Internal Revenue Bulletin 1997-11 (PDF rendition): IRS Revenue Rulings

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. Rul. 97–12, page 5.
Interest rates; underpayments and overpayments.
The rate of interest determined under section 6621 of
the Code for the calendar quarter beginning April 1,
1997, will be 8 percent for overpayments, 9 percent for
underpayments, and 11 percent for large corporate
underpayments. The rate of interest paid on the portion
of a corporate overpayment exceeding $10,000 is 6.5
percent.
Rev. Rul. 97–14, page 5.
Fringe benefits aircraft valuation formula.For pur-
poses of section 1.61–21(g) of the regulations, relating
to the rule for valuing noncommercial flights on
employer-provided aircraft, the Standard Industry Fare
Level (SIFL), cents-per-mile rates, and terminal charges
in effect for the first half of 1997 are set forth.
REG–208288–90, page 14.
Proposed regulations under section 905 of the Code
relate to the substantiation requirements for taxpayers
claiming foreign tax credits.
REG–209121–89, page 15.
Proposed regulations under section 337 of the Code
generally affect a taxable corporation that transfers all
or substantially all of its assets to a tax-exempt entity or
converts from a taxable corporation to a tax-exempt
entity, and generally requires the taxable corporation to
recognize gain or loss in such a transaction. A public
hearing will be held on May 6, 1997.
REG–209824–96, page 19.
Proposed regulations under section 1402 of the Code
relate to the definition of limited partner for self-
employment tax purposes. A public hearing will be held
on May 21, 1997.
EMPLOYEE PLANS
Announcement 97–20, page 22.
Beginning April 1, 1997, requests for employee plan
determination letters and applications for recognition of
tax exemption, formerly sent to the district office in Los
Angeles, CA, should be sent to the Internal Revenue
Service Center in Covington, KY.
Announcement 97–24, page 24.
An amendment to section 401(a)(9)(C) of the Code,
pertaining to the required beginning date for minimum
distributions in the instance of certain plan participants
(other than 5% owners) that was made by section
1404(a) of the Small Business Job Protection Act of
1996, is described.
EXEMPT ORGANIZATIONS
Announcement 97–23, page 23.
A list is given of organizations now classified as private
foundations.
ADMINISTRATIVE
REG–209729–94, page 19.
EE–45–94, 1995–1 C.B. 853, relating to the self-
employment tax treatment of members of certain limited
liability companies, is withdrawn.
Rev. Proc. 97–20, page 10.
Automobile owners and lessees.This procedure pro-
vides owners and lessees of passenger automobiles
with tables detailing the limitations on depreciation
deductions for automobiles first placed in service during
calendar year 1997 and the amounts to be included in
income for automobiles first leased during calendar year
1997. In addition, this procedure provides the maximum
(Continued on page 4)
Finding Lists begin on page 29.
Announcement of Disbarments and Suspensions begins on page 26.
Announcement of Declaratory Judgment Proceedings Under Section 7428 begins on page 26.
Bulletin No. 1997–11
March 17, 1997
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be relied
upon as authoritative interpretations.

HIGHLIGHTS
OF THIS ISSUE—Continued
ADMINISTRATIVE—Continued
allowable value of employer-provided automobiles first
made available to employees for personal use in calen-
dar year 1997 for which the vehicle cents-per-mile
valuation rule provided under section 1.61–21(e) of the
Income Tax Regulations may be applicable.
Notice 97–21, page 9.
Self-amortizing investments in conduit financing enti-
ties.The Service and Treasury expect to issue regula-
tions under section 7701(l) of the Code in order to
prevent tax avoidance. In cases where certain conduit
financing entities issue ‘‘equity’’ interests that are
economically self-amortizing, it is expected that the
regulations will treat the owners of the conduits as
having invested directly in the conduit’s income-
producing assets.
Announcement 97–21, page 23.
A list is provided of organizations that no longer qualify
as organizations to which contributions are deductible
under section 170 of the Code.
4

Mission of the Service
The purpose of the Internal Revenue Service is to
collect the proper amount of tax revenue at the least
cost; serve the public by continually improving the
quality of our products and services; and perform in a
manner warranting the highest degree of public
confidence in our integrity, efficiency and fairness.
Statement of Principles
of Internal Revenue
Tax Administration
The function of the Internal Revenue Service is to
administer the Internal Revenue Code. Tax policy
for raising revenue is determined by Congress.
With this in mind, it is the duty of the Service to
carry out that policy by correctly applying the laws
enacted by Congress; to determine the reasonable
meaning of various Code provisions in light of the
Congressional purpose in enacting them; and to
perform this work in a fair and impartial manner,
with neither a government nor a taxpayer point of view.
At the heart of administration is interpretation of the
Code. It is the responsibility of each person in the
Service, charged with the duty of interpreting the
law, to try to find the true meaning of the statutory
provision and not to adopt a strained construction in
the belief that he or she is ‘‘protecting the revenue.’’
The revenue is properly protected only when we as-
certain 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 hesitate
to raise a meritorious issue. It is also important
that care be exercised not to raise an issue or to
ask a court to adopt a position inconsistent with
an established Service position.
Administration should be both reasonable and
vigorous. It should be conducted with as little
delay as possible and with great courtesy and
considerateness. It should never try to overreach,
and should be reasonable within the bounds of law
and sound administration. It should, however, be
vigorous in requiring compliance with law and it
should be relentless in its attack on unreal tax
devices and fraud.
2

Introduction
The Internal Revenue Bulletin is the authoritative instru-
ment of the Commissioner of Internal Revenue for
announcing official rulings and procedures of the Inter-
nal Revenue Service and for publishing Treasury Deci-
sions, Executive Orders, Tax Conventions, legislation,
court decisions, and other items of general interest. It is
published weekly and may be obtained from the Superin-
tendent of Documents on a subscription basis. Bulletin
contents of a permanent nature are consolidated semi-
annually into Cumulative Bulletins, which are sold on a
single-copy basis.
It is the policy of the Service to publish in the Bulletin all
substantive rulings necessary to promote a uniform
application of the tax laws, including all rulings that
supersede, revoke, modify, or amend any of those
previously published in the Bulletin. All published rulings
apply retroactively unless otherwise indicated. Proce-
dures relating solely to matters of internal management
are not published; however, statements of internal
practices and procedures that affect the rights and
duties of taxpayers are published.
Revenue rulings represent the conclusions of the Ser-
vice 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 unwar-
ranted 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 published rulings and proce-
dures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be consid-
ered, and Service personnel and others concerned are
cautioned against reaching the same conclusions in
other cases unless the facts and circumstances are
substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on
provisions of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows:
Subpart A, Tax Conventions, and Subpart B, Legislation
and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to
these subjects are contained in the other Parts and
Subparts. Also included in this part are Bank Secrecy
Act Administrative Rulings. Bank Secrecy Act Administra-
tive Rulings are issued by the Department of the
Treasury’s Office of the Assistant Secretary (Enforce-
ment).
Part IV.—Items of General Interest.
With the exception of the Notice of Proposed Rulemak-
ing and the disbarment and suspension list included in
this part, none of these announcements are consoli-
dated in the Cumulative Bulletins.
The first Bulletin for each month includes an index for
the matters published during the preceding month.
These monthly indexes are cumulated on a quarterly and
semiannual basis, and are published in the first Bulletin
of the succeeding quarterly and semi-annual period,
respectively.
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents U.S. Government Printing Office, Washington, D.C. 20402.
3

Part I. Rulings and Decisions Under the Internal Revenue Code of 1986
Section 61.—Gross Income Defined
26 CFR 61–21: Taxation of fringe benefits.
This procedure provides the maximum value of
employer-provided automobiles first made avail-
able to employees for personal use in calendar
year 1997 for which the vehicle cents-per-mile
valuation rule provided under § 1.61–21(e) of the
Income Tax Regulations may be applicable. See
Rev. Proc. 97–20, page 10.
26 CFR 1.61–21: Taxation of fringe benefits.
Fringe benefits aircraft valuation
formula.For purposes of section 1.61–
21(g) of the regulations, relating to the
rule for valuing noncommercial flights
on employer-provided aircraft, the Stan-
dard Industry Fare Level (SIFL), cents-
per-mile rates, and terminal charges in
effect for the first half of 1997 are set
forth.
Rev. Rul. 97–14
For purposes of the taxation of fringe
benefits under section 61 of the Internal
Revenue Code, section 1.61–21(g) of
the Income Tax Regulations provides a
rule for valuing noncommercial flights
on employer-provided aircraft. Section
1.61–21(g)(5) provides an aircraft valua-
tion formula to determine the value of
such flights. The value of a flight is
determined under the base aircraft valu-
ation formula (also known as the Stan-
dard Industry Fare Level formula or
SIFL) by multiplying the SIFL cents-
per-mile rates applicable for the period
during which the flight was taken by the
appropriate aircraft multiple provided in
section 1.61–21(g)(7) and then adding
the applicable terminal charge. The SIFL
cents-per-mile rates in the formula and
the terminal charge are calculated by the
Department of Transportation and are
reviewed semi-annually.
The following chart sets forth the
terminal charges and SIFL mileage
rates:
Period During Which the Flight Was TakenTerminal ChargeSIFL Mileage Rates
1/1/97–6/30/97$31.73Up to 500 miles = $.1735 per mile
501–1500 miles = $.1323 per mile
Over 1500 miles = $.1272 per mile
DRAFTING INFORMATION
The principal author of this revenue
ruling is Felicia A. Daniels of the Office
of the Associate Chief Counsel (Em-
ployee Benefits and Exempt Organiza-
tions). For further information regarding
this revenue ruling contact, Ms. Daniels
on (202) 622–6050 (not a toll-free call).
Section 280F.—Limitation on
Depreciation for Luxury
Automobiles; Limitation Where
Certain Property Used for Personal
Purposes
26 CFR 280F–7: Property leased after December
31, 1986.
This procedure provides owners and lessees of
passenger automobiles with tables detailing the
limitations on depreciation deductions for automo-
biles first placed in service during calendar year
1997 and the amounts to be included in income
for automobiles first leased during calendar year
1997. See Rev. Proc. 97–20, page 10.
Section 6621.—Determination of
Interest Rate
26 CFR 301.6621–1: Interest rate.
Interest rates; underpayments and
overpayments.The rate of interest de-
termined under section 6621 of the
Code for the calendar quarter beginning
April 1, 1997, will be 8 percent for
overpayments, 9 percent for underpay-
ments, and 11 percent for large corpo-
rate underpayments. The rate of interest
paid on the portion of a corporate
overpayment exceeding $10,000 is 6.5
percent.
Rev. Rul. 97–12
Section 6621 of the Internal Revenue
Code establishes different rates for inter-
est on tax overpayments and interest on
tax underpayments. Under § 6621(a)(1),
the overpayment rate is the sum of the
federal short-term rate plus 2 percentage
points, except the rate for the portion of
a corporate overpayment of tax exceed-
ing $10,000 for a taxable period is the
sum of the federal short-term rate plus
0.5 of a percentage point for interest
computations made after December 31,
1994. Under § 6621(a)(2), the under-
payment rate is the sum of the federal
short-term rate plus 3 percentage points.
Section 6621(c) provides that for pur-
poses of interest payable under § 6601
on any large corporate underpayment,
the underpayment rate under
§ 6621(a)(2) is determined by substitut-
ing ‘‘5 percentage points’’ for ‘‘3 per-
centage points.’’ See § 6621(c) and
§ 301.6621–3 of the Regulations on
Procedure and Administration for the
definition of a large corporate underpay-
ment and for the rules for determining
the applicable rate. Section 6621(c) and
§ 301.6621–3 are generally effective for
periods after December 31, 1990.
Section 6621(b)(1) provides that the
Secretary will determine the federal
short-term rate for the first month in
each calendar quarter.
Section 6621(b)(2)(A) provides that
the federal short-term rate determined
under § 6621(b)(1) for any month ap-
plies during the first calendar quarter
beginning after such month.
Section 6621(b)(2)(B) provides that in
determining the addition to tax under
§ 6654 for failure to pay individual
estimated tax for any taxable year, the
federal short-term rate that applies dur-
ing the third month following such
taxable year also applies during the first
15 days of the fourth month following
such taxable year.
Section 6621(b)(3) provides that the
federal short-term rate for any month is
the federal short-term rate determined
during such month by the Secretary in
accordance with § 1274(d), rounded to
the nearest full percent (or, if a multiple
of 1/2 of 1 percent, the rate is increased
to the next highest full percent).
Notice 88–59, 1988–1 C.B. 546, an-
nounced that in determining the quar-
terly interest rates to be used for over-
payments and underpayments of tax
under § 6621, the Internal Revenue Ser-
vice will use the federal short-term rate
based on daily compounding because
that rate is most consistent with § 6621
which, pursuant to § 6622, is subject to
daily compounding.
Rounded to the nearest full percent,
the federal short-term rate based on
daily compounding determined during
5

the month of January 1997 is 6 percent.
Accordingly, an overpayment rate of 8
percent and an underpayment rate of 9
percent are established for the calendar
quarter beginning April 1, 1997. The
overpayment rate for the portion of
corporate overpayments exceeding
$10,000 for the calendar quarter begin-
ning April 1, 1997, is 6.5 percent. The
underpayment rate for large corporate
underpayments for the calendar quarter
beginning April 1, 1997, is 11 percent.
These rates apply to amounts bearing
interest during that calendar quarter.
Under § 6621(b)(2)(B), the 9 percent
rate that applies to individual estimated
tax underpayments for the first calendar
quarter in 1997, as provided in Rev.
Rul. 96–61, 1996–52 I.R.B. 24, also
applies to such underpayments for the
first 15 days in April 1997.
Interest factors for daily compound
interest for annual rates of 6.5 percent, 8
percent, 9 percent, and 11 percent are
published in Tables 18, 21, 23, and 27
of Rev. Proc. 95–17, 1995–1 C.B. 556,
572, 575, 577, and 581.
Annual interest rates to be com-
pounded daily pursuant to § 6622 that
apply for prior periods are set forth in
the tables accompanying this revenue
ruling.
DRAFTING INFORMATION
The principal author of this revenue
ruling is Marcia Rachy of the Office of
Assistant Chief Counsel (Income Tax
and Accounting). For further information
regarding this revenue ruling, contact
Ms. Rachy on (202) 622–4940 (not a
toll-free call).
TABLE OF INTEREST RATES
PERIODS BEFORE JUL. 1, 1975–PERIODS ENDING DEC. 31, 1986
OVERPAYMENTS AND UNDERPAYMENTS
PERIODDAILY RATE TABLE
RATEIN 1995–1 C.B.
Before Jul. 1, 19756%Table 2, pg. 557
Jul. 1, 1975—Jan. 31, 19769%Table 4, pg. 559
Feb. 1, 1976—Jan. 31, 19787%Table 3, pg. 558
Feb. 1, 1978—Jan. 31, 19806%Table 2, pg. 557
Feb. 1, 1980—Jan. 31, 198212%Table 5, pg. 560
Feb. 1, 1982—Dec. 31, 198220%Table 6, pg. 560
Jan. 1, 1983—Jun. 30, 198316%Table 37, pg. 591
Jul. 1, 1983—Dec. 31, 198311%Table 27, pg. 581
Jan. 1, 1984—Jun. 30, 198411%Table 75, pg. 629
Jul. 1, 1984—Dec. 31, 198411%Table 75, pg. 629
Jan. 1, 1985—Jun. 30, 198513%Table 31, pg. 585
Jul. 1, 1985—Dec. 31, 198511%Table 27, pg. 581
Jan. 1, 1986—Jun. 30, 198610%Table 25, pg. 579
Jul. 1, 1986—Dec. 31, 19869%Table 23, pg. 577
TABLE OF INTEREST RATES
FROM JAN. 1, 1987–PRESENT
OVERPAYMENTSUNDERPAYMENTS
RATE TABLEPGRATE TABLEPG
1995–1 C.B.1995–1 C.B.
Jan. 1, 1987—Mar. 31, 19878%215759%23577
Apr. 1, 1987—Jun. 30, 19878%215759%23577
Jul. 1, 1987—Sep. 30, 19878%215759%23577
Oct. 1, 1987—Dec. 31, 19879%2357710%25579
Jan. 1, 1988—Mar. 31, 198810%7362711%75629
Apr. 1, 1988—Jun. 30, 19889%7162510%73627
Jul. 1, 1988—Sep. 30, 19889%7162510%73627
Oct. 1, 1988—Dec. 31, 198810%7362711%75629
Jan. 1, 1989—Mar. 31, 198910%2557911%27581
Apr. 1, 1989—Jun. 30, 198911%2758112%29583
Jul. 1, 1989—Sep. 30, 198911%2758112%29583
Oct. 1, 1989—Dec. 31, 198910%2557911%27581
Jan. 1, 1990—Mar. 31, 199010%2557911%27581
Apr. 1, 1990—Jun. 30, 199010%2557911%27581
Jul. 1, 1990—Sep. 30, 199010%2557911%27581
Oct. 1, 1990—Dec. 31, 199010%2557911%27581
6

TABLE OF INTEREST RATES—Continued
FROM JAN. 1, 1987–PRESENT
OVERPAYMENTSUNDERPAYMENTS
RATE TABLEPGRATE TABLEPG
1995–1 C.B.1995–1 C.B.
Jan. 1, 1991—Mar. 31, 199110%2557911%27581
Apr. 1, 1991—Jun. 30, 19919%2357710%25579
Jul. 1, 1991—Sep. 30, 19919%2357710%25579
Oct. 1, 1991—Dec. 31, 19919%2357710%25579
Jan. 1, 1992—Mar. 31, 19928%696239%71625
Apr. 1, 1992—Jun. 30, 19927%676218%69623
Jul. 1, 1992—Sep. 30, 19927%676218%69623
Oct. 1, 1992—Dec. 31, 19926%656197%67621
Jan. 1, 1993—Mar. 31, 19936%175717%19573
Apr. 1, 1993—Jun. 30, 19936%175717%19573
Jul. 1, 1993—Sep. 30, 19936%175717%19573
Oct. 1, 1993—Dec. 31, 19936%175717%19573
Jan. 1, 1994—Mar. 31, 19946%175717%19573
Apr. 1, 1994—Jun. 30, 19946%175717%19573
Jul. 1, 1994—Sep. 30, 19947%195738%21575
Oct. 1, 1994—Dec. 31, 19948%215759%23577
Jan. 1, 1995—Mar. 31, 19958%215759%23577
Apr. 1, 1995—Jun. 30, 19959%2357710%25579
Jul. 1, 1995—Sep. 30, 19958%215759%23577
Oct. 1, 1995—Dec. 31, 19958%215759%23577
Jan. 1, 1996—Mar. 31, 19968%696239%71625
Apr. 1, 1996—Jun. 30, 19967%676218%69623
Jul. 1, 1996—Sep. 30, 19968%696239%71625
Oct. 1, 1996—Dec. 31, 19968%696239%71625
Jan. 1, 1997—Mar. 31, 19978%215759%23577
Apr. 1, 1997—Jun. 30, 19978%215759%23577
TABLE OF INTEREST RATES FOR LARGE CORPORATE UNDERPAYMENTS
FROM JANUARY 1, 1991–PRESENT
RATE TABLEPG
1995–1 C.B.
Jan. 1, 1991—Mar. 31, 199113%31585
Apr. 1, 1991—Jun. 30, 199112%29583
Jul. 1, 1991—Sep. 30, 199112%29583
Oct. 1, 1991—Dec. 31, 199112%29583
Jan. 1, 1992—Mar. 31, 199211%75629
Apr. 1, 1992—Jun. 30, 199210%73627
Jul. 1, 1992—Sep. 30, 199210%73627
Oct. 1, 1992—Dec. 31, 19929%71625
Jan. 1, 1993—Mar. 31, 19939%23577
Apr. 1, 1993—Jun. 30, 19939%23577
Jul. 1, 1993—Sep. 30, 19939%23577
Oct. 1, 1993—Dec. 31, 19939%23577
Jan. 1, 1994—Mar. 31, 19949%23577
Apr. 1, 1994—Jun. 30, 19949%23577
Jul. 1, 1994—Sep. 30, 199410%25579
Oct. 1, 1994—Dec. 31, 199411%27581
Jan. 1, 1995—Mar. 31, 199511%27581
Apr. 1, 1995—Jun. 30, 199512%29583
Jul. 1, 1995—Sep. 30, 199511%27581
7

TABLE OF INTEREST RATES FOR LARGE CORPORATE UNDERPAYMENTS—Continued
FROM JANUARY 1, 1991–PRESENT
RATE TABLEPG
1995–1 C.B.
Oct. 1, 1995—Dec. 31, 199511%27581
Jan. 1, 1996—Mar. 31, 199611%75629
Apr. 1, 1996—Jun. 30, 199610%73627
Jul. 1, 1996—Sep. 30, 199611%75629
Oct. 1, 1996—Dec. 31, 199611%75629
Jan. 1, 1997—Mar. 31, 199711%27581
Apr. 1, 1997—Jun. 30, 199711%27581
TABLE OF INTEREST RATES FOR CORPORATE OVERPAYMENTS EXCEEDING $10,000
FROM JANUARY 1, 1995–PRESENT
RATE TABLEPG
1995–1 C.B.
Jan. 1, 1995—Mar. 31, 19956.5%18572
Apr. 1, 1995—Jun. 30, 19957.5%20574
Jul. 1, 1995—Sep. 30, 19956.5%18572
Oct. 1, 1995—Dec. 31, 19956.5%18572
Jan. 1, 1996—Mar. 31, 19966.5%66620
Apr. 1, 1996—Jun. 30, 19965.5%64618
Jul. 1, 1996—Sep. 30, 19966.5%66620
Oct. 1, 1996—Dec. 31, 19966.5%66620
Jan. 1, 1997—Mar. 31, 19976.5%18572
Apr. 1, 1997—Jun. 30, 19976.5%18572
8

Part III. Administrative, Procedural, and Miscellaneous
Tax Avoidance Using
Self-Amortizing Investments In
Conduit Financing Entities
Notice 97–21
The Internal Revenue Service under-
stands that certain persons are engaging
in multiple-party financing transactions
to avoid taxes imposed by the Internal
Revenue Code. These transactions are
designed to allow a person (the ‘‘spon-
sor’’) to avoid tax on substantial
amounts of income (or to shelter sub-
stantial amounts of other income) by
using a conduit entity whose income tax
treatment artificially allocates the con-
duit entity’s income to participants that
are not subject to federal income tax.
Example
An example of these transactions is as
follows:
A corporate sponsor forms a real estate
investment trust or a foreign corporation (the
‘‘Company’’). The Company issues two classes
of stock. The corporate sponsor holds substan-
tially all of the common stock of the Company.
The other class (the ‘‘fast-pay preferred stock’’)
is held by persons that are not subject to
federal income tax (the ‘‘exempt participants’’).
The fast-pay preferred stock has limited voting
rights and provides for preferred ‘‘dividends’’
equal to 13 percent of the stock’s issue price
each year for 10 years.
The Company holds income-producing assets
(such as one or more mortgage loans) that are
the obligations of or guaranteed by the corpo-
rate sponsor or that are guaranteed by a federal
agency. At all times during the first 10 years
after the fast-pay preferred stock is issued, the
Company is required to invest in assets that
will produce income, and cash flows, at least
equal to 101 percent of the dividends payable
on the fast-pay preferred stock.
During the first 10 years, the Company may
also make distributions on its common stock. It
is not, however, permitted to distribute more
than 105 percent of its income in any year.
Accordingly, it is not permitted to make any
distributions representing a meaningful return
of initial investment to the holders of the
common stock during the first 10 years.
In year 11, and thereafter, the fast-pay pre-
ferred stock provides for distributions in each
year of 1 percent of its original issue price. As
a result, after the first 10 years, the fair market
value of the fast-pay preferred stock is substan-
tially less than the amount for which the
exempt participants purchased it.
Beginning in year 11, the Company may be
merged into another corporation without the
separate approval of the exempt participants
provided that the exempt participants receive a
formula payment equal to the present value of
the annual 1-percent dividend payments on the
fast-pay preferred stock (computed using a
discount rate of 10 percent). Otherwise the
fast-pay preferred stock cannot be called by the
Company.
As illustrated by this example, the
fast-pay preferred stock performs eco-
nomically much like a 10-year, self-
amortizing debt instrument. That is, pay-
ments on the fast-pay preferred stock
reflect in part recoveries of the amount
originally invested by the exempt par-
ticipants and in part a market yield on
the unamortized portion of the original
investment. The economic self-
amortization of the fast-pay preferred
stock is conceptually inconsistent with
characterizing the full amount of each
payment as a ‘‘dividend’’ (and thus as
income on an investment).
At the end of 10 years, the Compa-
ny’s obligation to make distributions on
the fast-pay preferred stock will have
virtually ceased, and substantially all of
the net value of the Company will be
represented by its common stock. Be-
cause only the current income of the
Company will have been distributed
during the first 10 years, the value of
the Company’s assets is unlikely to have
declined significantly. Accordingly, the
sponsor’s investment in the Company
economically performs like a zero-
coupon investment, substantially increas-
ing in value as the exempt participants’
interest in the Company declines. If the
Company makes the formula payment to
the exempt participants after the initial
10-year period, the Company may be
merged into or consolidated with a
corporate sponsor or its affiliate. In the
event of a merger, the corporate sponsor
expects to receive substantially all of the
Company’s assets with the Company’s
high basis and to avoid recognizing any
gain.
Thus, in the example, the corporate
sponsor’s expectation in investing in the
Company is that it will realize a predict-
able economic benefit at the end of the
10-year period without ever incurring
any tax liability for that benefit. Alterna-
tively, if the principal asset of the
Company is a debt instrument or other
obligation issued by the sponsor, the
sponsor could be viewed as attempting
to use deductions from that debt instru-
ment or obligation to shelter income,
without ever having to recognize its
share of the income that corresponds to
those deductions. These expectations re-
sult from the parties’ treatment of the
full amount of the payments to the
exempt participants as dividends. This
treatment causes substantially all of the
Company’s income to be allocated to
the exempt participants, even though a
significant portion of that income inures
economically to the sponsor.
Alternative tax-avoidance structures
may involve the use of other conduit
entities whose income is generally sub-
ject to U.S. income tax only at the
shareholder level, where the amount of
the tax depends on the receipt or non-
receipt by the shareholder of earnings
and profits from the conduit entity. The
terms of the stock issued by the conduit
entity may also vary, and the stock may
be subject to options to buy or sell.
Proper Characterization of the
Transactions
Under section 7701(l) of the Internal
Revenue Code, the Secretary may pre-
scribe regulations recharacterizing any
multiple-party financing transaction as a
transaction directly among two or more
of the parties in order to prevent the
avoidance of tax. Treasury and the Ser-
vice expect to issue regulations
recharacterizing any transaction (for ex-
ample, the transaction described above)
in which (1) a conduit entity is inter-
posed between two or more parties, (2)
an investment in the conduit entity is
economically, taking into account all
relevant factors including options to buy
or sell, partially or fully self-amortizing
(that is, the value of the investor’s
interest in the conduit entity is expected
to decrease over time as payments are
received), and (3) payments by the con-
duit entity that represent a recovery of
investment to the investor are treated by
the conduit entity as a distribution of
earnings and profits or otherwise as
reducing the conduit entity’s or any
other taxpayer’s taxable income.
It is expected that, under these regula-
tions, the sponsor will be treated as
having engaged in a transaction directly
with the other parties to the debt instru-
ments, leases, or other assets held by the
conduit entity, and the holders of the
self-amortizing interests in the conduit
entity will be treated either as having
engaged in the transaction directly with
the other parties or as having engaged in
an income ‘‘stripping’’ transaction with
the sponsor.See,e.g., section 1286 of
the Code. If the sponsor is the issuer of
a debt instrument held by the conduit
entity, the sponsor may be treated as
having issued one or more instruments
directly to the holders of the self-
amortizing interests in the conduit entity.
In that event, the sponsor’s obligation
9

under any asset held by the conduit
entity will be ignored for purposes of
determining the sponsor’s taxable in-
come. The regulations issued under sec-
tion 7701(l) of the Code will be appli-
cable to taxable years ending on or after
February 27, 1997. Thus, all amounts
accrued or paid on or after the first day
of the first taxable year ending on or
after February 27, 1997, will be subject
to the regulations, regardless of when a
particular share of stock or a particular
debt instrument was issued or acquired.
To the extent that a payment or accrual
under a conduit financing transaction is
not subject to these regulations, the
Service may determine under existing
tax principles, depending on the facts of
the particular case, that the transaction
does not produce the results intended by
the participants.
Persons that wish to comment on the
subject matter of this notice may submit
comments to: CC:DOM:CORP:R (OGI–
103642–97), Room 5226, Internal Rev-
enue Service, POB 7604, Ben Franklin
Station, Washington, DC 20044. Sub-
missions may be hand delivered be-
tween the hours of 8 a.m. and 5 p.m. to:
CC:DOM:CORP:R (OGI–103642–97),
Courier’s Desk, Internal Revenue Ser-
vice, 1111 Constitution Avenue NW,
Washington, DC. Alternatively, taxpay-
ers may submit comments electronically
via the Internet by selecting the ‘‘Tax
Regs’’ option of the IRS Home Page, or
by submitting comments directly to the
IRS Internet site at http://www.irs.
ustreas.gov/prod/tax_regs/comments.
html. Comments will be available for
public inspection.
This notice was issued to the public
on February 27, 1997.
For further information regarding this
notice, contact Jonathan Zelnik of the
Office of Assistant Chief Counsel (Fi-
nancial Institutions & Products) at (202)
622–3940 (not a toll-free call).
26 CFR 601.105: Examination of returns and
claims for refund, credit, or abatement; determina-
tion of correct tax liability.
(Also Part I, § 280F; 1.280F–7, 1.61–21.)
Rev. Proc. 97–20
SECTION 1. PURPOSE
This revenue procedure provides: (1)
limitations on depreciation deductions
for owners of passenger automobiles
first placed in service during calendar
year 1997; (2) the amounts to be in-
cluded in income by lessees of passen-
ger automobiles first leased during cal-
endar year 1997; and (3) the maximum
allowable value of employer-provided
automobiles first made available to em-
ployees for personal use in calendar
year 1997 for which the vehicle cents-
per-mile valuation rule provided under
§ 1.61–21(e) of the Income Tax Regula-
tions may be applicable. The tables
detailing these depreciation limitations
and lessee inclusion amounts reflect the
automobile price inflation adjustments
required by § 280F(d)(7) of the Internal
Revenue Code. The maximum allowable
automobile value for applying the ve-
hicle cents-per-mile valuation rule re-
flects the automobile price inflation ad-
justment of § 280F(d)(7) as required by
§ 1.61–21(e)(1)(iii)(A).
SECTION 2. BACKGROUND
For owners of automobiles, § 280F(a)
imposes dollar limitations on the depre-
ciation deduction for both the year that
the automobile is placed in service and
each succeeding year. Section
280F(d)(7) requires the amounts allow-
able as depreciation deductions to be
increased by a price inflation adjustment
amount for passenger automobiles
placed in service after calendar year
1988.
For leased automobiles, § 280F(c) re-
quires a reduction in the deduction al-
lowed to the lessee of the automobile.
The reduction must be substantially
equivalent to the limitations on the
depreciation deductions imposed on
owners of automobiles. Under
§ 1.280F–7(a), this reduction requires
the lessees to include in gross income
an inclusion amount determined by ap-
plying a formula to the amount obtained
from a table. The table shows inclusion
amounts for a range of fair market
values for each tax year after the auto-
mobile is first leased.
For automobiles first provided by em-
ployers to employees that meet the
requirements of § 1.61–21(e)(1), the
value to the employee of the use of the
automobile may be determined under
the vehicle cents-per-mile valuation rule
of § 1.61–21(e). Section 1.61–
21(e)(1)(iii)(A) provides that for an au-
tomobile first made available after 1988
to any employee of the employer for
personal use, the value of the use of the
automobile may not be determined un-
der the vehicle cents-per-mile valuation
rule for a calendar year if the fair
market value of the automobile (deter-
mined pursuant to § 1.61–21(d)(5)(i)
through (iv)) on the first date the auto-
mobile is made available to the em-
ployee exceeds $12,800 as adjusted by
§ 280F(d)(7).
SECTION 3. SCOPE AND
OBJECTIVE
01. The limitations on depreciation
deductions in section 4.02 of this rev-
enue procedure apply to automobiles
(other than leased automobiles) that are
placed in service in calendar year 1997
and continue to apply for each tax year
that the automobile remains in service.
02. The table in section 4.03 of this
revenue procedure applies to leased au-
tomobiles for which the lease term be-
gins in calendar year 1997. Lessees of
such automobiles must use this table to
determine the inclusion amount for each
tax year during which the automobile is
leased.SeeRev. Proc. 96–25, 1996–8
I.R.B. 19, which provides information
on determining inclusion amounts for
automobiles first leased before January
1, 1997.
03. The maximum fair market value
figure in section 4.04(2) of this revenue
procedure applies to employer-provided
automobiles first made available to any
employee for personal use in calendar
year 1997.
SECTION 4. APPLICATION
01. A taxpayer placing an automobile
in service for the first time during
calendar year 1997 is limited to the
depreciation deduction shown in Table 1
of section 4.02(2). A taxpayer first leas-
ing an automobile in calendar year 1997
must use Table 2 in section 4.03 to
determine the inclusion amount that is
added to gross income. Otherwise, the
procedures of § 1.280F–7(a) must be
followed. An employer providing an
automobile for the first time in calendar
year 1997 for the personal use of any
employee may determine the value of
the use of the automobile by using the
cents-per-mile valuation rule in § 1.61–
21(e) if the fair market value of the
automobile does not exceed the amount
specified in section 4.04(2). If the fair
market value of the automobile does
exceed the amount specified in section
4.04(2), the employer may determine the
value of the use of the automobile under
the general valuation rules of § 1.61–
21(b) or under the special valuation
rules of § 1.61–21(d) (Automobile lease
valuation) or § 1.61–21(f) (Commuting
valuation) if the applicable requirements
are met.
10

02.Limitations on Depreciation De-
ductions for Certain Automobiles.
(1)Amount of the Inflation Adjust-
ment.Under § 280F(d)(7)(B)(i), the au-
tomobile price inflation adjustment for
any calendar year is the percentage (if
any) by which the CPI automobile com-
ponent for October of the preceding
calendar year exceeds the CPI automo-
bile component for October 1987. The
term ‘‘CPI automobile component’’ is
defined in § 280F(d)(7)(B)(ii) as the
‘‘automobile component’’ of the Con-
sumer Price Index for all Urban Con-
sumers published by the Department of
Labor (the CPI). The new car compo-
nent of the CPI was 115.2 for October
1987 and 141.5 for October 1996. The
October 1996 index exceeded the Octo-
ber 1987 index by 26.3. The Internal
Revenue Service has, therefore, deter-
mined that the automobile price inflation
adjustment for 1997 is 22.83 percent
(26.3/115.2 x 100%). This adjustment is
applicable to all automobiles that are
first placed in service in calendar year
1997. The dollar limitations in
§ 280F(a) must therefore be multiplied
by a factor of 0.2283, and the resulting
increases, after rounding to the nearest
$100, are added to the 1988 limitations
to give the depreciation limitations for
1997.
(2)Amount of the Limitation.For
automobiles placed in service in calen-
dar year 1997, Table 1 contains the
dollar amount of the depreciation limita-
tions for each tax year.
REV. PROC. 97–20 TABLE 1
DEPRECIATION LIMITATIONS FOR AUTOMOBILES FIRST PLACED IN SERVICE IN CALENDAR YEAR 1997
Tax YearAmount
1st Tax Year$3,160
2nd Tax Year$5,000
3rd Tax Year$3,050
Each Succeeding Year$1,775
03.Inclusions in Income of Lessees of Automobiles.
The inclusion amounts for automobiles first leased in calendar year 1997 are calculated under the procedures described in
§ 1.280F–7(a). Table 2 of this revenue procedure is the applicable table to be used in applying those procedures.
REV. PROC. 97–20 TABLE 2
DOLLAR AMOUNTS FOR AUTOMOBILES
WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 1997
Fair Market Value of AutomobileTax Year During Lease
OverNot Over1st2nd3rd4th5th and Later
$ 15,80016,100155810
16,10016,400410131821
16,40016,700615222732
16,70017,000920303644
17,00017,5001228404958
17,50018,0001637536577
18,00018,5002046668295
18,50019,00024558097114
19,00019,500286493113132
19,50020,0003273106129151
20,00020,5003682120145169
20,50021,0004091133161187
21,00021,5004599147177205
21,50022,00049108160193224
22,00023,00055122180216252
23,00024,00063140206249288
24,00025,00071158233280326
25,00026,00079176259313362
26,00027,00088193287344399
27,00028,00096211313377435
28,00029,000104229340408473
29,00030,000112247366441509
30,00031,000120265393472546
31,00032,000128283420504583
32,00033,000137301446536620
33,00034,000145319472568657
11

REV. PROC. 97–20 TABLE 2—Continued
DOLLAR AMOUNTS FOR AUTOMOBILES
WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 1997
Fair Market Value of AutomobileTax Year During Lease
OverNot Over1st2nd3rd4th5th and Later
34,00035,000153337499600693
35,00036,000161355526631731
36,00037,000169373552664767
37,00038,000178391578696804
38,00039,000186409605727841
39,00040,000194427632759878
40,00041,000202445658791915
41,00042,000210463685823951
42,00043,000218481712854989
43,00044,0002274987398861,026
44,00045,0002355167659191,062
45,00046,0002435347929511,098
46,00047,0002515528199821,136
47,00048,0002595708451,0151,172
48,00049,0002685888711,0471,209
49,00050,0002766068981,0781,246
50,00051,0002846249251,1101,282
51,00052,0002926429511,1421,320
52,00053,0003006609781,1741,356
53,00054,0003086781,0041,2061,394
54,00055,0003176951,0321,2371,430
55,00056,0003257131,0581,2701,467
56,00057,0003337321,0841,3011,504
57,00058,0003417501,1101,3341,540
58,00059,0003497681,1371,3651,578
59,00060,0003587851,1641,3971,615
60,00062,0003708121,2041,4451,670
62,00064,0003868481,2571,5091,743
64,00066,0004038841,3101,5731,817
66,00068,0004199201,3631,6371,890
68,00070,0004359561,4171,7001,964
70,00072,0004529911,4701,7642,038
72,00074,0004681,0271,5241,8272,112
74,00076,0004841,0631,5771,8912,186
76,00078,0005011,0991,6301,9552,259
78,00080,0005171,1351,6832,0192,333
80,00085,0005461,1981,7762,1302,462
85,00090,0005871,2871,9092,2912,645
90,00095,0006271,3772,0422,4502,830
95,000100,0006681,4672,1752,6093,014
100,000110,0007301,6012,3752,8483,290
110,000120,0008121,7802,6413,1673,659
120,000130,0008931,9602,9073,4864,027
130,000140,0009752,1393,1733,8054,395
140,000150,0001,0572,3183,4394,1254,763
150,000160,0001,1392,4983,7044,4445,131
160,000170,0001,2212,6773,9714,7625,500
170,000180,0001,3022,8574,2365,0825,868
180,000190,0001,3843,0364,5035,4006,237
190,000200,0001,4663,2154,7695,7196,605
200,000210,0001,5483,3945,0356,0396,973
210,000220,0001,6303,5745,3006,3587,341
220,000230,0001,7123,7535,5676,6767,710
230,000240,0001,7933,9325,8336,9968,078
240,000250,0001,8754,1126,0997,3148,446
12

04.Maximum Automobile Value for
Using the Cents-per-mile Valuation
Rule.
(1)Amount of Adjustment.Under
§ 1.61–21(e)(1)(iii)(A), the limitation on
the fair market value of an employer-
provided automobile first made available
to any employee for personal use after
1988 is to be adjusted in accordance
with § 280F(d)(7). Accordingly, the ad-
justment for any calendar year is the
percentage (if any) by which the CPI
automobile component for October of
the preceding calendar year exceeds the
CPI automobile component for October
1987 (See, section 4.02(1).) The new car
component of the CPI was 115.2 for
October 1987 and 141.5 for October
1996. The October 1996 index exceeded
the October 1987 index by 26.3. The
Internal Revenue Service has, therefore,
determined that the adjustment for 1997
is 22.83 percent (26.3/115.2 x 100%).
This adjustment is applicable to all
employer-provided automobiles first
made available to any employee for
personal use in calendar year 1997. The
maximum fair market value specified in
§ 1.61–21(e)(1)(iii)(A) must therefore
be multiplied by a factor of 0.2283, and
the resulting increase, after rounding to
the nearest $100, is added to $12,800 to
give the maximum value for 1997.
(2)The Maximum Automobile Value.
For automobiles first made available in
calendar year 1997 to any employee of
the employer for personal use, the ve-
hicle cents-per-mile valuation rule may
be applicable if the fair market value of
the automobile on the date it is first
made available does not exceed
$15,700.
SECTION 5. EFFECTIVE DATE
This revenue procedure is effective
for automobiles (other than leased auto-
mobiles) that are first placed in service
during calendar year 1997, to leased
automobiles that are first leased during
calendar year 1997, and to employer-
provided automobiles first made avail-
able to employees for personal use in
calendar year 1997.
DRAFTING INFORMATION
The principal author of this revenue
procedure is Bernard P. Harvey of the
Office of the Assistant Chief Counsel
(Passthroughs and Special Industries).
For further information regarding the
depreciation limitations and lessee inclu-
sion amounts in this revenue procedure,
contact Mr. Harvey at (202) 622–3110;
for further information regarding the
maximum automobile value for applying
the vehicle cents-per-mile valuation rule,
contact Ms. Janine Cook of the Office
of the Associate Chief Counsel (Em-
ployee Benefits and Exempt Organiza-
tions) at (202) 622–6040 (not toll-free
calls).
13

Part IV. Items of General Interest
Notice of Proposed Rulemaking
Filing Requirements for Returns
Claiming the Foreign Tax Credit
REG–208288–90
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemak-
ing.
SUMMARY: This document contains a
proposed regulation relating to the sub-
stantiation requirements for taxpayers
claiming foreign tax credits. The pro-
posed regulation is necessary to provide
guidance to U.S. taxpayers who claim
foreign tax credits.
DATES: Written comments and requests
for a public hearing must be received by
April 14, 1997.
ADDRESSES: Send submissions to:
CC:DOM:CORP:R (REG–208288–90),
room 5228, Internal Revenue Service,
POB 7604, Ben Franklin Station, 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–208288–90), Courier’s Desk, In-
ternal Revenue Service, 1111 Constitu-
tion Avenue NW, Washington, DC. Al-
ternatively, 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 regulations, Joan
Thomsen, (202) 622–3840 (not a toll-
free call); concerning submissions,
Evangelista Lee, (202) 622–7190 (not a
toll-free call).
SUPPLEMENTARY
INFORMATION:
Background
On June 3, 1988, the Internal Rev-
enue Service issued a Notice (Notice
88–65, 1988–1 C.B. 552) which stated
that regulations would be issued sus-
pending portions of § 1.905–2 of the
Treasury Regulations. Section 1.905–2
requires taxpayers who claim foreign tax
credits to attach documents to their
returns substantiating the credits. The
Notice was issued in response to prob-
lems taxpayers were experiencing be-
cause they could not timely obtain and
prepare the necessary documentation in
a form suitable for submission with their
tax returns. The intent of the Notice was
to advise taxpayers that Treasury and
the IRS would issue a new regulation
that would suspend, beginning on Janu-
ary 1, 1988, the existing regulation
requiring the submission of this docu-
mentation with a tax return. This new
regulation has not been issued. Instead
of suspending the relevant portions of
the existing regulation, Treasury and the
IRS now have decided to permanently
eliminate the requirement that documen-
tation be submitted with the tax return,
effective January 1, 1988.
Explanation of Provisions
§ 1.905–2(a)(1), 1.905–2(b)(1) and (2),
and 1.905–2(c)
Sections 1.905–2(a)(1), 1.905–2(b)(1)
and (2), and 1.905–2(c) are unchanged
from the final regulations.
§ 1.905–2(a)(2)
Under § 1.905–2(a)(2), taxpayers
generally are required to attach to their
income tax returns either (1) the receipt
for the foreign tax payment, or (2) a
foreign tax return for accrued foreign
taxes. Proposed § 1.905–2(a)(2) re-
moves the requirement that the docu-
mentation must be attached to the in-
come tax return. The proposed
regulation now provides that such evi-
dence of foreign taxes must be pre-
sented to the district director upon re-
quest.
§ 1.905–2(b)(3)
Section 1.905–2(b)(3) addresses issues
for taxes withheld at the source. The
section allows the district director to
accept secondary evidence of such with-
holding. The proposed regulation clari-
fies that evidence of a tax withheld at
the source and the amount withheld is
only sufficient for an interim credit.
Upon request of the district director,
taxpayers must provide evidence, as pro-
vided in § 1.905–2(a)(2), that the tax
withheld was actually paid to the for-
eign country. Although this regulation
will be effective on the date that is 30
days after the date the final regulation is
published in theFederal Register, it
reflects an IRS requirement upheld as a
reasonable interpretation of current law
by the Tax Court and the Court of
Appeals for the Seventh Circuit inCon-
tinental Illinois Corp. v. Commissioner,
T.C. Memo. 1991–66, 61 T.C.M. (CCH)
1916, 1939–42 (1991),aff’d in part and
rev’d in part, 998 F.2d 513, 516–17 (7th
Cir. 1993).
Special Analyses
It has been determined that this Trea-
sury decision is not a significant regula-
tory action as defined in Executive
Order 12866. Therefore, a regulatory
assessment is not required. It has also
been determined that section 553(b) of
the Administrative Procedures Act (5
U.S.C. chapter 5) does not apply to this
regulation, and because the regulation
does not impose a collection of informa-
tion on small entities, the Regulatory
Flexibility Act (5 U.S.C. chapter 6) does
not apply. Pursuant to section 7805(f) of
the Internal Revenue Code, this notice
of proposed rulemaking will be submit-
ted to the Chief Counsel for Advocacy
of the Small Business Administration for
comment on its impact on small busi-
ness.
Comments and Requests for a Public
Hearing
Before this proposed regulation is
adopted as a final regulation, consider-
ation will be given to any comments
that are submitted timely to the IRS. All
comments will be available for public
inspection and copying. A public hear-
ing may be scheduled if requested in
writing by any person that timely sub-
mits comments. If a public hearing is
scheduled, notice of the date, time, and
place for the hearing will be published
in theFederal Register.
Drafting Information
The principal author of this regulation
is Joan Thomsen of the Office of the
Associate Chief Counsel (International),
IRS. However, other personnel from the
IRS and Treasury Department partici-
pated in their development.
* * * * *
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 1 is pro-
posed to be amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
26 CFR part 1 continues to read in part
as follows:
141997–11 I.R.B.

Authority: 26 U.S.C. 7805 * * *
Par 2. Section 1.905–2 is amended
by:
1. Revising the second through fourth
sentences in paragraph (a)(2).
2. Adding two sentences to the end
of paragraph (b)(3).
The revision and addition read as
follows:
§ 1.905–2 Conditions of allowance of
credit.
(a) * * *
(2) * * * Except where it is estab-
lished to the satisfaction of the district
director that it is impossible for the
taxpayer to furnish such evidence, the
taxpayer must provide upon request the
receipt for each such tax payment if
credit is sought for taxes already paid or
withheld, or the return on which each
such accrued tax was based if credit is
sought for taxes accrued. This receipt or
return must be either the original, a
duplicate original, or a duly certified or
authenticated copy. The preceding two
sentences are effective for returns whose
original due date falls on or after Janu-
ary 1, 1988. * * *
(b) * * *
(3) * * * Any foreign tax credit
claimed for taxes withheld at the source
is an interim credit and the taxpayer
must prove that any taxes withheld at
the source were paid to the foreign
country, as required in paragraph (a) of
this section. The preceding sentence is
effective the date that is 30 days after
the date this regulation is published in
theFederal Registeras a final regula-
tion, however, for periods prior to the
date that is 30 days after the date this
regulation is published in theFederal
Registeras a final regulation, seeConti-
nental Illinois Corp. v. Commissioner,
T.C. Memo. 1991–66, 61 T.C.M. (CCH)
1916, 1939–42 (1991),aff’d in part and
rev’d in part, 998 F.2d 513, 516–17 (7th
Cir. 1993), wherein the court upheld this
rule as a reasonable interpretation of
section 905(b) of the Internal Revenue
Code.
* * * * *
Margaret Milner Richardson,
Commissioner of Internal Revenue.
(Filed by the Office of the Federal Register on
January 10, 1997, 8:45 a.m., and published in the
issue of the Federal Register for January 13, 1997,
62 F.R. 1700)
Notice of Proposed Rulemaking
and Notice of Public Hearing
Certain Asset Transfers to a
Tax-Exempt Entity
REG–209121–89
AGENCY: Internal Revenue Service
(IRS), Treasury
ACTION: Notice of proposed rulemak-
ing and notice of public hearing
SUMMARY: This document contains
proposed regulations. The proposed
regulations effectuate provisions of the
Tax Reform Act of 1986 and the Techni-
cal and Miscellaneous Revenue Act of
1988. The proposed regulations gener-
ally affect a taxable corporation that
transfers all or substantially all of its
assets to a tax-exempt entity or converts
from a taxable corporation to a tax-
exempt entity, and generally require the
taxable corporation to recognize gain or
loss in such a transaction.
DATES: Written comments must be re-
ceived by April 15, 1997. Requests to
speak (with outlines of oral comments
to be discussed) at the public hearing
scheduled for May 6, 1997, at 10 a.m.
must be submitted by April 15, 1997.
ADDRESSES: Send submissions to:
CC:DOM:CORP:R (REG–209121–89),
Room 5226, Internal Revenue Service,
POB 7604, Ben Franklin Station, Wash-
ington, DC 20044. Submissions also
may be hand delivered between the
hours of 8 a.m. and 5 p.m. to:
CC:DOM:CORP:R (REG–209121–89),
Courier’s Desk, Internal Revenue Ser-
vice, 1111 Constitution Ave. NW, Wash-
ington, DC. Alternatively, taxpayers may
submit comments electronically via the
Internet by selecting the ‘‘Tax Regs’’
option on the IRS Home Page, or by
submitting comments directly to the IRS
Internet site at http://www.irs.ustreas.
gov/prod/tax_regs/comments.html. The
public hearing will be held in the IRS
Auditorium, Internal Revenue Building,
1111 Constitution Avenue, NW, Wash-
ington, DC.
FOR FURTHER INFORMATION CON-
TACT: Concerning the regulations,
Stephen R. Cleary (202) 622–7530; con-
cerning submissions and the hearing,
Evangelista Lee, (202) 622–7180, (not
toll-free numbers).
SUPPLEMENTARY
INFORMATION:
Background
This document contains proposed
amendments to the Income Tax Regula-
tions (26 CFR Part 1) relating to the
repeal of theGeneral Utilitiesdoctrine
in the Tax Reform Act of 1986. Under
theGeneral Utilitiesdoctrine, which
took its name fromGeneral Utilities &
Operating Co. v. Helvering, 296 U.S.
200 (1935), corporations were not re-
quired to recognize gain or loss when
they distributed appreciated or depreci-
ated property to their shareholders. The
General Utilitiesdoctrine applied to
distributions of property in complete
liquidation, certain sales of property that
were in connection with a complete
liquidation, and nonliquidating distribu-
tions of property. It was codified in
former sections 311, 336, and 337 of the
Internal Revenue Code of 1954.
TheGeneral Utilitiesdoctrine was an
exception to the general rule that in-
come earned by a corporation is taxed
twice, once to the corporation when the
income is earned and a second time to
the corporation’s shareholders when the
earnings are distributed. TheGeneral
Utilitiesdoctrine generally permitted the
permanent elimination of corporate-level
tax on the disposition of appreciated
assets because the transferee received a
fair market value basis in the assets and
the corporation generally did not recog-
nize any gain. Thus, the appreciated
assets left corporate solution without
any corporate-level tax having been
paid.
Beginning in 1969, the scope of the
General Utilitiesdoctrine was restricted
by a series of amendments (initially
relating to nonliquidating distributions
governed by section 311), until ulti-
mately theGeneral Utilitiesdoctrine
was repealed, with limited exceptions, in
the Tax Reform Act of 1986. Sections
336 and 337 were amended to generally
require corporations to recognize gain or
loss when appreciated or depreciated
property is distributed in complete liqui-
dation or sold in connection with a
complete liquidation.
Section 337(a) provides one of the
limited exceptions from the repeal of the
General Utilitiesdoctrine by allowing a
subsidiary to liquidate into its 80-
percent distributee (a corporation meet-
ing the stock ownership requirements of
section 332(b) in the liquidating corpo-
ration) without recognizing gain or loss.
151997–11 I.R.B.

The 80-percent distributee takes a car-
ryover basis in the distributed property.
However, under section 337(b)(2), this
nonrecognition exception generally does
not apply if the 80-percent distributee is
a tax-exempt entity.
The Tax Reform Act of 1986 added
section 337(d), directing the Secretary to
prescribe regulations as may be neces-
sary to carry out the purposes of the
repeal of theGeneral Utilities doctrine.
The legislative history of the Tax Re-
form Act of 1986 indicates that the
General Utilitiesdoctrine was repealed
because it tended to undermine the
corporate income tax by allowing appre-
ciated property to leave corporate solu-
tion without imposition of a corporate
level tax. H.R. Rep. No. 99–426, 99th
Cong., 1st Sess. 282 (1985). The Tech-
nical and Miscellaneous Revenue Act of
1988 amended section 337(d) to specify
that the section authorizes regulations to
‘‘ensure that these purposes shall not be
circumvented . . . through the use of a
. . . tax-exempt entity.’’ The legislative
history concerning the 1988 amendment
to section 337(d) explains:
The bill also clarifies in connection
with the built-in gain provisions of
the Act that the Treasury Department
shall prescribe such regulations as
may be necessary or appropriate to
carry out those provisions . . . . For
example, this includes rules to require
the recognition of gain if appreciated
property of a C corporation is trans-
ferred to a . . . tax-exempt entity
[footnote 32] in a carryover basis
transaction that would otherwise
eliminate corporate level tax on the
built-in appreciation.
[footnote 32] The Act generally re-
quires recognition of gain if a C
corporation transfers appreciated as-
sets to a tax exempt entity in a
section 332 liquidation. See Code sec-
tion 337(b)(2).
S. Rep. No. 145, 100th Cong., 2d Sess.
66 (1988).
Explanation of Provision
An acquisition by a tax-exempt entity
of all or substantially all of the assets of
a taxable corporation or a change in
status of a taxable corporation to a
tax-exempt entity, like a liquidation into
an 80-percent tax-exempt distributee that
is taxable under section 337(b)(2), could
eliminate the corporate level tax on the
appreciation in the taxable corporation’s
assets. Accordingly, the proposed regula-
tions apply rules similar to section
337(b)(2) to these transactions. The pro-
posed regulations generally do not affect
the tax treatment of the taxable corpora-
tion’s shareholders or the availability of
any charitable contribution deduction.
The proposed regulations provide that
a taxable corporation that transfers all or
substantially all of its assets to one or
more tax-exempt entities is required to
recognize gain or loss as if the assets
transferred were sold at their fair market
values. Like section 337(b)(2), the pro-
posed regulations provide that no gain
or loss will be recognized on any of the
assets transferred that are used by the
tax-exempt entity in an activity the
income from which is subject to the
unrelated business tax under section
511(a). However, gain on such assets
will later be recognized as unrelated
business taxable income if the tax-
exempt entity disposes of the assets or
ceases to use the assets in an unrelated
trade or business activity.
The proposed regulations generally
treat a taxable corporation that changes
its status to a tax-exempt entity as
having transferred all of its assets to a
tax-exempt entity immediately before
the change in status becomes effective,
irrespective of whether an actual transfer
of the assets has occurred. For this
purpose, if a state, a political subdivi-
sion thereof, or an entity any portion of
whose income is excluded from gross
income under section 115, acquires the
stock of a taxable corporation and there-
after any of the taxable corporation’s
income is excluded from gross income
under section 115, the taxable corpora-
tion will be treated as if it transferred all
of its assets to a tax-exempt entity
immediately before the stock acquisi-
tion.
Certain exceptions are provided to the
change in status rule for organizations
that are tax-exempt or are seeking tax-
exempt status under section 501(a).
These exceptions provide relief for cor-
porations needing a brief start-up period
to establish their tax-exempt status and
for those that temporarily lose their
tax-exempt status. Under the proposed
regulations, the change in status rule
does not apply to a corporation that is
tax-exempt within three taxable years of
the taxable year of its formation, or to a
corporation that regains its tax-exempt
status within three years after either a
final adverse adjudication on its tax-
exempt status or filing a tax return as a
taxable corporation. The change in sta-
tus rule also does not apply to an
organization that before publication of
these proposed regulations was exempt
or unsuccessfully applied for exemption,
if the organization is tax-exempt within
three years after the date of publication
of final regulations. An organization that
files for recognition of its exempt status
during one of the three-year periods will
be deemed to have or regain tax-exempt
status if the application ultimately re-
sults in recognition as of a date during
the three-year period. An anti-abuse rule
makes all these exceptions unavailable
to a taxable corporation that acquires all
or substantially all of the assets of
another taxable corporation and then
changes its status with a principal pur-
pose of avoiding the gain or loss recog-
nition rule made applicable by these
regulations.
The proposed regulations disallow the
recognition of loss if assets are acquired
by the taxable corporation in a section
351 transaction or a contribution to
capital, or if assets are distributed by the
taxable corporation to a shareholder,
with a principal purpose to recognize
loss by the taxable corporation on the
transfer of its assets to a tax-exempt
entity (loss limitation rule). For ex-
ample, the loss limitation rule may ap-
ply if (a) a loss asset is contributed to a
taxable corporation and then is trans-
ferred with substantially all of the tax-
able corporation’s assets to a tax-exempt
entity; (b) loss assets not constituting
substantially all of a taxable corpora-
tion’s assets are contributed to a new
subsidiary and then the new subsidiary
transfers the loss assets which are its
only assets to a tax-exempt entity, or (c)
assets are distributed by a taxable corpo-
ration to its parent and then the taxable
corporation transfers loss assets now
constituting substantially all of its assets
to a tax-exempt entity. For purposes of
the loss limitation rule, the principles of
section 336(d)(2) apply.
Under the proposed regulations, a
‘‘taxable corporation’’ is any corporation
that is not a tax-exempt entity as de-
fined in the proposed regulations. Thus,
taxable corporations include all S corpo-
rations whether or not subject to tax on
built-in gain under section 1374. After
the repeal of theGeneral Utilitiesdoc-
trine, an S corporation like a C corpora-
tion is required to recognize gain or loss
when it liquidates. This gain or loss
passes through to the S corporation’s
shareholders under section 1366. The
proposed regulations parallel this treat-
ment.
Under the proposed regulations, a
‘‘tax-exempt entity’’ includes organiza-
161997–11 I.R.B.

tions exempt from tax under section
501, section 527, section 528, or section
529; Federal, state, and local govern-
ments; Indian tribal governments and
federally chartered Indian tribal corpora-
tions; foreign governments and interna-
tional organizations; and entities any
portion of whose income is excluded
from gross income under section 115.
The term does not, however, include a
cooperative described in section 521,
paralleling the exception to section
337(b)(2).
A transaction conveying all or sub-
stantially all of the assets of a taxable
corporation to an Indian tribal govern-
ment or a corporation organized under
section 17 of the Indian Reorganization
Act (IRA) or section 3 of the Oklahoma
Welfare Act (OWA) will be covered by
these regulations. Rev. Rul. 94–16,
1994–1 C.B. 19, held that an unincorpo-
rated Indian tribe or a corporation orga-
nized under section 17 of the IRA is not
subject to federal income tax, but a
corporation wholly owned by an Indian
tribe and organized under state law is
subject to federal income tax. Rev. Rul.
94–65, 1994–2 C.B. 14, held that a
corporation organized under section 3 of
the OWA also was not subject to federal
income tax. In that ruling, the Service
announced that an Indian tribe seeking
to dissolve a corporation organized un-
der state law and organize into a feder-
ally chartered corporation (corporation
organized under either section 17 of the
IRA or section 3 of the OWA) will be
granted relief under section 7805(b) of
the Code upon application for such
relief provided it demonstrates to the
Service that it has acted reasonably and
in good faith to achieve the dissolution
and organization. The relief described in
that ruling applied to taxes on income
earned after September 30, 1994, by a
corporation organized by an Indian tribe
under state law from income earned
within the boundaries of the reservation
(including gain or loss properly al-
locable to such activities from the sale
or exchange of assets). The Service
intends to provide similar relief from tax
resulting from any gain or loss recog-
nized under the rules provided in these
regulations. The relief will be available
to state law corporations wholly owned
by Indian tribes that have acted reason-
ably and in good faith to dissolve and
reorganize as federally chartered corpo-
rations.
Proposed Effective Date
These regulations are proposed to be
applicable to transfers of assets as de-
scribed in the regulations occurring after
the date that is 30 days after publication
in the Federal Register of these regula-
tions as final regulations, unless the
transfer is pursuant to a written agree-
ment which is (subject to customary
conditions) binding on or before the
date that is 30 days after publication in
the Federal Register of these regulations
as final regulations.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a signifi-
cant regulatory action as defined in EO
12866. Therefore, a regulatory assess-
ment is not required. It has also been
determined that section 553(b) of the
Administrative Procedure Act (5 U.S.C.
chapter 5) does not apply to these
regulations and because the regulations
do not impose a collection of informa-
tion on small entities, the Regulatory
Flexibility Act (5 U.S.C. Chapter 6)
does not apply. Pursuant to section
7805(f) of the Internal Revenue Code,
this notice of proposed rulemaking will
be submitted to the Chief Counsel for
Advocacy of the Small Business Admin-
istration for comment on its impact on
small business.
Comments and Public Hearing
Before these proposed regulations are
adopted as final regulations, consider-
ation 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.
A public hearing has been scheduled
for Tuesday, May 6, 1997, at 10 a.m. in
the IRS Auditorium, Internal Revenue
Building, 1111 Constitution Avenue,
NW, Washington, DC. Because of ac-
cess restrictions, visitors will not be
admitted beyond the Internal Revenue
Service Building lobby more than 15
minutes before the hearing starts.
The rules of 26 CFR 601.601(a)(3)
apply to the hearing.
Persons that wish to present oral
comments at the hearing must submit
written comments by April 15, 1997,
and submit an outline of the topics to be
discussed and the time to be devoted to
each topic (signed original and eight (8)
copies) by April 15, 1997.
A period of 10 minutes will be allot-
ted to each person for making com-
ments.
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 Stephen R. Cleary of the Office
of Assistant Chief Counsel (Corporate),
IRS. However, other personnel from the
IRS and the Treasury Department par-
ticipated in their development.
* * * * *
Proposed Amendments to the
Regulations
Accordingly, 26 CFR Part 1 is pro-
posed to be amended as follows:
PART I—INCOME TAXES
Paragraph 1. The authority citation for
26 CFR Part 1 is amended by adding an
entry in numerical order to read as
follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.337(d)–4 also issued under
26 U.S.C. 337. * * *
Par. 2. Section 1.337(d)–4 is added to
read as follows:
§ 1.337(d)–4 Taxable to tax-exempt.
(a)Gain or loss recognition—(1)
General rule.If a taxable corporation
transfers all or substantially all of its
assets to one or more tax-exempt enti-
ties, the taxable corporation must recog-
nize gain or loss immediately before the
transfer as if the assets transferred were
sold at their fair market values. But see
section 267 and paragraph (d) of this
section concerning limitations on the
recognition of loss.
(2)Change in corporation’s tax sta-
tus treated as asset transfer.Except as
provided in paragraph (a)(3) of this
section, a taxable corporation’s change
in status to a tax-exempt entity will be
treated as if it transferred all of its
assets to a tax-exempt entity immedi-
ately before the change in status be-
comes effective in a transaction to
which paragraph (a)(1) of this section
applies. For purposes of this paragraph
(a), if a state, a political subdivision
thereof, or an entity any portion of
whose income is excluded from gross
income under section 115, acquires the
stock of a taxable corporation and there-
after any of the taxable corporation’s
171997–11 I.R.B.

income is excluded from gross income
under section 115, the taxable corpora-
tion will be treated as if it transferred all
of its assets to a tax-exempt entity
immediately before the stock acquisi-
tion.
(3)Exceptions for certain changes in
status— (i)To whom available.Para-
graph (a)(2) of this section does not
apply to the following corporations—
(A) A corporation previously exempt
under section 501(a) which regains its
tax-exempt status under section 501(a)
within three years from the later of a
final adverse adjudication on the corpo-
ration’s tax exempt status, or the filing
by the corporation, or by the Secretary
or his delegate under section 6020(b), of
a federal income tax return of the type
filed by a taxable corporation;
(B) A newly-formed corporation that
is tax-exempt under section 501(a)
within three taxable years from the end
of the taxable year in which it was
formed;
(C) A corporation previously exempt
under section 501(a) or that applied for
but did not receive recognition of ex-
emption under section 501(a), before
January 15, 1997, if such corporation is
tax-exempt under section 501(a) within
three years from the date of publication
of these regulations in the Federal Reg-
ister as final regulations.
(ii)Application for recognition.An
organization is deemed to have or regain
tax-exempt status within one of the
three-year periods described in para-
graph (a)(3)(i) of this section if it files
an application for recognition of exemp-
tion with the Commissioner within the
three-year period and the application
either results in a determination by the
Commissioner or a final adjudication
that the organization is tax-exempt un-
der section 501(a) during any part of the
three-year period. The preceding sen-
tence does not require the filing of an
application for recognition of exemption
by any organization not otherwise re-
quired, such as by § 1.501(a)–1,
§ 1.505(c)–1T, and § 1.508–1(a), to ap-
ply for recognition of exemption.
(iii)Anti-abuse rule.This paragraph
(a)(3) does not apply to a corporation
that, with a principal purpose of avoid-
ing the application of paragraphs (a)(1)
and (a)(2) of this section, acquires all or
substantially all of the assets of another
taxable corporation and then changes its
status to that of a tax-exempt entity.
(4)Related transactions.This section
applies to any series of related transac-
tions having an effect similar to any of
the transactions to which this section
applies.
(b)Exceptions.Paragraph (a) of this
section does not apply to—
(1) Any assets transferred to a tax-
exempt entity if the assets are used in
an activity the income from which is
subject to tax under section 511(a).
However, if assets on which no gain or
loss was recognized by reason of the
preceding sentence are disposed of by
the tax-exempt entity, then, notwith-
standing any other provision of law, any
gain (not in excess of the amount not
recognized by reason of the preceding
sentence) shall be included in the tax-
exempt entity’s unrelated business tax-
able income. If the tax-exempt entity
ceases to use the assets in an activity
the income from which is subject to tax
under section 511(a), the entity will be
treated for purposes of this subparagraph
as having disposed of the assets on the
date of the cessation;
(2) Any transfer of assets to the ex-
tent gain or loss otherwise is recognized
by the taxable corporation on the trans-
fer. See, for example, sections 336,
337(b)(2), 367, and 1001;
(3) Any forfeiture of a taxable corpo-
ration’s assets in a criminal or civil
action to the United States, the govern-
ment of a possession of the United
States, a state, the District of Columbia,
the government of a foreign country, or
a political subdivision of any of the
foregoing; or any expropriation of a
taxable corporation’s assets by the gov-
ernment of a foreign country; and
(4) Any transfer of assets to a coop-
erative described in section 521.
(c)Definitions.For purposes of this
section—
(1)Taxable corporation.Ataxable
corporationis any corporation that is
not a tax-exempt entity as defined in
paragraph (c)(2) of this section.
(2)Tax-exempt entity.Atax-exempt
entityis—
(i) Any entity that is exempt from tax
under section 501(a), section 527, sec-
tion 528, or section 529;
(ii) A charitable remainder annuity
trust or charitable remainder unitrust as
defined in section 664(d);
(iii) The United States, the govern-
ment of a possession of the United
States, a state, the District of Columbia,
the government of a foreign country, or
a political subdivision of any of the
foregoing;
(iv) An Indian Tribal Government as
defined in section 7701(a)(40), a subdi-
vision of an Indian tribal government
determined in accordance with section
7871(d), or an agency or instrumentality
of an Indian tribal government or subdi-
vision thereof;
(v) An Indian Tribal Corporation or-
ganized under section 17 of the Indian
Reorganization Act of 1934, 25 U.S.C.
477, or section 3 of the Oklahoma
Welfare Act, 25 U.S.C. 503;
(vi) An international organization as
defined in section 7701(a)(18);
(vii) An entity any portion of whose
income is excluded under section 115;
or
(viii) An entity that would not be
taxable under the Internal Revenue Code
for reasons substantially similar to those
applicable to any entity listed in this
paragraph (c)(2) unless otherwise explic-
itly made exempt from the application
of this section by statute or by action of
the Commissioner.
(3)Substantially all.The termsub-
stantially allhas the same meaning as
under section 368(a)(1)(C).
(d)Loss limitation rule.For purposes
of determining the amount of loss rec-
ognized by a taxable corporation on the
transfer of its assets to a tax-exempt
entity under paragraph (a) of this sec-
tion, if assets are acquired by the tax-
able corporation in a transaction to
which section 351 applied or as a
contribution to capital, or assets are
distributed from the taxable corporation
to a shareholder or another member of
the taxable corporation’s affiliated
group, and in either case as part of a
plan a principal purpose of which is to
recognize loss by the taxable corpora-
tion on the transfer of its assets to the
tax-exempt entity, the losses recognized
by the taxable corporation on the assets
transferred to the tax-exempt entity will
be disallowed. For purposes of the pre-
ceding sentence, the principles of sec-
tion 336(d)(2) apply.
(e)Effective date.This section is ap-
plicable to transfers of assets as de-
scribed in paragraph (a) of this section
occurring after the date that is 30 days
after publication in the Federal Register
of these regulations as final regulations,
unless the transfer is pursuant to a
written agreement which is (subject to
customary conditions) binding on or
before the date that is 30 days after
181997–11 I.R.B.

publication in the Federal Register of
these regulations as final regulations.
Margaret Milner Richardson,
Commissioner of Internal Revenue.
(Filed by the Office of the Federal Register on
January 10, 1997, 8:45 a.m., and published in the
issue of the Federal Register for January 15, 1997,
62 F.R. 2064)
Withdrawal of Notice of Proposed
Rulemaking
Self-Employment Tax Treatment of
Members of Certain Limited
Liability Companies
REG–209729–94
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Withdrawal of notice of pro-
posed rulemaking.
SUMMARY: This document withdraws
the notice of proposed rulemaking relat-
ing to the self-employment tax treatment
of members of certain limited liability
companies that was published in the
Federal Registeron Thursday, Decem-
ber 29, 1994. The proposed regulations
sought to provide guidance concerning
the applicability of certain self-
employment tax rules to certain mem-
bers of limited liability companies. The
IRS and Treasury have issued new pro-
posed regulations that will provide guid-
ance on this issue.
FOR FURTHER INFORMATION CON-
TACT: Robert Honigman, (202) 622–
3050 (not a toll-free number).
SUPPLEMENTARY
INFORMATION:
Background
On Thursday, December 29, 1994, the
IRS issued proposed regulations (EE–
45–94 [1995–1 C.B. 853]) relating to
the self-employment tax treatment of
members of certain limited liability
companies (59 FR 67253). Upon consid-
eration of the written comments re-
ceived and the oral comments made at
the public hearing held on June 23,
1995, the IRS has decided to withdraw
those proposed regulations.
* * * * *
Withdrawal of Notice of Proposed
Rulemaking
Accordingly, under the authority of 26
U.S.C. 7805, the notice of proposed
rulemaking that was published in the
Federal Register on Thursday, December
29, 1994, at 59 FR 67253, is withdrawn.
Margaret Milner Richardson,
Commissioner of Internal Revenue.
(Filed by the Office of the Federal Register on
January 10, 1997, 8:45 a.m., and published in the
issue of the Federal Register for January 13, 1997,
62 F.R. 1701)
Notice of Proposed Rulemaking
and Notice of Public Hearing
Definition of Limited Partner for
Self-Employment Tax Purposes
REG–209824–96
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemak-
ing and notice of public hearing.
SUMMARY: This document contains
proposed amendments to the regulations
relating to the self-employment income
tax imposed under section 1402 of the
Internal Revenue Code of 1986. These
regulations permit individuals to deter-
mine whether they are limited partners
for purposes of section 1402(a)(13),
eliminating the uncertainty in calculating
an individual’s net earnings from self-
employment under existing law. This
document also contains a notice of pub-
lic hearing on the proposed regulations.
DATES: Written comments must be re-
ceived by April 14, 1997. Requests to
speak and outlines of oral comments to
be discussed at the public hearing
scheduled for May 21, 1997, at 10 a.m.
must be received by April 30, 1997.
ADDRESSES: Send submissions to:
CC:DOM:CORP:R (REG–209824–96),
room 5226, Internal Revenue Service,
POB 7604, Ben Franklin Station, 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–209824–96), Courier’s Desk, In-
ternal Revenue Service, 1111 Constitu-
tion Avenue, NW, Washington, DC. Al-
ternatively, taxpayers may submit
comments electronically via the Internet
by selecting the ‘‘Tax Regs’’ option on
the IRS Home Page, or by submitting
comments directly to the IRS Internet
site at http://www.irs.ustreas.gov/prod/
tax_regs/comments.html. The public
hearing will be held in the Auditorium,
Internal Revenue Service building, 1111
Constitution Avenue, NW, Washington,
DC.
FOR FURTHER INFORMATION CON-
TACT: Concerning the regulation, Rob-
ert Honigman, (202) 622–3050; concern-
ing submissions and the hearing,
Christina Vasquez, (202) 622–6808 (not
toll-free numbers).
SUPPLEMENTARY
INFORMATION:
Background
This document contains proposed
amendments to the Income Tax Regula-
tions (26 CFR part 1) under section
1402 of the Internal Revenue Code and
replaces the notice of proposed rulemak-
ing published in theFederal Register
on December 29, 1994, at 59 FR 67253
(EE–45–94, 1995–1 C.B. 853), that
treated certain members of a limited
liability company (LLC) as limited part-
ners for self-employment tax purposes.
Written comments responding to the
proposed regulations were received, and
a public hearing was held on June 23,
1995.
Under the 1994 proposed regulations,
an individual owning an interest in an
LLC was treated as a limited partner if
(1) the individual lacked the authority to
make management decisions necessary
to conduct the LLC’s business (the
management test), and (2) the LLC
could have been formed as a limited
partnership rather than an LLC in the
same jurisdiction, and the member could
have qualified as a limited partner in the
limited partnership under applicable law
(the limited partner equivalence test).
The intent of the 1994 proposed regula-
tions was to treat owners of an LLC
interest in the same manner as similarly
situated partners in a state law partner-
ship.
Public comments on the 1994 pro-
posed regulations were mixed. While
some commentators were pleased with
the proposed regulations for attempting
to conform the treatment of LLCs with
state law partnerships, others criticized
the 1994 proposed regulations based on
a variety of arguments.
A number of commentators discussed
administrative and compliance problems
with the 1994 proposed regulations. For
example, it was noted that both the
management test and the limited partner
equivalence test depend upon legal or
factual determinations that may be diffi-
cult for taxpayers or the IRS to make
with certainty.
Another commentator pointed out that
basing the self-employment tax treat-
ment of LLC members on state law
191997–11 I.R.B.

limited partnership rules would lead to
disparate treatment between members of
different LLCs with identical rights
based solely on differences in the lim-
ited partnership statutes of the states in
which the members form their LLC. For
example, State A’s limited partnership
act may allow a limited partner to
participate in a partnership’s business
while State B’s limited partnership act
may not. Thus, an LLC member, who is
not a manager, that participates in the
LLC’s business would be a limited
partner under the proposed regulations if
the LLC is formed in State A, but not if
the LLC is formed in State B. Commen-
tators asserted that this disparate treat-
ment is inherently unfair for federal tax
purposes.
Some commentators argued for a
‘‘material participation’’ test to deter-
mine whether an LLC member’s dis-
tributive share is included in the indi-
vidual’s net earnings from self-
employment. The proposed regulations
did not contain a participation test.
Commentators advocating a participation
test stressed that such a test would
eliminate uncertainty concerning many
LLC members’ limited partner status
and would better implement the self-
employment tax goal of taxing compen-
sation for services.
Other commentators argued for a
more uniform approach, stating that a
single test should govern all business
entities (i.e., partnerships, LLCs, LLPs,
sole proprietorships, et al.) whose mem-
bers may be subject to self-employment
tax. These commentators generally rec-
ognized, however, that a change in the
treatment of a sole proprietorship or an
entity that is not characterized as a
partnership for federal tax purposes
would be beyond the scope of regula-
tions to be issued under section
1402(a)(13).
Finally, some commentators focused
on whether the Service would respect
the ownership of more than one class of
partnership interest for self-employment
tax purposes (bifurcation of interests).
The proposed regulations treated an
LLC member as a limited partner with
respect to his or her entire interest (if
the member was not a manager and
satisfied the limited partner equivalence
test), or not at all (if either the manage-
ment test or limited partner equivalence
test was not satisfied). Commentators,
however, pointed to the legislative his-
tory of section 1402(a)(13) to support
their argument that Congress only in-
tended to tax a partner’s distributive
share attributable to a general partner
interest. Under this argument, a partner
that holds both a general partner interest
and a limited partner interest is only
subject to self-employment tax on the
distributive share attributable to the part-
ner’s general partner interest. This intent
also may be inferred from the statutory
language of section 1402(a)(13) that the
self-employment tax does not apply to
‘‘. . . the distributive share of any item
of income or loss of a limited partner,
as such . . ..’’ Based on this evidence,
these commentators requested that the
proposed regulations be revised to allow
the bifurcation of interests for self-
employment tax purposes.
After considering the comments re-
ceived, the IRS and Treasury have de-
cided to withdraw the 1994 notice of
proposed rulemaking and to re-propose
amendments to the Income Tax Regula-
tions (26 CFR part 1) under section
1402 of the Code. Explanation of Provi-
sions
The proposed regulations contained in
this document define which partners of
a federal tax partnership are considered
limited partners for section 1402(a)(13)
purposes. These proposed regulations
apply to all entities classified as a
partnership for federal tax purposes, re-
gardless of the state law characterization
of the entity. Thus, the same standards
apply when determining the status of an
individual owning an interest in a state
law limited partnership or the status of
an individual owning an interest in an
LLC. In order to achieve this confor-
mity, the proposed regulations adopt an
approach which depends on the relation-
ship between the partner, the partner-
ship, and the partnership’s business.
State law characterizations of an indi-
vidual as a ‘‘limited partner’’ or other-
wise are not determinative.
Generally, an individual will be
treated as a limited partner under the
proposed regulations unless the indi-
vidual (1) has personal liability (as
defined in § 301.7701–3(b)(2)(ii) of the
Procedure and Administration Regula-
tions) for the debts of or claims against
the partnership by reason of being a
partner; (2) has authority to contract on
behalf of the partnership under the stat-
ute or law pursuant to which the part-
nership is organized; or, (3) participates
in the partnership’s trade or business for
more than 500 hours during the taxable
year. If, however, substantially all of the
activities of a partnership involve the
performance of services in the fields of
health, law, engineering, architecture,
accounting, actuarial science, or consult-
ing, any individual who provides ser-
vices as part of that trade or business
will not be considered a limited partner.
By adopting these functional tests, the
proposed regulations ensure that simi-
larly situated individuals owning inter-
ests in entities formed under different
statutes or in different jurisdictions will
be treated similarly. The need for a
functional approach results not only
from the proliferation of new business
entities such as LLCs, but also from the
evolution of state limited partnership
statutes. When Congress enacted the
limited partner exclusion found in sec-
tion 1402(a)(13), state laws generally
did not allow limited partners to partici-
pate in the partnership’s trade or busi-
ness to the extent that state laws allow
limited partners to participate today.
Thus, even in the case of a state law
limited partnership, a functional ap-
proach is necessary to ensure that the
self-employment tax consequences to
similarly situated taxpayers do not differ
depending upon where the partnership
organized.
The proposed regulations allow an
individual who is not a limited partner
for section 1402(a)(13) purposes to
nonetheless exclude from net earnings
from self-employment a portion of that
individual’s distributive share if the indi-
vidual holds more than one class of
interest in the partnership. Similarly, the
proposed regulations permit an indi-
vidual that participates in the trade or
business of the partnership to bifurcate
his or her distributive share by disre-
garding guaranteed payments for ser-
vices. In each case, however, such bifur-
cation of interests is permitted only to
the extent the individual’s distributive
share is identical to the distributive
share of partners who qualify as limited
partners under the proposed regulation
(without regard to the bifurcation rules)
and who own a substantial interest in
the partnership. Together, these rules
exclude from an individual’s net earn-
ings from self-employment amounts that
are demonstrably returns on capital in-
vested in the partnership.
Proposed Effective Date
These regulations are proposed to be
effective beginning with the individual’s
first taxable year beginning on or after
the date these regulations are published
as final regulations in theFederal Reg-
ister.
201997–11 I.R.B.

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
determined that section 553(b) of the
Administrative Procedure Act (5 U.S.C.
chapter 5) does not apply to these
regulations, and, because the regulations
do not impose a collection of informa-
tion on small entities, the Regulatory
Flexibility Act (5 U.S.C. chapter 6) does
not apply. Pursuant to section 7805(f) of
the Internal Revenue Code, this notice
of proposed rulemaking will be submit-
ted to the Chief Counsel for Advocacy
of the Small Business Administration for
comment on its impact on small busi-
ness.
Comments and Public Hearing
Before these proposed regulations are
adopted as final regulations, consider-
ation 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.
A public hearing has been scheduled
for Wednesday, May 21, 1997, at 10
a.m. in the Auditorium, Internal Rev-
enue Service building, 1111 Constitution
Avenue, NW, Washington, DC. Because
of access restrictions, visitors will not be
admitted beyond the Internal Revenue
Service building lobby more than 15
minutes before the hearing starts.
The rules of 26 CFR 601.601(a)(3)
apply to the hearing.
Persons that wish to present oral
comments at the hearing must submit
written comments by April 14, 1997,
and submit an outline of the topics to be
discussed and the time to be devoted to
each topic (signed original and eight (8)
copies) by April 30, 1997.
A period of 10 minutes will be allot-
ted to each person for making com-
ments.
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 Robert Honigman of the Office
of Assistant Chief Counsel (Pass-
throughs & Special Industries). How-
ever, other personnel from the IRS and
Treasury Department participated in
their development.
* * * * *
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 1 is pro-
posed to be amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as
follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.1402(a)–2 is
amended by:
1. Revising the first sentence of para-
graph (d).
2. Removing the reference ‘‘section
702(a)(9)’’ in the first sentence of para-
graph (e) and adding ‘‘section
702(a)(8)’’ in its place.
3. Revising the last sentence of para-
graph (f).
4. Revising paragraphs (g) and (h).
5. Adding new paragraphs (i) and (j).
The revisions and additions read as
follows:
§ 1.1402(a)–2Computation of net earn-
ings from self-employment.
* * * * *
(d) * * * Except as otherwise pro-
vided in section 1402(a) and paragraph
(g) of this section, an individual’s net
earnings from self-employment include
the individual’s distributive share
(whether or not distributed) of income
or loss described in section 702(a)(8)
from any trade or business carried on by
each partnership of which the individual
is a partner. * * *
* * * * *
(f) * * * For rules governing the
classification of an organization as a
partnership or otherwise, see
§ § 301.7701–1, 301.7701–2, and
301.7701–3 of this chapter.
(g)Distributive share of limited part-
ner.An individual’s net earnings from
self-employment do not include the indi-
vidual’s distributive share of income or
loss as a limited partner described in
paragraph (h) of this section. However,
guaranteed payments described in sec-
tion 707(c) made to the individual for
services actually rendered to or on be-
half of the partnership engaged in a
trade or business are included in the
individual’s net earnings from self-
employment.
(h)Definition of limited partner—(1)
In general.Solely for purposes of sec-
tion 1402(a)(13) and paragraph (g) of
this section, an individual is considered
to be a limited partner to the extent
provided in paragraphs (h)(2), (h)(3),
(h)(4), and (h)(5) of this section.
(2)Limited partner.An individual is
treated as a limited partner under this
paragraph (h)(2) unless the individual—
(i) Has personal liability (as defined
in § 301.7701–3(b)(2)(ii) of this chapter
for the debts of or claims against the
partnership by reason of being a partner;
(ii) Has authority (under the law of
the jurisdiction in which the partnership
is formed) to contract on behalf of the
partnership; or
(iii) Participates in the partnership’s
trade or business for more than 500
hours during the partnership’s taxable
year.
(3)Exception for holders of more
than one class of interest.An individual
holding more than one class of interest
in the partnership who is not treated as
a limited partner under paragraph (h)(2)
of this section is treated as a limited
partner under this paragraph (h)(3) with
respect to a specific class of partnership
interest held by such individual if, im-
mediately after the individual acquires
that class of interest—
(i) Limited partners within the mean-
ing of paragraph (h)(2) of this section
own a substantial, continuing interest in
that specific class of partnership interest;
and,
(ii) The individual’s rights and obli-
gations with respect to that specific
class of interest are identical to the
rights and obligations of that specific
class of partnership interest held by the
limited partners described in paragraph
(h)(3)(i) of this section.
(4)Exception for holders of only one
class of interest.An individual who is
not treated as a limited partner under
paragraph (h)(2) of this section solely
because that individual participates in
the partnership’s trade or business for
more than 500 hours during the partner-
ship’s taxable year is treated as a limited
partner under this paragraph (h)(4) with
respect to the individual’s partnership
interest if, immediately after the indi-
vidual acquires that interest—
(i) Limited partners within the mean-
ing of paragraph (h)(2) of this section
own a substantial, continuing interest in
that specific class of partnership interest;
and
(ii) The individual’s rights and obli-
gations with respect to the specific class
211997–11 I.R.B.

of interest are identical to the rights and
obligations of the specific class of part-
nership interest held by the limited
partners described in paragraph (h)(4)(i)
of this section.
(5)Exception for service partners in
service partnerships.An individual who
is a service partner in a service partner-
ship may not be a limited partner under
paragraphs (h)(2), (h)(3), or (h)(4) of
this section.
(6)Additional definitions.Solely for
purposes of this paragraph (h)—
(i) Aclass of interestis an interest
that grants the holder specific rights and
obligations. If a holder’s rights and
obligations from an interest are different
from another holder’s rights and obliga-
tions, each holder’s interest belongs to a
separate class of interest. An individual
may hold more than one class of interest
in the same partnership provided that
each class grants the individual different
rights or obligations. The existence of a
guaranteed payment described in section
707(c) made to an individual for ser-
vices rendered to or on behalf of a
partnership, however, is not a factor in
determining the rights and obligations of
a class of interest.
(ii) Aservice partneris a partner
who provides services to or on behalf of
the service partnership’s trade or busi-
ness. A partner is not considered to be a
service partner if that partner only pro-
vides a de minimis amount of services
to or on behalf of the partnership.
(iii) Aservice partnershipis a part-
nership substantially all the activities of
which involve the performance of ser-
vices in the fields of health, law, engi-
neering, architecture, accounting, actu-
arial science, or consulting.
(iv) Asubstantial interest in a class
of interestis determined based on all of
the relevant facts and circumstances. In
all cases, however, ownership of 20
percent or more of a specific class of
interest is considered substantial.
(i)Example.The following example
illustrates the principles of paragraphs
(g) and (h) of this section:
Example.(i) A, B, and C form LLC, a limited
liability company, under the laws of State to
engage in a business that is not a service partner-
ship described in paragraph (h)(6)(iii) of this
section. LLC, classified as a partnership for fed-
eral tax purposes, allocates all items of income,
deduction, and credit of LLC to A, B, and C in
proportion to their ownership of LLC. A and C
each contribute $1x for one LLC unit. B contrib-
utes $2x for two LLC units. Each LLC unit
entitles its holder to receive 25 percent of LLC’s
tax items, including profits. A does not perform
services for LLC; however, each year B receives a
guaranteed payment of $6x for 600 hours of
services rendered to LLC and C receives a
guaranteed payment of $10x for 1000 hours of
services rendered to LLC. C also is elected LLC’s
manager. Under State’s law, C has the authority to
contract on behalf of LLC.
(ii)Application of general rule of paragraph
(h)(2) of this section.A is treated as a limited
partner in LLC under paragraph (h)(2) of this
section because A is not liable personally for debts
of or claims against LLC, A does not have
authority to contract for LLC under State’s law,
and A does not participate in LLC’s trade or
business for more than 500 hours during the
taxable year. Therefore, A’s distributive share
attributable to A’s LLC unit is excluded from A’s
net earnings from self-employment under section
1402(a)(13).
(iii)Distributive share not included in net earn-
ings from self-employment under paragraph (h)(4)
of this section.B’s guaranteed payment of $6x is
included in B’s net earnings from self-employment
under section 1402(a)(13). B is not treated as a
limited partner under paragraph (h)(2) of this
section because, although B is not liable for debts
of or claims against LLC and B does not have
authority to contract for LLC under State’s law, B
does participates in LLC’s trade or business for
more than 500 hours during the taxable year.
Further, B is not treated as a limited partner under
paragraph (h)(3) of this section because B does
not hold more than one class of interest in LLC.
However, B is treated as a limited partner under
paragraph (h)(4) of this section because B is not
treated as a limited partner under paragraph (h)(2)
of this section solely because B participated in
LLC’s business for more than 500 hours and
because A is a limited partner under paragraph
(h)(2) of this section who owns a substantial
interest with rights and obligations that are identi-
cal to B’s rights and obligations. In this example,
B’s distributive share is deemed to be a return on
B’s investment in LLC and not remuneration for
B’s service to LLC. Thus, B’s distributive share
attributable to B’s two LLC units is not net
earnings from self-employment under section
1402(a)(13).
(iv)Distributive share included in net earnings
from self-employment.C’s guaranteed payment of
$10x is included in C’s net earnings from self-
employment under section 1402(a). In addition,
C’s distributive share attributable to C’s LLC unit
also is net earnings from self-employment under
section 1402(a) because C is not a limited partner
under paragraphs (h)(2), (h)(3), or (h)(4) of this
section. C is not treated as a limited partner under
paragraph (h)(2) of this section because C has the
authority under State’s law to enter into a binding
contract on behalf of LLC and because C partici-
pates in LLC’s trade or business for more than
500 hours during the taxable year. Further, C is
not treated as a limited partner under paragraph
(h)(3) of this section because C does not hold
more than one class of interest in LLC. Finally, C
is not treated as a limited partner under paragraph
(h)(4) of this section because C has the power to
bind LLC. Thus, C’s guaranteed payment and
distributive share both are included in C’s net
earnings from self-employment under section
1402(a).
(j)Effective date.Paragraphs (d), (e),
(f), (g), (h), and (i) are applicable begin-
ning with the individual’s first taxable
year beginning on or after the date this
section is published as a final regulation
in theFederal Register.
Margaret Milner Richardson,
Commissioner of Internal Revenue.
(Filed by the Office of the Federal Register on
January 10, 1997, 8:45 a.m., and published in the
issue of the Federal Register for January 13, 1997,
62 F.R. 1702)
Employee Plans and Exempt
Organizations; Requests for Certain
Determination Letters and
Applications for Recognition of
Exemption
Announcement 97–20
PURPOSE
This is to announce new ‘‘Where to
File’’ instructions for applications for
employee plan determination and other
letters, as well as exempt organization
applications for recognition of exemp-
tion from federal income tax, previously
submitted to the Los Angeles Key Dis-
trict Office of Internal Revenue.
BACKGROUND
The Internal Revenue Service is in
the process of centralizing the filing of
requests for determination and other
letters and applications for recognition
of tax exemption. Announcement 95–51,
published in Internal Revenue Bulletin
1995–25 at page 132, announced that
centralization will be phased in by dis-
trict. Announcement 96–92, published in
Internal Revenue Bulletin 1996–38 at
page 151, announced that beginning
September 1, 1996, requests formerly
sent to the key district offices in Atlanta,
Georgia, and Baltimore, Maryland,
should be sent to the Internal Revenue
Service Center in Covington, Kentucky.
Announcement 96–133, published in In-
ternal Revenue Bulletin 1996–53 at page
60, announced that beginning January 1,
1997, requests formerly sent to the key
district offices in Chicago, Illinois, and
Dallas, Texas, should also be sent to the
Covington address.
In addition, the Service is consolidat-
ing the employee plan volume submitter
and regional prototype programs that are
presently maintained by each individual
key district office. Plans previously ap-
proved by a key district office, whose
determination letter processing program
is being transferred to Cincinnati, will
be reviewed using the same criteria and
procedures used by the original district
office. New guidelines are being devel-
221997–11 I.R.B.

oped that will combine the best features
and procedures currently in use by the
districts. Guidelines for the revised vol-
ume submitter and regional prototype
programs will be explained in a future
announcement.
INSTRUCTIONS
Beginning April 1, 1997, letter re-
quests and applications previously sub-
mitted to the Key District Office in Los
Angeles, California, should be sent to
the Internal Revenue Service Center in
Covington, Kentucky, at the address
shown below. (For a period of time,
requests and applications mistakenly
sent to the Los Angeles Key District
Office will be forwarded.) The new
address applies to requests for determi-
nation letters, regional prototype notifi-
cation letters and volume submitter ad-
visory letters, on the qualified status of
employee plans under sections 401,
403(a), and 409, and the exempt status
of any related trust under section 501 of
the Internal Revenue Code, applications
for recognition of tax exemption on
Form 1023, Form 1024, and Form 1028
and other applications for recognition of
qualification or exemption. The affected
plan sponsors and organizations are
those whose principal office or place of
business is located in Alaska, California,
Hawaii, Idaho, Nevada, Oregon, and
Washington. These requests and applica-
tions, as well as those formerly submit-
ted to the Atlanta, Baltimore, Cincinnati,
Chicago, and Dallas Key Districts,
should be sent to:
Internal Revenue Service
P.O. Box 192
Covington, KY 41012–0192
Until further notice, plans and organi-
zations in all other locations, i.e., those
located within the jurisdiction of the
Brooklyn Key District Office, will con-
tinue to file their requests or applica-
tions in accordance with the applicable
user fee instructions, currently in Sec-
tion 7 of Revenue Procedure 97–8,
published in Internal Revenue Bulletin
1997–1, at page 187, and the instruc-
tions for Form 8717, User Fee for
Employee Plan Determination Letter Re-
quest, or Form 8718, User Fee for
Exempt Organization Determination Let-
ter Request.
Comments or concerns regarding the
centralization of the determination pro-
cess or applications submitted to the
Covington address, may be directed to
the EP/EO Customer Service Unit in
Cincinnati at (513) 684–3957 (not a
toll-free number).
Deletions From Cumulative List of
Organizations Contributions to
Which Are Deductible Under
Section 170 of the Code
Announcement 97–21
The name of an organization that no
longer qualifies as an organization de-
scribed in section 170(c)(2) of the Inter-
nal Revenue Code of 1986 is listed
below.
Generally, the Service will not disal-
low deductions for contributions made
to a listed organization on or before the
date of announcement in the Internal
Revenue Bulletin that an organization
no longer qualifies. However, the Ser-
vice is not precluded from disallowing a
deduction for any contributions made
after an organization ceases to qualify
under section 170(c)(2) if the organiza-
tion has not timely filed a suit for
declaratory judgment under section 7428
and if the contributor (1) had knowledge
of the revocation of the ruling or deter-
mination letter, (2) was aware that such
revocation was imminent, or (3) was in
part responsible for or was aware of the
activities or omissions of the organiza-
tion that brought about this revocation.
If on the other hand a suit for de-
claratory judgment has been timely
filed, contributions from individuals and
organizations described in section
170(c)(2) that are otherwise allowable
will continue to be deductible. Protec-
tion under section 7428(c) would begin
on March 17, 1997, and would end on
the date the court first determines that
the organization is not described in
section 170(c)(2) as more particularly
set forth in section 7428(c)(1). For indi-
vidual contributors, the maximum de-
duction protected is $1,000, with a hus-
band and wife treated as one contributor.
This benefit is not extended to any
individual who was responsible, in
whole or in part, for the acts or omis-
sions of the organization that were the
basis for revocation.
Gilpin Grammar School
Denver, CO
The National Organization for the
Reform of Marijuana Laws
Washington, DC
Foundations Status of Certain
Organizations
Announcement 97–23
The following organizations have
failed to establish or have been unable
to maintain their status as public chari-
ties or as operating foundations. Accord-
ingly, grantors and contributors may not,
after this date, rely on previous rulings
or designations in the Cumulative List
of Organizations (Publication 78), or on
the presumption arising from the filing
of notices under section 508(b) of the
Code. This listing doesnotindicate that
the organizations have lost their status
as organizations described in section
501(c)(3), eligible to receive deductible
contributions.
Former Public Charities. The follow-
ing organizations (which have been
treated as organizations that are not
private foundations described in section
509(a) of the Code) are now classified
as private foundations:
Abilene Cultural Foundation, Abilene,
TX
Academy of Mount St. Scholastica
Endowment Association, Inc.,
Atchison, KS
Accessible Parks Incorporated, Austin,
TX
Acorn-Pacific Foundation, Port Collins,
CO
Advocates for Incest Survival, Houston,
TX
American Association for Advancement
Core Curriculum, Denver, CO
American Awareness Institute, Inc.,
Kansas City, KS
American Economic Defense
Foundation, Denver, CO
American Indian Anti-Defamation
Council, Denver, CO
American Indian Resource and
Education Coalition, San Antonio, TX
American Pow-Mia Coalition, Shawnee
Mission, KS
A. M. G. Foundation, Inc., Lewisville,
TX
Andale Nogales Foundation, Nogales,
AZ
Ardra Foundation, Lawrence, KS
Arizona Childrens Heart Fund, Inc.,
Phoenix, AZ
Blummer 100 KN Trail Run, Boulder,
CO
Bob Rich Memorial Scholarship
Foundation Trust, Williamsburg, VA
Boys and Girls Club of La Joya Texas,
Inc., La Joya, TX
Brazos Valley Christian Home School
Sports Association, Bryan, TX
231997–11 I.R.B.

Bread of Love Outreach Ministries of
Texas, Houston, TX
Bright Hopes Foundation, Albuquerque,
NM
Broken Bow Summer Baseball, Inc.,
Broken Bow, OK
Businesswomen Unlimited, Inc., Olathe,
KS
Cerebral Palsy Foundation of Nassau,
Inc., Roosevelt, NY
Charles Schwartz Foundation for Music,
Inc., New York, NY
David Bowen Memorial Scholarship
Inc., Yokum, TX
Decatur County Retirement Housing
Inc., Oberlin, KS
Denver Broncos Alumni Charities,
Englewood, CO
East Texas Arboretum & Botanical
Society, Inc., Athens, TX
East Texas Center for Independent
Living, Tyler, TX
East Valley Pony Baseball, Sandy, UT
Eberle Puppet Player, Dallas, TX
Ellis County Sheriffs Posse Inc.,
Waxahachie, TX
Employees Helping Employees Inc.,
Phoenix, AZ
Environmental Literacy Project,
McAllen, TX
Executive Womens Coalition for
Children, Phoenix, AZ
Faith Victory Ministries Inc., Tulsa, OK
Families of Murder Victims, Watauga,
TX
Family Service Network, Irving, TX
Family Therapy Training Center of
Colorado, Denver, CO
Family Watch Inc., Albuquerque, NM
Fatima Foundation, Houston, TX
First Colorado Regiment United States
Volunteers LTD, Englewood, CO
First Step Shelter Inc., Pratt, KS
Flying Start Foundation, Tucson, AZ
Georgetown Little Dribblers, Inc.,
Georgetown, TX
G H F Ministries Inc., Keene, TX
Gloria Russell Childrens Ministry Inc.,
Lufkin, TX
Golden Earth Days, Golden, CO
Grady County Child Welfare Services
Advisory Board, Inc., Chickasha, OK
Greater New Bedford Aglas, Inc., New
Bedford, MA
Great Western Trail—Wasatch Section,
Farmington, NM
Gulf Coast Drum Corps Associates Inc.,
Spring, TX
Healthcare Solutions for America, Inc.,
Belmont, MA
Henry Lukas Foundation, Inc., Blue
Point, NY
Hercules Athletic Association, Inc., New
York, NY
He’s Not Heavy He’s My Brother, Inc.,
Roxbury, MA
Home Base, Inc., Ipswich, MA
Humanitarian Foundation for Nicaragua,
Incorporated, New York, NY
Jacksonville College Foundation, Inc.,
Jacksonville, TX
Jasper Fire Department, Jasper, TX
Jefferson County Domestic Violence
Task Force, Inc., Valley Falls, KS
Labette County Humane Society,
Parsons, KS
LaDonia Foundation, Inc., LaDonia, TX
Lake Powell Project, Page, AZ
Lamda Phoenix Center, Inc., Phoenix,
AZ
Lane Ranch Corporation, Cheyenne,
WY
Laughter to Go, Inc., Shawnee Mission,
KS
Make a Kid Smile Inc., Houston, TX
Marlin Volunteer Fire Department,
Marlin, TX
Metro-Rail Inc., Boulder, CO
Narciso Martinez Cultural Arts Center,
San Benito, TX
Northeast Mens Center, Denver, CO
North Texas Drug Awareness Library,
Ennis, TX
Operation Exaltation, Inc., Cedar Hill,
TX
Opportunity is Through Education,
Denver, CO
Orthodox Community Services, Inc.,
Denver, CO
Our Home, Inc., Tulsa, OK
Paces Foundation Inc., Atlanta, GA
Scottish Rite Charitable Trust Valley of
Kansas City Orient Kansas, Kansas
City, KS
Seguin Tri-Party Club, Seguin, TX
Seminole Youth Soccer Association,
Seminole, TX
Share Parents of Northern Utah, Ogden,
UT
Sheridan County Soccer Association,
Sheridan, WY
Sheridan Historical Society, Inc.,
Sheridan, CO
Shoebox Ministry, Inc., Phoenix, AZ
St. Augustine Technical Center
Foundation Inc., St. Augustine, FL
10-4 Ministries, Bellingham, MA
Tamina Action Committee, Inc., Spring,
TX
Tarrant County Opportunities
Industrialization Center, Inc., Fort
Worth, TX
Tecumseh Beautiful, Inc., Tecumseh,
OK
Telluride Youth Foundation, Telluride,
CO
United States Helicopter Museum,
Tucson, AZ
United Way of Choctaw County, Inc.,
Hugo, OK
University of Tulsa Lettermens
Association, Tulsa, OK
Unlimited Handi-Capable, Inc., Fowler,
CO
Wadley Partners, Inc., Dallas, TX
Walter Smith Ministry, Houston, TX
Water and Sanitation Consultancy
Group, Denver, CO
Welch Evangelistic Association,
Franklin, TX
Westbury High School Area
Improvement Corporation, Houston,
TX
West Roosevelt Community
Development Corporation, Phoenix,
AZ
Zinser Elementary Parent & Teacher
Organization, Grand Rapids, MI
If an organization listed above sub-
mits information that warrants the re-
newal of its classification as a public
charity or as a private operating founda-
tion, the Internal Revenue Service will
issue a ruling or determination letter
with the revised classification as to
foundation status. Grantors and con-
tributors may thereafter rely upon such
ruling or determination letter as pro-
vided in section 1.509(a)–7 of the
Income Tax Regulations. It is not
the practice of the Service to announce
such revised classification of foundation
status in the Internal Revenue Bulletin.
Timing of Certain Plan
Amendments Relating to Section
401(a)(9)
Announcement 97–24
PURPOSE
This announcement provides that an
employer is not precluded from offering,
to employees (other than 5-percent own-
ers) who attain age 70½ after 1995 and
have not retired, an option to defer
commencement of benefit distributions
under a qualified plan merely because
the plan has not yet been amended to
provide for the option.
BACKGROUND
Section 1404(a) of the Small Business
Job Protection Act of 1996 (SBJPA)
amended section 401(a)(9) of the Inter-
nal Revenue Code to provide that, in the
case of an employee who is not a
5-percent owner, the required beginning
date for minimum distributions from a
qualified plan is April 1 of the calendar
year following the later of the calendar
241997–11 I.R.B.

year in which the employee attains age
70½ or the calendar year in which the
employee retires. The amendment to
section 401(a)(9) applies to years begin-
ning after December 31, 1996.
Notice 96–67, 1996–53 I.R.B. 12,
Q&A–2, provides that, under section
401(a)(9) as amended by the SBJPA, an
employee (other than a 5-percent owner)
who attained age 70½ in 1996, but who
had not retired from employment with
the employer maintaining the plan by
the end of 1996, is not required to
receive a minimum distribution by April
1, 1997.
Many qualified plans continue to con-
tain provisions (consistent with section
401(a)(9) prior to its amendment by the
SBJPA) requiring an employee who at-
tains age 70½ in a calendar year to
begin receiving distributions by April 1
of the following calendar year. Some
employers wish to give employees
(other than 5-percent owners) who have
not retired the option to defer com-
mencement of distributions beyond April
1 following the calendar year the em-
ployees attain age 70½ and have re-
quested guidance as to whether such an
option may be offered before their plans
are amended to provide for the option.
This announcement responds to these
requests concerning the addition of an
option to defer commencement of distri-
butions before plan amendment. It does
not address the elimination of the option
to receive in-service distributions after
age 70½.
As noted in Notice 96–67, an amend-
ment that eliminates the right to receive
a distribution prior to retirement after
age 70½ is precluded by section
411(d)(6) if the amendment applies to
benefits accrued as of the later of the
adoption date or the effective date of the
amendment. In Notice 96–67, the Ser-
vice and Treasury requested comments
concerning the extent to which a relax-
ation of section 411(d)(6) protection is
appropriate for amendments that elimi-
nate in-service distributions after age
70½, and the Service and Treasury are
currently considering the comments re-
ceived.
TIMING OF PLAN AMENDMENTS
Under a qualified plan, an employer
is permitted to offer an employee (other
than a 5-percent owner) who attains age
70½ in a calendar year after 1995 and
has not retired by the end of that
calendar year the option to delay com-
mencement of benefit distributions until
no later than April 1 following the
calendar year in which the employee
retires from employment with the em-
ployer maintaining the plan. A plan that
continues to contain provisions requiring
an employee to begin receiving distribu-
tions by April 1 following the calendar
year in which the employee attains age
70½ will not fail to satisfy section
401(a) merely because the employer
offers the option described in the pre-
ceding sentence prior to amending the
plan to include this option. Thus, if
employees (other than 5-percent owners)
who attained age 70½ in 1996 and did
not retire from employment with the
employer maintaining the plan by the
end of 1996 are offered the opportunity
to make an election to defer commence-
ment of benefits rather than to begin
receiving benefits from the plan by
April 1, 1997, the plan will not fail to
satisfy section 401(a) merely because
the plan has not yet been amended to
provide for this election.
Future guidance will provide that an
employer that offers this option under a
plan must amend the plan retroactively,
no later than the date specified in that
guidance, to provide for the option. The
retroactive plan amendment will have to
conform the plan to its pre-amendment
operation regarding the option to defer
commencement of benefits. The date by
which a plan providing for this option
must be retroactively amended will not
be earlier than 90 days after the future
guidance is published and in no event
will be earlier than January 1, 1998.
This announcement also applies to an
employer that has adopted a master or
prototype or a regional prototype plan.
Such an employer should note that if a
conforming amendment is not an avail-
able option under the sponsor’s proto-
type plan document, the required
amendment may result in the loss of
prototype status.
ELECTIONS TO STOP RECEIVING
DISTRIBUTIONS
This announcement does not address
the conditions under which employers
may offer employees who have attained
age 70½ and have begun to receive
distributions under a plan an election to
stop receiving distributions until a date
no later than April 1 of the calendar
year following retirement. Employers
are cautioned that, under certain circum-
stances, an election to stop receiving
distributions may violate the qualifica-
tion requirements under section 401(a),
such as sections 401(a)(11) and 417
(relating to participant and spousal con-
sent, joint and survivor annuity require-
ments, and related matters). Future guid-
ance will address the conditions under
which these types of elections may be
made and the permitted timing of re-
lated plan amendments.
251997–11 I.R.B.

Announcement of the Disbarment, Suspension, or Consent to Voluntary
Suspension of Attorneys, Certified Public Accountants, Enrolled Agents and
Enrolled Actuaries From Practice Before the Internal Revenue Service
Under 31 Code of Federal Regula-
tions, Part 10, an attorney, certified pub-
lic accountant, enrolled agent or enrolled
actuary, in order to avoid the institution
or conclusion of a proceeding for his
disbarment or suspension from practice
before the Internal Revenue Service,
may offer his consent to suspension
from such practice. The Director of
Practice, in his discretion, may suspend
an attorney, certified public accountant,
enrolled agent or enrolled actuary in
accordance with the consent offered.
Attorneys, certified public accoun-
tants, enrolled agents and enrolled actu-
aries are prohibited in any Internal Rev-
enue Service matter from directly or
indirectly employing, accepting assis-
tance from, being employed by or shar-
ing fees with, any practitioner disbarred
or suspended from practice before the
Internal Revenue Service.
To enable attorneys, certified public
accountants, enrolled agents and en-
rolled actuaries to identify practitioners
under consent suspension from practice
before the Internal Revenue Service, the
Director of Practice will announce in the
Internal Revenue Bulletin the names and
addresses of practitioners who have
been suspended from such practice, their
designation as attorney, certified public
accountant, enrolled agent or enrolled
actuary, and date or period of suspen-
sion. This announcement will appear in
the weekly Bulletin at the earliest practi-
cable date after such action and will
continue to appear in the weekly Bulle-
tins for five successive weeks or for as
many weeks as is practicable for each
attorney, certified public accountant, en-
rolled agent or enrolled actuary so sus-
pended and will be consolidated and
published in the Cumulative Bulletin.
The following individuals have been
placed under consent suspension from
practice before the Internal Revenue
Service:
NameAddressDesignationDate of Suspension
Vlymen, Neal VanSan Diego, CACPAIndefinite from November 1, 1996
Lombardi, TheresaLivonia, MICPANovember 1, 1996 to October 31, 1998
Orfall, WarrenHood River, ORCPANovember 1, 1996 to June 30, 1997
Oberman, JosephHighland Park, ILCPADecember 1, 1996 to August 31, 1997
Gazzola, FrankN. Mankato, MNCPADecember 1, 1996 to November 30, 1997
Tumminello, Anthony G.St. Louis, MOAttorneyDecember 17, 1996 to June 16, 1997
Heffelfinger, Harry N.Buffalo Grove, ILCPADecember 20, 1996 to June 19, 1998
Zintl Jr., Ernst J.Newport, MNCPADecember 23, 1996 to December 22, 1997
Alms, William R.Lake Forest, CACPAJanuary 1, 1997 to March 31, 1997
Smith, Arthur L.Athens, GACPAJanuary 1, 1997 to December 31, 1997
DeGroote Sr., Kevin J.Mesa, AZCPAJanuary 1, 1997 to October 31, 1997
Oliveri, RobertBensalem, PACPAJanuary 1, 1997 to December 31, 1997
Davies, Preston S.Deerfield, ILCPAJanuary 15, 1997 to December 14, 1997
Elbert, David L.Franktown, COCPAIndefinite from January 21, 1997
Smith Jr., Phillip M.Long Beach, CAAttorneyFebruary 1, 1997 to March 31, 1997
Pennington, Richard A.Vandergrift, PACPAFebruary 1, 1997 to January 31, 2000
Tameron, Joseph A.Chandler, AZCPAFebruary 1, 1997 to September 30, 1998
Kalb, Mary C.Kearny, NECPAFebruary 1, 1997 to March 31, 1997
Pritchard, John J.San Diego, CAEnrolled AgentFebruary 1, 1997 to March 31, 1997
Garrett, RichardTorrance, GAEnrolled AgentMarch 1, 1997 to May 30, 1997
Englert, Larry R.Eaton, OHCPAApril 1, 1997 to May 30, 1997
Section 7428(c) Validation of
Certain Contributions Made During
Pendency of Declaratory Judgment
Proceedings
This announcement serves notice to
potential donors that the organization
listed below has recently filed a timely
declaratory judgment suit under section
7428 of the Code, challenging revoca-
tion of its status as an eligible donee
under section 170(c)(2).
Protection under section 7428(c) of
the Code begins on the date that the
notice of revocation is published in the
Internal Revenue Bulletin and ends on
the date on which a court first deter-
mines that an organization is not de-
scribed in section 170(c)(2), as more
particularly set forth in section
7428(c)(1). In the case of individual
contributors, the maximum amount of
contributions protected during this pe-
riod is limited to $1,000.00, with a
husband and wife being treated as one
26

contributor. This protection is not ex-
tended to any individual who was re-
sponsible, in whole or in part, for the
acts or omissions of the organization
that were the basis for the revocation.
This protection also applies (but without
limitation as to amount) to organizations
described in section 170(c)(2) which are
exempt from tax under section 501(a). If
the organization ultimately prevails in
its declaratory judgment suit, deductibil-
ity of contributions would be subject to
the normal limitations set forth under
section 170.
Society of Separationists, Inc.
Austin, TX
27

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as ‘‘rulings’’)
that have an effect on previous rulings
use the following defined terms to de-
scribe the effect:
Amplifieddescribes a situation where
no change is being made in a prior
published position, but the prior position
is being extended to apply to a variation
of the fact situation set forth therein.
Thus, if an earlier ruling held that a
principle applied to A, and the new
ruling holds that the same principle also
applies to B, the earlier ruling is ampli-
fied. (Compare withmodified, below).
Clarifiedis 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 es-
sential difference between them.
Modifiedis used where the substance
of a previously published position is
being changed. Thus, if a prior ruling
held that a principle applied to A but not
to B, and the new ruling holds that it
applies to both A and B, the prior ruling
is modified because it corrects a pub-
lished position. (Compare withamplified
andclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered de-
terminative with respect to future trans-
actions. This term is most commonly
used in a ruling that lists previously
published rulings that are obsoleted be-
cause of changes in law or regulations.
A ruling may also be obsoleted because
the substance has been included in regu-
lations subsequently adopted.
Revokeddescribes situations where
the position in the previously published
ruling is not correct and the correct
position is being stated in the new
ruling.
Supersededdescribes 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 previ-
ously published over a period of time in
separate rulings. If the new ruling does
more than restate the substance of a
prior ruling, a combination of terms is
used. For example,modifiedandsuper-
sededdescribes a situation where the
substance of a previously published rul-
ing 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 su-
perseded.
Supplementedis used in situations in
which a list, such as a list of the names
of countries, is published in a ruling and
that list is expanded by adding further
names in subsequent rulings. After the
original ruling has been supplemented
several times, a new ruling may be
published that includes the list in the
original ruling and the additions, and
supersedes all prior rulings in the series.
Suspendedis 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
formerly used will appear in material published in
the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C.—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
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. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statements of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.
28

Numerical Finding List
1
Bulletin 1997–1 through 1997–10
Announcements:
97–1, 1997–2 I.R.B.63
97–2, 1997–2 I.R.B.63
97–3, 1997–2 I.R.B.63
97–4, 1997–3 I.R.B.14
97–5, 1997–3 I.R.B.15
97–6, 1997–4 I.R.B.11
97–7, 1997–4 I.R.B.12
97–8, 1997–4 I.R.B.12
97–9, 1997–5 I.R.B.27
97–10, 1997–10 I.R.B.64
97–11, 1997–6 I.R.B.19
97–12, 1997–7 I.R.B.55
97–13, 1997–8 I.R.B.38
97–14, 1997–8 I.R.B.38
97–15, 1997–9 I.R.B.23
97–16, 1997–9 I.R.B.23
97–17, 1997–9 I.R.B.23
97–18, 1997–10 I.R.B.67
97–19, 1997–10 I.R.B.68
Notices:
97–1, 1997–2 I.R.B.22
97–2, 1997–2 I.R.B.22
97–3, 1997–1 I.R.B.8
97–4, 1997–2 I.R.B.24
97–5, 1997–2 I.R.B.25
97–6, 1997–2 I.R.B.26
97–7, 1997–1 I.R.B.8
97–8, 1997–4 I.R.B.7
97–9, 1997–2 I.R.B.35
97–10, 1997–2 I.R.B.41
97–11, 1997–2 I.R.B.50
97–12, 1997–3 I.R.B.11
97–13, 1997–6 I.R.B.13
97–14, 1997–8 I.R.B.23
97–15, 1997–8 I.R.B.23
97–16, 1997–9 I.R.B.15
97–17, 1997–10 I.R.B.34
97–18, 1997–10 I.R.B.35
97–19, 1997–10 I.R.B.40
97–20, 1997–10 I.R.B.52
Proposed Regulations:
REG–209040–88, 1997–7 I.R.B.34
REG–209494–90, 1997–8 I.R.B.24
REG–208172–91, 1997–10 I.R.B.59
REG–209672–93, 1997–6 I.R.B.15
REG–209762–95, 1997–3 I.R.B.12
REG–209817–96, 1997–7 I.R.B.41
REG–209828–96, 1997–6 I.R.B.15
REG–209834–96, 1997–4 I.R.B.9
REG–209839–96, 1997–8 I.R.B.26
REG–242996–96, 1997–9 I.R.B.18
REG–246018–96, 1997–8 I.R.B.30
REG–247678–96, 1997–6 I.R.B.17
REG–247862–96, 1997–8 I.R.B.32
REG–248770–96, 1997–8 I.R.B.33
REG–249819–96, 1997–7 I.R.B.50
REG–252231–96, 1997–7 I.R.B.52
REG–252233–96, 1997–9 I.R.B.19
Revenue Procedures:
97–1, 1997–1 I.R.B.11
97–2, 1997–1 I.R.B.64
97–3, 1997–1 I.R.B.84
97–4, 1997–1 I.R.B.96
97–5, 1997–1 I.R.B.132
97–6, 1997–1 I.R.B.153
Revenue Procedures—Continued
97–7, 1997–1 I.R.B.185
97–8, 1997–1 I.R.B.187
97–9, 1997–2 I.R.B.56
97–10, 1997–2 I.R.B.59
97–11, 1997–6 I.R.B.13
97–12, 1997–4 I.R.B.7
97–13, 1997–5 I.R.B.18
97–14, 1997–5 I.R.B.20
97–15, 1997–5 I.R.B.21
97–16, 1997–5 I.R.B.25
97–17, 1997–9 I.R.B.15
97–18, 1997–10 I.R.B.53
97–19, 1997–10 I.R.B.55
Revenue Rulings:
97–1, 1997–2 I.R.B.10
97–2, 1997–2 I.R.B.7
97–3, 1997–2 I.R.B.5
97–4, 1997–3 I.R.B.6
97–5, 1997–4 I.R.B.5
97–6, 1997–4 I.R.B.4
97–7, 1997–5 I.R.B.14
97–8, 1997–7 I.R.B.4
97–9, 1997–9 I.R.B.4
97–10, 1997–10 I.R.B.31
97–11, 1997–10 I.R.B.5
Social Security Domestic Coverage Threshold
1997–9, I.R.B.17
Treasury Decisions:
8688, 1997–3 I.R.B.7
8689, 1997–3 I.R.B.9
8690, 1997–5 I.R.B.5
8691, 1997–5 I.R.B.16
8692, 1997–3 I.R.B.4
8693, 1997–6 I.R.B.9
8694, 1997–6 I.R.B.11
8695, 1997–4 I.R.B.5
8696, 1997–6 I.R.B.4
8697, 1997–2 I.R.B.11
8698, 1997–7 I.R.B.29
8699, 1997–6 I.R.B.4
8700, 1997–7 I.R.B.5
8701, 1997–7 I.R.B.23
8702, 1997–8 I.R.B.4
8703, 1997–8 I.R.B.18
8704, 1997–8 I.R.B.12
8705, 1997–8 I.R.B.16
8706, 1997–9 I.R.B.11
8707, 1997–7 I.R.B.17
8708, 1997–10 I.R.B.14
8709, 1997–9 I.R.B.5
1
A cumulative list of all Revenue Rulings,
Revenue Procedures, Treasury Decisions, etc.,
published in Internal Revenue Bulletins 1996–27
through 1996–53 will be found in Internal
Revenue Bulletin 1997–1, dated January 6, 1997.
29

Finding List of Current Action on
Previously Published Items
1
Bulletin 1997–1 through 1997–10
*Denotes entry since last publication
Revenue Procedures:
66–3
Modified by
97–11, 1997–6 I.R.B.13
87–21
Modified by
97–11, 1997–6 I.R.B.13
92–20
Modified by
97–1, 1997–1 I.R.B.11
92–20
Modified by
97–10, 1997–2 I.R.B.59
92–90
Superseded by
97–1, 1997–1 I.R.B.11
94–52
Revoked by
97–11, 1997–6 I.R.B.13
96–1
Superseded by
97–1, 1997–1 I.R.B.11
96–2
Superseded by
97–2, 1997–1 I.R.B.64
96–3
Superseded by
97–3, 1997–1 I.R.B.84
96–4
Superseded by
97–4, 1997–1 I.R.B.96
96–5
Superseded by
97–5, 1997–1 I.R.B.132
96–6
Superseded by
97–6, 1997–1 I.R.B.153
96–7
Superseded by
97–7, 1997–1 I.R.B.185
96–8
Superseded by
97–8, 1997–1 I.R.B.187
Revenue Rulings:
70–480
Revoked by
97–6, 1997–4 I.R.B.4
72–527
Obsoleted by
8704, 1997–8 I.R.B.12
74–59
Revoked by
8708, 1997–10 I.R.B.14
Revenue Rulings—Continued
92–19
Supplemented in part by
97–2, 1997–2 I.R.B.7
96–12
Superseded by
97–3, 1997–1 I.R.B.84
96–13
Modified by
97–1, 1997–1 I.R.B.11
96–22
Superseded by
97–3, 1997–1 I.R.B.84
96–34
Superseded by
97–3, 1997–1 I.R.B.84
96–39
Superseded by
97–3, 1997–1 I.R.B.84
96–43
Superseded by
97–3, 1997–1 I.R.B.84
96–56
Superseded by
97–3, 1997–1 I.R.B.84
1
A cumulative finding list for previously published
items mentioned in Internal Revenue Bulletins
1996–27 through 1996–53 will be found in Inter-
nal Revenue Bulletin 1997–1, dated January 6,
1997.
30