These synopses are intended only as aids to the reader in

Agency decision

Ask Donna

What actually matters in this document.

Text

Bulletin No. 1998–9

March 2, 1998

Internal Revenue

bulletin

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

EXEMPT ORGANIZATIONS

T.D. 8752, page 4.

Announcement 98–16, page 17.

Final regulations under sections 354, 355, and 356 of the

Code provide for nonrecognition of gain or loss on the receipt, in pursuance of a reorganization, of rights to acquire

stock of a corporation that is a party to the reorganization.

ADMINISTRATIVE

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

T.D. 8753, page 6.

REG–121755–97, page 13.

REG–109333–97, page 9.

Temporary and proposed regulations provide guidance

under section 356(e) of the Code on when nonqualified preferred stock will not be treated as stock or securities for

purposes of sections 354, 355, and 356 of the Code. A

public hearing on the proposed regulations will be held on

May 5, 1998.

REG–251502–96, page 14.

EMPLOYEE PLANS

Notice 98–15, page 8.

Weighted average interest rate update. Guidelines are

set forth for determining for February 1998, the weighted

average interest rate and the resulting permissible range of

interest rates used to calculate current liability for purposes

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

as amended by the Omnibus Budget Reconciliation Act of

1987 and by the Uruguay Round Agreements Act (GATT).

Proposed regulations under section 7702B of the Code relate to consumer protection with respect to qualified longterm care insurance contracts. A public hearing will be held

on May 13, 1998.

Proposed regulations under section 7433 of the Code relate

to civil causes of action for damages caused by unlawful collection actions of officers and employees of the Internal

Revenue Service.

Announcement 98–17, page 16.

This announcement supersedes Announcement 98–6,

1998–5 I.R.B. 25, and clarifies Rev. Proc. 97–34, 1997–30

I.R.B. 14 dated July 28, 1997, regarding the use of the IRA,

SEP, and SIMPLE indicators on Form 5498 for magnetic or

electronic filing.

Finding Lists begin on page 22.

Announcement of Disbarments and Suspensions begins on page 19.

Index for January-February begins on page 24.

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 354.—Exchanges of

Stock and Securities in Certain

Reorganizations

26 CFR 1.354–1: Exchanges of stocks and

securities in certain reorganizations.

After consideration of all comments received, the proposed amendments are

adopted as revised by this Treasury decision. The principal changes to the regulations, as well as the major comments and

suggestions, are discussed below.

T.D. 8752

Explanation of Provisions

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

A. The Proposed Regulations

In general, sections 354, 355, and 356

provide for nonrecognition of gain or loss,

in whole or in part, to a stockholder or security holder on the exchange of stock or

securities of parties to a reorganization and

in pursuance of a plan of reorganization.

The proposed regulations would extend

the nonrecognition rule of sections 354,

355, and 356 to certain rights to acquire

stock. Thus, for purposes of sections 354,

355, and 356, the proposed regulations

would treat rights to acquire stock issued

by a corporation that is a party to a reorganization as securities of the corporation

with no principal amount. The preamble

to the proposed regulations provided that,

for this purpose, the term rights to acquire

stock issued by that corporation would

have the same meaning as the term has in

sections 305(d)(1) and 317(a). In addition, the preamble stated that the proposed regulations would have no effect on

other Internal Revenue Code rules that

pertain to securities, including sections 83

and 421 through 424 and the regulations

thereunder.

Reorganizations/Treatment of

Warrants as Securities

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Final regulations

SUMMARY: This document contains

final regulations that in certain instances

provide for nonrecognition of gain or loss

on the receipt, in pursuance of a reorganization, of rights to acquire stock of a corporation that is a party to the reorganization. These regulations change the

existing rules for such rights under sections 354, 355, and 356 of the Internal

Revenue Code. These regulations will affect holders of these rights who are involved in corporate reorganizations under

sections 355 and 368.

DATES: These regulations are effective

March 9, 1998.

FOR FURTHER INFORMATION CONTACT: Michael J. Danbury, (202) 6227750 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

On December 23, 1996, the IRS and

Treasury Department published a notice of

proposed rulemaking (REG–249819–96

[1997–1 C.B. 793]) in the Federal Register (61 F.R. 67508) containing proposed

amendments to the Income Tax Regulations (26 CFR part 1) under sections 354,

355, and 356, relating to exchanges of

stock and securities in certain reorganizations and corporate divisions. Written and

oral comments responding to this notice

were received. There were no requests to

attend a public hearing and none was held.

March 2, 1998

B. Comments on the Proposed

Regulations

1. Elaboration on the Definition of

“Rights To Acquire Stock”

Commentators recommended that the

final regulations include an explicit definition of rights to acquire stock. They submitted particular examples for inclusion

in the definition.

The final regulations add a cross-reference to sections 305 and 317(a) in defining rights to acquire stock. This crossreference should provide sufficient

guidance in most cases for taxpayers to

determine the consequences on a receipt

of rights. The IRS and Treasury believe

that illustrating the terms of sections 305

and 317 is outside the scope of these regulations. Accordingly, the final regulations

provide no definition other than the crossreference.

2. Treatment of Stock-For-Warrant

Exchanges

Section 1.354–1(d), Example 3, states

that section 354 does not apply to a shareholder’s receipt of solely debt securities

in exchange for stock. Commentators requested confirmation that section 354 also

does not apply to a shareholder’s receipt

of solely securities that are rights to acquire stock in exchange for stock. The

final regulations confirm this result in Example 4 to §1.354–1(d).

3. Effective Date

These final regulations are effective

March 9, 1998. This accords with the delayed effective date in the proposed regulations. Commentators requested more

immediate effectiveness.

The IRS and Treasury are concerned

that taxpayers who have planned transactions based on the proposed regulations’

delayed effective date could be disadvantaged by a change in the effective date.

Accordingly, the final regulations retain

the delayed effective date.

4. Interrelationship With Section 83

The preamble to the proposed regulations noted that the rules would apply to

rights to acquire stock only for purposes

of sections 354 through 356, and that such

rights may remain subject to other special

rules under the Internal Revenue Code

and the regulations including sections 83

and 421 through 424.

Commentators recommended an explicit statement to that effect in the final

regulations. The regulations adopt this

recommendation.

5. Effect in “B” Reorganizations

Commentators requested a review of

published guidance that concerns exchanges of rights to acquire stock as part

of a larger transaction that includes a

stock-for-stock reorganization under section 368(a)(1)(B). The IRS intends to address this issue in the near future.

6. No Principal Amount

Commentators sought clarification of

the proposed rule that rights to acquire

stock would have no principal amount.

1998–9 I.R.B.

The IRS and Treasury add Examples 7,

8, and 9 to §1.356–3(b) to illustrate the

effect of a right to acquire stock having no

principal amount.

7. Comments Not Addressed in the Final

Regulations

Comments were received with regard

to the tax issues of rights to acquire stock

under sections 302, 305, 306, and 351.

Resolution of these issues is beyond the

scope of this project and they are not addressed herein.

8. Interrelationship With Nonqualified

Preferred Stock Provisions

In connection with the finalization of

these regulations, the IRS and Treasury

became aware that additional rules were

needed to coordinate these regulations

with the treatment of rights to acquire

nonqualified preferred stock and new sections 354(a)(2)(C), 355(a)(3)(D), and

356(e). See §1.356–6T (T.D. 8753) on

page 6 of this Bulletin.

Special Analyses

It has been determined that this Treasury decision is not a significant regulatory action as defined in EO 12866.

Therefore, a regulatory assessment is not

required. It has also been determined that

section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not

apply to these regulations and, because

these regulations do not impose a collection of information requirement on small

entities, the Regulatory Flexibility Act (5

U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Internal

Revenue Code, the notice of proposed

rulemaking preceding these regulations

was submitted to the Chief Counsel for

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

small business.

Drafting Information

The principal author of these regulations is Michael J. Danbury of the Office

of Assistant Chief Counsel (Corporate).

However, other personnel from the IRS

and Treasury Department participated in

their development.

1998–9 I.R.B

Adoption of Amendments to the

Regulations

Accordingly, 26 CFR part 1 is amended

as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation

for part 1 continues to read, in part, as follows:

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

Par 2. Section 1.354–1 is amended by:

1. In paragraph (d), redesignating Example (1) through Example (3) as Example 1 through Example 3.

2. Adding Example 4 to paragraph (d).

3. Revising paragraph (e).

The addition and revision read as follows:

§1.354–1 Exchanges of stock and

securities in certain reorganizations.

(d) * * *

Example 4. The facts are the same as in Example

3 of this paragraph (d), except that C receives solely

rights to acquire stock in Corporation Z. Section

354 does not apply.

(e) Except as provided in §1.356–6T,

for purposes of section 354, the term securities includes rights issued by a party

to the reorganization to acquire its stock.

For purposes of this section and section

356(d)(2)(B), a right to acquire stock has

no principal amount. For this purpose,

rights to acquire stock has the same meaning as it does under sections 305 and

317(a). Other Internal Revenue Code

provisions governing the treatment of

rights to acquire stock may also apply to

certain exchanges occurring in connection

with a reorganization. See, for example,

sections 83 and 421 through 424 and the

regulations thereunder. This paragraph

(e) applies to exchanges occurring on or

after March 9, 1998.

Par 3. Section 1.355–1 is amended by

removing the last sentence of paragraph

(b) and adding paragraph (c) to read as

follows:

§1.355–1 Distribution of stock and

securities of a controlled corporation.

§1.356-6T, for purposes of section 355,

the term securities includes rights issued

by the distributing corporation or the controlled corporation to acquire the stock of

that corporation. For purposes of this section and section 356(d)(2)(B), a right to

acquire stock has no principal amount.

For this purpose, rights to acquire stock

has the same meaning as it does under

sections 305 and 317(a). Other Internal

Revenue Code provisions governing the

treatment of rights to acquire stock may

also apply to certain distributions occurring in connection with a transaction described in section 355. See, for example,

sections 83 and 421 through 424 and the

regulations thereunder. This paragraph

after March 9, 1998.

Par 4. Section 1.356–3 is amended by:

1. Redesignating paragraph (b) as

paragraph (c).

2. Adding a new paragraph (b).

3. In newly designated paragraph (c),

redesignating Example (1) through Example (6) as Example 1 through Example

4. Revising paragraph (c) introductory

text.

5. Adding Example 7 through Example

9 to paragraph (c).

The revisions and additions read as follows:

§1.356–3 Rules for treatment of

securities as “other property.”

(b) Except as provided in §1.356–6T,

for purposes of this section, a right to acquire stock that is treated as a security for

purposes of section 354 or 355 has no

principal amount. Thus, such right is not

other property when received in a transaction to which section 356 applies (regardless of whether securities are surrendered in the exchange). This paragraph

(b) applies to transactions occurring on or

after March 9, 1998.

(c), stock means common stock and warrants means rights to acquire common

stock. The following examples illustrate

the rules of paragraph (a) of this section:

March 2, 1998

Example 7. G, an individual, exchanged stock for

stock and a warrant. The warrant had no principal

amount. Thus, G received no excess principal

amount within the meaning of section 356(d).

Example 8. H, an individual, exchanged a warrant for stock and a warrant. The warrants had no

principal amount. Thus, H received no excess principal amount within the meaning of section 356(d).

Example 9. I, an individual, exchanged a warrant

for stock and a debt security. The warrant had no

principal amount. The debt security had a $100

principal amount. I received $100 of excess principal amount within the meaning of section 356(d).

Michael P. Dolan,

Deputy Commissioner of

Internal Revenue.

Approved December 17, 1997.

Donald C. Lubick,

Acting Assistant Secretary of

the Treasury.

(Filed by the Office of the Federal Register on

January 5, 1998, 8:45 a.m., and published in the

issue of the Federal Register for January 6, 1998, 63

F.R. 409)

Section 356.—Receipt of

Additional Consideration

26 CFR 1.356–6T: Rules for treatment of

nonqualified preferred stock as “other property”

(temporary).

T.D. 8753

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

Reorganizations; Nonqualified

Preferred Stock

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Temporary regulations.

SUMMARY: This document contains a

temporary regulation providing guidance

under section 356(e) of the Internal Revenue Code (Code) on when nonqualified

preferred stock (as defined in section

351(g)(2)) will not be treated as stock or

securities for purposes of sections 354,

355, and 356 of the Code. The guidance

also addresses the treatment of the receipt

of a right to acquire nonqualified preferred stock. The temporary regulation

provides that in some circumstances the

March 2, 1998

terms stock and securities will not include

nonqualified preferred stock, or a right to

acquire such stock, when received in exchange for stock or rights to acquire

stock. The text of this temporary regulation also serves as the text of REG–

121755–97, page 13 of this Bulletin.

DATES: This regulation is effective

March 9, 1998.

FOR FURTHER INFORMATION CONTACT: Concerning the temporary regulation, Michael J. Danbury, (202) 622-7750

(not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background and Explanation of

Provisions

A. In General

This document contains a temporary

regulation under section 356(e) of the Internal Revenue Code as added by section

1014 of the Taxpayer Relief Act of 1997

(TRA of 1997), Public Law 105–34. Section 1014 of the TRA of 1997, enacted on

August 5, 1997, amended sections 351,

354, 355, 356, and 1036 of the Code. As

amended, sections 354, 355, and 356, in

general, provide that nonqualified preferred stock (as defined in section

351(g)(2)) received in exchange for stock

other than nonqualified preferred stock

will not be treated as stock or securities

but, instead, will be treated as “other

property” or “boot.” As a result, unless

the transition rule of section 1014(f)(2) of

TRA of 1997 or another exception applies, the receipt of nonqualified preferred

stock will result in gain recognition.

Section 351(g)(4) provides authority to

issue regulations coordinating the rules

for nonqualified preferred stock with

other provisions of the Code. In connection with the issuance of final regulations

treating certain rights to acquire stock as

securities which can be received tax-free

under sections 354, 355, and 356 (see

§§1.354–1(e), 1.355–1(c), and 1.356–3(b)

(T.D. 8752) also published on page 4 of

this Bulletin, the IRS and Treasury became aware that additional rules were

needed to address the treatment of rights

to acquire nonqualified preferred stock to

coordinate with new sections 354(a)(2)(C), 355(a)(3)(D), and 356(e). Accordingly, this temporary regulation provides

that, notwithstanding §§1.354–1(e),

1.355–1(c), and 1.356–3(b), a right to acquire nonqualified preferred stock received in exchange for stock other than

nonqualified preferred stock (or for a

right to acquire stock other than nonqualified preferred stock) will not be treated as

a security, and that nonqualified preferred

stock received in exchange for stock other

than nonqualified preferred stock (or for a

right to acquire stock other than nonqualified preferred stock) will not be treated as

stock or a security.

This regulation does not attempt to address all questions and issues that may

arise regarding the exchange or receipt of

nonqualified preferred stock. The IRS

and Treasury recognize that further guidance is necessary on these matters and intend to provide it in the future. Accordingly, comments are requested not only

on these temporary and proposed regulations, but also with regard to the types of

guidance needed and other issues under

section 351(g) and the related provisions.

B. Effective Date

Except as provided in section 1014(f)(2)

of TRA of 1997, this temporary regulation

applies to nonqualified preferred stock (or

a right to acquire such stock) received in

connection with a transaction occurring on

or after March 9, 1998.

Special Analyses

It has been determined that this Treasury decision is not a significant regulatory action as defined in EO 12866.

Therefore, a regulatory assessment is not

required. It has also been determined that

section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not

apply to this regulation. 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. Pursuant to section

7805(f) of the Internal Revenue Code, the

notice of proposed rulemaking accompanying this regulation is being sent to the

Small Business Administration for comment on its impact on small business.

Drafting Information

The principal author of this regulation

is Michael J. Danbury of the Office of Assistant Chief Counsel (Corporate). How-

1998–9 I.R.B.

ever, other personnel from the IRS and

Treasury Department participated in its

development.

Adoption of Amendments to the

Regulations

Accordingly, 26 CFR part 1 is amended

as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation

for part 1 continues to read, in part, as follows:

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

Par. 2. Section 1.356–6T is added to

read as follows:

§1.356–6T Rules for treatment of

nonqualified preferred stock as “other

property” (temporary).

1998–9 I.R.B

(a) In general. For purposes of

§§1.354–1(e), 1.355–1(c), and 1.356–

3(b), the terms stock and securities do not

include—

(1) Nonqualified preferred stock, as defined in section 351(g)(2), received in exchange for (or in a distribution with respect to) stock, or a right to acquire stock,

other than nonqualified preferred stock; or

(2) A right to acquire such nonqualified

preferred stock, received in exchange for

(or in a distribution with respect to) stock,

or a right to acquire stock, other than nonqualified preferred stock.

(b) Exceptions. The following exceptions apply:

(1) Certain recapitalizations. Paragraph (a) of this section does not apply in

the case of a recapitalization under section 368(a)(1)(E) of a family-owned corporation as described in section 354(a)(2)(C)(ii)(II).

(2) Transition rule. Paragraph (a) of

this section does not apply to a transaction

described in section 1014(f)(2) of the Taxpayer Relief Act of 1997 (111 Stat. 921).

to nonqualified preferred stock, or a right

to acquire such stock, received in connection with a transaction occurring on or

after March 9, 1998.

Michael P. Dolan,

Deputy Commissioner of

Internal Revenue.

Approved December 17, 1997.

Donald C. Lubick,

Acting Assistant Secretary of

the Treasury.

(Filed by the Office of the Federal Register on

January 5, 1998, 8:45 a.m., and published in the

issue of the Federal Register for January 6, 1998, 63

F.R. 411)

March 2, 1998

Part III. Administrative, Procedural, and Miscellaneous

Weighted Average Interest Rate

Update

Notice 98–15

Notice 88–73 provides guidelines for

determining the weighted average interest

rate and the resulting permissible range of

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

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

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

and as further amended by the Uruguay

Round Agreements Act, Pub. L. 103–465

(GATT).

Month

Year

Weighted

Average

February

1998

6.73

Drafting Information

The principal author of this notice is

Donna Prestia of the Employee Plans Di-

March 2, 1998

90% to 106%

Permissible

Range

90% to 110%

Permissible

Range

6.06 to 7.14

6.06 to 7.41

vision. For further information regarding

this notice, call (202) 622-6076 between

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

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

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

is 5.81 percent.

The following rates were determined

for the plan years beginning in the month

shown below.

is (202) 622-7377 (also not a toll-free

number).

1998–9 I.R.B.

Part IV. Items of General Interest

Notice of Proposed Rulemaking

and Notice of Public Hearing

Qualified Long-Term Care

Insurance Contracts

REG–109333–97

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Notice of proposed rulemaking and notice of public hearing.

SUMMARY: This document contains

proposed regulations relating to consumer

protection with respect to qualified longterm care insurance contracts and relating

to events that will be considered material

changes with respect to long-term care insurance contracts issued prior to January

1, 1997. Changes to the applicable law

were made by the Health Insurance Portability and Accountability Act of 1996.

The regulations affect issuers of longterm care insurance contracts and individuals entitled to receive payments under

these contracts. The regulations are necessary to provide these taxpayers with

guidance needed to comply with these

changes.

DATES: Written comments must be received by April 2, 1998. Outlines of topics to be discussed at the public hearing

scheduled for May 13, 1998, must be received by April 2, 1998.

ADDRESSES: Send submissions to:

CC:DOM:CORP:R (REG–109333–97),

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–109333–97), Courier’s Desk, Internal Revenue Service, 1111 Constitution

Avenue NW, Washington, DC. Alternatively, taxpayers may also 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 Constitution Avenue NW,

Washington, DC.

1998–9 I.R.B

FOR FURTHER INFORMATION CONTACT: Concerning the regulations,

Katherine A. Hossofsky, (202) 622-3477;

concerning submissions and the hearing,

LaNita VanDyke, (202) 622-7190 (not

toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

This document contains proposed

amendments to the Income Tax Regulations (26 CFR part 1) to provide rules

under section 7702B of the Internal Revenue Code of 1986 (the “Code”). Section

7702B was added by sections 321 and

325 of the Health Insurance Portability

and Accountability Act of 1996 (Pub. L.

104–191, 110 Stat. 1936, 2054 and 110

Stat. at 2063)(“HIPAA”). Notice 97–31,

1997–21 I.R.B. 5 (May 6, 1997), provides

interim guidance on certain provisions of

section 7702B and other provisions of the

Code added or amended by HIPAA.

Explanation of Statutory Provisions

Section 7702B establishes the tax treatment for qualified long-term care insurance contracts. Sections 7702B(a)(1) and

(3) provide that a qualified long-term care

insurance contract is treated as an accident and health insurance contract and

that any employer plan providing coverage under a qualified long-term care insurance contract is treated as an accident

or health plan with respect to that coverage.

Section 7702B(a)(2) provides that

amounts (other than policyholder dividends and premium dividends) received

under a qualified long-term care insurance contract are generally excludable

from gross income as amounts received

for personal injuries and sickness.

Section 213(d)(1)(D) was amended by

section 322 of HIPAA to provide that eligible long-term care premiums as defined

in section 213(d)(10) are deductible medical expenses.

Under section 7702B(b)(1)(F), a qualified long-term care insurance contract

must meet the consumer protection provisions of section 7702B(g). In addition,

section 4980C imposes an excise tax on

issuers of qualified long-term care insur-

ance contracts that do not provide further

consumer protections.

Section 7702B of the Code applies to

contracts issued after December 31, 1996.

Section 321(f)(2) of HIPAA treats a contract issued before January 1, 1997, as a

qualified long-term care insurance contract under section 7702B(b) of the Code,

and services provided or reimbursed

under such a contract as qualified longterm care services under section 7702B(c)

of the Code, provided the contract met the

long-term care requirements of the State

in which the contract was sitused at the

time the contract was issued. Section

321(f)(2) of HIPAA also provides that in

the case of an individual covered on December 31, 1996, by a State long-term

care plan under section 7702B(f) of the

Code, the terms of the plan on that date

are treated as a contract meeting the longterm care insurance requirements of that

State.

Section 321(f)(4) of HIPAA provides

that for purposes of applying sections

101(f), 7702, and 7702A of the Code, neither the issuance of a rider that is treated

as a qualified long-term care insurance

contract nor the addition of any provision

required to conform any other long-term

care rider to the requirements applicable

to a qualified long-term care insurance

contract is treated as a modification or

material change of the contract.

Explanation of Provisions

The proposed regulations provide guidance concerning

• the consumer protection requirements that apply to qualified long-term

care insurance contracts under sections

7702B(g), 7702B(b)(1)(F), and 4980C

of the Code; and

• the grandfather provisions of section

321(f)(2) of HIPAA under which pre1997 contracts are treated as qualified

long-term care insurance contracts if

certain conditions are met.

The standards in the proposed regulations

are based on safe harbors that were originally set forth in Notice 97–31. They reflect comments made by consumer representatives, issuers of long-term care

insurance, independent sales agents, State

regulators of long-term care insurance,

March 2, 1998

and others. The proposed regulations are

intended to provide clear and workable

rules to assist those who want to ensure

that a contract issued before 1997 retains

its status as a qualified long-term care insurance contract.

31. For example, the consumer protection

requirements will be considered satisfied

if a contract complies with State law in a

State that has adopted the related NAIC

model or a more stringent version of the

model.

Notice 97–31

Pre-1997 Long-Term Care Insurance

Contracts

Notice 97–31 was issued to provide interim standards for taxpayers to use in interpreting the new long-term care provisions and to facilitate operation of the

insurance market by avoiding the need to

amend contracts. For example, Notice

97–31 includes interim guidance on the

determination of whether an individual is

a “chronically ill individual,” including

safe harbor definitions of the terms “substantial assistance,” “hands-on assistance,” “standby assistance,” “severe cognitive impairment,” and “substantial

supervision.” The standards contained in

Notice 97–31 include interim guidance on

both the consumer protection provisions

and the scope of the statutory grandfather

provisions that apply to long-term care insurance contracts issued before 1997.

Consumer Protection Requirements

Under sections 7702B(b)(1)(F),

7702B(g), and 4980C, qualified long-term

care insurance contracts and issuers of

those contracts are required to satisfy certain provisions of the model act and model

regulation promulgated by the National

Association of Insurance Commissioners

(NAIC) for long-term care insurance as of

January 1993. The requirements relate to

guaranteed renewability, unintentional

lapse, disclosure, prohibitions against

post-claims underwriting, inflation protection, and prohibitions against pre-existing

conditions exclusions and probationary

periods. Section 4980C imposes an excise

tax on an issuer of a qualified long-term

care insurance contract if, after 1996, the

issuer fails to satisfy certain requirements,

including requirements relating to application forms, reporting, marketing, appropriateness of recommended purchase, standard format outline of coverage, delivery

of a shopper’s guide, right to return, outline of coverage, and incontestability.

Most of these requirements are based on

the NAIC model act and regulation.

The proposed regulations reflect the

standards that were set forth in Notice 97–

March 2, 1998

Section 321(f)(2) of HIPAA provides

that a contract issued before January 1,

1997, is treated as a qualified long-term

care insurance contract if the contract met

the “long-term care insurance requirements of the State” in which the contract

was sitused at the time it was issued.

Under the proposed regulations, the date

on which a long-term care insurance contract other than a group long-term care insurance contract is issued is generally the

date assigned to the contract by the insurance company. In no event is the issue

date earlier than the date on which the

policyholder submitted a signed application for coverage to the insurance company. In addition, if the period between

the date of application and the date on

which the long-term care insurance contract actually becomes effective is substantially longer than under the insurance

company’s usual business practice, then

the issue date is the date the contract becomes effective. For purposes of applying the grandfather rule of section

321(f)(2) to a group long-term care insurance contract, the issue date of the contract is the date the group contract was issued. As a result, coverage for an

individual who joins a grandfathered

group long-term care insurance contract

on or after January 1, 1997, is accorded

the same treatment under section

321(f)(2) as is accorded coverage for

those who joined the group before that

date.

For purposes of applying section

321(f)(2) of HIPAA to long-term care insurance contracts issued before January 1,

1997, a material change in the contract

generally is considered the issuance of a

new contract. Notice 97–31 provides that

a material change includes any change in

the terms of the contract altering the

amount or timing of any item payable by

the policyholder (or certificate holder),

the insured, or the insurance company.

Notice 97–31 also provides that the exercise of an option or right granted to a pol-

icyholder under a qualified long-term care

insurance contract as in effect on December 31, 1996, does not constitute a material change.1

After Notice 97–31 was issued, commentators recommended that certain common practices should not cause long-term

care insurance contracts issued before

January 1, 1997, to lose their grandfathered status. In response to these comments, the proposed regulations provide

additional exceptions to the general rule

that a material change in a long-term care

insurance contract issued before January

1, 1997, will be considered the issuance

of a new contract.

• The proposed regulations provide

that the exercise of any right provided

to a policyholder (i.e., a right that can

be exercised without the issuer’s consent and without other conditions, such

as underwriting) or the addition of any

right that is required by State law to be

provided to the policyholder will not be

treated as a material change to a longterm care insurance contract.

• In addition, the proposed regulations

provide that the following practices

will not be treated as material changes

for purposes of section 7702B: (1) any

change in the mode of premium payment, such as a change from paying

premiums monthly to quarterly; (2) any

classwide increase or decrease in premiums for contracts that have been issued on a guaranteed renewable basis;

(3) a reduction in premiums due to the

purchase of a long-term care insurance

policy by a member of the policyholder’s family; (4) any reduction in

coverage (with correspondingly lower

premiums) made at the request of a policyholder; (5) the addition, without an

increase in premiums, of alternative

forms of benefits that may be selected

by the policyholder; (6) the purchase of

a rider to increase benefits under a pre1997 contract if the rider would constitute a qualified long-term care insurance contract if it were a separate

1The definition of material change in Notice 97–

31 is narrower than the definition of material change

for purposes of other sections of the Code. For example, the exercise of an option in a life insurance

contract results in the loss of grandfathering under

section 7702 if the option only guarantees terms that

are likely to be available when the option is exercised.

1998–9 I.R.B.

contract;2 (7) the deletion of a rider or

provision of a contract (called an HHS

rider) that prohibited coordination of

benefits with Medicare; and (8) the effectuation of a continuation or conversion of coverage right under a group

contract following an individual’s ineligibility for continued coverage under

the group contract.

The proposed regulations include examples illustrating certain of these standards.

The exceptions to the general rule that a

material change results in the issuance of

a new contract apply solely for purposes

of determining whether a pre-1997 insurance contract is treated as a qualified

long-term care insurance contract under

section 7702B.3

Comments are requested on these

standards, including (1) whether the material change rules in the proposed regulations should be limited to pre-1997 longterm care insurance contracts that cannot

have cash surrender value; (2) whether

there are any conditions under which the

expansion of coverage under a group

long-term care insurance contract in connection with a corporate merger, acquisition or similar transaction should not constitute a material change; and (3) whether

the extension of a group long-term care

contract to a collective bargaining unit is

a material change in all cases. For example, should the extension of a group longterm care contract to a bargaining unit

after 1997 be treated as a material change

2Thus, for example, the only coverage provided

under the rider must be coverage for qualified longterm care services and the purchase must satisfy the

consumer protection requirements of section

7702B(g) of the Code. (This would not include protections that apply only the first time a contract is

purchased, i.e., subsections (g)(2)(A)(i)(III),

(V),(VII)(other than section 6B of the NAIC model

regulation), and (X),(g)(3), and (g)(4) of section

7702B. Similarly, subsections (c)(1)(A)(i) and

(c)(2) of section 4980C would apply only the first

time a contract is purchased.)

3The exceptions depart from the definition of material change that would apply for purposes of other

sections of the Code, including sections 7702,

7702A, 101(f), and 264. These exceptions are consistent with the purpose of section 7702B, which has

the effect of expanding the tax benefits for certain

long-term care insurance contracts. By contrast,

sections 7702, 7702A, 101(f), and 264, for example,

limit the tax benefits associated with certain insurance products and, unlike pre-1997 long-term care

insurance contracts, apply to contracts with a substantial investment orientation.

1998–9 I.R.B

if the bargaining agreement for the unit

has not been renewed since before the

group contract was first adopted?

Comments also are requested on what

the effective date of the final regulations

should be. It is intended that the regulations will not be effective until after the

end of a specified period following adoption of the final regulations. Taxpayers

may rely on these proposed regulations

for guidance pending the issuance of final

regulations. If, and to the extent, future

guidance is more restrictive than the guidance in these proposed regulations, the future guidance will be applied without

retroactive effect. In addition, until further notice, taxpayers may continue to

rely on Notice 97–31.

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 assessment is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C.

chapter 5) does not apply to these regulations, and because the regulations do not

impose a collection of information on

small entities, the Regulatory Flexibility

Act (5 U.S.C. chapter 6) does not apply.

Pursuant to section 7805(f) of the Internal

Revenue Code, this notice of proposed

rulemaking will be submitted to the Chief

Counsel for Advocacy of the Small Business Administration for comment on its

impact on small business.

Comments and Public Hearing

Before these proposed regulations are

adopted as final regulations, consideration will be given to any 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 May 13, 1998, at 10 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.

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 April 2, 1998 and submit an

outline of the topics to be discussed and

the time to be devoted to each topic by

April 2, 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.

Drafting Information

The principal author of these regulations is Katherine A. Hossofsky, Office of

Assistant Chief Counsel (Financial Institutions & Products). However, other personnel from the IRS and Treasury Department participated in their development.

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. Sections 1.7702B–1 through

1.7702B–2 are added to read as follows:

§ 1.7702B–1 Consumer protection

provisions.

(a) In general. Under sections

7702B(b)(1)(F), 7702B(g), and 4980C,

qualified long-term care insurance contracts and issuers of those contracts are required to satisfy certain provisions of the

Long-Term Care Insurance Model Act

(Model Act) and Long-Term Care Insurance Model Regulation (Model Regulation) promulgated by the National Association of Insurance Commissioners

(NAIC), as adopted as of January 1993.

The requirements for qualified long-term

care insurance contracts under sections

7702B(b)(1)(F) and 7702B(g) relate to

guaranteed renewal or noncancellability,

prohibitions on limitations and exclusions, extension of benefits, continuation

or conversion of coverage, discontinuance and replacement of policies, unintentional lapse, disclosure, prohibitions

March 2, 1998

against post-claims underwriting, minimum standards, inflation protection, prohibitions against pre-existing conditions

exclusions and probationary periods, and

prior hospitalization. The requirements

for qualified long-term care insurance

contracts under section 4980C relate to application forms and replacement coverage,

reporting requirements, filing requirements for marketing, standards for marketing, appropriateness of recommended

purchase, standard format outline of coverage, delivery of a shopper’s guide, right

to return, outline of coverage, certificates

under group plans, policy summary,

monthly reports on accelerated death benefits, and incontestability period.

(b) Coordination with State requirements—(1) Contracts issued in a State

that imposes more stringent requirements.

If a State imposes a requirement that is

more stringent than the analogous requirement imposed by section 7702B(g)

or 4980C, then, under section 4980C(f),

compliance with the more stringent requirement of State law is considered compliance with the parallel requirement of

section 7702B(g) or 4980C. The principles of paragraph (b)(3) of this section

apply to any case in which a State imposes a requirement that is more stringent

than the analogous requirement imposed

by section 7702B(g) or 4980C (as described in this paragraph (b)(1)), but in

which there has been a failure to comply

with that State requirement.

(2) Contracts issued in a State that has

adopted the model provisions. If a State

imposes a requirement that is the same as

the parallel requirement imposed by section 7702B(g) or 4980C, compliance with

that requirement of State law is considered compliance with the parallel requirement of section 7702B(g) or 4980C, and

failure to comply with that requirement of

State law is considered failure to comply

with the parallel requirement of section

7702B(g) or 4980C.

(3) Contracts issued in a State that has

not adopted the model provisions or more

stringent requirements. If a State has not

adopted the Model Act, the Model Regulation, or a requirement that is the same as

or more stringent than the analogous requirement imposed by section 7702B(g)

or 4980C, then the language, caption, format, and content requirements imposed

by sections 7702B(g) and 4980C with re-

March 2, 1998

spect to contracts, applications, outlines

of coverage, policy summaries, and notices will be considered satisfied for a

contract subject to the law of that State if

the language, caption, format, and content

are substantially similar to those required

under the parallel provision of the Model

Act or Model Regulation. Only nonsubstantive deviations are permitted in order

for language, caption, format, and content

to be considered substantially similar to

the requirements of the Model Act or

Model Regulation.

§1.7702B–2 Special rules for pre-1997

long-term care insurance contracts.

(a) Scope. The definitions and special

provisions of this section apply solely for

purposes of determining whether an insurance contract (other than a qualified

long-term care insurance contract described in section 7702B(b) and any regulations issued thereunder) is treated as a

qualified long-term care insurance contract for purposes of the Internal Revenue

Code.

(b) Pre-1997 long-term care insurance

contracts.—(1) In general. A pre-1997

long-term care insurance contract is

treated as a qualified long-term care insurance contract, regardless of whether

the contract satisfies section 7702B(b)

and any regulations issued thereunder.

(2) Pre-1997 long-term care insurance

contract defined. A pre-1997 long-term

care insurance contract is any insurance

contract with an issue date before January

1, 1997, that met the long-term care insurance requirements of the State in which

the contract was sitused on the issue date.

For this purpose, the long-term care insurance requirements of the State are the

State laws (including statutory and administrative law) that are intended to regulate insurance coverage that constitutes

“long-term care insurance” (as defined in

section 4 of the National Association of

Insurance Commissioners (NAIC) LongTerm Care Insurance Model Act, as in effect on August 21, 1996), regardless of

the terminology used by the State in describing the insurance coverage.

(3) Issue date of a contract. (i) In general. The issue date of a contract is the

issue date assigned to the contract by the

insurance company, but in no event is the

issue date earlier than the date the policy-

holder submitted a signed application for

coverage to the insurance company.

However, if the period between the date

the signed application is submitted to the

insurance company and the date coverage

under the contract actually becomes effective is substantially longer than under

the insurance company’s usual business

practice, then the issue date is the date

coverage under the contract becomes effective (if this is later than the issue date

assigned to the contract by the insurance

company). A policyholder’s right to return a contract within a “free-look” period

following delivery for a full refund of any

premiums paid is not taken into account

in determining the contract’s issue date.

(ii) Special rule for group contracts.

The issue date of a group contract (including any certificate issued thereunder) is

the date on which coverage under the

group contract becomes effective.

(iii) Exchange of contract or material

change in a contract treated as a new issuance. For purposes of this paragraph

(b)(3)—

(A) A contract issued in exchange for

an existing contract after December 31,

1996, is considered a contract issued after

that date;

(B) Any material change (as defined in

paragraph (b)(4) of this section) in a contract is treated as the issuance of a new

contract with an issue date no earlier than

the date the material change goes into effect; and

the certificates evidencing coverage under

a group contract, then the insurance coverage under the changed certificates is

treated as coverage under a newly issued

group contract (and the insurance coverage provided by any unchanged certificate continues to be treated as coverage

under the original group contract).

(4) Material change. (i) In general.

For purposes of paragraph (b)(3) of this

section, except as provided in paragraph

(b)(4)(ii) of this section, a material

change means—

(A) A change in the terms of a contract

that alters the amount or timing of an item

payable by the policyholder (or certificate

holder), the insured, or the insurance

company;

(B) A substitution of the insured under

an individual contract; or

1998–9 I.R.B.

change) in the eligibility for membership

in the group covered under a group

contract.

(ii) Exceptions. For purposes of this

paragraph (b)(4), the following changes

are not treated as a material change:

(A) A policyholder’s exercise of any

right provided under the terms of the contract as in effect on December 31, 1996,

or a right required by applicable State law

to be provided to the policyholder;

(B) A change in the mode of premium

payment (for example, a change from

monthly to quarterly premiums);

a classwide increase or decrease in

premiums;

(D) A reduction in premiums due to the

purchase of a long-term care insurance

contract by a family member of the policyholder;

(E) A reduction in coverage (with a

corresponding reduction in premiums)

made at the request of a policyholder;

(F) The addition, without an increase in

premiums, of alternative forms of benefits

that may be selected by the policyholder;

(G) The addition of a rider (including

any similarly identifiable amendment) to

a pre-1997 long-term care insurance contract in any case in which the rider, if issued as a separate contract of insurance,

would itself be a qualified long-term care

insurance contract under section 7702B

and any regulations issued thereunder (including the consumer protection provisions in section 7702B(g) to the extent applicable to the addition of a rider);

(H) The deletion of a rider or provision

of a contract (often referred to as an HHS

rider) that prohibited coordination of benefits with Medicare; and

(I) The effectuation of a continuation

or conversion of coverage right provided

under a group contract following an individual’s ineligibility for continued coverage under the group contract.

(5) Examples. The following examples

illustrate the principles of this paragraph

(b):

Example 1. (i) On December 3, 1996, A, an individual, submits a signed application to an insurance

company to purchase a nursing home contract that

meets the long-term care insurance requirements of

the State in which the contract is sitused. The insurance company decides on December 20, 1996, that it

1998–9 I.R.B

will issue the contract, and assigns December 20,

1996, as the issue date for the contract. Under the

terms of the contract, A’s insurance coverage becomes effective on January 1, 1997. The company

delivers the contract to A on January 3, 1997. A has

the right to return the contract within 15 days following delivery for a refund of all premiums paid.

(ii) Under paragraph (b)(3)(i) of this section, the

issue date of the contract is December 20, 1996.

Thus, the contract is a pre-1997 long-term care insurance contract that is treated as a qualified longterm care insurance contract.

Example 2. (i) The facts are the same as in Example 1, except that the insurance coverage under

the contract does not become effective until March

1, 1997. Under the insurance company’s usual business practice, the period between the date of the application and the date the contract becomes effective

is 30 days or less.

(ii) Under paragraph (b)(3)(i) of this section, the

issue date of the contract is March 1, 1997. Thus,

the contract is not a pre-1997 long-term care insurance contract, and, accordingly, the contract must

meet the requirements of section 7702B(b) and any

regulations issued thereunder to be a qualified longterm care insurance contract.

Example 3. (i) B, an individual, is the policyholder under a long-term care insurance contract purchased in 1995. On June 15, 2000, the insurance coverage and premiums under the contract are increased

by agreement between B and the insurance company.

(ii) Under paragraph (b)(4)(i)(A) of this section,

a change in the terms of a contract that alters the

amount or timing of an item payable by the policyholder or the insurance company is a material

change in the contract. Thus, B’s coverage is treated

as coverage under a contract issued on June 15,

2000, and, accordingly, the contract must meet the

requirements of section 7702B(b) and any regulations issued thereunder in order to be a qualified

long-term care insurance contract.

Example 4. (i) C, an individual, is the policyholder under a long-term care insurance contract

purchased in 1994. At that time and through December 31, 1996, the contract met the long-term

care insurance requirements of the State in which

the contract was sitused. In 1996, the policy was

amended to add a provision requiring the policyholder to be offered the right to increase dollar limits

for inflation every three years (without the policyholder being required to pass a physical or satisfy

any other underwriting requirements). During 2002,

C elects to increase the amount of insurance coverage (with a resulting premium increase) pursuant to

the inflation protection provision.

(ii) Under paragraph (b)(4)(ii)(A) of this section,

an increase in the amount of insurance coverage at

the election of the policyholder (without the insurance company’s consent and without underwriting

or other limitations on the policyholder’s rights) pursuant to a pre-1997 inflation protection provision

does not constitute a material change in the contract.

Thus, C’s contract continues to be a pre-1997 longterm care insurance contract that is treated as a qualified long-term care insurance contract.

Michael P. Dolan,

Deputy Commissioner of

Internal Revenue.

(Filed by the Office of the Federal Register on

December 31, 1997, 8:45 a.m., and published in the

issue of the Federal Register for January 2, 1998, 63

F.R. 35)

Notice of Proposed Rulemaking

and Notice of Public Hearing

Reorganizations; Nonqualified

Preferred Stock

REG–121755–97

AGENCY: Internal Revenue Service

(IRS), Treasury.

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

SUMMARY: In T.D. 8753, page 6 of

this Bulletin, the IRS and Treasury Department are issuing a temporary regulation under section 356(e) of the Internal

Revenue Code (Code) relating to the receipt of nonqualified preferred stock in

certain exchanges. The temporary regulation provides guidance on when nonqualified preferred stock (as defined in section

351(g)(2)) will not be treated as stock or

securities for purposes of sections 354,

355, and 356. The guidance also addresses the treatment of the receipt of a

right to acquire nonqualified preferred

stock. The temporary regulation provides

that in certain circumstances the terms

stock and securities will not include nonqualified preferred stock, or a right to acquire such stock, when received in exchange for stock or rights to acquire

stock. The text of the temporary regulation also serves as the text of this proposed regulation. This document also

provides notice of a public hearing on this

proposed regulation.

DATES: Written comments must be received by April 6, 1998. Requests to appear and outlines of topics to be discussed

at the public hearing scheduled for May 5,

1998, at 10 a.m. must be received by

April 14, 1998.

ADDRESSES: Send submissions to:

CC:DOM:CORP:R [REG–121755–97],

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

March 2, 1998

[REG–121755–97], 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

Constitution Avenue NW, Washington,

DC 20224.

FOR FURTHER INFORMATION

CONTACT: Concerning the proposed

regulation, Michael J. Danbury, (202)

622-7750; concerning submissions and

the public hearing, LaNita Van Dyke,

(202) 622-7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

A temporary regulation in T.D. 8753

amends the Income Tax Regulations (26

CFR part 1) relating to section 356 by

adding §1.356–6T. The text of that temporary regulation also serves as the text of

this proposed regulation. The preamble to

the temporary regulation explains the reason for the addition.

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 assessment is not

required. It has also been determined that

section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not

apply to this regulation. 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. 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 its impact on

small business.

Comments and Public Hearing

Before this proposed regulation is

adopted as a final regulation, consideration will be given to any written comments (a signed original and eight (8)

March 2, 1998

copies) that are submitted timely to the

IRS. All comments will be available for

public inspection and copying.

A public hearing has been scheduled

for May 5, 1998, at 10 a.m. in room 2615,

Internal Revenue Building, 1111 Constitution Ave., NW, Washington, DC. Because of access restrictions, visitors will

not be admitted beyond the building

lobby more than 15 minutes before the

hearing starts.

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

apply to the hearing.

Persons who wish to present oral comments at the hearing must submit written

comments by April 6, 1998, and submit

an outline of the topics to be discussed

and the time to be devoted to each topic

(signed original and eight (8) copies) by

April 14, 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.

Drafting Information

The principal author of this regulation

is Michael J. Danbury of the Office of Assistant Chief Counsel (Corporate). However, other personnel from the IRS and

Treasury Department participated in its

development.

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 1.356–6 is added to

read as follows:

§1.356–6 Rules for treatment of

nonqualified preferred stock as “other

property.”

[The text of this proposed section is the

same as the text of §1.356–6T published

in T.D. 8753.]

Michael P. Dolan,

Deputy Commissioner of

Internal Revenue.

(Filed by the Office of the Federal Register on

January 5, 1998, 8:45 a.m., and published in the

issue of the Federal Register for January 6, 1998, 63

F.R. 453)

Notice of Proposed Rulemaking

Civil Cause of Action for Certain

Unauthorized Collection Actions

REG–251502–96

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Notice of proposed rulemaking.

SUMMARY: This document contains proposed regulations relating to civil causes of

action for damages caused by unlawful

collection actions of officers and employees of the Internal Revenue Service (IRS).

The proposed regulations reflect amendments made by the Taxpayer Bill of Rights

2. The proposed regulations affect all taxpayers who file civil actions for damages

caused by unlawful collection actions of

officers or employees of the IRS.

DATES: Written comments and requests

for a public hearing must be received by

March 31, 1998.

ADDRESSES: Send submissions to:

CC:DOM:CORP:R (REG–251502–96),

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–251502–96), 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.

FOR FURTHER INFORMATION CONTACT: Kevin B. Connelly, (202) 6223640 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

This document contains proposed

amendments to the Procedure and Admin-

1998–9 I.R.B.

istration Regulations (26 CFR part 301)

relating to civil actions for damages

caused by unlawful collection actions of

officers or employees of the IRS. The

Taxpayer Bill of Rights 2 (TBOR2), Public Law 104–168, 110 Stat. 1465 (1996),

amended section 7433 of the Internal

Revenue Code of 1986 (Code) by raising

the cap on the amount a taxpayer may be

awarded for damages caused by unlawful

collection actions from $100,000 to

$1,000,000. Under prior law, a suit for

damages could not be brought unless the

taxpayer first exhausted administrative

remedies available within the IRS.

TBOR2 eliminated this jurisdictional prerequisite but authorized federal district

courts to reduce damage awards if the taxpayer fails to exhaust administrative

remedies. The proposed regulations reflect these changes.

Explanation of Provision

Section 801 of TBOR2 amended section

7433(a) of the Code by increasing from

$100,000 to $1,000,000 the cap on the

amount of damages that a taxpayer may

recover in Federal district court from the

United States for damages caused by any

unauthorized collection actions of an officer or employee of the IRS occurring after

July 30, 1996. Section 802 of TBOR2

amended section 7433(d)(1) of the Code

by providing that a taxpayer’s failure to

exhaust administrative remedies available

within the IRS shall only be a factor that

the court may consider in determining

whether to reduce the amount of an award.

In actions filed prior to the enactment of

TBOR2, the failure to exhaust administrative remedies was a jurisdictional bar to an

action. The proposed regulations reflect

the changes made by TBOR2.

The regulations that are being amended

by these proposed regulations currently

provide that administrative remedies shall

be considered exhausted on the earlier of:

(1) the date the decision is rendered by the

IRS on an administrative claim for damages filed in accordance with the manner

and form set forth in the regulations; or

(2) the date six months after the date an

administrative claim is filed in accordance with the manner and form set forth

in the regulations. 26 CFR §301.7433–

l(d). An exception to this rule is provided

with respect to civil actions filed in fed-

1998–9 I.R.B

eral district court prior to July 31, 1996.

Under this exception, if an administrative

claim is filed during the last six months of

the period of limitations for filing a civil

action for damages under section 7433 of

the Code, administrative remedies shall

be considered exhausted on the date the

administrative claim is filed. The exception was included in the current regulations because, prior to the enactment of

TBOR2, the failure to exhaust administrative remedies was a jurisdictional bar to

an action. Without the exception, if a taxpayer filed an administrative claim during

the last six months of the period of limitations and the IRS did not consider the

claim before the limitations period expired, the taxpayer automatically would

have been barred from filing suit. These

provisions still apply to actions that were

filed on or before July 30, 1996, the enactment date of TBOR2.

With respect to actions filed after July

30, 1996, the proposed regulations do not

contain the exception for administrative

claims filed during the last six months of

the period of limitation because the failure to exhaust administrative remedies is

no longer a bar to an action. Since the enactment of TBOR2, the failure to exhaust

administrative remedies is just one factor

the court may consider in determining

whether to reduce an award of damages.

Pursuant to the notice of proposed rulemaking, if a taxpayer waits until the last

six months of the period of limitations to

file an administrative claim, the IRS does

not reach a determination before the limitations period expires, and the taxpayer

files a timely action under section 7433,

the court may consider the facts and circumstances of the case and decide what

effect the late filing of the claim should

have on the amount of damages awarded.

The proposed manner and form for filing an administrative claim for damages

remain the same as those set forth in the

current regulations at 26 CFR 301.7433–

l(e)(1) and (2). The claim must be sent in

writing to the district director (marked for

the attention of the Chief, Special Procedures Function) of the district in which

the taxpayer resides. The claim must include: (1) the name, current address, current home and work telephone numbers

and any convenient times to be contacted,

and taxpayer identification number of the

taxpayer making the claim; (2) the

grounds, in reasonable detail, for the

claim (include copies of any available

substantiating documentation or correspondence with the Internal Revenue Service); (3) a description of the injuries incurred by the taxpayer filing the claim

(include copies of any available substantiating documentation or evidence); (4) the

dollar amount of the claim, including any

damages that have not yet been incurred

but which are reasonably foreseeable (include copies of any available substantiating documentation or evidence); and (5)

the signature of the taxpayer or duly authorized representative.

The notice of proposed rulemaking

does not have a new effective date paragraph because amended paragraphs (a),

(d), and (e) set forth the effective dates of

the new statutory provisions as well as the

statutory provisions they are replacing.

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 assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C.

chapter 5) does not apply to these regulations, and because the regulation does not

impose a collection of information on

small entities, the Regulatory Flexibility

Act (5 U.S.C. chapter 6) does not apply.

Pursuant to section 7805(f) of the Internal

Revenue Code, this notice of proposed

rulemaking will be submitted to the Chief

Counsel for Advocacy of the Small Business Administration for comment on its

impact on small business.

Comments and Requests for a Public

Hearing

Before these proposed regulations are

adopted as final regulations, consideration will be given to any written comments that are submitted timely (a signed

original and eight (8) copies) to the IRS.

All comments will be available for public

inspection and copying. A public hearing

may be scheduled if requested in writing

by a person that timely submits written

comments. If a public hearing is scheduled, notice of the date, time, and place

for the hearing will be published in the

Federal Register.

March 2, 1998

Drafting Information

The principal author of these regulations is Kevin B. Connelly, Office of Assistant Chief Counsel (General Litigation)

CC:EL:GL, IRS. However, other personnel from the IRS and Treasury Department participated in their development.

Proposed Amendments to the Regulations

Accordingly, 26 CFR part 301 is proposed to be amended as follows:

PART 301—PROCEDURE AND

ADMINISTRATION

Paragraph 1. The authority citation for

part 301 continues to read in part as follows:

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

Par. 2. In §301.7433–1, paragraphs (a),

(d), (e), and (f) are revised to read as follows:

§301.7433 Civil cause of action for

certain unauthorized collection actions.

(a) In general. If, in connection with

the collection of a federal tax with respect

to a taxpayer, an officer or an employee of

the Internal Revenue Service recklessly or

intentionally disregards any provision of

the Internal Revenue Code or any regulation promulgated under the Internal Revedue Code, such taxpayer may bring a civil

action for damages against the United

States in federal district court. The taxpayer has a duty to mitigate damages. The

total amount of damages recoverable is

the lesser of $1,000,000 ($100,000 if the

act giving rise to damages occurred before July 31, 1996) or the sum of—

(1) The actual, direct economic damages sustained as a proximate result of the

reckless or intentional actions of the officer or employee; and

(2) Costs of the action.

* * * * *

(d) Exhaustion of administrative remedies in suits brought prior to July 31,

1996—(1) General. With respect to civil

actions filed in federal district court prior

to July 31, 1996, no action may be maintained before the exhaustion of administrative remedies. Administrative remedies

are exhausted on the earlier of the following dates—

March 2, 1998

(i) The date the decision is rendered on

an administrative claim filed in accordance with paragraph (f) of this section; or

(ii) The date six months after the date

an administrative claim is filed in accordance with paragraph (f) of this section.

(2) Exception. If an administrative

claim is filed in accordance with paragraph (f) of this section during the last six

months of the period of limitations described in paragraph (g) of this section,

the taxpayer may file an action in federal

district court any time after the administrative claim is filed and before the expiration of the period of limitations.

(3) No action in federal district court

for any sum in excess of the dollar amount

sought in the administrative claim. With

respect to civil actions filed in federal district court prior to July 31, 1996, no action

may be instituted for any sum in excess of

the amount (already incurred and estimated) of the administrative claim filed

under paragraph (f) of this section, except

where the increased amount is based upon

newly discovered evidence not reasonably discoverable at the time the administrative claim was filed, or upon allegation

and proof of intervening facts relating to

the amount of the claim.

(e) Exhaustion of administrative remedies in suits brought after July 30, 1996—

(1) General. With respect to civil actions

filed in federal district court after July 30,

1996, the amount of damages awarded

under paragraph (a) of this section may be

reduced if the court determines that the

taxpayer has not exhausted the administrative remedies available within the Internal Revenue Service.

(2) Administrative remedies exhausted.

Administrative remedies shall be considered exhausted on the earlier of—

(i) The date the decision is rendered on

a claim filed in accordance with paragraph (f) of this section; or

(ii) The date six months after the date

an administrative claim is filed in accordance with paragraph (f) of this section.

(f) Procedures for an administrative

claim—(l) Manner. An administrative

claim for damages shall be sent in writing

to the district director (marked for the attention of the Chief, Special Procedures

Function) of the district in which the taxpayer resides.

(2) Form. The administrative claim

shall include—

(i) The name, current address, current

home and work telephone numbers and

any convenient times to be contacted, and

taxpayer identification number of the taxpayer making the claim;

(ii) The grounds, in reasonable detail,

for the claim (include copies of any available substantiating documentation or correspondence with the Internal Revenue

Service);

(iii) A description of the injuries incurred by the taxpayer filing the claim

(include copies of any available substantiating documentation or evidence);

(iv) The dollar amount of the claim, including any damages that have not yet

been incurred but which are reasonably

foreseeable (include copies of any available substantiating documentation or evidence); and

(v) The signature of the taxpayer or the

taxpayer’s duly authorized representative

as defined in paragraph (f)(3) of this

section.

(3) Duly authorized representative. For

purposes of paragraph (f)(2)(v) of this

section, a duly authorized representative

is any attorney, certified public accountant, enrolled actuary, or any other person

permitted to represent the taxpayer before

the Internal Revenue Service who is not

disbarred or suspended from practice before the Internal Revenue Service and

who has a written power of attorney executed by the taxpayer.

Michael P. Dolan,

Deputy Commissioner of

Internal Revenue.

(Fi1ed by the Office of the Federal Register on

December 30, 1997, 8:45 a.m., and published in the

issue of the Federal Register for December 31, 1997,

62 F.R. 68242)

Change to Part B, Section 8 of

Rev. Proc. 97–34; Correction

Announcement 98–17

This announcement supersedes Announcement 98–6, 1998–5 I.R.B. 25,

dated February 2, 1998.

The purpose of this announcement is to

clarify information in Part B, Section 8 of

Rev. Proc. 97–34, 1997–30 I.R.B. 14,

dated July 28, 1997, reprinted as Pub.

1998–9 I.R.B.

1220, Specifications for Filing Forms

1098, 1099 series, 5498, 5498-MSA and

W-2G Magnetically or Electronically.

In the Payee “B” Record, the field descriptions for the Form 5498 IRA, SEP,

and SIMPLE Indicators have been revised. The statement, “and not reporting

contributions in Amount Codes 1, 6 or 7”

has been removed. For Form 5498 information returns filed magnetically or elec-

tronically, an IRA, SEP, or SIMPLE Indicator must always be used in conjunction

with Payment Amount Field 2 (Rollover)

or Payment Amount Field 4 (Fair Market

Value).

Field

Position

Field

Title

141

Form 5498

IRA

Indicator

(Individual

Retirement

Arrangement)

Required. Form 5498 only. Enter ‘1’ if reporting a rollover (Amount Code

2) or Fair Market Value (Amount Code 4) for an IRA. Otherwise,

enter a blank.

142

Form 5498

SEP

Indicator

(Simplified

Employee

Pension)

Required. Form 5498 only. Enter ‘1’ if reporting a rollover (Amount Code

2) or Fair Market Value (Amount Code 4) for a SEP. Otherwise

enter a blank.

143

Form 5498

SIMPLE

Indicator

(Savings

Incentive

Match Plan

for Employees

of Small

Employers)

Required. Form 5498 only. Enter ‘1’ if reporting a rollover (Amount Code

2) or Fair Market Value (Amount Code 4) for a SIMPLE. Otherwise,

enter a blank.

Length

Foundations Status of Certain

Organizations

Announcement 98–16

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:

1998–9 I.R.B

Description and Remarks

Cephas Ministry, Inc., Zephyehills, FL

Childrens Development Services Inc.,

Leonia, NJ

Childrens Heritage Montessori School,

Cheyenne, WY

Childrens Literature Assembly of the

National Council of Teachers of

English, Dekalb, IL

Childrens Museum of Arkansas Inc.,

Little Rock, AR

Chisam Memorial Trust, Vienna, VA

Christian Basketball Associates Inc., San

Antonio, TX

Christian Fellowship of San Antonio

Firefighters, San Antonio, TX

Christmas in April Greater Gateway, Inc.,

Edwardsville, IL

Christmas in April Joplin, Inc., Joplin,

Chrysalis Inc., New Orleans, LA

The Competitive America Foundation,

Bethesda, MD

Consolidated Community Development

Inc., Fort Smith, AR

Consortium for Educational Process and

Technology Incorporated, Princeton,

Constitution Football League, Lexington,

Consultation and Counseling Services,

Inc., Philadelphia, PA

Consumer Credit Counseling of Northern

Indiana, Inc., Mishawaka, IN

Downstate Afro-American Hall of Fame

Inc., Peoria, IL

Downtown Crossville Inc., Crossville,

Dr. John Gorrie Science Foundation of

Franklin County Inc., Apalachicola,

Eleusis Theater, Mobile, AL

Elijah Thurston Organization for Training

and Community Development,

Homewood, IL

Elim Retreat Center Inc., Chicago, IL

Elite Ladies Association Inc., Miami, FL

Elkhart County Safe Kids Coalition Inc.,

Elkhart, IN

March 2, 1998

Elkhorn Day Care Center Inc., Elkhorn,

WI.

Ellis County Child Protective Services

Board, Waxahachie, TX

Fido Inc., Oklahoma City, OK

Final Net Inc., Memphis, TX

Fishermens Wharf Inc., Wheaton, IL

Five Leaf Clover Society Inc., Florence,

Flight for Life Incorporated, Gahanna,

Flint and Vicinity Action Community

Economic Development Corporation,

Flint, MI

French Quarter North and South Inc.,

New Orleans, LA

Fresh Beginnings Incorporated,

Arlington, VA

Friend of Hospice Inc., Henderson, NC

Friends and Neighbors of the Greater

Washington Area Inc., Washington, DC

Friends of Braddock Maryland Chapter,

Silver Spring, MD

Friends of Challenger Inc., Akron, OH

Friends of Egypt Inc., McLean, VA

Friends of Geosphere Inc., Alpharetta,

Friends of Galena the Park Branch

Library, Galena Park, TX

Friends of Gresham Inc., Chicago, IL

Frontline Productions Inc., Tulsa, OK

Fort Wayne Indiana Seminoles Baseball

Club Inc., Fort Wayne, IN

Full Gospel Christian Center Inc.,

Taylorsville, KY

Fuller-Hunt Foundation Inc., Columbus,

Fund for Tenant Ownership Inc.,

Washington, DC

Handi-Capable in the Media, Inc.,

Atlanta, GA

Helping Gods Children Food Pantry,

Lima, OH

Hemingford Community Care Center

Foundation Inc., Alliance, NE

Henderson Catholic Education

Endowment Inc., Henderson, KY

Henderson County Fire Chiefs

Association Inc., Athens, TX

March 2, 1998

Henry County Family Housing Project

Incorporated, Mt. Pleasant, IA

Henry County Step Ahead Council

Incorporated, New Castle, IN

Henry Gonzales Nursing Education

Foundation, Chicago, IL

Heritage Design Consortium Inc.,

Lafayette, IN

Heritage Rails to Trails Coalition, Amlin,

Jersey City Center for the Performing

Arts Inc., Jersey City, NJ

Jesus Christ Hope Center Inc., Carmel,

Jobworks, Inc., St. Petersburg, FL

Keepers of Young Disadvantaged

Students Inc., Toledo, OH

Kemetic Education for Young Scholars,

Raleigh, NC

Kids Voting Georgia Inc., Macon, GA

Kidtech Inc., Austin, TX

Kimberly Bergalis Memorial Committee

Inc., Ft. Pierce, FL

Kinderfest Inc., Kinder, LA

King Youth Soccer League, King, NC

Lamplight Communications Inc.,

Bradenton, FL

Lancaster Area Interfaith Coalition for

Caring, Lancaster, PA

Lancaster Swim Team Booster Club Inc.,

Lancaster, OH

Lancelot H Owens Scholarship

Foundation Inc., Jersey City, NJ

Lewis County Childrens Fund,

Hohenwald, TN

Limestone Creek Community

Development Corporation, Jupiter, FL

Limon Train Ride & Heritage Society,

Limon, CO

Lincoln Arts & Humanities Foundation,

Lincoln, KS

Max Samples Evangelistic Association,

Inc., W. Frankfort, IL

Maximum Life Community Development

Corporation, Baltimore, MD

Maxine Guy Wildlife Rehabilitation

Center, Inc., Amado, AZ

Maya American Community Council

Inc., Homestead, FL

Mayfield Country Club Scholarship

Foundation, South Euclid, OH

Meals on Wheels of Jefferson County

Inc., Meriden, KS

Mecklenburg Child Daycare Inc., Chase

City, VA

Mediation Center of Kentucky Inc.,

Lexington, KY

Medical Awareness Association Inc.,

Annapolis, MD

Medical International Resource

Reclamation Organization, Denver, CO

Medical Research Junior Board

Foundation, Chicago, IL

Medici Foundation, Omaha, NE

Medina Community Playground, Medina,

Mediplex Hospice Foundation, Abilene,

Memphis City Relief Inc., Memphis, TN

Mending the Broken Hoop Inc., Phoenix,

Meridian Hills Arts Foundation Inc.,

Indianapolis, IN

M O Educators Inc., Hollywood, FL

Network Community Services, Livonia,

New Directions, Inc., Lexington, KY

San Antonio Urban Network, San

Antonio, TX

Texas Neurosciences Foundation, San

Antonio, TX

Wilson Group, Inc., Princeton, NJ

The Word’s Out, Chantilly, VA

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.

1998–9 I.R.B.

Announcement of the Consent Voluntary Suspension of Attorneys,

Certified Public Accountants, Enrolled Agents, and Enrolled Actuaries

From Practice Before the Internal Revenue Service

Under 31 Code of Federal Regulations,

Part 10, an attorney, certified public accountant, enrolled agent, or enrolled actuary, in order to avoid the institution or

conclusion of a proceeding for his disbarment or suspension from practice before

the Internal Revenue Service, may offer

his consent to suspension from such practice. The Director of Practice, in his discretion, may suspend an attorney, certified public accountant, enrolled agent, or

enrolled actuary in accordance with the

consent offered.

Attorneys, certified public accountants,

enrolled agents, and enrolled actuaries are

prohibited in any Internal Revenue Ser-

vice 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

consent 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 ac-

countant, enrolled 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 individuals have been

placed under consent suspension from

practice before the Internal Revenue Service:

Name

Address

Designation

Date of Suspension

Trempus Jr., Joseph

Tyler, Delbert D.

Gillmore, George P.

Kamin, James C.

Hubbard, Edward

Retzlaff, Gene

Conklin, Dennis M.

Bowen, Roger H.

Ciconte, William

Lopin, Paul I.

Goldstein, Benjamin

Olsen Jr., Burton

Hickman, Michael

Grant, Arthur J.

Zielinski, Henry

Rosales, John

Reinstein, Maxwell

Payne, Charlotte

Ibrahim, Mongy

Koutek, Paul J.

Doherty, Steven

Deren, Patricia

Calhoun, Sandra

Thurman, Stephen

Davidson, Mark

Hequembourg, Donald

Cabot, PA

Monroeville, PA

Hampton, NJ

Chicago, IL

Hortonville, WI

Arlington Hghts, IL

Lake Bluff, IL

Wilmington, DE

Chicago, IL

Des Plaines, IL

Rancho Cordova, CA

Lawrence, KS

Morris Plains, NJ

Woodstock, IL

Batavia, IL

Potomac, MD

Breckenridge, CO

Raleigh, NC

Westchester, IL

Chicago, IL

Lackawanna, NY

Louisville, KY

Arcadia, CA

Tulsa, OK

Glencoe, MO

CPA

Attorney

Enrolled Agent

CPA

Enrolled Agent

CPA

Attorney

CPA

October 1, 1997 to February 28, 1998

October 23, 1997 to April 22, 2000

Indefinite from October 10, 1997

December 1, 1997 to May 31, 1999

Indefinite from December 1, 1997

December 1, 1997 to May 31, 1998

December 3, 1997 to December 2, 1998

December 4, 1997 to December 3, 1999

December 10, 1997 to December 9, 2000

Indefinite from December 11, 1997

December 12, 1997 to June 11, 1998

December 15, 1997 to June 14, 1998

December 16, 1997 to April 15, 1998

January 1, 1998 to December 31, 2000

January 1, 1998 to June 30, 1999

January 1, 1998 to April 30, 1998

January 1, 1998 to March 31, 1998

January 1, 1998 to December 31, 1999

January 1, 1998 to December 31, 1998

January 1, 1998 to August 31, 1998

January 1, 1998 to December 31, 1999

January 1, 1998 to December 31, 1998

January 1, 1998 to March 31, 1998

January 1, 1998 to December 31, 1998

January 15, 1998 to October 14, 1999

January 20, 1998 to July 19, 1998

1998–9 I.R.B

March 2, 1998

Announcement of the Expedited Suspension of Attorneys, Certified Public

Accountants, Enrolled Agents, and Enrolled Actuaries From Practice

Before the Internal Revenue Service

Under title 31 of the Code of Federal

Regulations, section 10.76, the Director

of Practice is authorized to immediately

suspend from practice before the Internal

Revenue Service any practitioner who,

within five years from the date the expedited proceeding is instituted, (1) has had

a license to practice as an attorney, certified public accountant, or actuary suspended or revoked for cause; or (2) has

been convicted of any crime under title 26

of the United States Code or, of a felony

under title 18 of the United States Code

involving dishonesty or breach of trust.

Attorneys, certified public accountants,

enrolled agents, and enrolled actuaries are

prohibited in any Internal Revenue Service

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

before the Internal Revenue Service.

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

Internal Revenue Service, the Director of

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

practitioners who have been suspended

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

rolled agent, or enrolled actuary, and date

or period of suspension. This announcement will appear in the weekly Bulletin at

the earliest practicable date after such action and will continue to appear in the

weekly Bulletins for five successive weeks

or for as many weeks as is practicable for

each attorney, certified public accountant,

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

The following individual has been

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

of the expedited proceeding provisions of

the applicable regulations:

Name

Address

Designation

Date of Suspension

Christensen, Reed K.

Roseville, CA

Enrolled Agent

Indefinite from December 16, 1997

March 2, 1998

1998–9 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. Proc..—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.

1998–9 I.R.B

March 2, 1998

Numerical Finding List1

Revenue Rulings:

Bulletins 1998–1 through 1998–8

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

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

Notices:

98–1, 1998–3 I.R.B. 42

98–2, 1998–2 I.R.B. 22

98–3, 1998–3 I.R.B. 48

98–4, 1998–2 I.R.B. 25

98–5, 1998–3 I.B.R. 49

98–6, 1998–3 I.R.B. 52

98–7, 1998–3 I.R.B. 54

98–8, 1998–4 I.R.B. 6

98–9, 1998–4 I.R.B. 8

98–10, 1998–6 I.R.B. 9

98–11, 1998–6 I.R.B. 18

98–12, 1998–5 I.R.B. 12

98–13, 1998–6 I.R.B. 19

98–14, 1998–8 I.R.B. 27

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

Proposed Regulations:

REG–100841–97, 1998–8 I.R.B. 30

REG–102894–97, 1998–3 I.R.B. 59

REG–105163–97, 1998–8 I.R.B. 31

REG–109704–97, 1998–3 I.R.B. 60

REG–115795–97, 1998–8 I.R.B. 33

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–209807–95, 1998–8 I.R.B. 40

Revenue Procedures:

98–1, 1998–1 I.R.B. 7

98–2, 1998–1 I.R.B. 74

98–3, 1998–1 I.R.B. 100

98–4, 1998–1 I.R.B. 113

98–5, 1998–1 I.R.B. 155

98–6, 1998–1 I.R.B. 183

98–7, 1998–1 I.R.B. 222

98–8, 1998–1 I.R.B. 225

98–9, 1998–3 I.R.B. 56

98–10, 1998–2 I.R.B. 35

98–11, 1998–4 I.R.B. 9

98–12, 1998–4 I.R.B. 18

98–13, 1998–4 I.R.B. 21

98–14, 1998–4 I.R.B. 22

98–15, 1998–4 I.R.B. 25

98–16, 1998–5 I.R.B. 19

98–17, 1998–5 I.R.B. 21

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

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.

March 2, 1998

1998–9 I.R.B.

Finding List of Current Action on

Previously Published Items1

Bulletins 1998–1 through 1998–8

Revenue Procedures:

95–35

95–35A

Superseded by

98–19, 1998–7 I.R.B. 30

97–1

Superseded by

98–1, 1998–1 I.R.B. 7

97–2

Superseded by

98–2, 1998–1 I.R.B. 74

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

97–53

Superseded by

98–3, 1998–1 I.R.B. 100

Revenue Rulings:

75–17

Supplemented and superseded by

98–5, 1998–2 I.R.B. 20

92–19

Supplemented in part by

98–2, 1998–2 I.R.B. 15

1 A cumulative finding list for previously published

items mentioned in Internal Revenue Bulletins

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

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

1998–9 I.R.B

March 2, 1998

Index

EXCISE TAX

INCOME TAX—Continued

Internal Revenue Bulletins

1998–1 Through 1998–4

Bows and arrows; taxable and nontaxable

articles (RR 5) 2, 20

Proposed regulations:

26 CFR 40.0–1T, added; 40.6011(a)–

1T, added; 40.6302(c)–2T, added;

deposits of excise taxes (REG–

102894–97) 3, 59

Regulations:

26 CFR 40.0–1(a), amended;

40.6011(a)–1(a)(2)(iii), 40.5302(c)–

1, amended, 40.6302(c)–2(b)(2)(iii),

added; deposits of excise taxes (TD

8740) 3, 4

26 CFR 40.6011(a)–1(b)(2)(vi),

amended; 48.4082–5T, removed;

48.4082–5, added; 48.4081–1,

amended; 48.4082–5T, redesignated;

48.6416(b)(4)–1, removed; 48.6421–

3(d)(2), amended; 48.6427–3(d)(2),

amended; 48.6715–1(a)(3), revised;

48.6715–2T, removed; gasoline and

diesel fuel excise tax; special rules

for Alaska, definitions (TD 8748) 8,

Proposed regulations:

26 CFR 1.401(a)(9)–1, amended;

qualified plans and individual retirement plans, required distributions (REG– 209463–82) 4, 27

Recovery of basis; retirees (Notice 2)

2, 22

SIMPLE-IRAs (Notice 4) 2, 25

Technical advice (RP 5) 1, 155

User fees (RP 8) 1, 225

Environmental cleanup costs; letter

rulings (RP 17) 5, 21

Exempt Organizations:

Letter rulings, etc. (RP 4) 1, 113

Organizations excepted from reporting

lobbying expenditures (RP 19) 7, 30

Technical advice (RP 5) 1, 155

User fees (RP 8) 1, 225

Failure to deposit federal tax; penalty

abatement (Notice 14) 8, 27

Foreign tax credit abuse (Notice 5) 3, 49

Insurance companies:

Discounting estimated salvage recoverable (RP 12) 4, 18

Interest rate tables (RR 2) 2, 15

Loss reserves; discounting unpaid

losses (RP 11) 4, 9

Interest:

Investment:

Federal short-term, mid-term, and

long-term rates for January 1998

(RR 4) 2, 18; February 1998 (RR

7) 6, 6

Inventory:

LIFO:

Price indexes; department stores for

November 1997 (RR 6) 4, 4; December 1997 (RR 9) 6, 5

Letter rulings, determination letters, and

information letters issued by Associate

Chief Counsel (Domestic), Associate

Chief Counsel (EBEO), Associate

Chief Counsel (Enforcement Litigation), and Associate Chief Counsel

(International) (RP 1) 1, 7

Low-income housing tax credit (Notice

13) 6, 19

Satisfactory bond; “bond factor”

amounts for the period October

through December 1997 (RR 3) 2, 4

Proposed regulations:

26 CFR 1.72(p)–1, amended; loans to

plan participants (REG–209476–82)

8, 36

26 CFR 1.469–10, revised; 1.7704–1,

added; investment income, passive

activity income and loss rules for

For the index of items published during

the first six months of 1997, see I.R.B.

1998–1, dated January 5, 1998.

The abbreviation and number in parenthesis following the index entry refer to

the specific item; numbers in roman and

italic type following the parenthesis refer

to the Internal Revenue Bulletin in which

the item may be found and the page

number on which it appears.

Key to Abbreviations:

Revenue Ruling

Revenue Procedure

Treasury Decision

Court Decision

Public Law

Executive Order

Delegation Order

TDO

Treasury Department Order

Tax Convention

SPR

Statement of Procedural

Rules

PTE

Prohibited Transaction

Exemption

GIFT TAX

Qualifying income interest, disposition

(RR 8) 7, 24

EMPLOYMENT TAX

INCOME TAX

Proposed regulations:

26 CFR 31.3121(v)(2)–1, revised;

FICA and FUTA taxation of amounts

under employee benefit plans (REG–

209484–87; REG–209807–95) 8, 40

Student FICA exception (RP 16) 5, 19

Advance pricing agreements, small business taxpayers (Notice 10) 6, 9

Article XIII (8) Rev. Proc. (RP 21) 8, 27

Education loans (Notice 7) 3, 54

Elections under section 7704(g) (Notice

3) 3, 48

Employee Plans:

Determination letters (RP 6) 1, 183;

(RP 14) 4, 22

Discrimination; CODAs (Notice 1) 3,

Eligible deferred compensation plans

(Notice 8) 4, 6

Group health plans; COBRA continuation coverage; HIPAA portability

(Notice 12) 5, 12

Funding:

Full funding limitations, weighted

average interest rate (Notice 9) 4,

Letter rulings, etc. (RP 4) 1, 113

Limitations on benefits and contributions (RR 1) 2, 5

Minimum Funding Standards (RP 10)

2, 35

ESTATE TAX

Regulations:

26 CFR 20.2041–3, 20.2056(d)–2,

amended; 20.2046–1, revised; property interests and disclaimer (TD

8744) 7, 20

26 CFR 25.2702–5, –7, amended; qualified prsonal residence trust, sale of

residence (TD 8743) 7, 26

26 CFR 25.2511–1, 25.2514–3,

25.2518–1, –2, amended; property

interests and disclaimers (TD 8744)

7, 20

Revocable trust; election (RP 13) 4, 21

Underpayment interest, interest expense

deduction, estates (RP 15) 4, 25

March 2, 1998

1998–9 I.R.B.

INCOME TAX—Continued INCOME TAX—Continued INCOME TAX—Continued

publicly traded partnerships

(REG–105163–97) 8, 31

26 CFR 1.1291–1, 1.1293–1, 1.1295–1,

–3, 1.1297–3(c), added; 1.1296–4,

amended; passive foreign investment

company preferred shares, special

income exclusion (REG–115795–

97) 8, 33

26 CFR 301.6159–1, amended; agreements for tax liability installment

payments (REG–100841–97) 8, 30

26 CFR 54.9812–1, added; mental

health parity; HIPAA (REG–

109704–97) 3, 60

Qualified Funeral Trust; guidance (Notice

6) 3, 52

Qualified Zone Academy Zone Bonds

(RP) 3, 100

Real estate transactions (RP 20) 7, 32

Regulations:

26 CFR 1.61–12, 1.249–1, 1.1016–5,

1.1275–1, amended; 1.163–13,

1.171–5, added; 1.171–1, –2, –3, –4,

revised; 1.1016–9, removed; amortizable bond premium (TD 8746) 7, 4

1998–9 I.R.B

26 CFR 1.280B–1, added; building demolition, definition of structure (TD

8745) 7, 15

26 CFR 1.446–1, amended; 1.446–1T,

removed; 301.9100–0, added;

301.9100–1, revised; 301.9100–2,

–3, added; 301.9100–1T, –2T, –3T;

removed extensions of time to make

elections (TD 8742) 5, 4

26 CFR 1.1202–0, –2, added; qualified

small business stock (TD 8749) 7, 16

26 CFR 1.1290–0, amended; 1.1294–0,

added; 1.1291–0T, amended;

1.1291–1T, added; 1.1291–9,

amended; 1.1293–0, –1T, added;

1.1295–0, –1T, –3T, 1.1297–3T(c),

added; passive foreign investment

company preferred shares, special

income exclusion (TD 8750) 8, 4

26 CFR 1.1396–1; empowerment zone

employment credit, qualified zone

employees (TD 8747) 7, 18

26 CFR 54.9801–2T, amended;

54.9801–4T, –5T, revised; 54.9804–

1T, redesignated; 54.9806–1T, redes-

ignated; 54.9812–1T, added; mental

health parity, interim rules (TD

8741) 3, 6

Rulings:

Areas in which advance rulings will not

be issued:

Associate Chief Counsel (Domestic), Associate Chief Counsel

(EBEO) (RP 3) 1, 100

Associate Chief Counsel (International) (RP 7) 1, 222

Rural airports (RP 18) 6, 20

Technical advice to district directors and

chiefs, appeals offices, Associate Chief

Counsel (Domestic), Associate Chief

Counsel (EBEO), Associate Chief

Counsel (Enforcement Litigation), and

Associate Chief Counsel (International)

(RP 2) 1, 74

Treatment of hybrid arrangements under

subpart F (Notice 11) 6, 18

March 2, 1998

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.