Internal Revenue Bulletin 2001-37 (PDF rendition): IRS Revenue Rulings

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INCOME TAX
Rev. Rul. 2001–42, page 223.
Fringe benefits aircraft valuation formula. The Standard
Industry Fare Level (SIFL) cents-per-mile rates and terminal
charges in effect for the second half of 2001 are set forth
for purposes of determining the value of noncommercial
flights on employer-provided aircraft under section 1.61
–21(g) of the regulations.
Rev. Rul. 2001–44, page 223.
LIFO; price indexes; department stores. The July 2001
Bureau of Labor Statistics price indexes are accepted for
use by department stores employing the retail inventory and
last-in, first-out inventory methods for valuing inventories for
tax years ended on, or with reference to, July 31, 2001.
REG–106431–01, page 272.
Proposed regulations under section 1361 of the Code pro-
vide guidance regarding a qualified subchapter S trust elec-
tion for testamentary trusts and the period for which former
subpart E trusts and testamentary trusts may be permitted
shareholders of an S corporation.
Notice 2001–53, page 225.
2001 marginal production rates. This notice announces
the applicable percentage under section 613A of the Code
to be used in determining percentage depletion for marginal
properties for the 2001 calendar year.
Notice 2001–54, page 225.
2001 enhanced oil recovery credit. The enhanced oil
recovery credit for taxable years beginning in the 2001 cal-
endar year is determined without regard to the phase-out for
crude oil price increases provided in section 43(b) of the
Code.
ADMINISTRATIVE
Rev. Proc. 2001–45, page 227.
Substitute printed, computer-prepared, and comput-
er-generated tax forms and schedules. Requirements
are set forth for privately designed and printed federal tax
forms and conditions under which the Service will accept
computer-prepared, and computer-generated tax forms and
schedules. Rev. Proc. 2000–19 superseded.
Rev. Proc. 2001–46, page 263.
Business expenses, capital expenditures, railroad
track maintenance costs. This procedure provides a safe
harbor method of accounting for track structure expendi-
tures paid or incurred by certain railroads, and procedures
for a qualifying taxpayer to obtain automatic consent from
the Commissioner to change to the track maintenance
allowance method. In addition, this procedure provides an
optional procedure for certain qualifying taxpayers to settle
the issue of track structure expenditures for open taxable
years using the track maintenance allowance method. Rev.
Proc. 99–49 modified and amplified.
Internal Revenue
bbuulllleettiinn
Bulletin No. 2001–37
September 10, 2001
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
Department of the Treasury
Internal Revenue Service
Finding Lists begin on page ii.

September 10, 20012001–37 I.R.B.
The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing offi-
cial rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly and may be obtained
from the Superintendent of Documents on a subscription
basis. Bulletin contents are consolidated semiannually into
Cumulative Bulletins, which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of in-
ternal management are not published; however, statements
of internal practices and procedures that affect the rights
and duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service on
the application of the law to the pivotal facts stated in the
revenue ruling. In those based on positions taken in rulings
to taxpayers or technical advice to Service field offices,
identifying details and information of a confidential nature
are deleted to prevent unwarranted invasions of privacy and
to comply with statutory requirements.
Rulings and procedures reported in the Bulletin do not have
the force and effect of Treasury Department Regulations,
but they may be used as precedents. Unpublished rulings
will not be relied on, used, or cited as precedents by Service
personnel in the disposition of other cases. In applying pub-
lished rulings and procedures, the effect of subsequent leg-
islation, regulations, court decisions, rulings, and proce-
dures must be considered, and Service personnel and oth-
ers concerned are cautioned against reaching the same con-
clusions in other cases unless the facts and circumstances
are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B,
Legislation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to
these subjects are contained in the other Parts and Sub-
parts. Also included in this part are Bank Secrecy Act Admin-
istrative Rulings. Bank Secrecy Act Administrative Rulings
are issued by the Department of the Treasury’s Office of the
Assistant Secretary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.
The first Bulletin for each month includes a cumulative index
for the matters published during the preceding months.
These monthly indexes are cumulated on a semiannual basis,
and are published in the first Bulletin of the succeeding semi-
annual period, respectively.
The IRS Mission
Provide America’s taxpayers top quality service by help-
ing them understand and meet their tax responsibilities
and by applying the tax law with integrity and fairness to
all.
Introduction
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402.

2001–37 I.R.B.223September 10, 2001
Section 61.—Gross Income
Defined
26 CFR 1.61–21: Taxation of fringe benefits.
Fringe benefits aircraft valuation
formula. For purposes of section 1.61
–21(g) of the Income Tax Regulations, re-
lating to the rule for valuing noncommer-
cial flights on employer-provided aircraft,
the Standard Industry Fare Level (SIFL)
cents-per-mile rates and terminal charges
in effect for the second half of 2001 are
set forth.
Rev. Rul. 2001–42
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 em-
ployer-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 de-
termined under the base aircraft valuation
formula (also known as the Standard In-
dustry 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 air-
craft multiple provided in section
1.61–21(g)(7) and then adding the applic-
able 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 ter-
minal charges and SIFL mileage rates:
Part I. Rulings and Decisions Under the Internal Revenue Code of 1986
Period During WhichTerminalSIFL Mileage
the Flight Is Taken ChargeRates
7/1/01 - 12/31/01$36.88Up to 500 miles
= $.2017 per mile
501-1500 miles
= $.1538 per mile
Over 1500 miles
= $.1479 per mile
DRAFTING INFORMATION
The principle author of this revenue
ruling is Kathleen Edmondson of the Of-
fice of Division Counsel/Associate Chief
Counsel (Tax Exempt and Government
Entities). For further information regard-
ing this revenue ruling, contact Ms. Ed-
mondson at (202) 622-6040 (not a toll-
free call).
Section 446.—General Rule for
Methods of Accounting
26 CFR 1.446–1: General rule for methods of
accounting.
A safe harbor method of accounting is provided
for track structure expenditures paid or incurred by
certain railroads, as well as procedures for automatic
consent to change to this method. See Rev. Proc.
2001–46, page 263.
Section 472.—Last-in, First-out
Inventories
26 CFR 1.472–1: Last-in, first-out inventories.
LIFO; price indexes; department
stores. The July 2001 Bureau of Labor
Statistics price indexes are accepted for
use by department stores employing the
retail inventory and last-in, first-out in-
ventory methods for valuing inventories
for tax years ended on, or with reference
to, July 31, 2001.
Rev. Rul. 2001–44
The following Department Store Inven-
tory Price Indexes for July 2001 were is-
sued by the Bureau of Labor Statistics.
The indexes are accepted by the Internal
Revenue Service, under § 1.472–1(k) of
the Income Tax Regulations and Rev.
Proc. 86–46 (1986–2 C.B. 739) for appro-
priate application to inventories of depart-
ment stores employing the retail inven-
tory and last-in, first-out inventory meth-
ods for tax years ended on, or with
reference to, July 31, 2001.
The Department Store Inventory Price
Indexes are prepared on a national basis
and include (a) 23 major groups of depart-
ments, (b) three special combinations of
the major groups - soft goods, durable
goods, and miscellaneous goods, and (c) a
store total, which covers all departments,
including some not listed separately, ex-
cept for the following: candy, food,
liquor, tobacco, and contract departments.

September 10, 20012242001–37 I.R.B.
BUREAU OF LABOR STATISTICS, DEPARTMENT STORE
INVENTORY PRICE INDEXES BY DEPARTMENT GROUPS
(January 1941 = 100, unless otherwise noted)
Percent Change
GroupsJulyJulyfrom July 2000
20002001to July 2001
1
1. Piece Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .519.6495.0-4.7
2. Domestics and Draperies . . . . . . . . . . . . . . . . . . . . . . . . .630.3604.1-4.2
3. Women’s and Children’s Shoes . . . . . . . . . . . . . . . . . . . .613.6652.36.3
4. Men’s Shoes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .896.4865.9-3.4
5. Infants’ Wear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .629.5593.7-5.7
6. Women’s Underwear . . . . . . . . . . . . . . . . . . . . . . . . . . . .561.4567.11.0
7. Women’s Hosiery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .335.1352.6 5.2
8. Women’s and Girls’ Accessories . . . . . . . . . . . . . . . . . . .528.2542.12.6
9. Women’s Outerwear and Girls’ Wear . . . . . . . . . . . . . . . .364.0355.7-2.3
10. Men’s Clothing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .602.8577.6-4.2
11. Men’s Furnishings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .608.8588.4-3.4
12. Boys’ Clothing and Furnishings . . . . . . . . . . . . . . . . . . . .478.6476.0 -0.5
13. Jewelry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .945.5946.50.1
14. Notions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .780.8805.83.2
15. Toilet Articles and Drugs . . . . . . . . . . . . . . . . . . . . . . . . .965.7972.50.7
16. Furniture and Bedding . . . . . . . . . . . . . . . . . . . . . . . . . . .689.2637.7-7.5
17. Floor Coverings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .609.8628.73.1
18. Housewares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .783.5771.5-1.5
19. Major Appliances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .232.9225.6-3.1
20. Radio and Television . . . . . . . . . . . . . . . . . . . . . . . . . . . .59.153.9 -8.8
21. Recreation and Education
2
. . . . . . . . . . . . . . . . . . . . . . . .92.689.8-3.0
22. Home Improvements
2
. . . . . . . . . . . . . . . . . . . . . . . . . . .127.9125.8-1.6
23. Auto Accessories
2
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .106.5109.42.7
Groups 1 - 15: Soft Goods . . . . . . . . . . . . . . . . . . . . . . . . . . .583.3575.7-1.3
Groups 16 - 20: Durable Goods . . . . . . . . . . . . . . . . . . . . . . . .439.9423.3-3.8
Groups 21 - 23: Misc. Goods
2
. . . . . . . . . . . . . . . . . . . . . . . . .100.098.5-1.5
Store Total
3
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .529.2519.5-1.8
1
Absence of a minus sign before the percentage change in this column signifies a price increase.
2
Indexes on a January 1986=100 base.
3
The store total index covers all departments, including some not listed separately, except for the following: candy, food, liquor, tobacco, and contract departments.
DRAFTING INFORMATION
The principal author of this revenue
ruling is Michael Burkom of the Office of
Associate Chief Counsel (Income Tax and
Accounting). For further information re-
garding this revenue ruling, contact Mr.
Burkom at (202) 622-4930 (not a toll-free
call).
Section 481.—Adjustments
Required by Changes in Method
of Accounting
26 CFR 1.481–1: Adjustments in general.
A safe harbor method of accounting is provided
for track structure expenditures paid or incurred by
certain railroads, as well as procedures for automatic
consent to change to this method. See Rev. Proc.
2001–46, page 263.

2001–37 I.R.B.225September 10, 2001
2001 Marginal Production Rates
Notice 2001–53
Section 613A(c)(6)(C) of the Internal
Revenue Code defines the term “applica-
ble percentage” for purposes of determin-
ing percentage depletion for oil and gas
produced from marginal properties. The
applicable percentage is the percentage
(not greater than 25 percent) equal to the
sum of 15 percent, plus one percentage
point for each whole dollar by which $20
exceeds the reference price (determined
under § 29(d)(2)(C)) for crude oil for the
calendar year preceding the calendar year
in which the taxable year begins. The
reference price determined under
§ 29(d)(2)(C) for the 2000 calendar year
is $26.73.
Table 1 contains the applicable percent-
ages for marginal production for taxable
years beginning in calendar years 1991
through 2001.
Part III. Administrative, Procedural, and Miscellaneous
Notice 2001–53 Table 1
APPLICABLE PERCENTAGE FOR MARGINAL PRODUCTION
Calendar YearApplicable Percentage
1991 15 percent
1992 18 percent
1993 19 percent
1994 20 percent
199521 percent
1996 20 percent
1997 16 percent
1998 17 percent
199924 percent
2000 19 percent
2001 15 percent
The principal author of this notice is
Brenda M. Stewart of the Office of Asso-
ciate Chief Counsel (Passthroughs and
Special Industries). For further informa-
tion regarding this notice, contact Ms.
Stewart at (202) 622-3120 (not a toll-free
call).
2001 Section 43 Inflation
Adjustment
Notice 2001–54
Section 43(b)(3)(B) of the Internal Rev-
enue Code requires the Secretary to publish
an inflation adjustment factor. The en-
hanced oil recovery credit under § 43 for
any taxable year is reduced if the “reference
price,” determined under § 29(d)(2)(C), for
the calendar year preceding the calendar
year in which the taxable year begins is
greater than $28 multiplied by the inflation
adjustment factor for that year.
The term “inflation adjustment factor”
means, with respect to any calendar year,
a fraction the numerator of which is the
GNP implicit price deflator for the pre-
ceding calendar year and the denominator
of which is the GNP implicit price defla-
tor for 1990.
Because the reference price for the
2000 calendar year ($26.73) does not ex-
ceed $28 multiplied by the inflation ad-
justment factor for the 2001 calendar
year, the enhanced oil recovery credit for
qualified costs paid or incurred in 2001 is
determined without regard to the phase-
out for crude oil price increases.
Table 1 contains the GNP implicit price
deflator used for the 2001 calendar year,
as well as the previously published GNP
implicit price deflators used for the 1991
through 2000 calendar years.

September 10, 20012262001–37 I.R.B.
Notice 2001–54 TABLE 1
GNP IMPLICIT PRICE DEFLATORS
Calendar YearGNP Implicit Price Deflator
1990112.9 (used for 1991)
1991117.0 (used for 1992)
1992 120.9 (used for 1993)
1993124.1 (used for 1994)
1994126.0 (used for 1995)
1995 107.5 (used for 1996)*
1996 109.7 (used for 1997)
1997112.35 (used for 1998)**
1998112.64 (used for 1999)
1999104.59 (used for 2000)***
2000106.89 (used for 2001)
* Beginning in 1995, the GNP implicit price deflator was rebased relative to 1992. The 1990 GNP implicit price deflator used to
compute the 1996 § 43 inflation adjustment factor is 93.6.
** Beginning in 1997, two digits follow the decimal point in the GNP implicit price deflator. The 1990 GNP price deflator used
to compute the 1998 § 43 inflation adjustment factor is 93.63.
*** Beginning in 1999, the GNP implicit price deflator was rebased relative to 1996. The 1990 GNP implicit price deflator used
to compute the 2000 § 43 inflation adjustment factor is 86.53.
Table 2 contains the inflation adjustment factor and the phase-out amount for taxable years beginning in the 2001 calendar year
as well as the previously published inflation adjustment factors and phase-out amounts for taxable years beginning in the 1991
through 2000 calendar years.
Notice 2001–54 TABLE 2
INFLATION ADJUSTMENT FACTORS AND
PHASE-OUT AMOUNTS
CalendarInflation AdjustmentPhase-out
YearFactorAmount
19911.00000
19921.03630
19931.07080
19941.09920
19951.11600
19961.14850
19971.17200
19981.19990
19991.20300
20001.2087 0
20011.23530
DRAFTING INFORMATION
The principal author of this notice is
Brenda M. Stewart of the Office of Asso-
ciate Chief Counsel (Passthroughs and
Special Industries). For further informa-
tion regarding this notice, contact Ms.
Stewart at (202) 622-3120 (not a toll-free
call).

2001–37 I.R.B.227September 10, 2001
NOTE: This revenue procedure will be reprinted as the next revision of IRS Publication 1167, Substitute Printed, Computer-
Prepared, and Computer-Generated Tax Forms and Schedules.
Rev. Proc. 2001–45
TABLE OF CONTENTS
CHAPTER 1 - INTRODUCTION TO SUBSTITUTE FORMS
Section 1.1 - Overview of Revenue Procedure 2001–45 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .228
Section 1.2 - IRS Contacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .229
Section 1.3 - Nature of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .229
Section 1.4 - Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .230
Section 1.5 - Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .231
CHAPTER 2 - GENERAL GUIDELINES FOR SUBMISSIONS AND APPROVALS
Section 2.1 - General Specifications for Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .231
Section 2.2 - Highlights of Permitted Changes and Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .231
Section 2.3 - Vouchers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .232
Section 2.4 - Restrictions on Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .233
Section 2.5 - Guidelines for Obtaining IRS Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .233
Section 2.6 - Office of Management and Budget (OMB) Requirements
for All Substitute Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .235
CHAPTER 3 - PHYSICAL ASPECTS AND REQUIREMENTS
Section 3.1 - General Guidelines for Substitute Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .236
Section 3.2 - Paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .237
Section 3.3 - Printing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .238
Section 3.4 - Margins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .239
Section 3.5 - Examples of Approved Formats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .239
Section 3.6 - Miscellaneous Information for Substitute Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .240
CHAPTER 4 - ADDITIONAL RESOURCES
Section 4.1 - Guidance From Other Revenue Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .240
Section 4.2 - Ordering Publications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .241
Section 4.3 - Electronic Tax Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .241
Section 4.4 - Federal Tax Forms on CD-ROM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .242
CHAPTER 5 - REQUIREMENTS FOR SPECIFIC TAX RETURNS
Section 5.1 - Tax Returns (Form 1040, 1040A, 1120, Etc.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .242
Section 5.2 - Changes Permitted to Graphics (Forms 1040A and 1040) . . . . . . . . . . . . . . . . . . . . . . . . . .243
Section 5.3 - Changes Permitted to Form 1040A Graphics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .244
Section 5.4 - Changes Permitted to Form 1040 Graphics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .244
CHAPTER 6 - FORMAT AND CONTENT OF SUBSTITUTE RETURNS
Section 6.1 - Acceptable Formats for Computer-Generated Forms and Schedules . . . . . . . . . . . . . . . . . . 245
Section 6.2 - Additional Instructions for All Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .246
CHAPTER 7 - MISCELLANEOUS FORMS AND PROGRAMS
Section 7.1 - Paper Substitutes for Form 1042-S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .247
Section 7.2 - Specifications for Substitute Schedules K-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .249
Section 7.3 - Procedures for Printing IRS Envelopes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .249
Section 7.4 - Changes Involving EPMF Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .250
Section 7.5 - Procedures for Substitute Forms 5471 and 5472 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .251
CHAPTER 8 - ALTERNATIVE METHODS OF FILING
Section 8.1 - Forms for Electronically Filed Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .252
Section 8.2 - FTD Magnetic Tape Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .253
Section 8.3 - Effect on Other Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .253

September 10, 20012282001–37 I.R.B.
EXHIBITS
Exhibit A-1 Schedule A (Preferred)
Exhibit A-2 Schedule A (Acceptable)
Exhibit B-1 Schedule B (Preferred)
Exhibit B-2 Schedule B (Acceptable)
Exhibit CG-A Schedule A (Computer Generated)
Exhibit CG-B Schedule B (Computer Generated)
Exhibit C Sample Checklist
Exhibit D List of Forms Referred to in the Revenue Procedure
Chapter 1
Introduction to Substitute Forms
Section 1.1—Overview of Revenue Procedure 2001–45
1.1.1 PurposeThe purpose of this revenue procedure is to provide procedural guidelines and general requirements for the
development, printing, and approval of all substitute tax forms. Approval will be based on these guidelines.
After review and approval, submitted forms will be accepted as substitutes for official IRS forms.
1.1.2 Unique FormsCertain unique specialized forms require the use of other additional revenue procedures to supplement
this publication. See Chapter 4.
1.1.3 ScopeThe Internal Revenue Service accepts quality substitute tax forms that are consistent with the official
forms and do not have an adverse impact on our processing. The IRS Substitute Forms Program admin-
isters the formal acceptance and processing of these forms nationwide. While this program deals primar-
ily with paper documents, it also interfaces with other processing and filing media such as:
• Magnetic tape,
• Optical character recognition, and
• Electronic filing.
Only those substitute forms that comply fully with the requirements set forth are acceptable. Exhibit D
lists the form numbers mentioned in this document, their titles, and where their references are made. This
revenue procedure is updated as required to reflect pertinent tax year form changes and to meet process-
ing and/or legislative requirements.
1.1.4 Forms The following types of forms are covered by this revenue procedure:
Covered by This
Revenue Procedure• IRS tax returns and their related forms and schedules.
• Worksheets as they appear in instruction packages.
• Applications for permission to file returns electronically and forms used as required documentation for
electronically filed returns.
• Powers of Attorney.
• Over-the-counter estimated tax payment vouchers.
• Forms and schedules relating to partnerships, exempt organizations, and employee plans.
1.1.5The following types of forms are not covered by this revenue procedure:
Forms NOT
Covered by This• W-2, W-3 (see Publication 1141 for information on these forms).
Revenue Procedure • 1096, 1098 series, 1099 series, 5498 series, and W-2G (see Publication 1179 for information on these
forms).
• Federal Tax Deposit (FTD) coupons, which may not be reproduced.
• Forms 1040-ES(OCR) and 1041-ES(OCR), which may not be reproduced.
• Requests for information or documentation initiated by the Service.
• Forms used internally by the Service.
• State tax forms.
• Forms developed outside IRS (except for Form TD F 90–22.1, Report of Foreign Bank and Financial
Accounts).

2001–37 I.R.B.229September 10, 2001
Section 1.2—IRS Contacts
1.2.1 Where To SendSend your substitute forms for approval to the following offices (DO NOT send forms with taxpayer
Substitute Formsdata):
FormOffice and Address
4789, 8300, 8362, 8852,IRS Computing Center
TD F 90–22.1, TD F 90–22.47BSA Compliance Branch
P.O. Box 32063
Detroit, MI 48232-0063
All others (except W-2, W-3, 1096,Internal Revenue Service
1098, 1099, 5498, and W-2G)Attn: Substitute Forms Program
W:CAR:MP:FP:S:CS
1111 Constitution Avenue, NW
Room 5244 IR
Washington, DC 20224
In addition, the Substitute Forms Program Unit can be contacted via e-mail at tfp@publish.no.irs.gov.
Please enter “Substitute Forms” on the Subject Line. Use this e-mail address only to inquire about forms
covered by this revenue procedure. DO NOT attach graphic files for approval with e-mail.
For questions about Forms W-2 and W-3, refer to IRS Publication 1141, General Rules and Specifica-
tions for Private Printing of Substitute Forms W-2 and W-3. For Forms 1096, 1098, 1099, 5498, and
W-2G, refer to IRS Publication 1179, Rules and Specifications for Private Printing of Substitute Forms
1096, 1098, 1099, 5498, and W-2G.
Section 1.3—Nature of Changes
1.3.1 ChangesThe following changes have been made to the Revenue Procedure for 2001:
to the Revenue
Procedure• The pages have been renumbered for easier use.
• IRS Internet Web Site addresses have been updated.
• The OCR Forms address in Section 1.2.1 has been omitted. These form submissions may now be sent
to the Substitute Forms Program Unit.
• The Substitute Forms Program office symbols have been changed to W:CAR:MP:FP:S:CS.
• The definition under Section 1.4.7 has been deleted.
• The list of related publications in Chapter 4 has been updated. Pub. 1192 has been deleted from the list
because it is obsolete.
• Pricing information for the Federal Tax Forms CD-ROM has been revised.
• Section 7.1 has been deleted. Form 1040EZ is no longer being scanned.
• Information about Form 1040PC in Section 7.2 and elsewhere has been deleted. Effective tax year
2000, the Service is no longer accepting Form 1040PC.
• Section 7.3 has been deleted. The information concerning these OCR scannable forms is no longer valid.
• Because the information in Chapter 7 of the previous revision has been deleted, Chapters 8 and 9 are
now Chapters 7 and 8.
• Form 1042–S specifications have been revised.
• Forms 5500 and 5500–EZ are now handled by the Pension and Welfare Benefits Administration (PWBA).
Forms 5500 and 5500–EZ will no longer be accepted for IRS approval. Information can be found in Sec-
tion 7.4. Other references to these forms have been deleted throughout this revenue procedure.
• Exhibit L–1 is renamed Exhibit D. The list has been reformatted and updated.
• Various editorial changes have been made.

September 10, 20012302001–37 I.R.B.
Section 1.4—Definitions
1.4.1 Substitute A tax form (or related schedule) that differs in any way from the official version and is intended to replace
Formthe entire form that is printed and distributed by the Service. This term also covers those approved sub-
stitute forms exhibited in this revenue procedure.
1.4.2 Printed/A form produced using conventional printing processes. Also, a printed form which has been reproduced
Preprinted Formby photocopying or a similar process.
1.4.3 PreprintedA printed form that has marginal perforations for use with automated and high-speed printing equipment.
Pin-Fed Form
1.4.4 Computer-A preprinted form in which the taxpayer’s tax entry information has been inserted by a computer, com-
Prepared Substituteputer-printer, or other computer type equipment such as word-processing equipment.
Form
1.4.5 Computer-A tax return or form that is entirely designed and printed using a computer printer such as a laser printer,
Generated Substitute etc., on plain white paper. This return or form must conform to the physical layout of the corresponding
Tax Return or FormIRS form, although the typeface may differ. The text should match the text on the officially printed form
as closely as possible. Condensed text and abbreviations will be considered on a case-by-case basis.
Exception: All jurats (perjury statements) must be reproduced verbatim.
1.4.6 Manually-A preprinted reproduced form in which the taxpayer’s tax entry information is entered by an individual
Prepared Formusing a pen, pencil, typewriter, or other non-automated equipment.
1.4.7 GraphicsParts of a printed tax form that are not tax amount entries or required information. Examples of graphics
are line numbers, captions, shadings, special indicators, borders, rules, and strokes created by typesetting,
photo-graphics, photo-composition, etc.
1.4.8 AcceptableA legible photocopy of an original form.
Reproduced Form
1.4.9 SupportingA document providing detailed information to support a line entry on an official or approved substitute
Statementform and filed with (attached to) a tax return.
(Supplemental
Schedule)Note:A supporting statement is not a tax form and does not take the place of an official form unless
specifically permitted elsewhere in this procedure.
1.4.10 SpecificThe following specific terms are used throughout this revenue procedure in reference to all substitute
Form Termsforms: format, sequence, line reference, item caption, and data entry field.
1.4.11 FormatThe overall physical arrangement and general layout of a substitute form.
1.4.12 SequenceSequence is an integral part of the total format requirement. The substitute form should show the same
numeric and logical placement order of data, as shown on the official form.
1.4.13 Line Reference The line numbers, letters, or alphanumerics used to identify each captioned line on an official form.
These line references are printed to the immediate left of each caption or data entry field.
1.4.14 Item CaptionThe text on each line of a form, which identifies the data required.

2001–37 I.R.B.231September 10, 2001
1.4.15 DataDesignated areas for the entry of data such as dollar amounts, quantities, responses, checkboxes, etc.
Entry Field
1.4.16 Advanced A draft version of a new or revised form may be posted to the IRS Internet site for information purposes.
DraftSubstitute forms may be submitted based on these advanced drafts, but any company that receives forms
approval based on these early drafts is responsible for monitoring and revising forms to mirror any revi-
sions in the final forms provided by the Service.
Section 1.5—Agreement
1.5.1 Important Any person or company who uses substitute forms and makes all or part of the changes specified in
Stipulation of this revenue procedure agrees to the following stipulations:
This Revenue
Procedure• The Internal Revenue Service presumes the changes are made in accordance with these procedures and,
as such, will be non-interruptive to the processing of the tax return.
• Should any of the changes prove to be not exactly as described, and as a result become disruptive to the In-
ternal Revenue Service during processing of the tax return, the person or company agrees to accept the de-
termination of the IRS as to whether or not the form may continue to be used during the filing season.
• The person or company agrees to work with the IRS in correcting noted deficiencies. Notification of de-
ficiencies may be made by any combination of fax, letter, e-mail, or phone contact and may include the
return of unacceptable forms for re-submission of acceptable forms.
Chapter 2
General Guidelines for Submissions and Approvals
Section 2.1—General Specifications for Approval
2.1.1 OverviewIf you produce any tax returns and forms using IRS guidelines on permitted changes, you can generate
your own substitutes without further approval. If your changes are more extensive, you must get official
approval before using substitute forms. These changes include the use of typefaces and sizes other than
those found on the official form and the condensing of line item descriptions to save space.
2.1.2 SchedulesSchedules are considered to be an integral part of a complete tax return. A schedule may be included as
part of a form or printed separately.
2.1.3 Example of Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, is an example of this
Schedules That Must situation. Its Schedules A through U have pages numbered as part of the basic return. For Form 706
Be Submitted Withto be approved, the entire form including Schedules A through U must be submitted.
the Return
2.1.4 Examples of However, Schedules 1, 2, and 3 of Form 1040A are examples of schedules that can be separately
Schedules That Can computer-generated. Although printed by the IRS as a supplement to Form 1040A, none of these
Be Submitted schedules are required to be filed with Form 1040A. These schedules may be separated from Form
Separately1040A and submitted as computer-generated substitute forms.
2.1.5 Use and The Internal Revenue Service is continuing a program to identify and contact tax return preparers, forms
Distribution ofdevelopers, and software publishers who use or distribute unapproved forms that do not conform to this
Unapproved Formsrevenue procedure. The use of unapproved forms impedes processing of the returns.
Section 2.2—Highlights of Permitted Changes and Requirements
2.2.1 Methods of Official versions are supplied by the Internal Revenue Service, such as those in the taxpayer’s tax package,
Reproducing Internal those printed in revenue procedures, and over-the-counter forms available at IRS and other
Revenue Service governmental public offices or buildings. Forms are also available on CD-ROM, and on-line via the
FormsInternet.

There are methods of reproducing Internal Revenue Service printed tax forms suitable for use as substi-
tute tax forms without prior approval.
• You can photocopy most tax forms and use them instead of the official ones. The entire substitute form,
including entries, must be legible.
• You can reproduce any current tax form as cut sheets, snap sets, and marginally punched, pin-fed forms
so long as you use an official IRS version as the master copy.
• You can reproduce a “signature form” as a valid substitute form. Many tax forms (including re-
turns) have a taxpayer signature requirement as part of the form layout. The jurat/perjury state-
ment/signature line areas must be retained and worded exactly as on the official form. The re-
quirement for a signature by itself does not prohibit a tax form from being properly
computer-generated.
Section 2.3—Vouchers
2.3.1 OverviewAll payment vouchers (Forms 940–V, 940–EZ(V), 941–V, 943–V, 945–V, 1040–V, and 2290–V) must be
reproduced. Substitute vouchers must be the same size as the officially printed vouchers. Vouchers that
are prepared for printing on a laser printer may include a scan line.
2.3.2 Scan LineNNNNNNNNN AA AAAA NN N NNNNNN NNN
SpecificationsItem: AB C D EF G
A. Social Security Number/Employer Identification Number (SSN/EIN) has 9 numeric spaces.
B. Check Digit has 2 alpha spaces.
C.Name Control has 4 alphanumeric spaces.
D.Master File Tax (MFT) Code has 2 numeric spaces (see below).
E. Taxpayer Identification Number (TIN) Type has 1 numeric space (see below).
F.Tax period has six numeric spaces in year/month format (YYYYMM).
G. Transaction Code has 3 numeric spaces.
2.3.3 MFT CodeCode Number for Form:
• 1040 family – 30;
• 940/940–EZ – 10;
• 941 – 01;
• 943 – 11;
• 945 – 16; and
• 2290 – 60.
2.3.4 TIN TypeType Number for:
• Form 1040 family – 0; and
• Forms 940, 940–EZ, 941, 943, 945, and 2290 – 2.
2.3.5 Voucher SizeThe voucher size must be exactly 8.00x 3.250(Forms 1040–ES and 1041–ES must be 7.6250x 3.00). The
document scan line must be vertically positioned 0.25 inches from the bottom of the scan line to the bot-
tom of the voucher. The last character on the right of the scan line must be placed 3.5 inches from the
right leading edge of the document. The minimum required horizontal clear space between characters is
.014 inches. The line to be scanned must have a clear band 0.25 inches in height from top to bottom of
the scan line, and from border to border of the document. “Clear band” means no printing except for
dropout ink.
2.3.6 Print and Vouchers must be imaged in black ink using OCR A, OCR B, or Courier 10. These fonts may not be
Paper Weightmixed in the scan line. The horizontal character pitch is 10 CPI. The paper must be 20 to 24 pound OCR
bond paper weight.
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Section 2.4—Restrictions on Changes
2.4.1 Things You You cannot, without prior IRS approval, change any IRS tax form or use your own (non-approved)
CANNOT Do to IRS versions including graphics, unless specifically permitted by this revenue procedure.
Forms Suitable for
Substitute Tax FormsYou cannot adjust any of the graphics on Forms 1040, 1040A, and 1040EZ (except in those areas speci-
fied in Chapter 5 of this revenue procedure) without prior approval from the IRS Substitute Forms
Program Unit.
You cannot use your own preprinted label on tax returns filed with the IRS unless you fully comply with
the criteria specified in the section in this revenue procedure on use of pre-addressed IRS labels.
Section 2.5—Guidelines for Obtaining IRS Approval
2.5.1 Basic Preparers who submit substitute privately-designed, privately-printed, computer-generated, or computer-
Requirementsprepared tax forms must develop these substitutes using the guidelines established in this chapter. These
forms, unless excepted by the revenue procedure, must be approved by the IRS before being filed.
2.5.2 Conditional The IRS cannot grant final approval of your substitute form until the official form has been published.
Approval Based on However, the IRS has established a location on the Internet for the posting of advance drafts of forms.
Advance Drafts This site can be reached through the Tax Professional’s Corner at:
http://www.irs.gov/prod/bus_info/tax_pro.
We encourage submission of proposed substitutes of these advance draft forms, and will grant conditional
approval based solely on these early drafts. These advance drafts are subject to significant change before
forms are finalized. If these advance drafts are used as the basis for your substitute forms, you will be re-
sponsible for subsequently updating your final forms to agree with the final official version. These revi-
sions need not be submitted for further approval.
Note:Approval of forms based on advance drafts will not be granted after the final version of an official
form is published.
2.5.3 SubmissionPlease follow these general guidelines when submitting substitute forms for approval.
Procedures
• Any alteration of forms must be within the limits acceptable to the Service. It is possible that, from one
filing period to another, a change in law or a change in internal need (processing, audit, compliance,
etc.) may change the allowable limits for the alteration of the official form.
• When specific approval of any substitute form (other than those specified in Chapter 2, IRS Contacts) is
desired, a sample of the proposed substitute should be forwarded for consideration by letter to the Sub-
stitute Forms Program Unit at the address shown in Section 1.2.
• To expedite multiple forms approval, we prefer that your proposed forms be submitted in separate
sets by return. For example, Forms 1040 and their normally related schedules or attachments should
be submitted separately from Forms 1120 and 1065 if possible. Schedules and forms (e.g., Forms
3468, 4136, etc.) that can be used with more than one type of return (e.g., 1040, 1041, 1120, etc.)
should be submitted only once for approval, regardless of the number of different tax returns with
which they may be associated. Also, all pages of multi-page forms or returns should be submitted
in the same package.
2.5.4 ApprovingAs no IRS office except the ones specified in this procedure (per the chart in Section 1.2) are authorized
Officesto approve substitute forms, unnecessary delay may result if forms are sent elsewhere for approval.
All forms submitted to any other office must be forwarded to the appropriate office for formal control and
review. The Substitute Forms Program Unit may then coordinate the response with the program analyst
responsible for the processing of that form. Such coordination may include allowing the analyst to offi-
cially approve the form. No IRS office is authorized to allow deviations from this revenue procedure.
2001–37 I.R.B.233September 10, 2001

2.5.5 Service’s The IRS does not review or approve the logic of specific software programs, nor does the IRS
Review of Software confirm the calculations on the forms produced by these programs. The accuracy of the program remains
Programs, etc.the responsibility of the software package developer, distributor, or user.
The Substitute Forms Program is primarily concerned with the pre-filing quality review of the final
forms, produced by whatever means, that are expected to be processed by IRS field offices. For the
above reasons, you should submit forms without including any “taxpayer” information such as names,
addresses, monetary amounts, etc.
2.5.6 When To Send Proposed substitutes, which are required to be submitted per this revenue procedure, should be sent as
Proposed Substitutesmuch in advance of the filing period as possible. This is to allow adequate time for analysis and response.
2.5.7 Accompanying When submitting sample substitutes, you should include an accompanying statement that lists each
Statementform number and its changes from the official form (position, arrangement, appearance, line numbers,
additions, deletions, etc.). With each of the items you should include a detailed reason for the change and
an estimate of the number of forms expected to be filed.
When requesting approval for multiple forms, the statement should be presented as a checklist. Check-
lists are not mandatory, but do expedite the approval process. The checklist may look like the example
(Exhibit C) displayed in the back of this procedure or may be one of your own design. Please include
your fax number on the checklist.
2.5.8 Approval/Non-The Substitute Forms Unit will fax the checklist or an approval letter to the originator if a fax number has
Approval Noticebeen provided, unless:
• The requester has asked for a formal letter; or
• Significant corrections to the submitted forms are required.
Notice of approval may contain qualifications for use of the substitutes. Notices of nonapproval letters
may specify the changes required for approval, and may also require re-submission of the form(s) in
question. Telephone contact is used when possible.
2.5.9 Duration ofMost signature tax returns and many of their schedules and related forms have the tax (liability)
Approvalyear printed in the upper right corner. Approvals for these forms are usually good for one calendar year
(January through December of the year of filing). Quarterly tax forms in the 94X series and Form 720
require approval for any quarter in which the form has been revised.
Because changes are made to a form every year, each new filing season generally requires a new submis-
sion of a form. Very rarely is updating the preprinted year the only change made to a form.
2.5.10 Limited Limited continued use of a change approved for one tax year may be allowed for the same form in
Continued Use of an the following tax year. Examples of such limitations and requirements are the use of abbreviated words,
Approved Changerevised form spacing, compressed text lines, shortened captions, etc., which do not change the consisten-
cy of lines or text on the official forms.
If substantial changes are made to the form, new substitutes must be submitted for approval. If only minor editor-
ial changes are made to the form, it is not subject to review. It is the responsibility of each vendor who has been
granted permission to use substitute forms to monitor and revise forms to mirror any revisions to official forms
made by the Service. If there are any questions, please contact the Substitute Forms Unit.
If you received written approval of a previous tax year substitute form governed by this revenue proce-
dure and continue to use the approved change on your current tax year substitute form, you may revise
your form to include this change. Without additional written approval, you may use it as a current tax
year substitute form, provided you comply with the requirements in this revenue procedure.
2.5.11 When ApprovalIf you received written approval for a specific change on a form last year, such as deleting the vertical
Is Not Requiredlines used to separate dollars and cents, you may make the same change this year if the item is still pre-
sent on the official form.
• The new substitute does not have to be sent to the IRS and written approval is not required.
September 10, 20012342001–37 I.R.B.

• However, the new substitute must conform to the official current year IRS form in other respects: date, Of-
fice of Management and Budget (OMB) approval number, attachment sequence number, Paperwork Re-
duction Act Notice Statement, arrangement, item caption, line number, line reference, data sequence, etc.
• It must also comply with this revenue procedure. The procedure may have eliminated, added to, or oth-
erwise changed the guideline(s) that affected the change approved last year.
• An approved change is authorized only for the period from a prior tax year substitute form to a current
tax year substitute form.
Exception:Forms with temporary, limited, or interim approvals (or with approvals that state an approved
change is not allowed in any other tax year) are subject to review in subsequent years.
2.5.12 Continuous Forms without preprinted tax years are called “continuous use” forms. Continuous use forms are revised
Use Formswhen a legislative change affects the form or a change will facilitate processing. These forms may have
revision dates that are valid for longer than one year.
2.5.13 Internet A chart of print dates (for annual and quarterly forms) and most current revision dates (for continuous use
Program Chartforms) will be maintained on the Internet. For further details, see Section 4.3.1 on access to the Internet.
2.5.14 RequiredGenerally, you must send us one copy of each form being submitted for approval. However, if you
Copiesare producing forms for different computer systems (e.g., IBM (or compatible) vs. Macintosh) or differ-
ent types of printers (laser vs. dot matrix), and these forms differ significantly in appearance, submit one
copy for each type of system or printer.
2.5.15 Requestor’s Following the receipt of initial approval for a substitute forms package or of a software output
Responsibilityprogram to print substitute forms, it is the responsibility of the originator (designer or distributor) to pro-
vide client firms or individuals with the Service forms requirements that must be met for continuing ac-
ceptability. Examples of this responsibility include:
• Using the prescribed print paper, font size, legibility, state tax data deletion, etc.
• Informing all users of substitute forms of the legal requirements of the Paperwork Reduction Act No-
tice, which is generally found in the instructions for the official IRS forms.
2.5.16 Source CodeThe Substitute Forms Program Unit, W:CAR:MP:FP:S:CS, will assign a unique source code to each firm
that submits substitute paper forms for approval. This will be a permanent control number that should be
used on every form created by a particular firm.
The source code:
• For paper returns consists of three alpha characters.
• Should be printed at the bottom left margin area on the first page of every approved substitute paper form.
• Should not be used on optically scanned (OCR) forms.
Section 2.6—Office of Management and Budget (OMB) Requirements for All Substitute Forms
2.6.1 OMB There are legal requirements of the Paperwork Reduction Act of 1995 (The Act). Public Law 104–13
Requirements forrequires that:
All Substitute Forms
• OMB approve all IRS tax forms that are subject to the Act,
• Each IRS form contains (in the upper right corner) the OMB number, if any, and
• Each IRS form (or its instructions) states why IRS needs the information, how it will be used, and
whether or not the information is required to be furnished.
This information must be provided to every user of official or substitute tax forms.
2.6.2 Application of On forms that have been assigned OMB numbers:
the Paperwork
Reduction Act• All substitute forms must contain in the upper right corner the OMB number that is on the official form.
• The required format is: OMB No. XXXX-XXXX (Preferred)or OMB # XXXX-XXXX(Acceptable).
2001–37 I.R.B.235September 10, 2001

2.6.3 Required You must inform the users of your substitute forms of the IRS use and collection requirements stated in
Explanation to the instructions for official IRS forms.
Users
• If you provide your users or customers with the official IRS instructions, page 1 of each form must retain ei-
ther the Paperwork Reduction Act Notice (or Disclosure, Privacy Act, and Paperwork Reduction Act No-
tice), or a reference to it as the IRS does on the official forms (usually in the lower left corner of the forms).
• This notice reads, in part, “We ask for the information on this form to carry out the Internal Revenue
laws of the United States. You are required to give us the information. We need it to ensure that you are
complying with these laws and to allow us to figure and collect the right amount of tax....”
Note: If the IRS instructions are not provided to users of your forms, the exact text of the Paperwork Re-
duction Act Notice (or Disclosure, Privacy Act, and Paperwork Reduction Act Notice) must be furnished
separately or on the form.
2.6.4 Finding the The OMB number and the Paperwork Reduction Act Notice, or references to it, may be found printed
OMB Number and on an official form (or its instructions). The number and the notice are included on the official paper
Paperwork Reduction format and in other formats produced by the IRS (e.g., compact disc (CD) or Internet download)
Act Notice
Chapter 3
Physical Aspects and Requirements
Section 3.1—General Guidelines for Substitute Forms
3.1.1 GeneralThe official form is the standard. Because a substitute form is a variation from the official form, you
Informationshould know the requirements of the official form for the year of use before you modify it to meet your
needs. The IRS provides several means of obtaining the most frequently used tax forms. These include
the Internet, fax-on-demand, and CD-ROM (see Chapter 4).
3.1.2 DesignEach form must follow the design of the official form as to format arrangement, item caption, line num-
bers, line references, and sequence.
3.1.3 State Tax State tax information must not appear on the Federal tax return, associated form, or schedule
Information that is filed with the IRS. Exceptions occur when amounts are claimed on, or required by, the Federal
Prohibitedreturn (e.g., state and local income taxes, on Schedule A of Form 1040).
3.1.4 Vertical IF a form is to be...THEN...
Alignment of
Manually prepared• The column must have a vertical line or some type Amount Fields
of indicator in the amount field to separate dollars
from cents, if the official form has a vertical line.
• The cents column must be at least 3/100wide.
Computer-generated• Vertically align the amount entry fields where possible.
• Use one of the following amount formats:
• 0,000,000.
• 0,000,000.00.
Computer-prepared• You may remove the vertical line in the amount field
that separates dollars from cents.
• Use one of the following amount formats:
• 0,000,000.
• 0,000,000.00.
3.1.5 Attachment Many individual income tax forms have a required “attachment sequence number” located just below
Sequence Numberthe year designation in the upper right corner of the form. The IRS uses this number to indicate the order
September 10, 20012362001–37 I.R.B.

in which forms are to be attached to the tax return for processing. Some of the attachment sequence num-
bers may change each year.
On computer-prepared forms:
• The sequence number may be printed in no less than 12-point boldface type and centered below the
form’s year designation.
• The sequence number may also be placed following the year designation for the tax form and separated
with an asterisk.
• The actual number may be printed without labeling it the “Attachment Sequence Number.”
3.1.6 Paid Preparer’s On Forms 1040EZ, 1040A, 1040, and 1120, etc., the “Paid Preparer’s Use Only” area may not be re-
Information andarranged or relocated. You may, however, add three extra lines to the paid preparer’s address area
Signature Areawithout prior approval. This applies to other tax forms as well.
3.1.7 Assembly of If developing software or forms for use by others, please inform your customers/clients that the order in
Formswhich the forms are arranged may affect the processing of the package. A return must be arranged in the
order indicated below.
IF the form is...THEN the sequence is...
1040• Form 1040.
• Schedules and forms in sequence number order.
Any other tax return (Form 1120, 1120S,• The tax return.
1065, 1041, etc.)• Directly associated schedules (Schedule D, etc.).
• Directly associated forms.
• Additional schedules in alphabetical order.
• Additional forms in numerical order.
Supporting statements should then follow in the same sequence as the forms they support. Additional
information required should be attached last.
In this way, the forms are received in the order in which they must be processed. If you do not send returns
to us in order, processing may be delayed.
Section 3.2—Paper
3.2.1 Paper ContentThe paper must be:
• Chemical wood writing paper that is equal to or better than the quality used for the official form,
• At least 18 pound (170x 220, 500 sheets), or
• At least 50 pound offset book (250x 380, 500 sheets).
3.2.2 Paper With There are several kinds of paper prohibited for substitute forms. These are:
Chemical Transfer
• Carbon-bonded paper.
Properties
• Chemical transfer paper except when the following specifications are met:
• Each ply within the chemical transfer set of forms must be labeled, and
• Only the top ply (ply one and white in color), the one that contains chemical on the back only (coated
back), may be filed with the Service.
3.2.3 ExampleA set containing three plies would be constructed as follows: ply one (coated back), “Federal Return, File
with IRS”; ply two (coated front and back), “Taxpayer’s copy”; and ply three (coated front), “Preparer’s
copy.”
The file designation, “Federal Return, File with IRS,” for ply one must be printed in the bottom right
margin (just below the last line of the form) in 12-point, bold-face type.
2001–37 I.R.B.237September 10, 2001

It is not mandatory, but recommended, that the file designation “Federal Return, File with IRS,” be
printed in a contrasting ink for visual emphasis.
3.2.4 Carbon PaperDo not attach any carbon paper to any return you file with the IRS.
3.2.5 Paper andWe prefer that the color and opacity of paper substantially duplicates that of the original form. This
Ink Colormeans that your substitute must be printed in black ink and may be on white or on the colored paper the
IRS form is printed on. Forms 1040A and 1040 substitute reproductions may be in black ink without the
colored shading. The only exception to this rule is Form 1041–ES, which should always be printed with
a very light gray shading in the color screened area. This is necessary to assist us in expeditiously sepa-
rating this form from the very similar Form 1040–ES.
3.2.6 Page SizeSubstitute or reproduced forms and computer prepared/generated substitutes may be the same size as the
official form (80x 110in most cases) or they may be the standard commercial size (8 1/20x 110) exclusive
of pin-feed holes. The thickness of the stock cannot be less than .003 inch.
Section 3.3—Printing
3.3.1 PrintingThe private printing of all substitute tax forms must be by conventional printing processes,
Mediumphotocopying, computer-graphics, or similar reproduction processes.
3.3.2 LegibilityAll forms must have a high standard of legibility as to printing, reproduction, and fill-in matter. Entries
of taxpayer data may be no smaller than eight points. The IRS reserves the right to reject those with poor
legibility. The ink and printing method used must ensure that no part of a form (including text, graphics,
data entries, etc.) develops “smears” or similar quality deterioration. This includes any subsequent copies
or reproductions made from an approved master substitute form, either during preparation or during IRS
processing.
3.3.3 Type FontMany Federal tax forms are printed using “Helvetica” as the basic type font. We request that you use this
type font when composing substitute forms.
3.3.4 Print SpacingSubstitute forms should be printed using a 6 lines/inch vertical print option. They should also be printed hori-
zontally in 10 pitch pica (i.e., 10 print characters per inch) or 12 pitch elite (i.e.,12 print positions per inch).
3.3.5 Image SizeThe image size of a printed substitute form should be as close as possible to that of the official form. You
may omit any text on both computer-prepared and computer-generated forms that is solely instructional.
3.3.6 Title Area To allow a large top margin for marginal printing and more lines per page, the title line(s) for all
Changessubstitute forms (not including the form’s year designation and sequence number, when present) may be
photographically reduced by 40 percent or reset as one line of type. When reset as one line, the type size
may be no smaller than 14-point. You may omit “Department of the Treasury, Internal Revenue Service”
and all reference to instructions in the form’s title area.
3.3.7 Remove When privately printing substitute tax forms, the Government Printing Office (GPO) symbol and/or
Government Printing jacket number must be removed. In the same place, using the same type size, print the Employer
Office Symbol and Identification Number (EIN), the Social Security Number (SSN) of the printer or designer, or the
IRS Catalog NumberIRS-assigned source code. (We prefer this last number be printed in the lower left area of the first page
of each form.) Also, remove the IRS Catalog Number (Cat. No.) if one is present in the bottom center
margin, and the recycle symbol if the substitute is not produced on recycled paper.
September 10, 20012382001–37 I.R.B.

3.3.8 Printing on While it is preferred that both sides of the paper be used for substitute and reproduced forms,
One Side of Paperresulting in the same page arrangement as that of the official form or schedule, the IRS will not reject
your forms if only one side of the paper is used.
3.3.9 Photocopy The IRS does not undertake to approve or disapprove the specific equipment or process used
Equipmentin reproducing official forms. Photocopies of forms must be entirely legible and satisfy the conditions
stated in this and other revenue procedures.
3.3.10 ReproductionsReproductions of official forms and substitute forms that do not meet the requirements of this revenue
procedure may not be filed instead of the official forms. Illegible photocopies are subject to being re-
turned to the filer for re-submission of legible copies.
3.3.11 Removal of You may remove references to instructions. No prior approval is needed.
Instructions
Exception: The words “For Paperwork Reduction Act Notice, see instructions” must be retained or a
similar statement provided on each form. Some forms refer the taxpayer to a page number in the
instructions for information on the Paperwork Reduction Act Notice.
Section 3.4—Margins
3.4.1 Margin SizeThe format of a reproduced tax return when printed on the page must have margins on all sides at least as
large as the margins on the official form. This allows room for IRS employees to make the necessary en-
tries on the form during processing.
• A 1/2 inch to 1/4 inch margin must be maintained across the top, bottom, and both sides (exclusive of
any pin-fed holes) of all computer-generated substitutes.
• The marginal, perforated strips containing the pin-fed holes must be removed from all forms prior to fil-
ing with the Internal Revenue Service.
3.4.2 Marginal Prior approval is not required for the marginal printing allowed when printed on an official form or
Printingon a photocopy of an official form.
• With the exception of the actual tax return forms (i.e., Forms 1040, 1040A, 1040EZ, 1120, 940, 941,
etc.), you may print in the left vertical margin and in the left half of the bottom margin.
• Printing is never allowed in the top right margin of the tax return form (i.e., Forms 1040, 1040A,
1040EZ, 1120, 940, 941, etc.). The Service uses this area to imprint a Document Locator Number for
each return. There are no exceptions to this requirement.
Section 3.5—Examples of Approved Formats
3.5.1 Examples of Two sets of exhibits (Exhibits A-1, A-2, B-1, and B-2) are at the end of this revenue procedure.
Approved Formats These are examples of how the guidelines in this revenue procedure may be used in some specific
From the Exhibitscases. Vertical spacing is six (6) lines to the inch.
3.5.2 Examples of Examples of acceptable computer-generated formats are also shown in the exhibits section of
Acceptable Computer-this revenue procedure. Exhibits CG-A and CG-B show computer-generated 1995 Schedules A and B.
Generated Formats Vertical spacing is six (6) lines to the inch. You may also refer to them as examples of how the guide-
lines in this revenue procedure may be used in specific cases. A combination of upper and lower-case print
fonts is acceptable in producing the computer-generated forms included in this procedure. The same logic
for computer-generated forms can be applied to any IRS form that is normally reproducible as a substi-
tute form, with the exception of tax return forms as discussed elsewhere. These examples are from a prior
year and are not to be used as substitute forms.
2001–37 I.R.B.239September 10, 2001

Section 3.6—Miscellaneous Information for Substitute Forms
3.6.1 Filing To be acceptable for filing, a substitute return or form must print out in a format that will allow
Substitute Formsthe party submitting the return to follow the same instructions as for filing official forms. These instruc-
tions are in the taxpayer’s tax package or in the related form instructions. The form must be on the ap-
propriate size paper, be legible, and include a jurat where one appears on the published form.
3.6.2 Caution to The IRS has received returns produced by software packages with approved output where either the
Software Publishersform heading was altered or the lines were spaced irregularly. This produces an illegible or unrecogniz-
able return or a return with the wrong number of pages. We realize that many of these problems are
caused by individual printer differences but they may delay input of return data and, in some cases, gen-
erate correspondence to the taxpayer. Therefore, in the instructions to the purchasers of your product,
both individual and professional, please stress that their returns will be processed more efficiently if they
are properly formatted. This includes:
• Having the correct form numbers and titles at the top of the return, and
• Submitting the same number of pages as if the form were an official IRS form with the line items on the
proper pages.
3.6.3 Use Pre-If you are a practitioner filling out a return for a client or a software publisher who prints instruction
Addressed IRS manuals, stress the use of the pre-addressed label provided in the tax package the IRS sent to the taxpayer,
Labelwhen available. The use of this label (or its precisely duplicated label information) is extremely impor-
tant for the efficient, accurate, and economical processing of a taxpayer’s return. Labeled returns indi-
cate that a taxpayer is an established filer and permits the IRS to automatically accelerate processing of
those returns. This results in quicker refunds, more accurate names/addresses and postal deliveries, and
less manual review by IRS functions.
3.6.4 Caution to If you are producing a software package that generates name and address data onto the tax
Producers of Software return, do not under any circumstances, program either the Service preprinted check digits or a
Packagespractitioner-derived name control to appear on any return prepared and filed with the IRS.
3.6.5 ProgrammingWhenever applicable:
To Print Forms
• Use only the following label information format for single filers:
JOHN Q. PUBLIC
310 OAK DRIVE
HOMETOWN, STATE 94000
• Use only the following information for joint filers:
JOHN Q. PUBLIC
MARY I. PUBLIC
310 OAK DRIVE
HOMETOWN, STATE 94000
Chapter 4
Additional Resources
Section 4.1—Guidance From Other Revenue Procedures
4.1.1 General Guidance for the substitute tax forms not covered in this revenue procedure and the revenue procedures
that govern their use are as follows:
• Revenue Procedure 94–79, IRS Publication 1355, Requirements and Conditions for the Reproduction,
Private Design, and Printing of Substitute Forms 1040–ES.
• Revenue Procedure 2001–26, IRS Publication 1141, General Rules and Specifications for Private
Printing of Substitute Forms W-2 and W-3.
September 10, 20012402001–37 I.R.B.

• Revenue Procedure 2000–28, IRS Publication 1179, Rules and Specifications for Private Printing of
Substitute Forms 1096, 1098, 1099, 5498, and W-2G.
• Revenue Procedure 2001–40, IRS Publication 1187, Specifications for Filing Form 1042–S, Foreign
Person’s U.S. Source Income Subject to Withholding Magnetically or Electronically.
• Revenue Procedure 2001–32, IRS Publication 1220, Specifications for Filing Forms 1098, 1099, 5498,
and W-2G Magnetically or Electronically.
• Revenue Procedure 95–18, IRS Publication 1223, Specifications for Private Printing of Substitute
Forms W-2c and W-3c.
Section 4.2—Ordering Publications
4.2.1 Sources of The publications listed below are available either on the IRS Internet web site or may be ordered by
Publicationscalling 1-800-TAX-FORM (1-800-829-3676). Identify the requested document by IRS publication num-
ber:
• Pub. 1141, the revenue procedure on specifications for private printing for Forms W-2 and W-3.
• Pub. 1167, the revenue procedure on substitute printed, computer-prepared, and computer-generated tax
forms and schedules.
• Pub. 1179, the revenue procedure on paper substitute information returns (Forms 1096, 1098, 1099,
5498, and W-2G).
• Pub. 1220, the revenue procedure on electronic or magnetic reporting for information returns (Forms
1098, 1099 series, 5498, and W-2G).
• Pub. 1223, the revenue procedure on substitute Forms W-2c and W-3c.
• Pub. 1239, Specifications for Filing Form 8027, Employer’s Annual Information Return of Tip Income
and Allocated Tips, on Magnetic Tape.
• Pub. 1245, Magnetic Tape Reporting for Forms W-4.
• Pub. 1345, Handbook for Electronic Filers of Individual Income Tax Returns (Tax Year 2000). (This is
an annual publication; tax year is subject to change).
• Pub. 1345-A, Handbook for Electronic Filers of Individual Income Tax Returns (Tax Year 2000)(Sup-
plement). This publication, printed in the late fall, supplements Publication 1345.
• Pub. 1355, the revenue procedure on the requirements for substitute Form 1040–ES.
4.2.2 Where To OrderIf you are mailing your order, the address to use is determined by your location.
IF you live in the ...THEN mail your order to ...
Western United StatesWestern Area Distribution Center
Rancho Cordova, CA 95743-0001
Central United StatesCentral Area Distribution Center
P.O. Box 8903
Bloomington, IL 61702-8903
Eastern United States or a foreign countryEastern Area Distribution Center
P.O. Box 85074
Richmond, VA 23261-5074
Section 4.3—Electronic Tax Products
4.3.1 The InternetCopies of tax forms with instructions, publications, and other tax-related materials may be obtained via
the Internet at www.irs.gov.Forms can be downloaded in several file formats (PDF - Portable Document
Format, PS - PostScript, and PCL - Printer Control Language). Those choosing to use PDF files for view-
ing on a personal computer can also download a free copy of the Adobe Acrobat Reader.
2001–37 I.R.B.241September 10, 2001

September 10, 20012422001–37 I.R.B.
4.3.2 Tax FaxThe most frequently requested tax forms, instructions, and other information are available through IRS Tax
Fax at (703) 368-9694. Call from your fax machine and follow the voice prompts. Your request will be trans-
mitted directly back to you. Each call is limited to requesting three items; users pay the telephone line charges.
4.3.3 Report of The Service makes available a site on the Internet that shows print dates for forms used by taxpayers
Print Dates in the preparation of returns and subsequent transactions. It has three schedules:
• Anticipated print dates of annual returns,
• Anticipated print dates of quarterly returns, and
• Last revision dates for continuous use only forms.
The site address is http://www.irs.gov/prod/bus_info/tax_pro/formsch.html. The site will be updated
weekly during peak printing periods and as necessary at other times.
Section 4.4—Federal Tax Forms on CD-ROM
4.4.1 Information The CD-ROM contains over 3,000 tax forms and publications for small businesses, return preparers,
About Federal Tax and others who frequently need current or prior year tax products. Most current tax forms on the
Forms CD-ROMCD-ROM may be filled in electronically, then printed out for submission and saved for record keeping.
Other products on the CD-ROM include the Internal Revenue Bulletins, Tax Supplements, and Internet
resources for the tax professional with links to the World Wide Web.
All necessary software to view the files must be installed from the CD-ROM. Software for Adobe Acro-
bat Reader is included on the disk. The software will run under Windows 95/98/NT and Macintosh Sys-
tem 7.5 and later. All products are presented in Adobe’s Portable Document Format (PDF). In addition,
the TIPs are provided in the Hyper Text Markup Language (HTML).
4.4.2 System For system requirements, contact the National Technical Information Service (NTIS) help desk at
Requirements and 703-487-4608.
How To Order the
Federal Tax Forms The cost of the CD, if purchased via the Internet at http://www.irs.gov/cdordersfrom NTIS, is $21
CD-ROM(with no handling fee).
If purchased using the following methods, the cost for each CD is $21 (plus a $5 handling fee). The price
for 100 or more copies is $15.75 per CD (plus a $5 handling fee). These methods are:
• By phone - 1-877-CDFORMS (1-877-233-6767)
• By fax - (703) 605-6900
• By mail using the order form contained in IRS Publication 1045 (Tax Professionals Program)
• By mail to:
National Technical Information Service
5285 Port Royal Road
Springfield, VA 22161
Chapter 5
Requirements for Specific Tax Returns
Section 5.1—Tax Returns (Form 1040, 1040A, 1120, Etc.)
5.1.1 Acceptable FormsTax return forms (such as Forms 1040, 1040A, and 1120) require signature and establish tax liability
upon completion. Computer-generated versions are acceptable under the following conditions:
• These substitute returns must be printed on plain white paper.
• Substitute returns and forms must conform to the physical layout of the corresponding IRS form al-
though the typeface may differ. The text should match the text on the officially published form as

closely as possible. Condensed text and abbreviations will be considered on a case-by-case basis. Cau-
tion: All jurats (perjury statements) must be reproduced verbatim. No text can be added, deleted, or
changed in meaning.
• Various computer-graphic print media such as laser printing, dot matrix printing, etc., may be used to
produce the substitute forms.
• The substitute return must be the same number of pages and contain the same line text as the official re-
turn.
• All computer-generated tax returns must be submitted for approval prior to their original use. You do
not need approval for a substitute tax return form if its only change is the preprinted year and you had
received a prior year approval letter.
Exception: If the approval letter specifies a one-time exception for your return, the next year’s return
must be approved.
5.1.2 Prohibited The following are prohibited:
Forms
• Tax returns(e.g., Forms 1040, etc.) computer-generated on lined or color-barred paper.
• Tax returns that differ from the official IRS forms in a manner that makes them not standard or process-
able.
5.1.3 Changes Certain changes (listed in Sections 5.2 through 5.4) are permitted to the graphics of the form without
Permitted to Forms prior approval, but these changes apply only to acceptable preprinted forms. Changes not requiring prior
1040 and 1040Aapproval are good only for the annual filing period, which is the current tax year. Such changes are valid
in subsequent years only if the official form does not change.
5.1.4 Other Changes All changes not listed in Sections 5.2 through 5.4 require approval from the Service beforethe form
Not Listedmay be filed.
Section 5.2—Changes Permitted to Graphics (Forms 1040A and 1040)
5.2.1 AdjustmentsYou may make minor vertical and horizontal spacing adjustments to allow for computer or word-process-
ing printing. This includes widening the amount columns or tax entry areas if the adjustments comply
with other provisions stated in revenue procedures. No prior approval is needed for these changes.
5.2.2 Name and The horizontal rules and instructions within the name and address area may be removed and the
Address Areaentire area left blank. No line or instruction can remain in the area. However, the statement regarding
use of the IRS label should be retained. The heavy ruled border (when present) that outlines the name,
address area, and social security number must not be removed, relocated, expanded, or contracted.
5.2.3 Required FormatWhen the name and address area is left blank, the following format must be used when printing the tax-
payer’s name and address. Otherwise, unless the taxpayer’s preprinted label is affixed over the informa-
tion entered in this area, the lines must be filled in as shown:
• 1st name line (35 characters maximum).
• 2nd name line (35 characters maximum).
• In-care-of name line (35 characters maximum).
• City, state (25 characters maximum), one blank character, & ZIP code.
5.2.4 Conventional When there is no in-care-of name line, the name and address will consist of only three lines
Name and Address (single filer) or four lines (joint filer). Name and address (joint filer) with no in-care-of name line:
Data
JOHN Z. JONES
MARY I. JONES
1234 ANYWHERE ST., APT 111
ANYTOWN, STATE 12321
2001–37 I.R.B.243September 10, 2001

5.2.5 Example of In-Name and address (single filer) with in-care-of name line:
Care-Of Name Line
JOHN Z. JONES
C/O THOMAS A. JONES
4311 SOMEWHERE AVE.
SAMETOWN, STATE 54345
5.2.6 SSN and The vertical lines separating the format arrangement of the SSN/EIN may be removed. When the
Employer Identificationvertical lines are removed, the SSN and EIN formats must be 000-00-0000 or 00-0000000, respectively.
Number (EIN) Area
5.2.7 Cents Column • You may remove the vertical rule that separates the dollars from the cents.
• All entries in the amount column should have a decimal point following the whole dollar amounts
whether or not the vertical line that separates the dollars from the cents is present.
• You may omit printing the cents, but all amounts entered on the form must follow a consistent format.
You are strongly urged to round off the figures to whole dollar amounts, following the official return in-
structions.
• When several amounts are summed together, the total should be rounded off after addition (i.e, individ-
ual amounts should not be rounded off for computation purposes).
• When printing money amounts, you must use one of the following ten-character formats: (a) 0,000,000.
(b) 000,000.00.
• When there is no entry for a line, leave the line blank.
5.2.8 “PaidOn all forms, the paid preparer’s information area may not be rearranged or relocated. You may add three lines
Preparer’s Use and remove the horizontal rules in the preparer’s address area.
Only” Area
Section 5.3—Changes Permitted to Form 1040A Graphics
5.3.1 GeneralNo prior approval is needed for the following changes (for use with computer-prepared forms only).
5.3.2 Line 4 of This line may be compressed horizontally (to allow for same line entry for the name of the qualifying
Form 1040Achild) by using the following caption: “Head of household; child’s name” (name field).
5.3.3 Other LinesAny line with text that takes up two or more vertical lines may be compressed to one line by using con-
tractions, etc., and by removing instructional references.
5.3.4 Page 2 of All lines must be present and numbered in the order shown on the official form. These lines may also
Form 1040Abe compressed.
5.3.5 Color ScreeningIt is not necessary to duplicate the color screening used on the official form. A substitute Form 1040A
may be printed in black and white only with no color screening.
5.3.6 Other Changes No other changes to the Form 1040A graphics are allowed without prior approval except for the
Prohibitedremoval of instructions and references to instructions.
Section 5.4—Changes Permitted to Form 1040 Graphics
5.4.1 GeneralNo prior approval is needed for the following changes (for use with computer-prepared forms only).
September 10, 20012442001–37 I.R.B.

5.4.2 Line 4 of This line may be compressed horizontally (to allow for a larger entry area for the name
Form 1040of the qualifying child) by using the following caption: “Head of household; child’s name” (name field).
5.4.3 Line 6c of The vertical lines separating columns (1) through (4) may be removed. The captions may be
Form 1040shortened to allow a one-line caption for each column.
5.4.4 Other LinesAny other line with text that takes up two or more vertical lines may be compressed to one line by using
contractions, etc., and by removing instructional references.
5.4.5 Line 21 - The fill-in portion of this line may be expanded vertically to three lines. The amount entry box must
Other Incomeremain a single entry.
5.4.6 Line 40 of You may change the line caption to read “Tax” and computer print the words “Total includes tax from”
Form 1040 - Taxand either “Form(s) 8814” or “Form 4972”. If both forms are used, print both form numbers.
5.4.7 Line 49 ofYou may change the caption to read: “Other credits from Form” and computer-print only the form(s)
Form 1040that apply.
5.4.8 Color ScreeningIt is not necessary to duplicate the color screening used on the official form. A substitute Form 1040 may
be printed in black and white only with no color screening.
5.4.9 Other ChangesNo other changes to the Form 1040 graphics are permitted without prior approval except for the
Prohibitedremoval of instructions and references to instructions.
Chapter 6
Format and Content of Substitute Returns
Section 6.1—Acceptable Formats for Computer-Generated Forms and Schedules
6.1.1 Exhibits and Exhibits of acceptable computer-generated formats for the schedules usually attached to the
Use of Acceptable Form 1040 are shown in the exhibits section of this revenue procedure.
Computer-Generated
Formats• If your computer-generated forms appear exactly like the exhibits, no prior authorization is needed.
• You may computer-generate forms not shown here, but you must design them by following the manner
and style of those in the exhibits section. Take care to observe other requirements and conditions in this
revenue procedure. The Service encourages the submission of all proposed forms covered by this rev-
enue procedure.
6.1.2 InstructionsThe format of each substitute schedule or form must follow the format of the official schedule or form as
to item captions, line references, line numbers, sequence, form arrangement and format, etc. Basically,
try to make the form look like the official one, with readability and consistency being primary factors.
You may use periods and/or other similar special characters to separate the various parts and sections of
the form. DO NOT use alpha or numeric characters for these purposes. With the exceptions described in
paragraph 6.1.3, all line numbers and items must be printed even though an amount is not entered on the
line.
6.1.3 Line NumbersWhen a line on an official form is designated by a number or a letter, that designation (reference code)
must be used on a substitute form. The reference code must be printed to the left of the text of each line
and immediately preceding the data entry field, even if no reference code precedes the data entry field on
the official form. If an entry field contains multiple lines and shows the line references once on the left
and right side of the form, use the same number of line references on the substitute return.
2001–37 I.R.B.245September 10, 2001

In addition, the reference code that is immediately before the data field must either be followed by a pe-
riod or enclosed in parentheses. There also must be at least two blank spaces between the period or the
right parenthesis and the first digit of the data field. (See example below.)
6.1.4 Decimal PointsA decimal point (i.e., a period) should be used for each money amount regardless of whether the amount
is reported in dollars and cents or in whole dollars, or whether or not the vertical line that separates the
dollars from the cents is present. The decimal points must be vertically aligned when possible.
Example:
5 STATE & LOCAL INC.
TAXES................5 495.00
6 REAL ESTATE
TAXES................6
7 PERSONAL PROPERTY
TAXES................7 198.00
or
5 STATE & LOCAL INC.
TAXES................(5) 495.00
6 REAL ESTATE
TAXES................(6)
7 PERSONAL PROPERTY
TAXES................(7) 198.00
6.1.5 Multi-Page When submitting a multi-page form, send all its pages in the same package. If you are not producing
Formscertain pages, please note that in your cover letter.
Section 6.2—Additional Instructions for All Forms
6.2.1 Use of YourYou may show computer-preparer internal control numbers and identifying symbols on the substitute,
Own Internal if using such numbers or symbols is acceptable to the taxpayer and the taxpayer’s representative. Such
Control Numbers information must not be printed in the top 1/2 inch clear area of any form or schedule requiring a sign-
and Identifying ature. Except for the actual tax return form (Forms 1040, 1120, 940, 941, etc.), you may print in the left
Symbolsvertical and bottom left margins. The bottom left margin you may use extends 3 1/2 inches from the left
edge of the form.
6.2.2 Descriptions forDescriptions for captions, lines, etc., appearing on the substitute forms may be limited to one print line
Captions, Lines, etc.by using abbreviations and contractions, and by omitting articles, prepositions, etc. However, sufficient
key words must be retained to permit ready identification of the caption, line, or item.
6.2.3
Determining Final
Explanatory detail and/or intermediate calculations for determining final line totals may be included on
Totals
the substitute. We prefer that such calculations be submitted in the form of a supporting statement. If
intermediate calculations are included on the substitute, the line on which they appear may not be num-
bered or lettered. Intermediate calculations may not be printed in the right column. This column is
reserved only for official numbered and lettered lines that correspond to the ones on the official form.
Generally, you may choose the format for intermediate calculations or subtotals on supporting statements
to be submitted.
6.2.4 Instructional Text on the official form, which is solely instructional (e.g., “Attach this schedule to Form 1040,” “See
Text on the Official instructions,” etc.) may be omitted from the substitute form.
Form
6.2.5 Mixing Forms on You may not show more than one schedule or form on the same printout page. Both sides of the paper
the Same Page may be printed for multi-page official forms, but it is unacceptable to intermix single-page schedules of
Prohibited forms except for Schedules A and B (Form 1040), which are printed back to back by the Service.
September 10, 20012462001–37 I.R.B.

For instance, Schedule E can be printed on both sides of the paper because the official form is multi-page,
with page 2 continued on the back. However, do not print Schedule E on the front page and Schedule SE
on the back, or Schedule A on the front and Form 8615 on the back, etc. Both pages of a substitute form
must match the official form. The back page may be left blank if the official form contains only the in-
structions.
6.2.6 Identifying Identify all computer-prepared substitutes clearly. Print the form designation 1/2 inch from the top mar-
Computer-Prepared gin and 1 1/2 inches from the left margin. Print the title centered on the first line of print. Print the tax-
Substitutesable year and, where applicable, the sequence number on the same line 1/2 inch to 1 inch from the right
margin. Include the taxpayer’s name and SSN on all forms and attachments. Also, print the OMB num-
ber as reflected on the official form.
6.2.7 Negative Negative (or loss) amount entries should be enclosed in brackets or parentheses or include a minus
Amountssign. This assists in accurate computation and input of form data. The Service preprints brackets in neg-
ative data fields on many official forms. These brackets should be retained or inserted on affected sub-
stitute forms.
Chapter 7
Miscellaneous Forms and Programs
Section 7.1—Paper Substitutes for Form 1042–S
7.1.1 PaperPaper substitutes for Form 1042–S, Foreign Person’s U.S. Source Income Subject to Withholding, that
Substitutes totally conform to the specifications contained in this procedure may be privately printed without prior
approval from the Internal Revenue Service. Proposed substitutes not conforming to these specifications
must be submitted for consideration.
7.1.2 Time Frame The request should be submitted by November 15 of the year prior to the year the form is to be used.
For Submission of This is to allow the Service adequate time to respond and the submitter adequate time to make any cor-
Form 1042–Srections. These requests should contain a copy of the proposed form, the need for the specific devia-
tion(s), and the number of information returns to be printed.
7.1.3 RevisionsForm 1042–S is subject to annual review and possible change. Withholding agents and form suppliers
are cautioned against overstocking supplies of the privately printed substitutes.
7.1.4 ObtainingCopies of the official form for the reporting year may be obtained from most Service offices. The Service
Copiesprovides only cut sheets (no carbon interleaves) of these forms. Continuous fan-fold/pinned forms are
not provided.
7.1.5 Instructions ForIntructions for withholding agents:
• Only original copies may be filed with the Service. Carbon copies and reproductions are not acceptable.
Withholding Agents
• The term “Recipient’s U.S. TIN” for an individual means the social security number (SSN) or IRS indi-
vidual taxpayer identification number (ITIN), consisting of nine digits separated by hyphens as follows:
000-00-0000. For all other recipients, the term means employer identification number (EIN) or quali-
fied intermediary employer identification number (QI-EIN). The EIN and QI-EIN consist of nine dig-
its separated by a hyphen as follows: 00-0000000. The taxpayer identification number (TIN) must be
in one of these formats.
• Withholding agents are requested to type or machine print whenever possible, provide quality data en-
tries on the forms (that is, use black ribbon and insert data in the middle of blocks well separated from
other printing and guidelines), and take other measures to guarantee a clear, sharp image. Withholding
agents are not required, however, to acquire special equipment solely for the purpose of preparing these
forms.
• The “VOID,” “CORRECTED,” and “PRO-RATA BASIS REPORTING” boxes must be printed at the
top center of the form under the title and checked, if applicable.
2001–37 I.R.B.247September 10, 2001

• Substitute forms prepared in continuous or strip form must be burst and stripped to conform to the
size specified for a single form before they are filed with the Service. The dimensions are found
below. Computer cards are acceptable provided they meet all requirements regarding layout, con-
tent, and size.
7.1.6 Substitute
PropertySubstitute Forms Format Requirements
Forms Format
RequirementsPrintingPrivately printed substitute Forms 1042–S must be exact
replicas of the official forms with respect to layout and
content. Only the dimensions of the substitute form may
differ. The Government Printing Office (GPO) symbol
must be deleted. The exact dimensions are found below.
Box EntriesOnly one item of income may be represented on the copy
submitted to the Service (Copy A). Multiple income items
may be used on copies provided to recipients only. All
boxes appearing on the official form must be present on
the substitute form, with appropriate captions.
Color and Quality of InkAll printing must be in high quality non-gloss black ink.
Bar codes should be free from picks and voids.
Typography Type must be substantially identical in size and shape to
corresponding type on the official form. All rules on the
document are either 1 point (0.0150) or 3 point (0.0450).
Vertical rules must be parallel to the left edge of the docu-
ment; horizontal rules must be parallel to the top edge.
CarbonsCarbonized forms or “spot carbons” are not permissible.
Interleaved carbons, if used, must be of good quality to
preclude smudging and should be black.
Assembly If all five parts are present, the parts of the assembly
shall be arranged from top to bottom as follows: Copy A
(Original) “For Internal Revenue Service,” Copies B, C,
and D “For Recipient,” and Copy E “For Withholding
Agent.”
Color Quality of Paper• Paper For Copy A must be white chemical wood bond, or
equivalent, 20 pound (basis 17 x 22-500), plus or minus 5
percent; or offset book paper, 50 pound (basis 25 x 38-
500). No optical brighteners may be added to the pulp or
paper during manufacture. The paper must consist of prin-
cipally bleach chemical wood pulp or recycled printed
paper. It also must be suitably sized to accept ink without
feathering.
• Copies B, C, D (for Recipient), and E (For Withholding
Agent) are provided in the official assembly solely for the
convenience of the withholding agent. Withholding agents
may choose the format, design, color, and quality of the
paper used for these copies.
Dimensions• The official form is 8 inches wide x 5 1/2 inches deep,
exclusive of a 1/2 inch snap stub on the left side of the
form. The snap feature is not required on substitutes.
• The width of a substitute Copy A must be a minimum of
7 inches and a maximum of 8 inches, although adherence
to the size of the official form is preferred. If the width of
substitute Copy A is reduced from that of the official form,
the width of each field on the substitute form must be re-
duced proportionately. The left margin must be 1/2 inch
September 10, 20012482001–37 I.R.B.

PropertySubstitute Forms Format Requirements
Dimensions—continuedand free of all printing other than that shown on the offi-
cial form.
• The depth of a substitute Copy A must be a minimum of
5 1/6 inches and a maximum of 5 1/2 inches.
Other CopiesCopies B, C, and D must be furnished for the convenience
of payees who must send a copy of the form with other
Federal and State returns they file. Copy E may be used
as a withholding agent’s record/copy.
Section 7.2—Specifications for Substitute Schedules K-1
7.2.1 Schedule K-1 Prior approval is not required for a substitute Schedule K-1 that accompanies Form 1065 (for partner-
Requirementsship), Form 1120S (for small business corporation), or Form 1041 (for fiduciary) when the substitute
Schedule K-1 meets all of the following requirements.
• The Schedule K-1 must contain the payer and recipient’s name, address, and SSN/EIN.
• The Schedule K-1 must contain all the items required for use by the taxpayer.
• The line items must be in the same order and arrangement as those on the official form.
• The Schedule K-1 must include the OMB number.
• Each taxpayer’s information must be on a separate sheet of paper. Therefore, all continuously printed
substitutes must be separated, by taxpayer, before filing with the Service.
• Schedule K-1 for recipients must have instructions for required line items attached.
• You may be subject to penalties if you file Schedules K-1 with the Service and furnish Schedules K-1 to
partners, shareholders, or beneficiaries that do not conform to the specifications of this revenue proce-
dure.
• The amount of each partner’s, shareholder’s, or beneficiary’s share of each line item must be shown.
The furnishing of a total amount of each line item and a percentage (or decimal equivalent) to be ap-
plied to such total amount by the partner, shareholder, or beneficiary does not satisfy the law and the
specifications of this revenue procedure.
• If you file Schedules K-1 not conforming to the above specifications, IRS may consider these as not
processable and return them to you to be filed correctly. You may also be subjected to a penalty.
Section 7.3—Procedures for Printing IRS Envelopes
7.3.1 Procedures forOrganizations are permitted to produce substitute tax return envelopes. Use of substitute return
Printing IRS envelopes that comply with the requirements set forth in this section will assist in delivery of mail by
Envelopesthe U.S. Postal Service and facilitate internal sorting at the Internal Revenue Service Centers.
Use the following five-digit ZIP codes when mailing returns to the IRS Service Centers:
Service CenterZIP Code
Atlanta, GA39901
Kansas City, MO64999
Austin, TX73301
Philadelphia, PA19255
Memphis, TN37501
Andover, MA05501
Cincinnati, OH45999
Holtsville, NY00501
Ogden, UT84201
Fresno, CA93888
2001–37 I.R.B.249September 10, 2001

September 10, 20012502001–37 I.R.B.
7.3.2 Sorting Sorting returns by form type is accomplished by the preprinted bar codes on return envelopes included
Returns by in each specific type of form or package mailed to the taxpayers. The 32 bit bar code on the left of the
Form Typeaddress on each envelope identifies the type of form the taxpayer is filing, and it assists in consolidating
like returns for processing. Failure to use the envelopes furnished by the Service results in additional pro-
cessing time and effort, and possibly delays the timely deposit of funds, processing of returns, and
issuance of refund checks.
7.3.3 ZIP+4 orThe IRS will not furnish or sell bulk quantities of preprinted tax return envelopes to taxpayers or tax
9-Digit ZIP Codespractitioners. A suitable alternative has been developed that will accommodate the sorting needs of both
the IRS and the United States Postal Service (USPS). The alternative is based on the use of ZIP + 4, or
9-digit ZIP codes for mailing various types of tax returns to the IRS Service Centers. The IRS uses the
last four digits to identify and sort the various form types into separate groups for processing. The list of
4-digit extensions with the related form designations is provided below.
ZIP + FOURPackage
XXXXX-00021040
XXXXX-0005941
XXXXX-0006940
XXXXX-0008943
XXXXX-00111065
XXXXX-00121120
XXXXX-00131120S
XXXXX-00141040EZ
XXXXX-00151040A
XXXXX-0027990
XXXXX-00312290
XXXXX-0042945
7.3.4 Guidelines forYou may use the preparer company names, addresses, and logos as long as you do not interfere with the
Having Envelopes clear areas. The government recommends that the envelope stock have an average opacity of not less
Preprinted than 89 percent and contain a minimum of 50 percent waste paper. Use of carbon-based ink is essential for
effective address and bar code reading. Envelope construction can be of side seam or diagonal seam design.
The government recommends that the size of the envelope should be 5 3/4 inches by 9 inches. Continuous
pin-fed construction is not desirable but is permissible if the glued edge is at the top. This requirement is
firm because mail opening equipment is designed to open the bottom edge of each envelope.
7.3.5 Envelopes/The above procedures or guidelines are written for the user having envelopes preprinted. Many practi-
ZIP Codes tioners may not wish to have large quantities of envelopes with differing ZIP codes/form designations
preprinted due to low volume, warehousing, waste, etc. In this case, the practitioner can type or machine
print the addresses with the appropriate ZIP codes to accommodate sorting. If the requirements/guidelines
outlined in this section cannot be met, then use only the appropriate five-digit service center ZIP code.
Section 7.4—Changes Involving EPMF Forms
7.4.1 Changes All Forms 5500 and 5500-EZ are now processed by the Pension and Welfare Benefits Administration
Involving Forms (PWBA), an agency of the Department of Labor.
5500 and 5500–EZ
Under the computerized ERISA Filing Acceptance System (EFAST) filers can choose between two computer
scannable formats: “machine print” and “hand-print”. Machine print forms can be filed electronically or by mail
using computer software from EFAST approved vendors. Hand-print forms cannot be filed electronically.

Forms 5500 and 5500–EZ for plan year 2000 are printed in black ink with gray shading in response to re-
quests from Form 5500 software vendors who wanted to develop computer software for a hand-print ver-
sion. The hand-print version for 2000 permits completion by hand, typewriter, or computer software
from EFAST approved vendors.
Additional information is available on the PWBA web site, http://www.efast.dol.gov.
7.4.2 EFASTTo reduce the possibility of correspondence and penalties,
Processing Tips
• Paper forms must be obtained from the IRS or printed using software from an EFAST approved soft-
ware developer.
• Original forms are preferable. Photocopies may be rejected or cause correspondence requiring addi-
tional information.
• All information should be in the specific fields or boxes provided on the forms and schedules or the in-
formation may not be processed.
• Do not use felt tip pens or other writing instruments that can cause signatures or data to bleed through to
the other side of the paper. One-sided documents should have no markings on the blank side.
• Paper should be clean without glue or other sticky substances.
• Do not staple the forms. Use binder clips or other fasteners that do not perforate the paper.
• Do not submit extraneous material or information such as arrows used to indicate where to sign, notes
between preparers of the report, notations on the form, e.g., “DOL copy,” etc.
• Do not submit unnecessary or blank schedules. Except for certain Schedule SSA filings specifically per-
mitted by the instructions, schedules should be submitted only with a Form 5500 or in response to cor-
respondence from the PWBA regarding processing your return/report.
• Manual entries on the machine print forms are not permitted.
Section 7.5—Procedures for Substitute Forms 5471 and 5472
7.5.1 Forms 5471This section covers instructions for producing substitutes for:
and 5472
• Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations, and ac-
companying Schedules J, M, N, and O.
• Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation
Engaged in a U.S. Trade or Business.
7.5.2 Paper and Paper and computer-generated substitutes for Form 5471 and the accompanying Schedules J, M, N, and
Computer-Generated O, and Form 5472 that totally conform to the specifications contained in this procedure may be private-
Substitutesly printed, but must have prior approval and are subject to annual review from the Internal Revenue Service.
7.5.3 Where To Get Copies of the official Forms 5471 and 5472 for the reporting year may be obtained from most IRS offices.
the Official FormsThe IRS provides only cut sheets of these forms. Continuous fan-folded/pin-fed forms are not provided.
7.5.4 Quality The Service will accept quality substitute tax forms that are consistent with the official forms they rep-
Substitute Formsresent AND that do not have an adverse impact on our processing. Therefore, only those substitute forms
that conform to, and do not deviate from, the corresponding official forms are acceptable.
7.5.5 Computer-If the substitute returns and schedules meet the guidelines in this revenue procedure, the Service will
Prepared Tax Forms(for filing purposes) accept computer-prepared Forms 5471 and 5472 filled in by a computer, word pro-
cessing, or similar automated equipment. The IRS will also accept a combination of computer-pre-
pared/generated and filled-in information. They may be filed separately or attached to individual or busi-
ness income tax returns.
7.5.6 Format The specifications for Forms 5471 and 5472 are as follows:
Arrangement
• The substitute must follow the design of the official form as to format, arrangement, item caption, line num-
bers, line references, and sequence. It must be an exact textual and graphic mirror image of the official form.
2001–37 I.R.B.251September 10, 2001

September 10, 20012522001–37 I.R.B.
• The filer must use one of the official ten character amount formats. All entries in the amount column
should have a decimal point following the whole dollar amounts whether or not the vertical line that
separates the dollars from the cents is present. It must follow a consistent format.
• The reference code must be printed to the left of the corresponding captioned line and also immediately
preceding the data entry field even if there is no reference code preceding the data entry field on the of-
ficial form. The reference code that is immediately before the data field must either be followed by a
period or enclosed in parentheses. There also must be at least two blank spaces between the period or
the right parenthesis and the first digit of the data field.
• The size of the page must be the same as the official form (8 1/20x 110).
• The acceptable type is Helvetica.
• The spacing of the type must be 6 lines per inch vertically, 10 or 12 print characters per inch horizontally.
• A 1/4 inch to 1/2 inch margin must be maintained across the top, bottom, and both sides (exclusive of
any pin-fed holes).
• The substitute form must be the same number of pages as the official one.
• The preprinted brackets in the money fields should be retained.
• The filer must completely fill in all the specified numbers or referenced lines as they appear on the offi-
cial form (not just totals) before attaching any supporting statement.
• Supporting statements are never to be used until the required official form they support are completely
filled-in. A blank or incomplete form that refers to a supporting statement, in lieu of completing a tax
return, is unacceptable.
• Descriptions for captions, lines, etc., appearing in the substitute forms may be limited to one print line
by using abbreviations and contractions, and by omitting articles, prepositions, etc. However, sufficient
key words must be retained to permit ready identification of the caption, line, or item.
• Text prescribed for the official form, which is solely instructional (e.g., “Attach this schedule to Form
1120”, “See instructions”, etc.) may be omitted from the form.
7.5.7 FilingInstructions for filing substitute forms are the same as for filing official forms.
Instructions
Chapter 8
Alternative Methods of Filing
Section 8.1—Forms for Electronically Filed Returns
8.1.1 Electronic Electronic filing is a method by which qualified filers transmit tax return information directly to an IRS
Filing ProgramService Center over telephone lines in the format of the official Internal Revenue Service forms. The
Service accepts both refund and balance due individual tax returns that are filed electronically.
8.1.2 Applying forAnyone wishing to participate in the IRS e-fileprogram for individual income tax returns must submit a
the Electronic Filing Form 8633, Application To Participate in the IRS e-fileProgram.
Program
Note: For business returns, prospective participants must submit a Form 9041, Application For Elec-
tronic/Magnetic Media Filing of Business and Employee Benefit Plan Returns.
8.1.3 Mailing
InstructionsIF an application filed is...THEN mail it to...
Form 8633 for individual Internal Revenue Service
income taxes (regular mail)Andover Submission Processing Center
Attn: EFU Acceptance - Testing Stop 983
P.O. Box 4099
Woburn, MA 01888-4099

IF an application filed is...THEN mail it to...
Form 8633 for individual Internal Revenue Service
income taxes (overnight mail)Andover Submission Processing Center
Attn: EFU Acceptance - Testing Stop 983
310 Lowell Street
Andover, MA 05501-0001
Form 9041 for Forms 940, 941, and 1065Internal Revenue Service
Austin Submission Processing Center
Attn: EFU, Stop 6380
P.O. Box 1231
Austin, TX 78767
Form 9041 for Forms 1041Internal Revenue Service
Philadelphia Submission Processing Center
Attn: DP 2720
11601 Roosevelt Blvd.
Philadelphia, PA 19154
8.1.4 Obtaining the The taxpayer signature does not appear on the electronically transmitted tax return and is obtained by
Taxpayer Signaturethe qualified electronic filer on Form 8453, U. S. Individual Income Tax Declaration for an IRS e-file
Return, for Forms 1040, 1040A, and 1040EZ. Form 8453, which serves as a transmittal for the associat-
ed non-electronic (paper) documents, such as Forms W–2, W–2G, and 1099–R, is a one-page form and
can only be approved through the Substitute Forms Program in that format. Forms 8453–OL and
8453–NR serve the same purpose for taxpayers filing through online services and Form 1040–NR filers,
respectively. For specific information about electronic filing, refer to Publication 1345, Handbook for
Electronic Filers of Individual Income Tax Returns.
Note:For business returns, the electronic/magnetic media participants must use the official Form
8453–E, F, or P, or an approved substitute that duplicates the official form in language, format, content,
color, and size.
8.1.5 Guidelines forA participant in the electronic filing program, who wants to develop a substitute form should follow the
Preparing Substituteguidelines throughout this publication and send a sample form for approval to the Substitute Forms
Forms in the Electronic Unit at the address in Chapter 2. If you do not prepare Substitute Form 8453 using a font in which all
Filing ProgramIRS wording fits on a single page, the form will not be accepted. This applies primarily to dot-matrix
printers, although forms prepared similarly on laser and ink-jet printers will also be rejected.
Note:Use of unapproved forms could result in suspension of the participant from the electronic filing
program.
Section 8.2—FTD Magnetic Tape Payments
8.2.1 Instructions Publication 1315 provides the requirements and instructions for reporting agents who submit Federal
for ReportingTax Deposit (FTD) payment information on magnetic tape. Magnetic tape submissions for FTD can be
Agentsmade for Forms 940, 941, 942, 943, 720, CT–1, 990–PF, 990–T, 990–C, 1042, and 1120.
8.2.2 InstructionsRevenue Procedure 89–49 (Pub. 1374) provides the requirements and instructions for certain banks and
for Banks andfiduciaries to submit quarterly Form 1041–ES payments on magnetic tape through the system.
Fiduciaries
Section 8.3—Effect on Other Documents
8.3.1 Effect on This revenue procedure supersedes Revenue Procedure 2000–19, I.R.B. 2000–12, 785.
Other Documents
2001–37 I.R.B.253September 10, 2001

September 10, 20012542001–37 I.R.B.

2001–37 I.R.B.255September 10, 2001

September 10, 20012562001–37 I.R.B.

2001–37 I.R.B.257September 10, 2001

September 10, 20012582001–37 I.R.B.

2001–37 I.R.B.259September 10, 2001

September 10, 20012602001–37 I.R.B.

2001–37 I.R.B.261September 10, 2001
Exhibit D - List of Forms Referred to in the Revenue Procedure
FormTitleSection
706United States Estate (and Generation-Skipping Transfer) Tax Return2.1
720Quarterly Federal Excise Tax Return2.5; 8.2
940Employer’s Annual Federal Unemployment (FUTA) Tax Return2.3; 3.4; 6.2; 7.3; 8.2
940-EZEmployer’s Annual Federal Unemployment (FUTA) Tax Return2.3
941Employer’s Quarterly Federal Tax Return2.3; 3.4; 6.2; 7.3; 8.2
941-VForm 941 Payment Voucher2.3
943Employer’s Annual Tax Return for Agricultural Employees2.3; 7.3; 8.2
943-VForm 943 Payment Voucher2.3
945Annual Return of Withheld Federal Income Tax2.3
945-VForm 945 Payment Voucher2.3
990-CFarmers’ Cooperative Association Income Tax Return8.2
990-PFReturn of Private Foundation or Section 4947(a)(1)
Non-exempt Charitable Trust Treated as a Private Foundation8.2
990-TExempt Organization Business Income Tax Return
(and proxy tax under section 6033 (e))8.2
1040U.S. Individual Income Tax Return2.3; 2.4; 2.5; 3.1;
3.2; 3.4; 5.1; 5.2; 5.4;
6.1; 6.2; 7.3; 7.5; 8.1
1040-ESEstimated Tax for Individuals1.1; 2.3; 3.2; 4.1; 4.2
1040AU.S. Individual Income Tax Return2.1; 2.4; 3.1; 3.2;
3.4; 5.1; 5.2; 5.3; 7.3; 8.1
1040EZIncome Tax Return for Single and Joint Filers with No Dependents2.4; 3.1; 3.4; 7.3; 8.1
1040-NRU.S. Nonresident Alien Income Tax Return8.1
1040-VForm 1040 Payment Voucher2.3
1041U.S. Income Tax Return for Estates and Trusts2.5; 3.1; 7.2; 8.1
1041-ESEstimated Income Tax for Estates and Trusts1.1; 2.3; 3.2; 8.2
1042Annual Withholding Tax Return for U.S. Source Income
of Foreign Persons8.2
1042-SForeign Person’s U.S. Source Income Subject to
Withholding4.1; 7.1
1065U.S. Partnership Return of Income2.5; 3.1; 7.2; 7.3; 8.1
1096Annual Summary and Transmittal of U.S. Information Returns1.1; 1.2; 4.1; 4.2
1098Mortgage Interest Statement1.1; 1.2; 4.1; 4.2
1099Series1.1; 1.2; 4.1; 4.2
1120U.S. Corporation Income Tax Return2.5; 3.1; 3.4; 5.1;
6.2; 7.3; 8.2
2290Heavy Vehicle Use Tax Return2.3; 7.3
3468Investment Credit2.5
4136Credit for Federal Tax Paid on Fuels2.5

September 10, 20012622001–37 I.R.B.
FormTitleSection
4972Tax on Lump Sum Distributions5.4
5471Information Return of U.S. Persons With Respect to
Certain Foreign Corporations7.5
5472Information Return of a 25% Foreign-Owned U.S.
Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business7.5
5498Individual Retirement Arrangement Information1.1; 1.2; 4.1; 4.2
5500Annual Return/Report of Employee Benefit Plan1.3; 7.4
5500-EZAnnual Return of One-Participant (Owners and Their
Spouses) Retirement Plan1.3; 7.4
8453U.S. Individual Income Tax Declaration for an IRS e-file Return8.1
8453-EEmployee Benefit Plan Declaration and Signature for Electronic/
Magnetic Media Filing8.1
8453-FU.S. Estate or Trust Income Tax Declaration and Signature for
Electronic and Magnetic Media Filing8.1
8453-NRU.S. Nonresident Alien Income Tax Declaration for
Magnetic Media Filing8.1
8453-OLU.S. Individual Income Tax Declaration for an e-file
Online Return8.1
8453-PU.S. Partnership Declaration and Signature for Electronic
and Magnetic Media Filing8.1
8633Application to Participate in the IRS e-file Program8.1
8814Parents’ Election To Report Child’s Interest and Dividends5.4
9041Application for Electronic/Magnetic Media Filing of
Business and Employee Benefit Plan Returns8.1
CT-1Employer’s Annual Railroad Retirement Tax Return8.2
W-2Wage and Tax Statement1.1; 1.2; 4.1; 4.2; 8.1
W-2cCorrected Wage and Tax Statement4.1; 4.2
W-2GCertain Gambling Winnings1.1; 1.2; 4.1; 4.2; 8.1
W-3Transmittal of Income and Tax Statements1.1; 1.2; 4.1; 4.2
W-3cTransmittal of Corrected Wage and Tax Statements4.1; 4.2
W-4Employee’s Withholding Allowance Certificate4.2

26 CFR 601.204: Changes in accounting periods
and in methods of accounting.
(Also Part I, §§ 446, 481; 1.446-1, 1.481-1.)
Rev. Proc. 2001–46
CONTENTS
SECTION 1. PURPOSE
SECTION 2. BACKGROUND
SECTION 3. SCOPE
SECTION 4. DEFINITIONS
.01Track Structure
.02Track Structure Expenditures
.03 Current Additions
.04 New Track Structure
.05 Assigned Value of Relay Materials –
Schedule 330
.06 Operating Items
.07 Salvage Material Credits – Sched-
ule 410
.08Assigned Value of Relay Materials –
Schedule 410
.09 Removal Costs
SECTION 5. TRACK MAINTENANCE
ALLOWANCE METHOD
.01 In General
.02 Track Maintenance Allowance
.03 Capitalized Amount
.04 Changes to Form R-1
.05 Example
(1) Facts
(2) Track maintenance allowance
(3) Capitalized amount
SECTION 6. CHANGE IN METHOD
OF ACCOUNTING
.01 In General
.02 Issue Not Under Consideration
.03 Issue Under Consideration
.04Special Rule for Certain Taxpayers
With Issue Under Consideration
.05 Effect of Consent
.06 Changes Not Made Under this Rev-
enue Procedure
SECTION 7. RECORD KEEPING
SECTION 8. OPTIONAL SETTLEMENT
FOR TAXPAYERS UNDER
EXAMINATION, BEFORE AN AREA
APPEALS OFFICE, OR BEFORE
THE TAX COURT
.01 In General
.02 Terms of Settlement
.03 Procedures for Requesting the Set-
tlement
(1) Initiating the request
(2) Statement of facts, law, and argu-
ments
(3) Perjury statement
.04 Procedures for Processing the Re-
quest
(1) Receipt of request acknowledged
(2) Factual development
(3) Acceptance
(4) Notification of acceptance
.05 Procedures for Implementing the
Settlement
(1) Closing agreement or other ap-
propriate settlement agreement re-
quired
(2) Contents of closing agreement or
other appropriate settlement agree-
ment
(3) Review and execution of closing
agreement or other appropriate set-
tlement agreement
(4) Amended returns
.06 Effect on Other Offices of the Ser-
vice
SECTION 9. EFFECTIVE DATE
SECTION 10. EFFECT ON OTHER
DOCUMENTS
DRAFTING INFORMATION
APPENDIX
SECTION 1. PURPOSE
This revenue procedure provides a safe
harbor method of accounting for track
structure expenditures paid or incurred by
certain railroads (“track maintenance al-
lowance method”). This revenue proce-
dure also provides procedures for a quali-
fying taxpayer to obtain automatic
consent from the Commissioner of Inter-
nal Revenue to change to the track main-
tenance allowance method, including
rules relating to the limitations, terms, and
conditions the Commissioner deems nec-
essary to make the change. In addition,
this revenue procedure provides an op-
tional procedure for a qualifying taxpayer
whose treatment of track structure expen-
ditures is an issue under consideration in
examination, before an area appeals of-
fice, or before the United States Tax Court
(“Tax Court”) to settle open taxable years
using the track maintenance allowance
method.
SECTION 2. BACKGROUND
.01 Under § 446(b) of the Internal
Revenue Code, the Commissioner has
broad authority to determine whether a
method of accounting clearly reflects in-
come. If a taxpayer’s method of account-
ing does not clearly reflect income, the
computation of taxable income must be
made under a method that, in the opinion
of the Secretary, does clearly reflect in-
come. See Thor Power Tool Co. v. Com-
missioner, 439 U.S. 522 (1979);Commis-
sioner v. Hansen, 360 U.S. 446 (1959);
§ 1.446–1(c)(2)(ii) of the Income Tax
Regulations.
.02 Section 446(e) and § 1.446–1(e)
provide that, except as otherwise pro-
vided, a taxpayer must secure the consent
of the Commissioner before changing a
method of accounting for federal income
tax purposes. Section 1.446–1(e)(3)(ii)
authorizes the Commissioner to prescribe
administrative procedures setting forth
the limitations, terms, and conditions
deemed necessary to permit a taxpayer to
obtain consent to change a method of ac-
counting.
.03 A railroad incurs track structure ex-
penditures as a result of performing vari-
ous activities to acquire, construct, main-
tain, repair, and improve track structure.
To minimize disputes regarding the ac-
counting for these track structure expen-
ditures, the Internal Revenue Service will
permit a railroad that complies with the
requirements of this revenue procedure to
account for track structure expenditures
using the track maintenance allowance
method described in section 5 of this rev-
enue procedure.
SECTION 3. SCOPE
This revenue procedure applies to a
taxpayer that files (or is a member of a
combined reporting group that files) a
Railroad Annual Report R-1 (“Form
R-1”) with the Surface Transportation
Board (“STB”) based on the same report-
ing period as the taxpayer’s taxable year
and that chooses to account for track
structure expenditures under the track
maintenance allowance method described
in section 5 of this revenue procedure.
SECTION 4. DEFINITIONS
The following definitions apply solely
for purposes of this revenue procedure:
2001–37 I.R.B.263September 10, 2001

.01 Track Structure.“Track structure”
means the combination of a taxpayer’s rail
and other track material (OTM), ties, and
ballast, which provides a track for rail cars
and equipment powered by locomotives.
.02 Track Structure Expenditures.
“Track structure expenditures” for a par-
ticular taxable year are the sum of the tax-
payer’s expenditures for that year for cur-
rent additions (including new track
structure), operating items, and removal
costs.
.03 Current Additions.“Current addi-
tions” are the amounts included in the
Form R-1, on Schedule 330 (Road Prop-
erty and Equipment and Improvements to
Leased Property and Equipment), in Col-
umn (e) (Balance sheet additions), for Ac-
counts 8 (Ties), 9 (Rail and OTM), and 11
(Ballast), that represent additions to the
taxpayer’s track structure, that are taken
into account for federal income tax pur-
poses (see, e.g., §§ 404 and 461). Thus,
for example, current additions do not in-
clude the assigned value of relay materi-
als - Schedule 330.
.04 New Track Structure. “New track
structure” means the amount included in
current additions that reflect the tax-
payer’s expenditures for (1) track struc-
ture laid where none previously existed;
(2) existing track structure acquired by
the taxpayer; or (3) track structure previ-
ously abandoned by the taxpayer that
must be rehabilitated or improved to
make it suitable for the use intended by
the taxpayer, that are taken into account
for federal income tax purposes. New
track structure includes the cost of acquir-
ing and installing new track structure as
well as the cost of any rehabilitation or
improvement necessary to put newly ac-
quired or previously abandoned track
structure into operation. New track struc-
ture does not include new track amounts
not reflected in current additions (i.e.,
amounts reflected in Column (c) (Expen-
ditures during the year for original road
and equipment, and road extensions) or
Column (d) (Expenditures during the year
for purchase of existing lines, reorganiza-
tions, etc.)).
.05 Assigned Value of Relay Materials
– Schedule 330.The “assigned value of
relay materials - Schedule 330” means the
amounts included on Schedule 330, in
Column (e), on Lines 8, 9, and 11, that re-
flect the taxpayer’s fair market value ad-
justments (excluding rewelding and other
processing costs) for track materials re-
laid that were previously retired for finan-
cial reporting purposes. The assigned
value of relay materials does not include
relay track materials purchased by the
taxpayer.
.06 Operating Items.“Operating
items” are the amounts included in the
Form R-1, on Schedule 410 (Railway Op-
erating Expenses), in Column (h) (Total),
on Lines 1 (Track - Administration), 12
(Ties - Running), 13 (Ties - Switching),
14 (Rail and OTM - Running), 15 (Rail
and OTM - Switching), 16 (Ballast - Run-
ning), and 17 (Ballast - Switching), that
represent the taxpayer’s repairs and main-
tenance to its track structure, that are
taken into account for federal income tax
purposes. Thus, for example, operating
items do not include salvage material
credits - Schedule 410 or the assigned
value of relay materials - Schedule 410.
.07 Salvage Material Credits – Sched-
ule 410. “Salvage material credits -
Schedule 410” means the amounts in-
cluded on Schedule 410, in Column (h),
on Lines 1, 12, 13, 14, 15, 16, and 17, that
reflect credits to operating expenses for
the value of salvaged materials.
.08 Assigned Value of Relay Materials
– Schedule 410.The “assigned value of
relay materials - Schedule 410” means the
amounts included on Schedule 410, in
Column (h), on Lines 1, 12, 13, 14, 15,
16, and 17, that reflect the taxpayer’s fair
market value adjustments (excluding
rewelding and other processing costs) for
track materials relaid that were previously
retired for financial reporting purposes.
The assigned value of relay materials
does not include relay track materials pur-
chased by the taxpayer.
.09 Removal Costs. “Removal costs”
means the amount included in Account
735 (Accumulated Depreciation, Road
and Equipment Property) that represents
the taxpayer’s expenditures for track re-
moval that are taken into account for fed-
eral income tax purposes.
SECTION 5. TRACK MAINTENANCE
ALLOWANCE METHOD
.01 In General. Under the track main-
tenance allowance method, the taxpayer
must determine the amount of its track
structure expenditures that may be cur-
rently deducted under section 5.02 (the
track maintenance allowance) and the
amount required to be capitalized under
section 5.03 (the capitalized amount). A
taxpayer that uses the track maintenance
allowance method described in this sec-
tion 5 must use that method for all of its
track structure expenditures.
.02 Track Maintenance Allowance.
The track maintenance allowance for a
particular taxable year under the track
maintenance allowance method is deter-
mined as follows:
(1) Determine the track structure ex-
penditures for the taxable year;
(2) Subtract from the track structure
expenditures in (1) the following amounts
for the taxable year:
(a) New track structure; and
(b) Operating items;
(3) Multiply the resulting amount in
(2) by 40 percent; and
(4) Add to the product of (3) the op-
erating items for the taxable year.
.03 Capitalized Amount.The capital-
ized amount for the taxable year under the
track maintenance allowance method is
determined as follows:
(1) Determine the track structure ex-
penditures for the taxable year (see sec-
tion 5.02(1));
(2) Subtract from the track structure
expenditures in (1) the track maintenance
allowance determined under section 5.02
for the taxable year to determine the capi-
tal track structure expenditures;
(3) Allocate the capital track struc-
ture expenditures determined in (2) to
each track account (Rail and OTM, Ties,
and Ballast), first to new track to the ex-
tent of the new track structure for each
track account. The remaining capitalized
amount represents replacement track and
should be allocated to each track account
in proportion to adjusted current additions
(i.e.,current additions for each track ac-
count after excluding the amount allo-
cated to new track from each account).
For purposes of determining basis, the
amounts allocated to each track account
must be allocated further to the assets
within each account using any reasonable
method;
(4) For each track account, apply the
taxpayer’s method of accounting for uni-
form capitalization, as governed by
§ 263A and the regulations thereunder, to
the amounts capitalized to new track and
to replacement track (i.e., the amounts de-
September 10, 20012642001–37 I.R.B.

termined in (3)) to determine the addi-
tional § 263A costs (as defined in
§ 1.263A–1(d)(3)), whether positive or
negative, and, if applicable, interest costs
that must be capitalized;
(5) For each track account, add the
amounts capitalized to new track and to
replacement track in (3) to the additional
§ 263A costs and interest costs deter-
mined in (4) to determine the total capital-
ized amount;
(6) For each track account, treat the
total capitalized amount determined in (5)
as a capital expenditure and depreciate
that amount in accordance with § 167 and
the regulations thereunder.
.04 Changes to Form R-1. If the STB
modifies the Form R-1 by changing the
names of any account, column, or line on
the Schedule 330 or 410, any references
to that account, column, or line in this
revenue procedure (including the defini-
tions in section 4 of this revenue proce-
dure) are automatically modified accord-
ingly. Thus, for example, if the STB
changes Schedule 330 to require the re-
porting of current additions in Column
(f), rather than Column (e), any reference
to Column (e) in this revenue procedure is
to be treated by the taxpayer as a refer-
ence to Column (f). If the STB no longer
requires Form R-1, or any schedule refer-
enced in this revenue procedure, a change
in material facts upon which the original
consent was based will have occurred.
See section 6.05 of this revenue proce-
dure (Effect of Consent).
.05 Example.
(1) Facts.X is a railroad that owns
and maintains several thousand miles of
track structure throughout the United
States. X is a member of a combined re-
porting group that files a calendar year
Form R-1 and uses a calendar year for tax
purposes. For the year ending December
31, 2001, X includes the following
amounts in the Form R-1, Schedule 330,
Column (e) for Accounts 8, 9, and 11:
2001–37 I.R.B.265September 10, 2001
Account 8 (Ties)$1,500,000
Account 9 (Rail & OTM)2,500,000
Account 11 (Ballast) 500,000
Total$4,500,000
Included in this amount are:
New track structureAccount 8 $ 150,000
Account 9 $ 250,000
Account 11 $ 100,000
Total $ 500,000
Assigned value of relay
materials - Schedule 330Account 8 $ 30,000
Account 9 $ 120,000
Account 11 $ 0
Total $ 150,000
All of X’s current additions are taken into account for federal income tax purposes in the taxable year ended December 31, 2001, ex-
cept for the assigned value of relay materials - Schedule 330. Thus, X’s current additions for the taxable year ending December 31,
2001, are $4,350,000 ($4,500,000 - $150,000).
For the same taxable year, the following amounts included in the Form R-1, Schedule 410, Column (h) for Lines 1, 12, 13, 14, 15,
16, and 17, constitute X’s operating items:
Line 1 (Track - Administration)$ 315,000
Line 12 (Ties - Running)100,000
Line 13 (Ties - Switching)10,000
Line 14 (Rail & OTM - Running)600,000
Line 15 (Rail & OTM - Switching)60,000
Line 16 (Ballast - Running)150,000
Line 17 (Ballast - Switching)
15,000
Total$1,250,000
Included in this amount are:
Salvage material credits - Schedule 410($50,000)
Assigned value of relay
materials - Schedule 410$100,000

September 10, 20012662001–37 I.R.B.
$4,350,000 current additions
1,200,000 operating items
+ 300,000removal costs
$5,850,000 track structure expenditures
X then adjusts its track structure expenditures as follows:
$5,850,000 track structure expenditures
(500,000) new track structure
(1,200,000)operating items
$4,150,000 adjusted track structure expenditures
X then determines the track maintenance allowance as follows:
$4,150,000 adjusted track structure expenditures
x .40
allowance
$1,660,000
+1,200,000operating items
$2,860,000 track maintenance allowance
(3) Capitalized amount. To determine the capitalized amount, X first determines the capital track structure expenditures by sub-
tracting the track maintenance allowance determined in (2) as follows:
$5,850,000 track structure expenditures
(2,860,000)track maintenance allowance
$2,990,000 capital track structure expenditures
X then allocates its capital track structure expenditures to each track account (Rail and OTM, Ties, and Ballast), first to new track to
the extent of the $500,000 of new track structure for each track account. The remaining $2,490,000 of capital track structure expen-
ditures is then allocated to replacement track for each track account in proportion to the adjusted current additions. Thus, X allocates
these amounts as follows:
Amount
AmountAdjustedCapitalized –
CurrentCapitalized – CurrentReplacement
AdditionsNew Track AdditionsTrack
Account 8 (Ties)$1,470,000$ 150,000$1,320,000$ 853,714
Account 9 (Rail & OTM)2,380,000250,0002,130,0001,377,585
Account 11 (Ballast) 500,000 100,000 400,000 258,701
Total$4,350,000$ 500,000$3,850,000$2,490,000
For each track account, X applies its
method of accounting for uniform capital-
ization under § 263A to the amounts capi-
talized to new track and to replacement
track to determine the additional § 263A
costs (whether positive or negative) that
must be capitalized. The total capitalized
amount for each track account is deter-
mined by combining the amounts capital-
ized to new track and to replacement track
with the additional § 263A costs for each
track account. X must depreciate the total
capitalized amount for each track account
in accordance with § 167 and the regula-
tions thereunder.
SECTION 6. CHANGE IN METHOD
OF ACCOUNTING
.01 In General.A change in a tax-
payer’s treatment of track structure ex-
penditures to the track maintenance al-
lowance method is a change in method of
accounting to which §§ 446 and 481
apply.
.02 Issue Not Under Consideration.If
a taxpayer within the scope of this rev-
enue procedure wants to change to the
track maintenance allowance method for
either its first or second taxable year end-
ing on or after December 31, 2000, (“year
All of X’s operating items are taken into
account for federal income tax purposes in
the taxable year ended December 31, 2001,
except for the salvage material credits -
Schedule 410 and the assigned value of
relay materials - Schedule 410. Thus, X’s
operating items for the taxable year ended
December 31, 2001, are $1,200,000
($1,250,000 + $50,000 - $100,000). For
the taxable year ended December 31, 2001,
X included in Account 735 the following
amount which is taken into account for
federal income tax purposes in the taxable
year ended December 31, 2001:
Removal costs $300,000
(2)Track maintenance allowance. To
determine the track maintenance al-
lowance for the taxable year ended De-
cember 31, 2001, X first determines its
track structure expenditures, as follows:

2001–37 I.R.B.267September 10, 2001
of change”) and the treatment of its track
structure expenditures is not an issue
under consideration in examination, be-
fore an area appeals office, or before a
federal court (within the meaning of sec-
tion 3.08 of Rev. Proc. 97–27 (1997–1
C.B. 680)) on August 21, 2001, the tax-
payer must follow the automatic change
in method of accounting provisions in
Rev. Proc. 99–49 (1999–52 I.R.B. 725)
(or its successor) with the following mod-
ifications:
(1) The scope limitations in section
4.02 of Rev. Proc. 99–49 do not apply. If
the taxpayer is under examination, before
an area appeals office, or before a federal
court regarding any income tax issue
other than its treatment of track structure
expenditures, the taxpayer must provide a
copy of the Form 3115, Application for
Change in Accounting Method, to the ex-
amining officer, appeals officer, or gov-
ernment counsel (whichever is applica-
ble) at the time that it files the copy of the
Form 3115 with the national office. The
Form 3115 must contain the name(s) and
telephone number(s) of the examining of-
ficer, appeals officer or government coun-
sel (whichever is applicable).
(2) A taxpayer that wants to change
to the track maintenance allowance
method for its first taxable year ending on
or after December 31, 2000, and that, on
or before October 22, 2001, files its origi-
nal federal income tax return for its first
taxable year ending on or after December
31, 2000, is not subject to the filing re-
quirements in section 6.02(2)(a) of Rev.
Proc. 99–49, provided that it complies
with the following filing requirements.
The taxpayer must complete and file a
Form 3115 in duplicate. The original
must be attached to the taxpayer’s
amended federal income tax return for its
first taxable year ending on or after De-
cember 31, 2000. This amended return
must be filed no later than January 28,
2002. A copy of the Form 3115 must be
filed with the national office (see section
6.02(5)(a) of Rev. Proc. 99–49 for the ad-
dress) no later than when the taxpayer’s
amended return is filed.
(3) To assist the Service in process-
ing changes in method of accounting
under this section of the revenue proce-
dure, and to ensure proper handling, sec-
tion 6.02(3) of Rev. Proc. 99–49 is modi-
fied to require that a Form 3115 filed
under this revenue procedure include the
statement: “Automatic Change Filed
Under Rev. Proc. 2001–46.” This state-
ment should be legibly printed or typed at
the top of any Form 3115 filed under this
revenue procedure.
(4) If a taxpayer did not file Form
R-1 for one or more of the taxable years
to which the § 481(a) adjustment relates,
the taxpayer must compute the § 481(a)
adjustment based on information equiva-
lent to that required by Form R-1.
.03 Issue Under Consideration.If a
taxpayer within the scope of this revenue
procedure wants to change to the track
maintenance allowance method for either
its first or second taxable year ending on
or after December 31, 2000, (“year of
change”) and the treatment of its track
structure expenditures is an issue under
consideration in examination, before an
area appeals office, or before a federal
court (within the meaning of section 3.08
of Rev. Proc. 97–27) on August 21, 2001,
the taxpayer must follow the automatic
change in method of accounting provi-
sions in Rev. Proc. 99–49 with the follow-
ing modifications:
(1) The scope limitations in section
4.02 of Rev. Proc. 99–49 do not apply.
The taxpayer must provide a copy of the
Form 3115 to the examining officer, ap-
peals officer, or government counsel
(whichever is applicable) at the time that
it files the copy of the Form 3115 with the
national office. The Form 3115 must con-
tain the name(s) and telephone number(s)
of the examining officer, appeals officer,
or government counsel (whichever is ap-
plicable).
(2) A taxpayer that wants to change
to the track maintenance allowance
method for its first taxable year ending on
or after December 31, 2000, and that, on
or before October 22, 2001, files its origi-
nal federal income tax return for its first
taxable year ending on or after December
31, 2000, is not subject to the filing re-
quirements in section 6.02(2)(a) of Rev.
Proc. 99–49, provided that it complies
with the following filing requirements.
The taxpayer must complete and file a
Form 3115 in duplicate. The original
must be attached to the taxpayer’s
amended federal income tax return for its
first taxable year ending on or after De-
cember 31, 2000. This amended return
must be filed no later than January 28,
2002. A copy of the Form 3115 must be
filed with the national office (see section
6.02(5)(a) of Rev. Proc. 99–49 for the ad-
dress) no later than when the taxpayer’s
amended return is filed.
(3) To assist the Service in process-
ing changes in method of accounting
under this section of the revenue proce-
dure, and to ensure proper handling, sec-
tion 6.02(3) of Rev. Proc. 99–49 is modi-
fied to require that a Form 3115 filed
under this revenue procedure include the
statement: “Automatic Change Filed
Under Rev. Proc. 2001–46.” This state-
ment should be legibly printed or typed at
the top of any Form 3115 filed under this
revenue procedure.
(4) The change to the track mainte-
nance allowance method will be made
using a “cut-off method.” Under a cut-off
method, only the items arising on or after
the beginning of the year of change are
accounted for under the track mainte-
nance allowance method. Any items aris-
ing before the year of change continue to
be accounted for under the taxpayer’s for-
mer method of accounting. Because no
items are duplicated or omitted from in-
come when a cut-off method is used to ef-
fect a change in accounting method, no
§ 481(a) adjustment is necessary.
(5) Section 7 of Rev. Proc. 99–49
does not apply. The taxpayer does not re-
ceive audit protection in connection with
a change to the track maintenance al-
lowance method.
.04 Special Rule for Certain Taxpayers
with Issue Under Consideration. If a tax-
payer is within the scope of this revenue
procedure, and the treatment of its track
structure expenditures is an issue under
consideration (within the meaning of sec-
tion 3.08 of Rev. Proc. 97–27) in exami-
nation, before an area appeals office, or
before the Tax Court on August 21, 2001,
the taxpayer may change to the track
maintenance allowance method for its
first or second taxable year ending on or
after December 31, 2000, under section
6.03 of this revenue procedure or, alterna-
tively, for an earlier taxable year under
section 8 of this revenue procedure.
.05 Effect of Consent.For purposes of
section 8.01 of Rev. Proc. 99–49 (Effect
of Consent), a change in the material facts
on which the consent was based includes
a material change in how a taxpayer re-
ports amounts on the Form R-1 or a

September 10, 20012682001–37 I.R.B.
change in the taxpayer’s obligation to file
a Form R-1.
.06 Changes Not Made Under this Rev-
enue Procedure.A taxpayer that wants to
change to the track maintenance al-
lowance method described in section 5 of
this revenue procedure that does not
change its method of accounting under
section 6 or 8 of this revenue procedure
must follow the change in method of ac-
counting provisions in Rev. Proc. 97–27
(1997–1 C.B. 680) (or any successor).
SECTION 7. RECORD KEEPING
Section 6001 provides that every person
liable for any tax imposed by the Code, or
for the collection thereof, must keep such
records, render such statements, make such
returns, and comply with such rules and
regulations as the Secretary may from time
to time prescribe. The books or records re-
quired by § 6001 must be kept at all times
available for inspection by authorized in-
ternal revenue officers or employees, and
must be retained so long as the contents
thereof may become material in the admin-
istration of any internal revenue law. Sec-
tion 1.6001–1(e). In order to satisfy the
record keeping requirements of § 6001 and
the regulations thereunder, a taxpayer that
changes to the track maintenance al-
lowance method should maintain records
substantiating all aspects of entitlement to
the deduction, including, but not limited to,
the following:
.01 The Form R-1 and adequate docu-
mentation to verify the taxpayer’s infor-
mation included in the Form R-1. This
documentation includes reports and work-
papers of independent auditors with re-
spect to agreed upon procedures, as sub-
mitted to the STB pursuant to Ex Parte
460, Certification of Railroad Annual Re-
port R-1 by Independent Accountant;
.02 Work papers or reports that identify
and extract the taxpayer’s costs for new
track structure, including costs to rehabil-
itate or improve newly acquired or previ-
ously abandoned track structure;
.03 Work papers or reports that identify
and extract the taxpayer’s assigned value
of relay materials - Schedule 330 from the
Schedule 330;
.04 Work papers or reports that identify
and extract the taxpayer’s assigned value
of relay materials - Schedule 410 and sal-
vage material credits - Schedule 410 from
the Schedule 410; and
.05 Work papers or reports that identify
the amounts included in Account 735 for
the taxpayer’s removal costs.
SECTION 8. OPTIONAL
SETTLEMENT FOR TAXPAYERS
UNDER EXAMINATION, BEFORE AN
AREA APPEALS OFFICE, OR
BEFORE THE TAX COURT
.01 In General. If a taxpayer is within
the scope of this revenue procedure, the
treatment of its track structure expendi-
tures is an issue under consideration
(within the meaning of section 3.08 of
Rev. Proc. 97–27) in examination, before
an area appeals office, or before the Tax
Court on August 21, 2001, and the tax-
payer does not change to the track mainte-
nance allowance method under section
6.03 of this revenue procedure, the Ser-
vice offers to settle the track structure ex-
penditure issue by changing the tax-
payer’s method of accounting for track
structure expenditures to the track mainte-
nance allowance method in the earliest
open taxable year after which there is no
closed taxable year.
.02 Terms of Settlement.
(1) The Service will change the tax-
payer’s method of accounting for track
structure expenditures to the track mainte-
nance allowance method described in sec-
tion 5 of this revenue procedure.
(2) The change to the track mainte-
nance allowance method will be made in
the earliest open taxable year after which
there is no closed taxable year using a cut-
off method.
(3) The taxpayer must reflect the set-
tlement on its federal income tax returns
for any affected succeeding taxable years.
For example, an amount required to be
capitalized during a taxable year covered
by the settlement should be depreciated in
that taxable year and in affected succeed-
ing taxable years (whether or not covered
by the settlement) in accordance with the
taxpayer’s method of accounting for de-
preciation.
(4) The Service will not require the
taxpayer to change its method of account-
ing for track structure expenditures to a
method other than the track maintenance
allowance method for any taxable year for
which a federal income tax return has
been filed as of the date of the closing
agreement or other appropriate settlement
agreement, provided that:
(a) the taxpayer has complied with
all the applicable provisions of the closing
agreement or other appropriate settlement
agreement;
(b) there has been no taxpayer
fraud, malfeasance, or misrepresentation
of a material fact;
(c) there has been no change in the
material facts on which the closing agree-
ment or other appropriate settlement
agreement was based; and
(d) there has been no change in the
applicable law on which the closing
agreement or other appropriate settlement
agreement was based.
(5) The taxpayer must execute a
closing agreement under § 7121 or other
appropriate settlement agreement as de-
scribed in section 8.05 of this revenue
procedure.
.03 Procedures for Requesting the Set-
tlement.
(1) Initiating the request.
(a) Taxable years under examina-
tion or in Appeals. A taxpayer that wants
to request a settlement under this section
for taxable years under examination or in
Appeals must submit its request in writing
to the first line examination manager or
appeals officer (whichever is applicable)
on or before January 28, 2002.
(b) Taxable years before the Tax
Court. A taxpayer that wants to request
a settlement under this section for taxable
years before the Tax Court must submit
its request in writing to the Chief Counsel
attorney assigned to the case on or before
the earlier of January 28, 2002, or the date
that is 30 days before the date the case is
first set for trial, which is the date sched-
uled for the calendar call.
(2) Statement of facts, law, and argu-
ments.The request for settlement must
include the following information:
(a) the taxpayer’s name, address,
telephone number, and taxpayer identifi-
cation number;
(b) the taxable years covered by
the proposed settlement;
(c) the taxpayer’s earliest open
taxable year after which there is no closed
taxable year;
(d) the taxpayer’s current method
of accounting for track structure expendi-
tures;
(e) a statement of the material
facts, including the track maintenance al-
lowance and the capitalized amount under

2001–37 I.R.B.269September 10, 2001
the track maintenance allowance method
for each taxable year under examination,
before an area appeals office, or before
the Tax Court, and an explanation of the
computations used to determine those
amounts; and
(f) a statement of whether the
track maintenance allowance for each tax-
able year under examination, before an
area appeals office, or before the Tax
Court is taken into account for federal in-
come tax purposes, for example, whether
the amount was incurred under § 461 in
that taxable year, and, if § 404 applies to
any portion of the amount in a particular
taxable year, whether that portion meets
the deductibility requirements of § 404.
(3) Perjury statement.The request
for settlement must be accompanied by the
following declaration: “Under penalties of
perjury, I declare that I have examined this
request, including accompanying docu-
ments, and, to the best of my knowledge
and belief, the request contains all the rele-
vant facts relating to the request, and such
facts are true, correct, and complete.” This
declaration must be signed by, or on behalf
of, the taxpayer by an individual with the
authority to bind the taxpayer in these mat-
ters. The declaration may not be signed by
the taxpayer’s representative.
.04 Procedures for Processing the Re-
quest.
(1) Receipt of request acknowledged.
The first line examination manager, ap-
peals officer, or Chief Counsel attorney
(whichever is applicable) will acknowl-
edge receipt of the taxpayer’s request for
settlement in writing within 15 business
days of receipt.
(2) Factual development. The first
line examination manager, appeals offi-
cer, or Chief Counsel attorney (whichever
is applicable) will contact the taxpayer to
discuss any questions the Service may
have, or ask for additional information
believed to be necessary to execute the
settlement (for example, to verify the cor-
rectness of the taxpayer’s information).
(3) Acceptance. The first line exam-
ination manager, appeals officer, or Chief
Counsel attorney (whichever is applica-
ble) will accept the taxpayer’s request for
settlement if the request complies with the
applicable terms of this revenue proce-
dure. For taxable years before the Tax
Court, the settlement is subject to the ap-
proval of the Court.
(4) Notification of acceptance.The
first line examination manager, appeals
officer, or Chief Counsel attorney
(whichever is applicable) will notify the
taxpayer in writing when the Service
agrees to the settlement requested by the
taxpayer.
.05 Procedures for Implementing the
Settlement.
(1) Closing agreement or other ap-
propriate settlement agreement required.
A taxpayer implementing a settlement is
required to execute a closing agreement
under § 7121 or other appropriate settle-
ment agreement.
(2) Contents of closing agreement or
other appropriate settlement agreement.
A closing agreement must comply with
the requirements of Rev. Proc. 68–16
(1968–1 C.B. 770) and must be substan-
tially in the form set forth in the APPEN-
DIX of this revenue procedure. Settle-
ment agreements in cases pending before
the Tax Court must conform substantially
to the provisions set forth in the APPEN-
DIX of this revenue procedure and must
conform to the rules and procedures of the
Tax Court.
(3) Review and execution of closing
agreement or other appropriate settle-
ment agreement.
(a) Taxpayers under examination.
The first line examination manager will
prepare a closing agreement. The first
line examination manager should submit
the closing agreement to the Ground
Transportation Technical Advisor and his
assigned counsel for review prior to sub-
mitting the closing agreement to the tax-
payer for execution. Failure to submit the
closing agreement to the Technical Advi-
sor or his assigned counsel for review will
not invalidate the closing agreement.
After the closing agreement has been exe-
cuted by the taxpayer, it will be executed
on behalf of the Service by the Director,
Field Operations (LMSB) MCT, New Jer-
sey.
(b) Taxpayers before an area ap-
peals office.The appeals officer or ap-
peals team case leader will prepare a clos-
ing agreement. After the closing
agreement has been executed by the tax-
payer, it will be executed on behalf of the
Service by an authorized official from
Appeals.
(c) Taxpayers before the Tax
Court.For docketed tax years before the
Tax Court, the taxpayer and the Chief
Counsel attorney must prepare an appro-
priate settlement document, settlement
stipulation, or stipulated decision docu-
ment, pursuant to the rules and proce-
dures of the court. Such settlement docu-
ment, settlement stipulation, or stipulated
decision document is subject to the ap-
proval of the court.
(4) Amended returns.
(a) In general.In cases pending
before examination or appeals, the Ser-
vice will make the adjustments necessary
to reflect the settlement to the taxpayer’s
returns for the taxable years under exami-
nation or before an area appeals office. In
cases pending before the Tax Court, the
settlement agreement will include adjust-
ments necessary to reflect the settlement
with respect to the year(s) before the
court. The taxpayer is required to file
amended returns to reflect the settlement
for any other affected taxable years for
which a federal income tax return has
been filed as of the date of the closing
agreement or other appropriate settlement
agreement. The amended returns must in-
clude the adjustments to taxable income
necessary to reflect the new method and
any collateral adjustments to taxable in-
come or tax liability resulting from the
change. A taxpayer eligible to file a
“qualified amended return” under Rev.
Proc. 94–69 (1994–2 C.B. 804) may sat-
isfy the requirements of this section by
filing a qualified amended return in accor-
dance with that revenue procedure.
(b) Time and manner. The tax-
payer must file any required amended re-
turns on or before the date it executes the
closing agreement or other appropriate
settlement agreement. The taxpayer must
provide a copy of the amended returns to
the first line examination manager, ap-
peals officer, or Chief Counsel attorney
(whichever is applicable) at the time it
files the amended returns.
.07 Effect on Other Offices of the Ser-
vice. If a taxpayer is before an area ap-
peals office or the Tax Court regarding the
treatment of its track structure expendi-
tures and does not settle this issue under
the provisions of this section 8, an appro-
priate representative from an area appeals
office or Chief Counsel office may settle
a particular taxpayer’s case involving this
issue on a more favorable or less favor-
able basis than provided in this revenue

September 10, 20012702001–37 I.R.B.
procedure. For example, an appeals offi-
cer may settle a case based on the hazards
of litigation.
SECTION 9. EFFECTIVE DATE
This revenue procedure is effective for
taxable years ending on or after Decem-
ber 31, 2000.
SECTION 10. EFFECT ON OTHER
DOCUMENTS
Rev. Proc. 99–49 is modified and am-
plified to include this accounting method
change in the APPENDIX.
DRAFTING INFORMATION
The principal author of this revenue
procedure is Kimberly L. Koch of the Of-
fice of Associate Chief Counsel (Income
Tax and Accounting). For further infor-
mation regarding this revenue procedure,
contact Ms. Koch at (202) 622-5020 (not
a toll-free call).
APPENDIX
Department of the Treasury Internal Rev-
enue Service
Closing Agreement on Final Determina-
tion Covering Specific Matters
Under § 7121 of the Internal Revenue
Code of 1986, [Taxpayer’s name, address,
telephone number, and identifying num-
ber] (“the taxpayer”) and the Commis-
sioner of Internal Revenue make the fol-
lowing closing agreement:
WHEREAS:
1. The taxpayer files (or is a member
of a combined reporting group that files) a
Form R-1 based on the same reporting pe-
riod as the taxpayer’s taxable year.
2. The taxpayer is an accrual basis tax-
payer.
3. The issue covered in this closing
agreement is the taxpayer’s treatment of
track structure expenditures incurred as a
result of performing various activities to
acquire, construct, maintain, repair, and
improve track structure. The definition of
“track structure expenditures” and other
terms defined in section 4 of Rev. Proc.
2001–46, apply for purposes of this clos-
ing agreement.
4. The taxable years covered by this
closing agreement are [insert applicable
taxable years].
5. The taxpayer currently accounts for
track structure expenditures as follows:
[insert taxpayer’s current method of ac-
counting for track structure expenditures].
6. The taxpayer and the Internal Rev-
enue Service (“Service”) rely on the fol-
lowing facts and representations in mak-
ing this closing agreement: [insert
relevant facts, including the track mainte-
nance allowance and the capitalized
amount under the track maintenance al-
lowance method for each taxable year
under examination, before an area appeals
office, or before the Tax Court,
(whichever is applicable) an explanation
of the computations used to determine
those amounts, and a statement of
whether the track maintenance allowance
for each of those taxable years is taken
into account for federal income tax pur-
poses].
NOW IT IS HEREBY DETERMINED
AND AGREED for federal income tax
purposes:
1. That the Service is changing the tax-
payer’s method of accounting for track
structure expenditures to the track mainte-
nance allowance method of accounting
described in section 5 of Rev. Proc.
2001–46, for the taxable year ending [in-
sert earliest open taxable year after which
there is no closed taxable year].
2. That the method change will be im-
plemented using a cut-off method.
3. That the adjustments to taxable in-
come necessary to reflect the new
method, and any collateral adjustments to
taxable income or tax liability resulting
from the change for each of the taxable
years covered by this agreement, are as
follows: [insert appropriate adjustments].
4. (If appropriate), That the taxpayer
has filed any amended returns required by
section 8.05(4) of Rev. Proc. 2001–46, to
reflect the settlement.
5. That the Service will not require the
taxpayer to change its method of account-
ing for track structure expenditures to a
method other than the track maintenance
allowance method for any taxable year for
which a federal income tax return has
been filed as of the date of this closing
agreement, provided that: (a) the tax-
payer has complied with all the applicable
provisions of the closing agreement; (b)
there has been no taxpayer fraud, malfea-
sance, or misrepresentation of a material
fact; (c) there has been no change in the
material facts on which the closing agree-
ment was based; and (d) there has been no
change in the applicable law on which the
closing agreement was based.
6. That the Service is not precluded
from challenging the computation of the
track maintenance allowance for any tax-
able year covered by this closing agree-
ment on a basis unrelated to the track
maintenance allowance method (for ex-
ample, that all or a portion of the amount
is not incurred under § 461 or that the tax-
payer has not properly applied the uni-
form capitalization rules of § 263A and
the regulations thereunder).
7. That the taxpayer accepts this settle-
ment and agrees to the applicable terms of
Rev. Proc. 2001–46.
This agreement is final and conclusive
except:
(1) The matter it relates to may be re-
opened in the event of fraud, malfeasance,
or misrepresentation of a material fact;
(2) It is subject to the Internal Revenue
Code sections that expressly provide that
effect be given to their provisions (includ-
ing any stated exception for § 7122)
notwithstanding any law or rule of law;
and
(3) If it relates to a tax period ending after
the date of this agreement, it is subject to
any law enacted after the agreement date,
that applies to the tax period.
By signing, the parties certify that they
have read and agreed to the terms of this
document.

2001–37 I.R.B.271September 10, 2001
Taxpayer (other than individual):
By: ______________________________Date: __________________
Title: _____________________________
Commissioner of Internal Revenue:
By: ______________________________Date: __________________
Title: _____________________________
Instructions
[This agreement must be signed and filed in triplicate. (All copies must have original signatures.) The original and copies of the
agreement must be identical. The name of the taxpayer must be stated accurately. The agreement may relate to one or more years.
If an attorney or agent signs the agreement for the taxpayer, the power of attorney (or a copy) authorizing that person to sign must
be attached to the agreement.
If the taxpayer is a corporation, the agreement must be dated and signed with the name of the corporation, the signature and title of
an authorized officer or officers, or the signature of an authorized attorney or agent. It is not necessary that a copy of an enabling
corporate resolution be attached.
Use additional pages if necessary and identify them as part of this agreement.
Please see Rev. Proc. 68–16 (1968–1 C.B. 770) for a detailed description of practices and procedures applicable to most closing
agreements.]
I have examined the specific matters involved and recommend the acceptance of the proposed agreement
(Receiving Officer) ___________________ (Date) _________________
(Title) _____________________________
I have examined the specific matters involved and recommend the acceptance of the proposed agreement
(Receiving Officer) __________________(Date) _________________
(Title) ____________________________

Notice of Proposed Rulemaking
Qualified Subchapter S Trust
Election for Testamentary Trusts
REG–106431–01
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemak-
ing.
SUMMARY: This document contains
proposed regulations relating to a quali-
fied subchapter S trust election for testa-
mentary trusts under section 1361 of the
Internal Revenue Code. The Small Busi-
ness Job Protection Act of 1996 and the
Taxpayer Relief Act of 1997 made
changes to the applicable law. These pro-
posed regulations affect S corporations
and their shareholders.
DATES: Written or electronic comments
and requests for a public hearing must be
received by November 23, 2001.
ADDRESSES: Send submissions to: CC:
IT&A:RU (REG–106431–01), room
5226, Internal Revenue Service, POB
7604, Ben Franklin Station, Washington,
DC 20044. Submissions may also be hand
delivered Monday through Friday be-
tween the hours of 8 a.m. and 5 p.m.
to: CC:IT&A:RU (REG–106431–01),
Courier’s desk, Internal Revenue Service,
1111 Constitution Avenue, NW, Washing-
ton, DC. Alternatively, taxpayers may
submit comments electronically via the
Internet by selecting the “Tax Regs” op-
tion on the IRS Home Page, or by submit-
ting comments directly to the IRS
Internet site at http://www.irs.gov/tax_
regs/regslist.html.
FOR FURTHER INFORMATION CON-
TACT: Concerning the proposed regula-
tions, Deane M. Burke (202) 622-3070;
concerning submissions of comments,
Sonya Cruse (202) 622-7180 (not toll-free
numbers).
SUPPLEMENTARY INFORMATION:
Background
This document proposes to amend sec-
tion 1361 of the Income Tax Regulations
(26 CFR part 1) regarding a qualified sub-
chapter S trust (QSST) election for testa-
mentary trusts.
Section 1361(a) defines an S corpora-
tion as a small business corporation for
which an election under section 1362(a) is
in effect for the year. Section 1361(b)
provides, in part, that a small business
corporation is a domestic corporation
which is not an ineligible corporation and
which does not have as a shareholder a
person (other than a trust described in sec-
tion 1361(c)(2)) who is not an individual.
Under section 1361(c)(2), subpart E trusts
and testamentary trusts are permitted S
corporation shareholders. A qualified
subpart E trust is a trust, all of which is
treated (under subpart E of part I of sub-
chapter J, chapter 1) as owned by an indi-
vidual who is a citizen or resident of the
United States. A qualified subpart E trust
that continues in existence after the death
of the deemed owner (former qualified
subpart E trust) is a permitted share-
holder, but only for the 2-year period be-
ginning on the day of the deemed owner’s
death. A testamentary trust is a trust to
which S corporation stock is transferred
pursuant to the terms of a will, but only
for the 2-year period beginning on the day
the stock is transferred to it.
Section 1303 of the Small Business Job
Protection Act of 1996, Public Law
104–188 (110 Stat. 1779) (August 20,
1996) (1996 Act) amended section 1361 for
taxable years beginning after December 31,
1996. Prior to the 1996 Act, a former qual-
ified subpart E trust was a permitted share-
holder for a 60-day period beginning on the
day of the deemed owner’s death. How-
ever, if the entire corpus of the trust was in-
cludible in the gross estate of the deemed
owner, the trust was a permitted share-
holder for a 2-year period beginning on the
day of the deemed owner’s death. Under
the regulations, special rules applied if the
trust consisted of community property. A
testamentary trust was a permitted share-
holder of an S corporation for a 60-day pe-
riod beginning on the day that the S corpo-
ration stock was transferred to the trust.
After the 1996 Act, both a testamentary
trust and a former qualified subpart E
trust, whether or not the entire corpus is
included in the deemed owner’s gross es-
tate, are permitted shareholders for a
2-year period. Because the entire corpus
of a former qualified subpart E trust is not
required to be included in the deemed
owner’s estate, it is no longer relevant
whether the trust consists of community
property for purposes of the trust’s quali-
fying as a permitted shareholder for a
2-year period. However, whether a for-
mer qualified subpart E trust consists of
community property is still relevant for
purposes of determining the shareholders
of S corporation stock held by the trust.
Explanation of Provisions
A. Incorporation of Changes from the
1996 Act
The proposed regulations incorporate
changes from the 1996 Act regarding sec-
tion 1361 to provide that a testamentary
trust may be a permitted shareholder for a
2-year period. The proposed regulations
also provide that a former qualified sub-
part E trust is a permitted shareholder for
a 2-year period whether or not the entire
corpus is included in the deemed owner’s
gross estate. The proposed regulations
thus eliminate the special rules for deter-
mining whether trusts consisting of com-
munity property qualify for the 2-year pe-
riod.
The proposed regulations also incorpo-
rate additional changes made to section
1361 by the 1996 Act. Section 1302 of
the 1996 Act added a new type of trust,
the electing small business trusts
(ESBTs), to the types of trusts permitted
to be S corporation shareholders under
section 1361(c)(2). Section 1601(c) of
the Taxpayer Relief Act of 1997, Public
Law 105–34 (111 Stat. 1086) (August 5,
1997) made technical amendments to sec-
tion 1361 affecting ESBTs and S corpora-
tion shareholders. A notice of proposed
rulemaking (REG–251701–96, 2001–4
I.R.B. 396) regarding ESBTs was pub-
lished in the Federal Register(65 FR
82963) on December 29, 2000. The pro-
posed regulations refer to ESBTs and pro-
vide that certain former qualified subpart
E trusts and testamentary trusts can con-
tinue as permitted shareholders after the
end of the 2-year period by becoming
ESBTs.
Section 1316 of the 1996 Act allowed
certain exempt organizations to be S cor-
September 10, 20012722001–37 I.R.B.
Part IV. Items of General Interest

poration shareholders for taxable years
beginning after December 31, 1997, and
section 1301 increased the number of per-
missible S corporation shareholders from
35 to 75. The proposed amendments in-
corporate these additional changes.
B.QSST Election for Testamentary Trusts
Section 1.1361–1(j)(6)(iii)(C) of the
Income Tax Regulations provides guid-
ance regarding when a QSST election is
made for a former qualified subpart E
trust that also satisfies the requirements of
a QSST. Under the provision, a QSST
election may be made for a former quali-
fied subpart E trust at any time, but no
later than the end of the 16-day-and-2-
month period beginning on the date on
which the estate of the deemed owner
ceases to be treated as a shareholder (as
late as the end of the 2-year period).
Thus, a former qualified subpart E trust
can continue as a permitted shareholder
after the end of the 2-year period by elect-
ing to be a QSST.
Section 1.1361–1(h)(3)(ii)(B) provides
that if a testamentary trust continues to
own S corporation stock after the expira-
tion of the 60-day period (now 2-year pe-
riod), the corporation’s S election will ter-
minate unless the trust otherwise qualifies
as a permitted shareholder. The trust oth-
erwise qualifies as a permitted shareholder
if it satisfies the requirements of a QSST
under section 1361(d)(3) and the trust in-
come beneficiary makes a timely QSST
election under section 1361(d)(2). The
regulations, promulgated before 1996, do
not address when a QSST election may be
made for a testamentary trust during its
2-year period as a permitted shareholder.
The IRS and the Treasury Department be-
lieve that the regulations should provide
guidance similar to that for former quali-
fied subpart E trusts clarifying when an in-
come beneficiary of a testamentary trust
may make a QSST election.
Accordingly, the proposed regulations
clarify that a current income beneficiary
of a testamentary trust that satisfies the
QSST requirements may make a QSST
election at any time during the 2-year pe-
riod that the trust is a permitted share-
holder or the 16-day-and-2-month period
beginning on the date after the 2-year pe-
riod ends. Under this provision, a testa-
mentary trust continues as a permitted
shareholder after the end of the 2-year pe-
riod by becoming an electing QSST.
Once the trust becomes an electing QSST,
the beneficiary is treated as the share-
holder of the S corporation as of the effec-
tive date of the QSST election.
Proposed Effective Date
The regulations are proposed to apply
on and after the date that final regulations
are published in the Federal Register.
Special Analyses
It has been determined that this notice of
proposed rulemaking is not a significant
regulatory action as defined in Executive
Order 12866. It also has been determined
that section 533(b) of the Administrative
Procedures Act (5 U.S.C. chapter 5) does
not apply to these regulations, and because
these regulations do not impose a collec-
tion of information on small entities, the
Regulatory Flexibility Act (5 U.S.C. chap-
ter 6) does not apply. Therefore, a Regula-
tory Flexibility Analysis is not required.
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 Busi-
ness Administration for comment on its
impact on small business.
Comments and Request for a Public
Hearing
Before these proposed regulations are
adopted as final regulations, considera-
tion will be given to any electronic and
written comments (a signed original and
eight (8) copies) that are submitted timely
to the IRS. The IRS and the Treasury De-
partment specifically request comments
on the clarity of the proposed regulations
and how they may be made easier to un-
derstand. All comments will be available
for public inspection and copying. A pub-
lic hearing will be scheduled if requested
in writing by any person that timely sub-
mits written comments. If a public hear-
ing is scheduled, notice of the date, time,
and place for the public hearing will be
published in the Federal Register.
Drafting Information
The principal author of these proposed
regulations is Deane M. Burke, Office of
the Associate Chief Counsel (Pass-
throughs & Special Industries). However,
other personnel from the IRS and the
Treasury Department participated in their
development.
* * * * *
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 1 is 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 1.1361–1 is amended as
follows:
1. Revising paragraphs (b)(1)(ii), (f),
(h)(1)(ii), (h)(1)(iv), (h)(3)(i)(B), and
(h)(3)(i)(D). The undesignated paragraph
following (h)(3)(i)(B) is removed.
2. Revising the second sentence of
paragraph (h)(3)(ii)(A).
3. Revising paragraphs (h)(3)(ii)(B)
and (j)(6)(iii)(C).
4. Redesignating paragraph (j)(6)(iii)
(D) as paragraph (j)(6)(iii)(E).
5. Adding new paragraph (j)(6)(iii)(D).
6. Revising paragraph (j)(7)(ii).
7. Revising the fourth sentence of
paragraph (k)(1) Example 2(ii).
8. Revising paragraph (k)(1) Examples
3and 4(iii).
9. Adding a sentence to the end of
paragraph (k)(2)(i).
The revisions and additions read as fol-
lows:
§1.1361–1 S corporation defined.
* * * * *
(b)* * *(1)* * *
(ii) As a shareholder, a person (other
than an estate, a trust described in section
1361(c)(2), or, for taxable years begin-
ning after December 31, 1997, an organi-
zation described in section 1361(c)(6))
who is not an individual;
* * * * *
(f) Shareholder must be an individual
or estate. Except as otherwise provided
in paragraph (e)(1) of this section (relat-
ing to nominees), paragraph (h) of this
section (relating to certain trusts), and, for
taxable years beginning after December
31, 1997, section 1361(c)(6) (relating to
certain exempt organizations), a corpora-
tion in which any shareholder is a corpo-
ration, partnership, or trust does not qual-
ify as a small business corporation.
2001–37 I.R.B.273September 10, 2001

* * * * *
(h)* * *(1)* * *
(ii) Subpart E trust ceasing to be a
qualified subpart E trust after the death of
deemed owner. A trust which was a qual-
ified subpart E trust immediately before
the death of the deemed owner and which
continues in existence after the death of
the deemed owner, but only for the 2-year
period beginning on the day of the
deemed owner’s death. A trust is consid-
ered to continue in existence if the trust
continues to hold the stock of the S corpo-
ration during the period of administration
of the decedent’s estate or if, after the pe-
riod of administration, the trust continues
to hold the stock pursuant to the terms of
the will or the trust agreement. See
§1.641(b)–3 for rules concerning the ter-
mination of estates and trusts for federal
income tax purposes.
* * * * *
(iv) Testamentary trusts. A trust (other
than a qualified subpart E trust, an elect-
ing QSST, or an electing small business
trust (ESBT)) to which S corporation
stock is transferred pursuant to the terms
of a will, but only for the 2-year period
beginning on the day the stock is trans-
ferred to the trust.
* * * * *
(3)* * *
(i)* * *
(B) If stock is held by a trust defined in
paragraph (h)(1)(ii) of this section, the es-
tate of the deemed owner is generally
treated as the shareholder as of the day of
the deemed owner’s death. However, if
stock is held by such a trust in a commu-
nity property state, the decedent’s estate is
the shareholder only of the portion of the
trust included in the decedent’s gross es-
tate (and the surviving spouse continues
to be the shareholder of the portion of the
trust owned by that spouse under the ap-
plicable state’s community property law).
The estate ordinarily will cease to be
treated as the shareholder upon the earlier
of the transfer of that stock by the trust or
the expiration of the 2-year period begin-
ning on the day of the deemed owner’s
death. If the trust qualifies and becomes
an electing QSST, the beneficiary and not
the estate is treated as the shareholder as
of the effective date of the QSST election,
and the rules provided in paragraph (j)(7)
of this section apply. If the trust qualifies
and becomes an ESBT, the shareholders
are determined under provisions of
REG–251701–96 in 2001–4 I.R.B. 396
(see §601.601(d)(2) of this chapter) as of
the effective date of the ESBT election.
* * * * *
(D) If stock is transferred to a testa-
mentary trust described in paragraph
(h)(1)(iv) of this section (other than a
qualified subpart E trust, an electing
QSST, or an ESBT), the estate of the tes-
tator is treated as the shareholder until the
earlier of the transfer of that stock by the
trust or the expiration of the 2-year period
beginning on the day that the stock is
transferred to the trust. If the trust quali-
fies and becomes an electing QSST, the
beneficiary and not the estate is treated as
the shareholder as of the effective date of
the QSST election, and the rules provided
in paragraph (j)(7) of this section apply.
If the trust qualifies and becomes an
ESBT, the shareholders are determined
under provisions of REG–251701–96 in
2001–4 I.R.B. 396 (see §601.601(d)(2) of
this chapter) as of the effective date of the
ESBT election.
* * * * *
(ii)* * *
(A)* * * If the trust continues to own
the stock after the expiration of the 2-year
period, the corporation’s S election will
terminate unless the trust is otherwise a
permitted shareholder.* * *
(B) If stock is transferred to a testamen-
tary trust described in paragraph
(h)(1)(iv) of this section (other than a
qualified subpart E trust, an electing
QSST, or an ESBT), the trust is treated as
the shareholder. If the trust continues to
own the stock after the expiration of the
2-year period, the corporation’s S election
will terminate unless the trust otherwise
qualifies as a permitted shareholder. If
the trust qualifies as a QSST described in
section 1361(d) and the income benefi-
ciary of the trust makes a timely QSST
election, the beneficiary and not the trust
is treated as the shareholder from the ef-
fective date of the QSST election.
* * * * *
(j)* * *
(6)* * *
(iii)* * *
(C) If a trust ceases to be a qualified
subpart E trust but also satisfies the re-
quirements of a QSST, the QSST election
must be filed within the 16-day-and-2-
month period beginning on the date on
which the trust ceases to be a qualified sub-
part E trust. If the estate of the deemed
owner of the trust is treated as the share-
holder under paragraph (h)(3)(i) of this
section, the QSST election may be filed at
any time, but no later than the end of the
16-day-and-2-month period beginning on
the date on which the estate of the deemed
owner ceases to be treated as a shareholder.
(D) If a testamentary trust is a permit-
ted shareholder under paragraph
(h)(1)(iv) of this section and also satisfies
the requirements of a QSST, the QSST
election may be filed at any time, but no
later than the end of the 16-day-and-2-
month period beginning on the date after
the end of the 2-year period.
* * * * *
(7)* * *
(ii) If, upon the death of an income
beneficiary, the trust continues in exis-
tence, continues to hold S corporation
stock but no longer satisfies the QSST re-
quirements, and is not a qualified subpart
E trust, then, solely for purposes of sec-
tion 1361(b)(1), as of the date of the in-
come beneficiary’s death, the estate of
that income beneficiary is treated as the
shareholder of the S corporation with re-
spect to which the income beneficiary
made the QSST election. The estate ordi-
narily will cease to be treated as the share-
holder for purposes of section 1361(b)(1)
upon the earlier of the transfer of that
stock by the trust or the expiration of the
2-year period beginning on the day of the
income beneficiary’s death. During the
period that the estate is treated as the
shareholder for purposes of section
1361(b)(1), the trust is treated as the
shareholder for purposes of sections
1366, 1367, and 1368. If, after the 2-year
period, the trust continues to hold S cor-
poration stock, the corporation’s S elec-
tion terminates. If the termination is inad-
vertent, the corporation may request relief
under section 1362(f).
* * * * *
(k)(1)* * *
Example 2.* * *
(ii)* * * A’s estate will cease to be treated as the
shareholder for purposes of section 1361(b)(1) upon
the earlier of the transfer of the Corporation M stock
by the trust (other than to A’s estate), the expiration
of the 2-year period beginning on the day of A’s
death, or the effective date of a QSST election if the
trust qualifies as a QSST.* * *
* * * * *
Example 3. 2-year rule under section
1361(c)(2)(A)(ii) and (iii). F owns stock of Corpo-
September 10, 20012742001–37 I.R.B.

ration P, an S corporation. In addition, F is the
deemed owner of a qualified subpart E trust that
holds stock in Corporation O, an S corporation. F
dies on July 1, 2001. The trust continues in exis-
tence after F’s death but is no longer a qualified sub-
part E trust. On August 1, 2001, F’s shares of stock
in Corporation P are transferred to the trust pursuant
to the terms of F’s will. Because the stock of Corpo-
ration P was not held by the trust when F died, sec-
tion 1361(c)(2)(A)(ii) does not apply with respect to
that stock. Under section 1361(c)(2)(A)(iii), the last
day on which F’s estate could be treated as a permit-
ted shareholder of Corporation P is July 31, 2003,
(that is, the last day of the 2-year period that begins
on the date of the transfer from the estate to the
trust). With respect to the shares of stock in Corpo-
ration O held by the trust at the time of F’s death,
section 1361(c)(2)(A)(ii) applies and the last day on
which F’s estate could be treated as a permitted
shareholder of Corporation O is June 30, 2003, (that
is, the last day of the 2-year period that begins on the
date of F’s death).
Example 4.* * *
(iii) QSST when a person other than the current
income beneficiary may receive trust corpus. As-
sume the same facts as in paragraph (i) of this Exam-
ple 4, except that H dies on November 1, 2001.
Under the terms of the trust, after H’s death, L is the
income beneficiary of the trust and the trustee is au-
thorized to distribute trust corpus to L as well as to J.
The trust ceases to be a QSST as of November 1,
2001, because corpus distributions may be made to
someone other than L, the current (successive) in-
come beneficiary. Under section 1361(c)(2)(B)(ii),
H’s estate (and not the trust) is considered to be the
shareholder for purposes of section 1361(b)(1) for
the 2-year period beginning on November 1, 2001.
However, because the trust continues in existence
after H’s death and will receive any distributions
from the corporation, the trust (and not H’s estate) is
treated as the shareholder for purposes of sections
1366, 1367, and 1368, during that 2-year period.
After the 2-year period, the S election terminates
and the trust continues as a shareholder of a C cor-
poration. If the termination is inadvertent, Corpora-
tion Q may request relief under section 1362(f).
However, the S election would not terminate if the
trustee distributed all Corporation Q shares to L, J,
or both before October 31, 2003 (the last day of the
2-year period), assuming that neither L nor J be-
comes the 76th shareholder of Corporation Q as a
result of the distribution.
* * * * *
(2)* * *(i)* * * In addition, paragraphs
(h)(1)(ii), (h)(1)(iv), (h)(3)(i)(B),
(h)(3)(i)(D), (h)(3)(ii)(A) second
sentence, (h)(3)(ii)(B), (j)(6)(iii)(C),
(j)(6)(iii)(D), (j)(7)(ii), and (k)(1) Exam-
ple 2(ii) fourth sentence, Example 3,and
Example 4(iii) of this section apply on
and after the date that final regulations are
published in the Federal Register.
* * * * *
Robert E. Wenzel,
Deputy Commissioner
of Internal Revenue.
(Filed by the Office of the Federal Register on Au-
gust 23, 2001, 8:45 a.m. and published in the issue
of the Federal Register for August 24, 2001, 66 F.R.
44565)
2001–37 I.R.B.275September 10, 2001

September 10, 2001i2001–37 I.R.B.
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”)
that have an effect on previous rulings
use the following defined terms to de-
scribe the effect:
Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus,
if an earlier ruling held that a principle
applied to A, and the new ruling holds
that the same principle also applies to B,
the earlier ruling is amplified. (Compare
with modified, below).
Clarified is used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously
published ruling and points out an essen-
tial difference between them.
Modified is used where the substance
of a previously published position is
being changed. Thus, if a prior ruling
held that a principle applied to A but not
to B, and the new ruling holds that it ap-
plies to both A and B, the prior ruling is
modified because it corrects a published
position. (Compare with amplified and
clarified, above).
Obsoleted describes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used
in a ruling that lists previously published
rulings that are obsoleted because of
changes in law or regulations. A ruling
may also be obsoleted because the sub-
stance has been included in regulations
subsequently adopted.
Revoked describes situations where the
position in the previously published rul-
ing is not correct and the correct position
is being stated in the new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a pe-
riod of time in separate rulings. If the
new ruling does more than restate the
substance of a prior ruling, a combination
of terms is used. For example, modified
and superseded describes a situation
where the substance of a previously pub-
lished ruling is being changed in part and
is continued without change in part and it
is desired to restate the valid portion of
the previously published ruling in a new
ruling that is self contained. In this case
the previously published ruling is first
modified and then, as modified, is super-
seded.
Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and
that list is expanded by adding further
names in subsequent rulings. After the
original ruling has been supplemented
several times, a new ruling may be pub-
lished that includes the list in the original
ruling and the additions, and supersedes
all prior rulings in the series.
Suspended is used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The following abbreviations in current use and for-
merly used will appear in material published in the
Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security
Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contributions 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.
Definition of Terms

2001–37 I.R.B.iiSeptember 10, 2001
Numerical Finding List
1
Bulletins 2001–27 through 2001–36
Announcements:
2001–69, 2001–27 I.R.B. 23
2001–70, 2001–27 I.R.B. 23
2001–71, 2001–27 I.R.B. 26
2001–72, 2001–28 I.R.B. 39
2001–73, 2001–28 I.R.B. 40
2001–74, 2001–28 I.R.B. 40
2001–75, 2001–28 I.R.B. 42
2001–76, 2001–29 I.R.B. 67
2001–77, 2001–30 I.R.B. 83
2001–78, 2001–30 I.R.B. 87
2001–79, 2001–31 I.R.B. 97
2001–80, 2001–31 I.R.B. 98
2001–81, 2001–33 I.R.B. 175
2001–82, 2001–32 I.R.B. 123
2001–83, 2001–35 I.R.B. 205
2001–84, 2001–35 I.R.B. 206
2001–85, 2001–36 I.R.B. 219
2001–86, 2001–35 I.R.B. 207
2001–87, 2001–35 I.R.B. 208
2001–88, 2001–36 I.R.B. 220
2001–90, 2001–35 I.R.B. 208
2001–91, 2001–36 I.R.B. 221
Court Decisions:
2070, 2001–31 I.R.B. 90
Notices:
2001–39, 2001–27 I.R.B. 3
2001–41, 2001–27 I.R.B. 2
2001–42, 2001–30 I.R.B. 70
2001–43, 2001–30 I.R.B. 72
2001–44, 2001–30 I.R.B. 77
2001–45, 2001–33 I.R.B. 129
2001–46, 2001–32 I.R.B. 122
2001–47, 2001–36 I.R.B. 212
2001–48, 2001–33 I.R.B. 130
2001–49, 2001–34 I.R.B. 188
2001–50, 2001–34 I.R.B. 189
2001–51, 2001–34 I.R.B. 190
2001–52, 2001–35 I.R.B. 203
Proposed Regulations:
REG–110311–98, 2001–35 I.R.B. 204
REG–106917–99, 2001–27 I.R.B. 4
REG–103735–00, 2001–35 I.R.B. 204
REG–103736–00, 2001–35 I.R.B. 204
REG–100548–01, 2001–29 I.R.B. 67
Railroad Retirement Quarterly Rates:
2001–27, I.R.B. 1
Revenue Procedures:
2001–39, 2001–28 I.R.B. 38
2001–40, 2001–33 I.R.B. 130
2001–41, 2001–33 I.R.B. 173
2001–42, 2001–36 I.R.B. 212
2001–43, 2001–34 I.R.B. 191
2001–44, 2001–35 I.R.B. 203
Revenue Rulings:
2001–30, 2001–29 I.R.B. 46
2001–33, 2001–32 I.R.B. 118
2001–34, 2001–28 I.R.B. 31
2001–35, 2001–29 I.R.B. 59
2001–36, 2001–32 I.R.B. 119
2001–37, 2001–32 I.R.B. 100
2001–38, 2001–33 I.R.B. 124
2001–39, 2001–33 I.R.B. 125
2001–41, 2001–35 I.R.B. 193
2001–43, 2001–36 I.R.B. 209
Treasury Decisions:
8947, 2001–28 I.R.B. 36
8948, 2001–28 I.R.B. 27
8949, 2001–28 I.R.B. 33
8950, 2001–28 I.R.B. 34
8951, 2001–29 I.R.B. 63
8952, 2001–29 I.R.B. 60
8953, 2001–29 I.R.B. 44
8954, 2001–29 I.R.B. 47
8955, 2001–32 I.R.B. 101
8956, 2001–32 I.R.B. 112
8957, 2001–33 I.R.B. 125
8958, 2001–34 I.R.B. 183
8959, 2001–34 I.R.B. 185
8960, 2001–34 I.R.B. 176
8961, 2001–35 I.R.B. 194
8962, 2001–35 I.R.B. 201
8963, 2001–35 I.R.B. 197
1
A cumulative list of all revenue rulings, revenue
procedures, Treasury decisions, etc., published in
Internal Revenue Bulletins 2001–1 through 2001–26
is in Internal Revenue Bulletin 2001–27, dated July
2, 2001.

September 10, 2001iii2001–37 I.R.B.
Finding List of Current Actions on
Previously Published Items
1
Bulletins 2001–27 through 2001–36
Announcements:
2000–48
Modified by
Notice 2001–43, 2001–30 I.R.B. 72
Notices:
2001–4
Modified by
Notice 2001–43, 2001–30 I.R.B. 72
2001–9
Modified by
Notice 2001–46, 2001–32 I.R.B. 122
2001–15
Supplemented by
Notice 2001–51, 2001–34 I.R.B. 190
Proposed Regulations:
LR–97–79
Withdrawn by
REG–100548–01, 2001–29 I.R.B. 67
LR–107–84
Withdrawn by
REG–100548–01, 2001–29 I.R.B. 67
REG–110311–98
Supplemented by
T.D. 8961, 2001–35 I.R.B. 194
REG–106917–99
Corrected by
Ann. 2001–86, 2001–35 I.R.B. 207
REG–103735–00
Supplemented by
T.D. 8961, 2001–35 I.R.B. 194
REG–103736–00
Supplemented by
T.D. 8961, 2001–35 I.R.B. 194
REG–107186–00
Corrected by
Ann. 2001–71, 2001–27 I.R.B. 26
REG–130477–00
Supplemented by
Ann. 2001–82, 2001–32 I.R.B. 123
REG–130481–00
Supplemented by
Ann. 2001–82, 2001–32 I.R.B. 123
Revenue Procedures:
93–27
Clarified by
Rev. Proc. 2001–43, 2001–34 I.R.B. 191
97–13
Modified by
Rev. Proc. 2001–39, 2001–28 I.R.B. 38
98–44
Superseded by
Rev. Proc. 2001–40, 2001–33 I.R.B. 130
Revenue Procedures—continued:
99–27
Superseded by
Rev. Proc. 2001–42, 2001–36 I.R.B. 212
2000–20
Modified by
Notice 2001–42, 2001–30 I.R.B. 70
2000–39
Corrected by
Ann. 2001–73, 2001–28 I.R.B. 40
2001–2
Modified by
Rev. Proc. 2001–41, 2001–33 I.R.B. 173
2001–6
Modified by
Notice 2001–42, 2001–30 I.R.B. 70
Revenue Rulings:
57–589
Obsoleted by
REG–106917–99, 2001–27 I.R.B. 4
65–316
Obsoleted by
REG–106917–99, 2001–27 I.R.B. 4
68–125
Obsoleted by
REG–106917–99, 2001–27 I.R.B. 4
69–563
Obsoleted by
REG–106917–99, 2001–27 I.R.B. 4
70–379
Obsoleted by
Rev. Rul. 2001–39, 2001–33 I.R.B. 125
74–326
Obsoleted by
REG–106917–99, 2001–27 I.R.B. 4
78–179
Obsoleted by
REG–106917–99, 2001–27 I.R.B. 4
92–19
Supplemented by
Rev. Rul. 2001–38, 2001–33 I.R.B. 124
Treasury Decisions:
8948
Corrected by
Ann. 2001–90, 2001–35 I.R.B. 208
1
A cumulative list of current actions on previously
published items in Internal Revenue Bulletins
2001–1 through 2001–26 is in Internal Revenue
Bulletin 2001–27, dated July 2, 2001.

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