Bulletin No. 1998–26

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Internal Revenue

bulletin

Bulletin No. 1998–26

June 29, 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

REG–106031–98, page 38.

Proposed regulations under section 864 of the Code relate

to the treatment of foreign taxpayers trading in derivative financial instruments. A public hearing will be held on September 9, 1998.

EXEMPT ORGANIZATIONS

Announcement 98–56, page 44.

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

ADMINISTRATIVE

ing paper substitutes for Forms 1096, 1098, 1099, 5498,

and W–2G, and for furnishing substitute statements to form

recipients. Rev. Proc. 97–32 superseded.

Rev. Proc. 98–39, page 36.

This procedure modifies Rev. Proc. 97–35, 1997–33 I.R.B.

11, to clarify that capitalization under section 263 of the

Code applies to certain package design costs, and that Rev.

Proc. 97–35 does not apply to costs of a package design

that is “an amortizable section 197 intangible.” Rev. Proc.

97–35 modified.

Announcement 98–55, page 41.

The Service announces proposed changes to the 1999

Forms W–2, Wage and Tax Statement, and W–3, Transmittal

of Wage and Tax Statements.

Rev. Proc. 98–37, page 6.

Reproduction of forms; Forms 1096, 1098, 1099,

5498, and W–2G. Requirements are set forth for reproduc-

Finding Lists begin on page 50.

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 47.

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 197.—Amortization of

Goodwill and Certain Other

Intangibles

Rev. Proc. 97–35 is modified to make clear that

capitalization under section 263 applies to certain

package design costs, and that the revenue procedure does not apply to costs of a package design that

is an amortizable section 197 intangible. See Rev.

Proc. 98–39, page 36.

Section 220.—Medical Savings

Accounts

Specifications for paper substitutes for Forms

1096, 1098, 1099, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

Section 263.—Capital

Expenditures

Rev. Proc. 97–35 is modified to make clear that

capitalization under section 263 applies to certain

package design costs, and that the revenue procedure does not apply to costs of a package design that

is an amortizable section 197 intangible. See Rev.

Proc. 98–39, page 36.

Section 263A.—Capitalization

and Inclusion in Inventory Costs

of Certain Expenses

26 CFR 1.263A–2: Rules relating to property

produced by the taxpayer.

Rev. Proc. 97–35 is modified to make clear that

capitalization under section 263 applies to certain

package design costs, and that the revenue procedure does not apply to costs of a package design that

is an amortizable section 197 intangible. See Rev.

Proc. 98–39, page 36.

Section 408.—Individual

Retirement Accounts

26 CFR 1.408–5: Annual reports by trustees or

issuers.

Specifications for paper substitutes for Form

1096, 1098, 1099, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

Section 408A.—Roth IRAs

Specifications for paper substitutes for Form

1096, 1098, 1099, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

Section 6041.—Information at

Source

26 CFR 1.6044–2: Returns of information as to

payments of patronage dividends with respect to

patronage occurring in taxable years beginning

after 1962.

26 CFR 1.6041–1: Return of information as to

payments of $600 or more.

Specifications for paper substitutes for Forms

1096, 1098, 1099, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

Specifications for paper substitutes for Forms

1096, 1098, 1099, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

26 CFR 1.6044–5: Statements to recipients of

patronage dividends.

26 CFR 7.6041–1: Return of information as to

payments of winnings from bingo, keno, and slot

machines (Temporary).

Specifications for paper substitutes for Forms

1096, 1098, 1099, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

Section 6041A.—`Returns

Regarding Payments of

Remuneration for Services

and Direct Sales

Specifications for paper substitutes for Forms

1096, 1098, 1099, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

Section 6042.—Returns

Regarding Payments of

Dividends and Corporate

Earnings and Profits

26 CFR 1.6042–2: Returns of information as to

dividends paid in calendar years after 1962.

Specifications for paper substitutes for Forms

1096, 1098, 1099, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

26 CFR 1.6042–4: Statements to recipients of

dividend payments.

Specifications for paper substitutes for Forms

1096, 1098, 1099, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

26 CFR 1.408–7: Reports on distributions from

individual retirement plans.

Section 6043.—Liquidating,

Etc., Transactions

Specifications for paper substitutes for Forms

1096, 1098, 1099, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

Specifications for paper substitutes for Forms

1096, 1098, 1099, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

June 29, 1998

Section 6044.—Returns

Regarding Payments of

Patronage Dividends

Specifications for paper substitutes for Forms

1096, 1098, 1099, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

Section 6045.—Returns of

Brokers

26 CFR 1.6045–1: Returns of information of

brokers and barter exchanges.

Specifications for paper substitutes for Forms

1096, 1098, 1099, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

26 CFR 5f.6045–1: Returns of information for

brokers and barter exchanges (Temporary).

Specifications for paper substitutes for Forms

1096, 1098, 1099, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

26 CFR 1.6045–2: Furnishing statement required

with respect to certain substitute payments.

Specifications for paper substitutes for Forms

1096, 1098, 1099, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

26 CFR 1.6045–4: Information reporting on real

estate transactions with dates of closing on or after

January 1, 1991.

Specifications for paper substitutes for Forms

1096, 1098, 1099, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

Section 6047.—Information

Relating to Certain Trusts and

Annuity Plans

26 CFR 1.6047–1: Information to be furnished with

regard to employee retirement plan covering an

owner-employee.

1998–26 I.R.B.

Specifications for paper substitutes for Forms

1096, 1098, 1099, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

Section 6049.—Returns

Regarding Payments of Interest

26 CFR 1.6049–4: Return of information as to

interest paid and original issue discount includible

in gross income after December 31, 1982.

Specifications for paper substitutes for Forms

1096, 1098, 1099, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

26 CFR 1.6049–6: Statements to recipients of

interest payments and holders of obligations for

attributed original issue discount.

Specifications for paper substitutes for Forms

1096, 1098, 1099, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

29 CFR 1.6049–7: Returns of information with

respect to REMIC regular interests and

collateralized debt obligations.

Specifications for paper substitutes for Forms

1096, 1098, 1099, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

Section 6050A.—Reporting

Requirements of Certain Fishing

Boat Operators

26 CFR 1.6050A–1: Reporting requirements of

certain fishing boat operators.

Specifications for paper substitutes for Form

1096, 1098, 1099, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

Section 6050B.—Returns

Relating to Unemployment

Compensation

26 CFR 1.6050B–1: Information returns by person

making unemployment compensation payments.

Specifications for paper substitutes for Forms

1096, 1098, 1099, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

1998–26 I.R.B.

Section 6050D.—Returns

Relating to Energy Grants and

Financing

Section 6050N.—Returns

Regarding Payments of

Royalties

26 CFR 1.6050D–1: Information returns relating to

energy grants and financing.

26 CFR 1.6050N–1: Statements to recipients of

royalties.

Specifications for paper substitutes for Forms

1096, 1098, 1099, 5498, and W–2G. See Rev Proc.

98–37, page 6.

Specifications for paper substitutes for Forms

1096, 1098, 1099, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

Section 6050E.—State and

Local Income Tax Refunds

Section 6050P.—Returns

Relating to the Cancellation of

Indebtedness by Certain Entities

26 CFR 1.6050E–1: Reporting of State and local

income tax refunds.

Specifications for paper substitutes for Forms

1096, 1098, 1099, 5498 and W–2G. See Rev. Proc.

98–37, page 6.

26 CFR 1.6050P–1: Information reporting for

discharges of indebtedness by certain financial

entities.

Specifications for paper substitutes for Forms

1096, 1098, 1099, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

Section 6050H.—Returns

Relating to Mortgage Interest

Received in Trade or Business

From Individuals

Section 6050Q.—Certain

Long-Term Care Benefits

26 CFR 1.6050H–1: Information reporting of

mortgage interest received in a trade or business

from an individual.

Specifications for paper substitutes for Forms

1096, 1098, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

Specifications for paper substitutes for Forms

1096, 1098, 1099, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

26 CFR 1.6050H-2: Time, form, and manner of

reporting interest received on qualified mortgage.

Specifications for paper substitutes for Forms

1096, 1098, 1099, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

Section 6050J.—Returns

Relating to Foreclosures and

Abandonments of Security

26 CFR 1.6050J–1T: Questions and answers

concerning information returns relating to

foreclosures and abandonments of security

(Temporary).

Section 6050R.—Returns

Relating to Certain Purchases

of Fish

Specifications for paper substitutes for Forms

1096, 1098, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

Section 6050S.—Returns

Relating to Higher Education

Tuition and Related Expenses

Specifications for paper substitutes for Forms

1096, 1098, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

Specifications for paper substitutes for Forms

1096, 1098, 1099, 5498, and W–2G. See Rev. Proc.

98–37, page 6.

June 29, 1998

Part III. Administrative, Procedural, and Miscellaneous

26 CFR 601.602: Forms and instructions.

(Also Part I, Sections 220, 408, 408A, 6041, 6041A,

6042, 6043, 6044, 6045, 6047, 6049, 6050A, 6050B,

6050D, 6050E, 6050H, 6050J, 6050N, 6050P,

6050Q, 6050R, 6050S, 1.408–5, 1.408–7,

1.6041–1, 7.6041–1, 1.6042–2, 1.6042–4, 1.6044–2,

1.6044–5, 1.6045–1, 5f.6045–1, 1.6045–2,

1.6045–4, 1.6047–1, 1.6049–4, 1.6049–6,

1.6049–7, 1.6050A–1, 1.6050B–1, 1.6050D–1,

1.6050E–1, 1.6050H–1, 1.6050H–2, 1.6050J–1T,

1.6050N–1, 1.6050P–1).

PART B. SPECIFICATIONS FOR

SUBSTITUTE FORMS TO BE FILED

WITH IRS (EXCEPT Form W–2G)

Rev. Proc. 98–37

PART C. SPECIFICATIONS FOR

SUBSTITUTE FORMS W–2G TO BE

FILED WITH IRS

CONTENTS

PART A. GENERAL

SECTION 1. PURPOSE

SECTION 2. NATURE OF

CHANGES

SECTION 3. REQUIREMENTS

FOR ACCEPTABLE

SUBSTITUTE FORMS

1096, 1098, 1099, 5498,

AND W–2G

SECTION 4. DEFINITIONS

SECTION 5. INSTRUCTIONS FOR

PREPARING PAPER

FORMS THAT WILL

BE FILED WITH THE

IRS (COPY A)

SECTION 6. RESERVED

SECTION 7. SUBSTITUTE STATEMENTS TO FORM

RECIPIENTS AND

FORM RECIPIENT

COPIES

SECTION 1. GENERAL

SECTION 2. SPECIFICATIONS

FOR FORM 1096 AND

COPY A OF FORMS

1098, 1099, AND 5498

SECTION 1. GENERAL

SECTION 2. SPECIFICATIONS

FOR COPY A OF

FORMS W–2G

PART D. ADDITIONAL

INSTRUCTIONS FOR FORMS 1098,

1099, 5498, AND W–2G

SECTION 1. OTHER COPIES

SECTION 2. OMB REQUIREMENTS

SECTION 3. REPRODUCIBLE

COPIES

SECTION 4. EFFECT ON OTHER

REVENUE PROCEDURES

PART E. EXHIBITS

EXHIBIT A. Form 1098

EXHIBIT B. Form 1098–E

EXHIBIT C. Form 1098–T

EXHIBIT D. Form 1099–A

EXHIBIT E. Form 1099–B

EXHIBIT F. Form 1099–C

EXHIBIT G. Form 1099–DIV

EXHIBIT H. Form 1099–G

EXHIBIT I. Form 1099–INT

EXHIBIT J. Form 1099–LTC

EXHIBIT K. Form 1099–MISC

EXHIBIT L. Form 1099–MSA

EXHIBIT M. Form 1099–OID

EXHIBIT N. Form 1099–PATR

EXHIBIT O. Form 1099–R

EXHIBIT P. Form 1099–S

EXHIBIT Q. Form W–2G

EXHIBIT R. Form 5498

EXHIBIT S. Form 5498–MSA

EXHIBIT T. Form 1096

PART A. GENERAL

SECTION 1. PURPOSE

.01 The purpose of this revenue procedure is to set forth the requirements for:

1. Using official Internal Revenue Service (IRS) forms to file information returns with the IRS,

2. Preparing acceptable substitutes of

the official IRS forms to file information

returns with the IRS, and

3. Using official or acceptable substitute forms to furnish information to a recipient.

This revenue procedure contains specifications for the following information returns:

(a) Form 1098

Mortgage Interest Statement;

(b) Form 1098–E

Student Loan Interest Statement;

Tuition Payments Statement;

(d) Form 1099–A

Acquisition or Abandonment of Secured Property;

(e) Form 1099–B

Proceeds From Broker and Barter Exchange Transactions;

(f) Form 1099–C

Cancellation of Debt;

(g) Form 1099–DIV Dividends and Distributions;

(h) Form 1099–G

Certain Government Payments;

(I) Form 1099–INT

Interest Income;

(j) Form 1099–LTC

Long-Term Care and Accelerated Death Benefits;

(k) Form 1099–MISC Miscellaneous Income;

(l) Form 1099–MSA Distributions From Medical Savings Accounts;

(m) Form 1099–OID Original Issue Discount;

(n) Form 1099–PATR Taxable Distributions Received From

Cooperatives;

(o) Form 1099–R

Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts,

etc.;

(p) Form 1099–S

Proceeds From Real Estate Transactions;

(q) Form W–2G

Certain Gambling Winnings;

(r) Form 5498

IRA Contribution Information;

(s) Form 5498–MSA Medical Savings Account Information; and

(t) Form 1096

Annual Summary and Transmittal of U.S. Information Returns.

June 29, 1998

1998–26 I.R.B.

.02 For the purpose of this revenue

procedure, a substitute form or statement

is one that is not printed by the IRS. For a

substitute form or statement to be acceptable to the IRS, it must conform to the official form or the specifications outlined

in this revenue procedure. DO NOT

SUBMIT ANY SUBSTITUTE FORMS

OR STATEMENTS TO IRS FOR APPROVAL. Private printers may not state

“This is an IRS approved form.” Further,

only those forms that conform to the official form or comply with the specifications set forth herein are acceptable. See

Part A, Section 7, for the specifications

that apply to form recipient statements

(generally Copy B).

.03 Filers who make payments to certain persons (payees) (or in some cases receive payments) during a calendar year

are required by the Internal Revenue Code

(IRC) to file information returns with the

IRS reflecting these payments. Further, as

discussed below, these filers must provide

this information to their payees.

.04 In general, the manner in which a

filer must file an information return is

governed by section 6011 of the IRC. A

filer must file information returns on

magnetic media (including electronic filing) or on paper. Under section 6011 of

the IRC, a filer who is required to file 250

or more information returns (of any one

type except Form 1098–T) during a calendar year must file those returns on magnetic media. Filers required to file less

than 250 returns during a calendar year

may, but are not required to, file such information returns on magnetic media

(small volume filers). The IRS explains

these legal requirements for filing information returns (and providing a copy to a

payee) in the annual publication of Instructions for Forms 1099, 1098, 5498,

and W–2G. In addition, procedures are

contained in Publication 1220, “Specifications for Filing Forms 1098, 1099,

5498, and W–2G Electronically.”

.05 Copies of the official forms for the

reporting year and the instruction booklet

may be obtained by calling our toll-free

number 1-800-TAX-FORM (1-800-8293676).

.06 The IRS prints and provides the

forms on which various payments must be

reported. Alternatively, filers may prepare substitute copies of these IRS forms

and use such forms to report payments to

the IRS.

1998–26 I.R.B.

.07 IRS operates a centralized call site,

in Martinsburg, West Virginia, to answer

questions related to information returns,

penalties, and backup withholding. The

call site phone number is 304-263-8700.

The number for Telecommunications Device for the Deaf (TDD) is 304-267-3367.

These are not toll-free numbers.

.08 IRS has established a personal

computer-based Information Reporting

Program Bulletin Board System (IRPBBS). This system provides information

about forms and publications, including

this revenue procedure, news of the latest

changes, answers to questions, and other

features. The IRP-BBS is available for

public use and can be reached by dialing

304-264-7070. The IRP-BBS is compatible with most modems. For more information concerning this system, call 304263-8700 Monday through Friday 8:30

A.M. to 4:30 P.M. eastern time.

SEC. 2. NATURE OF CHANGES

.01 The title of this publication has

been changed by eliminating the word

“Series”. The new title is “Rules and

Specifications for Private Printing of Substitute Forms 1096, 1098, 1099, 5498 and

W–2G”.

.02 Two new forms were developed for

tax year 1998. They are Form 1098–E,

Student Loan Interest Statement (Exhibit

B); and Form 1098–T, Tuition Payments

Statement (Exhibit C).

.03 Form 1099–DIV, Dividends and

Distributions, has been completely revised. Box 1a, Gross dividends and other

distributions on stock, was eliminated.

The heading “Liquidation Distributions”

above boxes 5 and 6 was eliminated. The

new boxes and their titles are as follows:

– Box 1, Ordinary dividends

– Box 2a, Total capital gain distr.

– Box 2b, 28% rate gain

– Box 2c, Unrecap. sec. 1250 gain

– Box 2d, Section 1202 gain

– Box 3, Nontaxable distributions

– Box 4, Federal income tax withheld

– Box 5, Investment expenses

– Box 6, Foreign tax paid

– Box 7, Foreign country or U.S. possession

– Box 8, Cash liquidation distr.

– Box 9, Noncash liquidation distr.

.04 Form 5498 was retitled “IRA Contribution Information”; several box titles

were changed; and several new boxes

were added. The box numbers and titles

are as follows:

– Box 1, IRA contributions (other than

amounts in boxes 2,3 and 7-10)

– Box 2, Rollover contributions

– Box 3, Roth conversion amount

– Box 4, Fair market value of account

– Box 5, Life insurance cost included

in box 1

– Box 6, Check boxes for: IRA, SEP,

SIMPLE, Roth IRA, Roth conversion, Ed IRA

– Box 7, SEP contributions

– Box 8, SIMPLE contributions

– Box 9, Roth IRA contributions

– Box 10, Ed IRA contributions

.05 Forms 1098–E, 1098–T and

1099–LTC have been added to the list of

forms in Part A, Section 7.03(3) that require a telephone number on recipients’

statements.

.06 The IRS mailing address in Part A,

Sec. 3.01 has changed as follows:

Internal Revenue Service

Attn: IRP Coordinator, T:FS:S:P:S

5000 Ellin Road

Lanham, MD 20706

.07 A procedure was added which allows you to reverse the location of the

policyholder’s and insured’s name, street

address, city, state, and ZIP code for ease

of mailing on Copy C of Form 1099–

LTC. See Part A Section 3.02 and Section

7.03 (10).

.08 Procedures were added in Part A

Section 7.03(9) which allows states to include an additional box(es) on substitute

recipient statements for use by the state.

.09 The exhibits at the end of this publication have been realigned to include

new Forms 1098–E and 1098–T.

SEC. 3 REQUIREMENTS FOR

ACCEPTABLE SUBSTITUTE

FORMS 1096, 1098, 1099,

5498, and W–2G

.01 Paper substitutes for Form 1096

and Copy A of Forms 1098, 1099, 5498,

and W–2G that totally conform to the

specifications contained in this revenue

procedure may be privately printed and

filed as returns with the IRS. The reference to the Department of the Treasury Internal Revenue Service should be included on all such forms. If you are uncertain of any specification set forth

herein and want that specification clarified, you may submit a letter citing the

June 29, 1998

specification in question, giving your understanding and interpretation of the specification, and enclosing an example of the

form (if appropriate) to:

Internal Revenue Service

ATTN: IRP Coordinator – T:FS:S:P:S

5000 Ellin Road

Lanham, MD 20706

NOTE: Allow at least 45 days for the IRS

to respond.

.02 Copy B (Form 1098 – For Payer,

Form 1098–E – For Borrower, Form

1098–T – For Student, Form 1099–A –

For Borrower, Form 1099–C – For

Debtor, Form 1099–LTC – For Policyholder, Form 1099–S – For Transferor,

Other Forms 1099 – For Recipient, Forms

5498 and 5498–MSA – For Participant,

and Forms W–2G and 1099–R – To Be

Attached To the Federal Income Tax Return); and Copy C- (Form 1099–R – For

Recipient’s Records, Form W–2G – For

Winner’s Records and, Form 1099–LTC –

For Insured) must contain the information

specified in Part A, Section 7 in order to

constitute a “statement” or “official form”

under the applicable provisions of the Internal Revenue Code. The format of this

information is at the discretion of the filer

with the exception of the location of the

tax year, form number and form name

specified in Part A, Section 7.01(6) and

7.03(1) and composite Form 1099 statements specified in PART A, Section 7.02.

Note: On Copy C, Form 1099–LTC, you

may reverse the location of the policyholder’s name, street address, city, state,

and ZIP code with the location of the insured’s name, street address, city, state,

and ZIP code for ease in mailing.

.03 Forms 1096, 1098, 1099, 5498,

and W–2G are subject to annual review

and possible change. Therefore, filers are

cautioned against overstocking supplies

of privately printed substitutes. THE

SPECIFICATIONS CONTAINED IN

THIS REVENUE PROCEDURE APPLY

TO 1998 FORMS ONLY.

.04 Proposed substitutes for Copy A

that do not conform to the specifications

in this revenue procedure are not acceptable. Further, if you file such forms with

IRS, you may be subject to a penalty for

failure to file an information return under

section 6721 of the Internal Revenue

Code (IRC). Generally, the penalty is $50

for each failure to file a form (up to

$250,000) that the IRS cannot accept as a

June 29, 1998

return because it does not meet the provisions in this revenue procedure. No IRS

office is authorized to allow deviations

from this revenue procedure.

SEC. 5. INSTRUCTIONS FOR

PREPARING PAPER FORMS

THAT WILL BE FILED WITH THE

IRS (Copy A)

SEC. 4. DEFINITIONS

.01 The form recipient’s name, street

address, city, state, and ZIP code information should be TYPED OR MACHINE

PRINTED IN BLACK INK in the same

format as shown on the official IRS form.

Although handwritten forms will be accepted, in order for IRS to process the

submitted forms in the most economical

manner, the IRS prefers that filers TYPE

OR MACHINE PRINT data entries. In

addition, filers should insert data in the

middle of blocks well separated from

other printing and guidelines, and take

other measures to guarantee a clear, dark

black, sharp image. Carbon copies and

photocopies are not acceptable. The city,

state, and ZIP code must be on the same

line.

.02 The name of the appropriate form

recipient must be shown on the first or

second name line in the area on the form

provided for the form recipient’s name.

No descriptive information or other name

may precede the form recipient’s name.

Only ONE form recipient’s name may appear on the first name line of the form. If

the names of multiple recipients must be

set forth on the form, on the first name

line insert the recipient name that corresponds to the recipient taxpayer identification number (TIN) shown on the form.

Place the other form recipients’ names on

the succeeding name line (up to 2 name

lines are allowable). Because certain

states require that trust accounts be provided in a different format, generally filers should provide information returns reflecting payments to trust accounts with

(1) the trust’s employer identification

number (EIN) in the recipient’s TIN area,

(2) the trust’s name on the recipient’s first

name line, and (3) the name of the trustee

on the recipient’s second name line.

.03 You should use the account number box for an account number designation. This number must not appear anywhere else on the form, and this box may

not be used for any other item. Showing

the account number is optional. However, it may be to your benefit to include

the recipient’s account number or designation on paper documents if your system

of records uses the account number or

.01 The term “form recipient” means

the person to whom you are required by

law to furnish a copy of the official form

or information statement: i.e., for Form

1098, the recipient is the “payer/borrower”; Form 1098–E, the “borrower”;

Form 1098–T, the “student”; Form

1099–A, the “borrower”; Form 1099–C,

the “debtor”; Form 1099–LTC, “the policyholder” and the insured”; Form

1099–S, the “transferor”; other Forms

1099, the payment recipient; Forms 5498

and 5498–MSA, the “participant”; and

Form W–2G, the “winner.”

.02 The term “filer” means the person

or organization required by law to file a

form listed in Part A, Section 1.01 with

the IRS. Thus, a filer may be a payer, a

creditor, a recipient of mortgage or student loan interest payments, an educational institution, a broker, a barter exchange, a person reporting real estate

transactions, a trustee or issuer of any individual retirement arrangement or medical savings account, or a lender who acquires an interest in secured property or

who has reason to know that the property

has been abandoned.

.03 The term “substitute form” means

a paper substitute of Copy A of an official

form listed in Part A, Section 1.01 that totally conforms to the provisions in this

revenue procedure.

.04 The term “substitute form recipient

statement” means a paper statement of the

information reported on a form listed in

PART A, Section 1.01 that must be furnished to a person (form recipient), as so

defined under the applicable provisions of

the Internal Revenue Code and the applicable regulations.

.05 A composite substitute statement is

one in which two or more required statements (e.g., Forms 1099–INT and

1099–DIV) are furnished to the recipient

on one document. However, each statement must be separately designated and

must contain all the requisite Form 1099

information except as provided in Part A,

Section 7. A composite statement MAY

NOT be filed with the IRS. See Part A,

Section 7.02 and 7.04 for more information on composite statements.

1998–26 I.R.B.

designation in conjunction with, or rather

than, the name, social security number, or

employer identification number for identification purposes. If you furnish the account number, the IRS will include it in

future notices to you about backup withholding. If you use window envelopes

and reduced rate mail to mail statements

to recipients, be sure the account number

does not appear in the window. Otherwise the Postal Service may not accept

them for mailing.

.04 Machine printed forms should be

printed using a 6 lines/inch option, and

should be printed in 10 pitch pica (i.e., 10

print positions per inch) or 12 pitch elite

(i.e., 12 print positions per inch). Proportional spaced fonts are unacceptable.

.05 DO NOT use a felt tip marker. The

machine used to “read” paper forms generally cannot “read” this ink type.

.06 Substitute forms prepared in continuous or strip form must be burst and

stripped to conform to the size specified

for a single sheet before they are filed

with IRS. The size specified does not include pinfeed holes. Pinfeed holes MUST

NOT be present on forms filed with the

IRS.

.07 Use decimal points to indicate dollars and cents. DO NOT use dollar signs

($), ampersands (&), asterisks (*), commas (,), or other special characters in the

numbered money boxes. Example:

2000.00 is acceptable.

.08 DO NOT FOLD Forms 1096,

1098, 1099, or 5498 being mailed to IRS.

Mail these forms flat in an appropriately

sized envelope or box. Folded documents

cannot be readily moved through the

scanner transport used in IRS processing.

.09 DO NOT STAPLE Forms 1096 to

the returns being transmitted. Staple

holes in the vicinity of the return code

number reduce the IRS’s ability to machine scan the type of documents.

.10 DO NOT type other information

on Copy A. DO NOT cut or separate the

individual forms on the sheet of forms of

Copy A (except Forms W–2G).

.11 Mail completed paper forms to the

IRS service center specified on the back

of Form 1096 and in the 1998 “Instructions for Forms 1099, 1098, 5498, and

W–2G.” Specific information needed to

complete the forms in this revenue procedure is given in those instructions. A

chart is included in those instructions giv-

1998–26 I.R.B.

ing a quick guide to which form must be

filed to report a particular payment.

SEC. 6. RESERVED

SEC. 7. SUBSTITUTE STATEMENTS TO FORM RECIPIENTS

AND FORM RECIPIENT COPIES

If you do not use the official IRS form

to furnish statements to recipients, you

must furnish an acceptable substitute

statement. To be acceptable, your substitute statement must comply with the rules

in this section. In general, see Regulations sections 1.6042–4, 1.6044–5,

1.6049–6, and 1.6050N–1 on the manner

in which certain statements must be provided to recipients (statement mailing requirements for most Forms 1099–DIV

and 1099–INT, all Forms 1099–OID and

1099–PATR, and Form 1099–MISC or

1099–S for royalties). Note: A trustee of

a grantor-type trust may choose to file

Forms 1099 and furnish a statement to the

grantor under Regulations section 1.671–

4(b)(2)(iii) and (b)(3)(ii). The statement

required by those regulations is not subject to the requirements in this Section 7.

.01 SUBSTITUTE STATEMENTS TO

RECIPIENTS – Forms 1099–INT (except

for interest reportable under section

6041), 1099–DIV (except for section

404(k) dividends), 1099–OID, and 1099–

PATR ONLY. You may furnish form recipients with Copy B of the official Form

1099–INT, DIV, OID, or PATR or a substitute Form 1099 (form recipient statement) if it contains the same language as

that of the official IRS form (such as aggregate amounts paid to the form recipient, any backup withholding, the name,

address, and TIN of the person making

the return, and any other information required by the official form). Information

not required by the official form should

not be included on the substitute form except state tax withholding information.

You may enter a total of the individual accounts listed on the form only if they have

been paid by the same payer. For example, if you are listing interest paid on several accounts by one financial institution

on Form 1099–INT, you may also enter

the total interest amount. You may also

enter a date next to the corrected box if

that box is checked.

A substitute form recipient statement

for Forms 1099–INT, 1099–DIV,

1099–OID, or 1099–PATR must comply

with the following requirements.

(1) Box captions and numbers that are

applicable must be clearly identified,

using the same wording and numbering as

on the official form. However on Form

1099–INT, if box 3 is not on your substitute form, you may drop “not included in

box 3” from the box 1 caption.

(2) The form recipient statement must

contain all applicable form recipient instructions provided on the front and back

of the official IRS form. Those instructions may be provided on a separate sheet

of paper.

(3) The form recipient statement must

contain the following statement in bold

and conspicuous type, “This is important tax information and is being furnished to the Internal Revenue Service.

If you are required to file a return, a

negligence penalty or other sanction

may be imposed on you if this income is

taxable and the IRS determines that it

has not been reported.”

(4) The box caption “Federal income

tax withheld” must be in bold face type

on the form recipient statement.

(5) The form recipient statement must

contain the Office of Management and

Budget (OMB) number as shown on the

official IRS form. See Part D, Section 2.

(6) The form recipient statement must

contain the tax year 1998, form number

(e.g., Form 1099–INT), and form name

(e.g., Interest Income) of the official IRS

Form 1099 for which it substitutes prominently displayed together in one area of

the statement. For example, the tax year,

form number, and form name could be

shown in the upper right part of the statement. Each copy must be appropriately

labeled (such as Copy B, For Recipient)

(see Part D, Section 1.02 for applicable

labels and arrangement of assembly of

forms). NOTE: DO NOT include the

words “Substitute for” or “In lieu of” on

the form recipient statement.

(7) Layout and format of the form is at

the discretion of the filer. However, IRS

encourages the use of statements with

boxes so that the statement has the appearance of a form and can be easily distinguished from other nontax statements.

(8) Each Form 1099–DIV; 1099–INT;

1099–OID; and 1099–PATR recipient

statement must include the telephone

number of a person to contact: The tele-

June 29, 1998

phone number must be conspicuous

but may appear anywhere on the recipient statement.

(9) Until new regulations are issued,

the IRS will not assess penalties for the

use of a logo (including the name of the

payer in any typeface, font, or stylized

fashion and/or a symbolic icon) or slogan

on a statement to a recipient if the logo or

slogan is used by the payer in the ordinary

course of its trade or business. In addition, use of the logo or slogan must not

make it less likely that a reasonable payee

will recognize the importance of the statement for tax reporting purposes.

(10) A mutual fund family may separately state on one document (e.g., one

piece of paper) the dividend income

earned by a recipient from each fund

within the family of funds as required by

Form 1099–DIV. However, each fund

and its earnings must be separately stated.

The form must contain an instruction to

the recipient that each fund’s dividends

and name, not the name of the mutual

fund family, must be reported on the recipient’s tax return. The form cannot

contain an aggregate total of all funds.

In addition, a mutual fund family may

furnish a single statement (as a single

filer) for Forms 1099–INT, DIV, and OID

information. Each fund and its earnings

must be separately stated. The form must

contain an instruction to the recipient that

each fund’s earnings and name, not the

name of the mutual fund family, must be

reported on the recipient’s tax return.

The form cannot contain an aggregate

total of all funds.

.02 COMPOSITE SUBSTITUTE

STATEMENTS – FORMS 1099–INT

(except for interest reportable under

section 6041), 1099–DIV (except for

section 404(k) dividends)), 1099–OID,

1099–PATR, FORM 1099–MISC (FOR

ROYALTIES ONLY), AND FORM

1099–S (FOR ROYALTIES ONLY). –

A composite form recipient statement is

permitted for reportable payments of interest, dividends, original issue discount,

patronage dividends, and royalties (Forms

1099–INT, DIV, MISC (for royalties

only) OID, PATR or S (for royalties only)

when one payer is reporting more than

one of these payments during a calendar

year to the same form recipient. Generally, do not include any other Form 1099

information (e.g., 1098 or 1099–A) on a

June 29, 1998

composite statement with the information

required on the forms listed in the preceding sentence. Exception: A filer may include Form 1099–B information on a

composite form with the forms listed

above. Although the composite form recipient statement may be on one sheet, the

format of the composite form recipient

statement must satisfy the following requirements in addition to the requirements listed in Section 7.01 above.

(1) All information pertaining to a particular type of payment must be located

and blocked together on the form and

must be separate from any information

covering other types of payments included on the form. For example, if you

are reporting interest and dividends, the

Form 1099–INT information must be

presented separately from the Form

1099–DIV information.

(2) The tax year, form number, and

form name of the official IRS form for

which the composite form recipient statement substitutes must be prominently displayed together in one area at the beginning of each appropriate block of

information.

(3) Any information required by the

official IRS forms that would otherwise

be repeated in each information block is

only required to be listed once in the first

information block on the composite form.

For example, there is no requirement to

report the name of the filer in each information block. This rule does not apply to

any money amounts, e.g., Federal income

tax withheld, or to any other information

that applies to money amounts.

(4) A composite statement shall be

considered an acceptable substitute only

if the type of payment and the recipient’s

tax obligation with respect to the payment

are no less clear than if each required

statement were furnished separately on an

official form.

.03 SUBSTITUTE STATEMENTS TO

RECIPIENTS – FORMS 1098, 1098–E,

1098–T, 1099–A, 1099–B, 1099–C,

1099–G, 1099–LTC, 1099–MISC,

1099–MSA, 1099–R, 1099–S, 5498,

5498–MSA, W–2G, AND CERTAIN

FORMS 1099–INT AND 1099–DIV.

Statements to form recipients for Forms

1098, 1098–E, 1098-T, 1099–A, 1099–B,

1099–C, 1099–G, 1099–LTC, 1099–

MISC, 1099–MSA, 1099–R, 1099–S,

5498, 5498–MSA, 1099–DIV only for

section 404(k) dividends reportable

under section 6047, and 1099–INT only

for interest of $600 or more made in the

course of a trade or business reportable

under section 6041 can be copies of the

official forms or an acceptable substitute.

If you do not use the official form as the

form recipient statement, to be acceptable, the substitute recipient statement

must meet the following requirements:

(1) The tax year, form number, and

form name must be the same as the official form, and must be prominently displayed together in one area of the statement. For example, they may be shown

in the upper right part of the statement.

(2) The filer’s and the form recipient’s

identifying information required on the

official IRS form must be included.

(3) Each substitute recipient statement

for Forms W–2G; 1098; 1098–E; 1098–T;

1099–A; 1099–B; 1099–DIV; 1099–G

(excluding state and local income tax refunds); 1099–INT; 1099–LTC; 1099–

MISC (excluding fishing boat proceeds);

1099–0ID; 1099–PATR; and 1099–S

must include the telephone number of a

person to contact. The telephone number must be conspicuous but may appear anywhere on the recipient statement. Although not required, payers

reporting on Forms 1099–C, 1099–MSA,

1099–R, 5498 and 5498-MSA are encouraged to furnish telephone numbers.

(4) All applicable money amounts and

information, including box numbers, required to be reported to the form recipient

must be titled on the form recipient statement in substantially the same manner as

those on the official IRS form. The box

caption “Federal income tax withheld”

must be in bold face type on the form recipient statement. Exception: If you are

reporting a payment as “Other income” in

box 3 of Form 1099–MISC, you may

substitute appropriate explanatory language for the box title. For example, for

payments of accrued wages and leave to a

beneficiary of a deceased employee, you

might change the title of box 3 to “Beneficiary payments” or something similar.

(You cannot make this change on Copy

A.)

(5) Appropriate instructions to the

form recipient, similar to those on the official IRS form, must be provided to aid

in the proper reporting of the items on the

form recipient’s income tax return. For

1998–26 I.R.B.

payments reported on Form 1099–B, the

requirement to include instructions that

are substantially similar to those on the

official IRS form may be satisfied by providing form recipients with a single set of

instructions with respect to all forms

1099–B statements required to be furnished in a calendar year. NOTE: If

Federal income tax is withheld and shown

on Form 1099–R or W–2G, Copy B (to

be attached to the tax return) and Copy C

(for recipient’s/winner’s records) must be

furnished to the recipient. If Federal income tax is not withheld, only Copy C of

Forms 1099–R and W–2G is required to

be furnished. However, for Form

1099–R, instructions similar to those contained on the back of the official Copy B

and Copy C of Form 1099–R must be

furnished to the recipient. For convenience, you may choose to provide both

Copies B and C of Form 1099–R to the

recipient.

(6) The quality of carbon used to produce statements to recipients must meet

the following standards:

(a) all copies must be CLEARLY

LEGIBLE;

(b) all copies must have the capability to be photocopied;

(c) fading must not be of such a degree as to preclude legibility and the ability to photocopy. In general, black chemical transfer inks are preferred; other

colors are permitted only if the above

standards are met. Hot wax and cold carbon spots are NOT permitted on any of

the internal form plies. These spots are

permitted on the back of a mailer top envelope ply.

(7) A mutual fund family may separately state on one document (e.g., one

piece of paper) the Form 1099–B information for a recipient from each fund as

required by Form 1099–B. However, the

gross proceeds, etc., from each transaction within a fund must be separately

stated. The form must contain an instruction to the recipient that each fund’s

amount and name, not the name of the

mutual fund family, must be reported on

the recipient’s tax return. The form cannot contain an aggregate total of all funds.

(8) For Form 1099–S, you may use a

Uniform Settlement Statement under the

Real Estate Settlement Procedures Act of

1974 (RESPA) as the written statement to

the transferor if it is conformed by includ-

1998–26 I.R.B.

ing on the statement the legend described

in (12)(i) below and by designating which

information on the Uniform Settlement

Statement is being reported to IRS on

Form 1099–S.

(9) For reporting state income tax

withholding and state payments, states

may add an additional box(es) to their recipient copies as appropriate (You cannot

make this change on Copy A.)

(10) On Copy C, Form 1099–LTC, you

may reverse the location of the policyholder’s name, street address, city, state,

and ZIP code with the location of the insured’s name, street address, city, state,

and ZIP code for ease in mailing.

(11) Logos are permitted on substitute

recipient statements for the forms listed in

Section 7.03.

(12) Form recipient statements must

contain the following legends:

(a) Form 1098—(i) “The information in boxes 1, 2 and 3 is important tax

information and is being furnished to the

Internal Revenue Service. If you are required to file a return, a negligence

penalty or other sanction may be imposed

on you if the IRS determines that an underpayment of tax results because you

overstated a deduction for this mortgage

interest or for these points or because you

did not report this refund of interest on

your return.” (ii) “The amount shown

may not be fully deductible by you on

your Federal income tax return. Limitations based on the cost and value of the

secured property may apply. In addition,

you may only deduct an amount of mortgage interest to the extent it was incurred

by you, actually paid by you, and not reimbursed by another person.”

(b) Form 1098–E—“This is important tax information and is being furnished to the Internal Revenue Service. If

you are required to file a return, a negligence penalty or other sanction may be

imposed on you if the IRS determines that

an underpayment of tax results because

you overstated a deduction for student

loan interest.”

(d) Forms 1099–A and 1099–C—

“This is important tax information and is

being furnished to the Internal Revenue

Service. If you are required to file a return, a negligence penalty or other sanc-

tion may be imposed on you if taxable income results from this transaction and the

IRS determines that it has not been reported.”

(e) Forms 1099–B, 1099–DIV,

1099–G, 1099–INT, 1099–MISC,

1099–OID, 1099–PATR, and W–2G

(Copy C)—“This is important tax information and is being furnished to the Internal Revenue Service. If you are required

to file a return, a negligence penalty or

other sanction may be imposed on you if

this income is taxable and the IRS determines that it has not been reported.”

Copy B of Form W–2G must state “This

information is being furnished to the Internal Revenue Service. Report this income on your Federal tax return. If this

form shows Federal income tax withheld

in box 2, attach this copy to your return.”

(f) Form 1099–LTC, Copy B—

“This is important tax information and is

being furnished to the Internal Revenue

Service. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this item is

required to be reported and the IRS determines that it has not been reported.”

Copy C—“Copy C is provided to you for

information only. Only the policyholder

is required to report this information on a

tax return.”

(g) Form 1099–MSA—“This information is being furnished to the Internal

Revenue Service.”

(h) Form 1099–R, Copy B—“Report this income on your Federal tax return. If this form shows Federal income

tax withheld in box 4, attach this copy to

your return.” “This information is being

furnished to the Internal Revenue Service.” Copy C—“This information is

being furnished to the Internal Revenue

Service.”

(i) Form 1099–S—“This is important tax information and is being furnished to the Internal Revenue Service. If

you are required to file a return, a negligence penalty or other sanction may be

imposed on you if this item is required to

be reported and the IRS determines that it

has not been reported.”

(j) Form 5498—“This information

is being furnished to the Internal Revenue

Service.” Note: If you do not furnish another statement to the participant because

no contributions were made for the year,

the statement of the fair market value of

June 29, 1998

the account must contain this legend and

a designation of which information is

being furnished to the Internal Revenue

Service.

(k) Form 5498–MSA—“The information in boxes 1 through 5 is being furnished to the Internal Revenue Service.”

.04 COMPOSITE SUBSTITUTE

STATEMENT – FORMS SPECIFIED

IN 7.03 ONLY.—A composite form recipient statement for forms specified in

7.03 is permitted when one filer is reporting more than one type of payment during

a calendar year to the same form recipient. A composite statement is not allowable for a combination of forms listed in

7.01 and forms listed in 7.03 except that a

filer may report Form 1099–B information on a composite form with the forms

listed in 7.01 as described in 7.02. In addition, royalties reported on Form

1099–MISC or 1099–S may be reported

on a composite form only with forms

listed in 7.01. Although the composite

form recipient statement may be on one

sheet, the format of the composite form

recipient statement must satisfy the requirements listed in 7.02 above in addition to the requirements specified in 7.03.

A composite statement of Forms 1098

and 1099–INT (for interest reportable

under section 6049) IS NOT ALLOWABLE.

PART B—SPECIFICATIONS FOR

SUBSTITUTE FORMS TO BE

FILED WITH IRS (EXCEPT

Form W–2G)

SEC. 1. GENERAL

.01 The following specifications prescribe the format requirements for Forms

1096 and Copy A of Forms 1098, 1099,

and 5498. (See Part C for Form W–2G

specifications.)

.02 The form identifying number (e.g.,

9191 for Form 1099–DIV) must be

printed in nonreflective black carbonbased ink in print positions 15 through 19

using an OCR A font. The check boxes

located to the right of the form identifying

number must be 10-point boxes, the void

check box is in print position 25 and the

corrected check box in position 33. These

measurements are from the left edge of

the paper, not including the perforated

strip.

June 29, 1998

SEC. 2. SPECIFICATIONS FOR

FORM 1096 AND COPY A OF

FORMS 1098, 1099 AND 5498

.01 The substitute form must be an

exact replica of the official IRS form with

respect to layout and content. NOTE: To

determine the correct form measurements, see Exhibits A through T at the end

of this publication. Hot wax and cold carbon spots are not permitted on any of the

internal form plies. These spots are permitted on the back of a mailer top envelope ply. Use of chemical transfer paper

for Copy A is acceptable. The Government Printing Office (GPO) symbol must

be deleted.

.02 Color and quality of paper for

Copy A (cut sheets and continuous pinfeed forms) as specified by JCP Code 025, dated November 29, 1978, must be

white 100% bleached chemical wood, optical character recognition (OCR) bond

produced in accordance with the following specifications:

NOTE: Reclaimed fiber in any percentage is permitted provided the requirements of this standard are met.

(1) Acidity: Ph value, average,

not less than . . . . . . . . . . . . . . 4.5

(2) Basis Weight 17 ⫻ 22 500

cut sheets . . . . . . . . . . . . . . 18–20

Metric equivalent—g/m2 . . . . . 75

A Tolerance of ±5 pct. shall

be allowed.

(3) Stiffness: Average, each

direction, not less than—

milligrams . . . . . . . . . . . . . . . . 50

(4) Tearing strength: Average,

each direction, not less than—

grams . . . . . . . . . . . . . . . . . . . . .40

(5) Opacity: Average, not less

than—percent . . . . . . . . . . . . . . 82

(6) Thickness: Average—inch—

0.0038

Metric equivalent—mm—0.097

A tolerance of +0.0005 inch

(0.0127 mm) shall be allowed.

Paper shall not vary more than

0.0004 inch (0.0102 mm) from

one edge to the other.

(7) Porosity: Average, not less

than—seconds . . . . . . . . . . . . . 10

(8) Finish (smoothness): Average,

each side—seconds . . . . . . 20–55

For information only, the

Sheffield equivalent—

units . . . . . . . . . . . . . . . . 170–100

(9) Dirt: Average, each side,

not to exceed—parts per

million . . . . . . . . . . . . . . . . . . . . 8

.03 All printing on Copy A of Forms

1098, 1099, 5498 and the printing on

Form 1096 above the statement: “Please

return this entire page to the Internal

Revenue Service. Photocopies are NOT

acceptable.” must be in red OCR dropout

ink, Flint J–6983 (formerly SinclairValentine) or an exact match, except for

the 4-digit form identifying numbers,

which must be printed in non-reflective

carbon-based black ink. The shaded areas

of any substitute form should generally

correspond to that present on the official

form. All printing including and below

the Form 1096 statement may be in any

shade or tone of black ink. Black ink

should only appear on the lower portion

of the reverse side of Form 1096 where it

would not bleed through and interfere

with scanning. NOTE: The instructions

on the back of Form 1096, which include

filing addresses, must be printed. The

instructions to filers printed on the back

of the copy designated for the Payer, Recipient for Form 1098 and 1098–E,

Lender for Form 1099–A, Creditor for

Form 1099–C, Filer for Form 1098–T and

1099–S, or Trustee or Issuer for Forms

5498 and Form 5498–MSA, may be

printed in any ink color or tone. Separation between fields must be 0.1 inch.

Other than the Form 1099–R, the numbered captions are printed as a solid with

no shaded background. Other printing requirements are discussed below.

OCR Specifications

The contractor must have or initiate a

quality control program to assure OCR

ink density. In addition, the contractor

must have access to either a MacBeth

PCM-II tester or a Kidder 082A tester to

evaluate the ink at regular intervals

throughout a shift.

Paper and Ink

Readings will be made when printed on

approved 20 lb. white OCR bond with a

reflectance of not less than 80%. Black

ink used must not have a reflectance

greater than 15%. These readings are

based on requirements of the ”ScanOptics Series 9000” Optical Scanner

using Flint Ink (Formerly known as Sinclair – Valentine J–6983 red ink) or equal.

1998–26 I.R.B.

MacBeth PCM II Tester

The tested Print Contrast Signal (PCS)

values when using the MacBeth PCM-II

tester on the “C” scale must range from

.01 minimum to .06 maximum.

Kidder 082A Tester

The tested Print Contrast Signal (PCS)

values when using the Kidder 082A tester

on the Infra Red (IR) scale must range

from .12 minimum to .21 maximum.

White calibration disc must be 100%,

sensitivity must be set at one (1).

Alternative Tester

If an alternative tester is used it must be

approved by the Government so that

tested (PCS) values can be established

with this equipment. Approval may be

obtained by writing to the following address:

Commissioner of Internal Revenue

Attn: HR:F:P:P Room 1237

Tax Forms Procurement Analyst

1111 Constitution Avenue, NW

Washington, DC 20224

.04 Typography – Type must be substantially identical in size and shape with

corresponding type on the official form.

All rules are either 1⁄2-point or 3⁄4-point.

Rules must be identical to that on the official IRS form. NOTE: The form identifying number must be nonreflective carbon-based black ink in OCR A Font.

.05 Dimension – Three Forms 1098,

1099, or 5498 (Copy A) are contained on

a single page, except Form 1099–R,

which contains two documents per page,

which is 8 inches wide (exclusive of any

snap-stubs and/or pinfeed holes) by 11

inches deep. There is a .33 inch top margin from the top of the corrected box, and

there is a .25 inch right margin. There is a

1/32” (0.0313”) tolerance for the right

margin. These measurements are constant for all Forms 1098, 1099 and 5498.

The measurements will be shown only

once in the exhibit section of this publication, on the Form 1098. Exceptions to

these measurements will be shown on the

remainder of exhibits. If the right and top

margins are properly aligned, the left margin for all forms will be correct. All margins must be free of all printing. See Exhibits A through T in this publication for

the correct form measurements.

1998–26 I.R.B.

.06 The depth of the individual trim

size of each form on a page must be the

same as that of the official form (3 2⁄3

inches, except 5 1⁄2 inches for Form

1099–R).

.07 The words “For Paperwork Reduction Act Notice and instructions for completing this form, see the 1998 Instructions for Forms 1099, 1098, 5498, and

W–2G” must be printed on Copy A. The

words “For more information and the Paperwork Reduction Act Notice, see the

1998 Instructions for Forms 1099, 1098,

5498, and W–2G” must be printed on

Form 1096.

.08 The OMB Number must be printed

on Copies A and Form 1096 in the same

location as that on the official form.

.09 Privately printed continuous substitute forms (Copy A) must be perforated

at each 11” (3 per page, or 2 per page for

1099–R) page depth. No perforations are

allowed between the 3-2⁄3” forms (or 5-1⁄2”

for Form 1099–R) on a single copy page

of Copy A.

.10 The words “Do NOT Cut or Separate Forms on This Page” must be

printed in red dropout ink (as required by

form specifications) between the three

forms, or two forms for Forms 1099–R.

NOTE: Perforations are required between

all the other individual copies (Copies B

and C, and Copies 1 and 2 for Form

1099–R and Form 1099–MISC, and

Copy D for Form 1099–R) included in

the set.

.11 Chemical transfer paper is permitted for Copy A only if the following standards are met:

(1) Only chemically backed paper is

acceptable for Copy A.

(2) Carbon coated forms are not permitted. Front and back chemically treated

paper cannot be processed properly by

machine.

(3) Chemically transferred images

must be black in color.

.12 Hot wax and cold carbon spots are

NOT permitted for Copy A. Interleaved

carbon should be black and must be of

good quality to assure legibility of information on all copies to preclude smudging. All copies must be CLEARLY LEGIBLE. Fading must not be of such a

degree as to preclude legibility.

.13 Printer’s symbol—The GPO symbol must not be printed on substitute

Copy A. Instead, the employer identifica-

tion number (EIN) of the forms printer

must be entered in the bottom margin on

the face of each individual form of Copy

A, or the bottom margin on the reverse

side of each Form 1096. THE FORM

MUST NOT CONTAIN THE STATEMENT “IRS APPROVED.”

.14 A postal indicia may be used if it

meets the following criteria: a) it is

printed in the OCR ink color prescribed

for the form; and b) no part of the indicia

is within 1 print position of the scannable

area.

.15 The Catalog Number (Cat. No.)

shown on the 1998 forms is used for IRS

distribution purposes and need not be

printed on any substitute forms.

PART C. SPECIFICATIONS FOR

SUBSTITUTE FORMS W–2G TO

BE FILED WITH IRS

SEC. 1. GENERAL

.01 The following specifications prescribe the format requirements for Form

W–2G—COPY A ONLY.

.02 A filer may file a substitute Form

W–2G with the IRS (hereinafter referred

to as “substitute Copy A”). The substitute

form (filed with the IRS) must be an exact

replica of the official form with respect to

layout and contents.

SEC. 2. SPECIFICATIONS FOR

COPY A OF FORMS W–2G

.01 Color and Quality of Paper—Paper

for Copy A must be white chemical wood

bond, or equivalent, 20 pound (basis 17 ⫻

22–500), plus or minus 5 percent. The

paper must consist substantially of

bleached chemical wood pulp and be free

from unbleached or ground wood pulp or

recycled printed paper. It also must be

suitably sized to accept ink without feathering.

.02 Color and Quality of Ink—All

printing must be in a high quality nongloss black ink. Bar codes should be free

from picks and voids.

.03 Typography—The type must be

substantially identical in size and shape

with that on the official form. All rules on

the document are either 1⁄2 point (.007

inch), 1 point (0.015 inch), or 3 point

(0.045). Vertical rules must be parallel to

the left edge of the document; horizontal

rules, to the top edge.

June 29, 1998

.04 Dimensions—The official form is

8 inches wide x 3-2⁄3 inches deep, exclusive of a 2⁄3 inch snap stub on the left side

of the form. The snap feature is not required on substitutes. The top and right

margins must be 1⁄4 inch plus or minus

.0313. If the top and right margins are

properly aligned, the left margin for all

forms will be correct. All margins must

be free of any printing. If the substitute

forms are in continuous or strip form,

they must be burst and stripped to conform to the size specified for a single

form.

(1) The width of a substitute Copy A

must be 8 inches. The left margin must be

free of all printing other than that shown

on the official form.

(2) The depth of a substitute Copy A

must be 3-2⁄3 inches.

.05 Hot wax and cold carbon spots are

not permitted on any of the internal form

plies. These spots are permitted on the

back of a mailer top envelope ply. Interleaved carbons, if used, should be black

and of good quality to preclude smudging.

.06 Printer’s Symbol—The Government Printing Office (GPO) symbol must

not be printed on substitute Forms W–2G.

Instead the employer identification number (EIN) of the forms printer must be

printed in the bottom margin on the face

of each individual form of Copy A of such

substitute forms. The form must not contain the statement “IRS approved.”

.07 The Catalog Number (Cat. No.)

shown on the 1998 Form W–2G is used

for IRS distribution purposes and need

not be printed on any substitute forms.

PART D. ADDITIONAL INSTRUCTIONS FOR FORMS 1098, 1099,

5498, AND W–2G

SEC. 1. OTHER COPIES

.01 Copies B, C, and in some cases D,

1, and 2, are included in the official assembly for the convenience of the filer.

There is no legal requirement that privately printed substitute forms include all

these copies. Copies B, and in some cases

Copies C, will satisfy the requirement of

the law and regulations concerning the

statement of information that is required

to be furnished to the form recipient.

NOTE: If an amount of Federal income

tax withheld is shown on Form W–2G or

June 29, 1998

1099–R, Copy B (to be attached to the tax

return) and Copy C must be furnished to

the recipient. Copy D (Forms 1099–R

and W–2G) may be desired as a filer

record copy. Only Copy A should be filed

with the IRS.

.02 Arrangement of Assembly- The

parts of the assembly must be arranged,

from top to bottom, as follows: (a) All

forms-Copy A “For Internal Revenue Service Center.” (b) Form 1098 – Copy B

“For Payer”; Copy C “For Recipient.” (c)

Form 1098-E – Copy B “For Borrower”;

Copy C “For Recipient.” (d) Form 1098–

T – Copy B “For Student”; Copy C “For

Filer.” (e) Form 1099–A – Copy B “For

Borrower”; Copy C “For Lender.”(f)

Forms 1099–B, 1099–DIV, 1099–G,

1099–INT, 1099–MSA, 1099–OID, and

1099–PATR - Copy B “For Recipient”;

Copy C “For Payer.” (g) Form 1099–C –

Copy B “For Debtor”; Copy C “For Creditor.” (h) Form 1099–LTC – Copy B “For

Policyholder”; Copy C “For Insured” and

Copy D “For Payer.” (i) Form

1099–MISC – Copy 1 “For State Tax Department”; Copy B “For Recipient”; Copy

2 “To be filed with recipient’s state income tax return, when required.”; Copy C

“For Payer.” (j) Form 1099–R – Copy 1

“For State, City, or Local Tax Department”; Copy B “Report this income on

your Federal tax return. If this form

shows Federal income tax withheld in box

4, attach this copy to your return.”; Copy

C “For Recipient’s Records”; Copy 2

“File this copy with your state, city, or

local income tax return, when required.”;

Copy D “For Payer.” (k) Form 1099–S –

copy B “For Transferor”; Copy C “For

Filer.”(l) Form 5498 - Copy B “For Participant”; Copy C “For Trustee or Issuer.”(m) Form 5498-MSA – Copy B

“For Participant”; Copy C “For Trustee.”

(n) Form W–2G – Copy 1 “For State Tax

Department”; Copy B “Report this income on your Federal tax return. If this

form shows Federal income tax withheld

in box 2, attach this copy to your return.”

Copy C “For Winner’s Records”; Copy 2

“Attach this copy to your state income tax

return, if required.”; Copy D “For Payer.”

.03 Perforations are required between

forms on all copies except Copy A to enable the separation of individual forms.

Copy A of Form W–2G may be perforated.

SEC. 2. OMB REQUIREMENTS

.01 Office of Management and Budget

(OMB) Requirements for Substitute

Forms—Public Law 96-511 requires that

: (1) OMB approve Internal Revenue Service tax forms, (2) each form show (in the

upper right corner) the OMB approval

number, and (3) the form (or its instructions) state why IRS is collecting the information, how it will be used and

whether it must be given to IRS. The official IRS forms or instructions contain this

information and any substitute must contain it also.

.02 The OMB requirements for substitute IRS forms are:

(1) All substitute forms, including

substitute statements to recipients, must

show the OMB number as it appears on

the official IRS form;

(2) For Copy A, the OMB number

must appear exactly as shown on the official IRS form;

(3) For any copy other than Copy A,

the OMB number must use one of the following formats:

(a) OMB No. XXXX–XXXX

(preferred) or;

(b) OMB # XXXX–XXXX.

(4) All substitute forms (Copy A

only) must state “For Paperwork Reduction Act Notice, see the 1998 Instructions

for Forms 1099, 1098, 5498, and W–2G.”

.03 The official OMB numbers may be

obtained from the official IRS printed

forms, and are also shown on the forms in

the exhibits.

SEC 3. REPRODUCIBLE COPIES

.01 As of April 30, 1996, IRS discontinued taking orders for reproducible and

information copies of federal tax materials. However, there are several new options available to obtain federal tax material. The new options are:

(1) Internal Revenue Information

Services (IRIS)—IRIS is housed within

FedWorld, known also as the Electronic

Marketplace of U.S. Government Information. IRIS at FedWorld can be reached

by:

(a) Modem (dial up) at 703-3218020,

(b) by Internet – Telnet to

iris.irs.ustreas.gov

(FTP) connect to – ftp.irs.ustreas.gov

1998–26 I.R.B.

(d) or by World Wide Web –

http://www.irs.ustreas.gov

(2) IRS Federal Tax Forms CDROM—The IRS also offers an alternative

to downloading electronic files from IRIS

and provides current and prior-year access

to tax forms and instructions through it’s

Federal Tax Forms CD-ROM. First offered during 1994, the CD will again be

available for the upcoming filing season.

For system requirements and to order the

1998 Federal Tax Forms CD-ROM contact

the Government Printing Office’s (GPO’s)

Superintendent of Documents either:

(a) by telephone 202-512-1800;

(b) electronically through GPO’s

Web Site at http://www.access.gpo.gov/

su_docs

1998–26 I.R.B.

(3) Government Printing Office

Superintendent of Documents Bookstores—The Government Printing Office

Superintendent of Documents Bookstores

also sell individual copies of tax forms,

instructions and publications. Call 202512-1800 to find the bookstore nearest to

you.

.02 Forms 1096, 1098, 1099 series,

and 5498 series are provided electronically on the IRS home page, IRIS bulletin

board system, and on the Federal Tax

Forms CD-ROM, but CANNOT be used

for filing with IRS when printed from a

conventional printer. These forms contain

drop-out ink requirements as described in

Part B, Section 2 of this publication.

SEC. 4. EFFECT ON OTHER

REVENUE PROCEDURES

Revenue Procedure 97–32, 1997–27

I.R.B. 9, covering paper returns and statements for payments made during the 1997

calendar year is hereby superseded. Revenue Procedure 97–32A, Addendum to

Revenue Procedure 97–32, 1997–27

I.R.B. 9 which provides the Rules and

Specifications for Private Printing of

Forms 1096, 1099 Series, 5498 and

W–2G is hereby superseded.

June 29, 1998

1998–26 I.R.B.

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1998–26 I.R.B.

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1998–26 I.R.B.

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1998–26 I.R.B.

June 29, 1998

1998–26 I.R.B.

June 29, 1998

1998–26 I.R.B.

June 29, 1998

1998–26 I.R.B.

June 29, 1998

1998–26 I.R.B.

June 29, 1998

1998–26 I.R.B.

June 29, 1998

1998–26 I.R.B.

June 29, 1998

26 CFR 601.204: Changes in accounting periods

and in methods of accounting.

(Also Part I, sections 197, 263, 263A; 1.263A-2.)

Rev. Proc. 98–39

SECTION 1. PURPOSE

.01 This revenue procedure modifies

Rev. Proc. 97–35, 1997–33 I.R.B. 11,

which describes three alternative methods

of accounting for package design costs:

(1) the capitalization method, (2) the design-by-design capitalization and 60month amortization method, and (3) the

pool-of-cost capitalization and 48-month

amortization method. A taxpayer with

package design costs within the scope of

Rev. Proc. 97–35 may change to or adopt

any one of these three methods. The procedures for a taxpayer to change to one of

these three methods are provided in Rev.

Proc. 97–37, 1997–33 I.R.B. 18, which

provides simplified and uniform procedures to obtain automatic consent to make

this and other changes in methods of accounting.

.02 Rev. Proc. 97–35 is modified to

make clear that capitalization under § 263

(and not § 263A) of the Internal Revenue

Code is applicable for package design

costs incurred in taxable years beginning

after December 31, 1993, pursuant to

§ 1.263A–2(a)(2)(ii) of the Income Tax

Regulations. In addition, Rev. Proc. 97–

35 is further modified to make clear that it

does not apply to the costs of a package

design that is an “amortizable § 197 intangible” as defined in § 197(c). Rev. Proc.

97–35 will appear in 1997–2 C.B. as

modified by this revenue procedure.

SECTION 2. MODIFICATIONS

.01 Section 1 of Rev. Proc. 97–35 is

modified by deleting section 1.02.

.02 Section 2 of Rev. Proc. 97–35 is

modified by adding the word “design”

after the word “package” in the next to

last sentence.

.03 Section 3.03 of Rev. Proc. 97–35 is

modified by changing the regulation cite,

deleting the last sentence and a cite, and

adding a new last sentence and a cite to

read as follows:

See former § 1.263A–1T(a)(5)(iii) of

the temporary regulations. Section

263A and the temporary regulations

thereunder required that costs incurred after December 31, 1986, in

June 29, 1998

taxable years beginning before January 1, 1994, must be capitalized to

the extent that they were attributable

to the development and design of

product packages. See Rev. Rul.

89–23.

.04 Sections 3.04 and 3.05 of Rev.

Proc. 97–35 are renumbered as sections

3.07 and 3.08, respectively, and new sections 3.04, 3.05, and 3.06 are added to

read as follows:

.04 Section 1.263A–2(a)(2)(ii) of the

final regulations, which, in the case of

property that is not inventory, applies to

costs incurred in taxable years beginning

after December 31, 1993, modified the

definition of tangible personal property to

exclude from “other similar property” any

intellectual or creative property that is

embodied in a tangible medium that is

mass distributed merely incident to the

distribution of a principal product or good

of the creator. Thus, package design costs

incurred in taxable years beginning after

December 31, 1993, are not treated as

costs of tangible personal property under

§ 263A.

.05 Accordingly, taxpayers are required to: (1) capitalize under § 263 package design costs incurred prior to January

1, 1987, or in taxable years beginning

after December 31, 1993; and (2) capitalize under § 263A package design costs incurred after December 31, 1986, in taxable years beginning before January 1,

1994.

.06 Section 197(a), which is generally applicable to property acquired after

August 10, 1993, provides that a taxpayer

is entitled to an amortization deduction

with respect to any “amortizable § 197 intangible” (as defined in § 197(c)), which

may include the costs of certain package

designs. Section 197(b) provides that,

other than the amortization provided in

§ 197(a), no other depreciation or amortization is allowable for an amortizable

§ 197 intangible.

.05 Section 3.05 of Rev. Proc. 97–35

(new section 3.08) is modified by inserting in the first sentence after “Thus,” the

following: “except for the costs of a package design that is an amortizable § 197 intangible,”.

.06 Section 4 of Rev. Proc. 97–35 is

modified to read as follows:

.01 Applicability. Except as provided in section 4.02 of this revenue pro-

cedure, this revenue procedure applies to

the costs of a package design as defined in

section 2 of this revenue procedure.

.02 Inapplicability. This revenue

procedure does not apply to the costs of a

package design that is an amortizable

§ 197 intangible as defined in § 197(c).

.07 Sections 5.01(2)(the capitalization

method), 5.02(2)(the design-by-design

capitalization and 60-month amortization

method), and 5.03(2)(the pool-of-cost

capitalization and 48-month amortization

method) of Rev. Proc. 97–35 are modified

to read as follows:

.01(2) Computation of basis. The

basis of each package design (or modification to the design) subject to capitalization

is determined by applying the provisions

of § 263 and the regulations thereunder to

costs incurred prior to January 1, 1987, or

in taxable years beginning after December

31, 1993, and by applying the provisions

of § 263A and the regulations thereunder

to costs incurred after December 31, 1986,

in taxable years beginning before January

1, 1994 (regardless of the tax year the design (or modification to the design) is

placed in service). The costs required to

be capitalized are described in section 2 of

this revenue procedure.

.02(2) Computation of basis. Under

the design-by-design capitalization and

60-month amortization method, the basis

of each package design (or modification

of the design) subject to capitalization

must be determined by applying the provisions of § 263 and the regulations thereunder to costs incurred prior to January 1,

1987, or in taxable years beginning after

December 31, 1993, and by applying the

provisions of § 263A and the regulations

thereunder to costs incurred after December 31, 1986, in taxable years beginning

before January 1, 1994 (regardless of the

tax year the design (or modification to the

design) is placed in service). The costs

required to be capitalized are described in

section 2 of this revenue procedure.

.03(2) Costs subject to capitalization. All package design costs are subject

to capitalization without regard to

whether the costs create a package design

(or modification to the design) having an

ascertainable useful life that extends substantially beyond the end of the tax year

in which the costs are incurred. Thus, all

package design costs incurred prior to

January 1, 1987, or in taxable years be-

1998–26 I.R.B.

ginning after December 31, 1993, that are

capitalized under § 263 and the regulations thereunder or that would be capitalized under § 263 and the regulations

thereunder but for the fact that the costs

create a package design (or modification

to the design) having an ascertainable

useful life that does not extend substantially beyond the end of the tax year in

which the costs are incurred must be capitalized. All package design costs incurred

after December 31, 1986, in taxable years

beginning before January 1, 1994, that are

capitalized under § 263A and the regulations thereunder or that would be capitalized under § 263A and the regulations

thereunder but for the fact that the costs

create a package design (or modification

to the design) having an ascertainable

1998–26 I.R.B.

useful life that does not extend substantially beyond the end of the tax year in

which the costs are incurred must be capitalized. The costs required to be capitalized are described in section 2 of this revenue procedure.

.08 Section 5 (CHANGING PACKAGE DESIGN COSTS METHOD) of

Rev. Proc. 97–35 is renumbered as new

section 6.

.09 Sections 6 (INQUIRIES), 7 (EFFECT ON OTHER DOCUMENTS), and

8 (EFFECTIVE DATE), of Rev. Proc.

97–35 are renumbered as new sections 7,

8, and 9, respectively.

.10 Section 7 (EFFECT ON OTHER

DOCUMENTS) of Rev. Proc. 97–35 (new

section 8) is modified to read as follows:

Rev. Rul. 89–23, 1989–1 C.B. 85, is

modified. Rev. Proc. 90–63, 1990–2

C.B. 664, is modified, and as modified, is superseded. However, see

the transition rules in section 13.02

of Rev. Proc. 97–37.

SECTION 3. EFFECTIVE DATE

This revenue procedure is effective on

August 18, 1997.

DRAFTING INFORMATION

The principal author of this revenue

procedure is Dwight N. Mersereau of the

Office of Assistant Chief Counsel (Income Tax and Accounting). For further

information regarding this revenue procedure, contact Mr. Mersereau on (202)

622-4970 (not a toll free call).

June 29, 1998

Part IV. Items of General Interest

Notice of Proposed Rulemaking

and Notice of Public Hearing

Constitution Avenue NW., Washington,

DC.

Trading Safe Harbors

FOR FURTHER INFORMATION CONTACT: Milton Cahn of the Office of Associate Chief Counsel (International),

(202) 622-3870; concerning submissions

and the hearing, LaNita Van Dyke, (202)

622-7190 (not toll-free numbers).

REG–106031–98

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Notice of proposed rulemaking

and notice of public hearing.

SUPPLEMENTARY INFORMATION:

Background

SUMMARY: This document contains

proposed rules for the treatment of foreign taxpayers trading in derivative financial instruments for their own account.

These proposed rules provide that foreign

taxpayers who effect transactions in derivative financial instruments for their

own accounts are not thereby engaged in

a trade or business in the United States if

they are not dealers in stocks, securities,

commodities or derivatives. These proposed rules affect foreign persons that

conduct such trading for their own account either directly through U.S. offices

or indirectly through partnerships or other

agents. This document also provides notice of a public hearing on these proposed

regulations.

DATES: Written comments must be received by September 10, 1998. Outlines

of oral comments to be discussed at the

public hearing scheduled for September

9, 1998, must be received by August 19,

1998.

ADDRESSES: Send submissions to:

CC:DOM:CORP:R (REG–106031–98),

room 5226, Internal Revenue Service,

POB 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be

hand delivered between the hours of 8

a.m. and 5 p.m. to: CC:DOM:CORP:R

(REG–106031–98), Courier’s Desk, Internal Revenue Service, 1111 Constitution

Avenue NW, Washington, DC. Alternatively, taxpayers may submit comments

electronically via the Internet by selecting

the “Tax Regs” option on the IRS Home

Page, or by submitting comments directly

to the IRS Internet site at http://www.irs.

ustreas.gov/prod/tax_regs/comments.html.

The public hearing will be held in room

2615, Internal Revenue Building, 1111

June 29, 1998

Section 864(b) of the Code provides

that the phrase “trade or business within

the United States” generally includes the

performance of personal services within

the United States at any time during the

taxable year but, under certain circumstances, does not include trading in

stocks, securities, or commodities through

an independent agent or for a taxpayer’s

own account (the “trading safe harbors”).

Regulations regarding certain aspects of

the trading safe harbors were promulgated

in 1972. Since the promulgation of these

regulations, the use of derivative financial

instruments has increased significantly.

This is due in large measure to the overall

expansion and growing sophistication of

global capital markets. Although guidance concerning the tax treatment of derivatives and notional principal contracts

has been issued under other provisions of

the Code (see, e.g., §§1.446–3, 1.863–

7(b)), the section 864(b) regulations have

not been modernized to take into account

the manner in which taxpayers customarily use derivative transactions.

Explanation of Provisions

1. In General

These proposed regulations provide

that foreign taxpayers who are not dealers

with respect to any derivative transactions, who are not otherwise dealers in

stocks, securities, or commodities, and

who enter into derivative transactions for

their own accounts are not engaged in

trade or business within the United States

solely by reason of those transactions.

The term “derivative” is defined as an interest rate, currency, equity or commodity

notional principal contract or an evidence

of an interest in, or derivative financial instrument in, any commodity, currency, or

any of the items described in Code section

475(c)(2)(A)–(D).

For purposes of these proposed regulations, the term “currency” is limited to

those currencies that are of a kind customarily dealt in on an organized commodity

exchange. No inference is intended, however, as to whether currencies that are not

traded on an organized commodity exchange are “of a kind” customarily dealt

in on an organized commodity exchange.

Comments are solicited on this issue.

Under the statutory safe harbors, taxpayers who are dealers in stocks and securities but not commodities may avail

themselves of the commodities trading

safe harbor of section 864(b)(2)(B)(ii),

and likewise, dealers in commodities but

not stocks and securities may avail themselves of the stocks and securities trading

safe harbor of section 864(b)(2)(A)(ii).

The proposed regulations, however, do

not specify into which statutory safe harbor any particular derivative transaction

falls. Accordingly, dealers in stocks, securities, commodities, or derivatives may

not avail themselves of the benefits of

these proposed regulations.

Treasury and the IRS are considering

the appropriate application of both the

stocks and securities safe harbor of section 864(b)(2)(A)(ii) and the commodities

safe harbor of section 864(b)(2)(B)(ii)

with respect to a dealer in a derivative

which arguably might be classified as

both a security and a commodity. Treasury and the IRS are also considering the

appropriate application of the section

864(b)(2)(A)(ii) and (B)(ii) safe harbors

to dealers in either stocks and securities or

commodities who enter into a derivative

transaction which arguably might be classified within both sections. Comments

are solicited on these points including the

classification of specific derivatives for

purposes of the safe harbors.

Comments are also solicited regarding

whether the final regulations should include derivative transactions in either the

stocks and securities, or commodities

trading safe harbors under sections

864(b)(2)(A)(i) and (B)(i). In particular,

the IRS solicits comments as to whether

certain dealers could inappropriately

avoid the limitations of section

864(b)(2)(C) with respect to derivative

1998–26 I.R.B.

transactions effected through independent

agents in the United States.

2. Eligible Nondealer

Until Treasury and the IRS determine

whether particular derivative transactions

should be classified under the stocks and

securities or commodities safe harbors,

the proposed regulations provide that derivative transactions (including hedging

transactions) do not constitute a U.S.

trade or business if the taxpayer meets the

newly proposed definition of an “eligible

nondealer.”

An eligible nondealer is defined as a

foreign resident taxpayer who is not a

dealer in stocks, securities, commodities

or derivatives at any time during the taxable year. Dealer status is determined on

a worldwide basis and disqualifies a taxpayer from the safe harbor of the proposed regulations even if no dealing activities are conducted in the United States.

For example, if a taxpayer is a dealer in

commodities through its home country office and conducts no dealing activities

through its U.S. office, but enters into derivative transactions for its own account

through the U.S. office, the taxpayer fails

to be an eligible nondealer.

Under the proposed regulations, the definition of dealer in stocks or securities

refers to §1.864–2(c)(2)(iv) and the definition of dealer in commodities refers to

the use of that term in §1.864–2(d). The

definition of eligible nondealer contains

language based on the definition of dealer

in securities in 475(c)(1)(B), including

regularly holding oneself out, in the ordinary course of one’s trade or business, as

being willing and able to enter into either

side of a derivative transaction. See

§1.475(c)–1(a)(2).

Treasury and the IRS are considering

issuing additional guidance with respect

to the definition of a dealer for purposes

of applying the trading safe harbors generally. Comments are solicited regarding

the definition of a dealer, including the

adequacy of the present rules in §1.864–

2(c)(2)(iv) and §1.864–2(d), possible

rules for identifying derivative transactions entered into with customers in the

“ordinary course,” and the appropriateness of adopting a definition similar to

that provided in section 475(c)(1).

3. Swaps on U.S. Equities

Treasury and the IRS are aware that in

order to avoid the tax imposed on U.S.

1998–26 I.R.B.

source dividends under sections 871 and

881 and Chapter 3 of the Code, some foreign investors use notional principal contract transactions based on U.S. equities

(“U.S. based equity swaps”). Accordingly, Treasury and the IRS are considering whether rules should be developed to

preserve the withholding tax with respect

to such transactions. Specifically, Treasury and the IRS are evaluating whether

conduit (e.g., section 7701(l)) or other

principles should be invoked in regulations, to characterize payments made with

respect to U.S. based equity swaps as subject to U.S. withholding tax.

Treasury and the IRS are considering

whether or not finalization of the proposed

regulations as they relate to U.S. based equity swaps should await guidance concerning the application of the withholding

rules to such transactions. Broadening the

section 864(b)(2)(A)(ii) and (B)(ii) safe

harbors to include derivatives could impair the ability of the United States to tax

U.S. source dividend payments.

Congress enacted the stocks and securities trading safe harbor in 1936 to provide

certainty that foreign persons who merely

trade stocks and securities would not be

subject to the net income tax regime.

Section 211(b), Revenue Act of 1936,

Pub. L. 74–740, 49 Stat. 1648, 1714–15

(1936); S. Rep. No. 2156, 74th Cong., 2d

Sess. 21 (1936). Congress’ decision to include the safe harbor was premised on the

fundamental assumption that ordinary income from U.S. stocks and securities

would be appropriately subject to U.S.

taxation through the withholding tax on

fixed and determinable or annual and periodic income (“FDAP”), and that activities beyond the scope of the safe harbor

would remain subject to net tax if the taxpayer was engaged in a trade or business

or had an office in the United States. Id.

The Foreign Investors Tax Act of 1966,

which expanded the trading safe harbors

to include trading activities conducted by

or on behalf of a non-U.S. resident taxpayer through a U.S. office for the foreign

taxpayer’s own account, built upon the

same principles reflected in the Revenue

Act of 1936. See Section 102(d), Foreign

Investors Tax Act of 1966, Pub. L.

89–809, 80 Stat. 1539, 1544 (1966); S.

Rep. No. 1701, 99th Cong., 2d Sess. 1617, 22–23, 32–33 (1966).

Treasury and the IRS request comments regarding the U.S. taxation of non-

U.S. persons investing in derivatives generally in addition to the treatment of derivatives under the trading safe harbors.

Comments are also solicited concerning

the appropriate source of payments made

pursuant to U.S. based equity swaps and

whether conduit or other principles

should be invoked for purposes of sections 871, 881 and Chapter 3 of the Code,

including the circumstances under which

such payments between non-U.S. resident

counterparties (i.e., foreign-to-foreign

payments) may be included in such regulations. In addition, comments are also

solicited concerning the appropriate treatment of swaps or other derivative transactions on property (other than stocks and

securities) that produce FDAP income,

e.g., rents and royalties.

Special Analyses

It has been determined that this notice of

proposed rulemaking is not a significant

regulatory action as defined in EO 12866.

Therefore, a regulatory impact analysis 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 regulation does not impose a collection

of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6)

does not apply. Therefore, a Regulatory

Flexibility Analysis under the Regulatory

Flexibility Act (5 U.S.C. Chapter 6) is not

required. Pursuant to section 7805(f) of

the Code, this notice of proposed rulemaking will be submitted to the Chief Counsel

for Advocacy of the Small Business Administration for comment on their impact

on small business.

Comments and Public Hearing

Before these proposed regulations are

adopted as final regulations, consideration will be given to any written comments that are submitted timely to the IRS

(a signed original and eight (8) copies).

All comments will be available for public

inspection and copying.

A public hearing has been scheduled

for September 9, 1998, at 10:00 A.M.,in

room 2615, Internal Revenue Building,

1111 Constitution Avenue NW, Washington, DC. Because of access restrictions,

visitors will not be admitted beyond the

Internal Revenue Building lobby more

than 15 minutes before the hearing starts.

June 29, 1998

The rules of 26 CFR 601.601(a)(3)

apply to the hearing. Persons that wish to

present oral comments at the hearing must

submit written comments by September

10, 1998, and submit an outline of the

topics to be discussed and the time to be

devoted to each topic by August 19, 1998.

A period of 10 minutes will be allotted

to each person for making comments.

An agenda showing the scheduling of

the speakers will be prepared after the

deadline for receiving outlines has

passed. Copies of the agenda will be

available free of charge at the hearing.

Proposed Effective Date

These regulations are proposed to be

effective for taxable years beginning 30

days after the date final regulations are

published in the Federal Register. Taxpayers may elect to apply the provisions

of the final regulations to taxable years

beginning before the date which is 30

days after these regulations are published

as final in the Federal Register. No inference is intended regarding the treatment of derivative transactions under sections 864(b)(2)(A)(ii) and (B)(ii) and the

current regulations. For periods prior to

the effective date, taxpayers engaged in

derivative transactions may take any reasonable position with regard to the section

864(b)(2)(A)(ii) and (B)(ii) safe harbors.

Positions consistent with these proposed

regulations will be considered reasonable.

Drafting Information

The principal author of these regulations is Milton Cahn of the Office of Associate Chief Counsel (International).

However, other personnel from the IRS

and Treasury Department participated in

their development.

June 29, 1998

Proposed Amendments to the Regulations

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

PART 1—INCOME TAXES

Paragraph 1. The authority citation for

part 1 continues to read in part as follows:

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

Par. 2. Section 1.864(b)–1 is added to

read as follows:

§1.864(b)–1 Trading in derivatives.

(a) Trading for taxpayer’s own account.

As used in part I (section 861 and following) and part II (section 871 and following), subchapter N, chapter 1 of the Internal Revenue Code (Code), and chapter 3

(section 1441 and following) of the Code,

and the regulations thereunder, if a taxpayer is an eligible nondealer, the term

engaged in trade or business within the

United States does not include effecting

transactions in derivatives for the taxpayer’s own account, including hedging

transactions within the meaning of

§1.1221–2.

(b) Definitions—(1) Eligible nondealer. For purposes of this section, an eligible nondealer is a person that is not a

resident of the United States and is not, at

any place (domestic or foreign), nor at

any time during that person’s taxable

year, any of the following—

(i) A dealer in stocks or securities as defined in §1.864–2(c)(2)(iv)(a);

(ii) A dealer in commodities as that

term is used in §1.864–2(d); or

(iii) A person that regularly offers to

enter into, assume, offset, assign or otherwise terminate positions in derivatives

with customers in the ordinary course of a

trade or business, including regularly

holding oneself out, in the ordinary

course of one’s trade or business, as being

willing and able to enter into either side of

a derivative transaction.

(2) Derivative. For purposes of this

section, the term derivative includes—

(i) An interest rate, currency (as defined in paragraph (b)(3) of this section),

equity, or commodity (as the term is used

in section 864(b)(2)(B) and §1.864–2(d))

notional principal contract (as the term is

used in section 475(c)(2)); or

(ii) An evidence of an interest, or a derivative financial instrument (including

any option, forward contract, short position and any similar financial instrument),

in any—

(A) Commodity (as the term is used in

section 864(b)(2)(B) and §1.864–2(d));

(B) Currency (as defined in paragraph

(b)(3) of this section);

in §1.864–2(c)(2));

(D) Partnership or beneficial ownership

interest in a widely held or publicly traded

partnership or trust;

(E) Note, bond, debenture, or other evidence of indebtedness; or

(F) Notional principal contract described in paragraph (b)(2)(i) of this section.

(3) Limitation. For purposes of this

section, the term currency is limited to

currencies of a kind customarily dealt in

on an organized commodity exchange.

Michael P. Dolan,

Deputy Commissioner of

Internal Revenue.

(Filed by the Office of the Federal Register on June

11, 1998, 8:45 a.m., and published in the issue of the

Federal Register for June 12, 1998, 63 F.R. 32164)

1998–26 I.R.B.

Announcement 98–55

Proposed Changes to 1999 Forms W–2 and W–3

Background

Based on recommendations from the Information Reporting Program Advisory Committee (IRPAC), the

Social Security Administration (SSA), and others, the Internal Revenue Service (IRS) plans to revise Form

W-2, Wage and Tax Statement, and Form W-3, Transmittal of Wage and Tax Statements. Some revisions

will reduce reporting burden and some will enable the SSA to more accurately capture the data reported on

the forms. The revisions are proposed for the 1999 Forms W–2 and W–3 to be filed in 2000.

Purpose

The purpose of this announcement is to request comments on the proposed 1999 Forms W-2 and W-3.

Note: Forms W–2 and W–3 as shown are subject to change and OMB approval before final release.

Changes to

Form W–2

The overall size of Form W–2 will remain the same, as shown in the draft of Copy A of the 1999 version.

A summary of the proposed changes follows:

•

The document code “22222” is relocated to the upper right corner of the form.

• A shaded box separates box a and the “Void” box, which is enlarged and repositioned.

• The “For Official Use Only” area has no top rule and is reformatted.

• The widths of boxes b through e are narrower and boxes 1 through 17 are wider.

• Box e is expanded into four distinct entry areas for employee information:

1) First name and middle initial,

2) Last name,

3) Street address, and

4) City, state, and ZIP code.

• Box f is eliminated.

• Dollar signs ($) are added to boxes 1 through 12c, 16, and 17.

• Shading is added at the end of boxes 1 through 12c.

• Box 12, “Benefits included in box 1,” is eliminated. Employers may continue to report the lease value of

an automobile provided to an employee using a separate statement or by using redesignated box 13.

• Box 13 is redesignated as box 12 and reformatted to boxes 12a, 12b, and 12c to provide three distinct

entry spaces for codes and amounts.

• Box 14 is redesignated as box 13 and repositioned.

• Box 15 is redesignated as box 14 and the checkboxes in box 14 are enlarged.

• Boxes 16 through 21 are redesignated as boxes 15 through 17 and are combined and enlarged to allow

employers to report either state and/or local wages and withholdings.

Changes to

Form W-3

The overall size of Form W–3 will remain the same, as shown in the draft of the 1999 version. A summary

of the proposed changes follows:

• The document code “33333” is relocated to the upper right corner of the form.

• The “For Official Use Only” area has no top rule and is reformatted.

• A shaded horizontal box separates the top of the form from boxes b and 1 and 2.

• Dollar signs ($) are added to boxes 1 through 12 and 15.

• Form W–3 will be a single copy with separate instructions. “YOUR COPY” is eliminated.

Comments

Requested

1998–26 I.R.B.

The IRS would like to receive comments on the proposed changes to Forms W–2 and W–3 from employers, payers, payees, and other interested parties by July 31, 1998. Substitute forms will be required to follow the same format for Copy A of Form W–2 and Form W–3. Please send comments to:

June 29, 1998

Comments

Requested

(continued)

Chairman, Tax Forms Coordinating Committee

Internal Revenue Service, OP:FS:FP, Room 5577

1111 Constitution Avenue, NW

Washington, DC 20224

After the end of the comment period, the IRS will evaluate the comments received and announce the changes

to the 1999 Forms W-2 and W-3. Although we will not be able to respond to each comment, we will carefully consider all of them.

June 29, 1998

1998–26 I.R.B.

June 29, 1998

Foundations Status of Certain

Organizations

Announcement 98–56

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:

Achieve the Dream Productions Inc.,

Chicago, IL

Affordable Housing of Schenectady, Inc.,

Schenectady, NY

Ark Intergenerational Day Care and

Activity Center, Inc., Covington, KY

AFYA Bora Mobile Medical Unit,

San Jose, CA

Airfest Foundation Inc., Branford, CT

Alabama Council of Teachers of English,

Birmingham, AL

Allardt School Trust, Jamestown, TN

Alliance of Black Churches Inc., Louisa,

Ambrosene Personal Care Facility,

Houston, TX

Arid Club of Portage Michigan Inc.,

Portage, MI

Ark Christian Ministries, Traverse City,

Badger Union High School Endowment

Fund, Inc., Lake Geneva, WI

Bailey Smith Evangelistic Association,

Inc., Atlanta, GA

Baseball USA, San Antonio, TX

BeBop and Beyond, Novato, CA

Bijela Foundation, Westfield, NJ

Black Cinematheque Dallas Inc., Dallas,

Blue Moon Mountain Ranch-An

Environmental and Educational Ctr.,

Fort Collins, CO

Build-Up Ste Genevieve, Ste Genevieve,

June 29, 1998

Boston Youth Soccer Partnership Inc.,

Rosalindale, MA

Brockton Library Foundation, Inc.,

Brockton, MA

CAL Foundation, Inc., New Orleans, LA

Calmeadow 1993, Toronto, Canada

Carl Albert Take-Down Club Inc.,

Midwest City, OK

Carousel Infant and Childcare Center,

Inc., Lima, OH

Center for Attitudinal Healing in the Twin

Cities, White Bear Lake, MN

Central States Troopers Coalition

Association, Oklahoma City, OK

Charles S. Meyer Family Fund, Chicago,

Childrens Charities, Armonk, NY

Chinese Historical Society of Greater San

Diego and Baja, San Diego, CA

Childrens Food Services, Jefferson City,

COBH Heritage Foundation, New York,

Community Rehabilitative Services of

Florida Inc., Lake Alfred, FL

Conceptual International Agency,

Anchorage, AK

Crippled Children’s Trust of Lincoln

Lodge 914 BPOE, Lincoln, IL

Cure Aids of Wilmington Inc.,

Wilmington, NC

DCN Props, Gurnee, IL

District One B’nai B’rith Foundation

Inc., New York, NY

Eminence Inc., San Jose, CA

Education and Training Institute,

Alexandria, VA

Emergency Medical Transportation, Inc.,

Crookston, MN

Family Health Care Center, Fargo, ND

Field Day America, Inc., Notre Dame, IN

Ford-Iroquois Farm Bureau, Gilman, IL

Foristell Area Historical Society,

Foristen, MO

Foundation for Habitat and Children,

Houston, TX

Friends of North East Florida State

Hospital, MacClenny, FL

Grand Rapids Blaze, Grand Rapids, MI

Green China, Boston, MA

Gretna Economic Development

Association Limited, Gretna, LA

Hamsa Inc., Sedona, AZ

Harvest the Lost Souls Ministries,

Minneapolis, MN

Headspeth Inc., Atlanta, GA

Hospice Choice Inc., Memphis, TN

I Can Inc., Lonoke, AR

Initiative for Better Learning Inc., Austin,

Jefferson County Juniors-United States

Volleyball Association, Ft. Neches, TX

Jesus Way, Inc., Stanten Island, NY

Keehi Memorial Organization, Honolulu,

Kentucky Association of Collegiate

Registrars and Admissions Officers,

Somerset, KY

Las Americas Inc., Hyattsville, MD

Latino Health Organization Inc.,

Milwaukee, WI

Le Cercle Francais, Inc., N. Billerica,

Local 666 I A T S E Disaster Relief Fund,

Chicago, IL

Lord’s Kitchen, Connorsville, IN

Mainstay Boarding Inc., Battle Creek, MI

Mechling Historical Association,

Watseka, IL

Midwest Poultry Consortium Inc.,

Litchfield, MN

Minnechaduza Creek Basin Foundation,

Valentine, NE

Mira Loma High School Booster Club

Inc., Sacramento, CA

Mobile Harvest, Saraland, AL

Much Has Been Given Inc., Provo, UT

National Academy of Law Ethics &

Management Inc., Las Vegas, NV

New Beginnings Day Care Inc.,

Tomahawk, WI

New York Hysterical Society Inc., New

York, NY

North Communities Improvements

Association Inc., Pittsburgh, PA

Northwest Striders Track Club, Olympia,

Osmania University Alumni Foundation

of the United States, Whitefish Bay,

P R I D E for Our Children Inc.,

Lansdale, PA

Parents Forum, Cambridge, MA

Pebbles of Faith, Inc., Bolivar, MO

Phoenix Resident Council Incorporated,

Seminole, OK

Photographic Arts Center of Philadelphia

Inc., Philadelphia, PA

Playground Project Inc., Oceanville, NJ

Point Comfort Volunteer Fire Department

of Point Comfort Texas, Point

Comfort, TX

Presidential Inaugural Foundation-1993,

Washington, DC

1998–26 I.R.B.

Project 40, Brooklyn, NY

Project Peer Foundation, Phoenix, AZ

Providing Accessible Living Limited,

New Orleans, LA

Public Advocates Together for Health,

Inc., Hartsdale, NY

R S I Court of the Texas Riveria Empire

Inc., Corpus Christi, TX

Rose Garden Centre, Inc., St. Louis,

Rotary Club of Albuquerque Del Norte

Charity Golf Foundation,

Albuquerque, NM

Ruth Martin Little Theatre of Dauphin

Island, Dauphin Island, AL

San Antonio Urban Network,

San Antonio, TX

Servlife International Inc., Houston, TX

Shawn Allyce White Foundation,

Washington, DC

Shelter Plus Inc., N. Miami Beach, FL

Southwest Florida Library Network,

Ft. Myers, FL

Stop the Madness Movement Committee,

Inc., Grand Rapids, MI

Tejanos Unidos Association of Dallas

Fort Worth, Grand Prairie, TX

Tennessee Soybean Festival Inc., Martin,

Thank You Research Inc., Washington,

Tigard Aquatic Club of Oregon Inc.,

Tualatin, OR

Tim Freudenberg Scholarship Fund, Cold

Spring, KY

Timeless Tales Inc., Denver, CO

Timeweave a Nonprofit Corporation,

Boulder, CO

Timothys House of Hope in Sioux, Sioux

Falls, SD

Tippecanoe Youth Chorus Inc., Lafayette,

Toba Foundation Inc., Tampa, FL

Toivola-Meadowlands Development Inc.,

Meadowlands, MN

Toledo Insectarium Society, Toledo, OH

Tomorrow’s Visions Incorporated, West

Hyattsville, MD

Tomorrows Youth Today Inc., Worcester,

Too Cool Foundation Inc., Houston, TX

Toombs County Foster Parent

Association, Lyons, GA

Top Ten Scholarship Foundation, Los

Angeles, CA

Tortorell Charity Fund Inc., Chicago, IL

Touch of God Ministry Inc., Miami, FL

Touch Somebodys Life, Youngstown, OH

1998–26 I.R.B.

Touch the Earth Foundation, Solana

Beach, CA

Touching All Persons Inc., Detroit, MI

Tower Homes Development Corporation,

Compton, CA

Town and Country Competitive Soccer

Inc., Tampa, FL

Trade Schools, Inc., Rockville, VA

Trails End Riding Association for the

Disabled, Fountain, CO

Train Up a Child Foundation, Carrollton,

Transitional Family Turning Point,

Columbia, MO

Transplant Events Fund, Wauwatosa, WI

Transportation and Technology Museum,

Pittsburgh, PA

Trauma Recovery Foundation, Salt Lake

City, UT

Trauma Research Center Inc., Tampa, FL

Travelers Aid Services of Santa Clara

County, San Jose, CA

Trek for Life Inc., New Brunswick, NJ

Tremont Education Foundation, Tremont,

Trends Training Resources Education and

Networking on Down Syndrome,

Holland, MI

Trenton New Jersey Police Bicentennial

and Museum Committee, Inc.,

Hamilton TWP, NJ

Tres Foundation, San Antonio, TX

Tri-Central Youth Soccer Club, Kempton,

Tri-City Council for Dietetic Education,

Saginaw, MI

Tri County Community Partnership,

Peoria, IL

Tri-County Medical Emergency

Response Team Inc., Midland, IN

Tri-State Amateur Radio Society

Incorporated, Evansville, IN

Triad Arts Ensemble, Morristown, NJ

Triangle Blues Society, Cary, NC

Triangle Recovery Foundation Inc.,

Beaumont, TX

Trinity Adoption Services International

Inc., Houston, TX

Trinity Hospice Inc., Runnemede, NJ

Trinity House Inc., Hamilton, OH

Trinity Development Corporation,

Oakland, CA

Triple Cross Ranch Inc., Okeechobee, FL

Tripp Civic Group, Chicago, IL

True-Holiness Outreach Ministries Inc.,

Memphis, TN

Truevine Community Outreach,

Lynwood, CA

Truth Light & Life Ministries,

Mt. Crawford, VA

Tucson Electric Vehicle Association,

Tucson, AZ

Tucumcari Central Parent-Teacher,

Tucumcari, NM

Tuebingen Placid Way Development

LTD., Ann Arbor, MI

Tulsa Area Wheelchair Sports

Association, Broken Arrow, OK

Tulsa Boys Ranch Inc., Tulsa, OK

Tulsa Memorial High School Foundation

Inc., Tulsa, OK

Tuscaloosa Christian United Appeal

Fund, Tuscaloosa, AL

Tuslaw Jr. Baseball Association, North

Lawrence, OH

Twenty London Road Inc., Cranford, NJ

Twin Drug Rehab and Poly-Ti-Cians

Home Inc., Fort Worth, TX

Twin Elms Writers Center Inc.,

Princeton, NJ

Two Virginias Crusade With Billy

Graham, Princeton, WV

Tyler Place Community Development

Incorporation, Atlanta, GA

Tyrrell Action Group Inc., Columbia, NC

UCA Childrens Charities Foundation

Inc., Memphis, TN

U S A Amateur Baseball Hall of Fame,

Millington, TN

Unified Upliftment, Inc., Brandon, FL

Union Kids Baseball Inc., Tulsa, OK

Union-Tippah Rebel Club Inc., New

Albany, MS

United States Veterans Shelter, Phoenix,

Unity Housing Corporation, Manvel, TX

Universal Mercy Foundation of Islam,

Livonia, MI

Up Front Film Society, Redding, CA

Up-High Parenting for Prevention

Services, Flint, MI

Upper Valley Youth Association,

Concrete, WA

Upstream Incorporated, Canoga Park, CA

Vallejo Youth Football & Cheerleading

Association, Vallejo, CA

Valley Community Care Productions Inc.,

Arleta, CA

Vamos A La Pena Del Bronx, Inc.,

Bronx, NY

Vanguard Communications, St. Louis, MO

Vermont Womens Foundation, Shelburne,

Versin House Inc. Community Living

Facility, Dolton, IL

Vics House, Stockton, CA

June 29, 1998

Victims of Crime Project, Los Angeles,

Victory Ohana Prison Fellowship,

Honolulu, HI

Vietnamese Association of Charlotte,

Charlotte, NC

Vietnamese Scholarship Foundation,

Portland, OR

Village Associates, Inc., Bridgeport, CT

Vintage BMW House, McKinleyville,

W G Barber Scholarship Fund, El Paso,

WDIY, Washington, DC

Waconia Horizons a Minnesota Main

Street Program, Waconia, MN

Wall Biker Memorial Inc., Wisconsin

Dells, WI

Warren Public Library, Inc., Warren, CT

June 29, 1998

Watertown Athletic Booster Club,

Watertown, WI

Waupaca Area Public Radio

Incorporated, Waupaca, WI

We Care of Franklin County Inc., Rocky

Mount, VA

Weikali Ninja Do Self Protection Agency,

Inc., Nedrow, NY

Wellness 3000, Occidential, CA

Wellpinit Indian Student Scholarship

Fund, Wellpinit, WA

West Central Booster Club Inc., Fayette,

West Mesa High School Boosters,

Albuquerque, NM

West Parent Teacher Organization, New

Philadelphia, OH

West Texas Performing Arts Society,

Lubbock, TX

Westchester Center for Training &

Development, Inc., White Plains, NY

Wethersfield Elderly Housing

Corporation, E. Hartford, CT

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.

1998–26 I.R.B.

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

1998–26 I.R.B.

June 29, 1998

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

June 29, 1998

1998–26 I.R.B.

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.

1998–26 I.R.B.

June 29, 1998

Numerical Finding List1

Notices—Continued

Revenue Procedures—Continued

Bulletins 1998–1 through 1998–25

98–13, 1998–6 I.R.B. 19

98–14, 1998–8 I.R.B. 27

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

98–33, 1998–25 I.R.B. 10

98–16, 1998–5 I.R.B. 19

98–17, 1998–5 I.R.B. 21

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

Proposed Regulations:

Revenue Rulings:

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

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

98–30, 1998–25 I.R.B. 8

98–31, 1998–25 I.R.B. 4

98–32, 1998–25 I.R.B. 4

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

98–46, 1998–25 I.R.B. 11

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

98–54, 1998–25 I.R.B. 11

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

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

Treasury Decisions:

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

1 See footnote at end of list.

June 29, 1998

1998–26 I.R.B.

Numerical Finding List—Continued

Bulletins 1998–1 through 1998–25

Treasury Decisions—Continued

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

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.

1998–26 I.R.B.

June 29, 1998

Finding List of Current Action on

Previously Published Items1

Revenue Procedures—Continued

Bulletins 1998–1 through 1998–25

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.

June 29, 1998

1998–26 I.R.B.

Notes

1998–26 I.R.B.

June 29, 1998

Notes

June 29, 1998

1998–26 I.R.B.

June 29, 1998

INTERNAL REVENUE BULLETIN

The Introduction on page 3 describes the purpose and content of this publication. The weekly Internal Revenue Bulletin is sold

on a yearly subscription basis by the Superintendent of Documents. Current subscribers are notified by the Superintendent of

Documents when their subscriptions must be renewed.

CUMULATIVE BULLETINS

The contents of this weekly Bulletin are consolidated semiannually into a permanent, indexed, Cumulative Bulletin. These are

sold on a single copy basis and are not included as part of the subscription to the Internal Revenue Bulletin. Subscribers to the weekly Bulletin are notified when copies of the Cumulative Bulletin are available. Certain issues of Cumulative Bulletins are out of print

and are not available. Persons desiring available Cumulative Bulletins, which are listed on the reverse, may purchase them from the

Superintendent of Documents.

HOW TO ORDER

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

detach entire page, and mail to the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402. Please

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

WE WELCOME COMMENTS ABOUT THE

INTERNAL REVENUE BULLETIN

If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it, we

would be pleased to hear from you. You can e-mail us your suggestions or comments through the IRS Internet Home Page

(www.irs.ustreas.gov) or write to the IRS Bulletin Unit, T:FP:F:CD, Room 5560, 1111 Constitution Avenue NW, Washington, DC

20224. You can also leave a recorded message 24 hours a day, 7 days a week at 1–800–829–9043.

June 29, 1998

1998–26 I.R.B.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.