Bulletin No. 1997–11

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March 17, 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

EMPLOYEE PLANS

Rev. Rul. 97–12, page 5.

Interest rates; underpayments and overpayments.

The rate of interest determined under section 6621 of

the Code for the calendar quarter beginning April 1,

1997, will be 8 percent for overpayments, 9 percent for

underpayments, and 11 percent for large corporate

underpayments. The rate of interest paid on the portion

of a corporate overpayment exceeding $10,000 is 6.5

percent.

Announcement 97–20, page 22.

Beginning April 1, 1997, requests for employee plan

determination letters and applications for recognition of

tax exemption, formerly sent to the district office in Los

Angeles, CA, should be sent to the Internal Revenue

Service Center in Covington, KY.

Rev. Rul. 97–14, page 5.

Fringe benefits aircraft valuation formula. For purposes of section 1.61–21(g) of the regulations, relating

to the rule for valuing noncommercial flights on

employer-provided aircraft, the Standard Industry Fare

Level (SIFL), cents-per-mile rates, and terminal charges

in effect for the first half of 1997 are set forth.

REG–208288–90, page 14.

Proposed regulations under section 905 of the Code

relate to the substantiation requirements for taxpayers

claiming foreign tax credits.

REG–209121–89, page 15.

Proposed regulations under section 337 of the Code

generally affect a taxable corporation that transfers all

or substantially all of its assets to a tax-exempt entity or

converts from a taxable corporation to a tax-exempt

entity, and generally requires the taxable corporation to

recognize gain or loss in such a transaction. A public

hearing will be held on May 6, 1997.

REG–209824–96, page 19.

Proposed regulations under section 1402 of the Code

relate to the definition of limited partner for selfemployment tax purposes. A public hearing will be held

on May 21, 1997.

Announcement 97–24, page 24.

An amendment to section 401(a)(9)(C) of the Code,

pertaining to the required beginning date for minimum

distributions in the instance of certain plan participants

(other than 5% owners) that was made by section

1404(a) of the Small Business Job Protection Act of

1996, is described.

EXEMPT ORGANIZATIONS

Announcement 97–23, page 23.

A list is given of organizations now classified as private

foundations.

ADMINISTRATIVE

REG–209729–94, page 19.

EE–45–94, 1995–1 C.B. 853, relating to the selfemployment tax treatment of members of certain limited

liability companies, is withdrawn.

Rev. Proc. 97–20, page 10.

Automobile owners and lessees. This procedure provides owners and lessees of passenger automobiles

with tables detailing the limitations on depreciation

deductions for automobiles first placed in service during

calendar year 1997 and the amounts to be included in

income for automobiles first leased during calendar year

1997. In addition, this procedure provides the maximum

Finding Lists begin on page 29.

Announcement of Disbarments and Suspensions begins on page 26.

Announcement of Declaratory Judgment Proceedings Under Section 7428 begins on page 26.

(Continued on page 4)

HIGHLIGHTS

OF THIS ISSUE—Continued

ADMINISTRATIVE—Continued

prevent tax avoidance. In cases where certain conduit

financing entities issue ‘‘equity’’ interests that are

economically self-amortizing, it is expected that the

regulations will treat the owners of the conduits as

having invested directly in the conduit’s incomeproducing assets.

allowable value of employer-provided automobiles first

made available to employees for personal use in calendar year 1997 for which the vehicle cents-per-mile

valuation rule provided under section 1.61–21(e) of the

Income Tax Regulations may be applicable.

Notice 97–21, page 9.

Self-amortizing investments in conduit financing entities. The Service and Treasury expect to issue regulations under section 7701(l) of the Code in order to

Announcement 97–21, page 23.

A list is provided of organizations that no longer qualify

as organizations to which contributions are deductible

under section 170 of the Code.

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 61.—Gross Income Defined

26 CFR 61–21: Taxation of fringe benefits.

This procedure provides the maximum value of

employer-provided automobiles first made available to employees for personal use in calendar

year 1997 for which the vehicle cents-per-mile

valuation rule provided under § 1.61–21(e) of the

Income Tax Regulations may be applicable. See

Rev. Proc. 97–20, page 10.

26 CFR 1.61–21: Taxation of fringe benefits.

Fringe benefits aircraft valuation

formula. For purposes of section 1.61–

21(g) of the regulations, relating to the

rule for valuing noncommercial flights

on employer-provided aircraft, the Stan-

dard Industry Fare Level (SIFL), centsper-mile rates, and terminal charges in

effect for the first half of 1997 are set

forth.

Rev. Rul. 97–14

For purposes of the taxation of fringe

benefits under section 61 of the Internal

Revenue Code, section 1.61–21(g) of

the Income Tax Regulations provides a

rule for valuing noncommercial flights

on employer-provided aircraft. Section

1.61–21(g)(5) provides an aircraft valuation formula to determine the value of

such flights. The value of a flight is

determined under the base aircraft valuation formula (also known as the Standard Industry Fare Level formula or

SIFL) by multiplying the SIFL centsper-mile rates applicable for the period

during which the flight was taken by the

appropriate aircraft multiple provided in

section 1.61–21(g)(7) and then adding

the applicable terminal charge. The SIFL

cents-per-mile rates in the formula and

the terminal charge are calculated by the

Department of Transportation and are

reviewed semi-annually.

The following chart sets forth the

terminal charges and SIFL mileage

rates:

Period During Which the Flight Was Taken

Terminal Charge

SIFL Mileage Rates

1/1/97–6/30/97

$31.73

Up to 500 miles = $.1735 per mile

501–1500 miles = $.1323 per mile

Over 1500 miles = $.1272 per mile

DRAFTING INFORMATION

The principal author of this revenue

ruling is Felicia A. Daniels of the Office

of the Associate Chief Counsel (Employee Benefits and Exempt Organizations). For further information regarding

this revenue ruling contact, Ms. Daniels

on (202) 622–6050 (not a toll-free call).

Section 280F.—Limitation on

Depreciation for Luxury

Automobiles; Limitation Where

Certain Property Used for Personal

Purposes

26 CFR 280F–7: Property leased after December

31, 1986.

This procedure provides owners and lessees of

passenger automobiles with tables detailing the

limitations on depreciation deductions for automobiles first placed in service during calendar year

1997 and the amounts to be included in income

for automobiles first leased during calendar year

1997. See Rev. Proc. 97–20, page 10.

Section 6621.—Determination of

Interest Rate

26 CFR 301.6621–1: Interest rate.

Interest rates; underpayments and

overpayments. The rate of interest determined under section 6621 of the

Code for the calendar quarter beginning

April 1, 1997, will be 8 percent for

overpayments, 9 percent for underpayments, and 11 percent for large corporate underpayments. The rate of interest

paid on the portion of a corporate

overpayment exceeding $10,000 is 6.5

percent.

Rev. Rul. 97–12

Section 6621 of the Internal Revenue

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

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

the overpayment rate is the sum of the

federal short-term rate plus 2 percentage

points, except the rate for the portion of

a corporate overpayment of tax exceeding $10,000 for a taxable period is the

sum of the federal short-term rate plus

0.5 of a percentage point for interest

computations made after December 31,

1994. Under § 6621(a)(2), the underpayment rate is the sum of the federal

short-term rate plus 3 percentage points.

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

on any large corporate underpayment,

the

underpayment

rate

under

§ 6621(a)(2) is determined by substituting ‘‘5 percentage points’’ for ‘‘3 percentage points.’’ See § 6621(c) and

§ 301.6621–3 of the Regulations on

Procedure and Administration for the

definition of a large corporate underpayment and for the rules for determining

the applicable rate. Section 6621(c) and

§ 301.6621–3 are generally effective for

periods after December 31, 1990.

Section 6621(b)(1) provides that the

Secretary will determine the federal

short-term rate for the first month in

each calendar quarter.

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

the federal short-term rate determined

under § 6621(b)(1) for any month applies during the first calendar quarter

beginning after such month.

Section 6621(b)(2)(B) provides that in

determining the addition to tax under

§ 6654 for failure to pay individual

estimated tax for any taxable year, the

federal short-term rate that applies during the third month following such

taxable year also applies during the first

15 days of the fourth month following

such taxable year.

Section 6621(b)(3) provides that the

federal short-term rate for any month is

the federal short-term rate determined

during such month by the Secretary in

accordance with § 1274(d), rounded to

the nearest full percent (or, if a multiple

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

to the next highest full percent).

Notice 88–59, 1988–1 C.B. 546, announced that in determining the quarterly interest rates to be used for overpayments and underpayments of tax

under § 6621, the Internal Revenue Service will use the federal short-term rate

based on daily compounding because

that rate is most consistent with § 6621

which, pursuant to § 6622, is subject to

daily compounding.

Rounded to the nearest full percent,

the federal short-term rate based on

daily compounding determined during

the month of January 1997 is 6 percent.

Accordingly, an overpayment rate of 8

percent and an underpayment rate of 9

percent are established for the calendar

quarter beginning April 1, 1997. The

overpayment rate for the portion of

corporate overpayments exceeding

$10,000 for the calendar quarter beginning April 1, 1997, is 6.5 percent. The

underpayment rate for large corporate

underpayments for the calendar quarter

beginning April 1, 1997, is 11 percent.

These rates apply to amounts bearing

interest during that calendar quarter.

pounded daily pursuant to § 6622 that

apply for prior periods are set forth in

the tables accompanying this revenue

ruling.

Under § 6621(b)(2)(B), the 9 percent

rate that applies to individual estimated

tax underpayments for the first calendar

quarter in 1997, as provided in Rev.

Rul. 96–61, 1996–52 I.R.B. 24, also

applies to such underpayments for the

first 15 days in April 1997.

Interest factors for daily compound

interest for annual rates of 6.5 percent, 8

percent, 9 percent, and 11 percent are

published in Tables 18, 21, 23, and 27

of Rev. Proc. 95–17, 1995–1 C.B. 556,

572, 575, 577, and 581.

Annual interest rates to be com-

DRAFTING INFORMATION

The principal author of this revenue

ruling is Marcia Rachy of the Office of

Assistant Chief Counsel (Income Tax

and Accounting). For further information

regarding this revenue ruling, contact

Ms. Rachy on (202) 622–4940 (not a

toll-free call).

TABLE OF INTEREST RATES

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

OVERPAYMENTS AND UNDERPAYMENTS

PERIOD

Before Jul. 1, 1975

Jul. 1, 1975—Jan. 31, 1976

Feb. 1, 1976—Jan. 31, 1978

Feb. 1, 1978—Jan. 31, 1980

Feb. 1, 1980—Jan. 31, 1982

Feb. 1, 1982—Dec. 31, 1982

Jan. 1, 1983—Jun. 30, 1983

Jul. 1, 1983—Dec. 31, 1983

Jan. 1, 1984—Jun. 30, 1984

Jul. 1, 1984—Dec. 31, 1984

Jan. 1, 1985—Jun. 30, 1985

Jul. 1, 1985—Dec. 31, 1985

Jan. 1, 1986—Jun. 30, 1986

Jul. 1, 1986—Dec. 31, 1986

RATE

DAILY RATE TABLE

IN 1995–1 C.B.

12%

20%

16%

11%

13%

11%

10%

Table 2, pg. 557

Table 4, pg. 559

Table 3, pg. 558

Table 2, pg. 557

Table 5, pg. 560

Table 6, pg. 560

Table 37, pg. 591

Table 27, pg. 581

Table 75, pg. 629

Table 31, pg. 585

Table 27, pg. 581

Table 25, pg. 579

Table 23, pg. 577

TABLE OF INTEREST RATES

FROM JAN. 1, 1987–PRESENT

OVERPAYMENTS

Jan. 1, 1987—Mar. 31, 1987

Apr. 1, 1987—Jun. 30, 1987

Jul. 1, 1987—Sep. 30, 1987

Oct. 1, 1987—Dec. 31, 1987

Jan. 1, 1988—Mar. 31, 1988

Apr. 1, 1988—Jun. 30, 1988

Jul. 1, 1988—Sep. 30, 1988

Oct. 1, 1988—Dec. 31, 1988

Jan. 1, 1989—Mar. 31, 1989

Apr. 1, 1989—Jun. 30, 1989

Jul. 1, 1989—Sep. 30, 1989

Oct. 1, 1989—Dec. 31, 1989

Jan. 1, 1990—Mar. 31, 1990

Apr. 1, 1990—Jun. 30, 1990

Jul. 1, 1990—Sep. 30, 1990

Oct. 1, 1990—Dec. 31, 1990

UNDERPAYMENTS

RATE

TABLE

1995–1 C.B.

RATE

TABLE

1995–1 C.B.

10%

11%

10%

575

577

627

625

627

579

581

579

10%

11%

10%

11%

12%

11%

577

579

629

627

629

581

583

581

TABLE OF INTEREST RATES—Continued

FROM JAN. 1, 1987–PRESENT

OVERPAYMENTS

Jan. 1, 1991—Mar. 31, 1991

Apr. 1, 1991—Jun. 30, 1991

Jul. 1, 1991—Sep. 30, 1991

Oct. 1, 1991—Dec. 31, 1991

Jan. 1, 1992—Mar. 31, 1992

Apr. 1, 1992—Jun. 30, 1992

Jul. 1, 1992—Sep. 30, 1992

Oct. 1, 1992—Dec. 31, 1992

Jan. 1, 1993—Mar. 31, 1993

Apr. 1, 1993—Jun. 30, 1993

Jul. 1, 1993—Sep. 30, 1993

Oct. 1, 1993—Dec. 31, 1993

Jan. 1, 1994—Mar. 31, 1994

Apr. 1, 1994—Jun. 30, 1994

Jul. 1, 1994—Sep. 30, 1994

Oct. 1, 1994—Dec. 31, 1994

Jan. 1, 1995—Mar. 31, 1995

Apr. 1, 1995—Jun. 30, 1995

Jul. 1, 1995—Sep. 30, 1995

Oct. 1, 1995—Dec. 31, 1995

Jan. 1, 1996—Mar. 31, 1996

Apr. 1, 1996—Jun. 30, 1996

Jul. 1, 1996—Sep. 30, 1996

Oct. 1, 1996—Dec. 31, 1996

Jan. 1, 1997—Mar. 31, 1997

Apr. 1, 1997—Jun. 30, 1997

UNDERPAYMENTS

RATE

TABLE

1995–1 C.B.

RATE

TABLE

1995–1 C.B.

10%

579

577

623

621

619

571

573

575

577

575

623

621

623

575

11%

10%

581

579

625

623

621

573

575

577

579

577

625

623

625

577

TABLE OF INTEREST RATES FOR LARGE CORPORATE UNDERPAYMENTS

FROM JANUARY 1, 1991–PRESENT

Jan. 1, 1991—Mar. 31, 1991

Apr. 1, 1991—Jun. 30, 1991

Jul. 1, 1991—Sep. 30, 1991

Oct. 1, 1991—Dec. 31, 1991

Jan. 1, 1992—Mar. 31, 1992

Apr. 1, 1992—Jun. 30, 1992

Jul. 1, 1992—Sep. 30, 1992

Oct. 1, 1992—Dec. 31, 1992

Jan. 1, 1993—Mar. 31, 1993

Apr. 1, 1993—Jun. 30, 1993

Jul. 1, 1993—Sep. 30, 1993

Oct. 1, 1993—Dec. 31, 1993

Jan. 1, 1994—Mar. 31, 1994

Apr. 1, 1994—Jun. 30, 1994

Jul. 1, 1994—Sep. 30, 1994

Oct. 1, 1994—Dec. 31, 1994

Jan. 1, 1995—Mar. 31, 1995

Apr. 1, 1995—Jun. 30, 1995

Jul. 1, 1995—Sep. 30, 1995

RATE

TABLE

1995–1 C.B.

13%

12%

11%

10%

11%

12%

11%

585

583

629

627

625

577

579

581

583

581

TABLE OF INTEREST RATES FOR LARGE CORPORATE UNDERPAYMENTS—Continued

FROM JANUARY 1, 1991–PRESENT

Oct. 1, 1995—Dec. 31, 1995

Jan. 1, 1996—Mar. 31, 1996

Apr. 1, 1996—Jun. 30, 1996

Jul. 1, 1996—Sep. 30, 1996

Oct. 1, 1996—Dec. 31, 1996

Jan. 1, 1997—Mar. 31, 1997

Apr. 1, 1997—Jun. 30, 1997

RATE

TABLE

1995–1 C.B.

11%

10%

11%

581

629

627

629

581

TABLE OF INTEREST RATES FOR CORPORATE OVERPAYMENTS EXCEEDING $10,000

FROM JANUARY 1, 1995–PRESENT

Jan. 1, 1995—Mar. 31, 1995

Apr. 1, 1995—Jun. 30, 1995

Jul. 1, 1995—Sep. 30, 1995

Oct. 1, 1995—Dec. 31, 1995

Jan. 1, 1996—Mar. 31, 1996

Apr. 1, 1996—Jun. 30, 1996

Jul. 1, 1996—Sep. 30, 1996

Oct. 1, 1996—Dec. 31, 1996

Jan. 1, 1997—Mar. 31, 1997

Apr. 1, 1997—Jun. 30, 1997

RATE

TABLE

1995–1 C.B.

6.5%

7.5%

6.5%

5.5%

6.5%

572

574

572

620

618

620

572

Part III. Administrative, Procedural, and Miscellaneous

Tax Avoidance Using

Self-Amortizing Investments In

Conduit Financing Entities

Notice 97–21

The Internal Revenue Service understands that certain persons are engaging

in multiple-party financing transactions

to avoid taxes imposed by the Internal

Revenue Code. These transactions are

designed to allow a person (the ‘‘sponsor’’) to avoid tax on substantial

amounts of income (or to shelter substantial amounts of other income) by

using a conduit entity whose income tax

treatment artificially allocates the conduit entity’s income to participants that

are not subject to federal income tax.

Example

An example of these transactions is as

follows:

A corporate sponsor forms a real estate

investment trust or a foreign corporation (the

‘‘Company’’). The Company issues two classes

of stock. The corporate sponsor holds substantially all of the common stock of the Company.

The other class (the ‘‘fast-pay preferred stock’’)

is held by persons that are not subject to

federal income tax (the ‘‘exempt participants’’).

The fast-pay preferred stock has limited voting

rights and provides for preferred ‘‘dividends’’

equal to 13 percent of the stock’s issue price

each year for 10 years.

The Company holds income-producing assets

(such as one or more mortgage loans) that are

the obligations of or guaranteed by the corporate sponsor or that are guaranteed by a federal

agency. At all times during the first 10 years

after the fast-pay preferred stock is issued, the

Company is required to invest in assets that

will produce income, and cash flows, at least

equal to 101 percent of the dividends payable

on the fast-pay preferred stock.

During the first 10 years, the Company may

also make distributions on its common stock. It

is not, however, permitted to distribute more

than 105 percent of its income in any year.

Accordingly, it is not permitted to make any

distributions representing a meaningful return

of initial investment to the holders of the

common stock during the first 10 years.

In year 11, and thereafter, the fast-pay preferred stock provides for distributions in each

year of 1 percent of its original issue price. As

a result, after the first 10 years, the fair market

value of the fast-pay preferred stock is substantially less than the amount for which the

exempt participants purchased it.

Beginning in year 11, the Company may be

merged into another corporation without the

separate approval of the exempt participants

provided that the exempt participants receive a

formula payment equal to the present value of

the annual 1-percent dividend payments on the

fast-pay preferred stock (computed using a

discount rate of 10 percent). Otherwise the

fast-pay preferred stock cannot be called by the

Company.

As illustrated by this example, the

fast-pay preferred stock performs economically much like a 10-year, selfamortizing debt instrument. That is, payments on the fast-pay preferred stock

reflect in part recoveries of the amount

originally invested by the exempt participants and in part a market yield on

the unamortized portion of the original

investment. The economic selfamortization of the fast-pay preferred

stock is conceptually inconsistent with

characterizing the full amount of each

payment as a ‘‘dividend’’ (and thus as

income on an investment).

At the end of 10 years, the Company’s obligation to make distributions on

the fast-pay preferred stock will have

virtually ceased, and substantially all of

the net value of the Company will be

represented by its common stock. Because only the current income of the

Company will have been distributed

during the first 10 years, the value of

the Company’s assets is unlikely to have

declined significantly. Accordingly, the

sponsor’s investment in the Company

economically performs like a zerocoupon investment, substantially increasing in value as the exempt participants’

interest in the Company declines. If the

Company makes the formula payment to

the exempt participants after the initial

10-year period, the Company may be

merged into or consolidated with a

corporate sponsor or its affiliate. In the

event of a merger, the corporate sponsor

expects to receive substantially all of the

Company’s assets with the Company’s

high basis and to avoid recognizing any

gain.

Thus, in the example, the corporate

sponsor’s expectation in investing in the

Company is that it will realize a predictable economic benefit at the end of the

10-year period without ever incurring

any tax liability for that benefit. Alternatively, if the principal asset of the

Company is a debt instrument or other

obligation issued by the sponsor, the

sponsor could be viewed as attempting

to use deductions from that debt instrument or obligation to shelter income,

without ever having to recognize its

share of the income that corresponds to

those deductions. These expectations result from the parties’ treatment of the

full amount of the payments to the

exempt participants as dividends. This

treatment causes substantially all of the

Company’s income to be allocated to

the exempt participants, even though a

significant portion of that income inures

economically to the sponsor.

Alternative tax-avoidance structures

may involve the use of other conduit

entities whose income is generally subject to U.S. income tax only at the

shareholder level, where the amount of

the tax depends on the receipt or nonreceipt by the shareholder of earnings

and profits from the conduit entity. The

terms of the stock issued by the conduit

entity may also vary, and the stock may

be subject to options to buy or sell.

Proper Characterization of the

Transactions

Under section 7701(l) of the Internal

Revenue Code, the Secretary may prescribe regulations recharacterizing any

multiple-party financing transaction as a

transaction directly among two or more

of the parties in order to prevent the

avoidance of tax. Treasury and the Service expect to issue regulations

recharacterizing any transaction (for example, the transaction described above)

in which (1) a conduit entity is interposed between two or more parties, (2)

an investment in the conduit entity is

economically, taking into account all

relevant factors including options to buy

or sell, partially or fully self-amortizing

(that is, the value of the investor’s

interest in the conduit entity is expected

to decrease over time as payments are

received), and (3) payments by the conduit entity that represent a recovery of

investment to the investor are treated by

the conduit entity as a distribution of

earnings and profits or otherwise as

reducing the conduit entity’s or any

other taxpayer’s taxable income.

It is expected that, under these regulations, the sponsor will be treated as

having engaged in a transaction directly

with the other parties to the debt instruments, leases, or other assets held by the

conduit entity, and the holders of the

self-amortizing interests in the conduit

entity will be treated either as having

engaged in the transaction directly with

the other parties or as having engaged in

an income ‘‘stripping’’ transaction with

the sponsor. See, e.g., section 1286 of

the Code. If the sponsor is the issuer of

a debt instrument held by the conduit

entity, the sponsor may be treated as

having issued one or more instruments

directly to the holders of the selfamortizing interests in the conduit entity.

In that event, the sponsor’s obligation

under any asset held by the conduit

entity will be ignored for purposes of

determining the sponsor’s taxable income. The regulations issued under section 7701(l) of the Code will be applicable to taxable years ending on or after

February 27, 1997. Thus, all amounts

accrued or paid on or after the first day

of the first taxable year ending on or

after February 27, 1997, will be subject

to the regulations, regardless of when a

particular share of stock or a particular

debt instrument was issued or acquired.

To the extent that a payment or accrual

under a conduit financing transaction is

not subject to these regulations, the

Service may determine under existing

tax principles, depending on the facts of

the particular case, that the transaction

does not produce the results intended by

the participants.

Persons that wish to comment on the

subject matter of this notice may submit

comments to: CC:DOM:CORP:R (OGI–

103642–97), Room 5226, Internal Revenue Service, POB 7604, Ben Franklin

Station, Washington, DC 20044. Submissions may be hand delivered between the hours of 8 a.m. and 5 p.m. to:

CC:DOM:CORP:R (OGI–103642–97),

Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue NW,

Washington, DC. Alternatively, taxpayers may submit comments electronically

via the Internet by selecting the ‘‘Tax

Regs’’ option of 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. Comments will be available for

public inspection.

This notice was issued to the public

on February 27, 1997.

For further information regarding this

notice, contact Jonathan Zelnik of the

Office of Assistant Chief Counsel (Financial Institutions & Products) at (202)

622–3940 (not a toll-free call).

26 CFR 601.105: Examination of returns and

claims for refund, credit, or abatement; determination of correct tax liability.

(Also Part I, § 280F; 1.280F–7, 1.61–21.)

Rev. Proc. 97–20

SECTION 1. PURPOSE

This revenue procedure provides: (1)

limitations on depreciation deductions

for owners of passenger automobiles

first placed in service during calendar

year 1997; (2) the amounts to be included in income by lessees of passenger automobiles first leased during cal-

endar year 1997; and (3) the maximum

allowable value of employer-provided

automobiles first made available to employees for personal use in calendar

year 1997 for which the vehicle centsper-mile valuation rule provided under

§ 1.61–21(e) of the Income Tax Regulations may be applicable. The tables

detailing these depreciation limitations

and lessee inclusion amounts reflect the

automobile price inflation adjustments

required by § 280F(d)(7) of the Internal

Revenue Code. The maximum allowable

automobile value for applying the vehicle cents-per-mile valuation rule reflects the automobile price inflation adjustment of § 280F(d)(7) as required by

§ 1.61–21(e)(1)(iii)(A).

SECTION 2. BACKGROUND

For owners of automobiles, § 280F(a)

imposes dollar limitations on the depreciation deduction for both the year that

the automobile is placed in service and

each

succeeding

year.

Section

280F(d)(7) requires the amounts allowable as depreciation deductions to be

increased by a price inflation adjustment

amount for passenger automobiles

placed in service after calendar year

1988.

For leased automobiles, § 280F(c) requires a reduction in the deduction allowed to the lessee of the automobile.

The reduction must be substantially

equivalent to the limitations on the

depreciation deductions imposed on

owners

automobiles.

Under

§ 1.280F–7(a), this reduction requires

the lessees to include in gross income

an inclusion amount determined by applying a formula to the amount obtained

from a table. The table shows inclusion

amounts for a range of fair market

values for each tax year after the automobile is first leased.

For automobiles first provided by employers to employees that meet the

requirements of § 1.61–21(e)(1), the

value to the employee of the use of the

automobile may be determined under

the vehicle cents-per-mile valuation rule

of § 1.61–21(e). Section 1.61–

21(e)(1)(iii)(A) provides that for an automobile first made available after 1988

to any employee of the employer for

personal use, the value of the use of the

automobile may not be determined under the vehicle cents-per-mile valuation

rule for a calendar year if the fair

market value of the automobile (determined pursuant to § 1.61–21(d)(5)(i)

through (iv)) on the first date the auto-

mobile is made available to the employee exceeds $12,800 as adjusted by

§ 280F(d)(7).

SECTION 3. SCOPE AND

OBJECTIVE

01. The limitations on depreciation

deductions in section 4.02 of this revenue procedure apply to automobiles

(other than leased automobiles) that are

placed in service in calendar year 1997

and continue to apply for each tax year

that the automobile remains in service.

02. The table in section 4.03 of this

revenue procedure applies to leased automobiles for which the lease term begins in calendar year 1997. Lessees of

such automobiles must use this table to

determine the inclusion amount for each

tax year during which the automobile is

leased. See Rev. Proc. 96–25, 1996–8

I.R.B. 19, which provides information

on determining inclusion amounts for

automobiles first leased before January

1, 1997.

03. The maximum fair market value

figure in section 4.04(2) of this revenue

procedure applies to employer-provided

automobiles first made available to any

employee for personal use in calendar

year 1997.

SECTION 4. APPLICATION

01. A taxpayer placing an automobile

in service for the first time during

calendar year 1997 is limited to the

depreciation deduction shown in Table 1

of section 4.02(2). A taxpayer first leasing an automobile in calendar year 1997

must use Table 2 in section 4.03 to

determine the inclusion amount that is

added to gross income. Otherwise, the

procedures of § 1.280F–7(a) must be

followed. An employer providing an

automobile for the first time in calendar

year 1997 for the personal use of any

employee may determine the value of

the use of the automobile by using the

cents-per-mile valuation rule in § 1.61–

21(e) if the fair market value of the

automobile does not exceed the amount

specified in section 4.04(2). If the fair

market value of the automobile does

exceed the amount specified in section

4.04(2), the employer may determine the

value of the use of the automobile under

the general valuation rules of § 1.61–

21(b) or under the special valuation

rules of § 1.61–21(d) (Automobile lease

valuation) or § 1.61–21(f) (Commuting

valuation) if the applicable requirements

are met.

02. Limitations on Depreciation Deductions for Certain Automobiles.

(1) Amount of the Inflation Adjustment. Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for

any calendar year is the percentage (if

any) by which the CPI automobile component for October of the preceding

calendar year exceeds the CPI automobile component for October 1987. The

term ‘‘CPI automobile component’’ is

defined in § 280F(d)(7)(B)(ii) as the

‘‘automobile component’’ of the Con-

sumer Price Index for all Urban Consumers published by the Department of

Labor (the CPI). The new car component of the CPI was 115.2 for October

1987 and 141.5 for October 1996. The

October 1996 index exceeded the October 1987 index by 26.3. The Internal

Revenue Service has, therefore, determined that the automobile price inflation

adjustment for 1997 is 22.83 percent

(26.3/115.2 x 100%). This adjustment is

applicable to all automobiles that are

first placed in service in calendar year

1997. The dollar limitations in

§ 280F(a) must therefore be multiplied

by a factor of 0.2283, and the resulting

increases, after rounding to the nearest

$100, are added to the 1988 limitations

to give the depreciation limitations for

1997.

(2) Amount of the Limitation. For

automobiles placed in service in calendar year 1997, Table 1 contains the

dollar amount of the depreciation limitations for each tax year.

REV. PROC. 97–20 TABLE 1

DEPRECIATION LIMITATIONS FOR AUTOMOBILES FIRST PLACED IN SERVICE IN CALENDAR YEAR 1997

Tax Year

Amount

1st Tax Year

2nd Tax Year

3rd Tax Year

Each Succeeding Year

$3,160

$5,000

$3,050

$1,775

03. Inclusions in Income of Lessees of Automobiles.

The inclusion amounts for automobiles first leased in calendar year 1997 are calculated under the procedures described in

§ 1.280F–7(a). Table 2 of this revenue procedure is the applicable table to be used in applying those procedures.

REV. PROC. 97–20 TABLE 2

DOLLAR AMOUNTS FOR AUTOMOBILES

WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 1997

Fair Market Value of Automobile

Tax Year During Lease

Over

Not Over

1st

2nd

3rd

4th

5th and Later

$ 15,800

16,100

16,400

16,700

17,000

17,500

18,000

18,500

19,000

19,500

20,000

20,500

21,000

21,500

22,000

23,000

24,000

25,000

26,000

27,000

28,000

29,000

30,000

31,000

32,000

33,000

16,100

16,400

16,700

17,000

17,500

18,000

18,500

19,000

19,500

20,000

20,500

21,000

21,500

22,000

23,000

24,000

25,000

26,000

27,000

28,000

29,000

30,000

31,000

32,000

33,000

34,000

104

112

120

128

137

145

108

122

140

158

176

193

211

229

247

265

283

301

319

106

120

133

147

160

180

206

233

259

287

313

340

366

393

420

446

472

113

129

145

161

177

193

216

249

280

313

344

377

408

441

472

504

536

568

114

132

151

169

187

205

224

252

288

326

362

399

435

473

509

546

583

620

657

REV. PROC. 97–20 TABLE 2—Continued

DOLLAR AMOUNTS FOR AUTOMOBILES

WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 1997

Fair Market Value of Automobile

Tax Year During Lease

Over

Not Over

1st

2nd

3rd

4th

5th and Later

34,000

35,000

36,000

37,000

38,000

39,000

40,000

41,000

42,000

43,000

44,000

45,000

46,000

47,000

48,000

49,000

50,000

51,000

52,000

53,000

54,000

55,000

56,000

57,000

58,000

59,000

60,000

62,000

64,000

66,000

68,000

70,000

72,000

74,000

76,000

78,000

80,000

85,000

90,000

95,000

100,000

110,000

120,000

130,000

140,000

150,000

160,000

170,000

180,000

190,000

200,000

210,000

220,000

230,000

240,000

35,000

36,000

37,000

38,000

39,000

40,000

41,000

42,000

43,000

44,000

45,000

46,000

47,000

48,000

49,000

50,000

51,000

52,000

53,000

54,000

55,000

56,000

57,000

58,000

59,000

60,000

62,000

64,000

66,000

68,000

70,000

72,000

74,000

76,000

78,000

80,000

85,000

90,000

95,000

100,000

110,000

120,000

130,000

140,000

150,000

160,000

170,000

180,000

190,000

200,000

210,000

220,000

230,000

240,000

250,000

153

161

169

178

186

194

202

210

218

227

235

243

251

259

268

276

284

292

300

308

317

325

333

341

349

358

370

386

403

419

435

452

468

484

501

517

546

587

627

668

730

812

893

975

1,057

1,139

1,221

1,302

1,384

1,466

1,548

1,630

1,712

1,793

1,875

337

355

373

391

409

427

445

463

481

498

516

534

552

570

588

606

624

642

660

678

695

713

732

750

768

785

812

848

884

920

956

991

1,027

1,063

1,099

1,135

1,198

1,287

1,377

1,467

1,601

1,780

1,960

2,139

2,318

2,498

2,677

2,857

3,036

3,215

3,394

3,574

3,753

3,932

4,112

499

526

552

578

605

632

658

685

712

739

765

792

819

845

871

898

925

951

978

1,004

1,032

1,058

1,084

1,110

1,137

1,164

1,204

1,257

1,310

1,363

1,417

1,470

1,524

1,577

1,630

1,683

1,776

1,909

2,042

2,175

2,375

2,641

2,907

3,173

3,439

3,704

3,971

4,236

4,503

4,769

5,035

5,300

5,567

5,833

6,099

600

631

664

696

727

759

791

823

854

886

919

951

982

1,015

1,047

1,078

1,110

1,142

1,174

1,206

1,237

1,270

1,301

1,334

1,365

1,397

1,445

1,509

1,573

1,637

1,700

1,764

1,827

1,891

1,955

2,019

2,130

2,291

2,450

2,609

2,848

3,167

3,486

3,805

4,125

4,444

4,762

5,082

5,400

5,719

6,039

6,358

6,676

6,996

7,314

693

731

767

804

841

878

915

951

989

1,026

1,062

1,098

1,136

1,172

1,209

1,246

1,282

1,320

1,356

1,394

1,430

1,467

1,504

1,540

1,578

1,615

1,670

1,743

1,817

1,890

1,964

2,038

2,112

2,186

2,259

2,333

2,462

2,645

2,830

3,014

3,290

3,659

4,027

4,395

4,763

5,131

5,500

5,868

6,237

6,605

6,973

7,341

7,710

8,078

8,446

04. Maximum Automobile Value for

Using the Cents-per-mile Valuation

Rule.

(1) Amount of Adjustment. Under

§ 1.61–21(e)(1)(iii)(A), the limitation on

the fair market value of an employerprovided automobile first made available

to any employee for personal use after

1988 is to be adjusted in accordance

with § 280F(d)(7). Accordingly, the adjustment for any calendar year is the

percentage (if any) by which the CPI

automobile component for October of

the preceding calendar year exceeds the

CPI automobile component for October

1987 (See, section 4.02(1).) The new car

component of the CPI was 115.2 for

October 1987 and 141.5 for October

1996. The October 1996 index exceeded

the October 1987 index by 26.3. The

Internal Revenue Service has, therefore,

determined that the adjustment for 1997

is 22.83 percent (26.3/115.2 x 100%).

This adjustment is applicable to all

employer-provided automobiles first

made available to any employee for

personal use in calendar year 1997. The

maximum fair market value specified in

§ 1.61–21(e)(1)(iii)(A) must therefore

be multiplied by a factor of 0.2283, and

the resulting increase, after rounding to

the nearest $100, is added to $12,800 to

give the maximum value for 1997.

(2) The Maximum Automobile Value.

For automobiles first made available in

calendar year 1997 to any employee of

the employer for personal use, the vehicle cents-per-mile valuation rule may

be applicable if the fair market value of

the automobile on the date it is first

made available does not exceed

$15,700.

SECTION 5. EFFECTIVE DATE

This revenue procedure is effective

for automobiles (other than leased automobiles) that are first placed in service

during calendar year 1997, to leased

automobiles that are first leased during

calendar year 1997, and to employerprovided automobiles first made available to employees for personal use in

calendar year 1997.

DRAFTING INFORMATION

The principal author of this revenue

procedure is Bernard P. Harvey of the

Office of the Assistant Chief Counsel

(Passthroughs and Special Industries).

For further information regarding the

depreciation limitations and lessee inclusion amounts in this revenue procedure,

contact Mr. Harvey at (202) 622–3110;

for further information regarding the

maximum automobile value for applying

the vehicle cents-per-mile valuation rule,

contact Ms. Janine Cook of the Office

of the Associate Chief Counsel (Employee Benefits and Exempt Organizations) at (202) 622–6040 (not toll-free

calls).

Part IV. Items of General Interest

Notice of Proposed Rulemaking

Filing Requirements for Returns

Claiming the Foreign Tax Credit

REG–208288–90

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Notice of proposed rulemaking.

SUMMARY: This document contains a

proposed regulation relating to the substantiation requirements for taxpayers

claiming foreign tax credits. The proposed regulation is necessary to provide

guidance to U.S. taxpayers who claim

foreign tax credits.

DATES: Written comments and requests

for a public hearing must be received by

April 14, 1997.

ADDRESSES: Send submissions to:

CC:DOM:CORP:R (REG–208288–90),

room 5228, Internal Revenue Service,

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

hand delivered between the hours of 8

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

(REG–208288–90), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue NW, Washington, DC. Alternatively, taxpayers may submit

comments electronically via the internet

by selecting the ‘‘Tax Regs’’ option on

the IRS Home Page, or by submitting

comments directly to the IRS internet

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

tax_regs/comments.html.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Joan

Thomsen, (202) 622–3840 (not a tollfree call); concerning submissions,

Evangelista Lee, (202) 622–7190 (not a

toll-free call).

SUPPLEMENTARY

INFORMATION:

Background

On June 3, 1988, the Internal Revenue Service issued a Notice (Notice

88–65, 1988–1 C.B. 552) which stated

that regulations would be issued suspending portions of § 1.905–2 of the

Treasury Regulations. Section 1.905–2

requires taxpayers who claim foreign tax

credits to attach documents to their

returns substantiating the credits. The

Notice was issued in response to problems taxpayers were experiencing be-

1997–11

I.R.B.

cause they could not timely obtain and

prepare the necessary documentation in

a form suitable for submission with their

tax returns. The intent of the Notice was

to advise taxpayers that Treasury and

the IRS would issue a new regulation

that would suspend, beginning on January 1, 1988, the existing regulation

requiring the submission of this documentation with a tax return. This new

regulation has not been issued. Instead

of suspending the relevant portions of

the existing regulation, Treasury and the

IRS now have decided to permanently

eliminate the requirement that documentation be submitted with the tax return,

effective January 1, 1988.

Explanation of Provisions

§ 1.905–2(a)(1), 1.905–2(b)(1) and (2),

and 1.905–2(c)

Sections 1.905–2(a)(1), 1.905–2(b)(1)

and (2), and 1.905–2(c) are unchanged

from the final regulations.

§ 1.905–2(a)(2)

Under § 1.905–2(a)(2), taxpayers

generally are required to attach to their

income tax returns either (1) the receipt

for the foreign tax payment, or (2) a

foreign tax return for accrued foreign

taxes. Proposed § 1.905–2(a)(2) removes the requirement that the documentation must be attached to the income tax return. The proposed

regulation now provides that such evidence of foreign taxes must be presented to the district director upon request.

§ 1.905–2(b)(3)

Section 1.905–2(b)(3) addresses issues

for taxes withheld at the source. The

section allows the district director to

accept secondary evidence of such withholding. The proposed regulation clarifies that evidence of a tax withheld at

the source and the amount withheld is

only sufficient for an interim credit.

Upon request of the district director,

taxpayers must provide evidence, as provided in § 1.905–2(a)(2), that the tax

withheld was actually paid to the foreign country. Although this regulation

will be effective on the date that is 30

days after the date the final regulation is

published in the Federal Register, it

reflects an IRS requirement upheld as a

reasonable interpretation of current law

by the Tax Court and the Court of

Appeals for the Seventh Circuit in Continental Illinois Corp. v. Commissioner,

T.C. Memo. 1991–66, 61 T.C.M. (CCH)

1916, 1939–42 (1991), aff’d in part and

rev’d in part, 998 F.2d 513, 516–17 (7th

Cir. 1993).

Special Analyses

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

Order 12866. Therefore, a regulatory

assessment is not required. It has also

been determined that section 553(b) of

the Administrative Procedures Act (5

U.S.C. chapter 5) does not apply to this

regulation, and because the regulation

does not impose a collection of information on small entities, the Regulatory

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

not apply. Pursuant to section 7805(f) of

the Internal Revenue Code, this notice

of proposed rulemaking will be submitted to the Chief Counsel for Advocacy

of the Small Business Administration for

comment on its impact on small business.

Comments and Requests for a Public

Hearing

Before this proposed regulation is

adopted as a final regulation, consideration will be given to any comments

that are submitted timely to the IRS. All

comments will be available for public

inspection and copying. A public hearing may be scheduled if requested in

writing by any person that timely submits comments. If a public hearing is

scheduled, notice of the date, time, and

place for the hearing will be published

in the Federal Register.

Drafting Information

The principal author of this regulation

is Joan Thomsen of the Office of the

Associate Chief Counsel (International),

IRS. 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

26 CFR part 1 continues to read in part

as follows:

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

Par 2. Section 1.905–2 is amended

by:

1. Revising the second through fourth

sentences in paragraph (a)(2).

2. Adding two sentences to the end

of paragraph (b)(3).

The revision and addition read as

follows:

Notice of Proposed Rulemaking

and Notice of Public Hearing

SUPPLEMENTARY

INFORMATION:

Certain Asset Transfers to a

Tax-Exempt Entity

Background

§ 1.905–2 Conditions of allowance of

credit.

ACTION: Notice of proposed rulemaking and notice of public hearing

(a) * * *

(2) * * * Except where it is established to the satisfaction of the district

director that it is impossible for the

taxpayer to furnish such evidence, the

taxpayer must provide upon request the

receipt for each such tax payment if

credit is sought for taxes already paid or

withheld, or the return on which each

such accrued tax was based if credit is

sought for taxes accrued. This receipt or

return must be either the original, a

duplicate original, or a duly certified or

authenticated copy. The preceding two

sentences are effective for returns whose

original due date falls on or after January 1, 1988. * * *

(b) * * *

(3) * * * Any foreign tax credit

claimed for taxes withheld at the source

is an interim credit and the taxpayer

must prove that any taxes withheld at

the source were paid to the foreign

country, as required in paragraph (a) of

this section. The preceding sentence is

effective the date that is 30 days after

the date this regulation is published in

the Federal Register as a final regulation, however, for periods prior to the

date that is 30 days after the date this

regulation is published in the Federal

T.C. Memo. 1991–66, 61 T.C.M. (CCH)

1916, 1939–42 (1991), aff’d in part and

rev’d in part, 998 F.2d 513, 516–17 (7th

Cir. 1993), wherein the court upheld this

rule as a reasonable interpretation of

section 905(b) of the Internal Revenue

Code.

SUMMARY: This document contains

proposed regulations. The proposed

regulations effectuate provisions of the

Tax Reform Act of 1986 and the Technical and Miscellaneous Revenue Act of

1988. The proposed regulations generally affect a taxable corporation that

transfers all or substantially all of its

assets to a tax-exempt entity or converts

from a taxable corporation to a taxexempt entity, and generally require the

taxable corporation to recognize gain or

loss in such a transaction.

Margaret Milner Richardson,

Commissioner of Internal Revenue.

(Filed by the Office of the Federal Register on

January 10, 1997, 8:45 a.m., and published in the

issue of the Federal Register for January 13, 1997,

62 F.R. 1700)

REG–209121–89

AGENCY: Internal Revenue Service

(IRS), Treasury

DATES: Written comments must be received by April 15, 1997. Requests to

speak (with outlines of oral comments

to be discussed) at the public hearing

scheduled for May 6, 1997, at 10 a.m.

must be submitted by April 15, 1997.

ADDRESSES: Send submissions to:

CC:DOM:CORP:R (REG–209121–89),

Room 5226, Internal Revenue Service,

POB 7604, Ben Franklin Station, Washington, DC 20044. Submissions also

may be hand delivered between the

hours of 8 a.m. and 5 p.m. to:

CC:DOM:CORP:R (REG–209121–89),

Courier’s Desk, Internal Revenue Service, 1111 Constitution Ave. 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 the IRS

Auditorium, Internal Revenue Building,

1111 Constitution Avenue, NW, Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations,

Stephen R. Cleary (202) 622–7530; concerning submissions and the hearing,

Evangelista Lee, (202) 622–7180, (not

toll-free numbers).

This document contains proposed

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

repeal of the General Utilities doctrine

in the Tax Reform Act of 1986. Under

the General Utilities doctrine, which

took its name from General Utilities &

Operating Co. v. Helvering, 296 U.S.

200 (1935), corporations were not required to recognize gain or loss when

they distributed appreciated or depreciated property to their shareholders. The

General Utilities doctrine applied to

distributions of property in complete

liquidation, certain sales of property that

were in connection with a complete

liquidation, and nonliquidating distributions of property. It was codified in

former sections 311, 336, and 337 of the

Internal Revenue Code of 1954.

The General Utilities doctrine was an

exception to the general rule that income earned by a corporation is taxed

twice, once to the corporation when the

income is earned and a second time to

the corporation’s shareholders when the

earnings are distributed. The General

Utilities doctrine generally permitted the

permanent elimination of corporate-level

tax on the disposition of appreciated

assets because the transferee received a

fair market value basis in the assets and

the corporation generally did not recognize any gain. Thus, the appreciated

assets left corporate solution without

any corporate-level tax having been

paid.

Beginning in 1969, the scope of the

General Utilities doctrine was restricted

by a series of amendments (initially

relating to nonliquidating distributions

governed by section 311), until ultimately the General Utilities doctrine

was repealed, with limited exceptions, in

the Tax Reform Act of 1986. Sections

336 and 337 were amended to generally

require corporations to recognize gain or

loss when appreciated or depreciated

property is distributed in complete liquidation or sold in connection with a

complete liquidation.

Section 337(a) provides one of the

limited exceptions from the repeal of the

General Utilities doctrine by allowing a

subsidiary to liquidate into its 80percent distributee (a corporation meeting the stock ownership requirements of

section 332(b) in the liquidating corporation) without recognizing gain or loss.

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The 80-percent distributee takes a carryover basis in the distributed property.

However, under section 337(b)(2), this

nonrecognition exception generally does

not apply if the 80-percent distributee is

a tax-exempt entity.

The Tax Reform Act of 1986 added

section 337(d), directing the Secretary to

prescribe regulations as may be necessary to carry out the purposes of the

repeal of the General Utilities doctrine.

The legislative history of the Tax Reform Act of 1986 indicates that the

General Utilities doctrine was repealed

because it tended to undermine the

corporate income tax by allowing appreciated property to leave corporate solution without imposition of a corporate

level tax. H.R. Rep. No. 99–426, 99th

Cong., 1st Sess. 282 (1985). The Technical and Miscellaneous Revenue Act of

1988 amended section 337(d) to specify

that the section authorizes regulations to

‘‘ensure that these purposes shall not be

circumvented . . . through the use of a

. . . tax-exempt entity.’’ The legislative

history concerning the 1988 amendment

to section 337(d) explains:

The bill also clarifies in connection

with the built-in gain provisions of

the Act that the Treasury Department

shall prescribe such regulations as

may be necessary or appropriate to

carry out those provisions . . . . For

example, this includes rules to require

the recognition of gain if appreciated

property of a C corporation is transferred to a . . . tax-exempt entity

[footnote 32] in a carryover basis

transaction that would otherwise

eliminate corporate level tax on the

built-in appreciation.

[footnote 32] The Act generally requires recognition of gain if a C

corporation transfers appreciated assets to a tax exempt entity in a

section 332 liquidation. See Code section 337(b)(2).

S. Rep. No. 145, 100th Cong., 2d Sess.

66 (1988).

Explanation of Provision

An acquisition by a tax-exempt entity

of all or substantially all of the assets of

a taxable corporation or a change in

status of a taxable corporation to a

tax-exempt entity, like a liquidation into

an 80-percent tax-exempt distributee that

is taxable under section 337(b)(2), could

eliminate the corporate level tax on the

appreciation in the taxable corporation’s

assets. Accordingly, the proposed regulations apply rules similar to section

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I.R.B.

337(b)(2) to these transactions. The proposed regulations generally do not affect

the tax treatment of the taxable corporation’s shareholders or the availability of

any charitable contribution deduction.

The proposed regulations provide that

a taxable corporation that transfers all or

substantially all of its assets to one or

more tax-exempt entities is required to

recognize gain or loss as if the assets

transferred were sold at their fair market

values. Like section 337(b)(2), the proposed regulations provide that no gain

or loss will be recognized on any of the

assets transferred that are used by the

tax-exempt entity in an activity the

income from which is subject to the

unrelated business tax under section

511(a). However, gain on such assets

will later be recognized as unrelated

business taxable income if the taxexempt entity disposes of the assets or

ceases to use the assets in an unrelated

trade or business activity.

The proposed regulations generally

treat a taxable corporation that changes

its status to a tax-exempt entity as

having transferred all of its assets to a

tax-exempt entity immediately before

the change in status becomes effective,

irrespective of whether an actual transfer

of the assets has occurred. For this

purpose, if a state, a political subdivision thereof, or an entity any portion of

whose income is excluded from gross

income under section 115, acquires the

stock of a taxable corporation and thereafter any of the taxable corporation’s

income is excluded from gross income

under section 115, the taxable corporation will be treated as if it transferred all

of its assets to a tax-exempt entity

immediately before the stock acquisition.

Certain exceptions are provided to the

change in status rule for organizations

that are tax-exempt or are seeking taxexempt status under section 501(a).

These exceptions provide relief for corporations needing a brief start-up period

to establish their tax-exempt status and

for those that temporarily lose their

tax-exempt status. Under the proposed

regulations, the change in status rule

does not apply to a corporation that is

tax-exempt within three taxable years of

the taxable year of its formation, or to a

corporation that regains its tax-exempt

status within three years after either a

final adverse adjudication on its taxexempt status or filing a tax return as a

taxable corporation. The change in status rule also does not apply to an

organization that before publication of

these proposed regulations was exempt

or unsuccessfully applied for exemption,

if the organization is tax-exempt within

three years after the date of publication

of final regulations. An organization that

files for recognition of its exempt status

during one of the three-year periods will

be deemed to have or regain tax-exempt

status if the application ultimately results in recognition as of a date during

the three-year period. An anti-abuse rule

makes all these exceptions unavailable

to a taxable corporation that acquires all

or substantially all of the assets of

another taxable corporation and then

changes its status with a principal purpose of avoiding the gain or loss recognition rule made applicable by these

regulations.

The proposed regulations disallow the

recognition of loss if assets are acquired

by the taxable corporation in a section

351 transaction or a contribution to

capital, or if assets are distributed by the

taxable corporation to a shareholder,

with a principal purpose to recognize

loss by the taxable corporation on the

transfer of its assets to a tax-exempt

entity (loss limitation rule). For example, the loss limitation rule may apply if (a) a loss asset is contributed to a

taxable corporation and then is transferred with substantially all of the taxable corporation’s assets to a tax-exempt

entity; (b) loss assets not constituting

substantially all of a taxable corporation’s assets are contributed to a new

subsidiary and then the new subsidiary

transfers the loss assets which are its

only assets to a tax-exempt entity, or (c)

assets are distributed by a taxable corporation to its parent and then the taxable

corporation transfers loss assets now

constituting substantially all of its assets

to a tax-exempt entity. For purposes of

the loss limitation rule, the principles of

section 336(d)(2) apply.

Under the proposed regulations, a

‘‘taxable corporation’’ is any corporation

that is not a tax-exempt entity as defined in the proposed regulations. Thus,

taxable corporations include all S corporations whether or not subject to tax on

built-in gain under section 1374. After

the repeal of the General Utilities doctrine, an S corporation like a C corporation is required to recognize gain or loss

when it liquidates. This gain or loss

passes through to the S corporation’s

shareholders under section 1366. The

proposed regulations parallel this treatment.

Under the proposed regulations, a

‘‘tax-exempt entity’’ includes organiza-

tions exempt from tax under section

501, section 527, section 528, or section

529; Federal, state, and local governments; Indian tribal governments and

federally chartered Indian tribal corporations; foreign governments and international organizations; and entities any

portion of whose income is excluded

from gross income under section 115.

The term does not, however, include a

cooperative described in section 521,

paralleling the exception to section

337(b)(2).

A transaction conveying all or substantially all of the assets of a taxable

corporation to an Indian tribal government or a corporation organized under

section 17 of the Indian Reorganization

Act (IRA) or section 3 of the Oklahoma

Welfare Act (OWA) will be covered by

these regulations. Rev. Rul. 94–16,

1994–1 C.B. 19, held that an unincorporated Indian tribe or a corporation organized under section 17 of the IRA is not

subject to federal income tax, but a

corporation wholly owned by an Indian

tribe and organized under state law is

subject to federal income tax. Rev. Rul.

94–65, 1994–2 C.B. 14, held that a

corporation organized under section 3 of

the OWA also was not subject to federal

income tax. In that ruling, the Service

announced that an Indian tribe seeking

to dissolve a corporation organized under state law and organize into a federally chartered corporation (corporation

organized under either section 17 of the

IRA or section 3 of the OWA) will be

granted relief under section 7805(b) of

the Code upon application for such

relief provided it demonstrates to the

Service that it has acted reasonably and

in good faith to achieve the dissolution

and organization. The relief described in

that ruling applied to taxes on income

earned after September 30, 1994, by a

corporation organized by an Indian tribe

under state law from income earned

within the boundaries of the reservation

(including gain or loss properly allocable to such activities from the sale

or exchange of assets). The Service

intends to provide similar relief from tax

resulting from any gain or loss recognized under the rules provided in these

regulations. The relief will be available

to state law corporations wholly owned

by Indian tribes that have acted reasonably and in good faith to dissolve and

reorganize as federally chartered corporations.

Proposed Effective Date

These regulations are proposed to be

applicable to transfers of assets as described in the regulations occurring after

the date that is 30 days after publication

in the Federal Register of these regulations as final regulations, unless the

transfer is pursuant to a written agreement which is (subject to customary

conditions) binding on or before the

date that is 30 days after publication in

the Federal Register of these regulations

as final regulations.

Special Analyses

It has been determined that this notice

of proposed rulemaking is not a significant regulatory action as defined in EO

12866. Therefore, a regulatory assessment is not required. It has also been

determined that section 553(b) of the

Administrative Procedure Act (5 U.S.C.

chapter 5) does not apply to these

regulations and because the regulations

do not impose a collection of information on small entities, the Regulatory

Flexibility Act (5 U.S.C. Chapter 6)

does not apply. Pursuant to section

7805(f) of the Internal Revenue Code,

this notice of proposed rulemaking will

be submitted to the Chief Counsel for

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

small business.

Comments and Public Hearing

Before these proposed regulations are

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

copies) that are submitted timely to the

IRS. All comments will be available for

public inspection and copying.

A public hearing has been scheduled

for Tuesday, May 6, 1997, at 10 a.m. in

the IRS Auditorium, Internal Revenue

Building, 1111 Constitution Avenue,

NW, Washington, DC. Because of access restrictions, visitors will not be

admitted beyond the Internal Revenue

Service Building lobby more than 15

minutes before the hearing starts.

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

apply to the hearing.

Persons that wish to present oral

comments at the hearing must submit

written comments by April 15, 1997,

and submit an outline of the topics to be

discussed and the time to be devoted to

each topic (signed original and eight (8)

copies) by April 15, 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 Stephen R. Cleary of the Office

of Assistant Chief Counsel (Corporate),

IRS. However, other personnel from the

IRS and the Treasury Department participated in their development.

Proposed Amendments to the

Regulations

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

PART I—INCOME TAXES

Paragraph 1. The authority citation for

26 CFR Part 1 is amended by adding an

entry in numerical order to read as

follows:

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

Section 1.337(d)–4 also issued under

26 U.S.C. 337. * * *

Par. 2. Section 1.337(d)–4 is added to

read as follows:

§ 1.337(d)–4 Taxable to tax-exempt.

(a) Gain or loss recognition—(1)

General rule. If a taxable corporation

transfers all or substantially all of its

assets to one or more tax-exempt entities, the taxable corporation must recognize gain or loss immediately before the

transfer as if the assets transferred were

sold at their fair market values. But see

section 267 and paragraph (d) of this

section concerning limitations on the

recognition of loss.

(2) Change in corporation’s tax status treated as asset transfer. Except as

provided in paragraph (a)(3) of this

section, a taxable corporation’s change

in status to a tax-exempt entity will be

treated as if it transferred all of its

assets to a tax-exempt entity immediately before the change in status becomes effective in a transaction to

which paragraph (a)(1) of this section

applies. For purposes of this paragraph

(a), if a state, a political subdivision

thereof, or an entity any portion of

whose income is excluded from gross

income under section 115, acquires the

stock of a taxable corporation and thereafter any of the taxable corporation’s

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income is excluded from gross income

under section 115, the taxable corporation will be treated as if it transferred all

of its assets to a tax-exempt entity

immediately before the stock acquisition.

(3) Exceptions for certain changes in

status— (i) To whom available. Paragraph (a)(2) of this section does not

apply to the following corporations—

(A) A corporation previously exempt

under section 501(a) which regains its

tax-exempt status under section 501(a)

within three years from the later of a

final adverse adjudication on the corporation’s tax exempt status, or the filing

by the corporation, or by the Secretary

or his delegate under section 6020(b), of

a federal income tax return of the type

filed by a taxable corporation;

(B) A newly-formed corporation that

is tax-exempt under section 501(a)

within three taxable years from the end

of the taxable year in which it was

formed;

under section 501(a) or that applied for

but did not receive recognition of exemption under section 501(a), before

January 15, 1997, if such corporation is

tax-exempt under section 501(a) within

three years from the date of publication

of these regulations in the Federal Register as final regulations.

(ii) Application for recognition. An

organization is deemed to have or regain

tax-exempt status within one of the

three-year periods described in paragraph (a)(3)(i) of this section if it files

an application for recognition of exemption with the Commissioner within the

three-year period and the application

either results in a determination by the

Commissioner or a final adjudication

that the organization is tax-exempt under section 501(a) during any part of the

three-year period. The preceding sentence does not require the filing of an

application for recognition of exemption

by any organization not otherwise required, such as by § 1.501(a)–1,

§ 1.505(c)–1T, and § 1.508–1(a), to apply for recognition of exemption.

(iii) Anti-abuse rule. This paragraph

(a)(3) does not apply to a corporation

that, with a principal purpose of avoiding the application of paragraphs (a)(1)

and (a)(2) of this section, acquires all or

substantially all of the assets of another

taxable corporation and then changes its

status to that of a tax-exempt entity.

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(4) Related transactions. This section

applies to any series of related transactions having an effect similar to any of

the transactions to which this section

applies.

(b) Exceptions. Paragraph (a) of this

section does not apply to—

(1) Any assets transferred to a taxexempt entity if the assets are used in

an activity the income from which is

subject to tax under section 511(a).

However, if assets on which no gain or

loss was recognized by reason of the

preceding sentence are disposed of by

the tax-exempt entity, then, notwithstanding any other provision of law, any

gain (not in excess of the amount not

recognized by reason of the preceding

sentence) shall be included in the taxexempt entity’s unrelated business taxable income. If the tax-exempt entity

ceases to use the assets in an activity

the income from which is subject to tax

under section 511(a), the entity will be

treated for purposes of this subparagraph

as having disposed of the assets on the

date of the cessation;

(2) Any transfer of assets to the extent gain or loss otherwise is recognized

by the taxable corporation on the transfer. See, for example, sections 336,

337(b)(2), 367, and 1001;

(3) Any forfeiture of a taxable corporation’s assets in a criminal or civil

action to the United States, the government of a possession of the United

States, a state, the District of Columbia,

the government of a foreign country, or

a political subdivision of any of the

foregoing; or any expropriation of a

taxable corporation’s assets by the government of a foreign country; and

(4) Any transfer of assets to a cooperative described in section 521.

section—

(1) Taxable corporation. A taxable

corporation is any corporation that is

not a tax-exempt entity as defined in

paragraph (c)(2) of this section.

(2) Tax-exempt entity. A tax-exempt

entity is—

(i) Any entity that is exempt from tax

under section 501(a), section 527, section 528, or section 529;

(ii) A charitable remainder annuity

trust or charitable remainder unitrust as

defined in section 664(d);

(iii) The United States, the government of a possession of the United

States, a state, the District of Columbia,

the government of a foreign country, or

a political subdivision of any of the

foregoing;

(iv) An Indian Tribal Government as

defined in section 7701(a)(40), a subdivision of an Indian tribal government

determined in accordance with section

7871(d), or an agency or instrumentality

of an Indian tribal government or subdivision thereof;

(v) An Indian Tribal Corporation organized under section 17 of the Indian

Reorganization Act of 1934, 25 U.S.C.

477, or section 3 of the Oklahoma

Welfare Act, 25 U.S.C. 503;

(vi) An international organization as

defined in section 7701(a)(18);

(vii) An entity any portion of whose

income is excluded under section 115;

(viii) An entity that would not be

taxable under the Internal Revenue Code

for reasons substantially similar to those

applicable to any entity listed in this

paragraph (c)(2) unless otherwise explicitly made exempt from the application

of this section by statute or by action of

the Commissioner.

(3) Substantially all. The term substantially all has the same meaning as

under section 368(a)(1)(C).

(d) Loss limitation rule. For purposes

of determining the amount of loss recognized by a taxable corporation on the

transfer of its assets to a tax-exempt

entity under paragraph (a) of this section, if assets are acquired by the taxable corporation in a transaction to

which section 351 applied or as a

contribution to capital, or assets are

distributed from the taxable corporation

to a shareholder or another member of

the taxable corporation’s affiliated

group, and in either case as part of a

plan a principal purpose of which is to

recognize loss by the taxable corporation on the transfer of its assets to the

tax-exempt entity, the losses recognized

by the taxable corporation on the assets

transferred to the tax-exempt entity will

be disallowed. For purposes of the preceding sentence, the principles of section 336(d)(2) apply.

(e) Effective date. This section is applicable to transfers of assets as described in paragraph (a) of this section

occurring after the date that is 30 days

after publication in the Federal Register

of these regulations as final regulations,

unless the transfer is pursuant to a

written agreement which is (subject to

customary conditions) binding on or

before the date that is 30 days after

publication in the Federal Register of

these regulations as final regulations.

Federal Register on Thursday, December

29, 1994, at 59 FR 67253, is withdrawn.

Margaret Milner Richardson,

Commissioner of Internal Revenue.

Margaret Milner Richardson,

Commissioner of Internal Revenue.

(Filed by the Office of the Federal Register on

January 10, 1997, 8:45 a.m., and published in the

issue of the Federal Register for January 15, 1997,

62 F.R. 2064)

(Filed by the Office of the Federal Register on

January 10, 1997, 8:45 a.m., and published in the

issue of the Federal Register for January 13, 1997,

62 F.R. 1701)

Withdrawal of Notice of Proposed

Rulemaking

Notice of Proposed Rulemaking

and Notice of Public Hearing

Self-Employment Tax Treatment of

Members of Certain Limited

Liability Companies

Definition of Limited Partner for

Self-Employment Tax Purposes

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Withdrawal of notice of proposed rulemaking.

SUMMARY: This document withdraws

the notice of proposed rulemaking relating to the self-employment tax treatment

of members of certain limited liability

companies that was published in the

Federal Register on Thursday, December 29, 1994. The proposed regulations

sought to provide guidance concerning

the applicability of certain selfemployment tax rules to certain members of limited liability companies. The

IRS and Treasury have issued new proposed regulations that will provide guidance on this issue.

FOR FURTHER INFORMATION CONTACT: Robert Honigman, (202) 622–

3050 (not a toll-free number).

SUPPLEMENTARY

INFORMATION:

Background

On Thursday, December 29, 1994, the

IRS issued proposed regulations (EE–

45–94 [1995–1 C.B. 853]) relating to

the self-employment tax treatment of

members of certain limited liability

companies (59 FR 67253). Upon consideration of the written comments received and the oral comments made at

the public hearing held on June 23,

1995, the IRS has decided to withdraw

those proposed regulations.

Withdrawal of Notice of Proposed

Rulemaking

Accordingly, under the authority of 26

U.S.C. 7805, the notice of proposed

rulemaking that was published in the

SUPPLEMENTARY

INFORMATION:

Background

REG–209824–96

REG–209729–94

FOR FURTHER INFORMATION CONTACT: Concerning the regulation, Robert Honigman, (202) 622–3050; concerning submissions and the hearing,

Christina Vasquez, (202) 622–6808 (not

toll-free numbers).

AGENCY: Internal Revenue Service

(IRS), Treasury.

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

SUMMARY: This document contains

proposed amendments to the regulations

relating to the self-employment income

tax imposed under section 1402 of the

Internal Revenue Code of 1986. These

regulations permit individuals to determine whether they are limited partners

for purposes of section 1402(a)(13),

eliminating the uncertainty in calculating

an individual’s net earnings from selfemployment under existing law. This

document also contains a notice of public hearing on the proposed regulations.

DATES: Written comments must be received by April 14, 1997. Requests to

speak and outlines of oral comments to

be discussed at the public hearing

scheduled for May 21, 1997, at 10 a.m.

must be received by April 30, 1997.

ADDRESSES: Send submissions to:

CC:DOM:CORP:R (REG–209824–96),

room 5226, Internal Revenue Service,

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

hand delivered between the hours of 8

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

(REG–209824–96), 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 the Auditorium,

Internal Revenue Service building, 1111

Constitution Avenue, NW, Washington,

DC.

This document contains proposed

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

1402 of the Internal Revenue Code and

replaces the notice of proposed rulemaking published in the Federal Register

on December 29, 1994, at 59 FR 67253

(EE–45–94, 1995–1 C.B. 853), that

treated certain members of a limited

liability company (LLC) as limited partners for self-employment tax purposes.

Written comments responding to the

proposed regulations were received, and

a public hearing was held on June 23,

1995.

Under the 1994 proposed regulations,

an individual owning an interest in an

LLC was treated as a limited partner if

(1) the individual lacked the authority to

make management decisions necessary

to conduct the LLC’s business (the

management test), and (2) the LLC

could have been formed as a limited

partnership rather than an LLC in the

same jurisdiction, and the member could

have qualified as a limited partner in the

limited partnership under applicable law

(the limited partner equivalence test).

The intent of the 1994 proposed regulations was to treat owners of an LLC

interest in the same manner as similarly

situated partners in a state law partnership.

Public comments on the 1994 proposed regulations were mixed. While

some commentators were pleased with

the proposed regulations for attempting

to conform the treatment of LLCs with

state law partnerships, others criticized

the 1994 proposed regulations based on

a variety of arguments.

A number of commentators discussed

administrative and compliance problems

with the 1994 proposed regulations. For

example, it was noted that both the

management test and the limited partner

equivalence test depend upon legal or

factual determinations that may be difficult for taxpayers or the IRS to make

with certainty.

Another commentator pointed out that

basing the self-employment tax treatment of LLC members on state law

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limited partnership rules would lead to

disparate treatment between members of

different LLCs with identical rights

based solely on differences in the limited partnership statutes of the states in

which the members form their LLC. For

example, State A’s limited partnership

act may allow a limited partner to

participate in a partnership’s business

while State B’s limited partnership act

may not. Thus, an LLC member, who is

not a manager, that participates in the

LLC’s business would be a limited

partner under the proposed regulations if

the LLC is formed in State A, but not if

the LLC is formed in State B. Commentators asserted that this disparate treatment is inherently unfair for federal tax

purposes.

Some commentators argued for a

‘‘material participation’’ test to determine whether an LLC member’s distributive share is included in the individual’s net earnings from selfemployment. The proposed regulations

did not contain a participation test.

Commentators advocating a participation

test stressed that such a test would

eliminate uncertainty concerning many

LLC members’ limited partner status

and would better implement the selfemployment tax goal of taxing compensation for services.

Other commentators argued for a

more uniform approach, stating that a

single test should govern all business

entities (i.e., partnerships, LLCs, LLPs,

sole proprietorships, et al.) whose members may be subject to self-employment

tax. These commentators generally recognized, however, that a change in the

treatment of a sole proprietorship or an

entity that is not characterized as a

partnership for federal tax purposes

would be beyond the scope of regulations to be issued under section

1402(a)(13).

Finally, some commentators focused

on whether the Service would respect

the ownership of more than one class of

partnership interest for self-employment

tax purposes (bifurcation of interests).

The proposed regulations treated an

LLC member as a limited partner with

respect to his or her entire interest (if

the member was not a manager and

satisfied the limited partner equivalence

test), or not at all (if either the management test or limited partner equivalence

test was not satisfied). Commentators,

however, pointed to the legislative history of section 1402(a)(13) to support

their argument that Congress only intended to tax a partner’s distributive

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share attributable to a general partner

interest. Under this argument, a partner

that holds both a general partner interest

and a limited partner interest is only

subject to self-employment tax on the

distributive share attributable to the partner’s general partner interest. This intent

also may be inferred from the statutory

language of section 1402(a)(13) that the

self-employment tax does not apply to

‘‘. . . the distributive share of any item

of income or loss of a limited partner,

as such . . ..’’ Based on this evidence,

these commentators requested that the

proposed regulations be revised to allow

the bifurcation of interests for selfemployment tax purposes.

After considering the comments received, the IRS and Treasury have decided to withdraw the 1994 notice of

proposed rulemaking and to re-propose

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

1402 of the Code. Explanation of Provisions

The proposed regulations contained in

this document define which partners of

a federal tax partnership are considered

limited partners for section 1402(a)(13)

purposes. These proposed regulations

apply to all entities classified as a

partnership for federal tax purposes, regardless of the state law characterization

of the entity. Thus, the same standards

apply when determining the status of an

individual owning an interest in a state

law limited partnership or the status of

an individual owning an interest in an

LLC. In order to achieve this conformity, the proposed regulations adopt an

approach which depends on the relationship between the partner, the partnership, and the partnership’s business.

State law characterizations of an individual as a ‘‘limited partner’’ or otherwise are not determinative.

Generally, an individual will be

treated as a limited partner under the

proposed regulations unless the individual (1) has personal liability (as

defined in § 301.7701–3(b)(2)(ii) of the

Procedure and Administration Regulations) for the debts of or claims against

the partnership by reason of being a

partner; (2) has authority to contract on

behalf of the partnership under the statute or law pursuant to which the partnership is organized; or, (3) participates

in the partnership’s trade or business for

more than 500 hours during the taxable

year. If, however, substantially all of the

activities of a partnership involve the

performance of services in the fields of

health, law, engineering, architecture,

accounting, actuarial science, or consulting, any individual who provides services as part of that trade or business

will not be considered a limited partner.

By adopting these functional tests, the

proposed regulations ensure that similarly situated individuals owning interests in entities formed under different

statutes or in different jurisdictions will

be treated similarly. The need for a

functional approach results not only

from the proliferation of new business

entities such as LLCs, but also from the

evolution of state limited partnership

statutes. When Congress enacted the

limited partner exclusion found in section 1402(a)(13), state laws generally

did not allow limited partners to participate in the partnership’s trade or business to the extent that state laws allow

limited partners to participate today.

Thus, even in the case of a state law

limited partnership, a functional approach is necessary to ensure that the

self-employment tax consequences to

similarly situated taxpayers do not differ

depending upon where the partnership

organized.

The proposed regulations allow an

individual who is not a limited partner

for section 1402(a)(13) purposes to

nonetheless exclude from net earnings

from self-employment a portion of that

individual’s distributive share if the individual holds more than one class of

interest in the partnership. Similarly, the

proposed regulations permit an individual that participates in the trade or

business of the partnership to bifurcate

his or her distributive share by disregarding guaranteed payments for services. In each case, however, such bifurcation of interests is permitted only to

the extent the individual’s distributive

share is identical to the distributive

share of partners who qualify as limited

partners under the proposed regulation

(without regard to the bifurcation rules)

and who own a substantial interest in

the partnership. Together, these rules

exclude from an individual’s net earnings from self-employment amounts that

are demonstrably returns on capital invested in the partnership.

Proposed Effective Date

These regulations are proposed to be

effective beginning with the individual’s

first taxable year beginning on or after

the date these regulations are published

as final regulations in the Federal Register.

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 regulations

do not impose a collection of information on small entities, the Regulatory

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

not apply. Pursuant to section 7805(f) of

the Internal Revenue Code, this notice

of proposed rulemaking will be submitted to the Chief Counsel for Advocacy

of the Small Business Administration for

comment on its impact on small business.

Comments and Public Hearing

Before these proposed regulations are

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

copies) that are submitted timely to the

IRS. All comments will be available for

public inspection and copying.

A public hearing has been scheduled

for Wednesday, May 21, 1997, at 10

a.m. in the Auditorium, Internal Revenue Service building, 1111 Constitution

Avenue, NW, Washington, DC. Because

of access restrictions, visitors will not be

admitted beyond the Internal Revenue

Service building lobby more than 15

minutes before the hearing starts.

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

apply to the hearing.

Persons that wish to present oral

comments at the hearing must submit

written comments by April 14, 1997,

and submit an outline of the topics to be

discussed and the time to be devoted to

each topic (signed original and eight (8)

copies) by April 30, 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 Honigman of the Office

of Assistant Chief Counsel (Passthroughs & Special Industries). How-

ever, other personnel from the IRS and

Treasury Department participated in

their development.

Proposed Amendments to the

Regulations

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

PART 1—INCOME TAXES

Paragraph 1. The authority citation for

part 1 continues to read in part as

follows:

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

Par. 2. Section 1.1402(a)–2 is

amended by:

1. Revising the first sentence of paragraph (d).

2. Removing the reference ‘‘section

702(a)(9)’’ in the first sentence of paragraph (e) and adding ‘‘section

702(a)(8)’’ in its place.

3. Revising the last sentence of paragraph (f).

4. Revising paragraphs (g) and (h).

5. Adding new paragraphs (i) and (j).

The revisions and additions read as

follows:

§ 1.1402(a)–2 Computation of net earnings from self-employment.

(d) * * * Except as otherwise provided in section 1402(a) and paragraph

(g) of this section, an individual’s net

earnings from self-employment include

the individual’s distributive share

(whether or not distributed) of income

or loss described in section 702(a)(8)

from any trade or business carried on by

each partnership of which the individual

is a partner. * * *

(f) * * * For rules governing the

classification of an organization as a

partnership

otherwise,

see

§ § 301.7701–1, 301.7701–2, and

301.7701–3 of this chapter.

(g) Distributive share of limited partner. An individual’s net earnings from

self-employment do not include the individual’s distributive share of income or

loss as a limited partner described in

paragraph (h) of this section. However,

guaranteed payments described in section 707(c) made to the individual for

services actually rendered to or on behalf of the partnership engaged in a

trade or business are included in the

individual’s net earnings from selfemployment.

(h) Definition of limited partner—(1)

In general. Solely for purposes of section 1402(a)(13) and paragraph (g) of

this section, an individual is considered

to be a limited partner to the extent

provided in paragraphs (h)(2), (h)(3),

(h)(4), and (h)(5) of this section.

(2) Limited partner. An individual is

treated as a limited partner under this

paragraph (h)(2) unless the individual—

(i) Has personal liability (as defined

in § 301.7701–3(b)(2)(ii) of this chapter

for the debts of or claims against the

partnership by reason of being a partner;

(ii) Has authority (under the law of

the jurisdiction in which the partnership

is formed) to contract on behalf of the

partnership; or

(iii) Participates in the partnership’s

trade or business for more than 500

hours during the partnership’s taxable

year.

(3) Exception for holders of more

than one class of interest. An individual

holding more than one class of interest

in the partnership who is not treated as

a limited partner under paragraph (h)(2)

of this section is treated as a limited

partner under this paragraph (h)(3) with

respect to a specific class of partnership

interest held by such individual if, immediately after the individual acquires

that class of interest—

(i) Limited partners within the meaning of paragraph (h)(2) of this section

own a substantial, continuing interest in

that specific class of partnership interest;

and,

(ii) The individual’s rights and obligations with respect to that specific

class of interest are identical to the

rights and obligations of that specific

class of partnership interest held by the

limited partners described in paragraph

(h)(3)(i) of this section.

(4) Exception for holders of only one

class of interest. An individual who is

not treated as a limited partner under

paragraph (h)(2) of this section solely

because that individual participates in

the partnership’s trade or business for

more than 500 hours during the partnership’s taxable year is treated as a limited

partner under this paragraph (h)(4) with

respect to the individual’s partnership

interest if, immediately after the individual acquires that interest—

(i) Limited partners within the meaning of paragraph (h)(2) of this section

own a substantial, continuing interest in

that specific class of partnership interest;

and

(ii) The individual’s rights and obligations with respect to the specific class

1997–11

I.R.B.

of interest are identical to the rights and

obligations of the specific class of partnership interest held by the limited

partners described in paragraph (h)(4)(i)

of this section.

(5) Exception for service partners in

service partnerships. An individual who

is a service partner in a service partnership may not be a limited partner under

paragraphs (h)(2), (h)(3), or (h)(4) of

this section.

(6) Additional definitions. Solely for

purposes of this paragraph (h)—

(i) A class of interest is an interest

that grants the holder specific rights and

obligations. If a holder’s rights and

obligations from an interest are different

from another holder’s rights and obligations, each holder’s interest belongs to a

separate class of interest. An individual

may hold more than one class of interest

in the same partnership provided that

each class grants the individual different

rights or obligations. The existence of a

guaranteed payment described in section

707(c) made to an individual for services rendered to or on behalf of a

partnership, however, is not a factor in

determining the rights and obligations of

a class of interest.

(ii) A service partner is a partner

who provides services to or on behalf of

the service partnership’s trade or business. A partner is not considered to be a

service partner if that partner only provides a de minimis amount of services

to or on behalf of the partnership.

(iii) A service partnership is a partnership substantially all the activities of

which involve the performance of services in the fields of health, law, engineering, architecture, accounting, actuarial science, or consulting.

(iv) A substantial interest in a class

of interest is determined based on all of

the relevant facts and circumstances. In

all cases, however, ownership of 20

percent or more of a specific class of

interest is considered substantial.

(i) Example. The following example

illustrates the principles of paragraphs

(g) and (h) of this section:

Example. (i) A, B, and C form LLC, a limited

liability company, under the laws of State to

engage in a business that is not a service partnership described in paragraph (h)(6)(iii) of this

section. LLC, classified as a partnership for federal tax purposes, allocates all items of income,

deduction, and credit of LLC to A, B, and C in

proportion to their ownership of LLC. A and C

each contribute $1x for one LLC unit. B contributes $2x for two LLC units. Each LLC unit

entitles its holder to receive 25 percent of LLC’s

tax items, including profits. A does not perform

services for LLC; however, each year B receives a

1997–11

I.R.B.

guaranteed payment of $6x for 600 hours of

services rendered to LLC and C receives a

guaranteed payment of $10x for 1000 hours of

services rendered to LLC. C also is elected LLC’s

manager. Under State’s law, C has the authority to

contract on behalf of LLC.

(ii) Application of general rule of paragraph

(h)(2) of this section. A is treated as a limited

partner in LLC under paragraph (h)(2) of this

section because A is not liable personally for debts

of or claims against LLC, A does not have

authority to contract for LLC under State’s law,

and A does not participate in LLC’s trade or

business for more than 500 hours during the

taxable year. Therefore, A’s distributive share

attributable to A’s LLC unit is excluded from A’s

net earnings from self-employment under section

1402(a)(13).

(iii) Distributive share not included in net earnings from self-employment under paragraph (h)(4)

of this section. B’s guaranteed payment of $6x is

included in B’s net earnings from self-employment

under section 1402(a)(13). B is not treated as a

limited partner under paragraph (h)(2) of this

section because, although B is not liable for debts

of or claims against LLC and B does not have

authority to contract for LLC under State’s law, B

does participates in LLC’s trade or business for

more than 500 hours during the taxable year.

Further, B is not treated as a limited partner under

paragraph (h)(3) of this section because B does

not hold more than one class of interest in LLC.

However, B is treated as a limited partner under

paragraph (h)(4) of this section because B is not

treated as a limited partner under paragraph (h)(2)

of this section solely because B participated in

LLC’s business for more than 500 hours and

because A is a limited partner under paragraph

(h)(2) of this section who owns a substantial

interest with rights and obligations that are identical to B’s rights and obligations. In this example,

B’s distributive share is deemed to be a return on

B’s investment in LLC and not remuneration for

B’s service to LLC. Thus, B’s distributive share

attributable to B’s two LLC units is not net

earnings from self-employment under section

1402(a)(13).

(iv) Distributive share included in net earnings

from self-employment. C’s guaranteed payment of

$10x is included in C’s net earnings from selfemployment under section 1402(a). In addition,

C’s distributive share attributable to C’s LLC unit

also is net earnings from self-employment under

section 1402(a) because C is not a limited partner

under paragraphs (h)(2), (h)(3), or (h)(4) of this

section. C is not treated as a limited partner under

paragraph (h)(2) of this section because C has the

authority under State’s law to enter into a binding

contract on behalf of LLC and because C participates in LLC’s trade or business for more than

500 hours during the taxable year. Further, C is

not treated as a limited partner under paragraph

(h)(3) of this section because C does not hold

more than one class of interest in LLC. Finally, C

is not treated as a limited partner under paragraph

(h)(4) of this section because C has the power to

bind LLC. Thus, C’s guaranteed payment and

distributive share both are included in C’s net

earnings from self-employment under section

1402(a).

(j) Effective date. Paragraphs (d), (e),

(f), (g), (h), and (i) are applicable beginning with the individual’s first taxable

year beginning on or after the date this

section is published as a final regulation

in the Federal Register.

Margaret Milner Richardson,

Commissioner of Internal Revenue.

(Filed by the Office of the Federal Register on

January 10, 1997, 8:45 a.m., and published in the

issue of the Federal Register for January 13, 1997,

62 F.R. 1702)

Employee Plans and Exempt

Organizations; Requests for Certain

Determination Letters and

Applications for Recognition of

Exemption

Announcement 97–20

PURPOSE

This is to announce new ‘‘Where to

File’’ instructions for applications for

employee plan determination and other

letters, as well as exempt organization

applications for recognition of exemption from federal income tax, previously

submitted to the Los Angeles Key District Office of Internal Revenue.

BACKGROUND

The Internal Revenue Service is in

the process of centralizing the filing of

requests for determination and other

letters and applications for recognition

of tax exemption. Announcement 95–51,

published in Internal Revenue Bulletin

1995–25 at page 132, announced that

centralization will be phased in by district. Announcement 96–92, published in

Internal Revenue Bulletin 1996–38 at

page 151, announced that beginning

September 1, 1996, requests formerly

sent to the key district offices in Atlanta,

Georgia, and Baltimore, Maryland,

should be sent to the Internal Revenue

Service Center in Covington, Kentucky.

Announcement 96–133, published in Internal Revenue Bulletin 1996–53 at page

60, announced that beginning January 1,

1997, requests formerly sent to the key

district offices in Chicago, Illinois, and

Dallas, Texas, should also be sent to the

Covington address.

In addition, the Service is consolidating the employee plan volume submitter

and regional prototype programs that are

presently maintained by each individual

key district office. Plans previously approved by a key district office, whose

determination letter processing program

is being transferred to Cincinnati, will

be reviewed using the same criteria and

procedures used by the original district

office. New guidelines are being devel-

oped that will combine the best features

and procedures currently in use by the

districts. Guidelines for the revised volume submitter and regional prototype

programs will be explained in a future

announcement.

INSTRUCTIONS

Beginning April 1, 1997, letter requests and applications previously submitted to the Key District Office in Los

Angeles, California, should be sent to

the Internal Revenue Service Center in

Covington, Kentucky, at the address

shown below. (For a period of time,

requests and applications mistakenly

sent to the Los Angeles Key District

Office will be forwarded.) The new

address applies to requests for determination letters, regional prototype notification letters and volume submitter advisory letters, on the qualified status of

employee plans under sections 401,

403(a), and 409, and the exempt status

of any related trust under section 501 of

the Internal Revenue Code, applications

for recognition of tax exemption on

Form 1023, Form 1024, and Form 1028

and other applications for recognition of

qualification or exemption. The affected

plan sponsors and organizations are

those whose principal office or place of

business is located in Alaska, California,

Hawaii, Idaho, Nevada, Oregon, and

Washington. These requests and applications, as well as those formerly submitted to the Atlanta, Baltimore, Cincinnati,

Chicago, and Dallas Key Districts,

should be sent to:

Internal Revenue Service

P.O. Box 192

Covington, KY 41012–0192

Until further notice, plans and organizations in all other locations, i.e., those

located within the jurisdiction of the

Brooklyn Key District Office, will continue to file their requests or applications in accordance with the applicable

user fee instructions, currently in Section 7 of Revenue Procedure 97–8,

published in Internal Revenue Bulletin

1997–1, at page 187, and the instructions for Form 8717, User Fee for

Employee Plan Determination Letter Request, or Form 8718, User Fee for

Exempt Organization Determination Letter Request.

Comments or concerns regarding the

centralization of the determination process or applications submitted to the

Covington address, may be directed to

the EP/EO Customer Service Unit in

Cincinnati at (513) 684–3957 (not a

toll-free number).

Deletions From Cumulative List of

Organizations Contributions to

Which Are Deductible Under

Section 170 of the Code

Announcement 97–21

The name of an organization that no

longer qualifies as an organization described in section 170(c)(2) of the Internal Revenue Code of 1986 is 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 March 17, 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.

Gilpin Grammar School

Denver, CO

The National Organization for the

Reform of Marijuana Laws

Washington, DC

Foundations Status of Certain

Organizations

Announcement 97–23

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:

Abilene Cultural Foundation, Abilene,

Academy of Mount St. Scholastica

Endowment Association, Inc.,

Atchison, KS

Accessible Parks Incorporated, Austin,

Acorn-Pacific Foundation, Port Collins,

Advocates for Incest Survival, Houston,

American Association for Advancement

Core Curriculum, Denver, CO

American Awareness Institute, Inc.,

Kansas City, KS

American Economic Defense

Foundation, Denver, CO

American Indian Anti-Defamation

Council, Denver, CO

American Indian Resource and

Education Coalition, San Antonio, TX

American Pow-Mia Coalition, Shawnee

Mission, KS

A. M. G. Foundation, Inc., Lewisville,

Andale Nogales Foundation, Nogales,

Ardra Foundation, Lawrence, KS

Arizona Childrens Heart Fund, Inc.,

Phoenix, AZ

Blummer 100 KN Trail Run, Boulder,

Bob Rich Memorial Scholarship

Foundation Trust, Williamsburg, VA

Boys and Girls Club of La Joya Texas,

Inc., La Joya, TX

Brazos Valley Christian Home School

Sports Association, Bryan, TX

1997–11

I.R.B.

Bread of Love Outreach Ministries of

Texas, Houston, TX

Bright Hopes Foundation, Albuquerque,

Broken Bow Summer Baseball, Inc.,

Broken Bow, OK

Businesswomen Unlimited, Inc., Olathe,

Cerebral Palsy Foundation of Nassau,

Inc., Roosevelt, NY

Charles Schwartz Foundation for Music,

Inc., New York, NY

David Bowen Memorial Scholarship

Inc., Yokum, TX

Decatur County Retirement Housing

Inc., Oberlin, KS

Denver Broncos Alumni Charities,

Englewood, CO

East Texas Arboretum & Botanical

Society, Inc., Athens, TX

East Texas Center for Independent

Living, Tyler, TX

East Valley Pony Baseball, Sandy, UT

Eberle Puppet Player, Dallas, TX

Ellis County Sheriffs Posse Inc.,

Waxahachie, TX

Employees Helping Employees Inc.,

Phoenix, AZ

Environmental Literacy Project,

McAllen, TX

Executive Womens Coalition for

Children, Phoenix, AZ

Faith Victory Ministries Inc., Tulsa, OK

Families of Murder Victims, Watauga,

Family Service Network, Irving, TX

Family Therapy Training Center of

Colorado, Denver, CO

Family Watch Inc., Albuquerque, NM

Fatima Foundation, Houston, TX

First Colorado Regiment United States

Volunteers LTD, Englewood, CO

First Step Shelter Inc., Pratt, KS

Flying Start Foundation, Tucson, AZ

Georgetown Little Dribblers, Inc.,

Georgetown, TX

G H F Ministries Inc., Keene, TX

Gloria Russell Childrens Ministry Inc.,

Lufkin, TX

Golden Earth Days, Golden, CO

Grady County Child Welfare Services

Advisory Board, Inc., Chickasha, OK

Greater New Bedford Aglas, Inc., New

Bedford, MA

Great Western Trail—Wasatch Section,

Farmington, NM

Gulf Coast Drum Corps Associates Inc.,

Spring, TX

Healthcare Solutions for America, Inc.,

Belmont, MA

Henry Lukas Foundation, Inc., Blue

Point, NY

Hercules Athletic Association, Inc., New

York, NY

1997–11

I.R.B.

He’s Not Heavy He’s My Brother, Inc.,

Roxbury, MA

Home Base, Inc., Ipswich, MA

Humanitarian Foundation for Nicaragua,

Incorporated, New York, NY

Jacksonville College Foundation, Inc.,

Jacksonville, TX

Jasper Fire Department, Jasper, TX

Jefferson County Domestic Violence

Task Force, Inc., Valley Falls, KS

Labette County Humane Society,

Parsons, KS

LaDonia Foundation, Inc., LaDonia, TX

Lake Powell Project, Page, AZ

Lamda Phoenix Center, Inc., Phoenix,

Lane Ranch Corporation, Cheyenne,

Laughter to Go, Inc., Shawnee Mission,

Make a Kid Smile Inc., Houston, TX

Marlin Volunteer Fire Department,

Marlin, TX

Metro-Rail Inc., Boulder, CO

Narciso Martinez Cultural Arts Center,

San Benito, TX

Northeast Mens Center, Denver, CO

North Texas Drug Awareness Library,

Ennis, TX

Operation Exaltation, Inc., Cedar Hill,

Opportunity is Through Education,

Denver, CO

Orthodox Community Services, Inc.,

Denver, CO

Our Home, Inc., Tulsa, OK

Paces Foundation Inc., Atlanta, GA

Scottish Rite Charitable Trust Valley of

Kansas City Orient Kansas, Kansas

City, KS

Seguin Tri-Party Club, Seguin, TX

Seminole Youth Soccer Association,

Seminole, TX

Share Parents of Northern Utah, Ogden,

Sheridan County Soccer Association,

Sheridan, WY

Sheridan Historical Society, Inc.,

Sheridan, CO

Shoebox Ministry, Inc., Phoenix, AZ

St. Augustine Technical Center

Foundation Inc., St. Augustine, FL

10-4 Ministries, Bellingham, MA

Tamina Action Committee, Inc., Spring,

Tarrant County Opportunities

Industrialization Center, Inc., Fort

Worth, TX

Tecumseh Beautiful, Inc., Tecumseh,

Telluride Youth Foundation, Telluride,

United States Helicopter Museum,

Tucson, AZ

United Way of Choctaw County, Inc.,

Hugo, OK

University of Tulsa Lettermens

Association, Tulsa, OK

Unlimited Handi-Capable, Inc., Fowler,

Wadley Partners, Inc., Dallas, TX

Walter Smith Ministry, Houston, TX

Water and Sanitation Consultancy

Group, Denver, CO

Welch Evangelistic Association,

Franklin, TX

Westbury High School Area

Improvement Corporation, Houston,

West Roosevelt Community

Development Corporation, Phoenix,

Zinser Elementary Parent & Teacher

Organization, Grand Rapids, MI

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.

Timing of Certain Plan

Amendments Relating to Section

401(a)(9)

Announcement 97–24

PURPOSE

This announcement provides that an

employer is not precluded from offering,

to employees (other than 5-percent owners) who attain age 70½ after 1995 and

have not retired, an option to defer

commencement of benefit distributions

under a qualified plan merely because

the plan has not yet been amended to

provide for the option.

BACKGROUND

Section 1404(a) of the Small Business

Job Protection Act of 1996 (SBJPA)

amended section 401(a)(9) of the Internal Revenue Code to provide that, in the

case of an employee who is not a

5-percent owner, the required beginning

date for minimum distributions from a

qualified plan is April 1 of the calendar

year following the later of the calendar

year in which the employee attains age

70½ or the calendar year in which the

employee retires. The amendment to

section 401(a)(9) applies to years beginning after December 31, 1996.

Notice 96–67, 1996–53 I.R.B. 12,

Q&A–2, provides that, under section

401(a)(9) as amended by the SBJPA, an

employee (other than a 5-percent owner)

who attained age 70½ in 1996, but who

had not retired from employment with

the employer maintaining the plan by

the end of 1996, is not required to

receive a minimum distribution by April

1, 1997.

Many qualified plans continue to contain provisions (consistent with section

401(a)(9) prior to its amendment by the

SBJPA) requiring an employee who attains age 70½ in a calendar year to

begin receiving distributions by April 1

of the following calendar year. Some

employers wish to give employees

(other than 5-percent owners) who have

not retired the option to defer commencement of distributions beyond April

1 following the calendar year the employees attain age 70½ and have requested guidance as to whether such an

option may be offered before their plans

are amended to provide for the option.

This announcement responds to these

requests concerning the addition of an

option to defer commencement of distributions before plan amendment. It does

not address the elimination of the option

to receive in-service distributions after

age 70½.

As noted in Notice 96–67, an amendment that eliminates the right to receive

a distribution prior to retirement after

age 70½ is precluded by section

411(d)(6) if the amendment applies to

benefits accrued as of the later of the

adoption date or the effective date of the

amendment. In Notice 96–67, the Service and Treasury requested comments

concerning the extent to which a relaxation of section 411(d)(6) protection is

appropriate for amendments that eliminate in-service distributions after age

70½, and the Service and Treasury are

currently considering the comments received.

TIMING OF PLAN AMENDMENTS

Under a qualified plan, an employer

is permitted to offer an employee (other

than a 5-percent owner) who attains age

70½ in a calendar year after 1995 and

has not retired by the end of that

calendar year the option to delay commencement of benefit distributions until

no later than April 1 following the

calendar year in which the employee

retires from employment with the employer maintaining the plan. A plan that

continues to contain provisions requiring

an employee to begin receiving distributions by April 1 following the calendar

year in which the employee attains age

70½ will not fail to satisfy section

401(a) merely because the employer

offers the option described in the preceding sentence prior to amending the

plan to include this option. Thus, if

employees (other than 5-percent owners)

who attained age 70½ in 1996 and did

not retire from employment with the

employer maintaining the plan by the

end of 1996 are offered the opportunity

to make an election to defer commencement of benefits rather than to begin

receiving benefits from the plan by

April 1, 1997, the plan will not fail to

satisfy section 401(a) merely because

the plan has not yet been amended to

provide for this election.

Future guidance will provide that an

employer that offers this option under a

plan must amend the plan retroactively,

no later than the date specified in that

guidance, to provide for the option. The

retroactive plan amendment will have to

conform the plan to its pre-amendment

operation regarding the option to defer

commencement of benefits. The date by

which a plan providing for this option

must be retroactively amended will not

be earlier than 90 days after the future

guidance is published and in no event

will be earlier than January 1, 1998.

This announcement also applies to an

employer that has adopted a master or

prototype or a regional prototype plan.

Such an employer should note that if a

conforming amendment is not an available option under the sponsor’s prototype plan document, the required

amendment may result in the loss of

prototype status.

ELECTIONS TO STOP RECEIVING

DISTRIBUTIONS

This announcement does not address

the conditions under which employers

may offer employees who have attained

age 70½ and have begun to receive

distributions under a plan an election to

stop receiving distributions until a date

no later than April 1 of the calendar

year following retirement. Employers

are cautioned that, under certain circumstances, an election to stop receiving

distributions may violate the qualification requirements under section 401(a),

such as sections 401(a)(11) and 417

(relating to participant and spousal consent, joint and survivor annuity requirements, and related matters). Future guidance will address the conditions under

which these types of elections may be

made and the permitted timing of related plan amendments.

1997–11

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 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

Vlymen, Neal Van

Lombardi, Theresa

Orfall, Warren

San Diego, CA

Livonia, MI

Hood River, OR

CPA

Indefinite from November 1, 1996

November 1, 1996 to October 31, 1998

November 1, 1996 to June 30, 1997

Oberman, Joseph

Gazzola, Frank

Tumminello, Anthony G.

Highland Park, IL

N. Mankato, MN

St. Louis, MO

CPA

Attorney

December 1, 1996 to August 31, 1997

December 1, 1996 to November 30, 1997

December 17, 1996 to June 16, 1997

Heffelfinger, Harry N.

Zintl Jr., Ernst J.

Alms, William R.

Smith, Arthur L.

DeGroote Sr., Kevin J.

Oliveri, Robert

Buffalo Grove, IL

Newport, MN

Lake Forest, CA

Athens, GA

Mesa, AZ

Bensalem, PA

CPA

December 20, 1996 to June 19, 1998

December 23, 1996 to December 22, 1997

January 1, 1997 to March 31, 1997

January 1, 1997 to December 31, 1997

January 1, 1997 to October 31, 1997

January 1, 1997 to December 31, 1997

Davies, Preston S.

Elbert, David L.

Deerfield, IL

Franktown, CO

CPA

January 15, 1997 to December 14, 1997

Indefinite from January 21, 1997

Smith Jr., Phillip M.

Pennington, Richard A.

Tameron, Joseph A.

Kalb, Mary C.

Pritchard, John J.

Long Beach, CA

Vandergrift, PA

Chandler, AZ

Kearny, NE

San Diego, CA

Attorney

CPA

Enrolled Agent

February 1, 1997 to March 31, 1997

February 1, 1997 to January 31, 2000

February 1, 1997 to September 30, 1998

February 1, 1997 to March 31, 1997

Garrett, Richard

Englert, Larry R.

Torrance, GA

Eaton, OH

Enrolled Agent

CPA

March 1, 1997 to May 30, 1997

April 1, 1997 to May 30, 1997

Section 7428(c) Validation of

Certain Contributions Made During

Pendency of Declaratory Judgment

Proceedings

This announcement serves notice to

potential donors that the organization

listed below has recently filed a timely

declaratory judgment suit under section

7428 of the Code, challenging revocation of its status as an eligible donee

under section 170(c)(2).

Protection under section 7428(c) of

the Code begins on the date that the

notice of revocation is published in the

Internal Revenue Bulletin and ends on

the date on which a court first deter-

mines that an organization is not described in section 170(c)(2), as more

particularly set forth in section

7428(c)(1). In the case of individual

contributors, the maximum amount of

contributions protected during this period is limited to $1,000.00, with a

husband and wife being treated as one

contributor. This protection 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 the revocation.

This protection also applies (but without

limitation as to amount) to organizations

described in section 170(c)(2) which are

exempt from tax under section 501(a). If

the organization ultimately prevails in

its declaratory judgment suit, deductibility of contributions would be subject to

the normal limitations set forth under

section 170.

Society of Separationists, Inc.

Austin, TX

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

Abbreviations

The following abbreviations in current use and

formerly used will appear in material published in

the Bulletin.

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.

ER—Employer.

PR—Partner.

ERISA—Employee Retirement Income Security Act.

EX—Executor.

F—Fiduciary.

PRS—Partnership.

PTE—Prohibited Transaction Exemption.

Pub. L.—Public Law.

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.

FC—Foreign Country.

FICA—Federal Insurance Contribution Act.

Del. Order—Delegation Order.

M—Minor.

DISC—Domestic International Sales Corporation.

Nonacq.—Nonacquiescence.

DR—Donor.

O—Organization.

E—Estate.

P—Parent Corporation.

X—Corporation.

EE—Employee.

PHC—Personal Holding Company.

Y—Corporation.

E.O.—Executive Order.

PO—Possession of the U.S.

Z—Corporation.

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.

REIT—Real Estate Investment Trust.

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.

I.R.B.—Internal Revenue Bulletin.

TFR—Transferor.

LE—Lessee.

T.I.R.—Technical Information Release.

LP—Limited Partner.

TP—Taxpayer.

LR—Lessor.

TR—Trust.

TT—Trustee.

U.S.C.—United States Code.

Numerical Finding List1

Bulletin 1997–1 through 1997–10

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

97–6, 1997–4 I.R.B. 11

97–7, 1997–4 I.R.B. 12

97–8, 1997–4 I.R.B. 12

97–9, 1997–5 I.R.B. 27

97–10, 1997–10 I.R.B. 64

97–11, 1997–6 I.R.B. 19

97–12, 1997–7 I.R.B. 55

97–13, 1997–8 I.R.B. 38

97–14, 1997–8 I.R.B. 38

97–15, 1997–9 I.R.B. 23

97–16, 1997–9 I.R.B. 23

97–17, 1997–9 I.R.B. 23

97–18, 1997–10 I.R.B. 67

97–19, 1997–10 I.R.B. 68

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

97–8, 1997–4 I.R.B. 7

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

97–13, 1997–6 I.R.B. 13

97–14, 1997–8 I.R.B. 23

97–15, 1997–8 I.R.B. 23

97–16, 1997–9 I.R.B. 15

97–17, 1997–10 I.R.B. 34

97–18, 1997–10 I.R.B. 35

97–19, 1997–10 I.R.B. 40

97–20, 1997–10 I.R.B. 52

Proposed Regulations:

REG–209040–88, 1997–7 I.R.B. 34

REG–209494–90, 1997–8 I.R.B. 24

REG–208172–91, 1997–10 I.R.B. 59

REG–209672–93, 1997–6 I.R.B. 15

REG–209762–95, 1997–3 I.R.B. 12

REG–209817–96, 1997–7 I.R.B. 41

REG–209828–96, 1997–6 I.R.B. 15

REG–209834–96, 1997–4 I.R.B. 9

REG–209839–96, 1997–8 I.R.B. 26

REG–242996–96, 1997–9 I.R.B. 18

REG–246018–96, 1997–8 I.R.B. 30

REG–247678–96, 1997–6 I.R.B. 17

REG–247862–96, 1997–8 I.R.B. 32

REG–248770–96, 1997–8 I.R.B. 33

REG–249819–96, 1997–7 I.R.B. 50

REG–252231–96, 1997–7 I.R.B. 52

REG–252233–96, 1997–9 I.R.B. 19

Revenue Procedures—Continued

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

97–11, 1997–6 I.R.B. 13

97–12, 1997–4 I.R.B. 7

97–13, 1997–5 I.R.B. 18

97–14, 1997–5 I.R.B. 20

97–15, 1997–5 I.R.B. 21

97–16, 1997–5 I.R.B. 25

97–17, 1997–9 I.R.B. 15

97–18, 1997–10 I.R.B. 53

97–19, 1997–10 I.R.B. 55

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

97–5, 1997–4 I.R.B. 5

97–6, 1997–4 I.R.B. 4

97–7, 1997–5 I.R.B. 14

97–8, 1997–7 I.R.B. 4

97–9, 1997–9 I.R.B. 4

97–10, 1997–10 I.R.B. 31

97–11, 1997–10 I.R.B. 5

Social Security Domestic Coverage Threshold

1997–9, I.R.B. 17

Treasury Decisions:

8688, 1997–3 I.R.B. 7

8689, 1997–3 I.R.B. 9

8690, 1997–5 I.R.B. 5

8691, 1997–5 I.R.B. 16

8692, 1997–3 I.R.B. 4

8693, 1997–6 I.R.B. 9

8694, 1997–6 I.R.B. 11

8695, 1997–4 I.R.B. 5

8696, 1997–6 I.R.B. 4

8697, 1997–2 I.R.B. 11

8698, 1997–7 I.R.B. 29

8699, 1997–6 I.R.B. 4

8700, 1997–7 I.R.B. 5

8701, 1997–7 I.R.B. 23

8702, 1997–8 I.R.B. 4

8703, 1997–8 I.R.B. 18

8704, 1997–8 I.R.B. 12

8705, 1997–8 I.R.B. 16

8706, 1997–9 I.R.B. 11

8707, 1997–7 I.R.B. 17

8708, 1997–10 I.R.B. 14

8709, 1997–9 I.R.B. 5

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

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 1997–10

*Denotes entry since last publication

Revenue Procedures:

66–3

Modified by

97–11, 1997–6 I.R.B. 13

87–21

Modified by

97–11, 1997–6 I.R.B. 13

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

94–52

Revoked by

97–11, 1997–6 I.R.B. 13

Revenue Rulings—Continued

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

96–43

Superseded by

97–3, 1997–1 I.R.B. 84

96–56

Superseded by

97–3, 1997–1 I.R.B. 84

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:

70–480

Revoked by

97–6, 1997–4 I.R.B. 4

72–527

Obsoleted by

8704, 1997–8 I.R.B. 12

74–59

Revoked by

8708, 1997–10 I.R.B. 14

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.