us-irs-revenue-rulings-irb-2006-30-pdf•Internal Revenue Bulletin 2006-30 (PDF rendition): IRS Revenue Rulings
Internal Revenue Bulletin 2006-30 (PDF rendition): IRS Revenue Rulings
us-irs-revenue-rulings-irb-2006-30-pdfInternal Revenue Bulletin 2006-30 (PDF rendition): IRS Revenue RulingsGuidance
Preserve advance releases and the authoritative Internal Revenue Bulletin rendition; directory timestamps are file-publication metadata, not legal effective dates. HTML bulletins begin June 2003; earlier available issues require full PDF parsing. Whole bulletin rendition: numbered items are identified below; other legal material and publisher context remain included. This is not a new standalone advance release.
Bulletin No. 200 6-30 July 24, 2006 HIGHLIGHTS OF THIS ISSUE These synopses are intended only as aids to the reader in identifying the subject matter covered. They may not be relied upon as authoritative interpretations. INCOME TAX Rev. Rul. 2006–37, page 91. Low-income housing credit; satisfactory bond; “bond factor” amounts for the period January through Septem- ber 2006.This ruling provides the monthly bond factor amounts to be used by taxpayers who dispose of qualified low-income buildings or interests therein during the period January through September 2006. T.D. 9268 , page 94. REG–10951 2–05, page 100. Final, tem porary, and proposed regulations provide guidance under sect ions 6038 and 6038A of the Code. The final reg- ulations under section 1.6038–2 are revised to remove and replace o bsolete references to a form and IRS offices. The reg- ulations clarify the information required to be furnished regard- ing certa in related party transactions of certain foreign corpo- rations and certain foreign-owned domestic corporations. The regulat ions also increase the amount of certain penalties, and make cer tain other changes, to reflect the statutory changes made by t he Taxpayer Relief Act of 1997. T.D. 9269, page 92. Final regulations under section 382 of the Code provide guid- ance on whether a loss corporation has an owner shift where a qualified trust described in section 401(a) distributes an own- ership interest in an entity. EMPLOYEE PLANS Notice 2006–66, page 99. Weighted average interest rate update; 30-year Trea- sury securities.The weighted average interest rate for July 2006 and the resulting permissible range of interest rates used to calculate current liability and to determine the required con- tribution are set forth. Fi nding Lists begin on page ii. The IRS Mission Provide America’s taxpayers top quality service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all. Introduction The Internal Revenue Bulletin is the authoritative instrument of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service and for publishing Treasury Decisions, Executive Orders, Tax Conven- tions, 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 compiled 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, mod- ify, or amend any of those previously published in the Bulletin. All published rulings apply retroactively unless otherwise indi- cated. Procedures relating solely to matters of internal man- agement 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 published rulings and procedures, the effect of subsequent legislation, regulations, court decisions, rulings, and procedures must be considered, and Service personnel and others concerned are cautioned against reaching the same conclusions in other cases unless the facts and circumstances are substantially the same. The Bulletin is divided into four parts as follows: Part I.—19 86 Code. This part i ncludes rulings and decisions based on provisions of the Intern al 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, Leg- islation and Related Committee Reports. Part III.—Administrative, Procedural, and Miscellaneous. To the extent practicable, pertinent cross references to these subjects are contained in the other Parts and Subparts. Also included in this part are Bank Secrecy Act Administrative Rul- ings. Bank Secrecy Act Administrative Rulings are issued by the Department of the Treasury’s Office of the Assistant Sec- retary (Enforcement). Part IV .—Items of General Interest. This par t includes notices of proposed rulemakings, disbar- ment an d suspension lists, and announcements. The last 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 last Bulletin of each semiannual period. The c ontents 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. July 24, 20062006–30 I.R.B. Part I. Rulings and Decisions Under the Internal Revenue Code of 1986 Section 42.—Low-Income Housing Credit Low-income housing credit; satisfac- tory bond; “bond factor” amounts for the period January through September 2006.This ruling provides the monthly bond factor amounts to be used by taxpay- ers who dispose of qualified low-income buildings or interests therein during the pe- riod January through September 2006. Rev. Rul. 2006–37 In Rev. Rul. 90–60, 1990–2 C.B. 3, the Internal Revenue Service provided guidance to taxpayers concerning the gen- eral methodology used by the Treasury Department in computing the bond factor amounts used in calculating the amount of bond considered satisfactory by the Secre- tary under § 42(j)(6) of the Internal Rev- enue Code. It further announced that the Secretary would publishintheInternal Revenue Bulletin a table of bond factor amounts for dispositions occurring during each calendar month. Rev. Proc. 99–11, 1999–1 C.B. 275, established a collateral program as an al- ternative to providing a surety bond for taxpayers to avoid or defer recapture of the low-income housing tax credits under § 42(j)(6). Under this program, taxpayers may establish a Treasury Direct Account and pledge certain United States Treasury securities to the Internal Revenue Service as security. This revenue ruling provides in Table 1 the bond factor amounts for calculat- ing the amount of bond considered satis- factory under § 42(j)(6) or the amount of United States Treasury securities to pledge in a Treasury Direct Account under Rev. Proc. 99–11 for dispositions of qualified low-income buildings or interests therein during the period January through Septem- ber 2006. Table 1 Rev. Rul. 2006–37 Monthly Bond Factor Amounts for Dispositions Expressed As a Percentage of Total Credits Calendar Year Building Placed in Service or, if Section 42(f)(1) Election Was Made, the Succeeding Calendar Year Month of Disposition 19921993199419951996199719981999200020012002 Jan ’0616.4930.7443.0153.6562.9464.2865.9567.7669.7672.1974.98 Feb ’0616.4930.7443.0153.6562.9464.1465.8167.6269.6172.0374.80 Mar ’0616.4930.7443.0153.6562.9464.0065.6767.4769.4671.8974.63 Apr ’0616.4930.7443.0153.6562.9463.8765.5367.3369.3271.7374.46 May ’0616.4930.7443.0153.6562.9463.7365.4067.2069.1871.5874.30 Jun ’0616.4930.7443.0153.6562.9463.6165.2767.0669.0571.4474.15 Jul ’0617.4032.4245.3756.5966.3967.6170.0772.7275.6279.0182.82 Aug ’0617.4032.4245.3756.5966.3967.4769.9372.5775.4778.8682.65 Sep ’0617.4032.4245.3756.5966.3967.3469.7972.4375.3378.7182.49 2006–30 I.R.B.91July 24, 2006 Table 1 (cont’d) Rev. Rul. 2006–37 Monthly Bond Factor Amounts for Dispositions Expressed As a Percentage of Total Credits Calendar Year Building Placed in Service or, if Section 42(f)(1) Election Was Made, the Succeeding Calendar Year Month of Disposition 2003200420052006 Jan ’0678.01 81.0283.60 83.98 Feb ’0677.81 80.7783.28 83.98 Mar ’0677.61 80.5383.00 83.98 Apr ’0677.42 80.3282.76 83.98 May ’0677.25 80.1282.54 83.98 Jun ’0677.08 79.9382.35 83.98 Jul ’0686.92 90.9994.61 97.21 Aug ’0686.74 90.7994.41 97.21 Sep ’0686.56 90.6094.23 97.21 For a list of bond factor amounts ap- plicable to dispositions occurring during other calendar years, see: Rev. Rul. 98–3, 1998–1 C.B. 248; Rev. Rul. 2001–2, 2001–1 C.B. 255; Rev. Rul. 2001–53, 2001–2 C.B. 488; Rev. Rul. 2002–72, 2002–2 C.B. 759; Rev. Rul. 2003–117, 2003–2 C.B. 1051; Rev. Rul. 2004–100, 2004–2 C.B. 718; and Rev. Rul. 2005–67, 2005–43 I.R.B. 771. DRAFTING INFORMATION The principal author of this revenue ruling is David McDonnell of the Office of Associate Chief Counsel (Passthroughs and Special Industries). For further in- formation regarding this revenue ruling, contact Mr. McDonnell at (202) 622–3040 (not a toll-free call). Section 382.—Limitation on Net Operating Loss Carryforwards and Certain Built-In Losses Following Ownership Change 26 CFR 1.382–10: Special rules for determining time and manner of acquisition of an interest in a loss cor- poration. T.D. 9269 DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 Distributions of Interests in a Loss Corporation From Qualified Trusts AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Final regulations and removal of temporary regulations. SUMMARY: This document contains final regulations under section 382 of the Inter- nal Revenue Code of 1986. The final reg- ulations affect loss corporations and pro- vide guidance on whether a loss corpora- tion has an owner shift where a qualified trust described in section 401(a) distributes an ownership interest in an entity. DATES:Effective Date:These regulations areeffectiveJune23,2006. Applicability Dates:For dates of appli- cability, see §1.382–10(a)(4). FOR FURTHER INFORMATION CONTACT: Keith E. Stanley, (202) 622–7750, (not a toll-free number). SUPPLEMENTARY INFORMATION: Background This document contains amendments to 26 CFR Part 1. On June 27, 2003, tempo- rary regulations (T.D. 9063, 2003–2 C.B. 510 [68 FR 38177]) regarding whether a loss corporation has an owner shift where a qualifiedtrustdescribedinsection401(a) distributes an ownership interest in an entity were published in theFederal Reg- ister. A notice of proposed rulemaking (REG–108676–03, 2003–2 C.B. 523) cross-referencing the temporary regula- tions was published in theFederal Regis- terfor the same day (68 FR 38247). The temporary regulations provided that—(1) if a qualified trust distributes an owner- ship interest in an entity, then for testing dates on or after the date of the distribu- tion, the distributed ownership interest will be treated as having been acquired by the distributee on the date and in the manner acquired by the trust, and (2) the distribution itself does not give rise to a testing date. They further provided that, July 24, 2006922006–30 I.R.B. in determining which ownership interests have been distributed, the loss corporation must account for all dispositions of own- ership interests by the qualified trust either by specifically identifying the ownership interest disposed of, or by using a first-in, first-out (FIFO) method. The preamble of T.D. 9063 included background information and an explana- tion of provisions regarding the regula- tions. Also in the preamble, the IRS and Treasury Department requested comments regarding whether there are other events that, under current rules, are taken into ac- count in determining whether an owner- ship change occurs, but do not cause the ul- timate beneficial ownership of the loss cor- poration to change. In this regard, the IRS and Treasury Department indicated that they had been studying the constructive ownership rules as they apply to members of a family and the effect of those rules on the determination of whether a loss corpo- ration has an ownership change. The IRS and Treasury Department expressed con- cern that, under the current rules, a change in the composition of a family might be in- terpreted in certain circumstances as shift- ing ownership even though there has been no change in the ultimate beneficial own- ership of the loss corporation, as, for ex- ample, might occur when two individuals owning loss corporation stock get married. The IRS and Treasury Department fur- ther indicated that they were considering the promulgation of regulations to address such changes in family composition in a manner similar to that employed in the proposed regulations concerning qualified trusts. The IRS and Treasury Department will continue to study whether to issue regulations under section 382 concerning shifts in ownership resulting from certain changes in family composition. No comments were received respond- ing to the notice of proposed rulemaking, and no public hearing was requested or held. The proposed regulations are adopted with no substantive change by this Treasury decision, and the corresponding temporary regulations are removed. Special Analyses It has been determined that this regula- tion is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. Pursuant to 5 U.S.C. 553(d)(3), it has been determined that good cause exists to dispense with a delayed effec- tive date on grounds that this regulation, which is substantively identical to cur- rently effective temporary regulations and relieves a restriction on affected quali- fied trusts, merely continues to provide necessary guidance to taxpayers with re- spect to whether a loss corporation has an ownership change where a qualified trust described in section 401(a) distributes an ownership interest in an entity. It is hereby certified that these regulations will not have a significant economic impact on a substantial number of small entities. This certification is based on the fact that the regulations provide relief to qualifying loss corporations that might be affected by an unintended consequence of the opera- tion of the statute. Therefore, a Regulatory Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. Pursuant to section 7805(f) of the Code, the notice of proposed rulemak- ing preceding these final regulations was submitted to the Chief Counsel for Advo- cacy of the Small Business Administration for comment on its impact on small busi- ness. Drafting Information The principal author of these regula- tions is Keith E. Stanley of the Office of Associate Chief Counsel (Corporate). Other personnel from the IRS and Treasury Department participated in their develop- ment. ***** Adoption of Amendments to the Regulations Accordingly, 26 CFR part 1 is amended as follows: PART 1 — INCOME TAXES Paragraph 1. The authority citation for part1isamendedbyaddingentriesinnu- merical order to read, in part, as follows: Authority: 26 U.S.C. 7805 * * * Section 1.382–10 also issued under 26 U.S.C 382(m). * * * Par. 2. Section 1.382–1 is amended by removing the entry for §1.382–10T and revising the entry for §1.382–10 to read as follows: §1.382–1 Table of contents. ***** §1.382–10 Special rules for determining time and manner of acquisition of an in- terest in a loss corporation. ***** Par. 3. Section 1.382–10 is added to read as follows: §1.382–10 Special rules for determining time and manner of acquisition of an interest in a loss corporation. (a)Distributions from qualified trusts—(1)In general. For purposes of §1.382–2T, if a qualified trust described in section 401(a) (qualified trust) distributes anownershipinterestinanentity(asde- fined in §1.382–3(a)(1)), then for testing dates on or after the date of the distribu- tion, the distributed ownership interest is treated as having been acquired by the distributee on the date and in the manner acquired by the trust and not as having been acquired or disposed of by the trust. The distribution does not cause the day of the distribution to be a testing date. (2)Accounting for dispositions—(i) General rule. For purposes of this para- graph (a), in order to determine which ownership interest in an entity is dis- tributed from a qualified trust, a loss cor- poration must either specifically identify the ownership interests that are the subject of all dispositions by the qualified trust of ownership interests in an entity, or apply the first-in, first-out (FIFO) method to all such dispositions. (ii)Special rules. For purposes of this paragraph (a)(2): (A) The FIFO method must be applied on a class-by-class basis; and (B) The termdispositionsincludes dis- tributions, sales, and other transfers. (3)Examples. The following exam- ples illustrate the principles of this para- graph (a). For purposes of these exam- ples, unless otherwise stated, the nomen- clature and assumptions of the examples in §1.382–2T(b) apply, all corporations file separate income tax returns on a calendar year basis, the only 5-percent shareholder of a loss corporation is a public group, and the facts set forth the only acquisitions of stock by any participants in a qualified plan and the only owner shifts with respect 2006–30 I.R.B.93July 24, 2006 to the loss corporation during the testing period. The examples are as follows: Example 1—(i)Facts. In 1994, E, a qualified trust established under Plan F, acquires 10 percent of L stock. A is a participant in Plan F. On January 1, 2002, A acquires 4 percent of L stock, and B, who is not a participant or a beneficiary of a participant in Plan F, acquires 5 percent of L stock. On January 1, 2004, E distributes 2 percent of L stock to A. On July 1, 2004, A acquires 1 percent of L stock. (ii)Analysis. January 1, 2002, is a testing date be- cause B’s acquisition of 5 percent of L stock causes an increase in the percentage ownership of B, a 5-percent shareholder. As of the close of that testing date, A is treated as owning only 4 percent of L stock. There- fore, A is treated as a member of the public group of L. In addition, E is treated as owning 10 percent of L stock that it acquired in 1994. (iii) As a result of the application of paragraph (a)(1) of this section to E’s distribution of 2 percent of L stock to A on January 1, 2004, for testing dates on and after January 1, 2004, A is treated as having acquired that 2 percent interest in L in 1994, and E is treated as having acquired only 8 percent of L stock in 1994. Because there are no owner shifts on January 1, 2004, that date is not a testing date. (iv) July 1, 2004, is a testing date because on that date A, a 5-percent shareholder, acquires 1 percent of L stock. As of the close of that testing date, A’s percentage of ownership of L stock is 7 percent, and A’s lowest percentage of ownership of L stock at any time within the testing period is 2 percent (deemed acquired in 1994), representing an increase of 5 per- centage points. In addition, as of the close of July 1, 2004, B’s percentage of ownership of L stock is 5 percent, and B’s lowest percentage of ownership of L stock at any time within the testing period is 0 per- cent, representing an increase of 5 percentage points. Thus, on July 1, 2004, L must take into account an in- crease of 10 (5 + 5) percentage points in determining whether it has an ownership change. Example 2—(i)Facts. E is a qualified trust estab- lished under Plan F. L, a publicly traded corporation, has 100x shares of stock outstanding. As of January 1, 2006, C owns 5x shares of L stock and is not a par- ticipant or beneficiary of a participant in Plan F. At all times prior to January 1, 2006, E owns no L stock. On January 1, 2006, E acquires 10x shares of L stock from members of the public group of L. On December 1, 2007, E distributes 5x shares of L stock to some of the participants in Plan F. No one participant acquires all 5x shares as a result of the distribution. On Feb- ruary 1, 2008, C purchases 1x shares of L stock from the public group of L. (ii)Analysis. Because E’s acquisition of 10x shares of L stock on January 1, 2006, is an owner shift, that date is a testing date. As of the close of that date, E’s percentage of stock ownership in L has increased by 10 percentage points. (iii) As a result of the application of paragraph (a)(1) of this section to E’s distribution of 5x shares of L stock to some Plan F participants on December 1, 2007, for testing dates on and after December 1, 2007, those distributees are treated as having acquired those shares of stock on January 1, 2006, from members of the public group of L, and E is not treated as having acquired those shares on that date. E’s distribution of the 5x shares is not an owner shift. Therefore, December 1, 2007, is not a testing date. (iv) February 1, 2008, is a testing date because on that date an owner shift results from C’s purchase of 1x shares of L stock. As of the close of that test- ing date, the distributees of 5x shares of L stock are treated as members of the public group of L having acquired 5x shares of L stock from other members of the public group of L on January 1, 2006. Because those acquisitions are not by 5-percent shareholders, L does not take them into account. In addition, as of the close of February 1, 2008, E’s percentage of stock ownershipinLis5percent,andE’slowestpercent- age of stock ownership in L at any time within the testing period is 0 percent, representing an increase of 5 percentage points. In addition, as of the close of February 1, 2008, C’s percentage of stock ownership in L is 6 percent, and C’s lowest percentage of stock ownership in L at any time within the testing period is 5 percent, representing an increase of 1 percentage point. Therefore, on February 1, 2008, L must take into account an increase of 6 (5 + 1) percentage points in determining whether it has an ownership change. (4)Effective dates. This section applies to all distributions after June 23, 2006. For distributions on or before June 23, 2006, see §1.382–10T as contained in 26 CFR part 1, revised April 1, 2006. (b) [Reserved] §1.382–10T [Removed] Par. 4. Section 1.382–10T is removed. Mark E. Matthews, Deputy Commissioner for Services and Enforcement. Approved June 20, 2006. Eric Solomon, Acting Deputy Assistant Secretary oftheTreasury(TaxPolicy). (Filed by the Office of the Federal Register on June 23, 2006, 9:48 a.m., and published in the issue of the Federal Register for June 28, 2006, 71 F.R. 36676) Section 6038.—Information Reporting With Respect to Certain Foreign Corporations and Partnerships 26 CFR 1.6038–2: Information returns required of United States persons with respect to annual account- ing periods of certain foreign corporations beginning after December 31, 1962. T.D. 9268 DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Parts 1 and 602 Information Returns Required With Respect to Certain Foreign Corporations and Certain Foreign-Owned Domestic Corporations AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Final and temporary regula- tions. SUMMARY: This document contains fi- nal and temporary regulations that provide guidance under sections 6038 and 6038A of the Internal Revenue Code. The fi- nal regulations under §1.6038–2 are re- vised to remove and replace obsolete ref- erences to a form and IRS offices. The temporary regulations clarify the informa- tion required to be furnished regarding cer- tain related party transactions of certain foreign corporations and certain foreign- owned domestic corporations. The tempo- rary regulations also increase the amount of certain penalties, and make certain other changes, to reflect the statutory changes made by the Taxpayer Relief Act of 1997 (TRA ’97). The text of the temporary reg- ulations also serves as the text of the pro- posed regulations (REG–109512–05) set forth in this issue of the Bulletin. DATES:Effective Date:These final and temporary regulations are effective June 21, 2006. Applicability Date:Changes to §1.6038–2 are applicable June 21, 2006. Sections 1.6038–2T(f)(11), (12), and 1.6038A–2T(b)(8) apply with respect to information for annual accounting periods beginning on or after June 21, 2006. Sec- tion 1.6038–2T(k) applies June 21, 2006. FOR FURTHER INFORMATION CONTACT: Kate Y. Hwa (202) 622–3840 (not a toll-free number). July 24, 2006942006–30 I.R.B. SUPPLEMENTARY INFORMATION: Paperwork Reduction Act These temporary regulations are being issued without prior notice and public pro- cedure pursuant to the Administrative Pro- cedure Act (5 U.S.C. 553). For this reason, the collection of information contained in these regulations has been reviewed and pending receipt and evaluation of public comments, approved by the Office of Man- agement and Budget under control number 1545–2020. Responses to this collection of information are mandatory. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number assigned by the Office of Management and Budget. For further information concerning this collection of information, and where to submit comments on the collection of in- formation and the accuracy of the esti- mated burden, and suggestions for reduc- ing this burden, please refer to the pream- ble to the cross-referencing notice of pro- posed rulemaking published in this issue of the Bulletin. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103. Background Section 6038 of the Internal Revenue Code (Code) requires a U.S. person to fur- nish, with respect to any foreign business entity which such person controls, certain information as prescribed by the Secretary. More specifically, section 6038(a)(1)(D) provides that the information to be fur- nished includes information relating to transactions between the foreign business entity and (i) such U.S. person, (ii) any corporation or partnership controlled by such U.S. person, and (iii) any U.S. person owning at the time the transaction takes place a 10 percent or greater interest in the foreign business entity. Section 6038A requires certain for- eign-owned domestic corporations to fur- nish certain information prescribed by the Secretary. In particular, section 6038A(a) requires a 25-percent foreign-owned do- mestic corporation to furnish information with respect to certain transactions be- tween such corporation and certain related parties. Explanation of Provisions The final regulations are revised to re- move and correct obsolete references to a form and IRS offices. The temporary regulations conform the current final reg- ulations to specific statutory changes and make other minor clarifications to those fi- nal regulations. Section 1.6038–2 provides that each U.S. person, with respect to each foreign corporation such person controls, must furnish the required information on a Form 5471,“Information Return of U.S. Persons With Respect to Certain Foreign Corporations”, (or, in the case of taxable years that ended before December 31, 1982, on a Form 2952,“Information Re- turn With Respect to Foreign Controlled Corporations”). Section 1.6038–2(f) sets forth the information that must be provided on the applicable form. The in- formation that must be reported includes a summary showing the total amount of each of the types of transactions of the corporation specified in §1.6038–2(f)(11). In some cases, §1.6038–2(f)(11) requires reporting of sales and purchases of items. See §1.6038–2(f)(11)(i) (stock in trade) and (iii) (certain intangibles). In other cases, it requires reporting only of pur- chases. See §1.6038–2(f)(11)(ii) (tangible property other than stock in trade). The temporary regulations modify the rules of the final regulations to include the re- porting of sales and purchases, instead of just purchases, of tangible property. The temporary regulations also modify the current rules to include the reporting of premiums paid, instead of just premiums received, for insurance or reinsurance. This consistent treatment of sales and pur- chases, and premiums paid and received, more fully implements the purpose of sec- tion 6038. It also conforms the rules in §1.6038–2 to analogous reporting rules. See §1.6038A–2(b)(3)(ii) (reporting re- quirements for foreign-owned domestic corporations). It has come to the IRS’ attention that some foreign corporations that use an accrual method of accounting may not be properly reporting the transactions described in §1.6038–2(f)(11). Accord- ingly, §1.6038–2T(f)(12) modifies the rules of the final regulations to clarify that foreign corporations that use an accrual method of accounting must report the summary of the total amount of the trans- actions described in §1.6038–2T(f)(11) on an accrual basis. To maintain confor- mity, §1.6038A–2(b)(8), which provides a similar rule for foreign-owned domestic corporations, has been similarly clarified. Section 6038(b)(1), as amended by the TRA ’97, provides for a $10,000 penalty for failure to furnish the required informa- tion within the time prescribed under sec- tion 6038(a)(2). Section 6038(b)(2), as amended by the TRA ’97, also provides for additional $10,000 penalties (not to ex- ceed a total of $50,000) when there is a continuing failure to furnish the required information. Section 1.6038–2(k)(1) sets forth the dollar amounts of the penalty for failure to furnish the information required under section 6038. To conform to the statutory change made by the TRA ’97, §1.6038–2(k)(1) has been amended to re- flect the increased penalty amounts. Section6038(c)(4)(B)and §1.6038–2(k)(3) provide a reason- able cause exception for failure to furnish the information required under section 6038. Some questions have arisen regard- ing how one determines, after reasonable cause has been established, the time prescribed for furnishing the information under §1.6038–2(i) (time and place for filing return) and the 90-day period described in §1.6038–2(k)(1)(ii) (increase in penalty for continued failure after notification) and §1.6038–2(k)(2)(iv)(A) (reduction of foreign tax credit for contin- ued failure after notice). Two examples have been added in §1.6038–2T(k)(5) to illustrate the determination, after reason- able cause has been established under §1.6038–2(k)(3)(i), of the time for filing the Form 5471, and the beginning of the 90-day period. The temporary regulations also mod- ify the rules of the final regulations to in- clude transactions between the foreign cor- poration and controlled partnerships, im- plementing a change made by section 1142 of the TRA ’97. Section 1.6038–2 of the regulations has been updated to remove references to ob- solete Form 2952 and to reflect that the Di- 2006–30 I.R.B.95July 24, 2006 rector of Field Operations has replaced the district director and the Field Director has replaced the director of the service center. Special Analyses It has been determined that this Trea- sury decision is not a significant regula- tory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It has also been deter- mined that section 553(b) of the Admin- istrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations. For the applicability of the Regulatory Flexi- bility Act (5 U.S.C. chapter 6), refer to the Special Analyses section of the preamble to the cross-reference notice of proposed ruling making published in this issue of the Bulletin. Pursuant to section 7805(f) of the Code, these final and temporary regula- tions will be submitted to the Chief Coun- sel for Advocacy of the Small Business Administration for comment on their im- pact on small business. Drafting Information The principal author of these regula- tionsisKateY.Hwa,OfficeoftheAsso- ciate Chief Counsel (International). How- ever, other personnel from the IRS and Treasury Department participated in their development. ***** Amendments to the Regulations Accordingly, 26 CFR part 1 is 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 * * * §1.6038–2 [Amended] Par. 2. Section 1.6038–2 is amended as follows: 1. Paragraph (f) introductory text is amended by removing the language “Form 2952 or” in the first sentence. 2. Paragraph (f)(11) and (k)(1) are re- vised. 3. Paragraph (f)(12) and (m) are added. 4. Paragraph (i) is amended by remov- ing the language “Form 2952 or” in the first sentence, the second sentence, and the last sentence. 5. Paragraph (i) is also amended by removing the language “District direc- tors and directors of service centers” and adding the language “Directors of Field Operations and Field Directors” in its place in the second sentence. 6. Paragraph (k)(2)(iv) is amended by removing the language “district director” and adding the language “Director of Field Operations” in its place in the first sen- tence. 7. Paragraph (k)(3)(i) is amended by removing the language “district director” and adding the language “Director of Field Operations” in its place in the first sen- tence. The revisions and additions read as fol- lows: §1.6038–2 Information returns required of United States persons with respect to annual accounting periods of certain foreign corporations beginning after December 31, 1962. ***** (f) * * * (11) [Reserved]. For further guidance, see §1.6038–2T(f)(11). (12) [Reserved]. For further guidance, see §1.6038–2T(f)(12). ***** (k) * * * (1) [Reserved]. For further guidance, see §1.6038–2T(k)(1). ***** (m) [Reserved]. For further guidance, see §1.6038–2T(m) ***** Par. 3 Section 1.6038–2T is amended by revising paragraphs (e) through (m) to read as follows: §1.6038–2T Information returns required of United States persons with respect to annual accounting periods of certain foreign corporations (temporary). ***** (e) through (f)(10) [Reserved]. For fur- ther guidance, see §1.6038–2(e) through (f)(10). (f)(11)Transactions with certain re- lated parties. (i) A summary showing the total amount of each of the following types of transactions of the corporation, which took place during the annual accounting period, with the person required to file this return, any other corporation or part- nership controlled by that person, or any United States person owning at the time of the transaction 10 percent or more in value of any class of stock outstanding of the foreign corporation, or of any corporation controlling that foreign corporation— (A) Sales and purchases of stock in trade; (B) Sales and purchases of tangible property other than stock in trade; (C) Sales and purchases of patents, in- ventions, models, or designs (whether or not patented), copyrights, trademarks, se- cret formulas or processes, or any other similar property rights; (D) Compensation paid and compensa- tion received for the rendition of technical, managerial, engineering, construction, sci- entific, or like services; (E) Commissions paid and commis- sions received; (F) Rents and royalties paid and rents and royalties received; (G) Amounts loaned and amounts bor- rowed (except open accounts resulting from sales and purchases reported under other items listed in this paragraph (f)(11) that arise and are collected in full in the ordinary course of business); (H) Dividends paid and dividends re- ceived; (I) Interest paid and interest received; and (J) Premiums paid and premiums re- ceived for insurance or reinsurance. (ii)Special rule for banks.Forpur- poses of this paragraph (f)(11), if the United States person is a bank, as defined in section 581, or is controlled within the meaning of section 368(c) by a bank, the term transactions shall not, as to a cor- poration with respect to which a return is filed, include banking transactions entered into on behalf of customers; in any event, however, deposits in accounts between a foreign corporation, controlled (within the meaning of paragraph (b) of this section) by a United States person, and a person described in this paragraph (f)(11) and withdrawals from such accounts shall be summarized by reporting end-of-month balances. July 24, 2006962006–30 I.R.B. (12)Accrued payments and receipts. For purposes of the required summary un- der paragraph (f)(11) of this section, a cor- poration that uses an accrual method of ac- counting shall use accrued payments and accrued receipts for purposes of comput- ing the total amount of each of the types of transactions listed. (g) through (j)(3) [Reserved]. For fur- ther guidance, see §1.6038–2(g) through (j)(3). (k)Failure to furnish information—(1) Dollar amount penalty—(i)In general.If any person required to file Form 5471 un- der section 6038 and this section fails to furnish any information described in para- graphs (f) and (g) of this section within the time prescribed by paragraph (i) of this section, such person shall pay a penalty of $10,000 for each annual accounting period of each foreign corporation with respect to which such failure occurs. (ii)Increase in penalty for continued failure after notification.Ifafailurede- scribed in paragraph (k)(1)(i) of this sec- tion continues for more than 90 days after the date on which the Director of Field Operations mails notice of such failure tothepersonrequiredtofileForm5471, such person shall pay a penalty of $10,000, in addition to the penalty imposed by sec- tion 6038(b)(1) and paragraph (k)(1)(i) of this section, for each 30-day period (or a fraction of) during which such failure continues after such 90-day period has expired. The additional penalty imposed by section 6038(b)(2) and this paragraph (k)(1)(ii) shall be limited to a maximum of $50,000 for each failure. (k)(2) through (k)(4) [Reserved]. For further guidance, see §1.6038–2(k)(2) through (k)(4). (k)(5)Illustrations. [Reserved]. For further guidance, see §1.6038–2(k)(5). Examples 1and2. [Reserved]. For fur- ther guidance, see §1.6038–2(k)(5)Exam- ples 1and2. Example 3. A, a U.S. person, owns 100 percent of the stock of FC. On April 15, 2008, A timely filed its 2007 income tax return but did not file Form 5471 with respect to FC’s 2007 annual accounting period. On June 1, 2008, the Director of Field Operations mailed a notice to A of A’s failure to file Form 5471 for 2007 with respect to FC. On August 1, 2008, A submits a written statement asserting facts for rea- sonable cause for failure to file the 2007 Form 5471 for FC. Based on A’s statement and discussions with A, the Director of Field Operations agrees that A had reasonable cause for failure to file FC’s 2007 Form 5471 and determined that it is reasonable for A to file FC’s 2007 Form 5471 by September 15, 2008. The time prescribed for furnishing information under paragraph (i) of this section is September 15, 2008, and the 90-day period described under paragraphs (k)(1)(ii) and (k)(2)(iv)(A) of this section begins on that same date. Thus, if A files a completed Form 5471 by September 15, 2008, A is not subject to the penalties under paragraphs (k)(1) and (k)(2) of this section. If A does not file a completed Form 5471 by December 14, 2008, in addition to the penalties un- der paragraphs (k)(1) and (k)(2) of this section, A will also be subject to the penalties for continued failure under paragraphs (k)(1)(ii) and (k)(2)(iv)(A) of this section. Example 4. The facts are the same as inExample 3except A submits the written statement to the Direc- tor before a notice of failure to furnish information is mailedtoA.ThenoticeismailedtoAonSeptem- ber 7, 2008. Under these facts, the time prescribed for furnishing information under paragraph (i) of this section is September 15, 2008, and the 90-day period after mailing of notice of failure under paragraphs (k)(1)(ii) and (k)(2)(iv)(A) of this section begins on that same date. (l) through (l)(2) [Reserved]. For fur- ther guidance, see §1.6038–(2)(l) through (l)(2). (m)Effective dates. (1) Except as oth- erwise provided, this section applies with respect to information for annual account- ing periods beginning on or after June 21, 2006. Paragraph (d) of this section applies to taxable years ending after October 22, 2004. Paragraphs (k)(1) and (k)(5),Exam- ples 3and4, of this section apply June 21, 2006. (2) The applicability of paragraphs (f)(11), (f)(12), (k)(1), and (k)(5),Exam- ples 3and4, of this section will expire on or before June 19, 2009. Par. 4. Section 1.6038A–2 is amended by revising paragraph (b)(8) to read as fol- lows: §1.6038A–2 Requirement of return. ***** (b) * * * (8) [Reserved]. For further guidance, see §1.6038A–2T(b)(8). ***** Par. 5. Section 1.6038A–2T is amended by adding paragraphs (b)(8) and (h) to read as follows: §1.6038A–2T Requirement of return (temporary). ***** (b)(8)Accrued payments and receipts. For purposes of this section, a reporting corporation that uses an accrual method of accounting shall use accrued payments and accrued receipts for purposes of comput- ing the total amount of each of the types of transactions listed in this section. ***** (h)Effective date. (1) Except as other- wise provided, for effective dates for this section for certain reporting corporations, see §1.6038A–1(n). Paragraph (b)(8) of this section applies with respect to infor- mation for annual accounting periods be- ginning on or after June 21, 2006. (2) The applicability of paragraph (b)(8) of this section will expire on or before June 19, 2009. PART 602 — OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT Par. 6. The authority citation for part 602 continues to read as follows: Authority: 26 U.S.C. 7805. Par. 7. Section 602.101(b) is amended by adding an entry to the table in numerical order to read as follows: §602.101 OMB Control numbers. ***** (b) * * * CFR part or section where identified and described Current OMB control No. ***** 1.6038–2........................................................... 1545–2020 1545–1617 ***** 2006–30 I.R.B.97July 24, 2006 Mark E. Matthews, Deputy Commissioner for Services and Enforcement. Approved June 13, 2006. Eric Solomon, Acting Deputy Assistant Secretary oftheTreasury(TaxPolicy). (Filed by the Office of the Federal Register on June 20, 2006, 8:45 a.m., and published in the issue of the Federal Register for June 21, 2006, 71 F.R. 35524) July 24, 2006982006–30 I.R.B. Part III. Administrative, Procedural, and Miscellaneous Weighted Average Interest Rate Update Notice 2006–66 Sections 412(b)(5)(B) and 412(l)(7) (C)(i) of the Internal Revenue Code gen- erally provide that the interest rates used to calculate current liability for purposes of determining the full funding limitation under § 412(c)(7) and the required con- tribution under § 412(l) must be within a permissible range around the weighted average of the rates of interest on 30-year Treasury securities during the four-year period ending on the last day before the beginning of the plan year. Notice 88–73, 1988–2 C.B. 383, pro- vides guidelines for determining the weighted average interest rate and the resulting permissible range of interest rates used to calculate current liability for the purpose of the full funding limitation of § 412(c)(7) of the Code. Section 417(e)(3)(A)(ii)(II) defines the applicable interest rate, which must be used for purposes of determining the minimum present value of a participant’s benefit under § 417(e)(1) and (2), as the annual rate of interest on 30-year Treasury securities for the month before the date of distribution or such other time as the Secretary may by regulations prescribe. Section 1.417(e)–1(d)(3) of the Income Tax Regulations provides that the applica- ble interest rate for a month is the annual interest rate on 30-year Treasury securi- ties as specified by the Commissioner for that month in revenuerulings, notices or other guidance published in the Internal Revenue Bulletin. The rate of interest on 30-year Treasury securities for June 2006 is 5.16 percent. The Service has determined this rate as the monthly average of the daily determina- tion of yield on the 30-year Treasury bond maturing in February 2036. The following 30-year Treasury rates were determined for the plan years begin- ning in the month shown below. For Plan Years 30-Year Treasury90% to 105%90% to 110% Beginning in:WeightedPermissiblePermissible MonthYearAverageRangeRange July20064.834.35 to 5.074.35 to 5.31 Drafting Information The principal authors of this notice are Paul Stern and Tony Montanaro of the Em- ployee Plans, Tax Exempt and Govern- ment Entities Division. For further infor- mation regarding this notice, please con- tact the Employee Plans’ taxpayer assis- tance telephone service at 877–829–5500 (a toll-free number), between the hours of 8:30 a.m. and 4:30 p.m. Eastern time, Monday through Friday. Mr. Stern may be reached at 202–283–9703. Mr. Montanaro may be reached at 202–283–9714. The telephone numbers in the preceding sen- tences are not toll-free. 2006–30 I.R.B.99July 24, 2006 Part IV. Items of General Interest Notice of Proposed Rulemaking by Cross-Reference to Temporary Regulations Information Returns Required With Respect to Certain Foreign Corporations and Certain Foreign-Owned Domestic Corporations REG–109512–05 AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Notice of proposed rulemaking by cross-reference to temporary regula- tions. SUMMARY: In this issue of the Bulletin, the IRS is issuing temporary regulations (T.D. 9268) to clarify existing guidance under sections 6038 and 6038A of the In- ternal Revenue Code (Code) with respect to the information required to be furnished regarding certain related party transac- tions of certain foreign corporations and certain foreign-owned U.S. corporations. The temporary regulations also increase the amount of certain penalties, and make certain other changes, to reflect the statu- tory changes made by the Taxpayer Relief Act of 1997. The text of the temporary regulations also serves as the text of these proposed regulations. DATES: Written or electronic comments and requests for a public hearing must be received by September 19, 2006. ADDRESSES: Send submissions to: CC:PA:LPD:PR(REG–109512–05), room 5203, Internal Revenue Ser- vice, PO Box 7604, Ben Franklin Sta- tion, Washington, DC 20044. Submis- sions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG–109512–05), Courier’s Desk, In- ternal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC, or sent electronically, via the IRS Internet site at www.irs.gov/regsor via the Federal eRule- making Portal atwww.regulations.gov (IRS REG–109512–05). FOR FURTHER INFORMATION CONTACT: Concerning the proposed reg- ulations, Kate Y. Hwa, (202) 622–3840; concerning submissions of comments, Kelly Banks, (202) 622–7180 (not toll-free numbers). SUPPLEMENTARY INFORMATION: Paperwork Reduction Act The collection of information con- tained in these proposed regulations has been submitted to the Office of Manage- ment and Budget for review in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)). Comments concerning the collection of information should be sent to theOf- fice of Management and Budget, Attn: Desk Officer for the Department of the Treasury, Office of Information and Reg- ulatory Affairs, Washington, DC 20503, with copies to theInternal Revenue Ser- vice, Attn: IRS Reports Clearance Officer, SE:W:CAR:MP:T:T:SP, Washington, DC 20224. Any such comments should be submitted not later than August 21, 2006. Comments are specifically requested concerning: Whether the proposed collection of in- formation is necessary for the proper per- formance of the functions of the IRS, in- cluding whether the information will have practical utility; The accuracy of the estimated burden associated with the proposed collection of information (see below); How the quality, utility, and clarity of the information to be collected may be en- hanced; How the burden of complying with the proposed collections of information may be minimized, including through the appli- cation of automated collection techniques or other forms of information technology; and Estimates of capital or start-up costs and costs of operations, maintenance, and purchase of service to provide information. The collection of information is in §1.6038–2(f)(11). This information is re- quired by the IRS pursuant to section 6038 of the Code. The likely recordkeepers are business or other for-profit institutions. The estimated burden is as follows: Estimated total annual reporting and/or recordkeeping burden: 1250 hours. Estimated average annual burden per respondent: 15 minutes. Estimated number of respondents: 5,000. Estimated annual frequency of re- sponses: once. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number assigned by the Office of Management and Budget. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103. Background Temporary regulations in this issue of the Bulletin amend the Income Tax Regu- lations (26 CFR Part 1) to clarify the exist- ing rules under sections 6038 and 6038A of the Code with respect to the informa- tion required to be furnished regarding cer- tain related party transactions of certain foreign corporations and certain foreign- owned domestic corporations. The text of the temporary regulations also serves as the text of these proposed regulations. The preamble to the temporary regulations ex- plains the temporary regulations and these proposed regulations. Special Analyses It has been determined that this notice of proposed rulemaking is not a signifi- cant regulatory action as defined in Exec- utive Order 12866. Therefore, a regula- tory assessment is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regu- lations. Because these regulations impose no new collection of information on small July 24, 20061002006–30 I.R.B. entities, a Regulatory Flexibility Analy- sis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. Pur- suant to section 7805(f) of the Code, this notice of proposed rulemaking will be sub- mitted to the Chief Counsel for Advocacy of the Small BusinessAdministration for comment on their impact on small busi- ness. Comments and Request for Public Hearing Before these proposed regulations are adopted as final regulations, consideration will be given to any written (a signed origi- nal and eight (8) copies) or electronic com- ments that are submitted timely to the IRS. All comments will be available for public inspection and copying. A public hearing may be scheduled if requested by any per- son who timely submits comments. If a public hearing is scheduled, notice of the date, time, and place for the hearing will be published in theFederal Register. Drafting Information The principal author of these regula- tionsisKateY.Hwa,OfficeoftheAsso- ciate Chief Counsel (International). How- ever, other personnel from the IRS and Treasury Department participated in their development. ***** Proposed Amendments to the Regulations Accordingly, 26 CFR part 1 is proposed to be amended as follows: PART 1—INCOME TAXES Paragraph 1. The authority citation for part1isamendedbyaddingentriesinnu- merical order to read in part as follows: Authority: 26 U.S.C. 7805 * * * Par. 2. Section 1.6038–2 is amended to read as follows: 1. Paragraphs (f)(11), (k)(1), (k)(5) and (m) are revised. 2. Paragraph (f)(12) is added. The additions and revisions read as fol- lows: §1.6038–2 Information returns required of United States persons with respect to annual accounting periods of certain foreign corporations. ***** (f)(11) [The text of this proposed amendment is the same as the text of §1.6038–2T(f)(11) published elsewhere in this issue of the Bulletin]. (f)(12) [The text of this proposed amendment is the same as the text of §1.6038–2T(f)(12) published elsewhere in this issue of the Bulletin]. ***** (k)(1) [The text of this proposed amendment is the same as the text of §1.6038–2T(k)(1) published elsewhere in this issue of the Bulletin]. ***** (5) * * * Example 3. [The text of this proposed amendment is the same as the text of §1.6038–2T(k)(5)Example 3published elsewhere in this issue of the Bulletin]. Example 4. [The text of this proposed amendment is the same as the text of §1.6038–2T(k)(5)Example 4published elsewhere in this issue of the Bulletin]. ***** (m) [The text of this proposed amendment is the same as the text of §1.6038–2T(m) published elsewhere in this issue of the Bulletin]. Par. 3. Section 1.6038A–2 is amended by revising paragraphs (b)(8) and (h) to read as follows: §1.6038A–2 Requirement of return. ***** (b) * * * (8) [The text of this proposed amendment is the same as the text of §1.6038A–2T(b)(8) published elsewhere in this issue of the Bulletin]. ***** (h) [The text of this proposed amendment is the same as the text of §1.6038A–2T(h) published elsewhere in this issue of the Bulletin]. Mark E. Matthews, Deputy Commissioner for Services and Enforcement. (Filed by the Office of the Federal Register on June 20, 2006, 8:45 a.m., and published in the issue of the Federal Register for June 21, 2006, 71 F.R. 35592) 2006–30 I.R.B.101July 24, 2006 Definition of Terms Revenue rulings and revenue procedures (hereinafter referred to as “rulings”) that have an effect on previous rulings use the following defined terms to describe the ef- fect: Amplifieddescribes a situation where no change is being made in a prior pub- lished position, but the prior position is be- ingextendedtoapplytoavariationofthe fact situation set forth therein. Thus, if an earlier ruling held that a principle ap- plied to A, and the new ruling holds that the same principle also applies to B, the earlier ruling is amplified. (Compare withmodi- fied,below). Clarifiedis used in those instances where the language in a prior ruling is be- ing made clear because the language has caused, or may cause, some confusion. It is not used where a position in a prior ruling is being changed. Distinguisheddescribes a situation where a ruling mentions a previously pub- lished ruling and points out an essential difference between them. Modifiedis used where the substance of a previously published position is being changed. Thus, if a prior ruling held that a principle applied to A but not to B, and the new ruling holds that it applies to both A and B, the prior ruling is modified because it corrects a published position. (Compare withamplifiedandclarified, above). Obsoleteddescribes 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 rul- ings that are obsoleted because of changes in laws or regulations. A ruling may also be obsoleted because the substance has been included in regulations subsequently adopted. Revokeddescribes situations where the position in the previously published ruling is not correct and the correct position is beingstatedinanewruling. Supersededdescribes a situation where the new ruling does nothing more than re- state the substance and situation of a previ- ously published ruling (or rulings). Thus, the term is used to republish under the 1986 Code and regulations the same po- sition published under the 1939 Code and regulations. The term is also used when it is desired to republish in a single rul- ing a series of situations, names, etc., that were previously published over a period of time in separate rulings. If the new rul- ing does more than restate the substance of a prior ruling, a combination of terms is used. For example,modifiedandsu- persededdescribes a situation where the substance of a previously published ruling is being changed in part and is continued without change in part and it is desired to restate the valid portion of the previously published ruling in a new ruling that is self contained. In this case, the previously pub- lished ruling is first modified and then, as modified, is superseded. Supplementedis used in situations in which a list, such as a list of the names of countries, is published in a ruling and that list is expanded by adding further names in subsequent rulings. After the original rul- ing has been supplemented several times, a new ruling may be published that includes the list in the original ruling and the ad- ditions, and supersedes all prior rulings in the series. Suspendedis used in rare situations to show that the previous published rul- ings 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 fol lowing abbreviations in current use and for merly used will appear in material publis hedintheBulletin. A—Individual. Acq.—A cquiescence. B—Individual. BE—Beneficiary. BK—Bank . B.T.A.—Board of Tax Appeals. C—Individual. C.B.—Cu mulative Bulletin. CFR—Code of Federal Regulations. CI—City. COOP—Coo perative. Ct.D.—Court Decision. CY—County. D—Decede nt. 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—Emp loyer. ERISA—Employee Retirement Income Security Act. EX—Executor. F—Fiduc iary. FC—Foreign Country. FICA—Federal Insurance Contributions Act. FISC—Fo reign International Sales Company. FPH—Foreign Personal Holding Company. F.R.—Federal Register. FUTA—Fed eral Unemployment Tax Act. FX—Foreign corporation. G.C.M.—Chief Counsel’s Memorandum. GE—Grante e. GP—General Partner. GR—Grantor. IC—Insura nce Company. I.R.B.—Internal Revenue Bulletin. LE—Lessee. LP—Limited Partner. LR—Lessor. M—Minor. Nonacq.—No nacquiescence. O—Organization. P—Parent Corporation. PHC—Persona l Holding Company. PO—Possession of the U.S. PR—Partner. PRS—Pa rtnership. PTE—Prohibited Transaction Exemption. Pub. L.—Public Law. REIT—Re al Estate Investment Trust. Rev. Proc.—Revenue Procedure. Rev. Rul.—Revenue Ruling. S—Subsi diary. S.P.R.—Statement of Procedural Rules. Stat.—Statutes at Large. T—Target Corporation. T.C.—Tax Court. T.D.—Treasury Decision. TFE—Trans feree. TFR—Transferor. T.I.R.—Technical Information Release. TP—Taxpay er. TR—Trust. TT—Trustee. U.S.C.—Uni ted States Code. X—Corporation. Y—Corporation. Z—Corporat ion. July 24, 2006i2006–30 I.R.B. Numerical Finding List 1 Bulletins 2006–27 through 2006–30 Announcements: 2006-42, 2006-27 I.R.B.48 2006-43, 2006-27 I.R.B.48 2006-44, 2006-27 I.R.B.49 2006-46, 2006-28 I.R.B.76 2006-47, 2006-28 I.R.B.78 2006-49, 2006-29 I.R.B.89 Notices: 2006-56, 2006-28 I.R.B.58 2006-57, 2006-27 I.R.B.13 2006-58, 2006-28 I.R.B.59 2006-59, 2006-28 I.R.B.60 2006-60, 2006-29 I.R.B.82 2006-61, 2006-29 I.R.B.85 2006-62, 2006-29 I.R.B.86 2006-63, 2006-29 I.R.B.87 2006-64, 2006-29 I.R.B.88 2006-66, 2006-30 I.R.B.99 Proposed Regulations: REG-135866-02, 2006-27 I.R.B.34 REG-109512-05, 2006-30 I.R.B.100 REG-112994-06, 2006-27 I.R.B.47 REG-118775-06, 2006-28 I.R.B.73 Revenue Procedures: 2006-29, 2006-27 I.R.B.13 2006-31, 2006-27 I.R.B.32 2006-32, 2006-28 I.R.B.61 Revenue Rulings: 2006-35, 2006-28 I.R.B.50 2006-37, 2006-30 I.R.B.91 2006-38, 2006-29 I.R.B.80 Treasury Decisions: 9265, 2006-27 I.R.B.1 9266, 2006-28 I.R.B.52 9268, 2006-30 I.R.B.94 9269, 2006-30 I.R.B.92 1 A cumulative list of all revenue rulings, revenueprocedures, Treasury decisions, etc., publishedin Internal Revenue Bulletins 2006–1 through 2006–26 is in Internal Revenue Bulletin 2006–26, dated June 26, 2006. 2006–30 I.R.B.iiJuly 24, 2006 Finding List of Current Actions on Previously Published Items 1 Bulletins 2006–27 through 2006–30 Notices: 2006-20 Supplemented and modified by Notice 2006-56, 2006-28 I.R.B.58 Proposed Regulations: REG-134317-05 Corrected by Ann. 2006-47, 2006-28 I.R.B.78 Revenue Procedures: 2005-41 Superseded by Rev. Proc. 2006-29, 2006-27 I.R.B.13 Treasury Decisions: 9254 Corrected by Ann. 2006-44, 2006-27 I.R.B.49 9258 Corrected by Ann. 2006-46, 2006-28 I.R.B.76 9264 Corrected by Ann. 2006-46, 2006-28 I.R.B.76 1 A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2006–1 through 2006–26 is in Internal Revenue Bulletin 2006–26, dated June 26, 2006. July 24, 2006iii2006–30 I.R.B. 2006–30 I.R.B.July 24, 2006 July 24, 20062006–30 I.R.B. INTERNAL REVENUE BULLETIN The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue Bulletin is sold on a yearly subscription basis by the Superintendent of Documents. Current subscribers are notified by the Superin- tendent of Documents when their subscriptions must be renewed. CUMULATIVE BULLETINS The contents of this weekly Bulletin are consolidated semiannually into a permanent, indexed, Cumulative Bulletin. These are sold on a single copy basis andare notincluded as part of the subscription to the Internal Revenue Bulletin. Subscribers to the weekly Bulletin are notified when copies of the Cumulative Bulletin are available. Certain issues of Cumulative Bulletins are out of print and are not available. Persons desiring available Cumulative Bulletins, which are listed on the reverse, may purchase them from the Superintendent of Documents. ACCESS THE INTERNAL REVENUE BULLETIN ON THE INTERNET You may view the Internal Revenue Bulletin on the Internet at www.irs.gov. Under information for: select Businesses. Under related topics, select More Topics. Then select Internal Revenue Bulletins. INTERNAL REVENUE BULLETINS ON CD-ROM Internal Revenue Bulletins are available annually as part ofPublication 1796 (Tax Products CD-ROM). The CD-ROM can be purchased from National Technical Information Service (NTIS) on the Internet at www.irs.gov/cdorders (discount for online orders) or by calling 1-877-233-6767. The first release is available in mid-December and the final release is available in late January. HOW TO ORDER Check the publications and/or subscription(s) desired on the reverse, complete the order blank, enclose the proper remittance, detach entire page, and mail to the Superintendent of Documents, P.O. Box 371954, Pittsburgh PA, 15250–7954. Please allow two to six weeks, plus mailing time, for delivery. WE WELCOME COMMENTS ABOUT THE INTERNAL REVENUE BUL LETIN If you have c omments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it, we would be p leased to hear from you. You can e-mail us your suggestions or comments through the IRS Internet Home Page (www.irs.g ov) or write to the IRS Bulletin Unit, SE:W:CAR:MP:T:T:SP, Washington, DC 20224 Internal Revenue Service W ashington,DC20224 Official B usiness Penalty for Private Use, $300
Continue your research in ChatGPT or Claude
Connect Omnilex to search the legal corpus from your AI assistant.