Bulletin No. 1996–40

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September 30, 1996

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.

SPECIAL ANNOUNCEMENT

TAX CONVENTIONS

Announcement 96–100, page 10.

CO–24–96, 1996–30 I.R.B., the notice of a public

hearing relating to the carryover and carryback of losses

to consolidated returns, is corrected.

Page 8.

The bilateral agreements between the United States and

the Republic of Fiji, providing for the reciprocal tax

exemption of income from the international operation of

ships and/or aircraft, are set forth.

EMPLOYEE PLANS

ADMINISTRATIVE

Rev. Rul. 96–47, page 7.

Participant consent; significant detriment. Based on

the facts and circumstances described in the revenue

ruling, the loss of the right to choose among a broad

range of investment alternatives with materially different

risk and return characteristics is a significant detriment

that invalidates a participant’s consent to an immediate

distribution.

Del. Order 155 (Rev. 4), page 9.

This order gives authority to sign recommendation letters for nonsuit settlements to the Regional Counsel and

District Counsel in the field and to the Deputy Associate

Chief Counsel and Assistant Chief Counsel in the

National Office.

Rev. Rul. 96–48, page 4.

Nondiscrimination and coverage; rollover. The nondiscrimination, actual deferral percentage, and actual contribution percentage tests of a qualified plan are not

affected by a qualified rollover to that plan prior to the

individual who makes the rollover meeting the plan’s age

and service requirements. In addition, the rollover will

not trigger the minimum nonintegrated benefit or minimum nonintegrated contribution requirements of section

416(c) of the Code.

EXEMPT ORGANIZATIONS

Announcement 96–101, page 11.

A list is given of organizations now classified as private

foundations.

Finding Lists begin on page 17.

Announcements of Disbarments and Suspensions begin on page 14.

Announcement 96–95, page 10.

Waiver or reimbursement of expenses of a regulated

investment company. Comments are requested on

what effect the allocation of a waiver or reimbursement

or the allocation of certain differences in advisory fees

to specific shares of a regulated investment company

should have on the deduction for dividends paid.

Announcement 96–102, page 12.

T.D. 8675, 1996–29 I.R.B. 5, relating to the modification of debt instruments, is corrected.

Announcement 96–103, page 13.

T.D. 8677, 1996–30 I.R.B. 7, relating to the deductions

and losses of members and also the carryover and

carryback of losses to consolidated returns, 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 401.—Qualified Pension,

Profit-Sharing, and Stock Bonus

Plans

26 CFR 1.401(a)(4)–1: Nondiscrimination requirements of § 401(a)(4)

(Also, §§ 410, 416; 1.410(b)–6, 1.416–1.)

Nondiscrimination and coverage;

rollover. The nondiscrimination, actual

deferral percentage, and actual contribution percentage tests of a qualified plan

are not affected by a qualified rollover

to that plan prior to the individual who

makes the rollover meeting the plan’s

age and service requirements. In addition, the rollover will not trigger the

minimum nonintegrated benefit or minimum nonintegrated contribution requirements of section 416(c) of the Code.

Rev. Rul. 96–48

ISSUES

(1) If, under a qualified retirement

plan, employees who have not satisfied

the minimum age and service requirements for participation for a plan year

are permitted to make ‘‘rollover contributions’’ to the plan’s trust, to what

extent are such employees taken into

account for purposes of the minimum

coverage requirements of § 410(b) of

the Internal Revenue Code and the nondiscrimination requirements of §§ 401(a)(4), 401(k)(3), and 401(m)(2)?

(2) Are the employees described in

Issue 1 participants for purposes of the

minimum contribution and benefit requirements of § 416(c)?

FACTS

Employer X maintains Plan A, a

profit-sharing plan qualified under

§ 401(a) that includes a qualified cash

or deferred arrangement, as defined in

§ 1.401(k)–1(a)(4)(i) of the Income Tax

Regulations, and that provides for

matching contributions and nonelective

contributions. Plan A does not accept

after-tax employee contributions. Employer X consists of Division M and

Division N. Employees of Division M

are eligible to participate in Plan A, i.e.,

to make salary deferral contributions

and receive allocations of matching and

nonelective contributions, when they

have completed one year of service with

Employer X. Employees of Division M

who have satisfied Plan A’s minimum

one year of service requirement are also

permitted to make rollover contributions

to Plan A’s trust. Effective January 1,

1997, Plan A is amended to permit all

employees of Division M, including employees who have not completed one

year of service, to make rollover contributions to Plan A’s trust at any time

following commencement of employment. Plan A defines a rollover contribution as a rollover contribution under

§ 402(c), 403(a)(4), or 408(d)(3)(A)(ii),

or a direct rollover under § 401(a)(31).

LAW AND ANALYSIS (ISSUE 1)

MINIMUM COVERAGE

REQUIREMENTS OF § 410(b)

Section 410(b) describes minimum

coverage requirements that a plan must

satisfy in order to be qualified under

§ 401(a). Under § 1.410(b)–7(c)(1), a

plan that consists of (1) elective contributions under a section 401(k) plan (as

defined in § 1.410(b)–9), (2) employee

and matching contributions under a section 401(m) plan (as defined in

§ 1.410(b)–9), and (3) nonelective contributions (which are contributions that

are neither elective, employee, nor

matching contributions) is treated as

three separate plans, each of which must

separately satisfy the requirements of

§ 410(b). Under § 1.410(b)–6(b), if a

plan applies minimum age and service

eligibility conditions permissible under

§ 410(a)(1) (including any entry date

conditions under § 410(b)(4)(C)) and

excludes all employees who do not meet

those conditions from benefiting under

the plan, then all employees who fail to

satisfy those conditions are excludable

employees for purposes of determining

whether the plan satisfies § 410(b).

With respect to the portion of Plan A

that is a section 401(k) plan,

§ 1.410(b)–3(a)(2)(i) provides that an

employee is treated as benefiting under

the plan for a plan year if and only if

the employee is an eligible employee

under the plan for the plan year, as

defined in § 1.401(k)–1(g)(4). In general, under § 1.401(k)–1(g)(4), an employee is an eligible employee only if

the employee is directly or indirectly

eligible to make a cash or deferred

election under the plan for all or a

portion of the plan year.

Section 1.401(k)–1(a)(3)(i) defines a

cash or deferred election as any election

by an employee to have the employer

either provide an amount to the employee in cash or another taxable benefit

that is not currently available, or contribute an amount to a trust, or provide

an accrual or other benefit, under a plan

deferring the receipt of compensation.

An election to make a rollover contribution under Plan A is not a cash or

deferred election. Consequently, the employees who are not eligible to make

salary deferral contributions for a plan

year because they have not met Plan A’s

minimum one year of service requirement are not eligible employees within

the meaning of § 1.401(k)–1(g)(4) and

are not treated as benefiting under the

portion of Plan A that is a section

401(k) plan even though they are eligible to make rollover contributions under Plan A.

With respect to the portion of Plan A

that is a section 401(m) plan,

§ 1.410(b)–3(a)(2)(i) provides that an

employee is treated as benefiting under

the plan for a plan year if and only if

the employee is an eligible employee

under the plan for the plan year, as

defined in § 1.401(m)–1(f)(4). In general, under § 1.401(m)–1(f)(4), an employee is an eligible employee only if

the employee is directly or indirectly

eligible to make an employee contribution or to receive an allocation of

matching contributions under the plan

for the plan year.

Section 1.401(m)–1(f)(6) defines employee contribution to mean any mandatory or voluntary contribution to the

plan that is treated at the time of

contribution as an after-tax employee

contribution. The rollover contributions

that are permitted under Plan A are not

after-tax contributions and therefore are

not employee contributions for purposes

of § 401(m). Consequently, the employees who are not eligible to receive

allocations of matching contributions for

a plan year because they have not met

Plan A’s minimum one year of service

requirement are not eligible employees

within the meaning of § 1.401(m)–

1(f)(4) and are not treated as benefiting

under the portion of Plan A that is a

section 401(m) plan even though they

are eligible to make rollover contributions under Plan A.

With respect to the portion of Plan A

that is treated as a separate plan consisting of nonelective contributions,

§ 1.410(b)–3(a)(1) provides that an employee is treated as benefiting under the

plan for a plan year if and only if the

employee receives an allocation for the

plan year that is taken into account

under § 1.401(a)(4)–2(c)(2)(ii) in determining whether the plan satisfies the

nondiscriminatory amount requirement

of § 1.401(a)(4)–1(b)(2). As provided in

§ 1.401(a)(4)–11(b)(1), rollover contributions are not taken into account in

determining whether a plan satisfies the

nondiscriminatory amount requirement

of § 1.401(a)(4)–1(b)(2). Consequently,

the employees who do not receive allocations of nonelective contributions for

a plan year because they have not

satisfied Plan A’s minimum one year of

service requirement are not treated as

benefiting under the portion of Plan A

that is treated as a separate plan consisting of nonelective contributions even

though they make (or are eligible to

make) rollover contributions under Plan

Thus, the employees who have not

met Plan A’s minimum one year of

service requirement for participation for

a plan year are not treated as benefiting under any of the three portions of

Plan A that must separately satisfy the

requirements of § 410(b) even though

such employees make (or are eligible to

make) rollover contributions under Plan

A. Therefore, under § 1.410(b)–6(b),

these employees are excludable employees for purposes of applying the requirements of § 410(b) to Plan A.

NONDISCRIMINATION

REQUIREMENTS OF §§ 401(a)(4),

401(k)(3), AND 401(m)(2)

In order to be qualified under

§ 401(a), a plan must satisfy the nondiscrimination requirements of § 401(a)(4).

Among these requirements are the nondiscriminatory amount of contributions

or benefits requirement of § 1.401(a)(4)–

1(b)(2) and the nondiscriminatory availability of benefits, rights, and features

requirement of § 1.401(a)(4)–1(b)(3).

As provided in § 1.401(a)(4)–

1(b)(2)(ii)(B), the nondiscriminatory

amount requirement that applies to a

section 401(k) plan is the actual deferral

percentage (ADP) test in § 401(k)(3).

The nondiscriminatory amount requirement that applies to a section 401(m)

plan is the actual contribution percentage (ACP) test in § 401(m)(2). Under

§ 1.401(k)–1(b)(2), only eligible employees are taken into account in the

ADP test. Likewise, under § 1.401(m)–

1(b)(1), only eligible employees are

taken into account in the ACP test. As

noted above, the employees who are

eligible to make rollover contributions,

but not to make salary deferral contributions or to receive matching contributions, under Plan A are not eligible

employees with respect to the portion of

Plan A that is a section 401(k) plan or

the portion of Plan A that is a section

401(m) plan. Thus, these employees are

not included in either the ADP test or

the ACP test.

In general, only employees within the

meaning of § 1.401(a)(4)–12 (‘‘benefiting employees’’) are tested in applying

the nondiscrimination requirements of

§ 401(a)(4) to a plan. Under § 1.401(a)(4)–12, an employee is a benefiting

employee for a given plan year for

purposes of the nondiscrimination requirements of § 401(a)(4) if and only if

the employee benefits under the plan for

the plan year within the meaning of

§ 1.410(b)–3. As noted above, employees do not benefit under a plan within

the meaning of § 1.410(b)–3 merely

because they make (or are eligible to

make) rollover contributions under the

plan, since such contributions are not

taken into account in determining

whether a plan satisfies the nondiscriminatory amount requirement of § 1.401(a)(4)–1(b)(2). Thus, employees who

make (or are eligible to make) rollover

contributions under Plan A, but who do

not receive allocations of nonelective

contributions for a plan year, are not

tested in applying the nondiscriminatory

amount of contributions or benefits requirement to the portion of Plan A that

is treated as a separate plan consisting

of nonelective contributions.

The right to make a rollover contribution is an ‘‘other right or feature’’ under

§ 1.401(a)(4)–4(e)(3)(iii)(I) that must

satisfy the nondiscriminatory availability

of benefits, rights, and features requirement of § 1.401(a)(4)–1(b)(3). Under

§ 1.401(a)(4)–4, the tests of whether a

benefit, right, or feature is made available in a nondiscriminatory manner are

generally applied to benefiting employees. However, § 1.401(a)(4)–4(d)(2)

also requires a plan to satisfy a separate

test with respect to benefits, rights, and

features provided to nonexcludable employees with accrued benefits who are

not currently benefiting under the plan

(frozen participants). As noted above,

employees are not benefiting employees

merely because they make (or are eligible to make) rollover contributions

under a plan. In addition, the employees

who make (or are eligible to make)

rollover contributions under Plan A, but

who have not met Plan A’s minimum

one year of service requirement for

participation for a plan year, are not

frozen participants. Thus, with respect to

employees who are not benefiting em-

ployees under Plan A for a plan year

and who are not frozen participants, the

regulations under § 401(a)(4) do not

provide guidance for determining

whether a benefit, right, or feature available to such employees, such as the

right to make rollover contributions,

satisfies the nondiscriminatory availability of benefits, rights, and features requirement of § 1.401(a)(4)–1(b)(3).

Section 1.401(a)(4)–1(d) provides that

the Commissioner may, in revenue rulings, notices, and other guidance published in the Internal Revenue Bulletin,

provide any additional guidance that

may be necessary or appropriate in

applying the nondiscrimination requirements of § 401(a)(4), including additional safe harbors and alternative methods and procedures for satisfying those

requirements. Pursuant to this authority,

the following rule is provided.

A plan must separately satisfy the

nondiscriminatory availability requirement of § 1.401(a)(4)–1(b)(3) with respect to each benefit, right, or feature

that is made available under the plan to

employees who do not benefit under the

plan for a plan year within the meaning

of § 1.410(b)–3 and who are not frozen

participants within the meaning of

§ 1.401(a)(4)–4(d)(2). (Such employees

are hereinafter referred to as ‘‘limited

participants’’.) A plan will separately

satisfy this requirement if the benefit,

right, or feature is made available to

limited participants in a manner that,

under all of the relevant facts and

circumstances, does not discriminate significantly in favor of nonexcludable employees who are highly compensated

employees within the meaning of

§ 414(q). For purposes of satisfying this

requirement, whether an employee is

treated as an excludable employee is

determined under § 1.410(b)–6 based on

any minimum age and service requirements that are applied under the plan as

a condition on the availability of the

benefit, right, or feature.

If either of the following two safe

harbors is satisfied, a benefit, right, or

feature will be treated as made available

in a manner that does not discriminate

significantly in favor of nonexcludable

employees who are highly compensated

employees. The first safe harbor will

automatically be satisfied if the plan,

within the meaning of § 1.401(a)(4)–12,

meets the following requirements. The

limited participants to whom the benefit,

right, or feature is currently available,

within the meaning of § 1.401(a)(4)–

4(b), are all those, and only those,

employees who are excluded from participation solely on account of failure to

satisfy the plan’s minimum age and

service requirements, and the benefit,

right, or feature also satisfies the effective availability requirement of

§ 1.401(a)(4)–4(c). Thus, a plan would

automatically satisfy this safe harbor if

it allowed rollovers by all employees

who will participate once they satisfy

the plan’s minimum age and service

rules (and not by any other employees

who are excluded from participation in

the plan). A plan will not fail to satisfy

this design-based safe harbor merely

because it limits the availability of the

benefit, right, or feature to those employees who have satisfied any lesser

uniform minimum age and service requirements. The second safe harbor will

be satisfied if the benefit, right, or

feature is one that will satisfy

§ 1.401(a)(4)–4(b) and (c) either (1)

when the benefit, right, or feature is

treated as available only to employees

who are limited participants (i.e., as if it

were not available to other employees to

whom the benefit, right, or feature is, in

fact, available) or (2) when the benefit,

right, or feature is treated as available to

both limited participants and all other

employees to whom the benefit, right, or

feature is, in fact, available under the

plan.

Applying this rule to Plan A, the right

of employees who have not satisfied

Plan A’s minimum one year of service

requirement for participation for a plan

year to make rollover contributions must

separately satisfy the nondiscriminatory

availability requirement of § 1.401(a)(4)–1(b)(3). The limited participants to

whom the right to make rollover contributions under Plan A is currently available, within the meaning of § 1.401(a)(4)–4(b), are all those, and only those,

employees who are excluded from participation solely on account of failure to

satisfy the plan’s minimum one year of

service requirement, and, absent other

relevant facts and circumstances, the

right of such limited participants to

make rollover contributions also satisfies

the effective availability requirement of

§ 1.401(a)(4)–4(c). (The right to make

rollover contributions does not fail to be

currently and effectively available to an

employee merely because the employee

does not have an amount that is eligible

to be rolled over.) Plan A thus satisfies

the requirements of the design-based

safe harbor described above. Plan A is

therefore treated as separately satisfying

the nondiscriminatory availability re-

quirement of § 1.401(a)(4)– 1(b)(3)

with respect to the right of employees

who have not satisfied Plan A’s minimum one year of service requirement

for participation for a plan year to make

rollover contributions.

HOLDINGS (ISSUE 1)

1. Plan A is not precluded from treating as excludable, for purposes of

§ 410(b), all employees who have not

completed one year of service (as required by the plan for participation)

merely because Plan A permits rollover

contributions to be made by such employees.

2. Employees who are eligible to

make rollover contributions, but who

have not satisfied Plan A’s minimum

one year of service requirement for

participation for a plan year, are not

taken into account in applying the ADP

test in § 401(k)(3) to the portion of

Plan A that is a section 401(k) plan, the

ACP test in § 401(m)(2) to the portion

of Plan A that is a section 401(m) plan,

or the nondiscrimination in amount of

contributions or benefits requirement under § 401(a)(4) to the portion of Plan A

that consists of nonelective contributions.

3. Plan A must separately satisfy the

nondiscriminatory availability requirement of § 1.401(a)(4)–1(b)(3) with respect to the right of employees who

have not satisfied the minimum one year

of service requirement for participation

for a plan year to make rollover contributions to the plan. Plan A is treated as

separately satisfying this requirement

because it satisfies the requirements of

the design-based safe harbor described

in this revenue ruling.

LAW AND ANALYSIS (ISSUE 2)

Section 416(c) generally requires each

non-key employee who is a participant

in a defined benefit or defined contribution plan to accrue a minimum benefit

or receive a minimum contribution under the plan in any year the plan is

top-heavy. Section 1.416–1, Q&A M–4

and Q&A M–10, describes which employees must receive the top-heavy

minimums. In general, each non-key

employee who is a participant in a

top-heavy plan must receive the minimum if, in the case of a defined contribution plan, the participant has not separated from service by the end of the

plan year, or, in the case of a defined

benefit plan, the participant has at least

1,000 hours of service for the accrual

computation period. Non-key employees

may not fail to receive the top-heavy

minimum by virtue of being excluded

from participation because their compensation is less than a stated amount or

because of failure to make mandatory

employee contributions or elective contributions.

Employees who have not satisfied the

minimum age and service requirements

for plan participation for a plan year are

not participants for purposes of § 416(c)

merely because they make (or are eligible to make) rollover contributions

under a plan. Such employees, therefore,

are not required to accrue minimum

benefits or receive minimum allocations

for years in which a plan is top-heavy.

HOLDING (ISSUE 2)

For purposes of the minimum contribution and benefit requirements of

§ 416(c), employees are not participants

for a plan year merely because they

make (or are eligible to make) rollover

contributions under Plan A.

DRAFTING INFORMATION

The principal author of this revenue

ruling is James Flannery of the Employee Plans Division. For further information regarding this revenue ruling,

please contact the Employee Plans Division’s taxpayer assistance telephone service between the hours of 1:30 p.m. and

4 p.m. Eastern Time, Monday through

Thursday, by calling (202) 622–6074/

6075, or Mr. Flannery on (202) 622–

6214. (These telephone numbers are not

toll-free numbers.)

Section 410.—Minimum Coverage

Requirements

26 CFR 1.410(b)–6: Excludable employees.

Whether an employee who has not satisfied the

minimum age and service requirements for participation in a plan that is qualified under § 401(a) of

the Internal Revenue Code, but who has the right

to make a rollover contribution to the plan’s trust,

is an excludable employee for purposes of applying the minimum coverage requirements of

§ 410(b) to the plan. See Rev. Rul. 96–48,

page 4.

Section 411.—Minimum Vesting

Standards

26 CFR 1.411(a)–11: Restriction and valuation of

distributions.

Participant consent; significant detriment. Based on the facts and circumstances described in the revenue ruling,

the loss of the right to choose among a

broad range of investment alternatives

with materially different risk and return

characteristics is a significant detriment

that invalidates a participant’s consent to

an immediate distribution.

Rev. Rul. 96–47

ISSUE

Does a defined contribution plan that

allows participants who have not terminated employment to direct the investment of their accounts and that offers a

broad range of investment choices satisfy the consent requirements of

§ 411(a)(11) of the Internal Revenue

Code if the accounts of former employees who do not consent to an immediate

distribution of their account balances are

required to be invested in a money

market fund?

FACTS

Plan A, a profit-sharing plan, allows

each participant who has not terminated

employment to choose the manner in

which his or her account is invested

among the plan’s investment alternatives. The choices include a broad range

of investment alternatives, including a

money market fund and several other

funds with materially different risk and

return characteristics.

Plan A provides that a participant who

terminates employment prior to normal

retirement date will receive his or her

vested account balance at normal retirement date unless the participant elects,

upon termination of employment or any

time thereafter, to receive an immediate

distribution of the vested account balance.

Plan A also provides that upon termination of employment the participant may

no longer choose among investment alternatives and the participant’s account will

automatically be invested in the money

market fund until distributed.

LAW AND ANALYSIS

Section 411(a)(11) sets forth consent

requirements that must be satisfied with

respect to certain distributions in order

for a plan to be qualified under

§ 401(a). Under § 411(a)(11), if the

present value of a participant’s

nonforfeitable benefit exceeds $3,500,

the plan must provide that the benefit is

not immediately distributable without

the participant’s consent.

Section 1.411(a)–11(c)(2)(i) of the Income Tax Regulations provides that consent to a distribution is not valid if,

under the plan, a significant detriment is

imposed on any participant who does

not consent to the distribution. That

regulation further provides that whether

or not a significant detriment is imposed

is determined based on the particular

facts and circumstances.

Based on the facts and circumstances

applicable to Plan A, the loss of the

right to choose among a broad range of

investment alternatives with materially

different risk and return characteristics

is a significant detriment, within the

meaning of § 1.411(a)–11(c)(2)(i), that

is imposed by Plan A on a participant

who does not consent to a distribution.

Therefore, Plan A permits an immediate

distribution without a valid consent.

HOLDING

Plan A fails to satisfy § 411(a)(11)

because a participant’s benefit is immediately distributable under the plan without the participant’s valid consent.

EFFECT OF PRIOR

DETERMINATION LETTER

A plan that has received a determination letter on a provision inconsistent

with this revenue ruling, and that satisfies the conditions for reliance set forth

in section 22.04(1) through (4) of Rev.

Proc. 96–6, 1996–1 I.R.B. 151, may

continue to rely on that determination

letter for the period described in Rev.

Proc. 96–6. Such a plan, however, is not

entitled to the extended reliance provisions of Rev. Proc. 89–9, 1989–1 C.B.

780, and Rev. Proc. 89–13, 1989–1 C.B.

801, as modified by Rev. Proc. 93–9,

1993–1 C.B. 474, and Rev. Proc. 93–

39, 1993–2 C.B. 513, with respect to the

guidance in this revenue ruling. A plan

that is amended to comply with this

revenue ruling will not lose its otherwise applicable extended reliance period.

DRAFTING INFORMATION

The principal author of this revenue

ruling is James Flannery of the Employee Plans Division. For further information regarding this revenue ruling,

please contact the Employee Plans Division’s taxpayer assistance telephone service between the hours of 1:30 p.m. and

4 p.m. Eastern Time, Monday through

Thursday, by calling (202) 622–6074/

6075, or Mr. Flannery on (202) 622–

6214. (These telephone numbers are not

toll-free numbers.)

Section 416.—Special Rules for

Top-Heavy Plans

26 CFR 1.416–1: Questions and answers on topheavy plans.

Whether an employee who has not satisfied the

minimum age and service requirements for participation in a plan that is qualified under § 401(a) of

the Internal Revenue Code, but who has the right

to make a rollover contribution to the plan’s trust,

is a participant for purposes of the minimum

contribution or benefit requirements of § 416(c).

See Rev. Rul. 96–48, page 4.

Part II. Treaties and Tax Legislation

Subpart A.—Tax Conventions

FIJI

REPUBLIC OF FIJI

MINISTRY OF

FOREIGN AFFAIRS

SUVA

AUGUST 12, 1996

The Ministry of Foreign Affairs of the

Government of the Republic of Fiji

presents its compliments to the Embassy

of the United States of America and has

the honour to refer to the latter’s Note

No. 64 of June 19, 1996, the text of

which reads as follows:

‘‘The Embassy of the United States

of America presents its compliments

to the Ministry of Foreign Affairs of

the Government of the Republic of

Fiji and has the honour to propose

that the two governments conclude an

agreement to exempt from income tax

on a reciprocal basis, income derived

by residents of the other country from

the international operation of ships

and aircraft. The terms of the agreement are as follows:

The Government of the United

States of America, in accordance with

section 872(B) and 883(A) of the

Internal Revenue Code, agrees to exempt from tax gross income derived

from the international operation of

ships or aircraft by individuals who

are residents of Fiji (other than

United States citizens) and corporations which are incorporated in Fiji.

The Government of the Republic of

Fiji agrees to exempt from tax gross

income derived from the international

operation of ships or aircraft by individuals who are residents of the

United States of America (other than

Fiji citizens) and corporations which

are incorporated in the United States

of America.

In the case of a Fiji corporation,

the exemption shall apply only if the

corporation meets one of the following conditions:

(I) The corporation’s stock is primarily and regularly traded on an

established securities market in Fiji,

another country which grants an

equivalent exemption to U.S. corporations, or the United States,

(II) More than 50 percent of the

value of the corporation’s stock is

owned directly or indirectly by individuals who are residents of Fiji

or of another foreign country which

grants an equivalent exemption to

U.S. corporations or by a corporation organized in a country which

grants an equivalent exemption to

U.S. corporations and whose stock

is primarily and regularly traded on

an established securities market in

that country, another country which

grants an equivalent exemption to

U.S. corporations, or the United

States.

For the purpose of exemption from

the U.S. tax, Subparagraph (II) will

be considered to be satisfied if the

corporation is a ‘‘controlled foreign

corporation’’ under the Internal Revenue Code.

In the case of a U.S. corporation,

the exemption shall apply only if the

corporation meets the ownership requirements under Fiji law.

In this agreement:

(A) The terms ‘‘contracting state’’,

and ‘‘other contracting state’’ mean

the Sovereign Democratic Republic

of Fiji or the United States of

America, the governments of which

have concluded this agreement.

(B) Gross income includes all income derived from international

operation of ships or aircraft, including:

(I) Income from the rental on a

full (time or voyage) basis of

ships or aircraft used in international transport;

(II) Income from the rental on a

bareboat basis of ships or aircraft

used in international transport;

(III) Income from the rental of

containers and related equipment

used in international transport

that is incidental to income from

the international operation of

ships and aircraft; and

(IV) Gains from the sale or

other alienation of ships or aircraft used in international transport derived by a person primarily engaged in the international

operation of ships or aircraft.

In the application of this agreement

by a contracting state, any term not

defined in this agreement shall, unless

the context otherwise requires, have

the meaning which it has under the

laws of that state relating to the taxes

to which this agreement applies.

The Embassy proposes that if the

foregoing is acceptable to the Government of the Republic of Fiji, this note

and the Ministry’s note in reply shall

constitute an agreement. This agreement shall enter into force on the date

of the Ministry’s note in reply and

shall have effect in respect of income

derived on or after January 1, 1996,

and during all prior years for which

the relevant statute of limitations remains open on that date.

This agreement shall continue into

force until the Government of either

contracting state gives written notice

of termination of the agreement to the

Government of the other contracting

state through the diplomatic channel.

The Embassy of the United States

of America avails itself of this opportunity to renew to the Ministry of

Foreign Affairs of the Government of

the Republic of Fiji the assurances of

its highest consideration.’’

The Ministry has the further honour

to confirm that the Government of the

Republic of Fiji accepts that the Embassy’s above-quoted Note and this Note in

reply from the Ministry shall constitute

an agreement between the two governments to exempt from income tax on a

reciprocal basis, income derived by residents of the other country from the

international operation of ships and aircraft.

The Ministry of Foreign Affairs of the

Government of the Republic of Fiji

avails itself of this opportunity to renew

to the Embassy of the United States of

America the assurances of its highest

consideration.

Part III. Administrative, Procedural, and Miscellaneous

Delegation Order No. 155 (Rev. 4)

Delegation of Authority

AGENCY: Internal Revenue Service

ACTION: Delegation of Authority

SUMMARY: This delegation order is

revised to give authority to sign recommendation letters for nonsuit settlements

to the Regional Counsel and District

Counsel in the field and to the Deputy

Associate Chief Counsel and Assistant

Chief Counsel in the National Office. In

addition, it has been expanded in scope

to cover nonrefund matters. The text of

the delegation order appears below.

EFFECTIVE DATE: August 15, 1996.

FOR FURTHER INFORMATION CONTACT: Sara M. Coe, CC:DOM:FS:PROC,

Room 4135, 1111 Constitution Avenue,

NW, Washington, DC 20224, (202) 622–

7940 (not a toll-free call).

Recommendation Letters to the Department of Justice Concerning

Settlement Offers Covering Persons

or Periods Not in Suit Authority: For

matters under their respective jurisdictions, to sign recommendation letters to

the Department of Justice concerning

Settlement Offers related to pending

refund cases or any other cases or

matters referred to the Department of

Justice for prosecution or defense with

respect to persons or periods not in suit.

Delegated to:

Chief Counsel

Associate Chief Counsel

Deputy Associate Chief Counsel

Authority: For matters under their

respective jurisdictions, to sign recommendation letters concerning Settlement

Offers related to pending refund cases

or any other cases or matters referred to

the Department of Justice for prosecution or defense with respect to: (a)

periods not in suit ending prior to the

date of the resulting settlement agreement; (b) tax consequences for periods

not in suit ending after the date of the

settlement agreement that necessarily result from the settlement of the periods

in suit; (c) issues conceded in full by

the taxpayer for periods not in suit

ending after the date of the settlement

agreement; (d) persons not in suit for

the periods described in (a); and (e)

persons not in suit for the items described in (b) and (c).

Delegated to:

Regional Counsel

District Counsel

Assistant Chief Counsel

In exercising both of the above authorities, the advice of the Chief of

Appeals and/or District Director with

jurisdiction over the nonsuit persons or

periods should be obtained and considered.

Redelegation: The authority delegated herein may not be redelegated.

Sources of Authority: 26 CFR

301.7122–1, 26 CFR 301.7701–9. To the

extent that authority previously exercised consistent with this order may

require ratification, it is hereby approved

and ratified. This order supersedes Delegation Order No. 155 (Rev. 3), effective October 1, 1991.

Dated: August 15, 1996.

Michael P. Dolan,

Deputy Commissioner.

(Filed by the Ofice of the Federal Register on

September 5, 1996, 8:45 a.m., and published in

the issue of the Federal Register for September 6,

1996, 61 F.R. 47235)

Part IV. Items of General Interest

Request for Comments on the

Effect Under Rev. Proc. 96–47 of a

Waiver or Reimbursement of an

Expense of a Regulated Investment

Company.

Announcement 96–95

Rev. Proc. 96–47, 1996–39 I.R.B. 10,

describes certain situations in which

distributions made to shareholders of a

regulated investment company (RIC)

may vary and nevertheless be deductible

as dividends under § 562 of the Internal

Revenue Code. The Service understands

that in some instances a person may

waive or reimburse an expense of a RIC

and the benefit of the waiver or reimbursement may be allocated to specific

shares. In addition, various groups of

shares may be allocated different investment advisory fees under a performance-based fee contract. This announcement solicits public comment on

what effect, if any, these allocations

should have under §§ 561 and 562.

BACKGROUND

Section 852(b)(2)(D) allows a RIC a

deduction for dividends paid (as defined

in § 561 with certain modifications).

Section 561 defines the deduction for

dividends paid and applies the rules of

§ 562 to determine which dividends are

eligible for the deduction for dividends

paid. Section 562(c) provides that the

amount of any distribution is not considered a dividend for purposes of computing the dividends paid deduction under

§ 561 unless the distribution is pro rata,

does not prefer any share of stock of a

class over any other share of stock of

that same class, and does not prefer one

class of stock over another class except

to the extent that one class is entitled

(without reference to waivers of their

rights by shareholders) to the preference.

The legislative history to the 1986

amendment to section 562(c) explains

that any difference in the investment

advisory fee charged to shares of a RIC

results in a preference. See 2 H.R. Conf.

Rep. No. 841, 99th Cong., 2d Sess.

II–246, reprinted at 1986–3 (Vol. 4)

C.B. 246.

Many RICs have issued groups of

shares that represent interests in the

same portfolio of securities but have

different arrangements for shareholder

services or the distribution of shares or

both (Qualified Groups). Because the

fees for these arrangements and services

1996–40

I.R.B.

may vary, shareholders with equivalent

investments in the same fund may receive different distributions. To permit

open-end management investment companies to issue these groups of shares,

the Securities and Exchange Commission has adopted Rule 18f–3, 17 C.F.R.

270.18f–3, under the Investment Company Act of 1940, 15 U.S.C. 80a–1 to

–64.

Under Rev. Proc. 96–47, variations in

distributions to shareholders of different

Qualified Groups that exist solely as a

result of the allocation of expenses in

accordance with the revenue procedure

do not prevent the distributions from

being dividends under § 562. Occasionally, the person providing services to a

RIC waives some or all of its fees for

those services. In addition, occasionally

a person other than the person providing

particular services reimburses the RIC

for some or all of the fees that the RIC

incurred for those services. Rev. Proc.

96–47 is silent as to the treatment of

distributions to shareholders that differ

in part as a result of the allocation of

the benefit of a waiver or reimbursement.

Rule 18f–3 also permits a group of

shares to be allocated disproportionate

advisory fees to the extent that any

difference in amount allocated ‘‘is the

result of the application of the same

performance fee provisions in the advisory contract of the company to the

different investment performance [net of

other expenses]’’ of each group. Rev.

Proc. 96–47 does not apply to variations

in distributions that are due to

performance-based advisory fees.

REQUEST FOR COMMENTS

Where there is an allocation of a

waiver or reimbursement or of differing

advisory fees under a performance-based

contract, the Service requests comments

on what effect, if any, the allocation

should have under §§ 561 and 562. In

addition to other matters that commentators are interested in addressing, comments on the following questions may

be particularly helpful:

(1) What are the common situations

in which expenses of a RIC are waived

or reimbursed? In what situations, if

any, is a waiver or reimbursement a

legal necessity?

(2) What restrictions, if any, limit the

ability of a person to waive or reimburse an expense of a RIC?

(3) What accounting methods are

used to determine the proper allocation

of a waiver or reimbursement?

(4) Should the benefit of a waiver or

reimbursement of an expense be required to be allocated in a manner that

does not differ from how the unwaived

expense would have been allocated?

(5) Does the answer to (4) above

vary depending on whether a waiver or

reimbursement is made by a person

unrelated to the RIC’s investment advisor, by a person related to the RIC’s

investment advisor, or by the RIC’s

investment advisor itself?

(6) For purposes of §§ 561 and 562,

what is the appropriate treatment of

variations in distributions that arise as a

result of allocation of the investment

advisory fee under a contract that compensates the advisor on the basis of

applying the same performance-fee provisions to different groups of shares?

METHOD OF MAKING COMMENTS

Comments should be submitted in

writing on or before November 22, 1996

to: CC:DOM:CORP:R (Announcement

96–95), Room 5226, Internal Revenue

Service, POB 7604, Ben Franklin Station, Washington, DC 20044. In the

alternative, comments may be hand delivered to CC:DOM:CORP:R (Announcement 96–95), Courier’s Desk, Internal Revenue Service, 1111 Constitution Ave., NW, Washington, DC. Alternatively, taxpayers may submit comments electronically via the IRS Internet

site at http://www.irs.ustreas.gov/prod/

tax_regs/comments.html. All comments

will be available for public inspection

and copying.

DRAFTING INFORMATION

The principal author of this announcement is Arnold Golub of the Office of

Assistant Chief Counsel (Financial Institutions and Products). For further information regarding this announcement,

contact Mr. Golub at (202) 622–3950

(not a toll-free call).

Public Hearing on Consolidated

Returns—Limitations on the Use of

Certain Losses and Deductions;

Correction

Announcement 96–100

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Correction to the notice of

public hearing.

SUMMARY: This document contains a

correction to the notice of public hearing (CO–24–96 [1996–30 I.R.B. 22])

which was published in the Federal

FR 33393). The notice of public hearing

generally relates to the carryover and

carryback of losses to consolidated and

separate return years.

FOR FURTHER INFORMATION CONTACT: David Friedel (202) 622–7550

(not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

The notice of public hearing that is

the subject of this correction is under

section 1502 of the Internal Revenue

Code.

Need for Correction

As published, the notice of public

hearing (CO–24–96) contains an error

which may prove to be misleading and

is in need of clarification.

Correction of Publication

Accordingly, the publication of the

notice of public hearing (CO–24–96)

which is the subject of FR Doc. 96–

15826 is corrected as follows:

On page 33394, column 2, in the

preamble, under the heading “Comments

and Public Hearing”, in the second

paragraph, line 2, the language ‘‘for

Monday, September 16, 1996, at 10’’ is

corrected to read “for Thursday, October

17, 1996, at 10”.

Cynthia E. Grigsby,

Chief, Regulations Unit,

Assistant Chief Counsel (Corporate).

(Filed with the Office of the Federal Register on

September 10, 1996, 8:45 a.m., and published in

the issue of the Federal Register for September 11,

1996, 61 F.R. 47838)

Foundations Status of Certain

Organizations

Announcement 96–101

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:

Alliance for Educational Enhancement,

Shreveport, LA

Alternative Coping Resources Inc.,

Jacksonville, FL

America Family Center Inc., Miami, FL

American Institute for Medieval Studies

Inc., Gainesville, FL

American Legal Ethics Institute Inc.,

Charleston, SC

American Medical Relief Association

Incorporated, Winter Haven, FL

Americare Research Institute Inc.,

Miami, FL

Anchors Aweigh Club Inc., Key West,

Animal Aid for Vermilion Area Inc.,

Abbeville, LA

Artist Foundation of Broward Inc.,

Hollywood, FL

Arts Alliance Center Inc., Orange Park,

Arts Renaissance, Minneapolis, MN

Asian American AIDS Foundation,

Chicago, IL

Assistcare, Inc., West Palm Beach, FL

Association of Workers To Acquire

Resources for Education, Port Royal,

Astronomical Society of Bay County,

Panama City, FL

Atlanta Center for Torah Inc., Ft.

Lauderdale, FL

Awareness Information Discovery

Services Inc., Sunrise, FL

Baby Love Pregnancy Crisis Center

Inc., Spring Hill, FL

Basinger Ministries Inc., Okeechobee,

Baton Rouge National Senior Sports

Classic Inc., Baton Rouge, LA

Bayou Council on Promoting Esteem

Inc., Thibodaux, LA

Beaches Sea Turtle Patrol Inc.,

Jacksonville Beach, FL

Beaufort Alliance for the Mentally Ill,

Port Royal, SC

B. E. Enterprenue, Nashatah, WI

Boca Raton Police Athletic League Inc.,

Boca Raton, FL

Brevard Youth Soccer League Inc.,

Merritt Island, FL

Cameron Cares Inc. Concerned Adults

Responding to the Extra Special,

Cameron, LA

Center for Cetacean Studies Inc.,

Madeira Beach, FL

Charleston Leadership Foundation Inc.,

Charleston, SC

Children of the King, Conway, SC

Childrens Academy Daycare Center,

Jackson, MS

Childrens Home Literacy Council Inc.,

Ft. Myers, FL

Christian Action Services Association

Inc., Orange Park, FL

Christian Fellowship Alive Ministries

Inc., Lakeland, FL

Christian Golfers International Inc.,

Largo, FL

Christian Missionary Research &

Advocacy Association Inc.,

Gainesville, FL

Citizens for Water Inc., Deleon Springs,

College Assist Inc., West Palm Beach,

College Hill Homes Resident

Management Corp, Tampa, FL

Columbia Classical Ballet Company,

Columbia, SC

Combat and Transport Aircraft Museum,

Broussard, LA

Community and Friends Inc.,

Charleston, SC

Company Inc. Westlake Powers

Theatrical Productions, Ft. Myers, FL

Connections for At-Risk Runaway and

Homeless Youth, Columbia, SC

Cooper City Civic Association Inc.,

Cooper City, FL

Cornerstone Family Counseling Center

Inc., Shreveport, LA

Covenant Life Family Ministries Inc.,

Panama City, FL

Crime Busters, New Orleans, LA

Crown Foundation Inc., Gainesville, FL

D’Iberville Babe Ruth League Inc.,

D’Iberville, MS

Day and Nite Lovin Care Center of

Laurel Inc., Laurel, MS

Dayspring Maternity Home Inc.,

Melbourne, FL

Dennis Ministries Inc., Ocala, FL

Dispair to Victory Ministries, Baton

Rouge, LA

Dominican Republic Educational

Foundation Inc., Port Charlotte, FL

Drew Kids Inc., West Palm Beach, FL

Drugs Off the Street, New Orleans, LA

East Hillsborough Law Enforcement

Appreciation Association Inc., Plant

City, FL

1996–40

I.R.B.

El-Shadi Literacy Center, Greenville,

Elijah House of Florida Inc., Sanibel,

Faith in Children, Oceanside, CA

Faith Refuge, Inc., Shreveport, LA

Feed My Lambs Inc., Deland, FL

Fibromyalgia Polymyalgia Outreach of

Polk County Inc., Lakeland, FL

1st New York Volunteer Engineer

Regiment Association, Jacksonville,

Florence Family Fling Inc., Florence,

Florida Adoption & Childrens Center

Inc., Miami, FL

Florida AIDS Foundation Inc., Miami,

Florida Association for the Gifted Inc.,

Fort Lauderdale, FL

Florida Association of Suicidology Inc.,

Boca Raton, FL

Florida District 10 Little League

Baseball Inc., Ft. Lauderdale, FL

Florida Events for the Disadvantaged

Inc., Orlando, FL

Florida Fellowship Inc., Tallahassee, FL

Florida School of Addiction Studies

Alumni Association Inc., Titusville,

Florida Womens Foundation Inc., San

Antonio, FL

Floridawatch Institute Inc., Gainesville,

Foundation for Civic Development Inc.,

Picayune, MS

Free Enterprise Partnership of Florida

Inc., Jacksonville, FL

Friends of the Cultural Center Inc.,

Chalmette, LA

Gainesville Area Sports Support Inc.,

Gainesville, FL

Gateway to Heaven Inc., Morton, MS

Gibbs-Puckett Book Foundation

Incorporated, Winter Park, FL

GMAA Grover Loening Scholarship

Fund Inc., Sunrise, FL

Gods Community Out Reach Center

Inc., Miami, FL

Gospel Truth Foundation Inc., Metairie,

Greater Homestead Florida City

Chamber of Commerce Charitable

Trust Inc., Homestead, FL

Greater Miami Haitian Federation Inc.,

Miami, FL

Green Horizon Land Trust Incorporated,

Lake Wales, FL

Gretna Food Distribution Center Inc.,

Gretna, LA

Heartbreaker Boxing of America Inc.,

Daytona Beach, FL

Hollywood Performing Arts Inc.,

Hallandale, FL

1996–40

I.R.B.

Hope for the Deaf, Inc., Petal, MS

Hospital Jesus is the Rock and

Development Center Inc., Miami, FL

Humane Society of Walton County

Florida Inc., Defuniak, FL

Inter-Faith Mass Choir Incorporated,

Grenada, MS

International Genetic Epidemiology

Society Inc., New Orleans, LA

Irish Politicians Foundation Inc.,

Pensacola, FL

Jazz Society of Baton Rouge, Baton

Rouge, LA

Jehovah Shalom Personal Care Home

Inc., Jackson, MS

Jennie Moore Relief Fund, Mt. Pleasant,

John Mark Ministries Inc., Fernandina

Beach, FL

Jordan Park Resident Management

Corporation, St. Petersburg, FL

Lifeline Foundation Inc., Jersey City, NJ

Life Through the Word Inc., Paterson,

Lindenwold Baseball Athletic

Association, Lindenwold, NJ

Listening Ear Inc., Harrisonburg, VA

Little Lambs Day Care Center Plus Inc.,

Weehawken, NJ

Love All People Outreach Ministry

Incorporated, Edgewater, NJ

Lucretia Mott Center Inc., Philadelphia,

Major Thomas B. McGuire Jr

Foundation Inc., Woodbury, NJ

Mahima Inc., Lewisdale, MD

Manassas Society for the Preservation of

Black Heritage Inc., Manassas, VA

Manufactured Housing Educational

Institute Inc., Arlington, VA

Mario B. Magno Scholarship Fund Inc.,

Washington, DC

Med Insight Incorporated, St. Cloud,

Paraclete Ministries Inc., Eustis, FL

Parent Connection of Tampa Bay Inc.,

Brandon, FL

Park Way Housing Inc., Jacksonville, FL

Zimbabwe Child Survival &

Development Foundation,

Washington, DC

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 classi-

fication of foundation status in the Internal Revenue Bulletin.

Modifications of Debt Instruments;

Correction

Announcement 96–102

AGENCY: Internal Revenue Service

(IRS), Treasury

ACTION: Correction to final regulations.

SUMMARY: This document contains a

correction to final regulations (T.D.

8675 [1996–29 I.R.B. 5]) which were

published in the Federal Register on

Wednesday, June 26, 1996 (61 FR

32926). The final regulations relate to

the modification of debt instruments.

EFFECTIVE DATE: September 24,

1996

FOR FURTHER INFORMATION CONTACT: Thomas J. Kelly, (202) 622–

3930 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

The final regulations that are the

subject of this correction are under

section 1001 of the Internal Revenue

Code.

Need for Correction

As published, the final regulations

(T.D. 8675) contain an error which may

prove to be misleading and are in need

of clarification.

Correction of Publication

Accordingly, the publication of the

final regulations (T.D. 8675) which are

the subject of FR Doc. 96–15830 is

corrected as follows:

§ 1.1001–3 [Corrected]

On page 32935, column 3, § 1.1001–3

(g), paragraph (iv) of Example 5., line 8,

the language ‘‘(e)(4)(i)(E) of this section

and is a significant’’ is corrected to read

‘‘(e)(4)(i)(C) of this section and is a

significant’’.

Cynthia E. Grigsby,

Chief, Regulations Unit,

Assistant Chief Counsel (Corporate).

(Filed by the Office of the Federal Register on

September 10, 1996, 8:45 a.m., and published in

the issue of the Federal Register for September 11,

1996, 61 F.R. 47822)

Consolidated Returns—Limitations

on the Use of Certain Losses and

Deductions; Correction

FOR FURTHER INFORMATION CONTACT: David Friedel (202) 622–7550

(not a toll-free number).

Announcement 96–103

SUPPLEMENTARY INFORMATION:

AGENCY: Internal Revenue Service

(IRS), Treasury.

Background

ACTION: Correction to the final and

temporary regulations.

SUMMARY: This document contains

corrections to the final and temporary

regulations (T.D. 8677 [1996–30 I.R.B.

7]) which were published in the Federal

(61 FR 33321). The final and temporary

regulations relate to the deductions and

losses of members and also to the

carryover and carryback of losses to

consolidated and separate return years

and to the built-in deduction rules.

EFFECTIVE DATE: June 27, 1996

The final and temporary regulations

that are the subject of these corrections

are under section 1502 of the Internal

Revenue Code.

Need for Correction

As published, the final and temporary

regulations (T.D. 8677) contain errors

which may prove to be misleading and

are in need of clarification.

Correction of Publication

Accordingly, the publication of the

final and temporary regulations (T.D.

8677) which are the subject of FR Doc.

96–15823 is corrected as follows:

1. On page 33322, column 3, under

the authority citation for Part 1, the

entry ‘‘Section 1.1502–1T also issued

under 26 U.S.C. 1502’’ is corrected to

read ‘‘Section 1.1502–1 also issued under 26 U.S.C. 1502’’.

2. On page 33322, column 3, under

the authority citation for Part 1, the

entry ‘‘Section 1.1502–79T also issued

under 26 U.S.C. 1502’’ is corrected to

read ‘‘Section 1.1502–79 also issued

under 26 U.S.C. 1502’’.

Cynthia E. Grigsby,

Chief, Regulations Unit,

Assistant Chief Counsel (Corporate).

(Filed by the Office of the Federal Register on

September 10, 1996, 8:45 a.m., and published in

the issue of the Federal Register for September 11,

1996, 61 F.R. 47821)

1996–40

I.R.B.

Announcement of the Disbarment, Suspension, and 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 the 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

Styvaert, Richard

Davis Jr., George L.

San Diego, CA

Washington, D.C.

CPA

Enrolled Agent

July 5, 1996

August 15, 1996

Under 31 Code of Federal Regulations, Part 10, an enrolled agent 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 resignation from such practice. The Director of

Practice, in his discretion, may suspend

an enrolled agent in accordance with the

consent offered.

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 enrolled agent who

has resigned from practice before the

Internal Revenue Service.

To enable attorneys, certified public

accountants, enrolled agents and enrolled actuaries to identify former enrolled agents who have resigned from

practice before the Internal Revenue

Service, the Director of Practice will

announce in the Internal Revenue Bulletin the names and addresses of former

enrolled agents who have resigned from

such practice, and date of resignation.

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

enrolled agent who has resigned, and

will be consolidated and published in

the Cumulative Bulletin.

The following individual has offered

his resignation as an enrolled agent:

Name

Address

Date of Resignation

Marchioli, Anthony

Dallas, TX

July 12, 1996

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 Rev-

enue 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 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

accountant, 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

Berry, James R.

Rohner Jr., Richard E.

Bova, Robert J.

Rines, Robert L.

Kimball, Randy

Cole, Sherman

Barretta, Samuel N.

Harris, Luis F.

Vourvoulias, James

Swan, Roy E.

Hamilton, Barry K.

Horton, Greta

Addabbo, Marie P.

Crouch Jr., Richard E.

Sanders Jr., Wilfred A.

Perkins, Nancy F.

Nichols, Oliver R.

Winiemko, Ronald C.

Pallman, William F.

Gannon, Martin C.

Andrews, Craig A.

Columbus, MO

Burr Ridge, IL

Tampa, FL

Concord, NH

Rancho Cucamonga, CA

Oklahoma City, OK

Southfield, MI

Orlando, FL

Park Ridge, IL

Salem, OR

Twins Falls, ID

Richland, VA

Manchester, CT

Miss’nViejo, CA

Orlando, FL

Apple Valley, MN

Meriden, CT

Sterl’g Hts, MI

Guilford, CT

Wallingford, CT

Hicksville, OH

CPA

Attorney

CPA

Attorney

CPA

Enrolled Agent

CPA

Attorney

CPA

June 5, 1996 to December 4, 1997

June 10, 1996 to June 9, 1997

June 10, 1996 to March 9, 1997

June 17, 1996 to December 16, 1998

July 1, 1996 to December 31, 1996

July 1, 1996 to March 31, 1997

August 1, 1996 to December 31, 1999

August 1, 1996 to October 31, 1996

August 1, 1996 to January 31, 1997

August 1, 1996 to September 30, 1996

Indefinite from August 2, 1996

September 1, 1996 to May 31, 1997

September 1, 1996 to February 28, 1999

September 1, 1996 to August 31, 1998

September 1, 1996 to November 30, 1996

September 1, 1996 to May 31, 1997

September 1, 1996 to February 28, 1999

September 30, 1996 to January 29, 1997

September 30, 1996 to December 29, 1996

September 30, 1996 to September 29, 1997

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 actu-

aries 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, 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 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

Bower, Lewis H.

Reiss, Irvin L.

Reynolds, Mark E.

Moore, Philip J.

Broek, Kevin J.

Bein, William

Henry, Gregory

Sadler, George A.

Fuhr IV, John Henry

Rakov, Harris J.

Perkell, Mark E.

Darrah, Robert J.

Constantino, Enrico J.

VanLoan, Jonathan A.

Bennett, John J.

Lavin-Munch, Carole A.

Tampa, FL

Newton, PA

Brownsburg, IN

Rome, GA

Omaha, NE

Beachwood, OH

Bradford, PA

Houston, TX

Dallas, TX

Mahwah, NJ

S. Burlington, VT

Neola, IA

Bay Shore, NY

Frazer, PA

Milford, CT

Merrionette Pk, IL

CPA

Attorney

CPA

Attorney

CPA

Attorney

CPA

Attorney

CPA

Indefinite from May 30, 1996

Indefinite from June 4, 1996

Indefinite from July 1, 1996

Indefinite from July 10, 1996

Indefinite from August 1, 1996

Indefinite from August 21, 1996

Indefinite from August 27, 1996

Numerical Finding List1

Bulletins 1996–27 through 1996–39

Announcements:

96–61, 1996–27 I.R.B. 72

96–62, 1996–28 I.R.B. 55

96–63, 1996–29 I.R.B. 18

96–64, 1996–29 I.R.B. 18

96–65, 1996–29 I.R.B. 18

96–66, 1996–29 I.R.B. 19

96–67, 1996–30 I.R.B. 27

96–68, 1996–31 I.R.B. 45

96–69, 1996–32 I.R.B. 38

96–70, 1996–32 I.R.B. 40

96–71, 1996–33 I.R.B. 16

96–72, 1996–33 I.R.B. 16

96–73, 1996–33 I.R.B. 18

96–74, 1996–33 I.R.B. 19

96–75, 1996–34 I.R.B. 29

96–76, 1996–34 I.R.B. 29

96–77, 1996–35 I.R.B. 15

96–78, 1996–35 I.R.B. 15

96–79, 1996–35 I.R.B. 15

96–80, 1996–35 I.R.B. 16

96–81, 1996–36 I.R.B. 13

96–82, 1996–36 I.R.B. 14

96–83, 1996–36 I.R.B. 14

96–84, 1996–36 I.R.B. 14

96–85, 1996–37 I.R.B. 20

96–86, 1996–37 I.R.B. 21

96–87, 1996–37 I.R.B. 21

96–88, 1996–38 I.R.B. 150

96–89, 1996–37 I.R.B. 22

96–90, 1996–37 I.R.B. 22

96–91, 1996–37 I.R.B. 23

96–92, 1996–38 I.R.B. 151

96–93, 1996–38 I.R.B. 151

96–94, 1996–38 I.R.B. 153

96–96, 1996–39 I.R.B. 41

96–97, 1996–39 I.R.B. 41

96–98, 1996–39 I.R.B. 42

96–99, 1996–39 I.R.B. 42

Court Decisions:

2058, 1996–34 I.R.B. 13

2059, 1996–34 I.R.B. 10

2060, 1996–34 I.R.B. 5

Notices:

96–36, 1996–27 I.R.B. 11

96–37, 1996–31 I.R.B. 29

96–38, 1996–31 I.R.B. 29

96–39, 1996–32 I.R.B. 8

96–40, 1996–33 I.R.B. 11

96–41, 1996–35 I.R.B. 6

96–42, 1996–35 I.R.B. 6

96–43, 1996–36 I.R.B. 7

96–44, 1996–36 I.R.B. 7

96–45, 1996–39 I.R.B. 7

96–46, 1996–39 I.R.B. 7

96–47, 1996–39 I.R.B. 8

96–48, 1996–39 I.R.B. 8

Proposed Regulations—Continued

FI–59–94, 1996–30 I.R.B. 23

GL–7–96, 1996–33 I.R.B. 13

IA–26–94, 1996–30 I.R.B. 24

IA–29–96, 1996–33 I.R.B. 14

IA–292–84, 1996–28 I.R.B. 38

INTL–4–95, 1996–36 I.R.B. 8

PS–22–96, 1996–33 I.R.B. 15

PS–39–93, 1996–34 I.R.B. 27

REG–209827–96, 1996–37 I.R.B. 19

REG–208215–91, 1996–38 I.R.B. 145

Public Laws:

104–117, 1996–34 I.R.B. 19

104–134, 1996–38 I.R.B. 7

104–168, 1996–38 I.R.B. 8

Railroad Retirement Quarterly Rate

1996–29 I.R.B. 14

Revenue Procedures:

96–36, 1996–27 I.R.B. 11

96–37, 1996–29 I.R.B. 16

96–39, 1996–33 I.R.B. 11

96–40, 1996–32 I.R.B. 8

96–41, 1996–32 I.R.B. 9

96–42, 1996–32 I.R.B. 14

96–43, 1996–35 I.R.B. 6

96–44, 1996–35 I.R.B. 7

96–45, 1996–35 I.R.B. 12

96–46, 1996–38 I.R.B. 144

96–47, 1996–39 I.R.B. 10

96–48, 1996–39 I.R.B. 10

Revenue Rulings:

96–33, 1996–27 I.R.B. 4

96–34, 1996–28 I.R.B. 4

96–35, 1996–31 I.R.B. 4

96–36, 1996–30 I.R.B. 6

96–37, 1996–32 I.R.B. 4

96–38, 1996–33 I.R.B. 4

96–39, 1996–34 I.R.B. 4

96–42, 1996–35 I.R.B. 4

96–43, 1996–36 I.R.B. 4

96–44, 1996–38 I.R.B. 4

96–45, 1996–39 I.R.B. 5

96–46, 1996–39 I.R.B. 5

Tax Conventions:

1996–28 I.R.B. 36

1996–36 I.R.B. 6

Treasury Decisions:

8673, 1996–27 I.R.B. 4

8674, 1996–28 I.R.B. 7

8675, 1996–29 I.R.B. 5

8676, 1996–30 I.R.B. 4

8677, 1996–30 I.R.B. 7

8678, 1996–31 I.R.B. 11

8679, 1996–31 I.R.B. 4

8680, 1996–33 I.R.B. 5

8681, 1996–37 I.R.B. 17

8682, 1996–37 I.R.B. 4

Proposed Regulations:

CO–9–96, 1996–34 I.R.B. 20

CO–24–96, 1996–30 I.R.B. 22

CO–25–96, 1996–31 I.R.B. 30

CO–26–96, 1996–31 I.R.B. 31

FI–28–96, 1996–31, I.R.B. 33

FI–32–95, 1996–34 I.R.B. 21

FI–48–95, 1996–31 I.R.B. 36

A cumulative list of all Revenue Rulings, Revenue Procedures, Treasury Decisions, etc., published in Internal Revenue Bulletins 1996–1

through 1996–26 will be found in Internal Revenue Bulletin 1996–27, dated July 1, 1996.

Finding List of Current Action on

Previously Published Items1

Bulletins 1996–27 through 1996–39

*Denotes entry since last publication

Revenue Procedures:

80–27

Modified by

96–40, 1996–32 I.R.B. 8

87–32

Modified by

TD 8680, 1996–33 I.R.B. 5

92–20

Modified by

TD 8680, 1996–33 I.R.B. 5

95–29

Superseded by

96–36, 1996–27 I.R.B. 11

95–29A

Superseded by

96–36, 1996–27 I.R.B. 11

95–30

Superseded by

96–42, 1996–32 I.R.B. 14

A cumulative finding list for previously published

items mentioned in Internal Revenue Bulletins

1996–1 through 1996–26 will be found in Internal

Revenue Bulletin 1996–27, dated July 1, 1996.

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.