,

Idaho Falls, ID

Taylor Allderdice Hockey Club,

Pittsburgh, PA

Taylor Home of Charlotte Inc., Charlotte,

Team A Inc., South Bend, IN

Team Alpine, Olympia, WA

Team Indiana Inc., Indianapolis, IN

Team Parents Booster Club, Kansas City,

Teamster Retiree Housing, Washington,

Tech-Knowledge Bank LTD, Hunt

Valley, MD

Technologies Users of Broward Tub Inc.,

S. Florida, FL

Technology Institute, Los Alamos, NM

Tee Foundation, Mechanicsburg, PA

Teen Life for Christ, Dallas, TX

Teen Life Inc., Gadsden, AL

Teen Pregnancy Coalition of Oklahoma

County, Inc., Oklahoma City, OK

Telecommunications Information Project,

Salt Lake City, UT

Telemedicine U S A Inc., Ontario Canada

Tell the Truth Ministries Inc., Milwaukee,

Tennessee Ballet Theatre, Johnson City,

Tennessee River Museum, Savannah,

Tennessee Trucking Foundation Inc.,

Nashville, TN

Tennis & College Club Inc.,

Birmingham, AL

Tetelestai Ministries, Bellevue, WA

Texana Arts Council, Francitas, TX

Texas Association of Leather Artists,

Houston, TX

Texas Castles, Austin, TX

Texas Council of Child Welfare Boards,

Bryan, TX

Texas Environmental Consortium,

San Antonio, TX

Texas Federal Child Care Nutritional

Program, Incorporated, Houston, TX

Texas Fire Chiefs Association

Foundation, Inc., Austin, TX

Texas Partners Foundation, Austin, TX

Texas Social Services Inc., Houston, TX

Texas Superstar Foundation, Houston,

Texas Trails Network, Dallas, TX

Texas Veteran Foundation, Austin, TX

Texoma Charity Golf Classic Inc.,

Sherman, TX

Thad E. Saleeby Center Volunteer

Services, Inc., Hartsville, SC

Theatrefaire for Children, Lake Forest,

Thee Way Out, Seattle, WA

Therapeutic Alternative Care Programs,

Columbia, MO

Think Twice Foundation, Southfield,

Third Planet Theatre, Dallas, TX

Third World Foundation Inc., College

Park, MD

This is Colombia, Oak Brook, IL

Thomas Arthur Productions Inc.,

Florence, SC

Thornapple River Watershed Group Inc.,

Caledonia, MI

Those in Need Inc., Moundsville, WV

Three Places Productions Inc., Tucson,

Thumbs Up Vidor Inc., Vidor, TX

Thunder Road Ensemble, Chicago, IL

Thurman Brisben Homeless Shelter Inc.,

Fredericksburg, VA

Thy Kingdom Come Ministries, Denver,

Tibetan Resettlement Project-New,

Albuquerque, NM

Tidewater Chapter of the Association of

Military Surgeons, Chesapeake, VA

Tidewater Sampler Guilde Inc., Virginia

Beach, VA

Tiffin-Seneca Teen Center, Tiffin, OH

Tiftons Charlie Brown Playhouse, Tifton,

1998–25 I.R.B.

Total Care Living Center Incorporated,

Baltimore, MD

Training Trust Inc. c/o Nak Inc., England

Tri-County Sister Help Inc., Rock Hill,

Tropical Flora and Fauna Preservation

Society, Houston, TX

US Georgia Foundation Inc., Washington,

Vietnamese Nationalist Organization of

Dallas Vicinities, Garland, TX

1998–25 I.R.B.

Vietnamese Volunteer Youth Association,

West Valley City, UT

Welcome House Inc., Crowley, LA

Wild Side Inc., Wayne, PA

Williamstown Area Development

Corporation, Williamstown, WV

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 de-

termination 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.

June 22, 1998

Announcement of the Expedited Suspension of Attorneys, Certified Public

Accountants, Enrolled Agents, and Enrolled Actuaries From Practice

Before the Internal Revenue Service

Under title 31 of the Code of Federal

Regulations, section 10.76, the Director

of Practice 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 any crime under title 26

of the United States Code or, of a felony

under title 18 of the United States Code

involving dishonesty or breach of trust.

Attorneys, certified public accountants,

enrolled agents, and enrolled actuaries are

prohibited in any Internal Revenue Service

matter from directly or indirectly employing, accepting assistance from, being employed by, or sharing fees with, any practitioner disbarred or suspended from practice

before the Internal Revenue Service.

To enable attorneys, certified public accountants, enrolled agents, and enrolled actuaries to identify practitioners under expedited suspension from practice before the

Internal Revenue Service, the Director of

Practice will announce in the Internal Revenue Bulletin the names and addresses of

practitioners who have been suspended

from such practice, their designation as attorney, certified public accountant, en-

rolled agent, or enrolled actuary, and date

or 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

or for as many weeks as is practicable for

each attorney, certified public accountant,

enrolled agent, or enrolled actuary so suspended and will be consolidated and published in the Cumulative Bulletin.

The following individual has been

placed under suspension from practice before the Internal Revenue Service by virtue

of the expedited proceeding provisions of

the applicable regulations:

Name

Address

Designation

Date of Suspension

McDonald, Milton

Parsons, Gary D.

Stone Mountain, GA

Chattanooga, TN

Attorney

CPA

Indefinite from February 24, 1998

Buchanan, Steven

Phoenix, AZ

Attorney

Indefinite from February 24, 1998

Caplan, Alan

San Francisco, CA

Attorney

Indefinite from February 24, 1998

Delany, R. Emmet

Ridgefield, CT

Attorney

Indefinite from February 24, 1998

Hirsch, Sheldon

Brooklyn, NY

CPA

Indefinite from February 24, 1998

Newman, Peter R.

Syossett, NY

Attorney

Indefinite from February 24, 1998

Land, Gary

Hunt, William D.

Hamilton, Robert

Rabinowitz, Emile

McCaffrey, Michael

Eisenstein, Joel

Cannavo Jr., Joseph S.

Tilker, Robert M.

Toms, James H.

Everett, Kenneth

Frederick, Charles

Artho, David

Seale, Forrest I.

Yancey, Quinton E.

Hunnicut, Benjamin

Finkel, Merle

Mullay, Carl P.

Fayetteville, AR

Tulsa, OK

Corpus Christie, TX

Minnetonka, MN

Wheaton, IL

St. Charles, MO

St. Louis, MO

Fairfax, VA

Hendersonville, NC

New York, NY

Elk Grove

Lubbock, TX

San Antonio, TX

Stephens City, VA

Reseda, CA

Beverly Hills, CA

Swoyersville, PA

Enrolled Agent

Attorney

Enrolled Agent

CPA

Attorney

CPA

Attorney

Enrolled Agent

CPA

Indefinite from February 24, 1998

Indefinite from March 13, 1998

Indefinite from March 18, 1998

June 22, 1998

1998–25 I.R.B.

Name

Address

Designation

Date of Suspension

Cunning, Dennis A.

Adamson, Steven A.

Bowman, David W.

Beezley, Jack L.

Cunningham, Andrew

Palmquist, Craig S.

Ross, Mark J.

Madoch, Lawrence

Taylor, George M.

Casey, Kenneth J.

Akolt III, John P.

Dowdy, Frank

Eckert, Bruce G.

Rozanski, Lawrence J.

Mangum, Carl E.

Reeser, Richard M.

Bailey, Thomas O.

Johnson, Kenneth E.

Molalla, OR

Nampa, ID

Colorado Springs, CO

Dallas, TX

Hatfield, PA

Seattle, WA

Columbus, OH

Elgin, IL

Springfield, IL

Corte Madera, CA

Denver, CO

Huntsville, AL

Cleveland, OH

Pittsburgh, PA

Morris Plains, NJ

Thornton, CO

Dallas, TX

Forest Lake, MN

CPA

Attorney

CPA

Attorney

CPA

Attorney

CPA

Attorney

CPA

Indefinite from March 18, 1998

Indefinite from April 14, 1998

Indefinite from April 21, 1998

Indefinite from April 28, 1998

Indefinite from April 21, 1998

Indefinite from April 28, 1998

May 2, 1998 to May 1, 1999

June 1, 1998 to May 30, 2000

July 1, 1998 to December 31, 1999

July 1, 1998 to September 30, 1999

July 1, 1998 to June 30, 2001

July 1, 1998 to November 30, 1999

Deren, Joseph

Lackawanna, NY

Attorney

July 1, 1998 to June 30, 2001

1998–25 I.R.B.

June 22, 1998

Definition of Terms

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:

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 ap-

plies 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 law 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 the 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.

Abbreviations

E.O.—Executive Order.

ER—Employer.

ERISA—Employee Retirement Income Security Act.

EX—Executor.

F—Fiduciary.

FC—Foreign Country.

FICA—Federal Insurance Contribution 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.—Statements of Procedral 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.

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.

June 22, 1998

1998–25 I.R.B.

Numerical Finding List1

Notices—Continued

Revenue Procedures—Continued

Bulletins 1998–1 through 1998–24

98–15, 1998–9 I.R.B. 8

98–16, 1998–15 I.R.B. 12

98–17, 1998–11 I.R.B. 6

98–18, 1998–12 I.R.B. 11

98–19, 1998–13 I.R.B. 24

98–20, 1998–13 I.R.B. 25

98–21, 1998–15 I.R.B. 14

98–22, 1998–17 I.R.B. 5

98–23, 1998–18 I.R.B. 9

98–24, 1998–17 I.R.B. 5

98–25, 1998–18 I.R.B. 11

98–26, 1998–18 I.R.B. 14

98–27, 1998–18 I.R.B. 14

98–28, 1998–19 I.R.B. 7

98–29, 1998–22 I.R.B. 8

98–30, 1998–22 I.R.B. 9

98–31, 1998–22 I.R.B. 10

98–32, 1998–22 I.R.B. 23

98–18, 1998–6 I.R.B. 20

98–19, 1998–7 I.R.B. 30

98–20, 1998–7 I.R.B. 32

98–21, 1998–8 I.R.B. 27

98–22, 1998–12 I.R.B. 11

98–23, 1998–10 I.R.B. 30

98–24, 1998–10 I.R.B. 31

98–25, 1998–11 I.R.B. 7

98–26, 1998–13 I.R.B. 26

98–27, 1998–15 I.R.B. 15

98–28, 1998–15 I.R.B. 14

98–29, 1998–15 I.R.B. 22

98–30, 1998–17 I.R.B. 6

98–31, 1998–23 I.R.B. 9

98–32, 1998–17 I.R.B. 11

98–33, 1998–19 I.R.B. 7

98–34, 1998–18 I.R.B. 15

98–35, 1998–21 I.R.B. 6

98–36, 1998–23 I.R.B. 10

Announcements:

98–1, 1998–2 I.R.B. 38

98–2, 1998–2 I.R.B. 38

98–3, 1998–2 I.R.B. 38

98–4, 1998–4 I.R.B. 31

98–5, 1998–5 I.R.B. 25

98–6, 1998–5 I.R.B. 25

98–7, 1998–5 I.R.B. 26

98–8, 1998–6 I.R.B. 96

98–9, 1998–7 I.R.B. 35

98–10, 1998–7 I.R.B. 35

98–11, 1998–8 I.R.B. 42

98–12, 1998–8 I.R.B. 43

98–13, 1998–8 I.R.B. 43

98–14, 1998–8 I.R.B. 44

98–15, 1998–10 I.R.B. 36

98–16, 1998–9 I.R.B. 17

98–17, 1998–9 I.R.B. 16

98–18, 1998–10 I.R.B. 44

98–19, 1998–10 I.R.B. 44

98–20, 1998–11 I.R.B. 25

98–21, 1998–11 I.R.B. 26

98–22, 1998–12 I.R.B. 33

98–23, 1998–12 I.R.B. 34

98–24, 1998–12 I.R.B. 35

98–25, 1998–13 I.R.B. 43

98–26, 1998–14 I.R.B. 28

98–27, 1998–15 I.R.B. 30

98–28, 1998–15 I.R.B. 30

98–29, 1998–16 I.R.B. 48

98–30, 1998–17 I.R.B. 38

98–32, 1998–17 I.R.B. 39

98–33, 1998–17 I.R.B. 39

98–34, 1998–17 I.R.B. 39

98–35, 1998–17 I.R.B. 40

98–36, 1998–18 I.R.B. 18

98–37, 1998–19 I.R.B. 24

98–38, 1998–19 I.R.B. 26

98–39, 1998–20 I.R.B. 24

98–40, 1998–20 I.R.B. 24

98–41, 1998–20 I.R.B. 25

98–42, 1998–21 I.R.B. 26

98–43, 1998–21 I.R.B. 26

98–44, 1998–22 I.R.B. 24

98–45, 1998–23 I.R.B. 18

98–47, 1998–23 I.R.B. 5

98–48, 1998–24 I.R.B. 6

98–49, 1998–23 I.R.B. 19

98–50, 1998–23 I.R.B. 20

98–51, 1998–24 I.R.B. 7

98–52, 1998–24 I.R.B. 37

98–53, 1998–24 I.R.B. 37

Notices:

98–1, 1998–3 I.R.B. 42

98–2, 1998–2 I.R.B. 22

98–3, 1998–3 I.R.B. 48

98–4, 1998–2 I.R.B. 25

98–5, 1998–3 I.B.R. 49

98–6, 1998–3 I.R.B. 52

98–7, 1998–3 I.R.B. 54

98–8, 1998–4 I.R.B. 6

98–9, 1998–4 I.R.B. 8

98–10, 1998–6 I.R.B. 9

98–11, 1998–6 I.R.B. 18

98–12, 1998–5 I.R.B. 12

98–13, 1998–6 I.R.B. 19

98–14, 1998–8 I.R.B. 27

Proposed Regulations:

PS–158–86, 1998–11 I.R.B. 13

REG–100841–97, 1998–8 I.R.B. 30

REG–102144–98, 1998–15 I.R.B. 25

REG–102894–97, 1998–3 I.R.B. 59

REG–104062–97, 1998–10 I.R.B. 34

REG–104537–97, 1998–16 I.R.B. 21

REG–104691–97, 1998–11 I.R.B. 13

REG–105163–97, 1998–8 I.R.B. 31

REG–109333–97, 1998–9 I.R.B. 9

REG–109704–97, 1998–3 I.R.B. 60

REG–110965–97, 1998–13 I.R.B. 42

REG–115795–97, 1998–8 I.R.B. 33

REG–119449–97, 1998–10 I.R.B. 35

REG–120200–97, 1998–12 I.R.B. 32

REG–120882–97, 1998–14 I.R.B. 25

REG–121268–97, 1998–20 I.R.B. 12

REG–121755–97, 1998–9 I.R.B. 13

REG–208299–90, 1998–16 I.R.B. 26

REG–209276–87, 1998–11 I.R.B. 18

REG–209322–82, 1998–15 I.R.B. 26

REG–209373–81, 1998–14 I.R.B. 26

REG–209463–82, 1998–4 I.R.B. 27

REG–209476–82, 1998–8 I.R.B. 36

REG–209484–87, 1998–8 I.R.B. 40

REG–209485–86, 1998–11 I.R.B. 21

REG–209682–94, 1998–17 I.R.B. 20

REG–209807–95, 1998–8 I.R.B. 40

REG–243025–96, 1998–18 I.R.B. 18

REG–251502–96, 1998–9 I.R.B. 14

REG–251698–96, 1998–20 I.R.B. 14

Revenue Rulings:

98–1, 1998–2 I.R.B. 5

98–2, 1998–2 I.R.B. 15

98–3, 1998–2 I.R.B. 4

98–4, 1998–2 I.R.B. 18

98–5, 1998–2 I.R.B. 20

98–6, 1998–4 I.R.B. 4

98–7, 1998–6 I.R.B. 6

98–8, 1998–7 I.R.B. 24

98–9, 1998–6 I.R.B. 5

98–10, 1998–10 I.R.B. 11

98–11, 1998–10 I.R.B. 13

98–12, 1998–10 I.R.B. 5

98–13, 1998–11 I.R.B. 4

98–14, 1998–11 I.R.B. 4

98–15, 1998–12 I.R.B. 6

98–16, 1998–13 I.R.B. 18

98–17, 1998–13 I.R.B. 21

98–18, 1998–14 I.R.B. 22

98–19, 1998–15 I.R.B. 5

98–20, 1998–15 I.R.B. 8

98–21, 1998–18 I.R.B. 7

98–22, 1998–19 I.R.B. 5

98–23, 1998–18 I.R.B. 5

98–24, 1998–19 I.R.B. 6

98–25, 1998–19 I.R.B. 4

98–26, 1998–21 I.R.B. 4

98–27, 1998–22 I.R.B. 4

98–28, 1998–22 I.R.B. 5

98–29, 1998–24 I.R.B. 4

Treasury Decisions:

Revenue Procedures:

98–1, 1998–1 I.R.B. 7

98–2, 1998–1 I.R.B. 74

98–3, 1998–1 I.R.B. 100

98–4, 1998–1 I.R.B. 113

98–5, 1998–1 I.R.B. 155

98–6, 1998–1 I.R.B. 183

98–7, 1998–1 I.R.B. 222

98–8, 1998–1 I.R.B. 225

98–9, 1998–3 I.R.B. 56

98–10, 1998–2 I.R.B. 35

98–11, 1998–4 I.R.B. 9

98–12, 1998–4 I.R.B. 18

98–13, 1998–4 I.R.B. 21

98–14, 1998–4 I.R.B. 22

98–15, 1998–4 I.R.B. 25

98–16, 1998–5 I.R.B. 19

98–17, 1998–5 I.R.B. 21

8740, 1998–3 I.R.B. 4

8741, 1998–3 I.R.B. 6

8742, 1998–5 I.R.B. 4

8743, 1998–7 I.R.B. 26

8744, 1998–7 I.R.B. 20

8745, 1998–7 I.R.B. 15

8746, 1998–7 I.R.B. 4

8747, 1998–7 I.R.B. 18

8748, 1998–8 I.R.B. 24

8749, 1998–7 I.R.B. 16

8750, 1998–8 I.R.B. 4

8751, 1998–10 I.R.B. 23

8752, 1998–9 I.R.B. 4

8753, 1998–9 I.R.B. 6

8754, 1998–10 I.R.B. 15

8755, 1998–10 I.R.B. 21

8756, 1998–12 I.R.B. 4

8757, 1998–13 I.R.B. 4

1 See footnote at end of list.

1998–25 I.R.B.

June 22, 1998

Numerical Finding List—Continued

Bulletins 1998–1 through 1998–24

Treasury Decisions—Continued

8758, 1998–13 I.R.B. 15

8759, 1998–13 I.R.B. 19

8760, 1998–14 I.R.B. 4

8761, 1998–14 I.R.B. 13

8762, 1998–14 I.R.B. 15

8763, 1998–15 I.R.B. 5

8764, 1998–15 I.R.B. 9

8765, 1998–16 I.R.B. 11

8766, 1998–16 I.R.B. 17

8767, 1998–16 I.R.B. 4

8768, 1998–20 I.R.B. 4

1 A cumulative list of all revenue rulings, revenue

procedures, Treasury decisions, etc., published in

Internal Revenue Bulletins 1997–27 through

1997–52 will be found in Internal Revenue Bulletin

1998–1, dated January 5, 1998.

June 22, 1998

1998–25 I.R.B.

Finding List of Current Actions

on Previously Published Items1

Revenue Procedures—Continued

Bulletins 1998–1 through 1998–24

97–53

Superseded by

98–3, 1998–1 I.R.B. 100

Revenue Procedures:

Revenue Rulings:

91–59

Updated and superseded by

98–25, 1998–11 I.R.B. 7

68–352

Obsoleted by

98–24, 1998–19 I.R.B. 6

94–16

Modified and superseded by

98–22, 1998–12 I.R.B. 11

70–225

Modified by

98–27, 1998–22 I.R.B. 4

93–62

Modified and superseded by

98–22, 1998–12 I.R.B. 11

73–198

Modified by

98–24, 1998–19 I.R.B. 6

95–35

95–35A

Superseded by

98–19, 1998–7 I.R.B. 30

75–17

Supplemented and superseded by

98–5, 1998–2 I.R.B. 20

96–29

Modified and superseded by

98–22, 1998–12 I.R.B. 11

97–1

Superseded by

98–1, 1998–1 I.R.B. 7

97–2

Superseded by

98–2, 1998–1 I.R.B. 74

75–406

Obsoleted by

98–27, 1998–22 I.R.B. 4

92–19

Supplemented in part by

98–2, 1998–2 I.R.B. 15

96–30

Obsoleted by

98–27, 1998–22 I.R.B. 4

97–3

Superseded by

98–3, 1998–1 I.R.B. 100

97–4

Superseded by

98–4, 1998–1 I.R.B. 113

97–5

Superseded by

98–5, 1998–1 I.R.B. 155

97–6

Superseded by

98–6, 1998–1 I.R.B. 183

97–7

Superseded by

98–7, 1998–1 I.R.B. 222

97–8

Superseded by

98–8, 1998–1 I.R.B. 225

97–21

Superseded by

98–2, 1998–1 I.R.B. 74

97–24

97–24A

Superseded by

98–33, 1998–19 I.R.B. 7

97–26

Obsoleted by

98–28, 1998–15 I.R.B. 14

97–28

Superseded by

98–36, 1998–23 I.R.B. 10

97–34

Superseded by

98–35, 1998–21 I.R.B. 6

1 A cumulative finding list for previously published

items mentioned in Internal Revenue Bulletins

1997–27 through 1997–52 will be found in Internal

Revenue Bulletin 1998–1, dated January 5, 1998.

1998–25 I.R.B.

June 22, 1998

Notes

June 22, 1998

1998–25 I.R.B.

Notes

1998–25 I.R.B.

June 22, 1998

Notes

June 22, 1998

1998–25 I.R.B.

INTERNAL REVENUE BULLETIN

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