Internal Revenue Bulletin 1997-51 (PDF rendition): IRS Notices

Preserve advance releases and the authoritative Internal Revenue Bulletin rendition; directory timestamps are file-publication metadata, not legal effective dates. HTML bulletins begin June 2003; earlier available issues require full PDF parsing. Whole bulletin rendition: numbered items are identified below; other legal material and publisher context remain included. This is not a new standalone advance release.

INCOME TAX
Rev. Proc. 97–55, page 22.
Advance rulings on production payments.This proce-
dure sets forth the conditions under which the Service will
consider issuing an advance ruling that a right to mineral is a
production payment as defined in section 1.636–3(a) of the
Income Tax Regulations.
EMPLOYEE PLANS
T.D. 8738, page 4.
REG–243025–96, page 25.
Temporary and proposed regulations under section 125 of
the Code provide guidance on the circumstances under
which a cafeteria plan participant may revoke an existing
election and make a new election during a period of cover-
age.
Notice 97–74, page 18.
Weighted average interest rate update.Guidelines are
set for determining for December 1997, the weighted aver-
age interest rate and the resulting permissible range of in-
terest rates used to calculate current liability for purposes of
the full funding limitation of section 412(c)(7) of the Code as
amended by the Omnibus Budget Reconciliation Act of 1987
and by the Uruguay Round Agreements Act (GATT).
Notice 97–75, page 18.
Minimum distributions; age 70
1
⁄
2
; SBJPA.This notice
sets forth additional guidance with respect to the amend-
ments to the minimum distribution rules of section 401(a)(9)
of the Code made by section 1404 of the Small Business
Job Protection Act of 1996.
EXEMPT ORGANIZATIONS
Announcement 97–123, page 28.
A list is provided of organizations now classified as private
foundations.
ADMINISTRATIVE
T.D. 8737, page 11.
REG–252936–96, page 27.
Final, temporary, and proposed regulations under section
7623 of the Code relate to the rewards for information regard-
ing violations of the Internal Revenue laws.
T.D. 8739, page 8.
REG–103330–97, page 24.
Final, temporary, and proposed regulations under section
6109 of the Code relate to the IRS Adoption Taxpayer
Identification Number. A public hearing on the proposed reg-
ulations will be held on March 4, 1998.
Notice 97–65, page 14.
Due diligence; paid preparers; earned income credit.
Paid preparers of 1997 federal income tax returns and
claims for refund that involve the Earned Income Tax Credit
are informed of the due diligence requirements that apply
for purposes of the penalty under section 6695(g) of the
Code, as added by the Taxpayer Relief Act of 1997.
Notice 97–73, page 16.
Information reporting; Hope Scholarship Credit; Life-
time Learning Credit. Educational institutions are in-
formed of the information reporting requirements for 1998
under section 6050S of the Code, as added by the Taxpayer
Relief Act of 1997, in connection with the Hope Scholarship
Credit and Lifetime Learning Credit.
Internal Revenue
bbuulllleettiinn
Bulletin No. 1997–51
December 22, 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.
Department of the Treasury
Internal Revenue Service
Finding Lists begin on page 31.

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 prod-
ucts and services; and perform in a manner warranting
the highest degree of public confidence in our integrity, effi-
ciency, and fairness.
2
Statement of Principles
of Internal Revenue
Tax Administration
The function of the Internal Revenue Service is to adminis-
ter 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 provi-
sions 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.
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 “protect-
ing the revenue.” The revenue is properly protected only
when we ascertain and apply the true meaning of the statute.
The Service also has the responsibility of applying and
administering the law in a reasonable, practical manner.
Issues should only be raised by examining officers when
they have merit, never arbitrarily or for trading purposes.
At the same time, the examining officer should never hesi-
tate 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.
Administration should be both reasonable and vigorous. It
should be conducted with as little delay as possible and
with great courtesy and considerateness. It should never
try to overreach, and should be reasonable within the
bounds of law and sound administration. It should, howev-
er, be vigorous in requiring compliance with law and it
should be relentless in its attack on unreal tax devices and
fraud.

The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing offi-
cial 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 consoli-
dated semiannually into Cumulative Bulletins, which are sold
on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive 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 other-
wise indicated. Procedures relating solely to matters of in-
ternal management are not published; however, statements
of internal practices and procedures that affect the rights
and duties of taxpayers are published.
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.
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 pub-
lished rulings and procedures, the effect of subsequent leg-
islation, regulations, court decisions, rulings, and proce-
dures must be considered, and Service personnel and oth-
ers concerned are cautioned against reaching the same con-
clusions 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.
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 Sub-
parts. Also included in this part are Bank Secrecy Act Admin-
istrative Rulings. Bank Secrecy Act Administrative Rulings
are issued by the Department of the Treasury’s Office of the
Assistant Secretary (Enforcement).
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 Cumu-
lative Bulletins.
The first Bulletin for each month includes a cumulative index
for the matters published during the preceding months.
These monthly indexes are cumulated on a quarterly and
semiannual basis, and are published in the first Bulletin of the
succeeding quarterly and semiannual period, respectively.
3
Introduction
The contents of this publication are not copyrighted and may be reprinted freely.A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S.Government Printing Office, Washington, DC 20402.

December 22, 199741997–51 I.R.B.
Section 25A.—Hope and
Lifetime Learning Credits
What information reporting requirements apply
to educational institutions for 1998 under § 6050S of
the Code, as added by the Taxpayer Relief Act of
1997, in connection with the Hope Scholarship
Credit and the Lifetime Learning Credit. See Notice
97–73, page 16.
Section 125.—Cafeteria Plans
26 CFR 1.125–4T: Permitted election changes
(temporary).
T.D. 8738
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
Tax Treatment of Cafeteria
Plans
AGENCY: Internal Revenue Service
(IRS), Treasury
ACTION: Temporary regulations
SUMMARY: This document contains
temporary regulations that clarify the cir-
cumstances under which an employer
may permit a cafeteria plan participant to
revoke an existing election and make a
new election during a period of coverage.
The text of these temporary regulations
also serves as the text of the proposed reg-
ulations set forth in the REG–243025–96,
page 25.
DATES: These regulations are effective
on December 31, 1998.
FOR FURTHER INFORMATION CON-
TACT: Sharon Cohen, (202) 622-6080
(not a toll-free number).
SUPPLEMENTARYINFORMATION:
Background
This document contains amendments to
the Income Tax Regulations (26 CFR part
1) under section 125. These temporary
regulations provide guidance relating to
the circumstances under which a cafeteria
plan participant may revoke an existing
election and make a new election during a
period of coverage.
Explanation of Provisions
A“cafeteria plan” under section 125 al-
lows an employee to choose between cash
and certain nontaxable benefits, such as
accident or health coverage. Section 125
generally permits the employee to choose
the nontaxable benefit (rather than the
available cash) without the employee hav-
ing to include the available cash in gross
income. The temporary regulations:
• Permit a cafeteria plan to allow an
employee, during a plan year, to
change his or her health coverage
election to conform with the new
special enrollment rights provided
under the Health Insurance Portabil-
ity and Accountability Act of 1996
(HIPAA), and
• Permit a cafeteria plan to allow a
change in coverage election for a va-
riety of other changes in status.
These regulations are designed to provide
clear, administrable guidelines for deter-
mining when changes can be made in
cafeteria plan elections during a plan year.
These regulations are effective for plan
years beginning after December 31, 1998.
However, taxpayers may rely on the guid-
ance in the temporary regulations (or on
the existing proposed regulations) for
prior periods.
Summary
Section 125 generally provides that an
employee in a cafeteria plan will not have
an amount included in gross income
solely because the employee may choose
among two or more benefits consisting of
cash and “qualified benefits.” Aqualified
benefit generally is any benefit that is ex-
cludable from gross income because of an
express provision of the Code, including
coverage under an employer-provided ac-
cident or health plan under sections 105
and 106, group-term life insurance under
section 79, elective contributions under a
qualified cash or deferred arrangement
within the meaning of section 401(k), de-
pendent care assistance under section
129, and adoption assistance under sec-
tion 137.
1
Under §§1.125–1 and 1.125–2
of the existing proposed regulations,
2
an
employee is permitted to make an election
between cash and qualified benefits be-
fore the beginning of the period of cover-
age (which generally is the plan year of
the cafeteria plan); changes in the election
during the plan year are permitted only in
limited circumstances.
The temporary regulations clarify the
circumstances under which a cafeteria
plan may permit an employee to change
his or her cafeteria plan election with re-
spect to accident or health coverage or
group-term life insurance coverage during
the plan year. Proposed regulations are
also being published that cross-reference
these temporary regulations, and that re-
place the change in family status provi-
sions in Q&A–6 of proposed §1.125–2
with respect to accident or health plans
and group-term life insurance.
HIPAASpecial Enrollment Rules.
The temporary regulations conform the
cafeteria plan rules to the new special en-
rollment rights provided under HIPAA
(which generally require group health plans
to permit individuals to be enrolled for cov-
erage following the loss of other health
coverage, or if a person becomes the spouse
or dependent of an employee through birth,
marriage, adoption, or placement for adop-
tion).
3
Under the regulations, if an em-
ployee has a right to enroll in an employer’s
group health plan or to add coverage for a
family member under HIPAA, the em-
ployee can make a conforming election
under the cafeteria plan. This allows re-
quired contributions for such health cover-
age to be paid on a pre-tax basis.
Changes in Status.
The temporary regulations include
rules for other events, called “changes in
Part I. Rulings and Decisions Under the Internal Revenue Code of 1986
1
The following are not qualified benefits: prod-
ucts advertised, marketed, or offered as long-term
care insurance; medical savings accounts under sec-
tion 106(b); qualified scholarships under section
117; educational assistance programs under section
127; and fringe benefits under section 132.
2
Published as proposed rules at 49 FR 19321
(May 7, 1984) and 54 FR 9460 (March 7, 1989), re-
spectively.
3
See section 9801(f). Similar provisions are set
forth in section 701(f) of the Employee Retirement
Income Security Act of 1974 (ERISA), and section
2701(f) of the Public Health Service Act. Regula-
tions under these provisions are set forth in Treas.
Reg. §54.9801–6T; 29 C.F.R. §2590.701–6; and 45
C.F.R. §146.117.

status,” under which a cafeteria plan may
allow an employee to change his or her
election during the plan year. The events
that constitute changes in status under the
regulations are changes in legal marital
status, number of dependents, employ-
ment status, work schedule, and residence
or worksite, and cases where the depen-
dent satisfies or ceases to satisfy the re-
quirements for unmarried dependents.
The regulations permit a cafeteria plan
to allow a change of election during the
plan year if a change in status occurs that
affects eligibility for coverage and the
election change corresponds with the ef-
fect on eligibility. For example, if under
the terms of an accident or health plan a
child of an employee loses eligibility for
coverage upon graduation from college,
the cafeteria plan may allow the employee
to cease payment for the child’s coverage
when the child graduates and coverage
ceases.
Certain of these changes in status (mar-
riage, birth, adoption, and placement for
adoption) overlap with the special enroll-
ment events under HIPAA. The regula-
tions include examples that clarify the re-
lationship between HIPAA’s special
enrollment rights and these change in sta-
tus rules. In addition, if a change in status
occurs that entitles an employee or family
member to “COBRA” continuation cov-
erage (or coverage under a similar State
program) with respect to the employer’s
plan, the regulations permit payments for
the continuation coverage to be made on a
pre-tax basis under a cafeteria plan.
Other Events.
The regulations allow a corresponding
cafeteria plan change if a plan receives a
court order, such as a qualified medical
child support order under section 609 of
ERISA. In addition, if an employee,
spouse, or dependent becomes entitled to
Medicare or Medicaid, a cafeteria plan
can permit a corresponding election
change.
Elective Contributions Under a Qualified
Cash or Deferred Arrangement.
The temporary regulations, in provi-
sions similar to those of the existing pro-
posed regulations (proposed §1.125–2(f)),
make clear that the rules of section 401(k)
and (m), rather than the rules in these
temporary regulations (which apply to
other qualified benefits), govern changes
in elections under a qualified cash or de-
ferred arrangement (within the meaning
of section 401(k)) or with respect to em-
ployee after-tax contributions subject to
section 401(m).
Scope of Temporary Regulations and Re-
liance on Proposed Regulations.
The temporary regulations do not ad-
dress certain provisions concerning cafete-
ria plan election changes that are included
in the existing proposed regulations.
Guidance on these provisions is reserved
at paragraphs (f)–(i) of the temporary reg-
ulations.
For example, future guidance under the
significant cost change provision (re-
served at paragraph (g) of the temporary
regulations), rather than the change in sta-
tus rules, would determine whether an
employee who switches from full-time to
part-time employment and who remains
eligible under the employer’s health plan
could make an election change if the part-
time employee is required to pay signifi-
cantly higher amounts for the coverage.
The temporary regulations also reserve
guidance with respect to provisions set
forth in the existing proposed regulations
that permit an election change in the case
of a significant change in coverage
(which includes a significant change in
the health coverage of the employee or
spouse attributable to the spouse’s em-
ployment
4
). Other matters not addressed
in the temporary regulations include the
application of the cafeteria plan election
change rules to qualified benefits other
than accident or health coverage and
group-term life insurance coverage (for
example, dependent care assistance pro-
grams), and special rules concerning
changes in elections by employees taking
leave under the Family and Medical
Leave Act of 1993 (Public Law 103-3)
5
.
Pending further guidance, taxpayers can
continue to rely on the existing proposed
regulations
6
concerning these and other
matters not addressed in the temporary
regulations.
7
The temporary regulations are effective
for plan years beginning after December
31, 1998. Prior to that date, however, tax-
payers can rely on the guidance provided
in the temporary regulations (as well as
on the guidance provided in the existing
proposed regulations that relates to mat-
ters addressed in the temporary regula-
tions) in order to comply with the provi-
sions of section 125.
Special Analyses
It has been determined that this Trea-
sury Decision is not a significant regula-
tory 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 Pro-
cedure Act (5 U.S.C. chapter 5) do not
apply to these regulations, and because the
regulation does not impose a collection of
information on small entities, the Regula-
tory Flexibility Act (5 U.S.C. chapter 6)
does not apply. Pursuant to section
7805(f) of the Internal Revenue Code,
these temporary regulations will be sub-
mitted to the Chief Counsel for Advocacy
of the Small Business Administration for
comment on its impact on small business.
Drafting Information
The principal authors of these regula-
tions are Catherine Fuller and Sharon
Cohen, Office of the Associate Chief
Counsel (Employee Benefits and Exempt
Organizations). However, other person-
nel from the IRS and Treasury Depart-
ment participated in their development.
* * * * *
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 1 is amended
as follows:
PART1—INCOME TAXES
Paragraph 1. The authority for part 1
continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. §1.125–4Tis added to read as
follows:
1997–51 I.R.B.5December 22, 1997
4
See the second-to-last sentence in Q&A-6(c) of
proposed §1.125–2.
5
See §1.125–3, published as a proposed rule at 60
FR 66229 (December 21, 1995).
6
See also §1.125–2T, published at 51 FR 4312
(January 29, 1986), which describes benefits that
may be offered under a cafeteria plan.
7
See the preambles to proposed §§1.125–1 and
1.125–2 and Q&A-8 of proposed §1.125–3.

§1.125–4TPermitted election changes
(temporary).
(a) Election changes.Acafeteria plan
may permit an employee to revoke an
election during a period of coverage and
to make a new election only as provided
in paragraphs (b) through (i) of this sec-
tion. See paragraph (j) of this section for
special provisions relating to qualified
cash or deferred arrangements.
(b) Special enrollment rights.Acafe-
teria plan may permit an employee to re-
voke an election for accident or health
coverage during a period of coverage and
make a new election that corresponds
with the special enrollment rights pro-
vided in section 9801(f), whether or not
the change in election is permitted under
paragraph (c) of this section.
(c) Changes in status for accident or
health coverage and group-term life.(1)
In general.Acafeteria plan may permit
an employee to revoke an election for ac-
cident or health coverage or group-term
life insurance coverage during a period of
coverage and make a new election for the
remaining portion of the period if, under
the facts and circumstances—
(i) Achange in status occurs; and
(ii) The election change satisfies the
consistency requirement in paragraph
(c)(3) of this section (consistency rule for
accident or health coverage) or (c)(4) of
this section (consistency rule for group-
term life insurance coverage).
(2) Change in status events.The fol-
lowing events are changes in status for
purposes of this paragraph (c):
(i) Legal marital status.Events that
change an employee’s legal marital status,
including marriage, death of spouse, di-
vorce, legal separation, or annulment;
(ii) Number of dependents.Events that
change an employee’s number of depen-
dents (as defined in section 152), includ-
ing birth, adoption, placement for adop-
tion (as defined in regulations under
section 9801), or death of a dependent;
(iii) Employment status.Atermination
or commencement of employment by the
employee, spouse, or dependent;
(iv) Work schedule.Areduction or in-
crease in hours of employment by the em-
ployee, spouse, or dependent, including a
switch between part-time and full-time, a
strike or lockout, or commencement or re-
turn from an unpaid leave of absence;
(v) Dependent satisfies or ceases to
satisfy the requirements for unmarried de-
pendents. An event that causes an em-
ployee’s dependent to satisfy or cease to
satisfy the requirements for coverage due
to attainment of age, student status, or any
similar circumstance as provided in the
accident or health plan under which the
employee receives coverage; and
(vi) Residence or Worksite.Achange
in the place of residence or work of the
employee, spouse, or dependent.
(3) Consistency rule for accident or
health coverage.(i) General rule.(A)
An employee s revocation of a cafeteria
plan election during a period of coverage
and new election for the remaining por-
tion of the period (referred to below as an
“election change”) is consistent with a
change in status if, and only if —
(1) The change in status results in the
employee, spouse, or dependent gaining
or losing eligibility for accident or health
coverage under either the cafeteria plan or
an accident or health plan of the spouse’s
or dependent’s employer; and
(2) The election change corresponds
with that gain or loss of coverage.
(B) Achange in status results in an em-
ployee, spouse, or dependent gaining (or
losing) eligibility for coverage under a
plan only if the individual becomes eligi-
ble (or ineligible) to participate in the
plan. Acafeteria plan may treat an indi-
vidual as gaining (or losing) eligibility for
coverage if the individual becomes eligi-
ble (or ineligible) for a particular benefit
package option under a plan (e.g., a
change in status results in an individual
becoming eligible for a managed care op-
tion or an indemnity option). If, as a result
of a change in status, the individual gains
eligibility for elective coverage under a
plan of the spouse’s or dependent’s em-
ployer, the consistency rule of this para-
graph (c)(3)(i) is satisfied only if the indi-
vidual elects the coverage under the
spouse’s or dependent’s employer. See the
Examples in paragraph (k) of this section
for illustrations of the consistency rule.
(ii) Exception for COBRA.Notwith-
standing paragraph (c)(3)(i) of this sec-
tion, if the employee, spouse, or depen-
dent becomes eligible for continuation
coverage under the employer’s group
health plan as provided in section 4980B
or any similar State law, the employee
may elect to increase payments under the
employer’s cafeteria plan in order to pay
for the continuation coverage.
(4) Consistency rule for group-term
life insurance coverage.Except as pro-
vided in this paragraph (c)(4), the provi-
sions of paragraph (c)(3)(i) of this section
apply to group-term life insurance cover-
age. In the case of marriage, birth, adop-
tion, or placement for adoption, a cafete-
ria plan can allow an election change to
increase (but not to reduce) the amount of
the employee’s life insurance coverage.
In the case of divorce, legal separation,
annulment, or death of a spouse or depen-
dent, a cafeteria plan may allow an elec-
tion change to reduce (but not to increase)
the amount of the employee s life insur-
ance coverage.
(d) Judgment, decree, or order.This
paragraph (d) applies to a judgment, de-
cree, or order (“order”) resulting from a
divorce, legal separation, annulment, or
change in legal custody (including a qual-
ified medical child support order defined
in section 609 of the Employee Retire-
ment Income Security Act of 1974) that
requires accident or health coverage for
an employee’s child. Notwithstanding the
provisions of paragraph (c) of this sec-
tion, a cafeteria plan may—
(1) Change the employee s election to
provide coverage for the child if the order
requires coverage under the employee’s
plan; or
(2) Permit the employee to make an
election change to cancel coverage for the
child if the order requires the former
spouse to provide coverage.
(e) Entitlement to Medicare or Medic-
aid.If an employee, spouse, or dependent
who is enrolled in an accident or health
plan of the employer becomes entitled to
coverage (i.e., enrolled) under Part Aor
Part B of Title XVIII of the Social Secu-
rity Act (Medicare) or Title XIX of the
Social Security Act (Medicaid), other
than coverage consisting solely of bene-
fits under section 1928 of the Social Secu-
rity Act (the program for distribution of
pediatric vaccines), a cafeteria plan may
permit the employee to make an election
change to cancel coverage of that em-
ployee, spouse or dependent under the ac-
cident or health plan.
(f) Changes in status for other quali-
fied benefits.[Reserved].
December 22, 199761997–51 I.R.B.

(g) Significant coverage or cost
changes.[Reserved].
(1) Employer’s plan.[Reserved].
(2) Plan of spouse’s or dependent’s
employer.[Reserved].
(h) Cessation of required contribu-
tions.[Reserved].
(i) Special requirements concerning
the Family and Medical Leave Act.[Re-
served].
(j) Elective contributions under a qual-
ified cash or deferred arrangement.The
provisions of this section do not apply
with respect to elective contributions
under a qualified cash or deferred
arrangement (within the meaning of sec-
tion 401(k)) or employee contributions
subject to section 401(m). Thus, a cafete-
ria plan may permit an employee to mod-
ify or revoke elections in accordance with
sections 401(k) and 401(m) and the regu-
lations thereunder.
(k) Examples.The following examples
illustrate the rules of this section. In each
case involving an accident or health plan,
assume that the plan is subject to section
9801(f) (providing for special enrollment
rights under certain group health plans).
Example 1.(i) Employer M provides health cov-
erage for its employees under which employees may
elect either employee-only coverage or family cov-
erage. M also maintains a calendar year cafeteria
plan under which qualified benefits, including health
coverage, are funded through salary reduction. M’s
employee, A, elects employee-only health coverage
before the beginning of the calendar year. During
the year, Aadopts a child, C. Within 30 days there-
after, Awants to revoke A’s election for employee-
only health coverage and obtain family health cover-
age, as of the date of C’s adoption. Asatisfies the
conditions for special enrollment of an employee
with a new dependent under section 9801(f)(2), so
that Amay enroll in family coverage under M’s acci-
dent or health plan in order to provide coverage for
C, effective as of the date of C’s adoption.
(ii) In this Example 1,M’s cafeteria plan may
permit Ato change the employee s salary reduction
election to family coverage for salary not yet cur-
rently available. The increased salary reduction
could reflect the cost of family coverage from the
date of adoption. (The adoption of C is also a
change in status, and the election of family cover-
age is consistent with that change in status. Thus,
under the change in status provisions of paragraph
(c) of this section, M’s cafeteria plan could permit A
to elect family coverage prospectively in order to
cover C for the remaining portion of the coverage
period.)
Example 2.(i) The employer plans and permis-
sible coverage are the same as in Example 1.Before
the beginning of the calendar year, Employee A
elects employee-only health coverage under M’s
cafeteria plan. Amarries B during the plan year. B’s
employer, N, offers health coverage to N’s employ-
ees, and, prior to the marriage, B had elected em-
ployee-only coverage. Awants to revoke the elec-
tion for employee-only coverage, and is considering
electing family health coverage under M’s plan or
obtaining family health coverage under N’s plan.
(ii) In this Example 2,A’s marriage to B is a
change in status. Two possible election changes by
Awould be consistent with the change in status: to
cover Aand B by electing family health coverage
under M’s plan, or to cancel coverage under M’s
plan (with B electing family health coverage under
N’s plan in order to cover Aand B). Thus, M’s cafe-
teria plan may permit Ato make either change in
election. (M’s cafeteria plan could also permit Ato
change A’s salary reduction election to reflect the
change to family coverage under M’s group health
plan in accordance with paragraph (b) of this section
because the marriage would also create special en-
rollment rights under section 9801(f), pursuant to
which an election of family coverage under M’s plan
would be required to be effective no later than the
first day of the first calendar month beginning after
the completed request for enrollment is received by
the plan.)
Example 3. (i) Employee G, a single parent,
elects family health coverage under a calendar year
cafeteria plan maintained by Employer O. G and
G’s 21-year old child, H, are covered under O’s
health plan. During the year, H graduates from col-
lege. Under the terms of the health plan, dependents
over the age of 19 must be full-time students to re-
ceive coverage. G wants to revoke G’s election for
family health coverage and obtain employee-only
coverage under O’s cafeteria plan.
(ii) In this Example 3,H’s loss of eligibility for
coverage under the terms of the health plan is a
change in status. Arevocation of G s election for
family coverage and new election of employee-only
coverage is consistent with the change in status.
Thus, O’s cafeteria plan may permit G to elect em-
ployee-only coverage.
Example 4.(i) Employee J is married to K and
they have one child, S. Acalendar year cafeteria
plan maintained by Employer Pallows employees to
elect no health coverage, employee-only coverage,
employee-plus-one-dependent coverage, or family
coverage. Under the plan, before the beginning of
the calendar year, J elects family health coverage for
J, K, and S. J and K divorce during the year and,
under the terms of Ps accident or health plan, K
loses eligibility for P’s health coverage. S does not
lose eligibility for health coverage under Ps plan
upon the divorce. J now wants to revoke J’s election
under the cafeteria plan and elect no coverage.
(ii) In this Example 4,the divorce is a change in
status. Achange in the cafeteria plan election to can-
cel health coverage for K is consistent with that
change in status. However, the divorce does not af-
fect J’s or S’s eligibility for health coverage. There-
fore, an election change to cancel J’s or S’s health
coverage is not consistent with the change in status.
The cafeteria plan, however, may permit J to elect
employee-plus-one-dependent health coverage.
Example 5.(i) The facts are the same as Exam-
ple 4,except that, before the beginning of the year,
Employee J elected employee-only health coverage
(rather than family coverage). Pursuant to J’s di-
vorce agreement with K, P’s health plan receives a
qualified medical child support order (as defined in
section 609 of the Employee Retirement Income Se-
curity Act) during the plan year. The order requires
P’s health plan to cover S.
(ii) In this Example 5,P’s cafeteria plan may
change J’s election from employee-only health cov-
erage to employee-plus-one-dependent coverage in
order to cover S.
Example 6.(i) Before the beginning of the cov-
erage period, Employee Lelects to participate in a
cafeteria plan maintained by L’s Employer, Q. How-
ever, in order to change the election during the cov-
erage period so as to cancel coverage, and by prior
understanding with Q, Lterminates employment and
resumes employment one week later.
(ii) In this Example 6,under the facts and circum-
stances, in which a principal purpose of the termina-
tion of employment was to alter the election and rein-
statement of employment was understood at the time
of termination, Ldoes not have a change in status.
However, L’s termination of employment would con-
stitute a change in status, permitting a cancellation of
coverage during the period of unemployment, if L’s
original cafeteria plan election was reinstated upon
resumption of employment (for example, because of
a cafeteria plan provision requiring an employee who
resumes employment within 30 days, without any
other intervening event that would permit a change in
election, to return to the election in effect prior to ter-
mination of employment).
Example 7.(i) Employer R maintains a calendar
year cafeteria plan under which full-time employees
may elect coverage under one of three benefit pack-
age options provided under an accident or health
plan: an indemnity option or either of two HMO op-
tions for employees that work in the respective ser-
vice areas of the two HMOs. Employee T, who
works in the service area of HMO #1, elects the
HMO #1 option. During the year, Tis transferred to
another work location which is outside the HMO #1
service area and inside the HMO #2 service area.
(ii) In this Example 7,the transfer is a change in
status and, under the consistency rule, the cafeteria
plan may permit Tto make an election change to ei-
ther the indemnity option or HMO #2, or to cancel
accident or health coverage.
Example 8.(i) Acalendar year cafeteria plan
maintained by Employer S allows employees to
elect coverage under an accident or health plan pro-
viding indemnity coverage and under a flexible
spending arrangement (FSA). Prior to the beginning
of the calendar year, Employee U elects employee-
only indemnity coverage, and coverage under the
FSAfor up to $600 of reimbursements for the year
to be funded by salary reduction contributions of
$600 during the year. U’s spouse, V, has employee-
only coverage under an accident or health plan
maintained by V’s employer. During the year, Vter-
minates employment and loses coverage under that
plan. U now wants to elect family coverage under
S’s accident or health plan and increase U’s FSA
election.
(ii) In this Example 8,V’s termination of employ-
ment is a change in status. The cafeteria plan may
permit U to elect family coverage under S’s accident
or health plan, and to increase U’s FSAcoverage.
Example 9. (i) Employer Tprovides group-term
life insurance coverage as described under section
79. Under T’s plan, an employee may elect life in-
surance coverage in an amount up to the lesser of his
or her salary or $50,000. Talso maintains a calendar
year cafeteria plan under which qualified benefits,
1997–51 I.R.B.7December 22, 1997

including the group-term life insurance coverage,
are funded through salary reduction. Before the be-
ginning of the calendar year, Employee Welects
$10,000 of life insurance coverage, with W’s
spouse, X, as the beneficiary. During the year, a
child is placed for adoption with Wand X. Wwants
to increase W’s election for life insurance coverage
to $50,000 (without changing the designation of X
as the beneficiary).
(ii) In this Example 9,the placement of a child
for adoption with Wis a change in status. The in-
crease in coverage is consistent with the change in
status. Thus, W’s cafeteria plan may permit Wto in-
crease W’s life insurance coverage.
(l) Effective Date.This section is ap-
plicable for plan years beginning after
December 31, 1998.
Michael P. Dolan,
Acting Commissioner of
Internal Revenue.
Donald C. Lubick,
Assistant Secretary of
the Treasury.
(Filed by the Office of the Federal Register on No-
vember 6, 1997, 8:45 a.m., and published in the
issue of the Federal Register for November 7, 1997,
62 F.R. 60165)
Section 6109.—Identifying
Numbers
26 CFR 301.6109–1: Identifying numbers.
T.D. 8739
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 301 and 602
IRS Adoption Taxpayer
Identification Numbers
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final and temporary regula-
tions.
SUMMARY: This document contains
final and temporary regulations under
section 6109 relating to taxpayer identify-
ing numbers. The final regulations in-
clude a cross reference to the temporary
regulations, which provide rules for ob-
taining and using IRS adoption taxpayer
identification numbers. The temporary
regulations assist individuals who are in
the process of adopting children and wish
to claim certain tax benefits with respect
to those children. The text of these tem-
porary regulations also serves as the text
of REG–103330–97, page 24.
DATES: These regulations are effective
November 24, 1997.
FOR FURTHER INFORMATION CON-
TACT: Michael L. Gompertz, (202) 622-
4910 (not a toll-free number).
SUPPLEMENTARYINFORMATION:
Paperwork Reduction Act
These final and temporary regulations
are being issued without prior notice and
public procedure pursuant to the Adminis-
trative Procedure Act (5 U.S.C. 553). For
this reason, the collection of information
contained in these regulations has been
reviewed and, pending receipt and evalu-
ation of public comments, approved by
the Office of Management and Budget
under control number 1545–1564. Re-
sponses to this collection of information
are required to obtain a taxpayer identifi-
cation number.
For further information concerning this
collection of information, and where to
submit comments on the collection of in-
formation and the accuracy of the esti-
mated burden, and suggestions for reduc-
ing this burden, please refer to the
preamble to the cross-referencing notice
of REG–103330–97.
An agency may not conduct or sponsor,
and a person is not required to respond to,
a collection of information unless the col-
lection of information displays a valid
control number.
Books or records relating to this collec-
tion of information must be retained as
long as their contents may become mater-
ial in the administration of any internal
revenue law. Generally, tax returns and
tax return information are confidential, as
required by 26 U.S.C. 6103.
Background
This document contains amendments to
the Regulations on Procedure and Admin-
istration (26 CFR Part 301) relating to
identifying numbers under section 6109.
Section 6109(a)(1) provides that any per-
son required to make a return, statement,
or other document must include in the
document such identifying number as
may be prescribed for securing proper
identification of the person. Section
6109(a)(2) provides that any person with
respect to whom a return, statement, or
other document is required to be made by
another person or whose identifying num-
ber must be shown on a return of another
person, must furnish to the other person
such identifying number as may be pre-
scribed for securing the person’s proper
identification. Section 6109(d) provides
that an individual must use a social secu-
rity number as the individual’s taxpayer
identification number unless the Secretary
prescribes otherwise by regulations.
Currently, there are three types of tax-
payer identification numbers (TINs) as-
signed to individuals: (1) a social security
number (SSN), (2) an IRS individual tax-
payer identification number (ITIN) as-
signed to an alien individual who is ineli-
gible to obtain an SSN, and (3) an
employer identification number (EIN) as-
signed to an individual who is engaged in
a trade or business as a sole proprietor.
An SSN is assigned by the Social Security
Administration. An ITIN or an EIN is as-
signed by the IRS.
Section 1615 of the Small Business Job
Protection Act of 1996 (Public Law 104–
188, 110 Stat. 1755, 1853 (1996)) added
sections 21(e)(10) and 151(e) to deny the
dependent care credit and the deduction
for the dependency exemption if the TIN
(as defined by section 6109 and the regu-
lations thereunder) of the dependent is not
included on the return claiming the credit
or deduction. Sections 21(e)(10) and
151(e) generally are effective for tax re-
turns due (without regard to extensions)
after September 18, 1996.
In addition, section 101 of the Taxpayer
Relief Act of 1997 (Public Law 105–34,
111 Stat. 788, 796 (1997)) added section
24 to the Code to provide a child tax
credit for each qualifying child, effective
for taxable years beginning after Decem-
ber 31, 1997. Pursuant to section 24(e),
the taxpayer will be denied the credit if
the qualifying child’s TIN is not included
on the return claiming the credit.
In most cases, taxpayers can meet the
TIN requirements of sections 21, 24, and
151 by including a child’s SSN on the re-
turn claiming the credit or deduction. In
the case of adoption, however, a child
may not have an SSN or, if the child does
December 22, 199781997–51 I.R.B.

have an SSN, the taxpayer adopting the
child (the prospective adoptive parent)
may be unable to obtain the SSN because
of confidentiality laws. See H.R. Rep.
No. 542, 104th Cong., 2d Sess. 20 (1996);
S. Rep. No. 412, 103d Cong., 2d Sess.
163 (1994).
Explanation of Provisions
These temporary regulations authorize
the IRS to assign a new form of taxpayer
identification number, the IRS adoption
taxpayer identification number (ATIN), to
a child who is in the process of being
adopted (a prospective adoptive child).
The regulations are effective for income
tax returns due (without regard to exten-
sion) on or after April 15, 1998.
The temporary regulations provide that
an ATIN is a temporary taxpayer identifi-
cation number that expires two years after
the date of issuance. However, upon ap-
plication, the IRS may grant an extension
of the ATIN. Aprospective adoptive par-
ent may apply for an ATIN for a child if:
(1) the prospective adoptive parent is eli-
gible to claim a personal exemption under
section 151 with respect to the child; (2)
the child is placed with the prospective
adoptive parent for legal adoption by an
authorized placement agency (as defined
in §1.152–2(c)); (3) the Social Security
Administration will not assign the
prospective adoptive parent an SSN for
the child (for example, because the adop-
tion is not final); and (4) the prospective
adoptive parent has used all reasonable
means to obtain the child’s assigned SSN,
if any, but has been unsuccessful in ob-
taining this number (for example, because
the birth parent who obtained the number
is not legally required to disclose the num-
ber to the prospective adoptive parent).
The temporary regulations provide that
an application for an ATIN must be made
on the Form W–7A, Application for Tax-
payer Identification Number for Pending
Adoptions,or such other form prescribed
by the IRS. The ATIN application must
be accompanied by documentary evi-
dence to establish that an authorized
placement agency placed the child in the
prospective adoptive parent’s household
for legal adoption by the parent. Such
documentary evidence may include: a
copy of a placement agreement entered
into between the prospective adoptive par-
ent and an authorized placement agency;
an affidavit signed by the adoption attor-
ney or government official who placed the
child for legal adoption pursuant to state
law; a document authorizing the release of
a newborn child from a hospital to a
prospective adoptive parent for adoption;
or a court document ordering or approving
the placement of a child for adoption.
When an adoption becomes final, the
adoptive parent must apply for an SSN for
the child. Once obtained, the SSN, rather
than the ATIN, must be used as the child’s
TIN on all future returns, statements, or
other documents required by the Code.
An ATIN may be used by the prospec-
tive adoptive parents to meet the TIN re-
quirements of sections 21(e)(10), 24(e),
and 151(e), relating to the dependent care
credit, the child tax credit, and the depen-
dency exemption, respectively. Also, as
may be prescribed by forms, instructions,
or otherwise, an ATIN may be used to
meet the TIN requirements under sections
23(f) and 137(e), relating to qualified
adoption expenses. The ATIN may not be
used to meet the TIN requirement of sec-
tion 32. See section 32(l).
The ATIN procedures do not apply to
adoptions involving alien children. Gener-
ally, the Social Security Administration
will assign an SSN to an alien child if all
the requirements for assigning a number
are met. When the Social Security Admin-
istration cannot assign an SSN, the child
generally will be eligible for an ITIN.
In addition to adoptions involving alien
children, there are two other types of
adoptions to which the ATIN procedures
may not apply. If the child placed for
adoption is a foster child or is otherwise
in the custody of a government agency or
court (because, for example, the birth par-
ents’rights were previously terminated
for abuse or neglect), the government
agency or court will generally obtain an
SSN for the child and can make the SSN
available to the prospective adoptive par-
ent. Also, the prospective adoptive parent
may be able to obtain the child’s SSN
from the birth parents (or other person) in
the case of an adoption by the child’s rela-
tives or an adoption in which the adoptive
parent and birth parent share information
about the child and themselves.
Taxpayers are invited to comment on
two issues partially addressed by the tem-
porary regulations. First, comments are
requested regarding what types of docu-
ments are available to establish that a
child has been placed in the prospective
adoptive parent’s household for legal
adoption. Also, comments are requested
as to whether certain types of adoptions
(in addition to foreign adoptions) should
be completely excluded from the ATIN
process. In particular, comments are re-
quested regarding whether a prospective
adoptive parent is always able to obtain a
prospective adoptive child’s SSN if the
child is a foster child or is otherwise in the
custody of a government agency or court.
Special Analyses
It has been determined that this Trea-
sury decision is not a significant regula-
tory 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 Pro-
cedure Act (5 U.S.C. chapter 5) does not
apply to these regulations, and because
the regulation does not impose a collec-
tion of information on small entities, the
Regulatory Flexibility Act (5 U.S.C.
chapter 6) does not apply. Only individu-
als may receive ATINs under this Trea-
sury decision, and an individual is not a
small entity as defined in the Regulatory
Flexibility Act. See 5 U.S.C. 601(6).
Pursuant to section 7805(f) of the Inter-
nal Revenue Code, these regulations will
be submitted to the Chief Counsel for Ad-
vocacy of the Small Business Administra-
tion for comment on their impact on small
business.
Drafting Information
The principal author of these regula-
tions is Michael L. Gompertz of the Office
of Assistant Chief Counsel (Income Tax
and Accounting). However, other person-
nel from the IRS and Treasury Department
participated in their development.
* * * * *
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR parts 301 and
602 are amended as follows:
PART301—PROCEDURE AND AD-
MINISTRATION
Paragraph 1. The authority citation for
part 301 is amended by adding entries in
numerical order to read as follows:
1997–51 I.R.B.9December 22, 1997

Authority: 26 U.S.C. 7805 * * *
Section 301.6109–1Talso issued under
26 U.S.C. 6109;
Section 301.6109–3Talso issued under
26 U.S.C. 6109; * * *
Par. 2 Section 301.6109–1 is amended
by adding paragraph (h)(2)(iii) to read as
follows:
§301.6109–1 Identifying numbers.
* * * * *
(h) * * *
(2) * * *
(iii) Paragraphs (a)(1)(i), (a)(1)(ii)(A),
and (a)(1)(ii)(B) of this section do not
apply after November 24, 1997. For fur-
ther guidance after November 24,1997,
see §301.6109–1T(a)(1)(i), (a)(1)(ii) in-
troductory text, and (a)(1)(ii)(A) and (B).
Par. 3. Sections 301.6109–1Tis added
to read as follows:
§301.6109–1TIdentifying numbers
(temporary).
(a) In general—(1) Taxpayer identify-
ing numbers—(i) Principal types.There
are four principal types of taxpayer identi-
fying numbers: social security numbers,
Internal Revenue Service (IRS) individual
taxpayer identification numbers, em-
ployer identification numbers, and IRS
adoption taxpayer identification numbers.
Social security numbers take the form
000-00-0000. IRS individual taxpayer
identification numbers and IRS adoption
taxpayer identification numbers also take
the form 000-00-0000 but include a spe-
cific number or specific numbers desig-
nated by the IRS. Employer identifica-
tion numbers take the form 00-0000000.
(ii) Uses.Social security numbers, IRS
individual taxpayer identification num-
bers, and IRS adoption taxpayer identifi-
cation numbers are used to identify indi-
vidual persons. For the definition of
social security number and employer
identification number, see §§301.7701–11
and 301.7701–12, respectively. For the
definition of IRS individual taxpayer
identification number, see §301.6109–1
(d)(3). For the definition of IRS adoption
taxpayer identification number, see
§301.6109–3T. Except as otherwise pro-
vided in applicable regulations under this
title or on a return, statement, or other
document, and related instructions, tax-
payer identifying numbers must be used
as follows—
(A) Except as otherwise provided in
§301.6109–1(a)(1)(ii)(D), paragraph
(a)(1)(ii)(B) of this section, and
§301.6109–3T, an individual required to
furnish a taxpayer identifying number
must use a social security number.
(B) Except as otherwise provided in
§301.6109–1(a)(1)(ii)(D) and §301.6109–
3T, an individual required to furnish a
taxpayer identifying number but who is
not eligible to obtain a social security
number must use an IRS individual tax-
payer identification number.
(a)(1)(ii)(C) through (g) [
Reserved].
For further guidance, see §301.6109–
1(a)(1)(ii)(C) through (g).
(h) Effective date.Paragraphs (a)(1)(i),
(a)(1)(ii) introductory text, (a)(1)(ii)(A),
and (a)(1)(ii)(B) of this section are applic-
able after November 24, 1997. For fur-
ther guidance, prior to November 24,
1997, see §301.6109–1(a)(1)(i), (a)(1)(ii)-
(A) and (a)(1)(ii)(B).
Par. 4. Section 301.6109-3Tis added
to read as follows:
§301.6109–3TIRS adoption taxpayer
identification numbers (temporary).
(a) In general—(1) Definition.An IRS
Adoption Taxpayer Identification Number
(ATIN) is a temporary taxpayer identify-
ing number assigned by the Internal Rev-
enue Service (IRS) to a child (other than
an alien individual as defined in
§301.6109–1(d)(3)(i)) who has been
placed, by an authorized placement
agency, in the household of a prospective
adoptive parent for legal adoption. An
ATIN is assigned to the child upon appli-
cation for use in connection with filing re-
quirements under this title. When an
adoption becomes final, the adoptive par-
ent must apply for a social security num-
ber for the child. After the social security
number is assigned, that number, rather
than the ATIN, must be used as the child’s
taxpayer identification number on all re-
turns, statements, or other documents re-
quired under this title.
(2) Expiration and extension.An ATIN
automatically expires two years after the
number is assigned. However, upon re-
quest, the IRS may grant an extension if
the IRS determines the extension is war-
ranted.
(b) Definitions.The following defini-
tions apply for purposes of this section—
(1) Authorized placement agencyhas
the same meaning as in §1.152–2(c) of
this chapter;
(2) Prospective adoptive childor child
refers to a child who has not been
adopted, but who has been placed in the
household of a prospective adoptive par-
ent for legal adoption by an authorized
placement agency; and
(3) Prospective adoptive parentor par-
entrefers to an individual in whose
household a prospective adoptive child is
placed by an authorized placement
agency for legal adoption.
(c) General rule for obtaining a num-
ber—(1) Who may apply.Aprospective
adoptive parent may apply for an ATIN
for a child if—
(i) The prospective adoptive parent is
eligible to claim a personal exemption
under section 151 with respect to the
child;
(ii) An authorized placement agency
places the child with the prospective
adoptive parent for legal adoption;
(iii) The Social Security Administration
will not process an application for an SSN
by the prospective adoptive parent on be-
half of the child (for example, because the
adoption is not final); and
(iv) The prospective adoptive parent
has used all reasonable means to obtain
the child’s assigned social security num-
ber, if any, but has been unsuccessful in
obtaining this number (for example, be-
cause the birth parent who obtained the
number is not legally required to disclose
the number to the prospective adoptive
parent).
(2) Procedure for obtaining an ATIN.
If the requirements of paragraph (c)(1) of
this section are satisfied, the prospective
adoptive parent may apply for an ATIN
for a child on Form W–7A, Application
for Taxpayer Identification Number for
Pending Adoptions(or such other form as
may be prescribed by the IRS). An appli-
cation for an ATIN should be made far
enough in advance of the first intended
use of the ATIN to permit issuance of the
ATIN in time for such use. An applica-
tion for an ATIN must include the infor-
mation required by the form and accom-
panying instructions, including the name
and address of each prospective adoptive
parent and the child’s name and date of
birth. In addition, the application must in-
clude such documentary evidence as the
IRS may prescribe to establish that a child
December 22, 1997101997–51 I.R.B.

was placed in the prospective adoptive
parent’s household by an authorized
placement agency for legal adoption. Ex-
amples of acceptable documentary evi-
dence establishing placement for legal
adoption by an authorized placement
agency may include—
(i) Acopy of a placement agreement
entered into between the prospective
adoptive parent and an authorized place-
ment agency;
(ii) An affidavit signed by the adoption
attorney or government official who
placed the child for legal adoption pur-
suant to state law;
(iii) Adocument authorizing the release
of a newborn child from a hospital to a
prospective adoptive parent for adoption;
and
(iv) Acourt document ordering or ap-
proving the placement of a child for adop-
tion.
(d) Effective date.The provisions of
this section apply to income tax returns
due (without regard to extension) on or
after April 15, 1998.
PART602—OMB CONTROL
NUMBERS UNDER THE PAPER-
WORK REDUCTION ACT
Par. 5. The authority citation for part
602 continues to read as follows:
Authority: 26 U.S.C. 7805.
Par. 6. Section 602.101(c) is amended
by adding an entry in numerical order to
the table to read as follows:
§602.101 OMB Control numbers.
* * * * *
(c) * * *
CFR part or section Current OMB
where identifiedcontrol Number
and described
* * * * *
301.6109–3T. . . . . . . . . . . . . 1545–1564
* * * * *
Michael P. Dolan,
Acting Commissioner of
Internal Revenue.
Approved October 24, 1997.
Donald C. Lubick,
Acting Assistant Secretary of
the Treasury.
(Filed by the Office of the Federal Register on No-
vember 21, 1997, 8:45 a.m., and published in the
issue of the Federal Register for November 24,
1997, 62 F.R. 62518)
Section 6721.—Failure To File
Correct Information Returns
26 CFR 301.6721–1: Failure to file correct
information returns.
What information reporting requirements apply
to educational institutions for 1998 under § 6050S of
the Code, as added by the Taxpayer Relief Act of
1997, in connection with the Hope Scholarship
Credit and the Lifetime Learning Credit. See Notice
97–73, page 16.
Section 6722.—Failure To
Furnish Correct Payee
Statements
26 CFR 301.6722–1: Failure to furnish correct
payee statements.
What information reporting requirements apply
to educational institutions for 1998 under § 6050S of
the Code, as added by the Taxpayer Relief Act of
1997, in connection with the Hope Scholarship
Credit and the Lifetime Learning Credit. See Notice
97–73, page 16.
Section 7623.—Expenses of
Detection of Underpayments
and Fraud, Etc.
26 CFR 301.7623–1: Rewards for information
relating to violations of Internal Revenue laws.
T.D. 8737
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 301 and 602
Rewards for Information
Relating to Violations of Internal
Revenue Laws
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final and temporary regula-
tions.
SUMMARY: This document contains
temporary regulations relating to rewards
for information that relates to violations
of the internal revenue laws. The regula-
tions reflect changes to the law made by
the Taxpayer Bill of Rights 2 and affect
persons that are eligible to receive an in-
formant’s reward.
The text of these regulations also serves
as the text of the proposed regulations set
forth in REG–252936–96, page 27.
DATE: These regulations are effective
October 14, 1997.
For dates of applicability, see
§301.7623–1T(g).
FOR FURTHER INFORMATION CON-
TACT: Judith A. Lintz (202) 622-4940
(not a toll-free number).
SUPPLEMENTARYINFORMATION:
Paperwork Reduction Act
These regulations are being issued
without prior notice and public procedure
pursuant to the Administrative Procedure
Act (5 U.S.C. 553). For this reason, the
collections of information contained in
these regulations have been reviewed and,
pending receipt and evaluation of public
comments, approved by the Office of
Management and Budget under control
number 1545–1534. Responses to the
collection of information are voluntary
with respect to the provision of informa-
tion relating to violations of the internal
revenue laws, but are required to obtain a
benefit with respect to filing a claim for
reward.
An agency may not conduct or sponsor,
and a person is not required to respond to,
a collection of information unless it dis-
plays a valid control number assigned by
the Office of Management and Budget.
For further information concerning
these collections of information, and
where to submit comments on the collec-
tions of information and the accuracy of
the estimated burden, and suggestions for
reducing this burden, please refer to the
preamble to the cross-referencing notice
of proposed rulemaking published in
REG–252936–96.
Books or records relating to a collec-
tion of information must be retained as
long as their contents may become mater-
ial in the administration of any internal
revenue law. Generally, tax returns and
1997–51 I.R.B.11December 22, 1997

tax return information are confidential, as
required by 26 U.S.C. 6103.
Background
This document contains amendments to
the Procedure and Administration Regula-
tions (26 CFR part 301) under section
7623 relating to rewards for information
that relates to violations of the internal
revenue laws. This section was amended
by section 1209 of the Taxpayer Bill of
Rights 2 (TBOR 2) (Public Law 104–168,
110 Stat. 1452 (1996)).
Explanation of Provisions
Section 7623 provides the Secretary
with the authority, by regulation, to pay
rewards for information that relates to vi-
olations of the internal revenue laws.
Section 1209 of TBOR 2 amended section
7623 to clarify that rewards may be paid
for information relating to civil, as well as
criminal, violations. TBOR 2 also pro-
vided that the rewards are to be paid out
of the proceeds of amounts (other than in-
terest) collected by reason of the informa-
tion. These temporary regulations reflect
those amendments.
In addition, these temporary regulations
incorporate and update §301.7623– 1. For
example, the regulations increase the limit
on awards from 10% to 15% and provide
new titles and addresses to which persons
should submit information relating to vio-
lations of the internal revenue laws.
Special Analyses
It has been determined that this Trea-
sury Decision is not a significant regula-
tory 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 Pro-
cedure Act (5 U.S.C. chapter 5) does not
apply to these regulations.
It is hereby certified that the regula-
tions in this document will not have a sig-
nificant economic impact on a substantial
number of small entities. This certifica-
tion is based on a determination that in the
past approximately 10,000 persons have
filed claims for reward on an annual
basis. Of these persons, almost all have
been individuals. Accordingly, a regula-
tory flexibility analysis under the Regula-
tory Flexibility Act (5 U.S.C. chapter 6) is
not required.
Pursuant to section 7805(f) of the Inter-
nal Revenue Code, this Treasury Decision
will be submitted to the Chief Counsel for
Advocacy of the Small Business Admin-
istration for comments on its impact on
small businesses.
Drafting Information
The principal author of these regula-
tions is Judith A. Lintz, Office of Assis-
tant Chief Counsel (Income Tax & Ac-
counting), Internal Revenue Service.
However, other personnel from the IRS
and Treasury Department participated in
their development.
* * * * *
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR parts 301 and
602 are amended as follows:
PART301—PROCEDURE AND
ADMINISTRATION
Paragraph 1. The authority citation for
part 301 continues to read in part as fol-
lows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. §301.7623–1 is amended by
adding paragraph (g) to read as follows:
§301.7623-1 Rewards for information
relating to violations of internal revenue
laws.
* * * * *
(g) Effective date.This section is ap-
plicable with respect to rewards paid on
or before January 29, 1997. See
§301.7623–1Tfor rewards paid after Jan-
uary 29, 1997.
Par. 3. Section 301.7623–1Tis added
to read as follows:
§301.7623–1TRewards for information
relating to violations of internal revenue
laws (temporary).
(a) In general.In cases where rewards
are not otherwise provided for by law, a
district or service center director may ap-
prove a reward, in a suitable amount, for
information that leads to the detection of
underpayments of tax, or the detection and
bringing to trial and punishment of per-
sons guilty of violating the internal rev-
enue laws or conniving at the same. The
rewards provided for by section 7623 and
this section will be paid from the proceeds
of amounts (other than interest) collected
by reason of the information provided.
(b) Eligibility to file claim for reward—
(1) In general. Any person, other than
certain present or former federal employ-
ees described in paragraph (b)(2) of this
section, that submits, in the manner de-
scribed in paragraph (d) of this section,
information relating to the violation of an
internal revenue law is eligible to file a
claim for reward under section 7623 and
this section.
(2) Federal employees.No person who
was an officer or employee of the Depart-
ment of the Treasury at the time the indi-
vidual came into possession of information
relating to violations of the internal rev-
enue laws, or at the time the individual di-
vulged such information, is eligible for a
reward under section 7623 and this section.
Any other current or former federal em-
ployee is eligible to file a claim for reward
if the information provided came to the in-
dividual’s knowledge other than in the
course of the individual’s official duties.
(3) Deceased informants.Aclaim for
reward may be filed by an executor, ad-
ministrator, or other legal representative
on behalf of a deceased informant if, prior
to the informant’s death, the informant
was eligible to file a claim for such re-
ward under section 7623 and this section.
Certified copies of the letters testamen-
tary, letters of administration, or other
similar evidence must be attached to the
claim for reward on behalf of a deceased
informant in order to show the authority
of the legal representative to file the
claim.
(c) Amount and payment of reward.All
relevant factors, including the value of the
information furnished in relation to the
facts developed by the investigation of the
violation, will be taken into account by a
district or service center director in deter-
mining whether a reward will be paid,
and, if so, the amount of the reward. The
amount of a reward will represent what
the district or service center director
deems to be adequate compensation in the
particular case, generally not to exceed
fifteen percent of the amounts (other than
interest) collected by reason of the infor-
mation. Payment of a reward will be
made as promptly as the circumstances of
the case permit, but not until the taxes,
penalties, or fines involved have been col-
December 22, 1997121997–51 I.R.B.

lected. However, if the informant waives
any claim for reward with respect to an
uncollected portion of the taxes, penalties,
or fines involved, the claim may be im-
mediately processed. Partial reward pay-
ments, without waiver of the uncollected
portion of the taxes, penalties, or fines in-
volved, may be made when a criminal
fine has been collected prior to comple-
tion of the civil aspects of a case, and also
when there are multiple tax years in-
volved and the deficiency for one or more
of the years has been paid in full. No per-
son is authorized under these regulations
to make any offer, or promise, or other-
wise to bind a district or service center di-
rector with respect to the payment of any
reward or the amount of the reward.
(d) Submission of information.Aper-
son that desires to claim a reward under
section 7623 and this section may submit
information relating to violations of the
internal revenue laws, in person, to the of-
fice of a district director, preferably to a
representative of the Criminal Investiga-
tion Division. Such information may also
be submitted in writing to the Commis-
sioner of Internal Revenue, Attention: As-
sistant Commissioner (Criminal Investi-
gation), 1111 Constitution Avenue, NW,
Washington, DC 20224, to any district di-
rector, Attention: Chief, Criminal Investi-
gation Division, or to any service center
director. If the information is submitted
in person, either orally or in writing, the
name and official title of the person to
whom it is submitted and the date on
which it is submitted must be included in
the formal claim for reward.
(e) Identification of informant.No
unauthorized person will be advised of
the identity of an informant.
(f) Filing claim for reward.An infor-
mant that intends to claim a reward under
section 7623 and this section should notify
the person to whom the information is sub-
mitted of such intention, and must file a
formal claim on Form 211, Application for
Reward for Original Information, signed
by the informant in the informant’s true
name, as soon as practicable after the sub-
mission of the information. If other than
the informant’s true name was used in fur-
nishing the information, satisfactory proof
of identity as that of the informant must be
included with the claim for reward.
(g) Effective date.This section is ap-
plicable with respect to rewards paid after
January 29, 1997. See §301.7623–1 for
rewards paid on or before January 29,
1997.
PART602—OMB CONTROL
NUMBERS UNDER THE
PAPERWORK REDUCTION ACT
Par. 4. The authority citation for part
602 continues to read as follows:
Authority: 26 U.S.C. 7805.
Par. 5. In §602.101, paragraph (c) is
amended by adding anentry in numerical
order to the table to read as follows:
§602.101 OMB Control numbers.
* * * * *
(c) * * *
CFR part or sectionCurrent OMB
where identified control Number
and described
* * * * *
301.7623–1T . . . . . . . . .1545–1534
* * * * *
Michael P. Dolan,
Acting Commissioner of
Internal Revenue.
Approved August 26, 1997.
Donald C. Lubick,
Acting Assistant Secretary of
the Treasury.
(Filed by the Office of the Federal Register
on October 10, 1997, 8:45 a.m., and pub-
lished in the issue of the Federal Register
for October 14, 1997, 62 F.R. 53230)
1997–51 I.R.B.13December 22, 1997

December 22, 1997141997–51 I.R.B.
Income Tax Return Preparer
Penalties—1997 Federal
Income Tax Returns Due
Diligence Requirements for
Earned Income Credit (EIC)
Notice 97–65
PURPOSE
This notice sets forth due diligence re-
quirements that paid preparers of federal
income tax returns or claims for refund
(preparers) that involve the Earned In-
come Tax Credit (EIC) must meet to
avoid imposition of the penalty under §
6695(g) of the Internal Revenue Code for
1997 returns and claims for refund. The
Treasury Department intends to issue
temporary regulations under § 6695(g)
that will incorporate the requirements set
forth in this notice and that will apply to
1997 returns and claims for refund.
However, these regulations may impose
different due diligence requirements for
returns and claims for taxable years be-
ginning after 1997. Comments are re-
quested regarding possible alternatives
for meeting the due diligence require-
ments in the future.
BACKGROUND
Section 6695(g), as added by section
1085(a)(2) of the Taxpayer Relief Act of
1997, Pub. L. No. 105–34, 111 Stat. 788
(August 5, 1997), imposes a $100 penalty
on a preparer with respect to any return or
claim for refund for each failure to com-
ply with the due diligence requirements
imposed by regulations with respect to
determining a taxpayer’s eligibility for
the EIC or the amount of any allowable
EIC. This new penalty is effective for
taxable years beginning after December
31, 1996, and is in addition to any other
penalty imposed under present law.
DUE DILIGENCE REQUIREMENTS
FOR 1997
For each 1997 income tax return or
claim for refund involving the EIC, a pre-
parer will be liable for the § 6695(g)
penalty unless all of the following due
diligence requirements are met:
(1) The preparer must either (a) com-
plete the “Earned Income Credit (EIC) El-
igibility Checklist” (attached to this no-
tice) or (b) otherwise record in the
preparer’s paper or electronic files the in-
formation that would be necessary to
complete the Checklist (“alternate eligi-
bility record”). The preparer’s comple-
tion of the Checklist or alternate eligibil-
ity record must be based on information
provided by the taxpayer to the preparer
or otherwise reasonably obtained by the
preparer. The alternate eligibility record
may consist of one or more documents
containing the required information.
(2) The preparer must either (a) com-
plete the “Earned Income Credit Work-
sheet” in the 1997 Form 1040 instruc-
tions, or (b) otherwise record in the
preparer’s paper or electronic files the
preparer’s EIC computation, including the
method and information used to make that
computation (“alternate computation
record”). The preparer’s completion of
the Worksheet or alternate computation
record must be based on information pro-
vided by the taxpayer to the preparer or
otherwise reasonably obtained by the pre-
parer. The alternate computation record
may consist of one or more documents
containing the required information.
(3) The preparer must not know or have
reason to know that any information used
by the preparer in determining the tax-
payer’s eligibility for the EIC or in com-
puting the EIC is incorrect. The preparer
may not ignore the implications of infor-
mation furnished to, or known by, the pre-
parer, and must make reasonable inquiries
if the information furnished to, or known
by, the preparer appears to be incorrect,
inconsistent, or incomplete;
(4) The preparer must retain (a) the
completed Checklist (or alternate eligibil-
ity record); (b) a copy of the Worksheet
(or alternate computation record); and (c)
a record of how and when the information
was obtained by the preparer, including
the identity of any person furnishing such
information. These items must be re-
tained for three years after the June 30th
following the date the return was pre-
sented to the taxpayer for signature, and
may be retained on magnetic media con-
sistent with Rev. Proc. 81–46, 1981–2
C.B. 621, or in an electronic storage
media system consistent with Rev. Proc.
97–22, 1997–13 I.R.B. 9.
The § 6695(g) penalty will not be ap-
plied with respect to a particular return or
claim for refund if the preparer can
demonstrate to the satisfaction of the Ser-
vice that, considering all the facts and cir-
cumstances, the preparer’s normal office
procedures are reasonably designed and
routinely followed to ensure compliance
with the 1997 due diligence requirements,
and the failure to meet the 1997 due dili-
gence requirements with respect to the re-
turn or claim for refund in question was
isolated and inadvertent.
REQUESTFOR COMMENTS ON
FUTURE GUIDANCE
The Service and Treasury Department
invite public comment on the due dili-
gence requirements in § 6695(g) for tax
years after 1997. Comments are re-
quested by May 15, 1998. An original
and eight copies of written comments
should be sent to:
Internal Revenue Service
Attn: CC:DOM:CORP:R
Room 5228 (IT&A:Br4)
P.O. Box 7604
Ben Franklin Station
Washington, DC 20044,
or hand delivered between the hours of
8:00 a.m. and 5:00 p.m. to:
Courier’s Desk
Internal Revenue Service
Attn: CC:DOM:CORP:R
Room 5228 (IT&A:Br4)
1111 Constitution Ave., NW
Washington, DC
Alternatively, taxpayers may submit com-
ments electronically via the Internet by
selecting the “Tax Regs” option on the
IRS Home Page, or by submitting com-
ments directly to http://www.irs.ustreas.
gov./prod/tax
_
regs/comments.html (the
IRS Internet site). All comments will be
available for public inspection and copy-
ing in their entirety.
PAPERWORK REDUCTION ACT
The collections of information con-
tained in this notice have been reviewed
Part III. Administrative, Procedural, and Miscellaneous

1997–51 I.R.B.15December 22, 1997
and approved by the Office of Manage-
ment and Budget in accordance with the
Paperwork Reduction Act (44 U.S.C.
3507) under control number 1545–1570.
An agency may not conduct or sponsor,
and a person is not required to respond to,
a collection of information unless the col-
lection of information displays a valid
control number.
The collections of information in this
notice are contained under the heading
“DUE DILIGENCE REQUIREMENTS
FOR 1997” in this notice. This informa-
tion is required to implement § 6695(g),
and verify that preparers have exercised
due diligence in preparing any return or
claim for refund for taxable year 1997
that involves the EIC. The likely record-
keepers are preparers.
In 1998, the estimated total annual
recordkeeping burden will be 160,000
hours.
The estimated annual burden per
recordkeeper will vary from 0 minutes to
16 minutes, depending on individual cir-
cumstances, with an estimated average of
8 minutes.
The estimated number of recordkeepers
is 1,200,000.
Books or records relating to the collec-
tion of information in this notice must be
retained for three years after the June 30th
following the date the return was pre-
sented to the taxpayer for signature. Gen-
erally, tax returns and tax return informa-
tion are confidential, as required by 26
U.S.C. 6103.
DRAFTING INFORMATION
The principal author of this notice is
Celia Gabrysh, Office of Assistant Chief
Counsel (Income Tax and Accounting).
For further information regarding this no-
tice, contact Celia Gabrysh at (202) 622-
4940 (not a toll-free number).
EARNED INCOME CREDIT(EIC)
ELIGIBILITYCHECKLIST
For use by income tax return preparers
in preparing 1997 tax returns and claims
for refund
Taxpayer may claim the earned income
credit if all the following questions are
answered YES:
1. Do the taxpayer, spouse, and qualifying
child each have a social security number?
___
YES
___
NO
2. Is the taxpayer’s total taxable and non-
taxable earned income at least $1 but less
than:
* $9,770 if the taxpayer does not have a
qualifying child?
* $25,760 if the taxpayer has one quali-
fying child?
* $29,290 if the taxpayer has more than
one qualifying child?
___
YES
___
NO
3. Is the taxpayer’s modified AGI less
than:
* $9,770 if the taxpayer does not have a
qualifying child?
* $25,760 if the taxpayer has one quali-
fying child?
* $29,290 if the taxpayer has more than
one qualifying child?
___
YES
___
NO
4. Is the taxpayer’s investment income
$2,250 or less?
___
YES
___
NO
5. Is the taxpayer’s filing status one of
the following: married filing jointly, head
of household, qualifying widow(er), or
single?
___
YES
___
NO
6. If the taxpayer is a nonresident alien, is
the filing status married filing jointly? (If
taxpayer is not a nonresident alien, an-
swer YES).
___
YES
___
NO
7. Answer YES if the taxpayer (and
spouse if filing a joint return) is not a
qualifying child of another person.
___
YES
___
NO
8. Answer YES if the taxpayer (and
spouse if filing a joint return) is not filing
Form 2555 or Form 2555–EZ to exclude
from gross income any income earned in
foreign countries or to deduct or exclude a
foreign housing amount.
___
YES
___
NO
STOP: If the taxpayer has a qualifying
child, answer question 9 and skip 10. If
the taxpayer does not have a qualifying
child, skip 9 and answer 10.
9. (a) Does the child meet the age, rela-
tionship, and residence tests for a qualify-
ing child? See Form 1040 instructions for
Line 56a.
___
YES
___
NO
(b) Answer YES if the qualifying child
is also a qualifying child for one or more
other persons and the taxpayer’s modified
AGI is higher than each other person’s.
Answer YES if the child is a qualifying
child only for the taxpayer.
___
YES
___
NO
(c) If the qualifying child is married, is
the taxpayer claiming the child as a de-
pendent? (If the qualifying child is not
married, answer YES.)
___
YES
___
NO
OR
10. (a) Was the taxpayer’s main home
(and the spouse’s if filing a joint return) in
the United States for more than half the
year? Military personnel on extended ac-
tive duty outside the United States are
considered to be living in the United
States.
___
YES
___
NO
(b) Was the taxpayer (or spouse, if fil-
ing a joint return) at least age 25 but under
65 at the end of 1997?
___
YES
___
NO
(c) No one can claim the taxpayer (or
spouse if filing a joint return) as a depen-
dent on their return. If the taxpayer (and
spouse if filing a joint return) is not eligi-
ble to be a dependent on anyone else’s re-
turn, answer YES. If taxpayer (or spouse
if filing a joint return) is eligible to be
claimed as a dependent on someone else’s
return, answer NO.
___
YES
___
NO
*PERSONS WITH AQUALIFYING
CHILD: If the taxpayer answered YES to
questions 1 through 9(a), (b), and (c), the
taxpayer can claim the credit. Remember
to fill out Schedule EIC and attach it to
the taxpayer’s Form 1040 or 1040A.
*PERSONS WITHOUTAQUALIFY-
ING CHILD: If the taxpayer answered
YES to questions 1 through 8 and 10(a),
(b), and (c), taxpayer can claim the credit.
IF THE TAXPAYER ANSWERED NO
TO ANYQUESTION, TAXPAYER IS
NOTELIGIBLE FOR THE CREDIT.

December 22, 1997161997–51 I.R.B.
Returns Relating to Higher
Education Tuition and Related
Expenses
Notice 97–73
PURPOSE
This notice describes the information
reporting requirements for 1998 under
§ 6050S of the Internal Revenue Code (as
enacted by the Taxpayer Relief Act of
1997, Pub. L. No. 105–34, § 201(c), 111
Stat. 804 (the Act)) that apply to certain
educational institutions in connection with
the Hope Scholarship Credit and the Life-
time Learning Credit. The Treasury De-
partment intends to issue regulations on
the information reporting required under §
6050S. Pending the issuance of those reg-
ulations, this notice describes who must
report information, and the nature of the
information that will be required to be re-
ported under § 6050S for 1998.
BACKGROUND
A. The Hope Scholarship and Lifetime
Learning Credits.
Section 201(a) of the Act, 111 Stat.
799, added § 25Ato the Code. Section
25Aallows certain taxpayers who pay
qualified tuition and related expenses to
an eligible educational institution to claim
a Hope Scholarship Credit or a Lifetime
Learning Credit against their federal in-
come tax liability. The Hope Scholarship
Credit is available for qualified tuition
and related expenses paid after December
31, 1997, in taxable years ending after
that date for education furnished in acade-
mic periods beginning after December 31,
1997. The Lifetime Learning Credit is
available for qualified tuition and related
expenses paid after June 30, 1998, in tax-
able years ending after that date for edu-
cation furnished in academic periods be-
ginning after June 30, 1998. The term
“academic period” includes a semester,
trimester, quarter, or any other period des-
ignated as a period of instructional time
by the educational institution. For this
purpose, an academic period begins on
the first day of classes, and does not in-
clude periods of student orientation,
counseling, or vacation.
For a taxpayer to be eligible for the
Hope Scholarship Credit or the Lifetime
Learning Credit, qualified tuition and re-
lated expenses must be paid by the tax-
payer to an eligible educational institu-
tion for the taxpayer, the taxpayer’s
spouse or any dependents. Payments by
a taxpayer’s dependents are to be treated
as having been made by the taxpayer.
The Hope Scholarship Credit is available
only for the qualified tuition and related
expenses of students enrolled at least
half-time in the first two years of post-
secondary education and can be claimed
in no more than two years for each
student.
Qualified tuition and related expenses
are the tuition and fees an individual is re-
quired to pay in order to be enrolled at or
attend an eligible educational institution.
Amounts paid for any course or other ed-
ucation involving sports, games, or hob-
bies are not eligible for the credit, unless
the course or other education is part of the
student’s degree program. Charges and
fees associated with room, board, student
activities, athletics, insurance, books,
equipment, transportation, and similar
personal, living, or family expenses are
not qualified tuition and related expenses.
An eligible educational institution is a
college, university, vocational school, or
other postsecondary educational institu-
tion that is described in section 481 of the
Higher Education Act of 1965 (20 U.S.C.
1088) and, therefore, is eligible to partici-
pate in the student aid programs adminis-
tered by the Department of Education.
This category includes virtually all ac-
credited public, nonprofit, and proprietary
postsecondary institutions.
Notice 97–60, 1997–46 I.R.B. 8, pro-
vides additional information about the
Hope Scholarship Credit and the Lifetime
Learning Credit.
B. Information Reporting Relating to
Qualified Tuition and Related
Expenses.
Section 6050S(a) requires eligible edu-
cational institutions that receive payments
of qualified tuition and related expenses
or make reimbursements or refunds of
qualified tuition and related expenses to
submit an annual information report to the
Service with respect to each student on
whose behalf the payments are received
or the reimbursements or refunds are
made. Section 6050S(a) also requires
each person engaged in a trade or busi-
ness who makes a reimbursement or re-
fund of qualified tuition and related ex-
penses to submit an annual information
report to the Service with respect to each
student on whose behalf the reimburse-
ments or refunds are paid. The terms “el-
igible educational institution” and “quali-
fied tuition and related expenses” have
the same meanings for purposes of
§ 6050S as they do for purposes of the
Hope Scholarship Credit and the Lifetime
Learning Credit.
Section 6050S(b) provides that the re-
turn of information must be in the form
prescribed by the Secretary and contain:
(1) the name, address, and taxpayer
identification number (TIN) of the indi-
vidual with respect to whom the qualified
tuition and related expenses were re-
ceived or the reimbursement or refund
was paid,
(2) the name, address, and TIN of any
individual certified by the individual
named in the first item as the taxpayer
who will claim that individual as a depen-
dent for purposes of the deduction under
§ 151 for any taxable year ending with or
within the year for which the information
return is filed,
(3) the aggregate amount of payments
of qualified tuition and related expenses
received by the eligible educational insti-
tution or the aggregate amount of reim-
bursements or refunds (or similar
amounts) paid during the calendar year
with respect to the individual named in
the first item, and
(4) such other information as the Secre-
tary may prescribe.
Section 6050S(d) provides that every
person required to make an information re-
turn under § 6050S(a) shall furnish to each
individual whose name is required to be in-
cluded in the return a written statement
showing the name, address, and phone
number of the reporting person’s informa-
tion contact, and the aggregate amounts re-
quired to be included in the return.
DISCUSSION
A. Who Must File for 1998.
For 1998, an eligible educational insti-
tution that receives payments of qualified
tuition and related expenses in 1998 must
file an information return with the Service
with respect to each student on whose be-
half payments were received. An eligible
educational institution that makes reim-

bursements or refunds of tuition or related
expenses to a student during 1998, that
equal or exceed payments of qualified tu-
ition or related expenses received on be-
half of that student during 1998, is not re-
quired to file an information return or
furnish a statement with respect to that
student for 1998.
An institution is not required to provide
a report with respect to a student whose
tuition and related expenses were waived
in their entirety or paid entirely with
scholarships because it will have received
no payments of qualified tuition and re-
lated expenses on behalf of such a student.
Persons, other than eligible educa-
tional institutions, engaged in a trade or
business and making reimbursements or
refunds of qualified tuition and related
expenses will not be required to file in-
formation returns or furnish statements of
reimbursements or refunds for 1998.
For purposes of providing these infor-
mation reports, an eligible educational in-
stitution should provide reports on stu-
dents who are enrolled in the institution
for any academic term beginning in 1998.
An institution should determine its enroll-
ment for each term as of any of the fol-
lowing three dates:
(a) 30 days after the first day of the
academic term;
(b) a date during the term on which
enrollment data must be collected for
purposes of the Integrated Postsec-
ondary Education Data System ad-
ministered by the Department of Ed-
ucation; or
(c) a date during the term on which
the institution must report enroll-
ment data to the State, the institu-
tion’s governing board or some other
external governing body.
An institution should provide a single in-
formation report for each student on
whose behalf qualified tuition and related
expenses have been received in 1998 even
if the institution receives more than one
payment on that student’s behalf during
1998.
B. Information Required for 1998.
Eligible educational institutions re-
quired under this notice to file informa-
tion returns for 1998 must properly com-
plete Form 1098–T, Tuition Payments, for
each student with respect to whom infor-
mation reporting is required. For 1998, a
properly completed Form 1098–Tfiled
with the Service must include:
(1) the name, address, and TIN of the
eligible educational institution,
(2) the name, address, and TIN of the
individual with respect to whom pay-
ments of qualified tuition and related ex-
penses were received during 1998,
(3) an indication as to whether the in-
dividual named in the second item was
enrolled for at least half the full-time aca-
demic workload during any academic pe-
riod commencing in 1998, and
(4) an indication as to whether the indi-
vidual named in the second item was en-
rolled exclusively in a program or pro-
grams leading to a graduate-level degree,
graduate-level certificate, or other recog-
nized graduate-level educational credential.
For purposes of section 25Aand the re-
porting required under § 6050S, a student
will be considered to be enrolled at least
half-time if the student is enrolled for at
least half the full-time academic workload
for the course of study the student is pur-
suing as determined under the standards
of the institution where the student is en-
rolled. The institution’s standard for a
full-time workload must equal or exceed
the standards established by the Depart-
ment of Education under the Higher Edu-
cation Act and set forth in 34 C.F.R.
§ 674.2(b).
Although in the future institutions will
be required to provide the additional in-
formation specified in § 6050S (e.g.,the
amount of qualified tuition and related ex-
penses received and/or reimbursed), the
IRS will not impose penalties on an insti-
tution that does not provide this informa-
tion for 1998.
C. When To File
The information returns required under
§ 6050S for 1998 must be sent to the Ser-
vice by March 1, 1999.
D. Manner of Filing
Eligible educational institutions may
file the information returns required by
§ 6050S for 1998 on paper or by magnetic
media. Additional guidance will be is-
sued providing further information on
how to file returns by magnetic media. In
addition, the Service is exploring elec-
tronic filing options and will issue further
guidance when such options become
available.
E. Statements To Be Provided to
Students
Each eligible educational institution
must provide each student with respect to
whom an information return is filed a
statement containing the same informa-
tion that is provided to the Service on the
information return required by § 6050S.
In addition, the statement provided to the
student must contain the phone number
of the individual serving as information
contact at the eligible educational institu-
tion that made the return. The statement
with respect to qualified tuition and re-
lated expenses paid in 1998 must be pro-
vided to the student by February 1, 1999.
The statement may be a copy of Form
1098–Tor an acceptable substitute state-
ment.
F. Collecting Information
The Service is developing an optional
Form W–9S for use in collecting informa-
tion for the purpose of complying with
§ 6050S. Eligible educational institutions
will be able to use the form to collect a
student’s name, address, and TIN. The
form is being designed so that it can also
be used to collect any information neces-
sary to meet the information reporting re-
quirements associated with the student
loan interest deduction provided by new
§ 221. Eligible educational institutions
will be able to collect information from
students for 1998 information reporting
purposes on a paper or an electronic ver-
sion of Form W–9S (or an acceptable sub-
stitute). The eligible educational institu-
tion also may collect the necessary
information by using its own forms and
procedures.
Eligible educational institutions that
are also federal, state or local government
agencies are required to provide certain
disclosures under the Privacy Act when
collecting social security numbers from
individuals. See5 U.S.C. § 552a. The
Form W–9S will contain a Privacy Act
disclosure statement.
G. Waiver of Penalties.
The Treasury Department intends to
issue regulations under § 6050S provid-
ing guidance on how institutions are to
comply with the requirements of the
statute. Until the regulations are adopted,
no penalties will be imposed under
1997–51 I.R.B.17December 22, 1997

§§ 6721 and 6722 for failure to file cor-
rect information returns with the Service
or to furnish correct statements to the in-
dividuals with respect to whom informa-
tion reporting is required under § 6050S.
Furthermore, even after the regulations
are adopted, no penalties will be imposed
under §§ 6721 and 6722 for failure to file
correct information returns or furnish
correct written statements for 1998 as re-
quired by § 6050S if the institution made
a good faith effort to file information re-
turns and furnish statements in accor-
dance with this notice.
DRAFTING INFORMATION
The principal author of this notice is
John McGreevy of the Office of the As-
sistant Chief Counsel (Income Tax & Ac-
counting). For further information re-
garding this notice contact him on (202)
622-4910 (not a toll-free call).
Weighted Average Interest Rate
Update
Notice 97–74
Notice 88–73 provides guidelines for
determining the weighted average interest
rate and the resulting permissible range of
interest rates used to calculate current lia-
bility for the purpose of the full funding
limitation of § 412(c)(7) of the Internal
Revenue Code as amended by the Om-
nibus Budget Reconciliation Act of 1987
and as further amended by the Uruguay
Round Agreements Act, Pub. L. 103–465
(GATT).
The average yield on the 30-year Trea-
sury Constant Maturities for November
1997 is 6.11 percent.
The following rates were determined
for the plan years beginning in the month
shown below.
Drafting Information
The principal author of this notice is
Donna Prestia of the Employee Plans Divi-
sion. For further information regarding this
notice, call (202) 622-6076 between 2:30
and 3:30 p.m. Eastern time (not a toll-free
number). Ms. Prestia’s number is (202)
622-7377 (also not a toll-free number).
Minimum Distribution
Requirements
Notice 97–75
I. PURPOSE
This notice provides guidance relating
to the amendments to the minimum dis-
tribution requirements of § 401(a)(9) of
the Internal Revenue Code (“Code”)
made by § 1404 of the Small Business
Job Protection Act of 1996, Pub. L.
104–188 (“SBJPA”). Specifically, this
notice:
• Answers questions regarding the ac-
tuarial increase that must be provided
under a defined benefit plan for an em-
ployee who retires after age 70
1
⁄
2
, and the
interaction of this actuarial increase with
§ 411.
• Coordinates the § 401(a)(4) nondis-
crimination requirements with the
§ 401(a)(9) requirement that certain pre-
retirement distribution options be avail-
able to an employee at age 70
1
⁄
2
.
• Permits plans to allow participants
who commenced distributions under pre-
SBJPA§ 401(a)(9) to stop receiving those
distributions, and provides guidance on
the applicable notice and spousal consent
requirements.
• Clarifies the extent to which distribu-
tions made after 1996 to an employee
who has attained age 70
1
⁄
2
will be consid-
ered eligible rollover distributions under
§ 402(c)(4)(B).
• Gives relief from the direct rollover
requirements of § 401(a)(31), the written
explanation requirement under § 402(f)
and the mandatory 20-percent withhold-
ing requirement under § 3405(c) for cer-
tain distributions made in 1997.
• Provides an optional rule under
which an employee’s required beginning
date under pre-SBJPA§ 401(a)(9) may be
retained.
II. BACKGROUND
Section 401(a)(9) provides that, in
order for a plan to be qualified under
§ 401(a), distributions of each employee’s
interest in the plan must commence no
later than the “required beginning date”
for the employee. Prior to the amend-
ments made by the SBJPA, § 401(a)(9)(C)
generally defined the required beginning
date for an employee as the April 1 of the
calendar year following the calendar year
in which the employee attained age 70
1
⁄
2
.
This meant that an employee who attained
age 70
1
⁄
2
was required to commence re-
ceiving distributions from the plan during
the following year, even if the employee
had not retired from employment with the
employer maintaining the plan.
Section 1404(a) of the SBJPA
amended § 401(a)(9) of the Code to pro-
vide that, in the case of an employee who
is not a 5-percent owner, the required be-
ginning 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 at-
tains age 70
1
⁄
2
or the calendar year in
which the employee retires. In the case
of an employee who is a 5-percent
owner, the required beginning date con-
tinues to be the April 1 of the calendar
year following the calendar year in
which the employee attains age 70
1
⁄
2
. An
employee is treated as a 5-percent owner
for purposes of § 401(a)(9) as amended
by the SBJPAif such employee is a 5-
percent owner (as defined in § 416) with
respect to the plan year ending with or
within the calendar year in which such
owner attains age 70
1
⁄
2
. Once an em-
ployee is a 5-percent owner described in
the preceding sentence, distributions
must continue to such employee even if
such employee ceases to own more than
5 percent of the employer in a subse-
quent year.
Section 1404(a) of the SBJPAalso
amended § 401(a)(9) of the Code to pro-
vide that an employee’s accrued benefit
shall be actuarially increased to take into
account the period after age 70
1
⁄
2
in which
the employee was not receiving any bene-
fits under the plan. The amendments to
§ 401(a)(9) of the Code apply to years be-
ginning after December 31, 1996.
The amendments retain the existing
rules relating to the determination of the
required beginning date for distributions
December 22, 1997181997–51 I.R.B.
90% to 107%90% to 110%
WeightedPermissiblePermissible
MonthYearAverageRangeRange
December19976.796.11 to 7.266.11 to 7.47

from an individual retirement account or
individual retirement annuity under
§ 408, and the determination of the re-
quired beginning date for church plans
and government plans.
Notice 96–67, 1996–2 C.B. 235, pro-
vides guidance on the application of the
amendments to § 401(a)(9)(C) made by
the SBJPAto employees who attained age
70
1
⁄
2
in 1996 but did not retire by the end
of 1996.
Announcement 97–24, 1997–11 I.R.B.
24, provides that an employer may offer
employees (other than 5-percent owners)
who attain age 70
1
⁄
2
after 1995 and have
not retired, an option to defer com-
mencement of benefit distributions under
a qualified plan rather than to begin re-
ceiving benefits from the plan by April 1,
1997, even if the plan has not yet been
amended to provide for the option.
Announcement 97–70, 1997–29 I.R.B.
14, provides transition relief for a plan
under which certain distributions re-
quired under the terms of the plan were
not made to an employee (other than a 5-
percent owner) who attained age 70
1
⁄
2
in
1996 and who did not retire from em-
ployment with the employer maintaining
the plan by the end of 1996.
Section 1.411(d)–4, Q&A10, of the
proposed Income Tax Regulations, 62
F.R. 35752 (July 2, 1997), would provide
relief from § 411(d)(6) for certain plan
amendments that eliminate preretirement
distributions commencing at age 70
1
⁄
2
.
Rev. Proc. 97–41, 1997–33 I.R.B. 51,
provides guidance to sponsors of plans
that are qualified under § 401(a) with re-
spect to the date by which they must
adopt amendments to comply with
changes in the law, including a remedial
amendment period for amendments to
reflect changes to the qualification re-
quirements made by the SBJPA.
This notice provides guidance on ad-
ditional issues relating to the amend-
ments to § 401(a)(9)(C) made by the
SBJPA.
III. QUESTIONS AND ANSWERS
(1) ACTUARIALINCREASE FOR
DEFINED BENEFITPLANS
Q–1: If an employee retires in a calen-
dar year after the calendar year in which
the employee attains age 70
1
⁄
2
, for what
period must the employee’s accrued bene-
fit under a defined benefit plan be actuari-
ally increased?
A–1: (a) Actuarial increase starting
date.Under § 401(a)(9)(C)(iii), in the
case of an employee (other than a 5-per-
cent owner) who retires in a calendar
year after the calendar year in which the
employee attains age 70
1
⁄
2
, the em-
ployee’s accrued benefit under a defined
benefit plan must be actuarially increased
in order to take into account the period
after age 70
1
⁄
2
in which the employee is
not receiving benefits under the plan. If
an employee retires at age 70
1
⁄
2
, then, in
order to satisfy § 401(a)(9), the distribu-
tion of the employee’s benefits is re-
quired to begin no later than the April 1
following the calendar year in which the
employee attains age 70
1
⁄
2
. Thus, if an
employee retires after the calendar year
in which the employee attains age 70
1
⁄
2
,
the actuarial increase required to satisfy
§ 401(a)(9) to reflect the delay in pay-
ment must be provided for the period
starting on the April 1 following the cal-
endar year in which the employee attains
age 70
1
⁄
2
. In the case of an employee who
attained age 70
1
⁄
2
prior to 1996, the start-
ing date for the period of actuarial in-
crease is January 1, 1997.
(b) Actuarial increase ending date.The
period for which the actuarial increase must
be provided ends on the date on which ben-
efits commence after retirement in an
amount sufficient to satisfy § 401(a)(9).
(c) Nonapplication to defined benefit
plans using optional rule.If, pursuant to
the optional rule of Q&A–10, minimum
distributions under a plan to an employee
commence no later than April 1 of the cal-
endar year following the calendar year in
which the employee attains age 70
1
⁄
2
, in an
amount sufficient to satisfy § 401(a)(9) as
in effect prior to amendment by the
SBJPA, no actuarial increase is required
under § 401(a)(9)(C)(iii).
(d) Nonapplication to defined contribu-
tion plans.The actuarial increase re-
quired under this Q&A–1 does not apply
to defined contribution plans.
Q–2: What amount of actuarial in-
crease is required under § 401(a)(9)(C)-
(iii)?
A–2: In order to satisfy § 401(a)(9)-
(C)(iii), the retirement benefits payable
with respect to an employee as of the end
of the period for actuarial increases (de-
scribed in Q&A–1) must be no less than:
the actuarial equivalent of the employee’s
retirement benefits that would have been
payable as of the date the actuarial in-
crease must commence under Q&A–1
(i.e., the later of the April 1 following the
calendar year in which the employee at-
tained 70
1
⁄
2
or January 1, 1997) if benefits
had commenced on that date; plus the ac-
tuarial equivalent of any additional bene-
fits accrued after that date; reduced by the
actuarial equivalent of any distributions
made with respect to the employee’s re-
tirement benefits after that date. Actuarial
equivalence is determined using the plan’s
assumptions for determining actuarial
equivalence for purposes of satisfying
§ 411.
Q–3: How does the actuarial increase
required under § 401(a)(9)(C)(iii) relate
to the actuarial increase required under
§ 411?
A–3: As reflected in § 1.411(c)–1(f)(2)
of the proposed Income Tax Regulations,
in order for an employee’s accrued benefit
to be nonforfeitable as required by § 411,
a defined benefit plan must make an actu-
arial adjustment to an accrued benefit the
payment of which is deferred past normal
retirement age. The only exception to this
rule is that generally no actuarial adjust-
ment is required to reflect the period dur-
ing which a benefit is suspended as per-
mitted under section 203(a)(3)(B) of the
Employee Retirement Income Security
Act of 1974 (ERISA). The actuarial in-
crease required under § 401(a)(9) of the
Code for the period described in Q&A–1
is generally the same as, and not in addi-
tion to, the actuarial increase required for
that same period under § 411 to reflect
any delay in the payment of retirement
benefits after normal retirement age.
However, unlike the actuarial increase re-
quired under § 411, the actuarial increase
required under § 401(a)(9)(C) must be
provided even during the period during
which an employee is in section
203(a)(3)(B) service.
Q–4: To what extent may additional
accruals required under § 411(b)(1)(H) be
reduced by actuarial increases required
under § 401(a)(9)(C)(iii)?
A–4: For purposes of § 411(b)(1)(H)–
(iii)(II), the actuarial increase required
under § 401(a)(9)(C)(iii) will be treated as
an adjustment attributable to the delay in
distribution of benefits after the attainment
of normal retirement age. Accordingly, to
1997–51 I.R.B.19December 22, 1997

the extent permitted under § 411(b)(1)(H),
the actuarial increase required under
§ 401(a)(9)(C)(iii) may reduce the benefit
accrual otherwise required under § 411(b)–
(1)(H)(i). However, the rule in the last
sentence of § 1.411(b)–2(b)(4)(iii)(B) of
the proposed Income Tax Regulations re-
garding the actuarial adjustment in the case
of a plan that suspends benefits in accor-
dance with § 203(a)(3)(B) of ERISAand
the regulations thereunder is not applicable
to the calculation of additional accruals for
the period of time for which actuarial in-
creases are required under § 401(a)-
(9)(C)(iii).
(2) COORDINATION OF SECTION
401(a)(4) AND SECTION
401(a)(9) FOR CERTAIN
PRERETIREMENTAGE 70
1
⁄
2
DISTRIBUTION OPTIONS
Q–5: Are there special rules that coor-
dinate the implementation of the SBJPA
changes to § 401(a)(9) with the nondis-
criminatory current and effective avail-
ability requirements of § 1.401(a)(4)–4 of
the Income Tax Regulations?
A–5: (a) Aggregation of optional
forms of benefit.Solely for purposes of
determining whether a plan satisfies the
nondiscriminatory current and effective
availability requirements of § 1.401(a)-
(4)–4, a preretirement age 70
1
⁄
2
distribu-
tion option that is only available to re-
quired group members is permitted to be
aggregated with another optional form of
benefit that provides for commencement
in the retirement period and the two op-
tional forms of benefit may be treated as a
single optional form of benefit. This ag-
gregation treatment is permitted only if
the other optional form of benefit is the
same optional form of benefit as the pre-
retirement age 70
1
⁄
2
distribution option ex-
cept for the difference in the timing of the
commencement of payments.
(b) Interim minimum distributions.In
the case of a defined contribution plan, if
a preretirement age 70
1
⁄
2
distribution op-
tion is available only to required group
members and provides for payment of in-
stallment payments equal to the minimum
amount (calculated in accordance with a
method specified in the plan) necessary to
satisfy § 401(a)(9) (before or after amend-
ment by the SBJPA) with payment com-
mencing during the 70
1
⁄
2
period and end-
ing by the end of the retirement period,
and this form of payment does not apply
to benefit payments after the end of the
retirement period, this preretirement dis-
tribution option is treated as satisfying the
requirements of § 1.401(a)(4)–4.
(c) Definitions.The following defini-
tions apply only for purposes of this
Q&A–5:
(i) 70
1
⁄
2
period.The 70
1
⁄
2
period is the
period beginning on January 1 of the year
in which the employee attains age 70
1
⁄
2
and ending on the April 1 of the following
year.
(ii) Retirement period.The retirement
period is the period beginning on January
1 of the year in which the employee re-
tires from employment with the employer
maintaining the plan and ending on April
1 of the following year.
(iii) Preretirement age 70
1
⁄
2
distribution
option.Apreretirement age 70
1
⁄
2
distribu-
tion option is an optional form of benefit
under which benefits payable in a particu-
lar distribution form (including any modi-
fications that may be elected after benefit
commencement) commence during the
70
1
⁄
2
period prior to the employee’s retire-
ment from employment with the em-
ployer maintaining the plan.
(iv) Required group member.An em-
ployee who is a 5-percent owner for pur-
poses of section 401(a)(9) is a required
group member. If a plan is amended to
eliminate a preretirement age 70
1
⁄
2
distrib-
ution option with respect to all employees
(other than 5-percent owners) who attain
age 70
1
⁄
2
after a specified calendar year,
and the plan satisfied § 1.401(a)(4)–4
with respect to availability of the prere-
tirement age 70
1
⁄
2
distribution option im-
mediately before the amendment, then
employees who attained age 70
1
⁄
2
in or be-
fore the specified calendar year are also
required group members with respect to
the preretirement age 70
1
⁄
2
distribution op-
tion under the plan even if the employees
are not 5-percent owners for purposes of
section 401(a)(9).
(3) ISSUES RELATING TO
EMPLOYEES WHO ATTAINED
AGE 70
1
⁄
2
BEFORE JANUARY 1,
1997
Q–6: For purposes of § 401(a)(9)(C)
after amendment by the SBJPA, what is
the required beginning date for an em-
ployee (other than a 5-percent owner)
who attained age 70
1
⁄
2
before 1997, but
did not retire from employment with the
employer maintaining the plan before
January 1, 1997?
A–6: For purposes of determining the
amount of minimum distributions re-
quired after December 31, 1996, the re-
quired beginning date for an employee
who did not retire from employment
with the employer maintaining the plan
before January 1, 1997 is determined
under § 401(a)(9)(C), as amended by the
SBJPA. Accordingly, as described in
Q&A–2 of Notice 96–67, in the case of
an employee (other than a 5-percent
owner) who attained age 70
1
⁄
2
in 1996
and retired from employment with the
employer maintaining the plan on or
after January 1, 1997, the required be-
ginning date is April 1 of the calendar
year following the year in which the em-
ployee retires from employment with the
employer maintaining the plan. Further-
more, an employee (other than a 5-per-
cent owner) who attained age 70
1
⁄
2
prior
to 1996, and retires from employment
with the employer maintaining the plan
on or after January 1, 1997, has a re-
quired beginning date for purposes of de-
termining minimum distributions that are
required on or after January 1, 1997 that
is different from the required beginning
date for the employee for purposes of de-
termining minimum distributions that
were required prior to January 1, 1997.
Thus, for example, an employee (other
than a 5-percent owner) who attained age
70
1
⁄
2
in 1995, and retired from employ-
ment with the employer maintaining the
plan in 1997, has a required beginning
date of April 1, 1998. See Q&A–10 of
this notice for a special rule permitting
an employee’s required beginning date
determined without regard to the SBJPA
amendments to be treated as the required
beginning date for purposes of determin-
ing the minimum distributions required
after January 1, 1997.
Q–7: May a plan permit an employee
who attained age 70
1
⁄
2
before 1997 but did
not retire from employment with the em-
ployer maintaining the plan before Janu-
ary 1, 1997 to elect to stop current distrib-
utions?
A–7: (a) Election to stop permitted.An
employee who attained age 70
1
⁄
2
before
1997, but did not retire from employment
with the employer maintaining the plan
before January 1, 1997 has a new required
December 22, 1997201997–51 I.R.B.

beginning date as described in Q&A–6.
Accordingly, distributions are not re-
quired to be made to that employee after
December 31, 1996 and prior to the em-
ployee’s new required beginning date in
order to satisfy § 401(a)(9). Aplan may
provide that such an employee may affir-
matively elect to stop distributions at any
time until the employee retires, subject to
the terms of an applicable qualified do-
mestic relations order (QDRO), within
the meaning of § 414(p).
(b) Compliance with sections 401(a)-
(11) and 417.An employee’s election to
stop and recommence distributions under
paragraph (a) of this Q&A–7 is subject to
the requirements of §§ 401(a)(11) and
417, if the plan is otherwise subject to
those rules. However, a plan that permits
an employee to stop distributions in ac-
cordance with paragraph (a) of this
Q&A–7 and that complies with either of
the alternatives set forth in Q&A–8, will
not violate § 401(a)(11) and § 417 on ac-
count of the employee’s cessation and
recommencement of those distributions.
Q–8: What special alternatives are
available for a plan that is subject to
§ 401(a)(11) and § 417 in order to satisfy
those sections with respect to an em-
ployee who, pursuant to Q&A–7, elects to
stop and recommence distributions?
A–8 (a): In general.Aplan will not vi-
olate § 401(a)(11) and § 417 on account
of an employee’s cessation and recom-
mencement of distributions in accordance
with Q&A–7(a) if the plan operationally
complies with either paragraph (b) or (c)
of this Q&A–8, the plan is amended
within the remedial amendment period for
the plan for SBJPAchanges to reflect that
operational compliance, and the distribu-
tions stop prior to the end of that remedial
amendment period.
(b) No new annuity starting date upon
recommencement.
(i) Under this alternative, the plan pro-
vides that there is no new annuity starting
date under § 417 upon recommencement
of benefits. In such case, no spousal con-
sent is required for an employee to elect
to stop distributions pursuant to Q&A–
7(a). Moreover, no spousal consent is re-
quired when payments recommence to the
employee if:
(A) payments recommence to the em-
ployee with the same beneficiary and in a
form of benefit that is the same but for the
cessation of distributions,
(B) the individual who was the em-
ployee’s spouse on the annuity starting
date executed a general consent within the
meaning of § 1.401(a)–20, A–31 of the
Income Tax Regulations, or
(C) the individual who was the em-
ployee’s spouse on the annuity starting
date executed a specific consent to waive
a QJSAwithin the meaning of § 1.401(a)–
20, A–31, and the employee is not mar-
ried to that individual when benefits
recommence.
(ii) However, in order to comply with
this paragraph (b), consent of the individ-
ual who was the employee’s spouse on the
annuity starting date is required prior to
recommencement if the employee
chooses to recommence benefits either in
a different form than the form in which
they were being distributed prior to the
cessation of distributions or with a differ-
ent beneficiary and if:
(A) the original form was a qualified
joint and survivor annuity (QJSA) within
the meaning of § 417(b), or
(B) the individual who was the em-
ployee’s spouse on the annuity starting
date originally executed a specific con-
sent to waive a QJSAwithin the meaning
of § 1.401(a)–20, A–31, of the Income
Tax Regulations, and the employee is still
married to that individual when benefits
recommence.
(c) New annuity starting date upon
recommencement.Under this alternative,
the plan provides that there is a new annu-
ity starting date under § 417 upon recom-
mencement of benefits. In such case, no
spousal consent is required for an em-
ployee to elect to stop distributions pur-
suant to Q&A–7(a), except where such
distributions are being paid in the form of
a qualified joint and survivor annuity
(QJSA) within the meaning of § 417(b).
Where such distributions are being paid in
the form of a QJSA, in order to comply
with this paragraph (c), the person who
was the employee’s spouse on the original
annuity starting date must consent to the
election to stop distributions under Q&A–
7(a) and the spouse’s consent must ac-
knowledge the effect of the election. Be-
cause there is a new annuity starting date
upon recommencement of benefits, the
plan, in order to satisfy this paragraph (c),
must comply with all of the requirements
of § 417 upon such recommencement, in-
cluding payment of a qualified preretire-
ment survivor annuity (QPSA) if the em-
ployee dies before the new annuity
starting date.
(4) ISSUES RELATING TO
ELIGIBILITY FOR ROLLOVERS
Q–9: If distributions are made under a
plan to an employee (other than a 5-per-
cent owner) who did not retire before Jan-
uary 1, 1997 from employment with the
employer maintaining the plan, is any
portion of a distribution made after attain-
ment of age 70
1
⁄
2
a required distribution
under § 401(a)(9) for purposes of
§ 402(c)(4)(B)?
A–9: (a) General rule.Section 402(c)–
(4)(B) provides that a distribution is not
an eligible rollover distribution to the ex-
tent that it is required under § 401(a)(9).
As noted in Q&A–6, for purposes of de-
termining the amount of minimum distri-
butions that are required after December
31, 1996, the required beginning date for
an employee who did not retire before
January 1, 1997 from employment with
the employer maintaining the plan is rede-
termined under § 401(a)(9)(C), as
amended by the SBJPA. Therefore,
whether or not a plan allows an employee
who attained age 70
1
⁄
2
before January 1,
1997, but did not retire from employment
with the employer maintaining the plan
before that date, to stop receiving distrib-
utions in accordance with Q&A–7, a dis-
tribution to such an employee prior to the
year the employee retires is not a required
distribution under § 401(a)(9). Such a
distribution is an eligible rollover distrib-
ution unless it is excepted for some other
reason. An exception is provided under
§ 402(c)(4)(A) for a series of substantially
equal periodic payments made for the life
(or life expectancy) of the employee or
the joint lives (or joint life expectancy) of
the employee and the employee’s desig-
nated beneficiary, or for a specified pe-
riod of 10 years or more. If an em-
ployee’s benefit is being distributed in a
series of annual payments that would
equal the required minimum distribution
determined in accordance with Q&AF–1
of § 1.401(a)(9)–1 of the proposed In-
come Tax Regulations, then the series of
payments will be considered a series of
substantially equal payments over the life
(or life expectancy) of the employee or
1997–51 I.R.B.21December 22, 1997

the joint lives (or joint life expectancy) of
the employee and the employee’s desig-
nated beneficiary, or for a specified pe-
riod of 10 years or more, in accordance
with Q&A–5 of § 1.402(c)–2 of the In-
come Tax Regulations. Therefore, pay-
ments under such a series of payments are
not eligible rollover distributions.
(b) Treatment of 1996 distributions for
employees who attained age 70
1
⁄
2
in 1996.
As provided in Q&A–3 of Notice 96–67,
if a distribution is made during 1996 to an
employee who attained age 70
1
⁄
2
in 1996,
whether that distribution is a required dis-
tribution under § 401(a)(9) is determined
by applying § 401(a)(9) as in effect prior
to amendment by the SBJPA.
(c) Transition rule for 1997 distribu-
tions.Aplan will not fail to satisfy
§ 401(a)(31) merely because the plan ad-
ministrator or payor did not offer an em-
ployee (other than a 5-percent owner),
who has attained age 70
1
⁄
2
but has not re-
tired from employment with the employer
maintaining the plan, a direct rollover op-
tion with respect to the eligible rollover
distributions described in this paragraph
(c). Adistribution is described in this
paragraph (c) if it is paid in calendar year
1997 and, under pre-SBJPA§ 401(a)(9),
the distribution would not have been an
eligible rollover distribution because it
would have been a required minimum dis-
tribution. In addition, with respect to
such a distribution, a plan will not be re-
quired to satisfy the written explanation
requirement under § 402(f) or the manda-
tory 20-percent withholding requirement
under § 3405(c).
(5) PLANS MAINTAINING
PRE-SBJPAREQUIRED
BEGINNING DATE
Q–10: Will a plan satisfy § 401(a)(9)
as amended by SBJPAif it provides for
minimum required distributions for an
employee commencing no later than an
employee’s required beginning date of
April 1 of the calendar year following the
calendar year the employee attained age
70
1
⁄
2
, regardless of whether the employee
is a 5-percent owner?
A–10: (a) Aplan will not fail to sat-
isfy § 401(a)(9) as amended by SBJPA
merely because it provides for minimum
distributions commencing no later than
an employee’s pre-SBJPArequired be-
ginning date of April 1 of the calendar
year following the calendar year the em-
ployee attained age 70
1
⁄
2
, regardless of
whether the employee is a 5-percent
owner. For example, a plan may pro-
vide, in the case of all employees who at-
tained age 70
1
⁄
2
before 1999, that mini-
mum required distributions will
commence by the pre-SBJPArequired
beginning date of April 1 of the calendar
year following the calendar year the em-
ployee attained age 70
1
⁄
2
.
(b) If, pursuant to this Q&A–10, the
plan provides for minimum distributions
commencing no later than an employee’s
required beginning date of April 1 of the
calendar year following the calendar
year in which the employee attained age
70
1
⁄
2
, both the employee’s designated
beneficiary and whether recalculation of
life expectancy applies will be deter-
mined based on any elections in effect as
of that date. Furthermore, an employee
who dies after the required beginning
date determined under the plan terms is
treated as dying after the required begin-
ning date within the meaning of §
401(a)(9)(C). Thus, to determine the
distributions after such a death, §
401(a)(9)(B)(i) (and not
§ 401(a)(9)(B)(ii)) applies, requiring the
remaining portion of the employee’s in-
terest to be distributed at least as rapidly
as under the method being used under
§ 401(a)(9)(A)(ii) as of the employee’s
date of death. See Q&As B–4 and F–3A
of § 1.401(a)(9)–1 of the proposed Income
Tax Regulations for guidance on satisfying
the requirements of § 401(a)(9)(B)(i).
(c) Regardless of whether, pursuant to
this Q&A–10, the plan provides for mini-
mum distributions commencing no later
than an employee’s required beginning
date of April 1 of the calendar year fol-
lowing the calendar year the employee at-
tained age 70
1
⁄
2
, the employee’s required
beginning date for purposes of § 4974
(excise tax on excess accumulations) and
§ 402(c) (definition of eligible rollover
distribution) is determined in accordance
with § 401(a)(9) as amended by the
SBJPA. Thus, in the case of an employee
who is not a 5-percent owner, no excise
tax under § 4974 will apply prior to the
calendar year in which the employee re-
tires. However, beginning with that year,
the amount that is required to be distrib-
uted each year to satisfy § 401(a)(9), as
amended by the SBJPA, for purposes of
§ 4974 and § 402(c), will be determined
using the required beginning date under
the plan.
IV. COMMENTS
The Treasury and the Service invite
comments and suggestions regarding the
matters discussed in this notice. Com-
ments can be addressed to CC:DOM:
CORP:R (Notice 97–75), room 5228, In-
ternal Revenue Service, POB 7604, Ben
Franklin Station, Washington, DC
20044. In the alternative, comments may
be hand delivered between the hours of 8
a.m. and 5 p.m. to CC:DOM:CORP:R
(Notice 97–75), Courier’s Desk, Internal
Revenue Service, 1111 Constitution Av-
enue, NW, Washington, DC. Alterna-
tively, taxpayers may transmit comments
electronically via the IRS Internet site at
http://www.irs.ustreas.gov/prod/tax_regs/
comments.html.
V. DRAFTING INFORMATION
The principal authors of this notice are
Ingrid Grinde of the Employee Plans Di-
vision and Cheryl Press of the Office of
the Associate Chief Counsel (Employee
Benefits and Exempt Organizations).
However, other personnel from the Ser-
vice and Treasury contributed to its devel-
opment. For further information regard-
ing this notice, please contact the
Employee Plans Division’s taxpayer as-
sistance telephone service at (202) 622-
6074/6075 between the hours of 1:30 p.m.
and 3:30 p.m. Eastern Time, Monday
through Thursday. Alternatively, please
call Thomas Foley at (202) 622-6050 or
Ingrid Grinde at (202) 622-6214. These
telephone numbers are not toll-free.
26 CFR 601.201: Rulings and determination letters.
(Also Part I, § 636; 1.636–3.)
Rev. Proc. 97–55
SECTION 1. PURPOSE
This revenue procedure sets forth the
conditions under which the Internal Rev-
enue Service will consider issuing an ad-
vance ruling that a right to mineral is a
production payment as defined in
§ 1.636–3(a) of the Income Tax Regula-
tions.
December 22, 1997221997–51 I.R.B.

1997–51 I.R.B.23December 22, 1997
SECTION 2. BACKGROUND
Section 1.636–3(a)(1) defines a produc-
tion payment as a right to a specified share
of the production from mineral in place,
which is an economic interest in mineral in
place and which has an expected economic
life (at the time of its creation) of shorter
duration than the economic life of the bur-
dened property. The right may be limited
by a dollar amount, a quantum of mineral,
or a period of time. It may not reasonably
be expected to extend in substantial
amounts over the entire productive life of
the burdened property.
SECTION 3. SCOPE
This revenue procedure applies to any
production payment described in § 636 of
the Internal Revenue Code.
SECTION 4. APPLICATION
The Internal Revenue Service generally
will issue an advance ruling that a right to
mineral is a production payment if the fol-
lowing conditions are met:
.01 The right is an economic interest in
mineral in place as defined in § 1.611–
1(b), without regard to the application of
§ 636;
.02 The right is limited by a speci-
fied dollar amount, a specified quantum
of mineral, or a specified period of
time;
.03 It is reasonably expected, at the
time the right is created, that it will termi-
nate upon the production of not more than
90 percent of the reserves then known to
exist; and
.04 The present value of the produc-
tion expected to remain after the right ter-
minates is 5 percent or more of the pre-
sent value of the entire burdened property
(determined at the time the right is cre-
ated). The determination of present value
takes into account all the facts and cir-
cumstances, in accordance with the provi-
sions of § 1.611–2(e).
DRAFTING INFORMATION
The principal author of this revenue
procedure is Brenda M. Stewart of the Of-
fice of Assistant Chief Counsel (Pass-
throughs and Special Industries). For fur-
ther information regarding this revenue
procedure contact Roger E. Baker on
(202) 622-3120 (not a toll-free call).

December 22, 1997241997–51 I.R.B.
Notice of Proposed Rulemaking
and Notice of Public Hearing
IRS Adoption Taxpayer
Identification Numbers
REG–103330–97
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemaking
by cross-reference to temporary regula-
tions and notice of public hearing.
SUMMARY: In T.D. 8739, page 8, the
IRS is issuing temporary regulations
under section 6109 relating to taxpayer
identifying numbers. The temporary reg-
ulations provide rules for obtaining and
using IRS adoption taxpayer identifica-
tion numbers. The temporary regulations
assist individuals who are in the process
of adopting children and wish to claim
certain tax benefits with respect to these
children. The text of those temporary reg-
ulations also serves as the text of these
proposed regulations. This document also
provides notice of a public hearing on
these proposed regulations.
DATES: Written comments must be re-
ceived by February 23, 1998. Requests to
speak and outlines of topics to be dis-
cussed at the public hearing scheduled for
March 4, 1998, at 10:00 a.m., must be re-
ceived by February 11, 1998.
ADDRESSES: Send submissions to:
CC:DOM:CORP:R (REG–103330–97),
room 5228, Internal Revenue Service,
POB 7604, Ben Franklin Station, Wash-
ington, DC 20044. Submissions may be
hand delivered between the hours of 8
a.m. and 5 p.m. to: CC:DOM:CORP:R
(REG–103330–97), Courier’s Desk, In-
ternal Revenue Service, 1111 Constitution
Avenue NW, Washington, DC.
Taxpayers may also submit comments
electronically via the internet by selecting
the “Tax Regs” option on the IRS Home
Page, or by submitting comments directly
to the IRS internet site at http://www.
irs.ustreas.gov/prod/tax_regs/comments.h
tml. The public hearing will be held in
Room 2615, Internal Revenue Building,
1111 Constitution Avenue, NW, Washing-
ton, DC.
FOR FURTHER INFORMATION CON-
TACT: Concerning the proposed regula-
tions, Michael L. Gompertz, (202) 622-
4910; concerning submissions and the
hearing, Michael Slaughter, (202) 622-
7190 (not toll-free numbers).
SUPPLEMENTARYINFORMATION:
Paperwork Reduction Act
The collection of information con-
tained in this notice of proposed rulemak-
ing has been submitted to the Office of
Management and Budget for review in ac-
cordance with the Paperwork Reduction
Act of 1995 (44 U.S.C. 3507(d)). Com-
ments on the collection of information
should be sent to the Office of Manage-
ment and Budget,Attn: Desk Officer for
the Department of the Treasury, Office of
Information and Regulatory Affairs,
Washington, DC 20503, with copies to
the Internal Revenue Service,Attn: IRS
Reports Clearance Officer, T:FP, Wash-
ington, DC 20224. Comments on the col-
lection of information should be received
by February 23, 1998. Comments are
specifically requested concerning:
Whether the proposed collection of in-
formation is necessary for the proper per-
formance of the functions of the Internal
Revenue Service,including whether the
collection will have a practical utility;
The accuracy of the estimated burden
associated with the proposed collection of
information (see below);
How the quality, utility, and clarity of
the information to be collected may be en-
hanced;
How the burden of complying with the
proposed collection of information may
be minimized, including through the ap-
plication of automated collection tech-
niques or other forms of information tech-
nology; and
Estimates of capital or start-up costs and
costs of operation, maintenance, and pur-
chase of services to provide information.
The collection of information in this
proposed regulation is in §301.6109–
3T(c). This information is required by the
IRS to assign IRS adoption taxpayer iden-
tification numbers (ATINs) to children
who are in the process of being adopted.
Unless an ATIN is assigned to a prospec-
tive adoptive child, the prospective adop-
tive parent cannot claim a dependency ex-
emption for the child under section 151, a
dependent care credit for the child under
section 21, or, for taxable years beginning
after December 31, 1997, a child tax
credit under section 24. The collection of
information in §301.6109–3Tis thus re-
quired to obtain a benefit. The likely re-
spondents are individuals.
The collection of information in
§301.6109–3Tis satisfied by including
the required information on Form W–7A
or other form as may be prescribed by the
IRS to apply for an ATIN. The burden for
this requirement is reflected in the burden
estimate for Form W–7A.
An agency may not conduct or sponsor,
and a person is not required to respond to,
a collection of information unless it dis-
plays a valid control number assigned by
the Office of Management and Budget.
Books or records relating to a collec-
tion of information must be retained as
long as their contents may become mater-
ial in the administration of any internal
revenue law. Generally, tax returns and
tax return information are confidential, as
required by 26 U.S.C. 6103.
Background
Temporary regulations in T.D. 8739
amend the Regulations on Procedure and
Administration (26 CFR part 301) relat-
ing to section 6109. The text of those
temporary regulations also serves as the
text of these proposed regulations. The
preamble to the temporary regulations ex-
plains the regulations.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a signifi-
cant regulatory action as defined in EO
12866. Therefore, a regulatory assess-
ment is not required. It also has been de-
termined that section 553(b) of the Ad-
ministrative Procedure Act (5 U.S.C.
chapter 5) does not apply to these regula-
tions, 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.
Part IV. Items of General Interest

Pursuant to section 7805(f) of the Inter-
nal Revenue Code, this notice of pro-
posed 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, considera-
tion will be given to any written com-
ments (a signed original and eight (8)
copies) that are submitted timely to the
IRS. All comments will be available for
public inspection and copying.
Apublic hearing has been scheduled
for Wednesday, March 4, 1998, at 10:00
a.m. in Room 2615. Because of access
restrictions, visitors will not be admitted
beyond the building lobby more than 15
minutes before the hearing starts.
The rules of 26 CFR 601.601(a)(3)
apply to the hearing.
Persons that wish to present oral com-
ments at the hearing must submit written
comments by February 23, 1998 and sub-
mit requests to speak and an outline of the
topics to be discussed and the time to be
devoted to each topic (signed original and
eight (8) copies) by February 11, 1998.
Aperiod 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 regula-
tions is Michael L. Gompertz, Office of
Assistant Chief Counsel (Income Tax and
Accounting). However, other personnel
from the IRS and Treasury Department
participated in their development.
* * * * *
Proposed Amendments to the Regulations
Accordingly, 26 CFR part 301 is pro-
posed to be amended as follows:
PART301—PROCEDURE AND
ADMINISTRATION
Paragraph 1. The authority citation for
part 301 is amended by adding entries in
numerical order to read as follows:
Authority: 26 U.S.C. 7805 * * *
Section 301.6109–1 also issued under
26 U.S.C. 6109;
Section 301.6109–3 also issued under
26 U.S.C. 6109; * * *
Par. 2. Section 301.6109–1 is amended
by revising paragraphs (a)(1)(i), (a)(1)(ii)
introductory text, (a)(1)(ii)(A), and
(a)(1)(ii)(B) to read as follows:
§301.6109–1 Identifying numbers.
(a) * * * (1) Taxpayer identifying num-
bers—(i) [The text of proposed paragraph
(a)(1)(i) is the same as the text of
§301.6109–1T(a)(1)(i) published in T.D.
8739.]
(ii) [The text of proposed paragraph
(a)(1)(ii) introductory text is the same as
the text of §301.6109–1T(a)(1)(ii) intro-
ductory text published in T.D. 8739.]
(A) and (B) [The text of proposed
(a)(1)(ii)(A) and (B) are the same as the
text of §301.6109–1T(a)(1)(ii)(A) and (B)
published in T.D. 8739.]
* * * * *
Par. 3. Section 301.6109–3 is added to
read as follows:
§301.6109–3 IRS adoption taxpayer
identification numbers.
[The text of this proposed section is the
same as the text of §301.6109–3Tpub-
lished in T.D. 8739.]
Michael P. Dolan,
Acting Commissioner of
Internal Revenue.
(Filed by the Office of the Federal Register on No-
vember 21, 1997, at 8:45 a.m., and published in the
issue of the Federal Register for November 24,
1997, 62 F.R. 62538).
Notice of Proposed Rulemaking
and Partial Withdrawal of Notice
of Proposed Rulemaking
Tax Treatment of Cafeteria
Plans
REG–243025–96
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Partial withdrawal of notice of
proposed rulemaking, amendment to no-
tice of proposed rulemaking, and notice
of proposed rulemaking by cross refer-
ence to temporary regulations.
SUMMARY: This document withdraws
portions of the notice of proposed rule-
making published in the Federal Regis-
ter(54 FR 9460) on March 7, 1989 and
amends proposed regulations relating to
change in family status. In T.D. 8738,
page 4, the IRS is issuing temporary regu-
lations that provide guidance on the cir-
cumstances under which a cafeteria plan
participant may revoke an existing elec-
tion and make a new election during a pe-
riod of coverage. The text of those tempo-
rary regulations also serves as the text of
these proposed regulations.
DATES: Written comments and requests
for public hearing must be received by
February 5, 1998.
ADDRESSES: Send submissions to:
CC:DOM:CORP:R (REG–243025–96),
room 5226, Internal Revenue Service,
POB 7604, Ben Franklin Station, Wash-
ington, DC 20044. Submissions may be
hand delivered between the hours of 8
a.m. and 5 p.m. to: CC:DOM:CORP:R
(REG–243025–96), Courier’s Desk, Inter-
nal Revenue Service, 1111 Constitution
Avenue NW, Washington, DC. Alterna-
tively, 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 CON-
TACT: Concerning the proposed regula-
tions, Sharon Cohen, (202) 622-6080;
concerning submissions or to request a
public hearing, Evangelista Lee, (202)
622-7190 (not toll-free numbers).
SUPPLEMENTARYINFORMATION:
Background
Q&A–8 of §1.125–1
1
and Q&A–6(c)
and (d) of §1.125–2
2
provide that a par-
ticipant may make benefit election
changes pursuant to changes in family
status and separation from service. The
1997–51 I.R.B.25December 22, 1997
1
Published as a proposed rule at 49 FR 19321
(May 7, 1984).
2
Published as a proposed rule at 54 FR 9460
(March 7, 1989).

December 22, 1997261997–51 I.R.B.
temporary regulations set forth the stan-
dards under which a cafeteria plan can
allow an employee to change his or her
health coverage election during a period
of coverage to conform with the special
enrollment rights under the Health Insur-
ance Portability and Accountability Act
of 1996, and to change his or her health
coverage or group-term life insurance
coverage in a variety of other change in
status situations. Thus, these proposed
regulations modify A&A–8 of §1.125–1
and Q&A–6(c) and (d) of §1.125–2, and
clarify that the “change in family status
rules” in the existing proposed regula-
tions continue to apply to qualified bene-
fits (including dependent care assistance
under section 129 and adoption assis-
tance under section 137) other than acci-
dent or health coverage and group-term
life insurance coverage. Election
changes continue to be permitted where
there has been a significant change in the
health coverage of the employee or
spouse attributable to the spouses’s em-
ployment.
In addition, the temporary regulations
provide that the rules of section 401(k)
and (m), rather than the rules in the tem-
porary regulations that apply to other
qualified benefits, govern election
changes under a qualified cash or deferred
arrangement (within the meaning of sec-
tion 401(k)) or with respect to employee
contributions under section 401(m).
Therefore, the proposed regulations with-
draw Q&A–7(f) of §1.125–2.
T.D. 8738 amends the Income Tax Reg-
ulations (26 CFR part 1) relating to sec-
tion 125. The temporary regulations con-
tain rules relating to the circumstances
under which a cafeteria plan participant
may revoke an existing election and make
a new election during a period of cover-
age.
The text of those temporary regulations
also serves as the text of these proposed
regulations. The preamble to the tempo-
rary regulations explains the temporary
regulations.
Special Analyses
It has been determined that this Trea-
sury Decision is not a significant regula-
tory 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 Pro-
cedure Act (5 U.S.C. chapter 5) do not
apply to these regulations, and because
the regulations does not impose a collec-
tion of information on small entities, the
Regulatory Flexibility Act (5 U.S.C.
chapter 6) does not apply. Pursuant to sec-
tion 7805(f) of the Internal Revenue
Code, proposed regulations will be sub-
mitted to the Chief Counsel for Advocacy
of the Small Business Administration for
comment on their impact on small busi-
ness.
Comments and Public Hearing
Before these proposed regulations are
adopted as final regulations, considera-
tion will be given to any written com-
ments (a signed original and eight (8)
copies) that are submitted timely to the
IRS. All comments will be available for
public inspection and copying. Apublic
hearing may be scheduled if requested in
writing by any person that timely submits
written comments. If a public hearing is
scheduled, notice of the date, time, and
place for the hearing will be published in
the Federal Register.
Drafting Information
The principal authors of these regula-
tions are Catherine Fuller and Sharon
Cohen, Office of the Associate Chief
Counsel (Employee Benefits and Ex-
empt Organizations). However, other
personnel from the IRS and Treasury De-
partment participated in their develop-
ment.
Partial Withdrawal of Notice of Proposed
Rulemaking
Accordingly, under the authority of 26
U.S.C. 7805, §1.125–2 Q&A–6(f) in the
notice of proposed rulemaking that was
published on March 7, 1989 (54 FR 9460)
is withdrawn.
* * * * *
Amendments Previously Proposed Rules
Accordingly, the proposed rules pub-
lished on May 7, 1984 (49 FR 19321) and
March 7, 1989 (54 FR 9460) are amended
as follows:
PART1—INCOME TAXES
Paragraph 1. In §1.125–1, as proposed
May 7, 1984 (49 FR 19321), in Q&A–8,
Q–8 is republished and A–8 is amended
by revising the last sentence to read as
follows:
§1.125–1 Questions and answers relating
to cafeteria plan.
* * * * *
Q–8: What requirements apply to par-
ticipants’elections under a cafeteria plan?
A–8: *** However, except for benefit
elections relating to accident or health
plans and group-term life insurance cov-
erage, a cafeteria plan may permit a par-
ticipant to revoke a benefit election after
the period of coverage has commenced
and to make a new election with respect
to the remainder of the period of coverage
if both the revocation and the new elec-
tion are on account of and consistent with
a change in family status (e.g., marriage,
divorce, death of spouse or child, birth or
adoption of child, and termination of em-
ployment of spouse).
* * * * *
Par. 2. In §1.125–2, as proposed March
7, 1989 (54 FR 9460), in Q&A–6, Q–6 is
republished and A6 is amended by revis-
ing A–6(c) and (d) to read as follows:
§1.125–2 Miscellaneous cafeteria plan
questions and answers.
* * * * *
Q–6: In what circumstance may partici-
pants revoke existing elections and make
new elections under a cafeteria plan?
A–6: ***
* * * * *
(c) Certain Changes in Family Status.
Except as otherwise provided, in the case
of benefits other than accident or health
plan coverage and group-term life insur-
ance coverage, a cafeteria plan may per-
mit a participant to revoke a benefit elec-
tion during a period of coverage and to
make a new election for the remaining
portion of the period if the revocation and
new election are both on account of a
change in family status and are consistent
with such change in family status. For
purposes of this paragraph (c) of Q&A–6,
examples of changes in family status for
which a benefit election change may be
permitted include the marriage or divorce
of the employee, the death of the em-
ployee’s spouse or a dependent, the birth

or adoption of a child of the employee,
the termination of employment (or the
commencement of employment) of the
employee’;s spouse, the switching from
part-time to full-time employment status
or from full-time to part-time status by the
employee or the employee’s spouse, and
the taking of an unpaid leave of absence
by the employee or the employee’s
spouse. Benefit election changes are con-
sistent with family status changes only if
the election changes are necessary or ap-
propriate as a result of the family status
changes. In the case of accident or heath
plans, election changes are permitted
where there has been a significant change
in the health coverage of the employee or
spouse attributable to the spouse’s em-
ployment. For additional rules governing
cafeteria plan election changes with re-
spect to accident or health plan coverage
and group-term life insurance coverage,
see §1.125–4T.
(d) Separation from Service. Except
with respect to accident or health plan
coverage and group-term life insurance
coverage, a cafeteria plan may permit an
employee who separates from the service
of the employer during a period of cover-
age to revoke existing benefit elections
and terminate the receipt of benefits for
the remaining portion for the coverage pe-
riod. The plan must prohibit the em-
ployee, if the employee should return to
service for the employer, from making
new benefit elections for the remaining
portion of the period of coverage. For
rules governing cafeteria plan election
changes with respect to accident or health
plan coverage and group-term life insur-
ance coverage, see §1.125–4T.
* * * * *
Proposed Amendments to the Regulations
In addition, 26 CFR part 1 is proposed
to be amended as follows:
PART1—INCOME TAX
Paragraph 1. The authority for part 1
continues to read in part as follows:
Authority: 26 U.S.C. 7805 ***
Par. 2. Section 1.125–4 is added to read
as follows:
[The text of this proposed section is the
same as the text of §1.125–4Tpublished
in T.D. 8738.]
Michael P. Dolan,
Acting Commissioner of
Internal Revenue.
(Filed by the Office of the Federal Register on No-
vember 6, 1997, 8:45 a.m., and published in the
issue of the Federal Register for November 7, 1997,
62 F.R. 60196)
Notice of Proposed Rulemaking
Rewards for Information
Relating to Violations of Internal
Revenue Laws
REG–252936–96
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemak-
ing by cross-reference to temporary regu-
lations.
SUMMARY: In T.D. 8737, page 11, the
IRS is issuing temporary regulations re-
lating to rewards for information that re-
lates to violations of the internal revenue
laws. The text of the temporary regula-
tions also serves as the text of these pro-
posed regulations.
DATES: Written comments and requests
for a public hearing must be received by
January 16, 1998.
ADDRESSES: Send submissions to:
CC:DOM:CORP:T:R (REG–252936–96),
room 5228, Internal Revenue Service,
POB 7604, Ben Franklin Station, Wash-
ington, DC 20044. Submissions may also
be hand delivered between the hours of 8
a.m. and 5 p.m. to: CC:DOM:CORP:T:R
(REG–252936–96), Courier’s Desk, In-
ternal Revenue Service, 1111 Constitution
Avenue, NW, Washington, DC. Alterna-
tively, 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 CON-
TACT: Judith A. Lintz (202)622-4940
(not a toll-free number).
SUPPLEMENTARYINFORMATION:
Paperwork Reduction Act
The collections of information con-
tained in this notice of proposed rulemak-
ing have been submitted to the Office of
Management and Budget for review in ac-
cordance with the Paperwork Reduction
Act of 1995 (44 U.S.C. 3507(d)). Com-
ments on the collections of information
should be sent to the Office of Manage-
ment and Budget,Attn: Desk Officer for
the Department of the Treasury, Office of
Information and Regulatory Affairs,
Washington, DC 20503, with copies to
the Internal Revenue Service,Attn: IRS
Reports Clearance Officer, T:FP, Wash-
ington, DC 20224. Comments on the col-
lections of information should be received
by December 15, 1997. Comments are
specifically requested concerning:
Whether the proposed collections of infor-
mation are necessary for the proper perfor-
mance of the functions of the Internal
Revenue Service,including whether the
information will have practical utility; the
accuracy of the estimated burden associ-
ated with the proposed collections of in-
formation (see below); how the quality,
utility, and clarity of the information to be
collected may be enhanced; how the bur-
den of complying with the proposed col-
lections of information may be minimized,
including through the application of auto-
mated collection techniques or other
forms of information technology; and esti-
mates of capital or start-up costs and costs
of operation, maintenance, and purchase
of service to provide information.
The collections of information in this
proposed regulation are in §§301.7623–
1T(b)(3), 301.7623–1T(d), and 301.7623–
1T(f). The collections of information are
required to provide information relating
to violations of the internal revenue laws,
and to identify the proper claimant of a re-
ward. The collection of information is
voluntary with respect to the provision of
information relating to violations of the
internal revenue laws. The collections of
information are required to obtain a bene-
fit with respect to filing a claim for re-
ward. The likely respondents are individ-
uals, although non-individual claimants
are also allowed.
Estimated total annual reporting bur-
den: 30,000 hours.
1997–51 I.R.B.27December 22, 1997

Estimated average annual burden hours
per respondent: 3 hours.
Estimated number of respondents:
10,000.
Estimated annual frequency of re-
sponses: on occasion.
An agency may not conduct or sponsor,
and a person is not required to respond to,
a collection of information unless it dis-
plays a valid control number assigned by
the Office of Management and Budget.
Books or records relating to a collec-
tion of information must be retained as
long as their contents may become mater-
ial in the administration of any internal
revenue law. Generally, tax returns and
tax return information are confidential, as
required by 26 U.S.C. 6103.
Background
Temporary regulations in T.D. 8737
amend the Procedure and Administration
Regulations (26 CFR part 301) relating to
section 7623. The temporary regulations
contain rules relating to rewards for infor-
mation that relates to violations of the in-
ternal revenue laws. The text of those
temporary regulations also serves as the
text of these proposed regulations. The
preamble to the temporary regulations ex-
plains the temporary 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 Pro-
cedure Act (5 U.S.C. chapter 5) does not
apply to these regulations.
It is hereby certified that the regulations
in this document will not have a significant
economic impact on a substantial number
of small entities. This certification is based
on a determination that in the past approxi-
mately 10,000 persons have filed claims
for reward on an annual basis. Of these
persons, almost all have been individuals.
Accordingly, a regulatory flexibility analy-
sis under the Regulatory Flexibility Act (5
U.S.C. chapter 6) is not required.
Pursuant to section 7805(f) of the Inter-
nal Revenue Code, this notice of pro-
posed rulemaking will be submitted to the
Chief Counsel for Advocacy of the Small
Business Administration for comments on
its impact on small businesses.
Comments and Requests for a Public
Hearing
Before these proposed regulations are
adopted as final regulations, considera-
tion will be given to any written (a signed
original and eight (8) copies) or electronic
comments that are submitted timely to the
IRS. All comments will be available for
public inspection and copying.
Apublic hearing may be scheduled if
requested in writing by any person who
timely submits written or electronic com-
ments. 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 the regulations
is Judith A. Lintz, Office of Assistant
Chief Counsel (Income Tax & Account-
ing), Internal Revenue Service. However,
other personnel from the IRS and Trea-
sury Department participated in their de-
velopment.
* * * * *
Proposed Amendments to
the Regulations
Accordingly, 26 CFR part 301 is pro-
posed to be amended as follows:
PART301—PROCEDURE AND
ADMINISTRATION
Paragraph 1. The authority citation for
part 301 continues to read in part as fol-
lows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 301.7623–1 is revised to
read as follows:
§301.7623–1 Rewards for information
relating to violations of internal revenue
laws.
[The text of this proposed revised sec-
tion is the same as the text of §301.7623–
1Tpublished in T.D. 8737.]
Michael P. Dolan,
Acting Commissioner of
Internal Revenue.
(Filed by the Office of the Federal Register on Octo-
ber 10, 1997, 8:45 a.m., and published in the Federal
Register for October 14, 1997, 62 F.R. 53274.)
Foundations Status of Certain
Organizations
Announcement 97–123
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 des-
ignations in the Cumulative List of Orga-
nizations (Publication 78), or on the pre-
sumption arising from the filing of notices
under section 508(b) of the Code. This
listing does notindicate that the organiza-
tions have lost their status as organiza-
tions described in section 501(c)(3), eligi-
ble to receive deductible contributions.
Former Public Charities.The following
organizations (which have been treated as
organizations that are not private founda-
tions described in section 509(a) of the
Code) are now classified as private foun-
dations:
Arizona Institute for Public Policy Re-
search, Flagstaff, AZ
Arizona Love Project Inc., Tucson, AZ
Arizona Teachings Inc., Tucson, AZ
Arizona Therapeutic Photo Graphics,
Inc., Mesa, AZ
Ark Environmental Foundation US Inc.,
N. Miami Beach, FL
Ark Foundation Inc., Cleveland, OH
Arkansas African American Art Museum
Foundation, Inc., Little Rock, AR
Arkansas Recycling Coalition Inc., Little
Rock, AR
Armageddon Ministries Foundation, Inc.,
Delbarton, WV
Apocalypse Ministries Inc., Zionsville,
IN
Around the Coyote Inc., Chicago, IL
Art Deco Society of Northern Ohio,
Woodmere, OH
Art Levis Foundation, Washington, DC
Arts in the Park, Alpena, MI
Ascension Tabernacle Ministries of the
Apostolic Faith, Dolton, IL
Ashiwi AWan Museum and Heritage
Center, Zuni, NM
Ashland Answer Inc., Ashland, OH
Asian-American Community
Incorporated, Fort Wayne, IN
Asian Happy Nest Organization Inc.,
Grand Rapids, MI
Asociacion De La Conunidad Mexicana,
Norcross, GA
December 22, 1997281997–51 I.R.B.

Aspen Allergy Conference, Denver, CO
Aspen Ridiculous Theatre Company,
Aspen, CO
Assisi Village Inc., Baton Rouge, LA
Assisting Community Towards Success
Acts, Austin, TX
Assistive Devices Foundation, New
Iberia, LA
Association for AIDS Education and
Prevention, Inc., Detroit, MI
Association for Unmanned Vehicle
Systems Foundation, Inc., Washington,
DC
Association for Young Athletes,
Woodville, TX
Association of Disabled American,
Golfers, Inc., Englewood, CO
Association of Humanitarian Aid &
Development International, Inc., East
Orange, NJ
Association of Lisp Users Alu Inc.,
Sterling, VA
Association of Oklahoma Narcotic
Enforcers, Inc., Oklahoma City, OK
Association to Promote Intercultural
Relations, Inc., Climax, MI
Atalissa Betterment Committee, Iowa
City, IA
Athletic Success Programs Inc.,
Greensboro, NC
Augusta Community Caring Center Inc.,
Augusta, KS
Auralia Foundation, Masonville, CO
Austin Adelaide Sister City Committee,
Austin, TX
Austin Boxing Against Drugs, Austin, TX
Austin Community Resource Center,
Chicago, IL
Austin Downtown Development
Corporation, Austin, TX
Austin Public Education Foundation,
Austin, TX
Automobile Collector Museum of Greater
Louisville, Inc., Louisville, KY
Award Foundation of the Nations Capital,
Inc., Potomac, MD
Aware and Serene, Detroit, MI
Aztec Cultural Arts Center Inc., Eagle
Pass, TX
CHOICE, Southfield, MI
CREATEInc., New Orleans, LA
CROSSMinistries Inc., Grand Rivers,
KY
CYAssociation Inc., Fort Worth, TX
CAF Ministries, Friendswood, TX
Cairo Fire Association Inc., Cairo, OH
Caldwell County Courthouse Restoration
Corporation, Inc., Lockhart, TX
Caldwell County Firefighters
Association, Dale, TX
Calhoun Community Organization,
Letohatchee, AL
Calhoun Gordon Arts Council Inc.,
Calhoun, GA
Calico Rock Communitycare Program,
Calico Rock, AR
California Compact Inc., Phoenix, AZ
Camp Discovery Inc., Galveston, TX
Camp Leo Council of South Carolina
Inc., Hilton Head Island, SC
Camp Michi-Mac, Hudson, MI
Campaign for the Prevention of Head
Injury, Bozeman, MT
Campaign to End Racism in America,
Prospect Hts, IL
Canaan Land Ministries of St. Clair
Missouri, St. Clair, MO
Canadian River Racing Club Inc.,
Norman, OK
Cancer Alley Reconstruction Fund, Inc.,
New Orleans, LA
Cancer Network Foundation of America,
State College, PA
Cancer Prevention Coalition, Chicago, IL
Cancernet Inc., W. Des Moines, IA
Candlelighters of Indiana Inc.,
Indianapolis, IN
Caney Community Youth Center, Clay
Hole, KY
Canton Rotary Foundation Inc., Canton,
MI
Capal Life Foundation Inc., Orange Park,
FL
Cape Atlantic Area Service Office Inc.,
Atlantic City, NJ
Cape Coral Gridiron Club Inc., Cape
Coral, FL
Capital Area Families Helping Families
Inc., Baton Rouge, LA
Capital Charities Corporation, Silver
Spring, MD
Capital City Transit Coalition,
Reynoldsburg, OH
Capitol City Opera Company Inc.,
Atlanta, GA
Capitol Nutrition, Inc., Cary, NC
CAPS Ministries Inc., Holt, MI
Captive Ministries Inc., Edwardsville, IL
Carbondale Crimestoppers, Carbondale,
IL
Cardozo Club Inc., Washington, DC
Care for Kids Foundation, Orem, UT
Care Group & Associates Inc., Whittaker,
MI
Caring Adults Inc., Grinnell, IA
Carolina Association for Passenger
Trains, Charlotte, NC
Carolina Foundation for Oral Health,
Charlotte, NC
Carolina Place Inc., Rock Hill, SC
Carolina Regional Community
Development Corporation, Durham, NC
Carolina Youth Football League Inc.,
Charlotte, NC
Carriere Health Care Services Inc.,
Canton, OH
Carroll Housing Opportunities Inc.,
Carrollton, OH
Carrollton College Educational
Foundation, Inc., Carrollton, KY
Carrolton Community Economic
Development Corporation, New
Orleans, LA
Carter County Junior Livestock Show,
Ardmore, OK
Cary Ministerial Association, Cary, NC
Casmi Educational Foundation, Highland
Park, IL
Cass County Helpline Inc., Logansport,
IN
Catanduanes International Association
Inc., Hillside, IL
Catch-22 Youth Ranch Inc., Brownwood,
TX
If an organization listed above submits
information that warrants the renewal of its
classification as a public charity or as a pri-
vate operating foundation, the Internal
Revenue Service will issue a ruling or de-
termination letter with the revised classifi-
cation 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 classifi-
cation of foundation status in the Internal
Revenue Bulletin.
1997–51 I.R.B.29December 22, 1997

December 22, 1997301997–51 I.R.B.
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 pub-
lished 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 confu-
sion. It is not used where a position in a
prior ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously
published ruling and points out an essen-
tial 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 Abut not
to B, and the new ruling holds that it ap-
plies to both Aand B, the prior ruling is
modified because it corrects a published
position. (Compare with amplified and
clarified, above).
Obsoleted describes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used
in a ruling that lists previously published
rulings that are obsoleted because of
changes in law or regulations. Aruling
may also be obsoleted because the sub-
stance has been included in regulations
subsequently adopted.
Revoked describes situations where the
position in the previously published rul-
ing 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 pe-
riod 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 pub-
lished 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 super-
seded.
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 pub-
lished that includes the list in the original
ruling and the additions, and supersedes
all prior rulings in the series.
Suspended is used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The following abbreviations in current use and for-
merly used will appear in material published in the
Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C.—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contribution Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign Corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Proc..—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statements of Procedral Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.
Definition of Terms

1997–51 I.R.B.31December 22, 1997
Numerical Finding List
1
Bulletins 1997–27 through 1997–50
Announcements:
97–61, 1997–29 I.R.B. 13
97–67, 1997–27 I.R.B. 37
97–68, 1997–28 I.R.B. 13
97–69, 1997–28 I.R.B. 13
97–70, 1997–29 I.R.B. 14
97–71, 1997–29 I.R.B. 15
97–72, 1997–29 I.R.B. 15
97–73, 1997–30 I.R.B. 86
97–74, 1997–31 I.R.B.16
97–75, 1997–32 I.R.B. 28
97–76, 1997–32 I.R.B. 28
97–77, 1997–33 I.R.B. 58
97–78, 1997–34 I.R.B. 11
97–79, 1997–35 I.R.B. 8
97–80, 1997–34 I.R.B. 12
97–81, 1997–34 I.R.B. 12
97–82, 1997–34 I.R.B. 12
97–83, 1997–34 I.R.B. 13
97–84, 1997–34 I.R.B. 13
97–85, 1997–35 I.R.B. 8
97–86, 1997–35 I.R.B. 9
97–87, 1997–35 I.R.B. 9
97–88, 1997–35 I.R.B. 9
97–89, 1997–36 I.R.B. 10
97–90, 1997–36 I.R.B. 10
97–91, 1997–37 I.R.B. 25
97–92, 1997–37 I.R.B. 26
97–93, 1997–36 I.R.B. 11
97–94, 1997–36 I.R.B. 12
97–95, 1997–36 I.R.B. 12
97–96, 1997–39 I.R.B.15
97–97, 1997–38 I.R.B. 22
97–98, 1997–39 I.R.B. 15
97–99, 1997–40 I.R.B. 7
97–100, 1997–40 I.R.B. 8
97–101, 1997–41 I.R.B. 13
97–102, 1997–41 I.R.B. 15
97–103, 1997–41 I.R.B. 16
97–104, 1997–42 I.R.B. 39
97–105, 1997–42 I.R.B. 40
97–106, 1997–45 I.R.B. 11
97–107, 1997–43 I.R.B. 25
97–108, 1997–43 I.R.B. 25
97–109, 1997–45 I.R.B. 12
97–110, 1997–45 I.R.B. 14
97–111, 1997–47 I.R.B. 15
97–112, 1997–46 I.R.B. 20
97–113, 1997–46 I.R.B.21
97–114, 1997–46 I.R.B. 21
97–115, 1997–47 I.R.B. 17
97–116, 1997–48 I.R.B. 25
97–117, 1997–49 I.R.B. 12
97–118, 1997–49 I.R.B. 13
97–119, 1997–50 I.R.B.61
97–120, 1997–50 I.R.B. 61
97–121, 1997–50 I.R.B. 62
97–122, 1997–50 I.R.B. 63
Court Decisions:
2061, 1997–31 I.R.B. 5
2062, 1997–32 I.R.B. 8
Delegation Orders:
97 (Rev. 34), 1997–41 I.R.B. 14
Delegation Orders—Continued
172 (Rev. 5), 1997–28 I.R.B. 6
Notices:
97–37, 1997–27 I.R.B. 4
97–38, 1997–27 I.R.B. 8
97–39, 1997–27 I.R.B. 8
97–40, 1997–28 I.R.B. 6
97–41, 1997–28 I.R.B. 6
97–42, 1997–29 I.R.B. 12
97–43, 1997–30 I.R.B. 9
97–44, 1997–31 I.R.B. 15
97–45, 1997–33 I.R.B. 7
97–46, 1997–34 I.R.B. 10
97–47, 1997–35 I.R.B. 5
97–48, 1997–35 I.R.B. 5
97–49, 1997–36 I.R.B. 8
97–50, 1997–37 I.R.B. 21
97–51, 1997–38 I.R.B. 20
97–52, 1997–38 I.R.B. 20
97–53, 1997–40 I.R.B. 6
97–54, 1997–41 I.R.B. 7
97–55, 1997–40 I.R.B. 6
97–56, 1997–43 I.R.B. 19
97–57, 1997–43 I.R.B. 19
97–58, 1997–45 I.R.B. 7
97–59, 1997–45 I.R.B. 7
97–60, 1997–46 I.R.B.8
97–61, 1997–48 I.R.B.8
97–62, 1997–49 I.R.B.8
97–63, 1997–47 I.R.B. 6
97–64, 1997–47 I.R.B. 7
97–66, 1997–48 I.R.B.8
97–67, 1997–48 I.R.B.10
97–68, 1997–48 I.R.B. 11
97–69, 1997–48 I.R.B. 12
97–70, 1997–49 I.R.B.9
97–71, 1997–49 I.R.B.9
97–72, 1997–50 I.R.B.7
Railroad Retirement Quarterly Rate:
1997–28 I.R.B. 5
Public Laws
105–35, 1997–43 I.R.B. 13
Proposed Regulations:
REG–104893–97, 1997–29 I.R.B. 13
REG–105160–97, 1997–37 I.R.B. 22
REG–105162–97, 1997–48 I.R.B. 13
REG–106043–97, 1997–37 I.R.B. 24
REG–107644–97, 1997–32 I.R.B. 24
REG–107872–97, 1997–47 I.R.B. 11
REG–114000–97, 1997–47 I.R.B. 13
REG–208151–91, 1997–38 I.R.B. 21
REG–246250–96, 1997–42 I.R.B. 30
REG–251985–96, 1997–48 I.R.B. 18
Revenue Procedures:
97–32, 1997–27 I.R.B. 9
97–32A, 1997–34 I.R.B. 10
97–33, 1997–30 I.R.B. 10
97–34, 1997–30 I.R.B.14
97–35, 1997–33 I.R.B. 11
97–36, 1997–33 I.R.B. 14
97–37, 1997–33 I.R.B. 18
97–38, 1997–33 I.R.B. 43
97–39, 1997–33 I.R.B. 48
Revenue Procedures–Continued
97–40, 1997–33 I.R.B. 50
97–41, 1997–33 I.R.B. 5
97–42, 1997–33 I.R.B. 57
97–43, 1997–39 I.R.B. 12
97–44, 1997–41 I.R.B. 8
97–45, 1997–41 I.R.B. 10
97–46, 1997–42 I.R.B. 10
97–47, 1997–42 I.R.B. 19
97–48, 1997–43 I.R.B. 19
97–49, 1997–43 I.R.B. 22
97–50, 1997–45 I.R.B. 8
97–51, 1997–45 I.R.B. 9
97–52, 1997–46 I.R.B.17
97–53, 1997–47 I.R.B.10
97–54, 1997–50 I.R.B.8
Revenue Rulings:
97–27, 1997–27 I.R.B. 4
97–28, 1997–28 I.R.B. 4
97–29, 1997–28 I.R.B. 4
97–30, 1997–31 I.R.B.12
97–31, 1997–32 I.R.B.4
97–32, 1997–33 I.R.B. 4
97–33, 1997–34 I.R.B. 4
97–34, 1997–34 I.R.B. 14
97–35, 1997–35 I.R.B. 4
97–36, 1997–36 I.R.B. 5
97–37, 1997–37 I.R.B.15
97–38, 1997–38 I.R.B.14
97–39, 1997–39 I.R.B. 4
97–40, 1997–39 I.R.B. 8
97–41, 1997–40 I.R.B. 4
97–42, 1997–41 I.R.B. 4
97–43, 1997–42 I.R.B. 8
97–44, 1997–45 I.R.B. 5
97–45, 1997–46 I.R.B.4
97–46, 1997–46 I.R.B.7
97–47, 1997–47 I.R.B.4
97–48, 1997–49 I.R.B.5
97–49, 1997–48 I.R.B. 4
97–50, 1997–49 I.R.B.5
97–51, 1997–49 I.R.B. 4
97–52, 1997–50 I.R.B.4
Treasury Decisions:
8722, 1997–29 I.R.B. 4
8723, 1997–30 I.R.B. 4
8724, 1997–36 I.R.B. 4
8725, 1997–37 I.R.B. 16
8726, 1997–34 I.R.B. 7
8727, 1997–34 I.R.B. 5
8728, 1997–37 I.R.B. 4
8729, 1997–38 I.R.B. 4
8730, 1997–38 I.R.B. 16
8731, 1997–42 I.R.B. 6
8732, 1997–42 I.R.B. 4
8733, 1997–43 I.R.B. 8
8734, 1997–44 I.R.B. 5
8735, 1997–43 I.R.B. 4
8736, 1997–50 I.R.B.5
1
Acumulative list of all revenue rulings, revenue
procedures, Treasury decisions, etc., published in
Internal Revenue Bulletins 1997–1 through 1997–26
will be found in Internal Revenue Bulletin 1997–27,
dated July 7, 1997.

December 22, 1997321997–51 I.R.B.
Finding List of Current Action on
Previously Published Items
1
Bulletins 1997–27 through 1997–50
*Denotes entry since last publication
Notices:
97–9
Modified by
97–70, 1997–49 I.R.B. 9
Revenue Procedures:
82–36
Modified and superseded by
97–49, 1997–43 I.R.B. 22
96–36
Superseded by
97–34, 1997–30 I.R.B. 14
96–42
Superseded by
97–27, 1997–27 I.R.B. 9
96–48
Superseded by
97–54, 1997–50 I.R.B. 8
97–32
Modified and amplified by
97–32A, 1997–34 I.R.B. 10
Revenue Rulings:
73–67
Revoked by
97–46, 1997–46 I.R.B. 7
75–7
Revoked by
97–48, 1997–49 I.R.B. 5
89–42
Supplemented by
97–31, 1997–32 I.R.B. 4
93–76
Clarified, modified, partially
obsoleted, and superceded by
97–39, 1997–39 I.R.B 4
94–7
Clarified, modified, partially
obsoleted, and superceded by
97–39, 1997–39 I.R.B 4
1
Acumulative finding list for previously published
items mentioned in Internal Revenue Bulletins
1997–1 through 1997–26 will be found in Internal
Revenue Bulletin 1997–27, dated July 7, 1997.

1997–51 I.R.B.33December 22, 1997
Notes

December 22, 1997341997–51 I.R.B.
Notes

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