n-06-30.pdf

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Part III - Administrative, Procedural, and Miscellaneous

Qualified NMWHFIT Exception Extension

Notice 2006-30

PURPOSE

This notice informs taxpayers that § 1.671-5, which provides reporting rules for
widely held fixed investment trusts (WHFITs), will be amended to provide that the
availability of the Qualified NMWHFIT (non-mortgage widely held fixed investment trust)
Exception in § 1.671-5(c)(2)(iv)(E) is extended by 60 days from the date indicated in
Notice 2006-29, 2006-12 I.R.B. 644, issued by the IRS and the Treasury Department on
February 23, 2006.
BACKGROUND
On January 24, 2006, the IRS and Treasury Department published final
regulations under § 1.671-5 (Reporting Requirements for Widely Held Fixed Investment
Trusts) in the Federal Register (T.D. 9241, 2006-7 I.R.B. 427 [71 FR 4002]). Following
the publication of those final regulations, the IRS and Treasury Department received a
number of comments regarding the applicability of those regulations to NMWHFITs.
The commentators requested that the IRS and the Treasury Department issue
additional guidance to clarify and simplify the application of the final regulations to
NMWHFITs. Commentators also requested that the availability of the qualified

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NMWHFIT exception in § 1.671-5(c)(2)(iv)(E) be extended while the additional guidance
was being developed. The qualified NMWHFIT exception, if satisfied, excepts trustees
and middlemen from specific reporting requirements in the final regulations regarding
market discount, bond premium, sales and dispositions, redemptions, and sales of trust
interests. In response, the IRS and Treasury Department issued Notice 2006-29 which,
among other things, indicated that the IRS and Treasury Department intended to amend
§1.671-5 to extend the availability of the qualified NMWHFIT exception to NMWHFITs
created on or after February 23, 2006 which was the cut-off date for qualifying for the
exception in the final regulations. Under Notice 2006-29, to satisfy the qualified
NMWHFIT exception, a NMWHFIT’s registration statement must become effective
under the Securities Act of 1933, as amended (15 U.S.C. 77a, et. seq.) (Securities Act
of 1933) and trust interests must be offered for sale to the public by June 1, 2006 and
the NMWHFIT must be fully funded by August 1, 2006.
60 DAY EXTENSION
The IRS and the Treasury Department expect to issue additional guidance under
§ 1.671-5 in the near future that will include minor modifications to the reporting rules for
sales and dispositions in § 1.671-5. Such guidance, however, will not be issued prior to
June 1, 2006. Accordingly, the IRS and the Treasury Department are extending the
availability of the qualified NMWHFIT exception beyond the date in Notice 2006-29.
Specifically, taking into account the extensions indicated in Notice 2006-29 and the
extension indicated in this notice, § 1.671-5(c)(2)(iv)(E) will be amended to provide that
the qualified NMWHFIT exception is satisfied if the calendar year for which the trustee is

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reporting begins before January 1, 2011 and: (1) the NMWHFIT has a start-up date (as
defined in § 1.671-5(b)(19)) before February 23, 2006; (2) the registration statement of
the NMWHFIT becomes effective under the Securities Act of 1933 and trust interests
are offered for sale to the public before February 23, 2006; or (3) the registration
statement of the NMWHFIT becomes effective under the Securities Act of 1933 and
trust interests are offered for sale to the public on or after February 23, 2006 and before
July 31, 2006, and the NMWHFIT is fully funded before October 1, 2006.
EFFECTIVE DATE
The effective date for amended § 1.671-5(c)(2)(iv)(E) will be the date of
publication of those amendments in the Federal Register. Taxpayers, however, may
apply those amendments as though they were included in § 1.671-5 as published in the
Federal Register on January 24, 2006.
DRAFTING INFORMATION
The principal author of this notice is Faith P. Colson of the Office of Associate
Chief Counsel (Passthroughs & Special Industries). For further information regarding
this notice contact Faith P. Colson at (202) 622-3060 (not a toll-free call).