These synopses are intended only as aids to the reader in

Agency decision

Ask Donna

What actually matters in this document.

Text

Bulletin No. 1997–4

January 27, 1997

HIGHLIGHTS

OF THIS ISSUE

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be relied

upon as authoritative interpretations.

INCOME TAX

Rev. Rul. 97–6, page 4.

LIFO; price indexes; department stores. The November 1996 Bureau of Labor Statistics price indexes are

accepted for use by department stores employing the

retail inventory and last-in, first-out inventory methods

for valuing inventories for tax years ended on, or with

reference to, November 30, 1996.

Rev. Rul. 97–5, page 5.

Insurance companies; premium stabilization reserves. A non-life-insurance company’s surplus does not

include amounts held on behalf of a group of insureds in

a premium stabilization reserve. Rev. Rul. 70–480,

revoked.

T.D. 8695, page 5.

Final regulations under section 6103 of the Code relate

to the disclosure of returns and return information in

connection with the procurement of property and services for tax administration purposes.

REG–209834–96, page 9.

Proposed regulations under section 1396 of the Code

relate to the period employers may use in computing the

empowerment zone employment credit.

EMPLOYEE PLANS

Notice 97–8, page 7.

Weighted average interest rate update. Guidelines are

set forth for determining for January 1997 the weighted

average interest rate and the resulting permissible range

Finding Lists begin on page 16.

Announcement of Disbarments and Suspensions begins on page 14.

of interest rates used to calculate current liability for

purposes of the full funding limitation of section

412(c)(7) of the Code as amended by the Omnibus

Budget Reconciliation Act of 1987 and by the Uruguay

Round Agreements Act (GATT).

EXEMPT ORGANIZATIONS

Rev. Proc. 97–12, page 7.

Unrelated business taxable income. This procedure

provides guidance to tax-exempt organizations regarding

when associate member dues payments will be treated

as gross income of an unrelated trade or business

under section 512 of the Code. Rev. Proc. 95–21

modified and amplified.

ADMINISTRATIVE

Announcement 97–6, page 11.

A list is given of organizations now classified as private

foundations.

Announcement 97–7, page 12.

A list is provided of organizations that no longer qualify

as organizations to which contributions are deductible

under section 170 of the Code.

Announcement 97–8, page 12.

T.D. 8687, 1996–52, I.R.B. 4, relating to the source of

income from sales of natural resources or other inventory produced in one jurisdiction and sold in another

jurisdiction, is corrected.

Mission of the Service

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 products and services; and perform in a

manner warranting the highest degree of public

confidence in our integrity, efficiency and fairness.

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 of ficers 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 cour tesy 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.

court decisions, rulings, and procedures must be considered, and Service personnel and others concerned are

cautioned against reaching the same conclusions in

other cases unless the facts and circumstances are

substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.

This part includes rulings and decisions based on

provisions of the Internal Revenue Code of 1986.

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,

The first Bulletin for each month includes an index for

the matters published during the preceding month.

These monthly indexes are cumulated on a quarterly and

semiannual basis, and are published in the first Bulletin

of the succeeding quarterly and semi-annual 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, D.C. 20402.

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

Section 472.—Last-in, First-out

Inventories

26 CFR 1.472–1: Last-in, first-out inventories.

LIFO; price indexes; department

stores. The November 1996 Bureau of

Labor Statistics price indexes are accepted for use by department stores

employing the retail inventory and lastin, first-out inventory methods for valuing inventories for tax years ended on,

or with reference to, November 30,

1996.

Rev. Rul. 97–6

methods for tax years ended on, or with

reference to, November 30, 1996.

The following Department Store Inventory Price Indexes for November

1996 were issued by the Bureau of

Labor Statistics on December 12, 1996.

The indexes are accepted by the Internal

Revenue Service, under § 1.472–1(k) of

the Income Tax Regulations and Rev.

Proc. 86–46, 1986–2 C.B. 739, for appropriate application to inventories of

department stores employing the retail

inventory and last-in, first-out inventory

The Department Store Inventory Price

Indexes are prepared on a national basis

and include (a) 23 major groups of

departments, (b) three special combinations of the major groups - soft goods,

durable goods, and miscellaneous goods,

and (c) a store total, which covers all

departments, including some not listed

separately, except for the following:

candy, foods, liquor, tobacco, and contract departments.

BUREAU OF LABOR STATISTICS, DEPARTMENT STORE

INVENTORY PRICE INDEXES BY DEPARTMENT GROUPS

(January 1941 = 100, unless otherwise noted)

Groups

1. Piece Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2. Domestics and Draperies . . . . . . . . . . . . . . . . . . . . . . . . . . .

3. Women’s and Children’s Shoes . . . . . . . . . . . . . . . . . . . . . .

4. Men’s Shoes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5. Infants’ Wear. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6. Women’s Underwear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7. Women’s Hosiery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8. Women’s and Girls’ Accessories . . . . . . . . . . . . . . . . . . . . .

9. Women’s Outerwear and Girls’ Wear . . . . . . . . . . . . . . . . .

10. Men’s Clothing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11. Men’s Furnishings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12. Boys’ Clothing and Furnishings . . . . . . . . . . . . . . . . . . . . .

13. Jewelry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14. Notions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15. Toilet Articles and Drugs. . . . . . . . . . . . . . . . . . . . . . . . . . .

16. Furniture and Bedding . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17. Floor Coverings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18. Housewares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

19. Major Appliances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20. Radio and Television . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21. Recreation and Education2 . . . . . . . . . . . . . . . . . . . . . . . . . .

22. Home Improvements2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23. Auto Accessories2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Groups 1 - 15: Soft Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Groups 16 - 20: Durable Goods . . . . . . . . . . . . . . . . . . . . . . . . .

Groups 21 - 23: Misc. Goods2 . . . . . . . . . . . . . . . . . . . . . . . . . .

Store Total3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Nov.

1995

Nov.

1996

Percent Change

from Nov. 1995

to Nov. 19961

509.3

632.0

637.8

921.8

636.8

527.8

288.2

559.8

419.3

623.7

572.7

485.5

1001.1

776.6

875.3

661.2

555.4

790.5

248.7

79.9

113.4

121.9

107.0

595.2

465.0

113.5

550.7

555.9

634.7

656.1

903.7

614.8

535.4

287.4

562.5

415.9

633.0

591.5

495.1

1020.6

740.7

903.4

667.8

585.6

804.5

244.2

78.1

111.3

130.6

107.1

602.1

466.5

113.0

555.1

9.1

0.4

2.9

22.0

23.5

1.4

20.3

0.5

20.8

1.5

3.3

2.0

1.9

24.6

3.2

1.0

5.4

1.8

21.8

22.3

21.9

7.1

0.1

1.2

0.3

20.4

0.8

Absence of a minus sign before percentage change in this column signifies price increase.

Indexes on a January 1986=100 base.

The store total index covers all departments, including some not listed separately, except for the following: candy, foods,

liquor, tobacco, and contract departments.

DRAFTING INFORMATION

The principal author of this revenue

ruling is Stan Michaels of the Office of

Assistant Chief Counsel (Income Tax

and Accounting). For further information

regarding this revenue ruling, contact

Mr. Michaels on (202) 622–4970 (not a

toll-free call).

Section 501.—Exemption From Tax

on Corporations, Certain Trusts,

etc.

26 CFR 1.501(c)(5)-1: Labor, agricultural, and

horticultural organizations.

Rev. Proc. 95–21, 1995–1 C.B. 686, which

applies to organizations described in section

501(c)(5) that receive associate member dues

payments, is modified to take into account newly

enacted section 512(d). See Rev. Proc. 97–12,

page 7.

26 CFR 1.501(c)(6)–1: Business leagues, chambers of commerce, real estate boards, and boards

of trade.

The principles contained in Rev. Proc. 95–21,

1995–1 C.B. 686, which apply to organizations

described in section 501(c)(5) that receive associate member dues payments, also apply to organizations described in section 501(c)(6). See Rev.

Proc. 97–12, page 7.

Section 512.—Unrelated Business

Taxable Income

26 CFR 1.512(a)–1: Definition.

The principles contained in Rev. Proc. 95–21,

1995–1 C.B. 686, which apply to organizations

described in section 501(c)(5) that receive associate member dues payments, are extended to organizations described in section 501(c)(6). Also, Rev.

Proc. 95–21 is modified to take into account

newly enacted section 512(d). See Rev. Proc.

97–12, page 7.

Section 832.—Insurance Company

Taxable Income

26 CFR 1.832–4: Gross Income.

Insurance companies; premium stabilization reserves. A non-life-insurance

company’s surplus does not include

amounts held on behalf of a group of

insureds in a premium stabilization reserve. Rev. Rul. 70–480, revoked.

Rev. Rul. 97–5

Rev. Rul. 70–480, 1970–2 C.B. 142,

provides that amounts held by a nonlife

insurance company in a ‘‘stabilization

reserve’’ funded with credits on retrospectively rated term insurance contracts

are not taken into account in determining the company’s unearned premiums

under § 832(b)(4) of the Internal Revenue Code. Rev. Rul. 70–480 concludes

that stabilization reserves are not unearned premiums because the credits

retained by the insurance company to

fund the stabilization reserves came into

being after the relevant risk period expired and thus were part of the company’s earned premiums. Rev. Rul. 70–480

further states that the company’s earned

premiums less its costs and expenses

constitute part of its surplus, which is

available to pay policyholder dividends.

Rev. Rul. 70–480 thus treats the stabilization reserves as part of the company’s

surplus.

Rev. Rul. 70–480’s conclusion that

the stabilization reserves are part of the

insurance company’s surplus is erroneous. The stabilization reserves are avail-

able to the policyholders upon cancellation of the term accident and health

insurance contracts. The nonlife insurance company at all times had a legal

obligation to return the stabilization reserves to its policyholders to the extent

that the stabilization reserves were not

used to purchase future coverage. Thus,

stabilization reserves are not part of the

nonlife company’s surplus.

HOLDING

A non-life insurance company’s surplus does not include amounts held in a

stabilization reserve of the type described above.

EFFECT ON OTHER DOCUMENTS

Rev. Rul. 70–480 is revoked.

DRAFTING INFORMATION

The principal author of this revenue

ruling is Gary Geisler of the Office of

the Assistant Chief Counsel (Financial

Institutions and Products). For further

information regarding this revenue ruling contact Mr. Geisler on (202) 622–

3970 (not a toll-free call).

Section 6103.—Confidentiality and

Disclosure of Returns and Return

Information

26 CFR 301.6103(n)–1: Disclosure of returns and

return information in connection with procurement

of property and services for tax administration

purposes.

T.D. 8695

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

Disclosure of Returns and Return

Information to Procure Property or

Services for Tax Administration

Purposes

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Final regulations.

SUMMARY: This document contains final regulations relating to the disclosure

of returns and return information in

connection with the procurement of

property and services for tax administration purposes. The regulations authorize

the Department of Justice, including

offices of United States Attorneys, to

make such disclosures. Prior to these

amendments, disclosure authority within

the Department of Justice rested only

with the Tax Division. The amendments

also reflect a change to the law made by

the Omnibus Budget Reconciliation Act

of 1990 regarding the type of services

about which disclosures may be made.

EFFECTIVE DATE: These regulations

are effective on December 17, 1996.

FOR FURTHER INFORMATION

CONTACT: Donald Squires, 202–622–

4570 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

On December 15, 1995, a notice of

proposed rulemaking (DL–40–95 [1996–

1 C.B. 731]) relating to the disclosure of

returns and return information in connection with the procurement of property and services for tax administration

purposes was published in the Federal

hearing was requested or held nor were

any comments submitted by the public

in response to this notice.

The regulations proposed by DL–

40–95 are adopted by this Treasury

decision without revision and are discussed below.

Explanation of provisions

As previously written, 26 CFR

301.6103(n)–1 authorized the Tax Division of the Department of Justice,

among other entities and individuals, to

disclose returns and return information

pursuant to section 6103(n) of the Internal Revenue Code. This authority allowed the Tax Division to disclose tax

information incident to its contracts to

private parties for, among other purposes, automated litigation support services.

The Department of Justice indicated

its intention to establish an expanded

automated tracking system for all monetary judgments in favor of the United

States, which will be operated by a

private company under contract with the

Department. Although the majority of

tax cases are handled by the Tax Division, there are several United States

Attorneys’ offices that also have litigation responsibility in the civil tax area.

In addition, the Tax Division refers

some judgments in tax cases to the

United States Attorneys for collection.

The previously existing regulations arguably would not have permitted these

offices, which are technically not part of

the Tax Division, to disclose tax infor-

mation incident to their inclusion of tax

judgments in the automated tracking

system.

The amendments adopted by this

Treasury decision authorize the Department of Justice, including offices of

United States Attorneys, to make disclosures to procure property and services

for tax administration purposes. Any

such disclosures will be made under the

same conditions and restrictions already

set forth in the previously existing regulations. By definition, any office within

the Department of Justice without tax

administration duties will not have occasion or authority pursuant to these regulations to make such disclosures.

The amendments also authorize disclosures in connection with ‘‘the providing of other services,’’ i.e., services not

related to the strict mechanical processing or manipulation of tax returns or

return information. This conforms the

regulations to the language of the statute, as amended by the Omnibus Budget

Reconciliation Act of 1990 (Public Law

101–508, 104 Stat. 1388–353).

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 the notice of proposed rulemaking

preceding the regulations was issued

prior to March 29, 1996, the Regulatory

Flexibility Act (5 U.S.C. chapter 6) does

not apply. Pursuant to section 7805(f) of

the Internal Revenue Code, the notice of

proposed rulemaking preceding these

regulations was submitted to the Small

Business Administration for comment on

its impact on small business.

Drafting Information

The principal author of these regulations is Donald Squires, Office of the

Assistant Chief Counsel (Disclosure

Litigation), IRS. However, other personnel from the IRS, Department of Justice

and Treasury Department participated in

their development.

Adopted Amendments to the Regulations

Accordingly, 26 CFR part 301 is

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 * * *

Paragraph 2. Section 301.6103(n)–1 is

amended as follows:

1. The first sentence of paragraph (a)

introductory text is amended by removing the language ‘‘Tax Division,’’.

2. Paragraph (a)(2) is amended by

removing the language ‘‘or to’’.

3. Paragraph (a)(2) is further

amended by adding the language ‘‘or

the providing of other services,’’ immediately following the text ‘‘other property,’’.

4. The concluding text of paragraph

(a) is amended by removing the language ‘‘Tax Division,’’.

5. The second sentence of paragraph

(d) introductory text is amended by

removing the language ‘‘Tax Division,’’.

6. Paragraph (d)(2) is amended by

removing the language ‘‘Tax Division,’’.

7. Paragraph (e)(1) is amended by

removing the language ‘‘, and’’ at the

end of the paragraph and adding a

semicolon in its place.

8. Paragraph (e)(2) is amended by

removing the period at the end of the

paragraph and adding ‘‘; and’’ in its

place.

9. Paragraph (e)(3) is added.

10. The authority citation immediately following § 301.6103(n)–1 is removed.

The addition reads as follows:

§ 301.6103(n)–1 Disclosure of returns

and return information in connection

with procurement of property and services for tax administration purposes.

(e) * * *

(3) The term Department of Justice

includes offices of the United States

Attorneys.

Margaret Milner Richardson,

Commissioner of Internal Revenue.

Approved June 26, 1996.

Donald C. Lubick,

Acting Assistant Secretary of the

Treasury.

(Filed by the Office of the Federal Register on

December 16, 1996, and published in the issue of

the Federal Register for December 17, 1996, 61

F.R. 66217)

Part III. Administrative, Procedural, and Miscellaneous

Weighted Average Interest Rate

Update

Notice 97–8

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,

Month

Year

Weighted

Average

January

1997

6.88

Drafting Information

The principal author of this notice is

Donna Prestia of the Employee Plans

Division. For further information regarding this notice, call (202) 622–6076

between 2:30 and 4:00 p.m. Eastern

time (not a toll-free number). Ms.

Prestia’s number is (202) 622–7377

(also not a toll-free number).

26 CFR 601.201: Rulings and determinations

letters. (Also Part I, Sections 501(c)(5), 501(c)(6),

512(a)(1); 1.501(c)(5)–1, 1.501(c)(6)–1, 1.512(a)–

1.)

Rev. Proc. 97–12

SECTION 1. PURPOSE

This revenue procedure amplifies, in

part, and modifies, in part, Rev. Proc.

95–21, 1995–1 C.B. 686, which establishes when associate member dues payments received by organizations described in section 501(c)(5) of the

Internal Revenue Code will be treated as

gross income from the conduct of an

unrelated trade or business under section

512.

SECTION 2. BACKGROUND

As noted in Rev. Proc. 95–21, section

2, organizations described in section

501(c)(5) often receive dues payments

not only from members that are accorded full privileges in voting for the

directors of the organization, but also

from associate members that are accorded less than full or no voting privileges. Rev. Proc. 95–21, section 3, states

that the Service will not treat dues

payments from associate members as

gross income from the conduct of an

unrelated trade or business unless, for

the relevant period, the associate member category has been formed or availed

90% to 107%

Permissible

Range

90% to 110%

Permissible

Range

6.19 to 7.36

6.19 to 7.57

of for the principal purpose of producing unrelated business income. The revenue procedure also states that the Service will treat dues payments from

associate members as not included in

gross income from an unrelated trade or

business if the associate member category has been formed or availed of for

the principal purpose of furthering the

organization’s exempt purposes. The

revenue procedure further notes that in

applying these principles, the Service

will look to the purposes and activities

of the organization rather than of its

members.

Section 1115 of the Small Business

Job Protection Act of 1996, Pub.L. No.

104–188, amends section 512 as it applies to the treatment of dues paid to

agricultural or horticultural organizations

described in section 501(c)(5).

Under newly enacted section 512(d),

if an agricultural or horticultural organization described in section 501(c)(5)

requires annual dues to be paid in order

to be a member of such organization,

and the amount of such required annual

dues does not exceed $100, no portion

of such dues will be treated as derived

from an unrelated trade or business by

reason of any benefits or privileges to

which members of the organization are

entitled. The $100 dues amount is indexed according to a cost-of-living adjustment for taxable years beginning in

a calendar year after 1995. The term

‘‘dues’’ is defined as any payment

(whether or not designated as dues),

which is required to be made in order to

be recognized by the organization as a

member. This provision applies to taxable years beginning after December 31,

1986, and contains a transitional rule for

periods prior to that date.

P. L. 103–465 (GATT).

The average yield on the 30-year

Treasury Constant Maturities for December 1996 is 6.55 percent.

The following rates were determined

for the plan years beginning in the

month shown below.

SECTION 3. PROCEDURE

01. Rev. Proc. 95–21 is modified to

take into account newly enacted section

512(d). Thus, Rev. Proc. 95–21 will not

apply to agricultural and horticultural

organizations described in section

501(c)(5) if annual dues payments from

members do not exceed $100 for taxable

years beginning after December 31,

1986. The $100 dues amount is indexed

according to a cost-of-living adjustment

for taxable years beginning in a calendar

year after 1995.

02. Rev. Proc. 95–21 will continue to

apply to agricultural and horticultural

organizations described in section

501(c)(5) for purposes of determining

whether member dues payments will be

treated as gross income from an unrelated trade or business under section 512

where required annual dues amounts

paid by members exceed $100. If required annual dues exceed $100 per

member, the entire dues payment will be

subject to the principles of Rev. Proc.

95–21.

03. Rev. Proc. 95–21 will also continue to apply to labor organizations

described in section 501(c)(5) for purposes of determining whether associate

member dues payments will be treated

as gross income from an unrelated trade

or business under section 512.

04. Rev. Proc. 95–21 is amplified to

the extent that the principles contained

therein are also applicable to organizations described in section 501(c)(6).

Thus, Rev. Proc. 95–21 will also be

applied to section 501(c)(6) organizations for purposes of determining

whether associate member dues payments will be treated as gross income

from an unrelated trade or business

under section 512.

SECTION 4. EFFECTIVE DATE

DRAFTING INFORMATION

This revenue procedure is effective

for all open years.

The principal author of this revenue

procedure is Charles Barrett of the Exempt Organizations Division of the Office of the Assistant Commissioner (Employee Plans and Exempt Organizations). For further information regard-

SECTION 5. EFFECT ON OTHER

REVENUE PROCEDURES

Rev. Proc. 95–21 is amplified, in part,

and modified, in part.

ing this revenue procedure contact Mr.

Barrett at (202) 622–8152 (not a tollfree number).

Part IV. Items of General Interest

Notice of Proposed Rulemaking

and Notice of Public Hearing

hearing, Michael Slaughter, (202) 622–

7190 (not toll-free numbers).

Empowerment Zone Employment

Credit

SUPPLEMENTARY INFORMATION:

REG–209834–96

This document contains proposed

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

empowerment zone employment credit

under section 1396. Sections 1391

through 1397D (relating to empowerment zones and enterprise communities)

were added to the Internal Revenue

Code by the Omnibus Budget Reconciliation Act of 1993 (OBRA’93). Section

1397D of the Code authorizes the Secretary of the Treasury to prescribe regulations that may be necessary or appropriate to carry out the purposes of section

1394 through 1397C.

The amount of the empowerment

zone employment credit under section

1396 is equal to a specified percentage

of qualified zone wages, which are

certain wages paid or incurred by an

employer for services performed by a

qualified zone employee. Questions have

arisen about the definition of a ‘‘qualified zone employee’’ in section 1396(d).

In particular, questions have been raised

about the appropriate period under section 1396(d)(1)(A) during which substantially all of the services performed

by an employee for his or her employer

must be performed within an empowerment zone in a trade or business of the

employer.

In Notice 96–1, 1996–3 I.R.B. 30, the

IRS announced its intention to publish a

notice of proposed rulemaking that

would clarify the relevant period for this

purpose. Notice 96–1 described a rule

under which employers would have a

choice about what period to use, and

invited comments on this and any other

related issues for which guidance would

be helpful to employers. No comments

were received. These proposed regulations set forth the rule described in

Notice 96–1.

AGENCY: Internal Revenue Service

(IRS), Treasury

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

SUMMARY: This document contains

proposed regulations relating to the period employers may use in computing

the empowerment zone employment

credit under section 1396 of the Internal

Revenue Code. These proposed regulations reflect and implement certain

changes made by the Omnibus Budget

Reconciliation Act of 1993 (OBRA ’93).

They affect employers of employees

who live and work in an empowerment

zone designated under the statute. These

proposed regulations provide employers

with the guidance necessary to claim the

credit. This document also provides a

notice of public hearing on these proposed regulations.

DATES: Written comments are due on

March 17, 1997. Outlines of oral comments to be presented at the public

hearing scheduled for 10:00 a.m. on

Wednesday, May 7, 1997, must be received by Wednesday, April 16, 1997.

ADDRESSES: Send submissions to:

CC:DOM:CORP:R (REG–209834–96),

room 5226, Internal Revenue Service,

POB 7604, Ben Franklin Station, Washington, D.C. 20044. Submissions may

be hand delivered between the hours of

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

(REG–209834–96), 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. The public

hearing will be held in room 2615,

Internal Revenue Building, 1111 Constitution Avenue, NW, Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, Robert G. Wheeler, (202) 622–

6060; concerning submissions and the

Background

Explanation of Provisions

Under the proposed regulations, an

employer may use either each pay period or the entire calendar year as the

relevant period in determining whether a

particular employee performed substantially all of his or her services within an

empowerment zone (the ‘‘location-ofservices’’ requirement). For each taxable

year the employer must use the same

method for all its employees, but the

employer may change methods from one

year to the next.

In addition to comments on the relevant period for applying the locationof-services requirement, Treasury and

IRS request comments on other issues

relating to the empowerment zone employment credit with respect to which

guidance may be helpful to employers.

In particular, comments are requested on

whether the final regulations should include guidance on (1) the meaning of

‘‘substantially all’’ in the location-ofservices requirement, or (2) a provision

authorizing employers to rely on employee certifications to demonstrate

compliance with the requirement that a

qualified zone employee’s principal

place of abode be in an empowerment

zone. In this regard, commentators may

wish to consider analogous provisions in

the final regulations under § 1.1394–1

on enterprise zone facility bonds (T.D.

8673, 61 FR 27258, May 31, 1996).

Some taxpayers and their representatives have asked whether there is any

requirement that an employee’s status as

a qualified zone employee be certified

by a third party in a fashion similar to

the eligibility certifications required under the targeted jobs tax credit (prior to

its expiration on December 31, 1994).

There is no such requirement.

Proposed Effective Date

These proposed regulations are proposed to be effective December 21,

1994, the date on which the nine empowerment zones authorized by

OBRA’93 were designated by the Secretaries of Housing and Urban Development and Agriculture.

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

1997–4

I.R.B.

of the Small Business Administration for

comment on its impact on small business.

Empowerment Zone Employment Credit

Comments and Public Hearing

(a) In general. A qualified zone employee of an employer is an employee

who satisfies the location-of-services requirement and the abode requirement

with respect to the same empowerment

zone and is not otherwise excluded by

section 1396(d).

(1) Location-of-services requirement.

The location-of- services requirement is

satisfied if substantially all of the services performed by the employee for the

employer are performed in the empowerment zone in a trade or business of

the employer.

(2) Abode requirement. The abode requirement is satisfied if the employee’s

principal place of abode while performing those services is in the empowerment zone.

(b) Period for applying location-ofservices requirement. In applying the

location-of-services requirement, an employer may use either the pay period

method described in paragraph (b)(1) of

this section or the calendar year method

described in paragraph (b)(2) of this

section. For each taxable year of an

employer, the employer must either use

the pay period method with respect to

all of its employees or use the calendar

year method with respect to all of its

employees. The employer may change

the method applied to all of its employees from one taxable year to the next.

(1) Pay period method—(i) Relevant

period. Under the pay period method,

the relevant period for applying the

location- of-services requirement is each

pay period in which an employee provides services to the employer. If an

employer has one pay period for certain

employees and a different pay period for

other employees (e.g., a weekly pay

period for hourly wage employees and a

bi-weekly pay period for salaried employees), the pay period actually applicable to a particular employee is the

relevant pay period for that employee

under this method.

(ii) Application of method. Under this

method, an employee does not satisfy

the location-of-services requirement during a pay period unless substantially all

of the services performed by the employee for the employer during that pay

period are performed within the empowerment zone in a trade or business of

the employer.

(2) Calendar year method—(i) Relevant period. Under the calendar year

Before these proposed regulations are

adopted as final regulations, consideration will be given to any written comments (preferably a signed original and

eight (8) copies) that are timely submitted to the IRS. All comments will be

available for public inspection and copying.

A public hearing has been scheduled

for Wednesday, May 7, 1997 in room

2615, Internal Revenue Building, 1111

Constitution Avenue 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 that wish

to present oral comments at the hearing

must submit written comments and an

outline of topics to be discussed and the

time to be devoted to each topic (signed

original and eight (8) copies by Wednesday, April 16, 1997).

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 Robert G. Wheeler, Office of

Associate Chief Counsel, Employee

Benefits and Exempt Organizations.

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 is amended by adding an entry in

numerical order to read as follows:

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

Section 1.1396–1 also issued under 26

U.S.C. 1397D.

Par. 2. A new undesignated center

heading and § 1.1396–1 are added to

read as follows:

1997–4

I.R.B.

§ 1.1396–1 Qualified zone employees.

method, the relevant period for an employee is the entire calendar year with

respect to which the credit is being

claimed. However, for any employee

who is employed by the employer for

less than the entire calendar year, the

relevant period is the portion of that

calendar year during which the employee is employed by the employer.

(ii) Application of method. Under this

method, an employee does not satisfy

the location-of-services requirement during any part of a calendar year unless

substantially all of the services performed by the employee for the employer during that calendar year (or, if

the employee is employed by the employer for less than the entire calendar

year, the portion of that calendar year

during which the employee is employed

by the employer) are performed within

the empowerment zone in a trade or

business of the employer.

(3) Examples. This paragraph (b) may

be illustrated by the following examples.

In each example, the employees satisfy

the abode requirement at all relevant

times and all services performed by the

employees for their employer are performed in a trade or business of the

employer. The employees are not precluded from being qualified zone employees by section 1396(d)(2) (certain

employees ineligible). No portion of the

employees’ wages is precluded from

being qualified zone wages by section

1396(c)(2) (only first $15,000 of wages

taken into account) or section 1396(c)(3)

(coordination with targeted jobs credit

and work opportunity credit). The examples are as follows:

Example 1. (i) Employer X has a weekly pay

period for all its employees. Employee A works

for X throughout 1997. During each of the first 20

weekly pay periods in 1997, substantially all of

A’s work for X is performed within the empowerment zone in which A resides. A also works in the

zone at various times during the rest of the year,

but there is no other pay period in which substantially all of A’s work for X is performed within the

empowerment zone.

(ii) Employer X uses the pay period method.

For each of the first 20 pay periods of 1997, A is

a qualified zone employee, all of A’s wages from

X are qualified zone wages, and X may claim the

empowerment zone employment credit with respect to those wages. X cannot claim the credit

with respect to any of A’s wages for the rest of

1997.

Example 2. (i) Employer Y has a weekly pay

period for its factory workers and a bi-weekly pay

period for its office workers. Employee B works

for Y in various factories and Employee C works

for Y in various offices.

(ii) Employer Y uses the pay period method. Y

must use B’s weekly pay periods to determine the

periods (if any) in which B is a qualified zone

employee. Y may claim the empowerment zone

employment credit with respect to B’s wages only

for the weekly pay periods for which B is a

qualified zone employee, because those are B’s

only wages that are qualified zone wages. Y must

use C’s bi-weekly pay periods to determine the

periods (if any) in which C is a qualified zone

employee. Y may claim the credit with respect to

C’s wages only for the bi-weekly pay periods for

which C is a qualified zone employee, because

those are C’s only wages that are qualified zone

wages.

Example 3. (i) Employees D and E work for

Employer Z throughout 1997. Although some of

D’s work for Z in 1997 is performed outside the

empowerment zone in which D resides, substantially all of it is performed within the empowerment zone. E’s work for Z is performed within the

empowerment zone in which E resides for several

weeks of 1997 but outside the zone for the rest of

the year so that, viewed on an annual basis, E’s

work is not substantially all performed within the

empowerment zone.

(ii) Employer Z uses the calendar year method.

D is a qualified zone employee for the entire year,

all of D’s 1997 wages from Z are qualified zone

wages, and Z may claim the empowerment zone

employment credit with respect to all of those

wages, including the portion attributable to work

outside the zone. Under the calendar year method,

E is not a qualified zone employee for any part of

1997, none of E’s 1997 wages are qualified zone

wages, and Z cannot claim any empowerment

zone employment credit with respect to E’s wages

for 1997. Z cannot use the calendar year method

for D and the pay period method for E because Z

must use the same method for all employees. For

1998, however, Z can switch to the pay period

method for E if Z also switches to the pay period

method for D and all Z’s other employees.

incurred on or after December 21, 1994.

Margaret Milner Richardson,

Commissioner of Internal Revenue.

(Filed by the Office of the Federal Register on

December 13, 1996, 8:45 a.m., and published in

the issue of the Federal Register for December 16,

1996, 61 F.R. 66000)

Foundations Status of Certain

Organizations

Announcement 97–6

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:

Action for Youth Christian Council

Incorporated, Greenville, GA

Albemarle Fire Safety Committee,

Elizabeth City, NC

All Races Coalition With Native

American People, Chapel Hill, NC

Bellevue Schools Music Boosters,

Bellevue, OH

BHIA A New Jersey Non-Profit

Corporation, Bay Head, NJ

Bone Cabin Quarry Inc., Orem, UT

Center for Hearing Impaired Persons

Services, Downers Grove, IL

Center for Science Technology & Media

Inc., Chevy Chase, MD

Chevra Chesed Leysroel, Brooklyn, NY

Childrens at Heart Inc., Bridgewater, VA

Chinese Seniors Association of Houston,

Inc., Houston, TX

C Incorporated Support for Visions in

Action, Hopewell, NJ

CNCA Foundation, Grand Island, NE

Committee to Restore Pop Lloyd Field,

Inc., Atlantic City, NJ

Community United for Progress Inc.,

Southfield, MI

Concerned Grandparents Organization,

Inc., Clearwater, FL

Dade County Khoury League Inc.,

Naranja, FL

Dexter Intergenerational Center Inc.,

Dexter, MI

Eartheart Foundation Inc., Crozet, VA

Epoch Industries Inc., Bronx, NY

Family Learning Center Inc., Egg

Harbor Township, NJ

Financial Women International of

Illinois Charitable FDTN, Des

Plaines, IL

Forest City Hospital Scholarship

Foundation Inc., Cleveland, OH

Foundation for Quality Service Inc.,

Butte, MT

Four Bishop Inc., Boston, MA

Friends of the Burgdorff Cultural Center

Inc., Maplewood, NJ

Friends of VA Research, Inc.,

Manchester, NH

Georgetown County Environmental

Protection Society, Pawley Island, SC

Grand Strand Aviation Park Inc., Myrtle

Beach, NC

Grand Traverse-Mtskheta Association,

Traverse City, MI

Grand Traverse Poseicon Swim Club,

Traverse City, MI

Greater Cincinnati Employee Benefit

Council Inc., Ft. Mitchell, KY

Great Lakes Aquarium and Research

Center, Inc., Muskegon, MI

Helping Hands Recycling Centers Inc.,

Chesterfield, MO

High Desert Nurse Education Council

Inc., Lancaster, CA

High Risk Child Foundation, Golden,

High Voltage Transient Research

Laboratory Inc., Lexington, KY

Historical EastField Foundation, East

Nassau, NY

Houston Social Service Coalition NE,

Houston, TX

In Focus Productions Inc., Evanston, IL

Jethro Institute for Biblical Leadership,

Inc., Chester, MD

Kansas City Science and Mathematics

Alliance, Kansas City, MO

Kids Voting Tennessee Inc., Knoxville,

Klamath-Modoc Yahooskin Band of

Snake Indians Development Inc.,

Chiloquin, OR

Lawrence County Hunger Coalition Inc.,

Lawrenceburg, TN

Lexington School District Four

Education Fund, Swansea, SC

Lonesome Pine Community Concert

Association, Big Stone Gap, VA

Lukas Foss Cultural Centre Inc.,

Milwaukee, WI

M E C C A Rights of Passage, Inc.,

Gary, IN

Michigan CFIDS Organization,

Wyoming, MI

Michigan Citizens for America’s

Children, Ann Arbor, MI

National Association for

Underprivileged Blach Athletic

Students Inc., Oklahoma City, OK

Neighborhood Network Development

Corporation, Cincinnati, OH

New Attitude Drill Team, Centerville,

New Hope Youth Homes Inc., Sarasota,

New Horizons Child Birth Incorporated,

Fletcher, OH

Operation New World Ltd, New York,

Peoples View Enterprises, Minneapolis,

Philipsburg Business Incubator Inc.,

Philipsburg, MT

Phillipine Charities Foundation Inc.,

Miami, FL

PMHCC Managed Care Corporation,

Philadelphia, PA

Ragged Mountain Foundation, Inc.,

Prospect, CT

Rodney Howard-Browne Evangelistic

Association, Inc., Tampa, FL

1997–4

I.R.B.

Ronceverte Food Pantry, Ronceverte,

Rossano Clinic, Flint, MI

Second Chance for Racetrack Animals,

Athens, OH

Senior Scholastic Invitional, Zanesville,

Shaar Zion, Brooklyn, NY

Shelbyville Bedford Foster Care

Association, Shelbyville, IN

Sign of Jonah Accupuncture Clinic, Inc.,

Washington, DC

Sisters Cities of Richmond, Indiana,

Inc., Richmond, IN

Skiles Test Baseball League, Inc.,

Indianapolis, IN

Son Rise Ministries International

Incorporated, Cleveland, OH

Sophia Youth Wrestling, Beckley, WV

Soul Survival Ministry Corporation,

Northfork, WV

Southlake Sportsmens Club, Lowell, IN

Southport Jaycees Foundation Inc.,

Southport, IN

Southside Foundation Inc., Alberta, VA

Southwest Michigan Underwater

Preserve Committee, Inc., South

Haven, MI

St. John Youth Baseball, Inc., St. John,

Students Aiding Students Foundation,

McAlester, OK

Supporting Single Parents to Save Our

Youth, Oak Park, MI

Sutton Educational Foundation Inc.,

Sharon, MA

Tacoma Lesbian Concern, Tacoma, WA

Tague Hall, Inc., Columbus, OH

Task Unit One Incorporated, Versailles,

Ted Nugent’s Kamp for Kids, Jackson,

Tittabawassee Township Historical,

Freeland, MI

Toledo Olde Towne Community

Organization, Toledo, OH

Tri-State Tres Dias, Inc., Evansville, IN

Trotwood Circle Theater II, Clayton,

Trout Creek Mill Pond & Dam

Restoration Project, Trout Creek, MI

University Students Against Cancer,

Ypsilanti, MI

Upper Peninsula Reading Association,

Marquette, MI

Upper Sandusky Soccer Association

Charitable Trust, Upper Sandusky,

Veterans Community Foundation, Inc.,

Toledo, OH

Vigo County Child Abuse Prevention

Council, Inc., Terre Haute, IN

Walkathon Committee for Shrine

Hospitals, Milford, OH

1997–4

I.R.B.

Wasmver Development Corp, Newark,

Wayne County Foster Parents Network,

West Salem, OH

West Michigan Health Care Foundation,

Grand Rapids, MI

Western Michigan Festival of Missions,

Grand Rapids, MI

Whitely Productions Inc., Mentor, OH

William McKay Chapman Living Center

Inc., Wakpala, SD

Woodstock Academy, Inc., Woodstock,

Young Fundamentalists Association,

Inc., Cedar Lake, IN

Youth Resource Center, Cleveland, OH

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.

Deletions From Cumulative List of

Organizations Contributions to

Which Are Deductible Under

Section 170 of the Code

Announcement 97–7

The names of organizations that no

longer qualify as organizations described

in section 170(c)(2) of the Internal Revenue Code of 1986 are listed below.

Generally, the Service will not disallow deductions for contributions made

to a listed organization on or before the

date of announcement in the Internal

Revenue Bulletin that an organization

no longer qualifies. However, the Service is not precluded from disallowing a

deduction for any contributions made

after an organization ceases to qualify

under section 170(c)(2) if the organization has not timely filed a suit for

declaratory judgment under section 7428

and if the contributor (1) had knowledge

of the revocation of the ruling or determination letter, (2) was aware that such

revocation was imminent, or (3) was in

part responsible for or was aware of the

activities or omissions of the organization that brought about this revocation.

If on the other hand a suit for declaratory judgment has been timely

filed, contributions from individuals and

organizations described in section

170(c)(2) that are otherwise allowable

will continue to be deductible. Protection under section 7428(c) would begin

on January 27, 1997, and would end on

the date the court first determines that

the organization is not described in

section 170(c)(2) as more particularly

set forth in section 7428(c)(1). For individual contributors, the maximum deduction protected is $1,000, with a husband and wife treated as one contributor.

This benefit is not extended to any

individual who was responsible, in

whole or in part, for the acts or omissions of the organization that were the

basis for revocation.

International University

Independence, MO

Owning the Realty, Inc.

Cincinnati, OH

Source of Income From Sales of

Inventory and Natural Resources

Produced in One Jurisdiction and

Sold in Another Jurisdiction;

Correction

Announcement 97–8

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Correction to final and temporary regulations.

SUMMARY: This document contains

corrections to final and temporary regulations (T.D. 8687 [1996–52 I.R.B. 4]),

which were published in the Federal

(61 FR 60540) governing the source of

income from sales of natural resources

or other inventory produced in the

United States and sold outside the

United States or produced outside the

United States and sold in the United

States.

EFFECTIVE DATE: December 30,

1996.

FOR FURTHER INFORMATION CONTACT: Anne Shelburne (202) 622–3880,

(not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

The final regulations that are the

subject of these corrections are under

section 863 of the Internal Revenue

Code.

Need for Correction

As published, the final regulations

contain errors which may prove to be

misleading and are in need of clarification. Correction of Publication

Accordingly, the publication of the

final regulations (T.D. 8687), which are

the subject of FR Doc. 96–30617, is

corrected as follows:

1. On page 60540, column 3, in the

preamble, under the caption ‘‘DATES’’,

line 3, the language ‘‘Applicability: Taxpayers may apply’’ is corrected to read

‘‘Applicability: These regulations apply

to taxable years beginning after December 30, 1996. However, taxpayers may

apply’’.

§ 1.863–1 [Corrected]

2. On page 60546, column 3,

§ 1.863–1 (e), is corrected to read as

follows:

§ 1.863–1 Allocation of gross income.

(e) Effective dates. The rules of paragraphs (a), (b) and (c) of this section

will apply to taxable years beginning

after December 30, 1996. However, taxpayers may apply the rules of this

section for taxable years beginning after

July 11, 1995, and on or before December 30, 1996. For years beginning before December 30, 1996, see § 1.863–1

(as contained in 26 CFR part 1 revised

as of April 1, 1996).

§ 1.863–2 [Corrected]

3. On page 60547, column 1,

§ 1.863–2 (c), line 2, the language

‘‘apply to taxable years beginning’’ is

corrected to read ‘‘apply to taxable

years beginning after’’.

4. On page 60547, column 2,

§ 1.863–2 (c), line 2 from the top of the

column, the language ‘‘1995, and before

December 30, 1996.’’ is corrected to

read ‘‘1995, and on or before December

30, 1996.’’.

§ 1.863–3 [Corrected]

5. On page 60550, column 3,

§ 1.863–3 (h), is corrected to read as

follows:

§ 1.863–3 Allocation and apportionment

of income from certain sales of inventory.

(h) Effective dates. The rules of this

section apply to taxable years beginning

after December 30, 1996. However, taxpayers may apply these regulations for

taxable years beginning after July 11,

1995, and on or before December 30,

1996. For years beginning before December 30, 1996, see §§ 1.863–3A and

1.863–3AT.

Cynthia E. Grigsby,

Chief, Regulations Unit,

Assistant Chief Counsel (Corporate).

(Filed by the Office of the Federal Register on

December 10, 1996, 2:21 p.m. and published in

the issue of the Federal Register for December 12,

1996, 61 F.R. 65323)

1997–4

I.R.B.

Announcement of the Disbarment, Suspension, or Consent to Voluntary

Suspension of Attorneys, Certified Public Accountants, Enrolled Agents, and

Enrolled Actuaries From Practice Before the Internal Revenue Service

Under Section 330, Title 31 of the

United States Code, the Secretary of the

Treasury, after due notice and opportunity for hearing, is authorized to suspend or disbar from practice before the

Internal Revenue Service any person

who has violated the rules and regulations governing the recognition of attorneys, certified public accountants, enrolled agents or enrolled actuaries to

practice before the Internal Revenue

Service.

Attorneys, certified public accountants, enrolled agents, and enrolled actuaries are prohibited in any Internal Rev-

enue Service matter from directly or

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

or under suspension from practice before the Internal Revenue Service.

To enable attorneys, certified public

accountants, enrolled agents, and enrolled actuaries to identify such disbarred or suspended practitioners, 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, enrolled agent, or enrolled

actuary, and date of disbarment or period of suspension. This announcement

will appear in the weekly Bulletin for

five successive weeks or as long as it is

practicable for each attorney, certified

public accountant, enrolled agent, or

enrolled actuary so suspended or disbarred and will be consolidated and

published in the Cumulative Bulletin.

After due notice and opportunity for

hearing before an administrative law

judge, the following individuals have

been disbarred from further practice before the Internal Revenue Service:

Name

Address

Designation

Effective Date

Noske, Joan Marie

Dalrymple, John K.

Bismarck, ND

Troy, MI

CPA

September 7, 1996

September 26, 1996

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

applies to both A and B, the prior ruling

is modified because it corrects a published position. (Compare with amplified

and clarified, above).

Obsoleted describes a previously published ruling that is not considered determinative with respect to future transactions. This term is most commonly

used in a ruling that lists previously

published rulings that are obsoleted because of changes in 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.

PHC—Personal Holding Company.

PO—Possession of the U.S.

FC—Foreign Country.

FICA—Federal Insurance Contribution Act.

Pub. L.—Public Law.

REIT—Real Estate Investment Trust.

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.

Rev. Proc.—Revenue Procedure.

Rev. Rul.—Revenue Ruling.

S—Subsidiary.

S.P.R.—Statements of Procedural Rules.

Stat.—Statutes at Large.

T—Target Corporation.

T.C.—Tax Court.

T.D.—Treasury Decision.

TFE—Transferee.

TFR—Transferor.

T.I.R.—Technical Information Release.

TP—Taxpayer.

TR—Trust.

TT—Trustee.

M—Minor.

U.S.C.—United States Code.

Nonacq.—Nonacquiescence.

X—Corporation.

O—Organization.

Y—Corporation.

P—Parent 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.

PR—Partner.

PRS—Partnership.

PTE—Prohibited Transaction Exemption.

Numerical Finding List1

Bulletin 1997–1 through 1997–3

Announcements:

97–1, 1997–2 I.R.B. 63

97–2, 1997–2 I.R.B. 63

97–3, 1997–2 I.R.B. 63

97–4, 1997–3 I.R.B. 14

97–5, 1997–3 I.R.B. 15

Notices:

97–1, 1997–2 I.R.B. 22

97–2, 1997–2 I.R.B. 22

97–3, 1997–1 I.R.B. 8

97–4, 1997–2 I.R.B. 24

97–5, 1997–2 I.R.B. 25

97–6, 1997–2 I.R.B. 26

97–7, 1997–1 I.R.B. 8

97–9, 1997–2 I.R.B. 35

97–10, 1997–2 I.R.B. 41

97–11, 1997–2 I.R.B. 50

97–12, 1997–3 I.R.B. 11

Proposed Regulations:

REG–209762–95, 1997–3 I.R.B. 12

Revenue Procedures:

97–1, 1997–1 I.R.B. 11

97–2, 1997–1 I.R.B. 64

97–3, 1997–1 I.R.B. 84

97–4, 1997–1 I.R.B. 96

97–5, 1997–1 I.R.B. 132

97–6, 1997–1 I.R.B. 153

97–7, 1997–1 I.R.B. 185

97–8, 1997–1 I.R.B. 187

97–9, 1997–2 I.R.B. 56

97–10, 1997–2 I.R.B. 59

Revenue Rulings:

97–1, 1997–2 I.R.B. 10

97–2, 1997–2 I.R.B. 7

97–3, 1997–2 I.R.B. 5

97–4, 1997–3 I.R.B. 6

Treasury Decisions:

8697, 1997–2 I.R.B. 11

8688, 1997–3 I.R.B. 7

8689, 1997–3 I.R.B. 9

8692, 1997–3 I.R.B. 4

A cumulative list of all Revenue Rulings, Revenue Procedures, Treasury Decisions, etc., published in Internal Revenue Bulletins 1996–27

through 1996–53 will be found in Internal Revenue Bulletin 1997–1, dated January 6, 1997.

Finding List of Current Action on

Previously Published Items1

Bulletin 1997–1 through 1997–3

*Denotes entry since last publication

Revenue Procedures:

Revenue Rulings—Continued

96–43

Superseded by

97–3, 1997–1 I.R.B. 84

96–56

Superseded by

97–3, 1997–1 I.R.B. 84

92–20

Modified by

97–1, 1997–1 I.R.B. 11

92–20

Modified by

97–10, 1997–2 I.R.B. 59

92–90

Superseded by

97–1, 1997–1 I.R.B. 11

96–1

Superseded by

97–1, 1997–1 I.R.B. 11

96–2

Superseded by

97–2, 1997–1 I.R.B. 64

96–3

Superseded by

97–3, 1997–1 I.R.B. 84

96–4

Superseded by

97–4, 1997–1 I.R.B. 96

96–5

Superseded by

97–5, 1997–1 I.R.B. 132

96–6

Superseded by

97–6, 1997–1 I.R.B. 153

96–7

Superseded by

97–7, 1997–1 I.R.B. 185

96–8

Superseded by

97–8, 1997–1 I.R.B. 187

Revenue Rulings:

92–19

Supplemented in part by

97–2, 1997–2 I.R.B. 7

96–12

Superseded by

97–3, 1997–1 I.R.B. 84

96–13

Modified by

97–1, 1997–1 I.R.B. 11

96–22

Superseded by

97–3, 1997–1 I.R.B. 84

96–34

Superseded by

97–3, 1997–1 I.R.B. 84

96–39

Superseded by

97–3, 1997–1 I.R.B. 84

A cumulative finding list for previously published

items mentioned in Internal Revenue Bulletins

1996–27 through 1996–53 will be found in Internal Revenue Bulletin 1997–1, dated January 6,

1997.

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.