Internal Revenue Bulletin 2008-30 (PDF rendition): IRS Revenue Rulings

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

Bulletin No. 200
8-30
July 28, 2008
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. 2008–36, page 165.
Low–income housing credit; satisfactory bond; “bond
factor” amounts for the period January through Septem-
ber 2008.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 2008.
Rev. Rul. 2008–41, page 170.
Charitable remainder trust (CRT).This ruling provides tax-
payers with guidelines on dividing a charitable remainder trust
into two or more separate and equal CRTs without violating the
provisions of section 664 of the Code. It also provides that,
if the division of the CRT is made in accordance with the sit-
uations described in the ruling, (i) the division is not a sale,
exchange, or other disposition producing gain or loss, the ba-
sis under section 1015 of each separate trust’s share of each
asset is the same share of the basis of that asset in the hands
of the trust immediately before the division of the trust, and, un-
der section 1223, each separate trust’s holding period for an
asset transferred to it by the original trust includes the holding
period of the asset as held by the original trust immediately be-
fore the division, (ii) the division of the CRT does not terminate
under section 507(a)(1) the CRT’s status as a trust described
in, and subject to, the private foundation provisions of section
4947(a)(2), or result in the imposition of an excise tax under
section 507(c), (iii) the division of the CRT does not constitute
an act of self-dealing under section 4941, and (iv) the division
of the CRT does not constitute a taxable expenditure under sec-
tion 4945.
Rev. Rul. 2008–42, page 175.
S corporation; life insurance contract; accumulated ad-
justments account (AAA).This ruling, under section 1368 of
the Code, outlines the effects of premiums paid by an S cor-
poration on an employer-owned life insurance contract and the
benefits received by reason of death of the insured on its AAA.
Notice 2008–60, page 178.
This notice provides guidance under section 45 of the Code
for the credit for electricity produced from certain renewable
resources. Notice 2006–88 modified and superseded.
Notice 2008–61, page 180.
This notice provides for the suspension of certain requirements
under section 42 of the Code for low-income housing credit
projects in the United States in order to provide emergency
housing relief needed as a result of the devastation caused by
severe storms, tornadoes, and flooding in Wisconsin beginning
on June 5, 2008.
Rev. Proc. 2008–43, page 186.
This procedure announces that the Service generally will view
a rolling average method that is used to value inventories for
financial accounting purposes as clearly reflecting income for
federal income tax purposes. The procedure provides two safe
harbors under which a taxpayer’s rolling average method will
be deemed to clearly reflect income. Rev. Ruls. 71–234 and
77–480 modified. Rev. Proc. 2002–9 modified and amplified.
Rev. Proc. 2008–45, page 224.
Sample inter vivos nongrantor and grantor charitable
lead unitrusts (CLUTs) forms.This procedure contains sam-
ple forms for inter vivos nongrantor and grantor charitable lead
unitrusts. The procedure also contains annotations to the sam-
ple trusts and alternate provisions that may be integrated into
thesampletrusts.
(Continued on the next page)
Announcements of Disbarments and Suspensions begin on page 244.
Fi
nding Lists begin on page ii.
Index for July begins on page iv.

Rev. Proc. 2008–46, page 238.
Sample testamentary charitable lead unitrust (CLUT)
form.This procedure contains a sample form, annotations,
and alternate provisions for a testamentary charitable lead
unitrust.
EMPLOYEE PLANS
Rev. Rul. 2008–40, page 166.
Transfer of amounts; nonqualified foreign trust; transi-
tion relief.This ruling provides that the transfer of amounts
from a trust under a plan qualified under section 401(a) of the
Code to a nonqualified foreign trust is treated as a distribution
from the transferor plan. The ruling also holds that a transfer of
assets and liabilities from a plan qualified under section 401(a)
of the Code to a plan that satisfies section 1165 of the Puerto
Rico Code is also treated as a distribution from the transferor
plan. Rev. Rul. 67–213 amplified.
Notice 2008–65, page 182.
Weighted average interest rate update; corporate bond
indices; 30-year Treasury securities; segment rates.
This notice contains updates for the corporate bond weighted
average interest rate for plan years beginning in July 2008;
the 24-month average segment rates; the funding transitional
segment rates applicable for July 2008; and the minimum
present value transitional rates for June 2008.
EXEMPT ORGANIZATIONS
Rev. Rul. 2008–41, page 170.
Charitable remainder trust (CRT).This ruling provides tax-
payers with guidelines on dividing a charitable remainder trust
into two or more separate and equal CRTs without violating the
provisions of section 664 of the Code. It also provides that,
if the division of the CRT is made in accordance with the sit-
uations described in the ruling, (i) the division is not a sale,
exchange, or other disposition producing gain or loss, the ba-
sis under section 1015 of each separate trust’s share of each
asset is the same share of the basis of that asset in the hands
of the trust immediately before the division of the trust, and, un-
der section 1223, each separate trust’s holding period for an
asset transferred to it by the original trust includes the holding
period of the asset as held by the original trust immediately be-
fore the division, (ii) the division of the CRT does not terminate
under section 507(a)(1) the CRT’s status as a trust described
in, and subject to, the private foundation provisions of section
4947(a)(2), or result in the imposition of an excise tax under
section 507(c), (iii) the division of the CRT does not constitute
an act of self-dealing under section 4941, and (iv) the division
of the CRT does not constitute a taxable expenditure under sec-
tion 4945.
ESTATE TAX
Rev. Proc. 2008–45, page 224.
Sample inter vivos nongrantor and grantor charitable
lead unitrusts (CLUTs) forms.This procedure contains sam-
ple forms for inter vivos nongrantor and grantor charitable lead
unitrusts. The procedure also contains annotations to the sam-
ple trusts and alternate provisions that may be integrated into
thesampletrusts.
Rev. Proc. 2008–46, page 238.
Sample testamentary charitable lead unitrust (CLUT)
form.This procedure contains a sample form, annotations,
and alternate provisions for a testamentary charitable lead
unitrust.
GIFT TAX
Rev. Proc. 2008–45, page 224.
Sample inter vivos nongrantor and grantor charitable
lead unitrusts (CLUTs) forms.This procedure contains sam-
ple forms for inter vivos nongrantor and grantor charitable lead
unitrusts. The procedure also contains annotations to the sam-
ple trusts and alternate provisions that may be integrated into
thesampletrusts.
EXCISE TAX
Rev. Rul. 2008–41, page 170.
Charitable remainder trust (CRT).This ruling provides tax-
payers with guidelines on dividing a charitable remainder trust
into two or more separate and equal CRTs without violating the
provisions of section 664 of the Code. It also provides that,
if the division of the CRT is made in accordance with the sit-
uations described in the ruling, (i) the division is not a sale,
exchange, or other disposition producing gain or loss, the ba-
sis under section 1015 of each separate trust’s share of each
asset is the same share of the basis of that asset in the hands
of the trust immediately before the division of the trust, and, un-
der section 1223, each separate trust’s holding period for an
asset transferred to it by the original trust includes the holding
period of the asset as held by the original trust immediately be-
fore the division, (ii) the division of the CRT does not terminate
under section 507(a)(1) the CRT’s status as a trust described
in, and subject to, the private foundation provisions of section
4947(a)(2), or result in the imposition of an excise tax under
section 507(c), (iii) the division of the CRT does not constitute
an act of self-dealing under section 4941, and (iv) the division
oftheCRTdoesnotconstituteataxableexpenditureundersec-
tion 4945.
(Continued on the next page)
July 28, 20082008–30 I.R.B.

ADMINISTRATIVE
Rev. Proc. 2008–44, page 187.
This procedure provides specifications for filing Form 1042-S,
Foreign Person’s U.S. Source Income Subject to Withholding,
electronically. The procedure will be reproduced as the cur-
rent revision of Publication 1187. Rev. Proc. 2006–34 super-
seded.
2008–30 I.R.B.July 28, 2008

The IRS Mission
Provide Americ
a’s taxpayers top quality service by helping them
understand an
d 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 Secre-
tary (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 28, 20082008–30 I.R.B.

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 42.—L
ow-Income
Housing Credi
t
Low–income housing credit; satisfac-
tory bond; “bond factor” amounts for
the period January through September
2008.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 2008.
Rev. Rul. 2008–36
In Rev. Rul.
90–60, 1990–2 C.B.
3, the Inte
rnal Revenue Service provided
guidance to ta
xpayers concerning the gen-
eral methodol
ogy used by the Treasury
Department in
computing the bond factor
amounts used
in calculating the amount of
bond conside
red satisfactory by the Secre-
tary under § 4
2(j)(6) of the Internal Rev-
enue Code. It
further announced that the
Secretary w
ould publish in the Internal
Revenue Bul
letin a table of bond factor
amounts for
dispositions occurring during
each calend
ar month.
Rev. Proc. 9
9–11, 1999–1 C.B. 275,
establishe
d a collateral program as an al-
ternative
to providing a surety bond for
taxpayers
to avoid or defer recapture of
the low-in
come housing tax credits under
§ 42(j)(6). Un
der this program, taxpayers
may establish
a Treasury Direct Account
and pledge cer
tain United States Treasury
securities t
o the Internal Revenue Service
as security.
This revenue
ruling provides in Table
1 the bond fac
tor amounts for calculat-
ing the amoun
t of bond considered satis-
factory unde
r § 42(j)(6) or the amount of
United Stat
es Treasury securities to pledge
in a Treasur
y Direct Account under Rev.
Proc. 99–11
for dispositions of qualified
low income b
uildings or interests therein
during the
period January through Septem-
ber 2008.
Table 1
Rev. Rul. 2008–36
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
1994
1995
199619971998199920002001200220032004
Jan ’0816.4130.7043.23
54.19
63.81
65.4267.35
69.6372.1474.7977.33
Feb ’0816.4130.7043.23
54.19
63.81
65.27
67.1969.4671.96
74.59
77.11
Mar ’0816.4130.7043.23
54.19
63.81
65.12
67.0469.2971.7874.3976.89
Apr ’08
15.52
29.0440.88
51.2460.35
60.8662.0263.47
65.09
66.7968.34
May ’08
15.52
29.0440.88
51.2460.35
60.7361.8963.33
64.95
66.6368.17
Jun ’08
15.52
29.0440.88
51.2460.35
60.6061.7663.1964.8066.4768.01
Jul ’0814.71
27.53
38.76
48.5857.2156.7857.3058.0458.9359.85
60.63
Aug ’0814.71
27.53
38.76
48.5857.2156.6757.1857.9358.8159.7360.50
Sep ’0814.71
27.53
38.76
48.5857.2156.5657.0757.8258.6959.60
60.37
2008–30 I.R.B.165July 28, 2008

Table 1 (cont’d)
Rev. Rul. 2008–36
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
2005
200620072008
Jan ’08
79.5681.5783.59
83.98
Feb ’0879.3181.3083.2783.98
Mar ’0879.07
81.05
82.9983.98
Apr ’08
69.59
70.6471.69
72.55
May ’0869.4170.47
71.5372.55
Jun ’08
69.25
70.3171.39
72.55
Jul ’0861.1461.4961.9062.68
Aug ’0861.0161.3861.8262.68
Sep ’0860.8961.2761.7462.68
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; Rev. Rul. 2005–67,
2005–2 C.B. 771; Rev. Rul. 2006–51,
2006–2 C.B. 632; and Rev. Rul. 2007–62,
2007–41 I.R.B. 767.
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 45.—Electricity
Produced From Certain
Renewable Resources, etc.
A notice, modifying Notice 2006–88, provides
guidance under section 45 of the Internal Revenue
Code for electricity produced from certain renewable
resources. See Notice 2008-60, page 178.
Section 170.—Charitable,
etc., Contributions and Gifts
26 CFR 1.170A–6: Charitable contribution in trust.
Sample inter vivos charitable lead unitrusts.
This revenue procedure contains sample declarations
of trust for nongrantor and grantor charitable lead
unitrusts. This revenue procedure also contains an-
notations to the sample trusts and alternate provisions
that may be integrated into the sample trusts. See
Rev. Proc. 2008-45, page 224.
Section 401.—Qualified
Pension, P
rofit-Sharing,
and Stock Bonus Plans
(Also, §§ 402, 404A, 410, 414, 933, 7805; 26 CFR
1.410(b)–6, 1.414(l)–1, 1.933–1, 301.7805–1.)
Transfer of amounts; nonqualified
foreign trust; transition relief.This rul-
ing provides that the transfer of amounts
from a trust under a plan qualified under
section 401(a) of the Code to a nonquali-
fied foreign trust is treated as a distribution
from the transferor plan. The ruling also
holds that a transfer of assets and liabilities
from a plan qualified under section 401(a)
of the Code to a plan that satisfies sec-
tion 1165 of the Puerto Rico Code is also
treated as a distribution from the transferor
plan. Rev. Rul. 67–213 amplified.
Rev. Rul. 2008–40
ISSUES
1. Whether a transfer of amounts from a
trust under a plan qualified under § 401(a)
of the Internal Revenue Code
1
to a non-
qualified foreign trust is treated as a dis-
tribution.
2. Whether this result is different if the
transferee plan satisfies the requirements
of section 1165(a) of the Puerto Rico In-
ternal Revenue Code and is described in
section 1022(i)(1) of the Employee Retire-
ment Income Security Act of 1974.
FACTS
Situation 1. An employer maintains
two retirement plans, Plan A and Plan B,
each of which is funded through a trust.
Plan A is a qualified plan under § 401(a).
Plan A covers employees of the employer
who perform all of their services within
the United States and employees who per-
form all of their services within Country X.
The Plan A trust is created and organized
within the United States, and is classified
as a U.S. person under § 7701(a)(30)(E).
Plan B covers only Country X employees
who perform all of their services within
Country X, and is maintained for the exclu-
sive purpose of providing retirement ben-
efits to those employees. The Plan B trust
is created and organized under the laws of
1
For purposes of this revenue ruling, unless otherwise indicated, all section references are to the U.S. Internal Revenue Code of 1986, as amended.
July 28, 20081662008–30 I.R.B.

Country X, and is classified as a foreign
trust under § 7701(a)(31)(B). Plan B is not
a qualified plan under § 401(a) (and would
not satisfy the qualification requirements
of § 401(a) even if the Plan B trust were
a domestic trust). Plans A and B are each
amended to provide for the assets and li-
abilities held in the Plan A trust on be-
half of the Country X employees who per-
form all of their services within Country X
to be transferred from the Plan A trust to
the Plan B trust. There is no income tax
treaty in force between the United States
and Country X.
Situation 2. An employer maintains
two retirement plans, Plan C and Plan D,
each of which is funded through a trust.
Plan C is a qualified plan under § 401(a) of
the Internal Revenue Code, and also sat-
isfies the requirements of section 1165(a)
of the Puerto Rico Internal Revenue Code
(PuertoRicoCode). PlanCcoversboth
employees of the employer who perform
all of their services within the United
States and employees who arebona fide
residents of Puerto Rico who perform
all of their services within Puerto Rico.
The Plan C trust is created and organized
within the United States, and is classified
as a U.S. person under § 7701(a)(30)(E).
Plan D is a plan described in section
1022(i)(1) of the Employee Retirement
Income Security Act of 1974 (ERISA)
that satisfies the requirements of section
1165(a) of the Puerto Rico Code, but does
not satisfy the requirements of § 401(a)
of the Internal Revenue Code (and would
not satisfy § 401(a) even if the Plan D
trust were a domestic trust). Plan D cov-
ers onlybona fideresidents of Puerto
Rico who perform all of their services for
the employer within Puerto Rico, and is
maintained for the exclusive purpose of
providing retirement benefits to those em-
ployees. The Plan D trust is created and
organized under the laws of Puerto Rico,
and is classified as a foreign trust under
§ 7701(a)(31)(B). Plans C and D are each
amended to provide for the assets and li-
abilities held in the Plan C trust on behalf
ofbona fideresidents of Puerto Rico who
perform all of their services within Puerto
Rico to be transferred from the Plan C
trust to the Plan D trust.
LAW
Section 401(a) provides that a trust cre-
ated or organized in the United States and
forming a part of a stock bonus, pension,
or profit-sharing plan that satisfies the re-
quirements set out in § 401(a) constitutes
a qualified trust. Section 501(a) provides
that a trust described in § 401(a) is exempt
from tax under Subtitle A.
Section 401(a)(7) provides that a trust
is not a qualified trust unless the plan of
which it is part satisfies the requirements
of § 411 (relating to minimum vesting
standards). Section 411(d)(6)(A) pro-
vides that a plan is not a qualified plan
if an employee’s accrued benefit is de-
creased by any amendment of the plan,
and § 1.411(d)–3(a)(1) of the Income
Tax Regulations provides that a plan is
not a qualified plan (and a trust form-
ing a part of such plan is not a qualified
trust) if a plan amendment decreases the
accrued benefit of any plan participant.
For this purpose, a plan amendment in-
cludes any changes to the terms of a plan.
Section 1.411(d)–3(a)(2)(i) provides that,
for purposes of determining whether or
not any participant’s accrued benefit is
decreased, amendments to all the pro-
visions of a plan affecting, directly or
indirectly, the computation of accrued
benefits are taken into account. Section
1.411(d)–4, Q&A–3(a)(1), provides that
§ 411(d)(6) protected benefits may not
be eliminated by reason of a transfer or
any transaction amending or having the
effect of amending a plan to transfer ben-
efits. Section 411(d)(6)(D) and paragraph
(b) of § 1.411(d)–4, Q&A–3, provide an
exception for elective transfers between
qualified defined contribution plans, pro-
vided certain requirements are met.
Under § 401(a)(11)(B)(iii), the quali-
fied joint and survivor annuity (QJSA) re-
quirements of § 417 do not apply to cer-
tain defined contribution plans. Under
§ 401(a)(11)(B)(iii)(III), in order for a de-
fined contribution plan to not be subject to
the QJSA requirements for a participant,
the plan cannot be a direct or indirect trans-
feree of a plan that is subject to the QJSA
requirements with respect to assets and li-
abilities that were transferred with respect
to the participant.
Section 401(a)(12) provides that a trust
is not qualified under § 401(a) unless the
plan of which such trust is a part provides
that, in the case of any merger or con-
solidation with, or transfer of assets or
liabilities to, any other plan, each partic-
ipantintheplanwould(iftheplanthen
terminated) receive a benefit immediately
after the merger, consolidation, or trans-
fer which is equal to or greater than the
benefit he or she would have been entitled
to receive immediately before the merger,
consolidation, or transfer (if the plan had
then terminated). Section 414(l) requires
a plan to satisfy this minimum benefit re-
quirement and also provides rules for how
plan assets must be allocated. Regulations
under § 414(l) treat a transfer of assets and
liabilities from one plan to another as a
combination of events that is fundamen-
tally the same as a spinoff of a plan from
the transferor plan followed by a merger of
the spun off plan with the transferee plan.
See §§ 1.414(l)–1(o), 1.414(l)–1(b)(4),
and 1.414(l)–1(b)(2). Thus, as is the case
for a plan that results from the merger of
two plans, a transferee plan is a continu-
ation of the transferor plan with regard to
transferred assets and liabilities.
Section 402(a) provides that a partici-
pant’s interest in a trust forming part of a
qualified plan is includible in gross income
in the taxable year in which it is distributed
from the trust.
Section 402(c) describes rules applica-
ble to rollovers from exempt trusts. An eli-
gible rollover distribution is excluded from
income if, among other requirements, the
distribution is rolled over to an eligible re-
tirement plan. Section 402(c)(8)(B) de-
fines “eligible retirement plan” to mean (i)
an individual retirement account described
in § 408(a); (ii) an individual retirement
annuity described in § 408(b); (iii) a qual-
ified trust,i.e., an employees’ trust de-
scribed in § 401(a) that is exempt from tax
under § 501(a); (iv) an annuity plan de-
scribed in § 403(a); (v) an eligible deferred
compensation plan described in § 457(b)
whichismaintainedbyaneligibleem-
ployer described in § 457(e)(1)(A); or (vi)
an annuity contract described in § 403(b).
Section 402(d) provides that, for pur-
poses of subsections (a), (b), and (c) of
§ 402, a stock bonus, pension, or profit-
sharing trust that would qualify for exemp-
tion from tax under § 501(a) except for
the fact that it is a trust created or orga-
nized outside the United States is treated
as if it were a trust exempt from tax under
§ 501(a).
2008–30 I.R.B.167July 28, 2008

Section 404(a)(4)provides that, if a
stock bonus, pension, or profit-sharing
trust would qualify for exemption under
§ 501(a) except for the fact that it is a trust
created or organized outside the United
States, contributions to such a trust by an
employer that is a resident, or corporation,
or other entity of the United States, shall
be deductible under the preceding para-
graphs of § 404(a).
Under § 404A(e) and (f), a qualified
funded plan is a written plan of an em-
ployer for deferring the receipt of compen-
sation if: the plan is for the exclusive ben-
efit of the employer’s employees or their
beneficiaries; 90 percent or more of the
amounts taken into account for the taxable
year under the plan areattributable to ser-
vices performed by nonresident aliens and
the compensation for which is not subject
to tax under Chapter 1 of the Code; the em-
ployer elects to have section 404A apply to
the plan; and the plan is not a funded re-
serve plan.
Section 933(1) generally provides that,
in the case of an individual who is a
bona fideresident of Puerto Rico during
the entire taxable year, income derived
from sources within Puerto Rico (except
amounts received for services performed
as an employee of the United States or any
agency thereof) is excluded from gross
income and is exempt from tax under sub-
title A of the Internal Revenue Code of
1986, as amended. See § 937(a) and the
regulations thereunder for rules for deter-
mining whether an individual is abona
fideresident of any of the possessions of
the United States, including Puerto Rico.
Section 937(b)(1) generally provides
that rules similar to the rules for deter-
mining whether income is income from
sources within the United States apply for
purposes of determining whether income
is from sources within a possession.
For purposes of determining the source
of pension payments from a qualified
trust under § 401(a), the portion of each
payment that is attributable to employer
contributions with respect to services ren-
dered within the United States is treated
as income from sources within the United
States and the portion that is attributable
to employer contributions with respect to
services rendered outside the United States
is treated as income from sources without
the United States. For rules regarding
the treatment of earnings and accretions
with respect to contributions of either the
employer or the employee, see Rev. Rul.
79–388, 1979–2 C.B. 270, and Rev. Proc.
2004–37, 2004–1 C.B. 1099. See also
Clayton v. United States,33Fed.Cl.628
(1995),aff’d without published opinion,
91 F.3d 170 (Fed. Cir.),cert. denied,519
U.S. 1040 (1996).
Section 1022(i)(1) of ERISA provides
that, for purposes of § 501(a), any trust
forming part of a pension, profit-sharing,
or stock bonus plan all the participants
of which are residents of Puerto Rico is
treated as an organization described in
§ 401(a), and therefore generally exempt
from income taxation, if the trust both
forms part of a pension, profit-sharing,
or stock bonus plan and is exempt from
income tax under the laws of Puerto Rico.
For purposes of section 1022(i) of ERISA,
a resident of Puerto Rico is either abona
fideresident of Puerto Rico or a person
who performs labor or services primarily
within Puerto Rico, regardless of resi-
dence for other purposes, and a participant
is a current employee who is not excluded
under the eligibility provisions of the plan.
Section 1.501(a)–1(e). Section 1022(i)(1)
of ERISA does not extend qualified status
under § 401(a) to a plan, favorable tax
treatment under § 402(a) for distributions
to participants, or favorable treatment un-
der § 404(a) for employer contributions.
Section 1022(i)(2)(A) of ERISA pro-
vides that if the administrator of a pension,
profit-sharing, or stock bonus plan that is
created or organized in Puerto Rico elects,
at such time and in such manner as the
Secretary of the Treasury may require, to
have the provisions of, and amendments
made by, Title II of ERISA apply, then, for
plan years beginning after the date of elec-
tion, any trust forming a part of the plan
is treated as a trust created or organized in
the United States for purposes of § 401(a)
of the Internal Revenue Code. Section
1.401(a)–50 provides that plans created or
organized in Puerto Rico whose adminis-
trators have made theelection referred to
in section 1022(i)(2) of ERISA are to be
treated as trusts created or organized in
the United States for purposes of § 401(a).
Thus, in contrast to a plan under section
1022(i)(1) of ERISA, a plan for which an
election under section 1022(i)(2) has been
made is treated as a qualified plan for pur-
poses of §§ 401(a), 402(a), and 404(a),
even though the trustis created and orga-
nized in Puerto Rico and is classified as a
foreign trust under § 7701(a)(31)(B).
Under the Puerto Rico Code, any retire-
ment plan that covers Puerto Rican em-
ployees must satisfy the requirements of
section 1165(a) of the Puerto Rico Code.
Section 1165(a) of the Puerto Rico Code
contains rules similar to the qualification
requirements of § 401(a). However, there
are many significant differences between
the two sets of requirements, such as dif-
ferent definitions of a highly compensated
employee, so that there are circumstances
under which a plan sponsor may not be
able to design a retirement plan that is as-
suredofbeingabletosatisfybothsetsof
requirements.
Revenue Ruling 67–213, 1967–2 C.B.
149, holds that, where the interests of
participants are transferred from a trust
forming part of one qualified plan to a trust
forming part of another qualified plan,
no amounts are considered distributed or
made available to the participants by rea-
son of the transfer.
Revenue Ruling 94–76, 1994–2 C.B.
46, describes a transfer of participant ac-
counts from a § 401(a) qualified money
purchase pension plan to a § 401(a) quali-
fied profit-sharing plan that permitted dis-
tribution upon events that would not have
been permitted under a qualified pension
plan. The revenue ruling notes that, under
the regulations issued under § 414(l), a
transfer is the same as a merger of as-
sets and liabilities of a qualified money
purchase pension plan with the assets
and liabilities of a qualified profit-shar-
ing plan. Accordingly, the revenue ruling
holds that the transfer does not divest the
assets and liabilities of the money pur-
chase pension plan of their attributes as
pension plan assets and liabilities and that
the transferee plan is disqualified if the
transferred amounts fail to remain subject
to the restrictions on distributions applica-
ble to a qualified money purchase pension
plan.
ANALYSIS
A transfer of assets and liabilities from
one plan to another that constitutes a con-
tinuation of the transferor plan with re-
gard to the transferred assets and liabilities
is not a distribution of benefits. A non-
qualified plan cannot be a continuation of
a qualified plan. Accordingly, the hold-
July 28, 20081682008–30 I.R.B.

ing described in Rev. Rul. 67–213 for a
transfer from one qualified plan to another
does not apply to a transfer from a qual-
ified plan to a nonqualified plan. Under
the facts in this revenue ruling (including
the fact that the nonqualified plan is main-
tained for the exclusive purpose of provid-
ing benefits to participants or beneficia-
ries), the transfer is a distribution of the
participant’s or beneficiary’s beneficial in-
terest in the transferor plan. Any such dis-
tribution would result in disqualification of
the transferor plan if the distribution failed
to satisfy the applicable qualification re-
quirements (e.g., if any participant was not
eligible for a distribution or if the transfer
impermissibly eliminated rights protected
under § 411(d)(6)).
Section 402(c)(8) lists the types of ar-
rangements that constitute eligible retire-
ment plans for purposes of excluding el-
igible rollover distributions from income
under § 402(c), which does not include
nonqualified foreign trusts. Section 402(d)
provides that a nonqualified foreign trust
is nonetheless treatedas qualified under
§ 501(a) for purposes of § 402(c)(8) if
it satisfies all of the qualification require-
ments of § 401(a) other than having a U.S.
trust. Accordingly, a distribution to a non-
qualified foreign trust is excluded from in-
come under § 402(c) only if it is rolled over
to a trust described in § 402(d).
Under the facts of Situation 1, the trans-
fer of the assets and liabilities of the Coun-
try X employees from the Plan A trust to
the Plan B trust is treated as a distribu-
tion from Plan A. In the case of a Plan
B participant or beneficiary who is a non-
resident alien, the portion of the distri-
bution sourced to the United States (i.e.,
the earnings and accretions) is subject to
30-percent withholding under §§ 871(a)
and 1441(a) unless the distribution is ex-
empt under § 871(f) (relating to annuities
from plans under which at least 90 percent
of the employees are citizens or residents
of the United States). In the case of a par-
ticipant or beneficiary who is a resident
alien (e.g., a green-card holder) or a U.S.
citizen, the distribution is includible in the
gross income of the participant or benefi-
ciary to the extent applicable under §§ 402
and72(i.e., the distribution is includible in
the gross income of the participant except
to the extent it consists of investment in the
contract).
Under the facts of Situation 2, the trans-
fer of assets and liabilities of the Puerto
Rican employees to the Plan D trust is
treated as a distribution from the Plan C
trust. If the distribution fails to satisfy
the applicable qualification requirements,
the distribution will result in disqualifi-
cation of the transferor plan and is gen-
erally includible in the gross income of
the participant or beneficiary to the ex-
tent applicable under §§ 402 and 72. In
the case of a Plan D participant who is a
bona fideresident of Puerto Rico (within
the meaning of § 937(a)) who has per-
formed all of his or her services for the
employer in Puerto Rico, the source of
the distribution for purposes of § 933 is
based on the source of plan contributions
and the source of earnings and accretions
with respect to plan contributions. Ac-
cordingly, in Situation 2, with respect to
the distribution from Plan C that results
from the transfer, the portion of the distri-
bution that is attributable to employer con-
tributions to the plan is treated as income
from sources within Puerto Rico, and the
portion that represents earnings and accre-
tions with respect to contributions of either
the employer or the employee is treated
as income from sources within the United
States. Subsequent distributions to the em-
ployee from Plan D that are attributable to
contributions made by the employer, along
with post-transferearnings and accretions
with respect to employer or employee con-
tributions, will be treated entirely as in-
come from sources within Puerto Rico for
purposes of § 933 provided that the Plan
D trust remains a Puerto Rico trust and
all of the employee’s subsequent services
covered by Plan D are performed within
Puerto Rico.
By contrast, a transfer from a qualified
plan to a plan that has made an election
under section 1022(i)(2) of ERISA is not
treated as a distribution from the transferor
plan because a plan that has made an elec-
tion under section 1022(i)(2) of ERISA is
treated as a qualified plan for purposes of
§ 401(a). This conclusion only applies
if the transfer is not part of a series of
transfers or amendments under which as-
sets and liabilities are subsequently trans-
ferred to a nonqualified plan.
For purposes of this revenue ruling, a
transfer includes a transaction that is struc-
tured as a merger or consolidation.
HOLDINGS
1. A transfer of amounts from a trust
under a plan qualified under § 401(a) to
a nonqualified foreign trust is treated as a
distribution from the transferor plan.
2. A transfer of assets and liabilities
from a qualified plan to a plan that satisfies
section 1165 of the Puerto Rico Code is
also treated as a distribution from the trans-
feror plan, even if the plan is described in
section 1022(i)(1) of ERISA.
TRANSITION RELIEF
1.Transfers to certain foreign plans
before October 1, 2008.With regard to
a transfer from a qualified plan to a plan
that would be a qualified funded plan un-
der § 404A(f)(1) if the employer were to
elect to have § 404A apply to the plan, the
holdings in this revenue ruling are not ef-
fectiveforatransfermadebeforeOctober
1, 2008.
2.Transfers to plans under section
1022(i)(1) of ERISA.With regard to a
transfer from a qualified plan to a plan
described in section 1022(i)(1) of ERISA
(“section 1022(i)(1) transferee plan”) that
would satisfy the requirements of § 414(l)
but for the fact that the transferee trust is
not a qualified trust within the meaning
of § 401(a), the holdings in this revenue
ruling are not effective for the transfer if
the date of transfer is before January 1,
2011. In the case of a transfer to a section
1022(i)(1) plan with respect to which the
holdings in this revenue ruling are not
effective under the preceding sentence,
the transfer is not treated as a distribution
from the transferor plan and the transfer
will not be treated as causing the transferor
plan to fail to satisfy the requirements of
§ 401(a) solely on account of the holdings
in this revenue ruling.
3.Applicationof§933todistribu-
tions from section 1022(i)(1) transferee
plans. For purposes of § 933, the por-
tion of each distribution from a section
1022(i)(1) transferee plan that is attribut-
able to amounts that were transferred from
a qualified plan before January 1, 2011,
will be treated as income from sources
within Puerto Rico.
4.Application of section 410(b) to
U.S. plans of employers with excluded
Puerto Rico employees.(a)Background.
Section 410(b) requires the sponsor of a
2008–30 I.R.B.169July 28, 2008

qualified plan to include all employees
in testing coverage regardless of whether
the employees benefit under the plan.
Section 410(b)(3) provides certain excep-
tions to this coverage requirement, such
as § 410(b)(3)(C) which permits the ex-
clusion of nonresident aliens who receive
no U.S.-sourced earned income from the
employer. However, employees in pos-
sessions of the United States, such as
Puerto Rico, are not excluded from cover-
age testing under § 410(b)(3)(C) because
they generally are not nonresident aliens.
Section 410(b) also precludes the aggre-
gation of a nonqualified plan, such as a
plan qualified only under the Puerto Rico
Code, with a qualified plan for purposes
of testing coverage.
(b)Relief.In accordance with
§ 7805(b), employees participating under
a section 1022(i)(1) transferee plan may
be treated as excludable employees for
purposes of applying § 410(b) with re-
spect to the transferor plan for plan years
beginning prior to January 1, 2011. This
relief is only available if either: (1) the
U.S. plan would satisfy the requirements
of § 410(b) if the U.S. plan and the section
1022(i)(1) transfereeplan were aggregated
for testing purposes, and the U.S. plan by
itself would satisfy the average deferral
percentage test of § 401(k)(3) (disregard-
ing subparagraph § 401(k)(3)(A)(i)) and
the average contribution percentage test of
§ 401(m), if applicable; or (2) in the case
of a defined contribution plan that pro-
vides for contributions other than elective
contributions (as defined in §1.401(k)–6),
for employees benefiting under the sec-
tion 1022(i)(1) transferee plan, the rate of
such contributions following the date of
the transfer is not reduced from the rate
of such contributions under the transferor
plan prior to the date of transfer.
EFFECT ON OTHER GUIDANCE
Rev. Rul. 67–213 is amplified.
DRAFTING INFORMATION
The principal author of this revenue
ruling is Diane S. Bloom. For fur-
ther information regarding this revenue
ruling, please contact Ms. Bloom at
RetirementPlanQuestions@irs.gov;for
information regarding the sourcing of
distributions under this revenue ruling,
please contact Quyen P. Huynh at (202)
622–3880 (not a toll-free number).
Section 402.—Taxability of
Beneficiary o
fEmployees’
Trust
Whether, in the instance of participating in a sec-
tion 1022(i)(1) transferee plan, transferred amounts
will be treated as a distribution. See Rev. Rul. 2008-
40, page 166.
Section 404A.—Deduction
for Certain Foreign
Deferred Compensation
Plans
Whether amounts transferred to a 404A plan from
a qualified plan under 401(a) before October 1, 2008,
are treated as distributions. See Rev. Rul. 2008-40,
page 166.
Section 410.—Minimum
Participation Standards
26 CFR 1.410(b)–6: Excludable employees.
Whether, in the instance of a section 1022(i)(1)
transferee plan, relief will be granted for purposes
of applying section 410(b) coverage. See Rev. Rul.
2008-40, page 166.
Section 4
14.—Definitions
and Speci
al Rules
26 CFR 1.4
11(l)–1: Mergers and consolidations of
plans or t
ransfers of plan assets.
Whether t
here was a transfer of plan assets or li-
abilitie
s that would be considered as a combination
of separa
te mergers and spinoffs. See Rev. Rul.
2008-40
, page 166.
Section 507.—Termination
of Private Foundation Status
This revenue ruling provides taxpayers with guide-
lines on dividing a charitable remainder trust (CRT)
into two or more separate and equal CRTs without vi-
olating the provisions of § 664. It also provides rul-
ings involving §§ 507, 1015, 1223, 4941, 4945, and
4947. See Rev. Rul. 2008-41, page 170.
Section 642.—Special
Rules for Credits and
Deductions
26 CFR 1.642(c)–1: Unlimited deduction for
amounts paid for a charitable purpose.
Sample inter vivos charitable lead unitrusts.
This revenue procedure contains sample declarations
of trust for nongrantor and grantor charitable lead
unitrusts. This revenue procedure also contains an-
notations to the sample trusts and alternate provisions
that may be integrated into the sample trusts. See
Rev. Proc. 2008-45, page 224.
Sample testamentary charitable lead unitrust.
This revenue procedure contains a sample declara-
tion of trust for a testamentary charitable lead uni-
trust. This revenue procedure also contains annota-
tions to the sample trust and alternate provisions that
may be integrated into the sample trust. See Rev.
Proc. 2008-46, page 238.
Section 664.—Charitable
Remainder Trusts
(Also: §§ 507, 1015, 1223, 4941, 4945, 4947.)
Charitable remainder trust (CRT).
This ruling provides taxpayers with guide-
lines on dividing a charitable remainder
trust into two or more separate and equal
CRTs without violating the provisions of
section 664 of the Code. It also provides
that, if the division of the CRT is made in
accordance with the situations described
in the ruling, (i) the division is not a sale,
exchange, or other disposition producing
gain or loss, the basis under section 1015
of each separate trust’s share of each asset
is the same share of the basis of that asset
in the hands of the trust immediately be-
fore the division of the trust, and, under
section 1223, each separate trust’s holding
period for an asset transferred to it by the
original trust includes the holding period
of the asset as held by the original trust
immediately before the division, (ii) the
division of the CRT does not terminate
under section 507(a)(1) the CRT’s status
as a trust described in, and subject to, the
private foundation provisions of section
4947(a)(2), or result in the imposition of
an excise tax under section 507(c), (iii) the
division of the CRT does not constitute an
act of self-dealing under section 4941, and
(iv) the division of the CRT does not con-
stitute a taxable expenditure under section
4945.
July 28, 20081702008–30 I.R.B.

Rev. Rul. 2008–41
ISSUES
Under the facts of this revenue ruling:
(1) Does thepro ratadivision of a trust
that qualifies as a charitable remainder
trust (CRT) under § 664(d) of the Internal
Revenue Code into two or more separate
trusts cause the trust or any of the separate
trusts to fail to qualify as a CRT under
§ 664(d)?
(2) When a trust that qualifies as a CRT
under § 664(d) is dividedpro ratainto two
or more separate trusts, is the basis un-
der § 1015 of each separate trust’s share
of each asset the same share of the basis of
that asset in the hands of the trust immedi-
ately before the division of the trust, and,
under § 1223, does each separate trust’s
holding period for an asset transferred to
it by the original trust include the holding
period of the asset as held by the original
trust immediately before the division?
(3) Does thepro ratadivision of a trust
that qualifies as a CRT under § 664(d) into
two or more separate trusts terminate un-
der § 507(a)(1) the trust’s status as a trust
described in, and subject to, the private
foundation provisions of § 4947(a)(2), and
result in the imposition of an excise tax un-
der § 507(c)?
(4) When a trust that qualifies as a CRT
under § 664(d) is dividedpro ratainto
two or more separate trusts, does the divi-
sion constitute an act of self-dealing under
§ 4941?
(5) When a trust that qualifies as a CRT
under § 664(d) is dividedpro ratainto
two or more separate trusts, does the divi-
sion constitute a taxable expenditure under
§ 4945?
FACTS
Situation 1. Trust qualifies as either a
charitable remainder annuity trust (CRAT)
described in § 664(d)(1) or a charitable
remainder unitrust (CRUT) described in
§ 664(d)(2). Under the terms of Trust, two
or more individuals (recipients) are each
entitled to an equal share of the annuity or
unitrust amount, payable annually, during
the recipient’s lifetime, and upon the death
of one recipient, each surviving recipient
becomes entitled for life to an equal share
of the deceased recipient’s annuity or uni-
trust amount. Thus, the last surviving re-
cipient becomes entitled to the entire an-
nuity or unitrust amount for his or her life.
Upon the death of the last surviving recipi-
ent, the assets of Trust are to be distributed
to one or more charitable organizations de-
scribed in § 170(c) (remainder beneficia-
ries).
Trust has not committed any act (or fail-
ure to act) in the past giving rise to liability
for tax under chapter 42 (Private Founda-
tions and Certain Other Tax-Exempt Orga-
nizations). Moreover, Trust has made no
distributions to charitable beneficiaries.
The state court having jurisdiction over
Trust has approved apro ratadivision
of Trust into as many separate and equal
trusts as are necessary to provide one such
separate trust for each recipient living at
the time of the division, with each sepa-
rate trust being intended to qualify as the
same type of CRT (i.e., CRAT, CRUT,
net income CRUT with makeup) as Trust.
Either the court’s order or the trust agree-
ment itself incorporates the provisions
described in these facts that will govern
the separate trusts.
The separate trusts may have different
trustees. To carry out the division of Trust
into separate trusts, each asset of Trust is
divided equally among and transferred to
the separate trusts. For purposes of de-
termining the character of distributions to
the recipient of each separate trust, each
separate trust upon the division of Trust is
deemed to have an equal share of Trust’s
income in each tier described in § 664(b)
and, similarly, on each subsequent consol-
idation of separate trusts by reason of the
death of a recipient, the income in each tier
of the consolidated trust is the sum of the
income in that tier formerly attributed to
the trusts being combined. The recipients
pay all the costs associated with the divi-
sion of Trust into separate trusts, including
(i) legal fees relating to the court proceed-
ing, and (ii) the administrative costs of the
creation and funding ofthe separate trusts.
Each of the separate trusts has the same
governing provisions as Trust, except that:
(i) immediately after the division of Trust,
each separate trust has only one recipient,
and each recipient is the annuity or uni-
trust recipient of only one of the separate
trusts (that recipient’s separate trust); (ii)
each separate trust is administered and in-
vested independently by its trustee(s); (iii)
upon the death of the recipient, each as-
set of that recipient’s separate trust is to
be divided on apro ratabasis and trans-
ferred to the separate trusts of the surviv-
ing recipient(s), and the annuity amount
payable to the recipient of each such sepa-
rate CRAT is thereby increased by an equal
share of the deceased recipient’s annuity
amount (the unitrust amount of each sep-
arate CRUT is similarly increased as a re-
sult of the augmentation of the CRUT’s
corpus, and each separate CRUT incorpo-
rates the requirements of § 1.664–3(b) of
the Income Tax Regulations with respect to
the subsequent computation of the unitrust
amount from that trust); and (iv) upon the
death of the last surviving recipient, that
recipient’s separate trust (being the only
separate trust remaining) terminates, and
the assets are distributed to the remainder
beneficiaries.
The remainder beneficiaries of Trust
are the remainder beneficiaries of each of
the separate trusts and are entitled to the
same (total) remainder interest after the
division of Trust as before. In addition,
each recipient is entitled to receive from
his or her separate trust the same annuity
or unitrust amount as the recipient was en-
titled to receive under the terms of Trust.
Because the annual net fair market value
of the assets in each of the separate trusts
may vary from one another due to differ-
ing investment strategies of the separate
trusts, in situations where Trust is a CRUT,
the amount of the unitrust payments from
each separate CRUT may vary over time,
both from year to year and among the
separate CRUTs. Nevertheless, the uni-
trust percentage of each separate CRUT
remains the same as each recipient’s share
of the unitrust percentage under the terms
of Trust, and the recipients and the re-
mainder beneficiaries are entitled to the
same benefits after the division of Trust as
before.
For example, assume Trust is a CRUT.
UnderthetermsofTrust,X,Y,andZare
entitled to share equally the annual pay-
ments of a 15 percent unitrust amount (5
percent each) while all three are living, and
upon the death of one recipient, the surviv-
ing recipients are entitled to the deceased
recipient’s share. Thus, if X dies first, the
surviving recipients(Y and Z) are entitled
to share equally in the annual payments of
the 15 percent unitrust amount (7.5 percent
each) while both are living. Thereafter, if
Y predeceases Z, then upon the death of Y,
Z is entitled to receive annual payments of
2008–30 I.R.B.171July 28, 2008

the entire 15 percent unitrust amount for
life. Upon the division of Trust, three sep-
arate trusts are created (one for each of X,
Y, and Z) and each of the separate trusts
holds one-third of the assets of Trust. X, Y,
and Z are each entitled to annual payments
of a 15 percent unitrust amount from his or
her separate trust (15 percent of one-third
of the assets is equivalent to 5 percent of
all the assets of Trust). After the division
of Trust and upon the death of X, each as-
set of X’s separate trust is divided on a
pro ratabasis and transferred to Y and Z’s
separate trusts. Y and Z each remain en-
titled to annual payments of a 15 percent
unitrust amount from his or her respective
separate trust, each of which is now funded
with the equivalent of one-half the assets
of Trust (15 percent of one-half of the as-
sets is equivalent to 7.5 percent of all the
assets of Trust). Upon the death of Y, the
assets of Y’s separate trust are transferred
to Z’s separate trust, and Z remains entitled
to annual payments of a 15 percent unitrust
amount from Z’s separate trust. These are
thesameintereststowhichX,Y,andZ
would have been entitled under the terms
of Trust if Trust had not been divided into
separate trusts.
Situation 2. The facts are the same as in
Situation 1except that Trust has only two
recipients who are U.S. citizens married to
each other but in the process of obtaining
a divorce, and, instead of the provision de-
scribedin(iii)ofSituation 1, each sepa-
rate trust inSituation 2has governing pro-
visions providing that upon the death of the
recipient, that recipient’s separate trust ter-
minates and the assets of that separate trust
then are distributed to the remainder ben-
eficiaries. Because the remainder benefi-
ciaries of Trust (and thus of each separate
trust) receive a distribution of one-half of
the assets of Trust upon the death of the
first spouse to die and the remaining half
of the assets upon the death of the surviv-
ing spouse (rather than a distribution of all
of the assets of Trust upon the later death
of the surviving recipient), the value of the
remainder payable to the remainder bene-
ficiaries as a result of the division of Trust
into separate trusts may be larger than the
present value of that interest as computed
at the creation of Trust; no additional char-
itable deduction is permitted, however.
Each recipient (spouse) is entitled to
receive from his or her separate trust
the same share of the annuity or unitrust
amount as the recipient was entitled to re-
ceive under the terms of Trust. However,
each spouse relinquishes all interests in
Trust to which he or she would have been
entitled by reason of having survived the
other (survivorship right).
LAW AND ANALYSIS
Issue 1.Qualification of Trusts under
§ 664(d)
Section 664(d)(1) provides that a CRAT
is a trust:
(A) from which a sum certain (which is
not less than 5 percent or more than 50 per-
cent of the initial net fair market value of
all property placed in trust) is to be paid,
not less often than annually, to one or more
persons (at least one of which is not an or-
ganization describedin § 170(c) and, in the
caseofindividuals,onlytoanindividual
who is living at the time of the creation of
the trust) for a term of years (not in excess
of 20 years) or for the life or lives of such
individual or individuals;
(B) from which no amount other than
the payments described in § 664(d)(1)(A)
and qualified gratuitous transfers de-
scribed in § 664(d)(1)(C) may be paid to
or for the use of any person other than an
organization described in § 170(c);
(C) the remainder interest of which (fol-
lowing the termination of the payments de-
scribed in § 664(d)(1)(A)), is to be trans-
ferred to, or for the use of, an organization
described in § 170(c) or is to be retained by
thetrustforsuchauseor,totheextentthe
remainder interest is in qualified employer
securities (as definedin § 664(g)(4)), all or
part of such securities are to be transferred
to an employee stock ownership plan (as
defined in § 4975(e)(7)) in a qualified gra-
tuitous transfer (as defined in § 664(g));
and
(D)theremainderinterestofwhichhas
a value (determined under § 7520) that is
at least 10 percent of the initial net fair
market value of all property placed in trust.
Section 664(d)(2) provides that a
CRUT is a trust:
(A) from which a fixed percentage
(which is not less than 5 percent nor more
than 50 percent) of the net fair market
value of its assets, valued annually, is to be
paid, not less often than annually, to one
or more persons (at least one of which is
not an organization described in § 170(c)
and, in the case of individuals, only to an
individual who is living at the time of the
creation of the trust) for a term of years
(not in excess of 20 years) or for the life
or lives of such individual or individuals;
(B) from which no amount other than
the payments described in § 664(d)(2)(A)
and qualified gratuitous transfers de-
scribedin§664(d)(2)(C)maybepaidto
or for the use of any person other than an
organization described in § 170(c);
(C) the remainder interest of which (fol-
lowing the termination of the payments de-
scribed in § 664(d)(2)(A)), is to be trans-
ferred to, or for the use of, an organization
describedin§170(c)oristoberetainedby
thetrustforsuchauseor,totheextentthe
remainder interest is in qualified employer
securities (as definedin § 664(g)(4)), all or
part of such securities are to be transferred
to an employee stock ownership plan (as
defined in § 4975(e)(7)) in a qualified gra-
tuitous transfer (as defined in § 664(g));
and
(D)theremainderinterestofwhich,
with respect to each contribution of prop-
erty to the trust, has a value (determined
under § 7520) that is atleast 10 percent of
the net fair market value of such property
as of the date such property is contributed
to the trust.
Section 1.664–1(a)(4) provides, in part,
that in order for a trust to be a CRT, it
must meet the definition of and function
exclusively as a CRT from the creation of
the trust.
Section 1.664–2(b) provides that a trust
is not a CRAT unless its governing instru-
ment provides that no additional contribu-
tions may be made to the CRAT after the
initial contribution.
Section 1.664–3(b) provides that a
trust is not a CRUT unless its govern-
ing instrument either prohibits additional
contributions to the trust after the initial
contribution or provides that the rules in
§ 1.664–3(b)(1) and (2) must be satisfied
with regard to each additional contribu-
tion, if any.
To carry out the division of Trust in
Situation 1andSituation 2, each asset
of Trust is divided on apro ratabasis
(in these cases, equally) among and dis-
tributed to the separate trusts. Each of
the separate trusts has the same governing
provisions as Trust, with the exceptions
noted above, and the same recipients and
remainder beneficiaries, collectively, as
July 28, 20081722008–30 I.R.B.

Trust. InSituation 1, after the division of
Trust into separate trusts, the total annuity
amount or unitrust percentage to be paid
annually by the separate trusts remains the
same as under the terms of Trust. Each
recipient and remainder beneficiary es-
sentially has the same beneficial interest
after the division as before. A transfer
of the assets from a deceased recipient’s
separate trust to the separate trust(s) of
the surviving recipient(s) inSituation 1
is not treated as a transferred remainder
interest that would violate § 664(d)(1)(C)
or § 664(d)(2)(C), and is not treated as
a prohibited additional contribution to a
CRAT under § 1.664–2(b). InSituation
2, after the division of Trust into separate
trusts, the total annuity amount or unitrust
percentage to be paid annually remains the
same as it was under the terms of Trust,
with the exception of the survivorship
right to the annuity or unitrust payments
the recipients relinquish. Consequently, in
Situation 1andSituation 2, the division of
Trust into separate trusts does not cause
Trust or any of the separate trusts to fail to
qualify as a CRT under § 664(d).
Issue 2.Basis and Holding Period of
Assets
Section 1015(b) provides that, if prop-
erty is acquired by a transfer in trust (other
than by a transfer in trust by a gift, be-
quest, or devise) after December 31, 1920,
the basis shall be the same as it would be
in the hands of the grantor, increased by
the amount of gain, or decreased by the
amount of loss, recognized by the grantor
on such a transfer in trust under the law
applicable to the year in which the trans-
fer was made. Section 1.1015–2(a)(1) pro-
vides that, if the taxpayer acquired prop-
erty by such a transfer in trust, this basis
rule applies whether the property is in the
hands of the trustee or the beneficiary, and
whether the property was acquired before,
upon, or after termination of the trust and
distribution of the property.
Section 1223(2) provides that, in deter-
mining the period for which the taxpayer
has held property, however acquired, there
shall be included the period during which
the property was held by another person if,
under chapter 1 (Normal Taxes and Sur-
taxes), the property has, for purposes of
determining gain or loss from a sale or ex-
change, the same basis, in whole or in part,
in the taxpayer’s hands as it would have in
the hands of the other person.
InSituation 1andSituation 2,thepro
ratadivision of Trust into separate trusts
is not a sale, exchange, or other disposi-
tion producing gain or loss. Pursuant to
§ 1015(b), inSituation 1andSituation 2,
the basis of each separate trust’s share of
each asset immediately after the division
of Trust is the same share of the basis of
that asset in the hands of Trust immediately
before the division. Furthermore, pursuant
to § 1223(2), each separate trust’s hold-
ing period of each asset transferred to it by
Trust includes the holding period of the as-
set as held by Trust immediately before the
division. Similarly, upon the death of a re-
cipient and the consolidation of the assets
of the deceased recipient’s separate trust
into the separate trust(s) of the surviving
recipient(s) inSituation 1, each separate
trust of a surviving recipient receives the
same share of each asset of the deceased
recipient’s separate trust and of the basis
of each asset in the hands of the deceased
recipient’s separate trust immediately be-
fore the consolidation, and the holding pe-
riod of each asset transferred to a separate
trust of a surviving recipient includes the
holdingperiodoftheassetasheldbythe
deceased recipient’s separate trust imme-
diately before the consolidation.
Issue 3.Status as Trust Subject to Private
Foundation Rules of § 4947(a)(2) and
Imposition of § 507(c) Excise Tax
Section 4947(a)(2) and § 53.4947–1(c)
of the Foundation and Similar Excise
Taxes Regulations provide that split-in-
terest trusts generally are subject to the
provisions of § 507 (among other pro-
visions) in the same manner as if such
trusts were private foundations, but, under
§ 4947(a)(2)(A), not with respect to any
amounts payable under the terms of such
trust to income beneficiaries, unless a de-
duction was allowed for those amounts
under §§ 170(f)(2)(B), 2055(e)(2)(B), or
2522(e)(2)(B). Both CRATs and CRUTs
are split-interest trusts for this purpose and
are, thus, subject to the rules of § 507(a).
Section 507(a) provides that, except as
provided in § 507(b), a private founda-
tion’s tax status shall be terminated only
if (1) the organization notifies the Secre-
tary of its intent to terminate its status as
a private foundation, or (2) it is involun-
tarily terminated by the Secretary due to
willful repeated acts (or failures to act),
or a willful and flagrant act (or failure to
act), giving rise to chapter 42 liability.See
§ 1.507–1(a)(1) and § 1.507–1(b)(1) re-
garding filing the notice of termination.
Upon such a termination, § 507(c) imposes
a termination tax that generally equals the
lower of the “aggregate tax benefit” (as de-
fined in § 507(d)) resulting from the tax
exempt status of the terminating founda-
tion or the fair market value of that foun-
dation’s net assets.
Section 507(b)(2) provides that, in the
case of the transfer of assets of any pri-
vate foundation to another private founda-
tion pursuant to any liquidation, merger,
redemption, recapitalization, or other ad-
justment, organization, or reorganization,
the transferee foundation is not treated as
a newly created organization.
Section 1.507–1(b)(6) generally con-
firms that, if a private foundation transfers
all or part of its assets to one or more other
private foundations pursuant to a transfer
described in §§ 507(b)(2) and 1.507–3(c),
such transferor foundation will not have
terminated its private foundation status
under § 507(a)(1).
Section 1.507–3(a)(1) and (2) provide,
in substance, that in a § 507(b)(2) trans-
fer of assets from one private foundation
to one or more other private foundations,
no transferee private foundation shall be
treated as a newly created organization, but
instead shall succeed tothe transferor’s ag-
gregate tax benefit within the meaning of
§ 507(d).
Section 1.507–3(c)(1) generally pro-
vides that, as used in § 507(b)(2), the
term “other adjustment, organization or
reorganization” shall include any partial
liquidation or any other significant dis-
position of assets to one or more private
foundations.
Section 1.507–3(c)(2)(ii) provides that
the term a “significant disposition of as-
sets” includes the transfer of a total of 25
percent or more of the fair market value (as
of the beginning of the taxable year, or of
the first taxable year in which any of a se-
ries of dispositions was made) of the net
assets of the foundation to one or more pri-
vate foundations. Such disposition may be
made for a single year or in a series of re-
lated dispositions over more than one year.
Section 1.507–4(b) provides that the
excise tax on termination of private foun-
2008–30 I.R.B.173July 28, 2008

dation status under § 507(c) generally does
not apply to a transfer of assets pursuant
to § 507(b)(2).
InSituation 1andSituation 2, the sepa-
rate trusts have the same governing provi-
sions as Trust, with the exceptions noted
above, and collectively, the same recipi-
ents, remainder beneficiaries, and assets as
Trust. In addition, each recipient and re-
mainder beneficiary is entitled to the same
benefits both before and after the division
of Trust, with the exceptions noted above.
Further, in bothSituation 1andSituation 2,
Trust transfers all of its assets to the sepa-
rate trusts pursuant to a transfer described
in § 507(b)(2). Thus, inSituation 1andSit-
uation 2, Trust has not terminated its pri-
vate foundation status under § 507(a)(1) as
a result of the division of Trust (or a sub-
sequent consolidation of the separate trusts
arising from the death of a recipient inSit-
uation 1), because no notice of termination
was filed or was required to be filed.See
§ 1.507–1(b)(6). Accordingly, the excise
tax imposed under § 507(c) does not ap-
ply.
Issue 4.Act of Self-Dealing under § 4941
Section 4947(a)(2) and § 53.4947–
1(c)(1)(ii) provide that split-interest trusts
generally are subject to the provisions
of § 4941 (among other provisions)
in the same manner as if such trusts
were private foundations, but, under
§ 4947(a)(2)(A), not with respect to any
amounts payable under the terms of such
trust to income beneficiaries, unless a
deduction was allowed for those amounts
under §§ 170(f)(2)(B), 2055(e)(2)(B), or
2522(e)(2)(B). Both CRATs and CRUTs
are split-interest trusts for this purpose and
are, thus, subject to the rules of § 4941.
Section 4941(a)(1) imposes an excise
tax on each act of self-dealing between a
disqualified person and a private founda-
tion.
Section 4941(d)(1)(A) provides that the
term “self-dealing” includes any direct or
indirect sale or exchange, or leasing, be-
tween a private foundation and a disquali-
fied person.
Section 4941(d)(1)(E) provides that the
term “self-dealing” includes any direct or
indirect transfer to, or use by or for the ben-
efit of, a disqualified person of the income
or assets of a private foundation.
Section 4946(a)(1)(A), (B), and (D) de-
fines the term “disqualified person” with
respect to a private foundation as includ-
ing(amongothers)asubstantial contribu-
tor to the private foundation, a foundation
manager, and a member of the family of a
substantial contributor or foundation man-
ager.
Section 4947(a)(2)(A) and § 53.4947–
1(c)(2) provide that annuity or unitrust
amounts payable tothe recipients under
the terms of a charitable remainder
split-interest trust are not subject to § 4941.
InSituation 1andSituation 2,there-
cipients might be disqualified persons with
respect to Trust under § 4946. The only
interest that the recipients have in Trust is
the right to the payment of the annuity or
unitrust amount under § 664(d)(1) or (2),
respectively. As a result of the division of
Trust inSituation 1andSituation 2, each
separate trust holds apro rata(in these
cases, equal) share of each asset of Trust,
and each recipient receives his or her an-
nuity or unitrust payment from only one of
the separate trusts. The annuity or unitrust
payments a recipient receives from his or
her separate trust remains equivalent to the
recipient’s share of the annuity or unitrust
payments under the terms of Trust, with
the exception of the survivorship right to
the annuity or unitrust payments each re-
cipient relinquishes inSituation 2.
Thus, upon the division of Trust inSit-
uation 1andSituation 2, the recipients
are insulated from self-dealing with re-
spect to their annuity or unitrust interests.
Because of thepro rata(equal) distribu-
tions to the separate trusts, none of the dis-
qualified persons, if any, receive any ad-
ditional interest in the assets of Trust, and
no self-dealing transaction occurs within
the meaning of § 4941(d). The remain-
der interest of Trust remains preserved ex-
clusively for charitable interests, and there
is no increase in the annuity or unitrust
amount at the expense of the charitable in-
terest. Additionally, thepro ratadivision
of the assets of Trust among the separate
trusts inSituation 1andSituation 2is not
asaleorexchangeand,therefore,isnota
sale or exchange between a private foun-
dation and a disqualified person. All legal
and other expenses and costs incident to
the division of Trust are paid by the recipi-
ents.Situation 1andSituation 2involve no
other transactions with the recipients that
affect the principal of Trust; accordingly,
no self-dealing transaction occurs by rea-
son of the division of Trust in eitherSitua-
tion 1orSituation 2, or by reason of a sub-
sequent consolidation of the separate trusts
arising from the death of a recipient inSit-
uation 1.
Issue 5.Taxable Expenditures under
§4945
Section 4947(a)(2) and § 53.4947–1(c)
provide that split-interest trusts generally
are subject to the provisions of § 4945
(among other provisions) in the same
manner as if such trusts were private foun-
dations, but, under § 4947(a)(2)(A), not
with respect to any amounts payable under
the terms of such trust to income benefi-
ciaries, unless a deduction was allowed
for those amounts under §§ 170(f)(2)(B),
2055(e)(2)(B), or 2522(e)(2)(B). Both
CRATs and CRUTs are split-interest trusts
for this purpose and are, thus, subject to
the rules of § 4945.
Section 4945 imposes an excise tax
on each taxable expenditure described in
§ 4945(d) made by a private foundation.
Section 4945(d)(4) provides that a tax-
able expenditure includes any amount paid
or incurred by a private foundation as a
grant to an organization unless the private
foundation exercises expenditure respon-
sibility with respect to such grant in accor-
dance with § 4945(h).
Section 53.4945–5(b)(7) confirms that
§§ 1.507–3(a)(7), 1.507–3(a)(8)(ii)(f), and
1.507–3(a)(9) govern the extent to which
the expenditure responsibility rules con-
tained in § 4945(d)(4) and (h) apply to
transfers of assets described in § 507(b)(2).
Section 1.507–3(a)(7) provides, in part,
that, except as provided in § 1.507–3(a)(9),
if the transferor has disposed of all of its
assets, then during any period in which the
transferor has no assets, § 4945(d)(4) and
(h) shall not apply to the transferee or the
transferor with respect to any “expenditure
responsibility” grants made by the trans-
feror.
Section 1.507–3(a)(9) provides, in part,
that if a private foundation transfers all of
its net assets to one or more private foun-
dations which are effectively controlled
(within the meaning of § 1.482–1(a)(3)),
directly or indirectly, by the same person
or persons which effectively controlled the
transferor private foundation, then for cer-
tain purposes, such a transferee private
July 28, 20081742008–30 I.R.B.

foundation shall be treated as if it were the
transferor.
Rev. Rul. 2002–28, 2002–1 C.B. 941,
provides, in part, that, once a private foun-
dation distributes all of its assets to one
or more other effectively controlled private
foundations under a plan of dissolution, the
obligation to exercise expenditure respon-
sibility under § 4945(h) with respect to
the transfers made by the transferor foun-
dation passes from that foundation to the
transferee foundation(s).
Section 4945(d)(5) provides that a tax-
able expenditure includes any amount paid
or incurred by a private foundation for a
non-charitable purpose.
Section 53.4945–6(b)(2) provides that
expenditures for unreasonable administra-
tive expenses will ordinarily be taxable ex-
penditures under § 4945(d)(5).
The transfers of Trust’s assets to the
separate trusts inSituation 1andSituation
2are not expenditures that require expen-
diture responsibility by Trust, pursuant
either to § 1.507–3(a)(9) (if Trust and the
separate trust are controlled by the same
person or persons) or § 1.507–3(a)(7) (if
Trust and the separate trust are not con-
trolled by the same person or persons).
Because Trust made no prior distribu-
tions for which expenditure responsibility
is required, the separate trusts assume
no preexisting expenditure responsibility
from Trust under § 1.507–3(a)(9). A simi-
lar analysis applies regarding a subsequent
consolidation of the separate trusts arising
from the death of a recipient inSituation 1.
Thus, inSituation 1andSituation 2,Trust
is not required to exercise “expenditure
responsibility” under § 4945(d) and (h)
with respect to the assets transferred to the
separate trusts.
HOLDINGS
Under the facts of this revenue ruling:
(1) InSituation 1andSituation 2,the
pro ratadivision of a trust that qualifies
as a CRT under § 664(d) into two or more
separate trusts does not cause the trust or
any of the separate trusts to fail to qualify
as a CRT under § 664(d).
(2) InSituation 1andSituation 2,
where a trust that qualifies as a CRT under
§ 664(d) is dividedpro ratainto two or
more separate trusts, the division is not a
sale, exchange, or other disposition pro-
ducing gain or loss, the basis under § 1015
of each separate trust’s share of each asset
is the same share of the basis of that as-
set in the hands of the trust immediately
before the division of the trust, and, un-
der § 1223, each separate trust’s holding
period for an asset transferred to it by the
original trust includes the holding period
of the asset as held by the original trust
immediately before the division.
(3) InSituation 1andSituation 2,the
pro ratadivision of a trust that qualifies
as a CRT under § 664(d) into two or more
separate trusts does not terminate under
§ 507(a)(1) the trust’s status as a trust de-
scribed in, and subject to, the private foun-
dation provisions of § 4947(a)(2), and does
not result in the imposition of an excise tax
under § 507(c).
(4) InSituation 1andSituation 2,
where a trust that qualifies as a CRT under
§ 664(d) is dividedpro ratainto two or
more separate trusts, the division does
not constitute an act of self-dealing under
§ 4941.
(5) InSituation 1andSituation 2,
where a trust that qualifies as a CRT under
§ 664(d) is dividedpro ratainto two or
more separate trusts, the division does
not constitute a taxable expenditure under
§ 4945.
DRAFTING INFORMATION
The principal authors of this revenue
ruling are Megan A. Stoner of the Office of
Associate Chief Counsel (Passthroughs &
Special Industries) and Ward L. Thomas of
theOfficeoftheCommissioner(TaxEx-
empt & Government Entities) Exempt Or-
ganizations Ruling Division. For further
information regarding this revenue ruling,
contact Ms. Stoner with respect to issues
1 and 2 at (202) 622–3070 (not a toll-free
call) and contact Mr. Thomas with re-
spect to issues 3–5 at (202) 283–8913 (not
a toll-free call).
Section 933.—Income From
Sources Within Puerto Rico
26 CFR 1.933–1: Exclusion of certain income from
sources within Puerto Rico.
Whether distributions from a section 1022(i)(1)
transferee plan are granted special transition relief un-
der section 933. See Rev. Rul. 2008-40, page 166.
Section 1015.—Basis of
Property Acquired by Gifts
and Transfers in Trust
This revenue ruling provides taxpayers with guide-
lines on dividing a charitable remainder trust (CRT)
into two or more separate and equal CRTs without vi-
olating the provisions of § 664. It also provides rul-
ings involving §§ 507, 1015, 1223, 4941, 4945, and
4947. See Rev. Rul. 2008-41, page 170.
Section 1223.—Holding
Period of Property
This revenue ruling provides taxpayers with guide-
lines on dividing a charitable remainder trust (CRT)
into two or more separate and equal CRTs without vi-
olating the provisions of § 664. It also provides rul-
ings involving §§ 507, 1015, 1223, 4941, 4945, and
4947. See Rev. Rul. 2008-41, page 170.
Section 1368.—Distri-
butions
26 CFR 1.1368–2: Accumulated adjustments ac-
count.
(Also: §§ 101, 264, 1.264–1.)
S corporation; life insurance con-
tract; accumulated adjustments ac-
count (AAA).This ruling, under section
1368 of the Code, outlines the effects of
premiums paid by an S corporation on an
employer-owned life insurance contract
and the benefits received by reason of
deathoftheinsuredonitsAAA.
Rev. Rul. 2008–42
ISSUES
(1)DopremiumspaidbyanScorpo-
ration on an employer-owned life insur-
ance contract, of which the S corporation
is directly or indirectly a beneficiary, re-
duce the S corporation’s accumulated ad-
justments account (AAA)?
(2) Do the benefits received by reason
of the death of the insured from an em-
ployer-owned life insurance contract that
meets an exception under § 101(j)(2) in-
crease an S corporation’s AAA?
FACTS
X is a corporation that has a valid S
election in effect. X purchases an em-
ployer-owned life insurance contract on
the life of one of its employees in order
2008–30 I.R.B.175July 28, 2008

to cover expenses the company would in-
cur as a result of the death of the employee
(also known as a key-man policy). The
employee is a highly compensated em-
ployee of X. X pays all of the premiums for
the policy. X is a beneficiary of the policy.
At the end of the taxable year, X has sub-
chapter C accumulated earnings and prof-
its (E&P).
LAW AND ANALYSIS
Section 101(a)(1) provides that gross
income does not include amounts received
under a life insurance contract, if such
amounts are paid by reason of the death of
the insured.
Section 101(j)(1) provides that death
benefits from employer-owned life insur-
ance contracts shall be taxable, in excess of
premiums and other amounts paid, unless
the employer-owned life insurance con-
tract meets one of the exceptions provided
under § 101(j)(2).
Section 101(j)(2)(A) provides that
§ 101(j)(1) shall not apply to any amount
received by reason of the death of an in-
sured who, with respect to an applicable
policyholder (i) was an employee at any
time during the 12-month period before
the insured’s death, or (ii) is, at the time the
contract is issued a director, a highly com-
pensated employee within the meaning
of § 414(q) (without regard to paragraph
(1)(B)(ii) thereof), or a highly compen-
sated individual within the meaning of
§ 105(h)(5), except that “35 percent” shall
be substituted for “25 percent” in subpara-
graph (C) thereof.
Section 264(a)(1) provides that no de-
duction is allowed for premiums paid on
any life insurance policy, or endowment or
annuity contract, if thetaxpayer is directly
or indirectly a beneficiary under the policy
or contract.
Section 1.264–1(a) provides that the
premiums paid for life insurance on the
life of any officer, employee, or person
financially interested in a business car-
ried on by the taxpayer are not deductible
where the taxpayer is directly or indirectly
a beneficiary of the policy.
Section 1.1366–1(a)(2)(viii) provides
that for the purposes of subchapter S,
tax-exempt income is income that is per-
manently excludible from gross income in
all circumstances inwhich the applicable
provision of the Code applies and provides
as an example that income that is excludi-
ble from gross income under § 101 (certain
death benefits) is tax-exempt income.
Section 1368(e)(1)(A) provides that the
term “accumulated adjustments account”
means an account of the S corporation
which is adjusted for the S period in a man-
ner similar to the adjustments under § 1367
(except that no adjustment shall be made
for income (and related expenses) which
is exempt from tax under Title 26 and the
phrase “(but not below zero)” shall be dis-
regarded in § 1367(a)(2)).
Section 1.1368–2 provides for the cal-
culation and maintenance of the AAA.
The AAA is an account of the S cor-
poration and is not apportioned among
shareholders. The AAA is generally in-
creased by the items of income described
in § 1366(a)(1)(A), other than income
that is exempt from tax, and any nonsepa-
rately computed income determined under
§ 1366(a)(1)(B). The AAA is generally
decreased by the items of loss or deduction
described in § 1366(a)(1)(A), any nonsep-
arately computed loss determined under
§ 1366(a)(1)(B), and any nondeductible
expense not properly chargeable to a capi-
tal account other than expenses related to
tax-exempt income.
An S corporation’s AAA tracks the
amount of undistributed income that has
been taxed to the shareholders, similar to
the manner in which E&P generally tracks
a C corporation’s undistributed income.
The AAA is the mechanism that allows
previously taxed but undistributed income
to be distributed tax-free to S corporation
shareholders to the extent of the share-
holders’ basis in their stock.
HOLDINGS
(1) Premiums paid by an S corporation
on an employer-owned life insurance con-
tract, of which the S corporation is directly
or indirectly a beneficiary, do not reduce
the S corporation’s AAA.
(2) The benefits received by reason of
thedeathoftheinsuredfromanemployer-
owned life insurance contract that meets an
exception under § 101(j)(2) do not increase
the S corporation’s AAA.
DRAFTING INFORMATION
The principal author of this revenue rul-
ingisVishalR.AminoftheOfficeof
Associate Chief Counsel (Passthroughs &
Special Industries). For further informa-
tion regarding this revenue ruling, contact
Vishal R. Amin at (202) 622–3060 (not a
toll-free call).
Section 2055.—Transfers
for Public, Charitable, and
Religious Uses
26 CFR 20.2055–2: Transfers not exclusively for
charitable purposes.
Sample inter vivos charitable lead unitrusts.
This revenue procedure contains sample declarations
of trust for nongrantor and grantor charitable lead
unitrusts. This revenue procedure also contains an-
notations to the sample trusts and alternate provisions
that may be integrated into the sample trusts. See
Rev. Proc. 2008-45, page 224.
Sample testamentary charitable lead unitrust.
This revenue procedure contains a sample declara-
tion of trust for a testamentary charitable lead uni-
trust. This revenue procedure also contains annota-
tions to the sample trust and alternate provisions that
may be integrated into the sample trust. See Rev.
Proc. 2008-46, page 238.
Section 2522.—Charitable
and Similar Gifts
26 CFR 25.2522(c)–3: Transfers not exclusively for
charitable, etc., purposes in the case of gifts made
after July 31, 1969.
Sample inter vivos charitable lead unitrusts.
This revenue procedure contains sample declarations
of trust for nongrantor and grantor charitable lead
unitrusts. This revenue procedure also contains an-
notations to the sample trusts and alternate provisions
that may be integrated into the sample trusts. See
Rev. Proc. 2008-45, page 224.
Section 4941.—Taxes
on Self-Dealing
This revenue ruling provides taxpayers with guide-
lines on dividing a charitable remainder trust (CRT)
into two or more separate and equal CRTs without vi-
olating the provisions of § 664. It also provides rul-
ings involving §§ 507, 1015, 1223, 4941, 4945, and
4947. See Rev. Rul. 2008-41, page 170.
Section 4945.—Taxes on
Taxable Expenditures
This revenue ruling provides taxpayers with guide-
lines on dividing a charitable remainder trust (CRT)
July 28, 20081762008–30 I.R.B.

into two or more separate and equal CRTs without vi-
olating the provisions of § 664. It also provides rul-
ings involving §§ 507, 1015, 1223, 4941, 4945, and
4947. See Rev. Rul. 2008-41, page 170.
Section 4947.—Application
of Taxes to Certain
Nonexempt Trusts
This revenue ruling provides taxpayers with guide-
lines on dividing a charitable remainder trust (CRT)
into two or more separate and equal CRTs without vi-
olating the provisions of § 664. It also provides rul-
ings involving §§ 507, 1015, 1223, 4941, 4945, and
4947. See Rev. Rul. 2008-41, page 170.
Section 7805.—Rules
and Regulations
26 CFR 301.7805–1: Rules and regulations.
Whether, in the instance of a section 1022(i)(1)
transferee plan, relief will be granted for purposes
of applying section 410(b) coverage. See Rev. Rul.
2008-40, page 166.
2008–30 I.R.B.177July 28, 2008

Part III. Administrative, Procedural, and Miscellaneous
Electricity Produced From
Certain Renewable Resources,
etc.
Notice 2008–60
SECTION 1. PURPOSE
This notice sets forth interim guidance,
pending the issuance of regulations, re-
garding the tax credit under § 45 of the
Internal Revenue Code for electricity pro-
duced from certain renewable resources.
This notice modifies Notice 2006–88,
2006–2 C.B. 686, which set forth in-
terim guidance regarding the tax credit
under § 45 for electricity produced from
open-loop biomass. This notice super-
sedes Notice 2006–88, as modified, by
republishing the guidance contained in that
notice with the following modifications:
(1) the guidance relating to the simultane-
ous sale and purchase of electricity is not
included; and (2) the guidance is modified
to reflect legislative changes since Notice
2006–88 was published. The Service will
continue the no rule policy announced in
section 3.05 of Notice 2006–88.
This notice also provides guidance on
the provisions in § 45 of the Code involv-
ing a sale to an unrelated person. The guid-
ance for sales to unrelated persons applies
with respect to electricity produced from
any qualified energy resource and with re-
spect to refined coal and Indian coal.
SECTION 2. BACKGROUND
.01In General. Section 710 of the
American Jobs Creation Act of 2004
(P.L. 108–357) amended § 45 to add
open-loop biomass to the definition
of qualified energy resources and to
add open-loop biomass facilities to the
definition of qualifiedfacilities. Section
1301 of the Energy Tax Incentives
Act of 2005 (P.L. 109–58) added “any
nonhazardous ligninwaste material”
to the definition of open-loop biomass
and extended the deadline for placing
open-loop biomass facilities in service to
December 31, 2007. Section 402(b) of
the Gulf Opportunity Zone Act of 2005
(P.L. 109–135) amended the definition
of open-loop biomass to include “any
lignin material.” Section 201 of the Tax
Relief and Health Care Act of 2006
(P.L. 109–432) extended the deadline for
placing open-loop biomass facilities in
service to December 31, 2008. Section
7(b)(1) of the Tax Technical Corrections
Act of 2007 (P.L. 110–172) eliminated
the requirement that open-loop biomass
be segregated from other waste materials.
As a result of these statutory changes, the
Internal Revenue Service has received
requests for guidance on the § 45 tax credit
for electricity produced from open-loop
biomass.
Section 38(a) provides for a gen-
eral business tax credit that includes the
amount of the current year business credit.
Section 38(b)(8) provides that the amount
of the current year business credit includes
the renewable electricity production credit
under § 45(a).
Section 45(a) provides that the renew-
able electricity production credit for a tax-
able year is 1.5 cents (adjusted for infla-
tion) for each kilowatthour of electricity
that the taxpayer (1) produces from qual-
ified energy resources at a qualified facil-
ity during the 10-year period beginning on
the date the facility was originally placed
in service, and (2) sells to an unrelated per-
son during the taxable year. Both sections
45(e)(8), for refined coal, and 45(e)(10),
for Indian coal, limit the credit under those
provisions to coal that is sold to an unre-
lated person. Section 45(e)(4) defines re-
lated persons. Section 45J provides a tax
credit for electricity production from ad-
vanced nuclear power facilities and, in lan-
guage identical to that in § 45(a), limits
the credit to electricity sold to an unrelated
person. Section 45J(e) provides, in part,
that rules similar to section 45(e)(4) shall
apply for purposes of section 45J.
Notice 2006–40, 2006–1 C.B. 855,
provides guidance under § 45J concern-
ing sales to unrelated persons. Notice
2006–40 provides that electricity will be
treated as sold to an unrelated person if
the ultimate purchaser of the electricity is
not related to the person that produces the
electricity. Therefore, the requirement of a
sale to an unrelated person will be treated
as satisfied for purposes of § 45J if the
producer sells the electricity to a related
person for resale by the related person to a
person that is not related to the producer.
.02Open-Loop Biomass.
(1)In General. Section 45(c)(1)(C)
provides that the term qualified energy re-
sources includes open-loop biomass. Sec-
tion 45(c)(3)(A), as amended by section
7(b)(1) of the Tax Technical Correction
Act of 2007, defines the term “open-loop
biomass” to mean—
(a) any agricultural livestock (includ-
ing bovine, swine, poultry, and sheep) ma-
nure and litter, including wood shavings,
straw, rice hulls, and other bedding mate-
rial for the disposition of manure (agricul-
tural livestock waste nutrients); or
(b) any solid, nonhazardous, cellu-
losic waste material or any lignin material
which is derived from—
(i) any of the following forest-related
resources: mill and harvesting residues,
precommercial thinnings, slash, and brush;
(ii) solid wood waste materials, includ-
ing waste pallets, crates, dunnage, man-
ufacturing and construction wood wastes,
and landscape or right-of-way tree trim-
mings; or
(iii) agricultural sources, including
orchard tree crops, vineyards, grain,
legumes, sugar, and other crop by-prod-
ucts or residues.
(2)Exclusions. The term “open-loop
biomass” does not include the following:
(a) manufacturing or construction wood
waste that has been pressure treated, chem-
ically treated, or painted;
(b) municipal solid waste as defined in
§45(c)(6);
(c) gas derived from the biodegradation
of solid waste;
(d) paper products that are commonly
recycled (for example, office paper, news-
paper, paperboard, and cardboard);
(e) closed-loop biomass as defined in
§ 45(c)(2); or
(f) biomass cofired with fossil fuel in
excess of the minimum amount of fossil
fuel necessary for startup and flame stabi-
lization.
.03Qualified Open-Loop Biomass
Facilities. Section 45(d)(3)(A) pro-
vides, in the case of a facility using
open-loop biomass to produce electricity
(an open-loop biomass facility), that a
qualified facility (a qualified open-loop
biomass facility) is any facility that is
owned by the taxpayer and that—
July 28, 20081782008–30 I.R.B.

(i) in the case of a facility using agri-
cultural livestock waste nutrients, is orig-
inally placed in service after October 22,
2004, and before January 1, 2009, and has
a nameplate capacity rating of not less than
150 kilowatts, or
(ii) in the case of any other facility, is
originally placed in service before January
1, 2009.
.04Credit Rate. Section 45(b)(4)(A)
provides that the credit rate for electricity
produced at a qualified open-loop biomass
facility is one-half the amount in effect
under § 45(a)(1) for the calendar year in
which the electricity is sold.
.05Credit Period.
(1)Facilities placed in service after
August 8, 2005. For qualified open-loop
biomass facilities placed in service after
August 8, 2005, § 45(b)(4)(B)(iii) pro-
vides that the 10-year credit period in
§ 45(a)(2)(A)(ii) applies.
(2)Facilities placed in service after
October 21, 2004, and on or before Au-
gust 8, 2005. For qualified open-loop
biomass facilities placed in service after
October 21, 2004, and on or before Au-
gust 8, 2005, § 45(b)(4)(B)(i) provides
that the § 45 credit is determined by sub-
stituting the 5-year period beginning on
the date the facility was originally placed
in service for the 10-year credit period in
§ 45(a)(2)(A)(ii).
(3)Facilities placed in service be-
fore October 22, 2004. For facilities
placed in service before October 22, 2004,
§ 45(b)(4)(B)(ii) provides that the § 45
credit is determined by substituting the
5-year period beginning on January 1,
2005, for the 10 year credit period in
§ 45(a)(2)(A)(ii).
.06Credit Eligibility. If the owner
of a qualified open-loop biomass facil-
ity is not the producer of the electricity,
§ 45(d)(3)(B) provides that the person eli-
gible for the credit allowable under § 45(a)
is the lessee or the operator of such facility.
SECTION 3. RULES RELATING TO
OPEN-LOOP BIOMASS
.01Components of Facility.
(1)In general. For purposes of
§ 45(d)(3), an open-loop biomass facility
is a power plant consisting of all com-
ponents necessary for the production of
electricity from open-loop biomass (and,
if applicable, other energy sources). Thus,
a qualified open-loop biomass facility in-
cludes all burners and boilers (whether or
not burning open-loop biomass), any han-
dling and delivery equipment that supplies
fuel directly to and is integrated with such
burners and boilers, steam headers, tur-
bines, generators, and all other depreciable
property necessary tothe production of
electricity. The facility does not include
(i) property used for the collection, pro-
cessing, or storage of open-loop biomass
before its use in the production of electric-
ity, (ii) transformers or other property used
in the transmission of electricity after its
production, or (iii) ancillary site improve-
ments, such as roadways and fencing,
that are not necessary to the production
of electricity. Each power plant that is
operated as a separate integrated unit is
treated as a separate facility for purposes
of § 45(d)(3).
(2)Cogeneration. A facility using
open-loop biomass to produce both elec-
tric energy and useful thermal energy, such
as heat or steam, through the sequential
use of energy (cogeneration) may be a
qualified open-loop biomass facility.
(3)Addition or improvement to an
existing facility. An open-loop biomass
facility will not be treated as originally
placed in service after October 22, 2004,
if more than 20 percent of the facility’s
total value (the cost of the new property
plus the value of the used property) is
attributable to property placed in service
on or before October 22, 2004. Similarly,
an open-loop biomass facility will not be
treated as originally placed in service after
August 8, 2005, if more than 20 percent
of the facility’s total value (the cost of the
new property plus the value of the used
property) is attributable to property placed
in service on or before August 8, 2005.
(4)Example. The following example
illustrates the application of section 3.01 of
this notice:
Example. A power plant using fossil fuel was
originally placed in service before October 22, 2004.
The power plant consists of a burner, a boiler, a steam
header, a turbine, and a generator. After October
22, 2004, one new burner and boiler using open-
loop biomass are added to the power plant. The new
burner and boiler are connected to the existing steam
header, turbine, and generator in the power plant.
Under section 3.01(1) of this notice, the open-loop
biomass facility consists of the entire power plant that
is operated as a separate integrated unit and includes
both the existing power plant and the new burner and
boiler. The fair market value of the existing power
plant on the date the new burner and boiler are placed
in service exceeds 20 percent of the facility’s total
value (the cost of the new burner and boiler plus the
value of the used property). Under section 3.01(3)
of this notice, the facility will not be treated as orig-
inally placed in service after October 22, 2004. Ac-
cordingly, § 45(b)(4)(B)(ii) applies and the credit pe-
riod for the facility is the 5-year period beginning on
January 1, 2005.
.02Cofiring.
(1)In general. Electricity produced
from open-loop biomass that is cofired
with fuels other than fossil fuels may
qualify for the § 45 credit. Electricity pro-
duced from the other fuel may separately
qualify for the § 45 credit if the other fuel
meets the definition of a qualified energy
resource under § 45(c) and the facility is
placed in service during the period spec-
ified in § 45(d) for that qualified energy
resource.
(2)Cofiring with agricultural livestock
waste nutrients. If open-loop biomass
other than agricultural livestock waste
nutrients is cofired with agricultural live-
stock waste nutrients at a facility placed
in service on or before October 22, 2004,
electricity produced from the open-loop
biomass other than agricultural livestock
waste nutrients may qualify for the § 45
credit because the facility is placed in ser-
vice before January 1, 2009 (the generally
applicable placed-in-service deadline for
purposes of determining whether elec-
tricity produced from open-loop biomass
qualifies for the § 45 credit). The elec-
tricity produced from agricultural live-
stock waste nutrients does not qualify
for the § 45 credit because the facility is
not placed in service after October 22,
2004, and before January 1, 2009 (the
placed-in-service period for purposes of
determining whetherelectricity produced
from agricultural livestock waste nutrients
qualifies for the § 45 credit).
(3)Cofiring with fossil fuel for startup
and flame stabilization. Electricity pro-
duced from open-loop biomass that is
cofired with fossil fuel may qualify for
the § 45 credit, but biomass will qualify
as open-loop biomass only if the amount
of fossil fuel used is the minimum nec-
essary for startup and flame stabilization.
See § 45(c)(3)(A) and section 2.02(2)(f)
of this notice. If open-loop biomass is
cofired with the minimum amount of fos-
sil fuel necessary for startup and flame
stabilization, only the electricity produced
from the open-loop biomass can qualify
for the credit. The electricity produced
2008–30 I.R.B.179July 28, 2008

from the fossil fuel used for startup and
flame stabilization does not qualify for the
credit. In addition, if biomass (other than
closed-loop biomass) is cofired with fossil
fuel in excess of the minimum amount of
fossil fuel necessary for startup and flame
stabilization, the biomass is not open-loop
biomass and the electricity produced from
the biomass does not qualify for the § 45
credit.
.03Rules Relating to Sales of Commin-
gled Electricity.
(1)Sales of Commingled Electricity.If
a taxpayer produces electricity from both
open-loop biomass and other fuels and
sells part or all of the electricity produced
to an unrelated party, only the applicable
percentage of the electricity sold to the
unrelated party is treated as electricity
produced from open-loop biomass. The
applicable percentage for this purpose is
the percentage of the thermal content of all
fuels used to produce the electricity that is
thermal content from open-loop biomass.
Electricity is treated as produced from
both open-loop biomass and other fuels to
the extent (i) open-loop biomass and other
fuels are commingled during combustion,
(ii) steam produced from the combus-
tion of open-loop biomass and from the
combustion of other fuels is commingled
before or during the production of the
electricity, and (iii) electricity produced
from open-loop biomass and from other
fuels is commingled before transmission
to the purchaser.
(2)Example. The following example
illustrates the application of section 3.03 of
this notice:
Example. A qualified facility at a paper mill pro-
duces 100 kilowatt hours of electricity per day. At
all times, 25 percent of the thermal content of the
fuels used in the facility is from open-loop biomass
and the remainder is from other fuels. The facil-
ity uses separate boilers for the combustion of the
open-loop biomass and the combustion of other fuels,
but the steam from both boilers is commingled dur-
ing the production of electricity. The entire electric
output of the facility is sold to a public utility. Only
25 kilowatt hours (25 percent of 100 kilowatt hours)
will be treated as electricity produced from open-loop
biomass.
.04Wood Bark And Lignin. Open-loop
biomass includes wood bark and lignin
material recovered from spent pulping
liquors.
.05No Rule Area.TheServicewill
not issue private letter rulings regarding
§ 45 as it relates to open-loop biomass.
In addition, the Service will not rule on
any issues under Subchapter K for partner-
ships claiming the credit under § 45. See
Rev. Proc. 2007–65, 2007–45 I.R.B. 967,
as revised by Announcement 2007–112,
2007–50 I.R.B 1175.
SECTION 4. SALE TO UNRELATED
PERSON
Thecreditunder§45isallowedonly
for (1) electricity that the taxpayer pro-
duces from qualified energy resources and
sells to an unrelated person, (2) refined
coal that the taxpayer produces and sells
to an unrelated person, and (3) Indian coal
that the taxpayer produces and sells to an
unrelated person. Electricity or coal will
be treated as sold to an unrelated person
for these purposes if the ultimate purchaser
of the electricity or coal is not related to
the person that produces the electricity or
coal. The requirement of a sale to an un-
related person will be treated as satisfied
in these circumstances if the producer sells
the electricity or coal to a related person for
resale by the related person to a person that
is not related to the producer. For purposes
of determining whether a person is related
to the producer of the electricity or coal,
see § 45(e)(4).
SECTION 5. EFFECTIVE DATE
The effective date of this Notice
2008–60 is the same as Notice 2006–88.
However, any modifications made by this
notice to Notice 2006–88 will not be ap-
plied adversely to taxpayers for electricity
produced before July 28, 2008.
SECTION 6. EFFECT ON OTHER
DOCUMENTS
Notice 2006–88 is modified and as
modified is superseded.
SECTION 7. DRAFTING
INFORMATION
The principal author of this notice is
Philip Tiegerman of the Office of Asso-
ciate Chief Counsel (Passthroughs and
Special Industries). However, other per-
sonnel from the IRS and Treasury par-
ticipated in its development. For further
information regarding this notice, contact
Mr. Tiegerman at (202) 622–3110 (not a
toll-free call).
Relief From Certain
Low-Income Housing Credit
Requirements Due to Severe
Storms, Tornadoes, and
Flooding in Wisconsin
Notice 2008–61
The Internal Revenue Service is sus-
pending certain requirements under § 42
of the Internal Revenue Code for low-in-
come housing credit projects in the United
States to provide emergency housing relief
needed as a result of the devastation caused
by severe storms, tornadoes, and flooding
in Wisconsin beginning on June 5, 2008.
This relief is being granted pursuant to
the Service’s authority under § 42(n) and
§ 1.42–13(a) of the Income Tax Regula-
tions.
BACKGROUND
On June 14, 2008, the President de-
clared a major disaster for the State of
Wisconsin. This declaration was made un-
der the Robert T. Stafford Disaster Relief
and Emergency Assistance Act, 42 U.S.C.
5121–5206 (2000 and Supp. II 2002).
Subsequently, the Federal Emergency
Management Agency (FEMA) designated
jurisdictions for Individual Assistance.
The State of Wisconsin has requested that
the Service allow owners of low-income
housing credit projects to provide tempo-
rary housing in vacantunits to individuals
who resided in jurisdictions designated for
Individual Assistance in Wisconsin and
who have been displaced because their
residences were destroyed or damaged
as a result of the devastation caused by
the severe storms, tornadoes, and flood-
ing. Based upon this request and because
of the widespread damage to housing
caused by the severe storms, tornadoes,
and flooding, the Service has determined
that the Wisconsin Housing and Economic
Development Authority (Authority) may
provide approval to project owners to pro-
vide temporary emergency housing for
displaced individuals in accordance with
this notice.
I. SUSPENSION OF INCOME
LIMITATIONS
The Service has determined that it is
appropriate to temporarily suspend certain
July 28, 20081802008–30 I.R.B.

income limitation requirements under § 42
for certain qualified low-income projects.
The suspension will apply to low-income
housing projects approved by the Author-
ity, in which vacant units are rented to dis-
placed individuals. The Authority will de-
termine the appropriate period of tempo-
rary housing for each project, not to extend
beyond July 31, 2009 (temporary housing
period).
II. STATUS OF UNITS
A. Units in the first year of the credit
period
A displaced individual temporarily
occupying a unit during the first year of
the credit period under § 42(f)(1) will be
deemed a qualified low-income tenant
for purposes of determining the project’s
qualified basis under § 42(c)(1), and for
meeting the project’s 20–50 test or 40–60
test as elected by the project owner under
§ 42(g)(1). After the end of the temporary
housing period established by the Author-
ity (not to extend beyond July 31, 2009),
a displaced individual will no longer be
deemed a qualified low-income tenant.
B. Vacant units after the first year of the
credit period
During the temporary housing period
established by the Authority, the status of a
vacant unit (that is, market-rate or low-in-
come for purposes of § 42 or never previ-
ously occupied) after the first year of the
credit period that becomes temporarily oc-
cupied by a displaced individual remains
the same as the unit’s status before the
displaced individual moves in. Displaced
individuals temporarily occupying vacant
units will not be treated as low-income
tenants under § 42(i)(3)(A)(ii). However,
even if it houses a displaced individual, a
low-income or market rate unit that was
vacant before the effective date of this no-
tice will continue to be treated as a va-
cant low-income or market rate unit. Sim-
ilarly, a unit that was never previously oc-
cupied before the effective date of this no-
tice will continue to be treated as a unit
that has never been previously occupied
even if it houses a displaced individual.
Thus, the fact that a vacant unit becomes
occupied by a displaced individual will
not affect the building’s applicable frac-
tion under § 42(c)(1)(B) for purposes of
determining the building’s qualified basis,
nor will it affect the 20–50 test or 40–60
test of § 42(g)(1). If the income of oc-
cupants in low-income units exceeds 140
percent of the applicable income limita-
tion, the temporary occupancy of a unit by
a displaced individual will not cause ap-
plication of the available unit rule under
§ 42(g)(2)(D)(ii). In addition, the project
owner is not required during the temporary
housingperiodtomakeattemptstorent
to low-income individuals the low-income
units that house displaced individuals.
III. SUSPENSION OF
NON-TRANSIENT REQUIREMENTS
The non-transient use requirement of
§ 42(i)(3)(B)(i) shall not apply to any
unit providing temporary housing to a
displaced individual during the temporary
housing period determined by the Author-
ity in accordance with section I of this
notice.
IV. OTHER REQUIREMENTS
All other rules and requirements of
§ 42 will continue to apply during the
temporary housing period established
by the Authority. After the end of the
temporary housing period, the appli-
cable income limitations contained in
§ 42(g)(1), the available unit rule un-
der § 42(g)(2)(D)(ii), the nontransient
requirement of § 42(i)(3)(B)(i), and the
requirement to make reasonable attempts
to rent vacant units to low-income individ-
uals shall resume. If a project owner offers
to rent a unit to a displaced individual after
the end of the temporary housing period,
the displaced individual must be certified
under the requirements of § 42(i)(3)(A)(ii)
and § 1.42–5(b) and (c) to be a qualified
low-income tenant. To qualify for the re-
lief in this notice, the project owner must
additionally meet all of the following re-
quirements:
(1) Major Disaster Area
The displaced individual must have
resided in a Wisconsin jurisdiction desig-
nated for Individual Assistance by FEMA
as a result of the severe storms, tornadoes,
and flooding in Wisconsin beginning on
June 5, 2008.
(2) Approval of the Wisconsin Housing
and Economic Development Authority
The project owner must obtain approval
from the Authority for the relief described
in this notice. The Authority will deter-
mine the appropriate period of temporary
housing for each project, not to extend be-
yond July 31, 2009.
(3) Certifications and Recordkeeping
To comply with the requirements of
§ 1.42–5, project owners are required to
maintain and certify certain information
concerning each displaced individual tem-
porarily housed in the project, specifically:
name, address of damaged residence,
social security number, and a statement
signed under penalties of perjury by the
displaced individualthat, because of dam-
age to the individual’s residence in an
Wisconsin jurisdiction designated for Indi-
vidual Assistance by FEMA as a result of
the severe storms, tornadoes, and flooding
beginning on June 5, 2008, the individual
requires temporary housing. The owner
must notify the Authority that vacant units
are available for rent to displaced individ-
uals.
The owner must also certify the date the
displaced individual began temporary oc-
cupancy and the date the project will dis-
continue providing temporary housing as
established by the Authority. The certi-
fications and recordkeeping for displaced
individuals must be maintained as part of
the annual compliancemonitoring process
with the Authority.
(4) Rent Restrictions
Rents for the low-income units that
house displaced individuals must not ex-
ceed the existing rent-restricted rates for
the low-income units established under
§ 42(g)(2).
(5) Protection of Existing Tenants
Existing tenants in occupied low-in-
come units cannot be evicted or have their
tenancy terminated as a result of efforts to
provide temporary housing for displaced
individuals.
EFFECTIVE DATE
This notice is effective June 14, 2008
(the date of the President’s major disas-
ter declarations as a result of the severe
storms, tornadoes, and flooding in Wis-
consin beginning on June 5, 2008).
PAPERWORK REDUCTION ACT
The collection of information contained
in this notice has been reviewed and ap-
proved by the Office of Management and
Budget in accordance with the Paperwork
Reduction Act (44 U.S.C. 3507) under
control number 1545–2107.
2008–30 I.R.B.181July 28, 2008

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
OMB control number.
The collection of information in this no-
tice is in the section titled “OTHER RE-
QUIREMENTS” under “(3) Certifications
and Recordkeeping.” This information is
required to enable the Service to verify
whether individuals are displaced as a re-
sult of the devastation caused by severe
storms, tornadoes, and flooding in Wis-
consin beginning on June 5, 2008, and
thus warrant temporary housing in vacant
low-income housing credit units. The col-
lection of information is required to obtain
a benefit. The likely respondents are indi-
viduals and businesses.
The estimated total annual recordkeep-
ing burden is 125 hours.
The estimated annual burden per
recordkeeper is approximately 15 minutes.
The estimated numberof recordkeepers is
500.
Books or records relating to a collection
of information must be retained as long
as their contents may become material to
the administration of the internal revenue
law. Generally, tax returns and tax return
information are confidential, as required
by 26 U.S.C. 6103.
DRAFTING INFORMATION
The principal author of this notice is
David Selig of the Office of the Associate
Chief Counsel (Passthroughs and Special
Industries). For further information re-
garding this notice, contact Mr. Selig at
(202) 622–3040 (not a toll-free call).
Update for Weighted Average
Interest Rates, Yield Curves,
and Segment Rates
Notice 2008–65
This notice provides guidance as to the
corporate bond weighted average interest
rate and the permissible range of interest
rates specified under § 412(b)(5)(B)(ii)(II)
of the Internal Revenue Code as in ef-
fect for plan years beginning before 2008.
It also provides guidance on the corpo-
rate bond monthly yield curve (and the
corresponding spot segment rates), the
24-month average segment rates, and
the funding transitional segment rates
under § 430(h)(2). In addition, this no-
tice provides guidance as to the interest
rate on 30-year Treasury securities un-
der § 417(e)(3)(A)(ii)(II) as in effect for
plan years beginning before 2008, the
30-year Treasury weighted average rate
under § 431(c)(6)(E)(ii)(I), and the min-
imum present value segment rates under
§ 417(e)(3)(D) as in effect for plan years
beginning after 2007.
CORPORATE BOND WEIGHTED
AVERAGE INTEREST RATE
Sections412(b)(5)(B)(ii)and
412(l)(7)(C)(i), as amended by the Pen-
sion Funding Equity Act of 2004 and by
the Pension Protection Act of 2006 (PPA),
provide that the interest rates used to cal-
culate current liability and to determine
the required contribution under § 412(l)
for plan years beginning in 2004 through
2007 must be within a permissible range
based on the weighted average of the rates
of interest on amounts invested conser-
vatively in long term investment grade
corporate bonds during the 4-year period
ending on the last day before the beginning
of the plan year.
Notice 2004–34, 2004–1 C.B. 848, pro-
vides guidelines for determining the cor-
porate bond weighted average interest rate
and the resulting permissible range of in-
terest rates used to calculate current liabil-
ity. That notice establishes that the corpo-
rate bond weighted average is based on the
monthly composite corporate bond rate de-
rived from designated corporate bond in-
dices. The methodology for determining
the monthly composite corporate bond rate
as set forth in Notice 2004–34 continues to
apply in determining that rate. See Notice
2006–75, 2006–2 C.B. 366.
The composite corporate bond rate for
June 2008 is 6.69 percent. Pursuant to No-
tice 2004–34, the Service has determined
this rate as the average of the monthly
yields for the included corporate bond in-
dices for that month.
The following corporate bond weighted
average interest rate was determined for
plan years beginning in the month shown
below.
For Plan Years
Beginning inPermissible Range
MonthYear
Corporate
Bond Weighted
Average90%to100%
July20086.04
5.44
6.04
YIELD CURVE AND SEGMENT
RATES
Generally for plan years beginning
after 2007 (except for delayed effective
dates for certain plans under sections 104,
105, and 106 of PPA), § 430 of the Code
specifies the minimum funding require-
ments that apply to single employer plans
pursuant to § 412. Section 430(h)(2) spec-
ifies the interest rates that must be used
to determine a plan’s target normal cost
and funding target. Under this provision,
present value is generally determined us-
ing three 24-month average interest rates
(“segment rates”), each of which applies
to cash flows during specified periods.
However, an election may be made under
§ 430(h)(2)(D)(ii) to use the monthly yield
curve in place of the segment rates. For
plan years beginning in 2008 and 2009, a
transitional rule under § 430(h)(2)(G) pro-
vides that the segment rates are blended
with the corporate bond weighted average
as specified above. An election may be
made under § 430(h)(2)(G)(iv) to use the
segment rates without applying the transi-
tional rule.
Notice 2007–81, 2007–44 I.R.B. 899,
provides guidelines for determining the
monthly corporate bond yield curve, the
24-month average corporate bond segment
rates, and the funding transitional segment
rates used to compute the target normal
cost and the funding target. Pursuant to
Notice 2007–81, the monthly corporate
bond yield curve derived from June 2008
July 28, 20081822008–30 I.R.B.

data is in Table I at the end of this notice.
The spot first, second, and third segment
rates for the month of June 2008 are, re-
spectively, 4.99, 6.64, and 6.95. The three
24-month average corporate bond seg-
ment rates applicable for July 2008 under
the election of § 430(h)(2)(G)(iv) are as
follows:
First
Segment
Second
Segment
Third
Segment
5.10
6.03
6.54
The transitional segment rates under
§ 430(h)(2)(G) applicable for July 2008,
taking into account the corporate bond
weighted average of 6.04 stated above, are
as follows:
For Plan Years
Beginning in
First
Segment
Second
Segment
Third
Segment
2008
5.73
6.046.21
30-YEAR TREASURY SECURITIES
INTEREST RATES
Section 417(e)(3)(A)(ii)(II) (prior to
amendment by PPA) defines the appli-
cable 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 se-
curities 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
rate of interest on 30-year Treasury secu-
rities as specified by the Commissioner
for that month in revenue rulings, notices
or other guidance published in the Internal
Revenue Bulletin.
The rate of interest on 30-year Treasury
securities for June 2008 is 4.69 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 2038.
Generally for plan years beginning
after 2007, § 431 specifies the mini-
mum funding requirements that apply to
multiemployer plans pursuant to § 412.
Section 431(c)(6)(B)specifies a minimum
amount for the full-funding limitation
described in section 431(c)(6)(A), based
on the plan’s current liability. Section
431(c)(6)(E)(ii)(I) provides that the inter-
est rate used to calculate current liability
for this purpose must be no more than 5
percent above and no more than 10 percent
below the weighted average of the rates of
interest on 30-year Treasury securities dur-
ing the four-year period ending on the last
day before the beginning of the plan year.
Notice 88–73, 1988–2 C.B. 383, provides
guidelines for determining the weighted
average interest rate. The following rates
were determined for plan years beginning
in the month shown below.
For Plan Years
Beginning inPermissible Range
MonthYear
30-Year
Treasury
Weighted
Average
90%to
105%
July20084.744.274.98
MINIMUM PRESENT VALUE
SEGMENT RATES
Generally for plan years beginning af-
ter December 31, 2007, the applicable in-
terest rates under § 417(e)(3)(D) are seg-
ment rates computed without regard to a
24-month average. For plan years begin-
ning in 2008 through 2011, the applica-
ble interest rate is the monthly spot seg-
ment rate blended with the applicable rate
under § 417(e)(3)(A)(ii)(II) as in effect
for plan years beginning in 2007. Notice
2007–81 provides guidelines for determin-
ing the minimum present value segment
rates. Pursuant to that notice, the min-
imum present value transitional segment
rates determined for June 2008, taking into
account the June 2008 30-year Treasury
rate of 4.69 stated above, are as follows:
2008–30 I.R.B.183July 28, 2008

For Plan Years
Beginning in
First
Segment
Second
Segment
Third
Segment
2008
4.755.085.14
DRAFTING INFORMATION
The principal author of this notice is
Tony Montanaro of the Employee Plans,
Tax Exempt and Government Entities Di-
vision. Mr. Montanaro may be e-mailed at
RetirementPlanQuestions@irs.gov.
July 28, 20081842008–30 I.R.B.

Table I
Monthly Yield Curve for June 2008
Maturity YieldMaturity YieldMaturity YieldMaturity YieldMaturity Yield
0.5
3.44
20.5
6.95
40.5
6.95
60.5
6.96
80.5
6.96
1.04.0321.06.9541.06.9561.0
6.96
81.0
6.96
1.54.5421.5
6.95
41.5
6.95
61.5
6.96
81.5
6.96
2.0
4.93
22.06.9542.06.9562.0
6.96
82.0
6.96
2.5
5.19
22.5
6.95
42.5
6.95
62.5
6.96
82.5
6.96
3.0
5.36
23.0
6.94
43.06.9563.0
6.96
83.0
6.96
3.55.4723.5
6.94
43.5
6.95
63.5
6.96
83.5
6.96
4.0
5.55
24.0
6.94
44.06.9564.0
6.96
84.0
6.96
4.55.6324.5
6.94
44.5
6.95
64.5
6.96
84.5
6.96
5.05.7125.0
6.94
45.06.9565.0
6.96
85.0
6.96
5.5
5.79
25.5
6.94
45.5
6.95
65.5
6.96
85.5
6.96
6.0
5.87
26.0
6.94
46.06.9566.0
6.96
86.0
6.96
6.5
5.96
26.5
6.94
46.5
6.95
66.5
6.96
86.5
6.96
7.0
6.05
27.0
6.94
47.06.9567.0
6.96
87.0
6.96
7.56.1527.5
6.94
47.5
6.95
67.5
6.96
87.5
6.96
8.06.2428.0
6.94
48.06.9568.0
6.96
88.0
6.96
8.5
6.32
28.5
6.94
48.5
6.95
68.5
6.96
88.5
6.96
9.0
6.40
29.06.9449.0
6.95
69.06.9689.06.96
9.56.4829.5
6.94
49.56.9569.5
6.96
89.5
6.96
10.0
6.55
30.0
6.94
50.0
6.9570.0
6.9690.06.96
10.5
6.61
30.5
6.94
50.5
6.95
70.5
6.96
90.5
6.96
11.06.6631.0
6.94
51.06.9571.0
6.9691.06.96
11.5
6.71
31.5
6.94
51.5
6.95
71.5
6.9691.56.96
12.06.7632.0
6.94
52.0
6.9572.0
6.9692.06.96
12.5
6.80
32.5
6.94
52.5
6.95
72.5
6.96
92.5
6.96
13.06.8333.0
6.94
53.0
6.9573.0
6.9693.06.96
13.5
6.86
33.5
6.94
53.5
6.95
73.5
6.96
93.5
6.96
14.06.8834.0
6.94
54.06.9574.0
6.9694.06.96
14.5
6.90
34.5
6.95
54.5
6.95
74.5
6.9694.56.96
15.0
6.91
35.0
6.95
55.0
6.95
75.0
6.96
95.0
6.96
15.5
6.92
35.5
6.95
55.5
6.95
75.5
6.96
95.5
6.96
16.0
6.93
36.06.95
56.0
6.9576.0
6.9696.06.96
16.5
6.94
36.5
6.95
56.5
6.96
76.5
6.96
96.5
6.96
17.0
6.94
37.06.9557.0
6.96
77.0
6.9697.06.96
17.5
6.95
37.5
6.95
57.5
6.96
77.5
6.9697.56.96
18.06.9538.06.95
58.0
6.96
78.0
6.9698.06.96
18.5
6.95
38.5
6.95
58.5
6.96
78.5
6.96
98.5
6.96
19.0
6.95
39.0
6.9559.0
6.9679.06.9699.06.96
19.56.9539.56.9559.5
6.96
79.5
6.96
99.5
6.96
20.06.9540.06.9560.0
6.96
80.0
6.96
100.0
6.96
2008–30 I.R.B.185July 28, 2008

26 CFR 601.204: Changes in accounting periods
and in methods of accounting.
(Also Part I, §§ 471, 472; 1.471–2, 1.471–8,
1.472–1.)
Rev. Proc. 2008–43
SECTION 1. PURPOSE
The Internal Revenue Service tradition-
ally viewed rolling-average inventory val-
uation as a method of accounting that does
not clearly reflect income, especially when
inventory is held for several years or costs
fluctuate substantially. See Rev. Rul.
71–234, 1971–1 C.B. 148, and Rev. Rul.
77–480, 1977–2 C.B. 186.
However, many industries consider
the rolling-average method an accurate
estimate of costs and use a rolling-av-
erage method for financial statement
purposes. The Service recognizes that
using a rolling-average for financial state-
ment purposes can produce an accurate
approximation of costs. Therefore, this
revenue procedure announces that the Ser-
vice generally will view a rolling-average
method that is used to value invento-
ries for financial accounting purposes as
clearly reflecting income for federal in-
come tax purposes. However, if inventory
is held for several years or costs fluctu-
ate substantially, a rolling-average cost
method may or may not clearly reflect
income, depending on the particular facts
and circumstances. This revenue pro-
cedure provides two safe harbors under
which a taxpayer’s financial accounting
rolling-average method will be deemed to
clearly reflect income for federal income
tax purposes. If a taxpayer does not use
a rolling-average method for financial
accounting purposes thenthe rolling-aver-
age method may not accurately determine
costs or clearly reflect income for federal
income tax purposes.
This revenue procedure also provides
the procedures by which a taxpayer may
obtain automatic consent to change to a
rolling-average method. A taxpayer that
complies with all the applicable provisions
of this revenue procedure has obtained the
consent of the Commissioner to change its
method of accounting under § 446(e) of the
Internal Revenue Code and the regulations
thereunder.
SECTION 2. BACKGROUND
.01 Section 446(a) provides that tax-
able income shall be computed under
the method of accounting on the basis of
which the taxpayer regularly computes
income in keeping its books.
.02 Sections 446(e) and 1.446–1(e)(2)
of the Income Tax Regulations state that,
except as otherwise provided, a taxpayer
must secure the consent of the Commis-
sioner before changing a method of ac-
counting 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 necessary to permit
a taxpayer to obtain consent to change a
method of accounting.
.03 Rev. Proc. 2002–9, 2002–1 C.B.
327 (as modified and clarified by An-
nouncement 2002–17, 2002–1 C.B. 561,
modified and amplified by Rev. Proc.
2002–19, 2002–1 C.B. 696, and ampli-
fied, clarified, and modified by Rev. Proc.
2002–54, 2002–2 C.B. 432), provides pro-
cedures for a taxpayerto obtain automatic
consent of the Commissioner to change to
a method of accounting described in the
Appendix of Rev. Proc. 2002–9.
.04 Section 471 provides that invento-
ries must be taken on such basis as the
Secretary may prescribe as conforming as
nearly as may be to the best accounting
practice in the trade or business and as
most clearly reflecting income.
.05 Section 1.471–2(c) permits mer-
chants and manufacturers to value inven-
tories at either (1) cost, or (2) cost or
market, whichever is lower (LCM). When
applying one of these valuation methods,
a taxpayer uses a cost-flow assumption,
such as first-in, first-out (FIFO) or last-in,
first-out (LIFO), to identify the items in
ending inventories.
.06 Section 472(a) provides that a tax-
payer may use the LIFO inventory method.
Under § 472(b)(2), a taxpayer using the
LIFO inventory method must value its
goods at cost.
.07 Section 1.471–3(b) defines the cost
of merchandise purchased since the begin-
ning of the taxable year as the invoice price
less trade or other discounts, except strictly
cash discounts approximating a fair inter-
est rate, which a taxpayer may or may not
deduct at the taxpayer’s option, provided
the taxpayer does so consistently. Trans-
portation and other necessary charges in-
curred in acquiring possession of the goods
are added to this net invoice price.
.08 In the case of merchandise produced
by the taxpayer, § 1.471–3(c) defines cost
as (1) the cost of raw materials and sup-
plies entering into or consumed in con-
nection with the product, (2) expenditures
for direct labor, and (3) indirect production
costs incident to and necessary for the pro-
duction of the particular article, including
an appropriate portion of management ex-
penses, but not including any cost of sell-
ingorreturnoncapital.See§§ 1.263A–1
and 1.263A–2 for more specific rules re-
garding the treatment of production costs.
.09 Section 1.471–3(d) provides that
in any industry in which the usual rules
for computation of cost of production are
inapplicable, cost may be approximated
upon a basis that is reasonable and in con-
formity with established trade practice in
that industry.
SECTION 3. SCOPE
This revenue procedure applies to a tax-
payer that is required to account for inven-
tories under § 471 and uses a rolling-aver-
age method to value those inventories for
financial accounting purposes.
SECTION 4. ROLLING-AVERAGE
METHOD SAFE HARBORS
.01In general. A taxpayer’s use of the
rolling-average method it uses for finan-
cial accounting purposes to value invento-
ries for federal income tax purposes will be
deemed to clearly reflect income if—
(1) The taxpayer recomputes the rolling
average cost of an inventory item on one of
the following bases:
(A) Each time the taxpayer purchases or
produces an additional unit or units of that
item; or
(B) On a regular basis but no less fre-
quently than once per month; and
(2) The taxpayer satisfies one of the fol-
lowing conditions:
(A) The variance percentage, as deter-
mined under section 4.02 of this revenue
procedure, does not exceed one percent; or
(B) The entire inventory of a taxpayer’s
trade or business turns at least four times
per year, as determined under section 4.03
of this revenue procedure.
July 28, 20081862008–30 I.R.B.

.02Determination of variance percent-
age. The variance percentage is deter-
mined by—
(1) Subtracting the cost of the ending
inventory of the trade or business com-
puted using the taxpayer’s rolling-average
method from the cost of the ending in-
ventory of the trade or business computed
using either the FIFO method or the spe-
cific identification method to determine
the variance; and then
(2) Dividing the variance by the aggre-
gate rolling-average cost of the inventory.
.03Determination of inventory turns.
The number of times that the entire in-
ventory of a taxpayer’s trade or business
turns during a taxable year is equal to the
cost of goods sold divided by average in-
ventory (average of beginning and end-
ing inventory). A taxpayer that uses a
LIFO cost-flow assumption for tax pur-
poses must calculate inventory turns using
rolling-average cost and a FIFO cost-flow
assumption.
SECTION 5. PROCEDURES
FORCHANGINGMETHODOF
ACCOUNTING
.01 Taxpayers are granted the consent of
the Commissioner to change to a rolling-
average method ofaccounting permitted
under section 4 of this revenue procedure
in accordance with the applicable provi-
sions of Rev. Proc. 2002–9 or any succes-
sor, subject to the following modifications:
(1) The scope limitation in section
4.02(6) of Rev. Proc. 2002–9 does not
apply to the change to a rolling-average
method in the taxpayer’s first or second
taxable year ending on or after December
31, 2007; and
(2) The designated automatic account-
ing method change number for changes in
method of accounting made pursuant to
this revenue procedure is No. 114.
.02 A taxpayer changing to a rolling-av-
erage method of accounting must use a
cut-off method unless the taxpayer’s books
and records contain sufficient information
to compute a § 481(a) adjustment, in which
case the taxpayer may choose to imple-
ment the change with a § 481(a) adjust-
ment as provided in sections 5.03 and 5.04
of Rev. Proc. 2002–9.
SECTION 6. AUDIT PROTECTION
A taxpayer’s use of a rolling-average
method of accounting in accordance with
section 4 of this revenue procedure on a
federal income tax return filed before June
25, 2008, will not be raised as an issue by
the Service. Moreover, if a taxpayer’s use
of a rolling-average method in accordance
with section 4 of this revenue procedure
on a federal income tax return filed before
June 25, 2008, is an issue under considera-
tion in examination, appeals, or before the
Tax Court, the Service will not further pur-
sue the issue.
SECTION 7. EFFECT ON OTHER
DOCUMENTS
Rev. Rul. 71–234, 1971–1 C.B. 148,
and Rev. Rul. 77–480, 1977–2 C.B. 186,
are modified to permit taxpayers to use a
rolling-average method of accounting for
inventories as provided under this revenue
procedure. Rev. Proc. 2002–9 is modified
and amplified to include in the APPEN-
DIX the automatic change provided in this
revenue procedure.
SECTION 8. EFFECTIVE DATE
This revenue procedure is effective for
taxable years ending on or after December
31, 2007.
DRAFTING INFORMATION
The principal author of this revenue
procedure is Leo F. Nolan II of the office
of the Associate Chief Counsel (Income
Tax and Accounting). For further infor-
mation regarding this revenue procedure,
contact Mr. Nolan at (202) 622–4970 (not
a toll-free call).
NOTE:
Following is a list of related instructions and forms for filing Form 1042-S Electronically:
•Current Instructions for Form 1042-S
•Form 4419 — Application for Filing Information Returns Electronically (FIRE)
•Form8508—RequestforWaiverFromFilingInformation Returns Electronically
•Form 8809 — Application for Extension of Time To File Information Returns
•Publication 515 — Withholding of Tax on Nonresident Aliens and Foreign Entities (for general information and expla-
nation of tax law associated with Form 1042-S)
•Publication 901 — U.S. Tax Treaties
The Internal Revenue Service (IRS), Enterprise Computing Center at Martinsburg (ECC-MTB) encourages filers to make copies
of the blank forms in the back of this publication for future use.These forms can also be obtained by calling 1–800–TAX–FORM
(1–800–829–3676). You can also download forms and publications from the IRS Web Site atw
ww.irs.gov.
2008–30 I.R.B.187July 28, 2008

IMPORTANT NOTES:
For tax year 2008 forms filed in calendaryear 2009, IRS/ECC-MTB will no longer
accept tape cartridges. Electronic filing will be the ONLY acceptable method for filing
Form 1042-S at IRS/ECC-MTB. IRS/ECC-MTB offers an Internet connection at
h
ttp://fire.irs.govfor electronic filing. The Filing Information Returns Electronically
(FIRE) System will be down the last week of December through the first week January
for upgrading. It is not operationalduring this time for submissions.
THE RECORD LENGTH FOR ALL RECORDS WAS INCREASED TO 820 POSITIONS.
THE RECIPIENT “Q” RECORD HAS NUMEROUS CHANGES. PLEASE REVIEW
PART C CAREFULLY BEFORE SUBMITTING YOUR FILE.
Rev. Proc. 2008–44
TABLE OF CONTENTS
Part A. General
SEC. 1. PURPOSE................................................................................................. 189
SEC. 2. NATURE OF CHANGES—CURRENT YEAR (TAX YEAR2008).................................................. 190
SEC. 3. WHERE TO FILE AND HOW TO CONTACT THE IRS, ENTERPRISE COMPUTING CENTER AT
MARTINSBURG
....................................................................................... 190
SEC. 4. FILING AND RETENTION REQUIREMENTS................................................................. 191
SEC. 5. VENDOR LIST............................................................................................. 192
SEC. 6. FORM 4419, APPLICATION FOR FILING INFORMATION RETURNS ELECTRONICALLY
(FIRE)
................................................................................................ 192
SEC. 7. DUE DATES............................................................................................... 193
SEC. 8. VALIDATION OF INFORMATION RETURNS AT IRS SERVICE CENTER........................................ 193
SEC. 9. AMENDED RETURNS...................................................................................... 194
SEC. 10. TAXPAYER IDEN
TIFICATION NUMBER (TIN)
.............................................
.................. 197
SEC. 11. EFFECT ON PAPER RETURNS AND STATEMENTS TO RECIPIENTS.......................................... 197
SEC. 12. DEFINITION OF TERMS.................................................................................. 197
SEC. 13. STATE ABBREVIATIONS.................................................................................. 200
Part B. Electronic Filing Specifications
SEC. 1. GENERAL................................................................................................ 201
SEC. 2. ELECTRONIC FILING APPROVAL PROCEDURE............................................................. 201
SEC. 3. TEST FILES............................................................................................... 202
SEC. 4. ELECTRONIC SUBMISSIONS............................................................................... 202
SEC. 5. PIN REQUIREMENTS...................................................................................... 203
SEC. 6. ELECTRONIC FILING SPECIFICATIONS.................................................................... 203
SEC. 7. CONNECTING TO THE FIRE SYSTEM....................................................................... 203
July 28, 20081882008–30 I.R.B.

SEC. 8. COMMON SUBMISSIONPROBLEMS AND QUESTIONS...................................................... 204
Pa
rt C. Record Format Specifications and Record Layouts
SEC. 1. TRANSMITTER “T” RECORD............................................................................... 206
SEC. 2. WITHHOLDING AGENT “W” RECORD...................................................................... 209
SEC. 3. RECIPIENT “Q” RECORD.................................................................................. 212
SEC. 4. RECONCILIATION “C” RECORD........................................................................... 218
SEC. 5. END OF TRANSMISSION “F” RECORD...................................................................... 219
Part D. Extensions of Time and Waivers
SEC. 1. GENERAL — EXTENSIONS................................................................................. 220
SEC. 2. SPECIFICATIONS FOR FILING EXTENSIONS OF TIME ELECTRONICALLY................................... 221
SEC. 3. RECORD LAYOUT — EXTENSION OF TIME................................................................. 222
SEC. 4. EXTENSION OF TIME FOR RECIPIENT COPIES OF INFORMATION RETURNS................................. 223
SEC. 5. FORM 8508, REQUEST FOR WAIVERFROM FILING INFORMATION RETURNS
ELECTRONICALLY
................................................................................... 223
Use this Revenue Procedure to prepare Tax Year2008and prior year information returns for submission to Internal Revenue Service
(IRS) electronically.
This Revenue Procedure is not revised every year. Updates will beprinted as needed in the Internal Revenue Bulletin. General
Instructions for Form 1042-S are revised every year. Be sure to consult current instructions when preparing Form 1042-S.
Part A. General
Revenue Procedures are generally revised annually to reflect legislative and form changes. Comments concerning this Revenue
Procedure, or suggestions for making it more helpful, can be addressed to:
Internal Revenue Service
Enterprise Computing Center — Martinsburg
Attn: Information Reporting Program
230 Murall Drive
Kearneysville, WV 25430
Sec. 1. Purpose
.01The purpose of this Revenue Procedure is to provide the specifications for filing Form 1042-S with IRS/ECC-MTB electroni-
cally through the FIRE (Filing Information Returns Electronically) System. This Revenue Procedure must be used to prepare current
and prior year information returnsfiled beginning January 1, 2009, and received by IRS/ECC-MTB or postmarked by December
31, 2009.
.02Generally, the box names on the paper Form 1042-S correspond with the fields used to file electronically; however, if discrep-
ancies occur, the instructions in this Revenue Procedure govern.
.03This Revenue Procedure supersedes Rev. Proc. 2006–34 published as Publication 1187, Specifications for Filing Form 1042-S,
Foreign Person’s U.S. Source Income Subject to Withholding, Electronically or Magnetically.
.04Refer to Part A, Sec.12, for definitions of terms used in this publication.
.05Specifications for filing Forms W-2, Wage and Tax Statements,electronically are available from the Social Security Admin-
istration (SSA)only. Filers can call 1–800–SSA–6270 to obtain the telephone number of the SSA Employer Service Liaison Officer
for their area.
2008–30 I.R.B.189July 28, 2008

.06IRS/ECC-MTB doesnotprocess Forms W-2. Forms W-2 must be sent to SSA.IRS/ECC-MTB does, however, process waiver
requests (Form 8508) and extension of time to file requests (Form 8809) for Forms W-2 and requests for an extension of time to
provide the employee copies of Forms W-2.
.07The following Revenue Procedures and publications provide moredetailed filing procedures for certain information returns:
(a)Instructions for Form 1042-S.
(b)Publication 1179, General Rules and Specifications for Substitute Forms 1096, 1098, 1099, 5498, W-2G and 1042-S.
(c)Publication 1239, Specifications for Filing Form 8027, Employer’s Annual Information Return of Tip Income and Allocated
Tips, Electronically.
(d)Publication 1220, Specifications for Filing Forms 1098, 1099, 5498, and W-2G Electronically.
(e)Publication 3609, Filing Information Returns Electronically (FIRE)
Sec. 2. Nature of Changes—Current Year (Tax Year2008)
Editorial changes of a clarifying n
ature have been made throughout this publication.Please read the entire publication carefully.
.01The record length for all record
s, T, W, Q, C, and F was increased to 820 positions. Please review Part C carefully before
formatting and submitting your fi
le.
.02IRS/ECC-MTB no longer accepts
any form of magnetic media. Electronic filingthrough the FIRE System is the only method
to report Form 1042-S to IRS/ECC-M
TB.
.03Title of Publication 1187 was c
hanged to reflect the elimination of magnetic media filing.
.04Form 4804, Transmittal of Infor
mation Returns Reported Magnetically, is obsolete. This form was only required for magnetic
media reporting which is no longer
a valid method of reporting information returns.
.05Test procedures have been elimi
nated from Part A since tape cartridges will not be acceptable after December 1, 2008. Elec-
tronic filing specifications, Pa
rt B, Sec. 3 details testing procedures for electronic files.
.06Form 8809, Application for Ext
ension of Time To File Information Returns, is available as a fill-in form on the FIRE System
andishighlyencouragedinlieuof
the paper Form 8809. (See Part D, Sec. 1.)
.07Several sections have been del
eted due to the elimination of magnetic media filing and others combined for greater clarity.
Please review the entire Publicat
ion for all relevant changes.
.08Part A, Sec. 9, Amended Returns
, has extensive revisions. A chart was added detailing the one and two step amended process.
.09Part A, Sec. 8, .10 was expande
d to give detailed instruction on how to report “UNKNOWN RECIPIENT”.
.10For the Withholding Agent “W” R
ecord, additional instructions were added to the Return Type Indicator field and Postal or
ZIP Code field.
.11FortheEndofTransmission“F”
Record, Media Count, positions 5–7, was eliminated. Positions 5–810 are reserved.
.12 Major format changes were made
to the Recipient “Q” Record. New fields were added and others were moved to new
locations within the record. Plea
se review Part C carefully before formatting and submitting your file.
Sec.3.WhereToFileandHowtoContacttheIRS,Enterprise Computing Center at Martinsburg
.01All information returns filed electronically are processed at IRS/ECC-MTB. General inquiries concerning the filing of 1042-S
Forms should be sent to the following address:
IRS–Enterprise Computing Center — Martinsburg
Attn: 1042-S Reporting
230 Murall Drive
Kearneysville, WV 25430
.02All requests for an extension of time to file information returns with IRS/ECC-MTB or to the recipients, and requests for undue
hardship waivers filed on Form 8508, are sent to the following address:
IRS–Enterprise Computing Center — Martinsburg
Information Reporting Program
Attn: Extension of Time Coordinator
240 Murall Drive
Kearneysville, WV 25430
.03The telephone numbers for electronic filing inquiries are:
July 28, 20081902008–30 I.R.B.

Information Reporting Program Customer Service Section
TOLL-FREE 1–866–455–7438 or
Outside the U.S. 304–263–8700
email at m
ccirp@irs.gov
304–267–3367 — TDD
(Telecommunication Device for the Deaf)
Fax Machine
Toll-free within the U.S. — 877–477–0572
Outside the U.S. — 304–264–5602
Electronic Filing — FIRE System
h
ttp://fire.irs.gov
TO OBTAIN FORMS:
1–800–TAX–FORM (1–800–829–3676)
w
ww.irs.gov— IRS Web Site access to forms and publications.
.04Current Instructions for Form 1042-S have been included in the Publication 1187 for your convenience. The Form 1042-T is
used only to transmit Copy A ofpaperForms 1042-S. If filing paper returns, follow the mailing instructions on Form 1042-T and
submit the paper returns to the Ogden Service Center, P.O. Box 409101, Ogden, UT 84409.
.05Requests for paper Form 1042-S should be made by calling the IRS toll-free number1–800–TAX–FORM (1–800–829–3676)
or via the IRS Web Site atw
ww.irs.gov.
.06Questions pertaining to electronic filing of Forms W-2mustbe directed to the Social Security Administration (SSA). Filers
can call 1–800–772–6270 to obtain the telephone number of theSSA Employer Service Liaison Officer for their area.
.07Filersshould notcontact IRS/ECC-MTB if they have received a penalty notice and need additional information or are re-
questing an abatement of the penalty. A penalty notice contains an IRS representative’s name and/or telephone number for contact
purposes; or, the filer may be instructed to respond in writing to the address provided. IRS/ECC-MTB doesnotissue penalty notices
and doesnothave the authority to abate penalties. For penalty information, refer to the Penalty section of the current Instructions for
Form 1042-S.
.08A taxpayer or authorized representative may request a copy of a taxreturn, including Form W-2 filed with a return, by submitting
Form 4506, Request for Copy of Tax Return, to IRS. This form may be obtained by calling1–800–TAX–FORM (1–800–829–3676).
For any questions regarding this form, call 215–516–2000 and select option 1. This is not a toll-free number.
.09Electronic Products and Support Services, Information Reporting Branch, Customer Service Section (IRB/CSS), answers elec-
tronic, paper filing, and tax law questionsfrom the payer community relating to the correct preparation and filing of business in-
formation returns (Forms 1096, 1098, 1099, 5498, 8027, and W-2G).IRB/CSS also answers questions relating to the electronic
filing of Forms 1042-S. Call toll-free 1–800–455–7438 for specific information on 1042-S filing.Inquiries dealing with backup
withholding and reasonable cause requirements due to missing and incorrect taxpayer identification numbers are also addressed by
IRB/CSS. Assistance is available year-round to payers, transmitters, and employers nationwide, Monday through Friday, 8:30 a.m.
to 4:30 p.m. Eastern Standard Time, by calling toll-free1–866–455–7438orviae-mailatm
ccirp@irs.gov. Do not include SSNs or
EINs on e-mails since this is not a secure line.The Telecommunications Device for the Deaf(TDD)toll number is304–267–3367.
Call as soon as questions arise to avoid the busy filing seasons. Recipients of information returns (payees) should continue to contact
1–800–829–1040 with any questions on how to report the information returns data on their tax returns.
Note: The Customer Service Section does not answer tax law questions concerning the requirements for withholding of tax
on payments of U.S. source income to foreign persons under Chapter 3 of the Code. If you need such assistance, you may call
215–516–2000 and select option 1 (not a toll-free number) or write to: Philadelphia Internal Revenue Service, International
Section, P.O. Box 920, Bensalem, PA 19020–8518.
Sec. 4. Filing and Retention Requirements
.01The regulations under section 6011(e)(2)(A) of the Internal Revenue Code provide that any person, including a corporation,
partnership, individual, estate, and trust, who is required to file 250or more information returns must file such returns electronically.
Withholding agents who meet the threshold of 250 or more Forms1042-S are required to submit their information electronically.
Note: Even though filers with less than 250 information returns are not required to submit the information returns electroni-
cally and may submit them on paper, IRS/ECC-MTB encourages filers to transmit those information returns electronically.
2008–30 I.R.B.191July 28, 2008

.02These requirements apply separately to both originals and amended records filed electronically.
.03All filing requirements that follow apply individually to each reporting entity as defined by its separate Taxpayer Identification
Number (TIN), [Social Security Number (SSN), Employer Identification Number (EIN), Individual Taxpayer Identification Number
(ITIN), or Qualified Intermediary Employer Identification Number (QI-EIN), Withholding Foreign Partnership Employer Identifica-
tion Number (WP-EIN), Withholding Foreign Trust Employer Identification Number (WT-EIN)]. Forexample, if a corporation with
several branches or locations uses the same EIN, the corporation must aggregate the total volume of returns to be filed for that EIN
and apply the filing requirements to each type of return accordingly.
.04The above requirements do not apply if the filer establishes hardship (see Part D, Sec. 5).
.05Current and prior year data must be submitted in separate electronic transmissions. Each tax yearmust be a separate electronic
file.
.06Filers who have prepared their information returns in advance of the due date should submit this information to IRS/ECC-MTB
no earlier than January 1 of the year the return is due.
.07Do not report duplicate information. If a filer submits returns electronically, identical paper documents must not be filed.
Duplicate filing will result in penalty notices being sent to recipients.
.08Withholding agents should retain a copy of the information returns filed with IRS/ECC-MTB or have the ability to reconstruct
the data for at least 3 years from the due date of the returns.
Sec. 5. Vendor List
.01IRS/ECC-MTB prepares a list of vendors who support electronic filing. The Vendor List (Pub. 1582) contains the names of
service bureaus that will produce or submit files for electronic filing. It also contains the names of vendors who provide software
packages for payers who wish to produce electronic files on their own computer systems. This list is compiled as a courtesy and in
no way implies IRS/ECC-MTB approval or endorsement.
.02If filers engage a service bureau to prepare files on their behalf, the filers must not also report this data, as it will create a
duplicate filing situation which may cause penalty notices to be generated.
.03The Vendor List, Publication 1582, is updated periodically. The most recent revision is available on the IRS website at
w
ww.irs.gov. For an additional list of software providers, log on to www.irs.govandgototheApprovedIRSe-fileforBusiness
Providerslink.
.04A vendor, who offers a software package, or has the capability to electronically file information returns for customers, and who
would like to be included in Publication 1582 must submit a letter or e-mail to IRS/ECC-MTB. The request should include:
(a)Company name
(b)Address (include city, state, and ZIP code)
(c)Telephone and FAX number (include area code)
(d)E-mail address
(e)Contact person
(f)Website
(g)Type(s) of service provided (e.g.,service bureau and/or software)
(h)Method of filing (only electronic filing is acceptable)
(i)Type(s) of return(s)
Sec. 6. Form 4419, Application for Filing Information Returns Electronically (FIRE)
.01Transmitters are required to submit Form 4419, Application forFiling Information Returns Electronically (FIRE), to request
authorization to file information returns with IRS/ECC-MTB. A single Form 4419 may be filed. IRS/ECC-MTB encourages transmit-
ters who file for multiple withholding agents or qualified intermediaries to submit one application and to use the assigned Transmitter
Control Code (TCC) for all. Please make sure you submit your electronic files using the correct TCC.
Note: EXCEPTIONS — An additional Form 4419 is required for filing Forms 1098, 1099, 5498 and W-2G and Form 8027,
Employer’s Annual Information Return of Tip Income and Allocated Tips. See back of Form 4419 for detailed instructions.
.02Electronically filed returns may not be submitted to IRS/ECC-MTB until the application has been approved. Please read the
instructions on the back of Form 4419 carefully. A Form 4419 is included in the Publication 1187 for the filer’s use. This form may
be photocopied. Additional forms may be obtained by calling1–800–TAX–FORM (1–800–829–3676). The form is also available
atw
ww.irs.gov.
.03Upon approval, a five-character alpha/numeric Transmitter Control Code (TCC) beginning with the digits“22”will be assigned
andincludedinanapprovalletter.TheTCCmustbe coded in the Transmitter “T” Record. If a transmitter uses more than one TCC
to file, each TCC must be reported on a separate electronic transmission.
July 28, 20081922008–30 I.R.B.

.04Ifanyof the information (name, TIN or address) on the Form 4419 changes, please notify IRS/ECC-MTB in writing so the
IRS/ECC-MTB database can be updated. The transmitter should include the TCC in all correspondence.
.05Form 4419 may be submitted anytime during the year; however, itmustbe submitted to IRS/ECC-MTB at least 30 days before
the due date of the return(s) for current year processing. This will allow IRS/ECC-MTB the minimum amount of time necessary to
process and respond to applications. Form 4419 may befaxed to IRS/ECC-MTB toll-free within the U.S. at877–477–0572.Inthe
event that computer equipment or software is not compatible withIRS/ECC-MTB, a waiver may be requested to file returns on paper
documents.
.06IRS/ECC-MTB encourages a transmitter who files for multiplewithholding agents to submit one application and to use the
assigned TCC for all withholding agents.
.07If a withholding agent’s files are prepared by a service bureau, it may not be necessary for the withholding agent to submit
an application to obtain a TCC. Some service bureaus will produce files, code their own TCC on the file, and send it to IRS/ECC-
MTB for the withholding agent. Other service bureaus will prepareelectronic files for the withholding agent to submit directly to
IRS/ECC-MTB. These service bureaus may require the withholding agent to obtain aTCCtobecodedintheTransmitter“T”Record.
Withholding agents should contact their service bureaus for further information.
.08Once a transmitter is approved to file electronically, it is not necessary to reapply each yearunless:
(a)The withholding agent has discontinued filing electronicallyfor two consecutive years; the withholding agent’s TCC may
have been reassigned by IRS/ECC-MTB. Withholding agents who are aware that the TCC assigned will no longer be used
are requested to notify IRS/ECC-MTB so these numbers may be reassigned;or
(b)The withholding agent’s electronic files were transmitted inthe past by a service bureau using the service bureau’s TCC,
but now the withholding agent has computer equipment compatible with that of IRS/ECC-MTB and wishes to prepare his
or her own files. The withholding agent must request a TCC by filing Form 4419.
.09One Form 4419 may be submitted per TIN. Multiple TCCs will only be issued to withholding agents with multiple TINs. Only
one TCC will be issued per TIN unless the filer has checked the application for the following forms in addition to the Form 1042-S:
Forms 1098, 1099, 5498, W-2G, and/or 8027. A separate TCC will be assigned for these forms.
.10Approval to file does not imply endorsementby IRS/ECC-MTB of any computer software or of the quality of tax preparation
services provided by a service bureau or software vendor.
Sec. 7. Due Dates
.01The due dates for filing paper returns with IRS also applies to electronic filing of Form 1042-S which is on a calendar year
basis.
.02Form 1042-S filed electronically must be submitted to IRS/ECC-MTB on or before March 15.
.03If any due date falls on a Saturday, Sunday, or legal holiday, the return or statement is considered timely if filed or furnished
on the next day that is not a Saturday, Sunday, or legal holiday.
.04Statements to recipients must be mailed on or before March 15.
Sec. 8. Validation of Information Returns at IRS Service Center
.01The accuracy of data reported on Form 1042-S will now be reviewed and validated at the IRS Service Center. All fields
indicated as“Required”in the record layouts in Part Cmustcontainvalid information. If the Service identifies an error, you will
be notified and required to provide correct information.
.02 Know your recipient!See Notice 2006–35, 2006–1 C.B. 708, for know-your-customer rules.
.03The tax rate entered must be a valid tax rate based on the Internal Revenue Code or on a valid treaty article. The valid treaty
rate is based on the recipient’s country of residence for tax purposes. The rate selected must be justified by the appropriate treaty. A
valid Tax Rate Table can be found in the Instructions for Forms 1042-S.
.04The Gross Income amount field must reflect pretax income. The Gross Income amount is the total income paid before any
deduction of tax at source.
.05If a qualified intermediary, withholding foreign partnership, or withholding foreign trust is acting as such, either as a withhold-
ing agent or as a recipient, the TIN reported must be a QI-EIN, WP-EIN, or WT-EIN and must begin with “98”. See definition of QI
in the Instructions for Form 1042-S.
.06Country Codes used must be valid codes taken from the Country Code Table. Generally, the use of “OC” or “UC” will generate
an error condition. If a recipient is claiming treaty benefits, the Country Code can never be “OC” or “UC”.
.07If a recipient is an “UNKNOWN RECIPIENT” or “WITHHOLDINGRATE POOL”, no address should be present. These are
the only two situations where a street address is not required.
.08A U.S. TIN for a recipient is now generally required, particularly for most treaty benefits. The exceptions are very limited and
are listed in the current Instructions for Form 1042-S.
.09Apply the following formula to determine U.S. Federal Tax Withheld (field positions 48–59 of the “Q” Record). All field
positions described below are in the “Q” Record.
2008–30 I.R.B.193July 28, 2008

IncomeCodes(15–19)AllotherIncomeCodes
Gross Income Paid (6–17)Gross Income Paid (6–17)
−Withholding Allowance (18–29)
X Tax Rate (42–45)
= Net Income Amount (30–41)=U.S. Federal Tax Withheld (359–370)
X Tax Rate (42–45)
=U.S. Federal Tax Withheld (359–370)
.10The following is how to correctly report an Unknown Recipient. All entries are in the Recipient “Q” Record.
(a)Tax Rate (positions 42–45) must be 3000.
(b)Exemption Code (positions 46–47) is 00.
(c)Recipient Code (positions 92–93) is 20.
(d)Recipient’s Name Line-1 (positions 94–133) must have “UNKNOWN” or “UNKNOWN RECIPIENT”
(e)Recipient’s Name Line-2 (positions 134–173) must be blank.
(f)Recipient’s address (positions 214–337) must be blank.
(g)Recipient’s Country Code (positions 338–339) is UC.
.11When making a payment to an international organization (e.g., United Nations) or a tax-exempt organization under IRC 501(a),
use Country Code “OC”. Use “UC” only when you have an “Unknown Recipient”.
.12When using Exemption Code 4, the Recipient Country of Residence Code for Tax Purposes MUST be a VALID treaty country
(e.g., if tax resident of Northern Ireland use United Kingdom).Do not use Exemption Code 4 unless a reduction or exemption of tax
isbasedonatreatyclaim.
.13Generally, payments under Income Codes 06 and 08 are not exempt from withholding, however, certain exceptions apply. See
the current Instructions for Form 1042-S.
.14If income is from gambling winnings (Income Code 28) or is notspecified (Income Code 50), the tax rate must generally be
30%. This type of income is only exempt from withholding at source if the exemption is based on a tax treaty that has an “Other
Income” article.
.15If Income Code 20 (Earnings as Artist or Athlete) is used, the Recipient Code must be 09. Do not use Recipient Code 01
(Individual), 02 (Corporation), or 03 (Partnership). Generally, the tax rate cannot be reduced even if a treaty may apply.
.16When paying scholarship and fellowship grants (Income Code 15), the Recipient’s Country of Residence for Tax Purposes must
be identified and cannot be “OC” or “UC”. Grants that are exempt under Code Section 117 are no longer required to be reported on
Form 1042-S.
Note: Grants that are exempt under Code 117 include only amounts provided for tuition, fees, books, and supplies to a quali-
fied student. Amounts provided for room and board can only be exempted under a tax treaty and must be reported on Form
1042-S whether exempt from tax or not.
.17If a student is receiving compensation (Income Code 19) or a teacher or a researcher isreceiving compensation (Income Code
18), all or part of which is exempted from tax under a tax treaty, the Country of Residence for Tax Purposes must be identified and
cannot be “OC” or “UC”.
Sec. 9. Amended Returns
.01If you filed a Form 1042-S with the IRS and later discovered an error on the filing, you must send an amended 1042-S as soon
as possible.
Note: If any information you correct on Form(s) 1042-S changes the information previously reported on Form 1042, you must
also correct the Form 1042 by filing an amended return.
.02The electronic filing requirement of information returns of 250 or more applies separately to both original and amended returns.
E
X
A
M
P
L
E
If a withholding agent has 100 Forms 1042-S to be amended, they can be filed on paper because they fall
under the 250 threshold. However, if the withholding agent has 300 Forms 1042-S to be amended, they must
be filed electronically because they exceed the 250 threshold. If for some reason a withholding agent cannot
file the 300 amended returns electronically, to avoid penalties, a request for a waiver must be submitted
before filing on paper. If a waiver is approved for original documents, any amended returns for the same
type of return will be covered under this waiver.
July 28, 20081942008–30 I.R.B.

.03Amended returns should be filedas soon as possible. Amended returns filed after August 1 may be subject to the maximum
penalty of $50 per return. Amended returns filed by August 1 may be subject to a lesser penalty. For information on penalties, refer to
the Penalty section of the current Instructions for Form 1042-S. However, if a withholding agent discovers errors after August 1, the
withholding agent is still required to file amended returns or be subject to a penalty for intentional disregard of the filing requirements.
If a record is incorrect, all fields on that record must be completed with the correct information.Submit amended returns only for the
returns filed in error. Do not submit the entire file. Furnish amended statements to recipients as soon as possible.
Note: Do not include original returns and amended returns on the same electronic file.
.04If filers discover that certain information returns were omitted on their original file, they mustnotcode these documents as
amended returns. The file must be coded and submitted as an original file.
.05Prior year data, original and amended,mustbe filed according to the requirements of this Revenue Procedure. If submitting
prior year amended returns, use the record format for the current year and submit in separate transmission. However, use the actual
year designation of the amended return in Field Positions 2–5 of the “T” Record. A separate electronic transmission must be made
for each tax year.
.06In general, filers should submit amended returns for returns filed within the last 3 calendar years.
.07All paper returns, whether original or amended, must be filed with IRS, Ogden Service Center, P.O. Box 409101, Ogden, UT
84409.
.08The “Q” Record provides a 20-position field (positions 72–91)for the recipient’s account number assigned by the withholding
agent. This number will help identify the appropriate incorrect return if more than one return is filed for a particular payee. This
number should appear on the initial return and on the amended returnin order to identify and process the amended return properly.
Do not enter a TIN in this field.
.09The record sequence for filing amended returns is the same as for original returns.
.10Following is a chart showing the steps to be taken for amending Form 1042-S:
Guidelines for Filing Amended Returns Electronically
One transaction is required to make the following corrections properly.
Error Made on the Original ReturnHow To File the Amended Return
ERRORTYPE1CORRECTION
1.Original return was filed with one or more of the
following errors:
A.Prepare a new file. The first record on the file will be
the Transmitter “T” Record.
B.Make a separate “W” Record with a Return Type
Indicator of “1” (1 = Amended) in field position 2.
C.
The Recipient “Q” Records must show the correct
record information with a Return Type Indicator of
“1” for amended in field position 2.(See Note 1.)
D.Prepare a separate Reconciliation “C” Record
summarizing the preceding amended “Q” Records.
(a)Incorrect money amount
(b)Incorrect codes and/or check boxes
(c)Incorrect address
(d)Form 1042-S submitted in error — should not have
been submitted
Note 1: If the 1042-S was submitted in error then all
fields must be exactly the same as the original record
exceptthat all money amounts will be zero.
E.ThelastrecordonthefilewillbetheEndof
Transmission “F” Record.
File layout one step corrections
Transmitter
“T”
Record
Amended
coded
Withholding
Agent “W”
Record
Amended
coded
Recipient “Q”
Record
Amended
coded
Recipient “Q”
Record
Reconciliation
“C”
Record
End of
Transmission
“F” Record
2008–30 I.R.B.195July 28, 2008

Guidelines for Filing Amended Returns Electronically (Continued)
Two (2) separate transactions (files) are required to make the following corrections properly. Follow the directions for both
Transactions 1 and 2. DO NOT use the two step correction process to correct money amounts.
Error Made on the Original ReturnHow To File the Amended Return
ERRORTYPE2CORRECTION
1.
Original “Q” Records were filed with one or more of
the following errors:
Transaction 1:Identify incorrect returns.
A.Prepare a new file. The first record on the file will be
the Transmitter “T” Record.
B.Make a separate “W” Record for each withholding
agent being reported. The information in the “W”
Record will beexactlythe same as it was in the
original submission except for the Return Type
Indicator of “1” (1 = Amended) in field position 2.
(See Note 2.)
C.
The Recipient “Q” Records must containexactly the
sameinformation as submitted previously,except,
insert the Amended Return Indicator Code of “1” in
Field Position 2 of the “Q” Records, and enter “0”
(zeros) in all payment amounts.(See Note 2.)
D.Prepare a separate Reconciliation “C” Record for
each withholding agent being reported.
E.Continue with Transaction 2 to complete the
correction.
(a)No Recipient TIN (SSN, EIN, ITIN, QI-EIN)
(b)Incorrect Recipient TIN
(c)Incorrect Recipient name
(d)Incorrect Recipient name and address
Note 2: The Record Sequence Number will be
different since this is a counter number and is unique
to each file.
F.ThelastrecordonthefilewillbetheEndof
Transmission “F” Record.
Transaction 2:Report the correct information.
A.Prepare a new file. The first record on the file will be
the Transmitter “T” Record.
B.Make a separate “W” Record for each withholding
agent being reported.
C.
The Recipient “Q” Records must show the correct
information.
D.Prepare a separate Reconciliation “C” Record for
each withholding agent being reported.
Note 3: Do not include amended returns and original
returns on the same electronic file.
E.ThelastrecordonthefilewillbetheEndof
Transmission “F” Record.
File layouts two step corrections
FILE 1
Transmitter
“T”
Record
Amended
coded
Withholding
Agent “W”
Record
Amended
coded
Recipient “Q”
Record
Amended
coded
Recipient “Q”
Record
Amended
coded
Recipient “Q”
Record
Reconciliation
“C”
Record
End of
Transmission
“F”
Record
July 28, 20081962008–30 I.R.B.

FILE 2
Transmitter
“T”
Record
Withholding
Agent “W”
Record
Recipient “Q”
Record
Recipient “Q”
Record
Recipient “Q”
Record
Reconciliation
“C”
Record
End of
Transmission
“F”
Record
.11When correcting the Withholding Agent “W” Record follow the two step correction process. When the “W” Record is being
corrected theneveryRecipient “Q” Record reported under that incorrect “W” record must be amended by zero filling all the amount
fields as described in the Transaction 1 step.
.12For information on when an amended Form 1042 is required, refer to the current Form 1042 Instructions.
Sec. 10. Taxpayer Identification Number (TIN)
.01Section 6109 of the Internal Revenue Code establishes the general requirements under which a person is required to furnish a
U.S. TIN to the person obligated to file the information return.
.02The Withholding Agent must provide its EIN, QI-EIN, WP-EIN or WT-EIN as appropriate, in the “W” Record and “T” Record
if the Withholding Agent is also the transmitter.
.03A recipient U.S. TIN (SSN, ITIN, EIN,QI-EIN, WP-EIN, WT-EIN) must be provided on every “Q” Record when:
(a)Tax rate is less than 30% (See the current Instructions for Form 1042-S for exceptions)
(b)Income is effectively connected with the conduct of a trade or business in the United States
(c)Recipient claims tax treaty benefits (generally)
(d)Recipient is a Qualified Intermediary
(e)An NRA individual is claiming exemption from withholding on independent personal services
(f)Other situations may apply, see Publication 515
.04In the event the recipient does not have a U.S. TIN, the withholding agent should advise the recipient to take the necessary
steps to apply for one.
.05The recipient’s U.S. TIN and name combination are used to associate information returns reported to IRS/ECC-MTB with
corresponding information on recipients’ tax returns. It is imperative thatcorrectU.S. Taxpayer Identification Numbers (TINs) for
recipients be provided to IRS/ECC-MTB.Do not enter hyphens or alpha characters.Entering all zeros, ones, twos, etc., will have
the effect of an incorrect TIN.
.06The withholding agent and recipient names with associated TINs should be consistent with the names and TINs used on other
tax returns.
Note: A withholding agent must have a valid EIN, QI-EIN, WP-EIN, and/or WT-EIN. It is no longer valid for a withholding
agent to use SSNs and ITINs.
Sec. 11. Effect on Paper Returns and Statements to Recipients
.01Electronic reporting of Form 1042-S eliminates the need to submit paper documents to the IRS.CAUTION: Do not send Copy
A of the paper forms to IRS for any forms filed electronically.This will result in duplicate filing.
.02Withholding agents are responsible for providing statements to the recipients as outlined in the current Instructions for Form
1042-S. Refer to those instructions forfiling Form 1042-S on paper with the IRS andfurnishing statements to recipients.
.03Statements to recipients should be clear and legible. If the official IRS form is not used, the filer must adhere to the specifications
and guidelines in Publication 1179, General Rules and Specifications for Substitute Forms 1096, 1098, 1099, 5498, W-2G and 1042-S.
.04The address for filing paper Forms 1042-S and Form 1042 is: Ogden Service Center, P.O. Box 409101, Ogden, UT 84409. Do
NOTsend paper Forms 1042-S or 1042 to IRS/ECC-MTB.
Sec. 12. Definition of Terms
ElementDescription
Amended ReturnAn amended return is an information return submitted by the transmitter to amend an
information return that was previously submitted to and processed by IRS/ECC-MTB,
but contained erroneous information.
2008–30 I.R.B.197July 28, 2008

ElementDescription
Beneficial OwnerThe beneficial owner of income is, generally, the person who is required under U.S.
tax principles to include the income in gross income on a tax return. For additional
information and special conditions see Definitions in the current Instructions for
Form 1042-S.
Employer Identification Number (EIN) A nine-digit number assigned by IRS for Federal tax reporting purposes.
Electronic FilingSubmission of information returnselectronically via the Internet. See Part B of this
publication for specific information on electronic filing.
FileFor purposes of this Revenue Procedure,a file consists of one Transmitter “T” Record
at the beginning of the file, a Withholding Agent “W” Record, followed by the
Recipient “Q” Record(s), a Reconciliation “C” Record summarizing the number
of preceding “Q” Records and total of preceding money fields. Follow with any
additional “W”, “Q”, and “C” Record sequences as needed. The last record on the file
will be the End of Transmission “F” Record. Nothing should be reported after the
EndofTransmission“F”Record.
FilerPerson (may be withholding agent and/ortransmitter) submitting information returns
to IRS.
Filing YearThe calendar year in which the information returns are being submitted to IRS.
Flow-Through EntityA flow-throughentity is a foreign partnership (other than a withholding foreign
partnership) or a foreign simple or grantor trust (other than a withholding foreign
trust). For any payments for which a reduced rate of withholding under an income
tax treaty is claimed, any entity is considered to be a flow-through entity if it is
considered to be fiscally transparent under IRC Section 894 with respect to the
payment by an interest holder’s jurisdiction.
Foreign PersonA foreign person includes a nonresident alien individual, a foreign corporation,
a foreign partnership, a foreign trust, a foreign estate, and any other person who
is not a U.S. person. The term also includes a foreign branch or office of a U.S.
financial institution or U.S. clearing organization if the foreign branch is a Qualified
Intermediary. Generally, a payment to aU.S. branch of a foreign institution is a
paymenttoaforeignperson.
Gross IncomeGross income includes income from all sources, except certain items expressly
excluded by statute. Gross income is the starting point for computing adjusted gross
income and taxable income.
Individual Taxpayer Identification
Number (ITIN)
A nine-digit number issued by IRS to individuals who are required to have a U.S.
taxpayer identification number for tax purposes but are not eligible to obtain a Social
Security Number (SSN). ITIN may be used for tax purposes only.
Information ReturnThe vehicle for withholding agents to submit required tax information about a
recipient to IRS. For this Revenue Procedure, it is information about a foreign person’s
U.S. source income subject to withholding, and the information return is Form 1042-S.
IntermediaryAn intermediary is a person who acts as a custodian, broker, nominee, or otherwise as
an agent for another person, regardless of whether that other person is the beneficial
owner of the amount paid, a flow-through entity, or another intermediary.
Nonqualified Intermediary (NQI)A Nonqualified Intermediary is a foreign intermediary who is not a U.S. person and
that is not a Qualified Intermediary.
PayerA payer is the person for whom the withholding agent acts as a paying agent pursuant
to an agreement whereby the withholdingagent agrees to withhold and report a
payment.
Presumption RulesThe presumption rules are thoserules prescribed under Chapter 3 and Chapter 61
of the Internal Revenue Code that a withholding agent must follow to determine
the status of a beneficial owner as a U.S. or foreign person when it cannot reliably
associate a payment with valid documentation.
July 28, 20081982008–30 I.R.B.

ElementDescription
Pro-Rata Basis ReportingIf the withholding agent has agreed that an NQI may provide information allocating
a payment to its account holders under the provisions of Regulations section
1.1441–1(e)(3)(iv)(D), and the NQI fails to allocate the payment in a withholding rate
pool to the specific recipients in the pool, the withholding agent must file a Form
1042-S for each recipient on a pro-rata basis.
Qualified Intermediary (QI)A Qualified Intermediary is a foreign intermediary who is a party to a withholding
agreement with the IRS, in which it agrees to comply with the relevant terms of
Chapters 3 and 61 of the Internal Revenue Codeand is in a country with approved
know-your-customer rules. See Notice 2006–35, 2006–1 C.B. 708.
Qualified Intermediary Employer
Identification
A nine-digit number assigned by IRS to a QI for Federal tax reporting purposes. A
QI-EIN is only to be used when a QI is acting as a qualified intermediary.
RecipientPerson (nonresident alien individual, fiduciary, foreign partnership, foreign
corporation, Qualified Intermediary, Withholding Rate Pool, or other foreign entity)
who receives payments from a withholding agent as a beneficial owner or as a
qualified intermediary acting on behalf of a beneficial owner. A non-qualified
intermediary cannot be a recipient.
Replacement File
A replacement file is an information return file sent by the filerat the request of
IRS/ECC-MTBbecause of certain errors encountered while processing the filer’s
original submission.
Service BureauPerson or organization with whom the withholding agent has a contract to prepare
and/or submit information return files to IRS/ECC-MTB. A parent company
submitting data for a subsidiary is not considered a service bureau.
Social Security Number (SSN)A nine-digit number assigned by Social Security Administration to an individual for
wage and tax reporting purposes.
Special CharacterAny character that isnota numeric, an alpha, or a blank.
Taxpayer Identification Number (TIN)Refers to either an Employer Identification Number (EIN), Social Security Number
(SSN), Individual Taxpayer Identification Number (ITIN), or a Qualified Intermediary
Employer Identification Number (QI-EIN).
Tax YearThe year in which payments were made by a withholding agent to a recipient.
TransmitterRefers to the person or organization submitting file(s) electronically. The transmitter
may be the payer, agent of the payer, or withholding agent.
Transmitter Control Code (TCC)A five-character alpha/numeric number assigned by IRS/ECC-MTB to the transmitter
prior to filing electronically. An application Form 4419 must be filed with
IRS/ECC-MTB to receive this number. Thisnumber is insertedin the Transmitter
“T” Record ( field positions 190–194) of the file andmustbe present before the file
can be processed. Transmitter Control Codes assigned to 1042-S filers will always
begin with“22”.
Unknown RecipientFor this Revenue Procedure,an unknown recipient is arecipient for whom no
documentation has been received by a withholding agent or intermediary or for which
documentation received cannot be reliablyassociated. This includes incomplete
documentation. An unknown recipient is always subject to withholding at the
maximum applicable rate. No reduction of or exemption from tax may be applied
u
nderanycircumstances.
VendorVendors include service bureaus that produce information return files on electronic
files for withholding agents. Vendors also include companies that provide software
for those who wish to produce their own electronic files.
2008–30 I.R.B.199July 28, 2008

ElementDescription
Withholding AgentAny person, U.S. or foreign, who has control, receipt, or custody of an amount
subject to withholding or who can disburse or make payments of an amount subject to
withholding. The withholding agent may be an individual, corporation, partnership,
trust, association, or any other entity. Theterm withholding agent also includes, but is
not limited to, a qualified intermediary, a nonqualified intermediary, a withholding
foreign partnership, a withholding foreign trust, a flow-through entity, a U.S. branch
of a foreign insurance company or foreign bank that is treated as a U.S. person, and an
authorized foreign agent. A person may be a withholding agent under U.S. law even
if there is no requirement to withhold from a payment or even if another person has
already withheld the required amount from a payment.
Withholding Foreign Partnership (WP) or
Withholding Foreign Trust (WT)
A foreign partnership or trust that has entered into a withholding or Withholding
Foreign Trust agreement with the IRS in which it agrees to assume primary
withholding responsibility for all payments that are made to it for its partners,
beneficiaries, or owners.
Sec. 13. State Abbreviations
.01The following state and U.S. territory abbreviations are to be used when developing the state code portion of address fields.
This table provides state and territory abbreviations.
StateCodeStateCodeStateCode
AlabamaALKansasKSNo. Mariana IslandsMP
AlaskaAKKentuckyKYOhioOH
American SamoaASLouisianaLAOklahomaOK
ArizonaAZMaineMEOregonOR
ArkansasARMarylandMDPennsylvaniaPA
CaliforniaCAMassachusettsMAPuerto RicoPR
ColoradoCOMichiganMIRhode IslandRI
Connectic
ut
CTMinnesotaMNSouth Caro
lina
SC
DelawareDEMississippiMSSouth DakotaSD
District of ColumbiaDCMissouriMOTennesseeTN
Federated States of Micronesia FMMontanaMTTexasTX
FloridaFLNebraskaNEUtahUT
GeorgiaGANevadaNVVermontVT
GuamGUNew Hamp
shire
NHVirgini
a
VA
HawaiiHINew JerseyNJU.S. Virgin IslandsVI
IdahoIDNew MexicoNMWashingtonWA
IllinoisILNew YorkNYWest VirginiaWV
IndianaINNorth CarolinaNCWisconsinWI
IowaIANorth DakotaNDWyomingWY
.02When reporting APO/FPO addresses use the following format:
July 28, 20082002008–30 I.R.B.

EXAMPLE:
Recipient NamePVT Willard J. Doe
Mailing AddressCompany F, PSC B
ox 100
167InfantryREG
T
Recipient CityAPO (or FPO)
Recipient StateAE, AA, or AP*
Recipient ZIP Code098010100
*AE is the designation for ZIPs beginning with 090–098, AA for ZIP 340, and AP for ZIPs 962–966.
Part B. Electronic Filing Specifications
Note:The FIRE System DOES NOT provide fill-in forms, except for Form 8809, Application for Extension of Time To File Infor-
mation Returns.Filers must program files according to the Record Layout Specifications contained in this publication. For a
list of software providers, log on to w
ww.irs.govandgototheApprovedIRSe-fileforBusinessProviderslink. Also, see Part
A, Sec. 5 .03.
Sec. 1. General
.01Electronic filing of Form 1042-S (originals, amended and replacement files) is a reporting method for filers submitting 250 or
more 1042-S Forms. Payers who are under the filing threshold requirement, are encouraged to file electronically.
.02All electronic filing of information returns are received at IRS/ECC-MTB via the FIRE (Filing Information Returns Elec-
tronically) System. To connect to the FIRE System, point your browser to h
ttp://fire.irs.gov. The system is designed to support the
electronic filing of information returns only.
.03For files submitted on the FIRE System, it is the responsibility of the filer to check the status of your file within 5 business days
to verify the results of your transmission. IRS/ECC-MTB will no longer mail error reports to filers for files that are bad. Information
about the errors including the number of errors, a description and the first occurrence will be provided on the FIRE System. If addi-
tional information is needed to understand the errors, the filer can call toll-free 1–866–455–7438 or outside the U.S. at 304–263–8700.
.04The electronic filing of information returns is not affiliated with any other IRS electronic filing programs. Filers must obtain
separate approval to participate in each of them. Only inquiries concerning electronic filing of information returns should be directed
to IRS/ECC-MTB.
.05Files submitted to IRS/ECC-MTB electronically must be in standard ASCII code. Do not send paper forms with the same
information as electronically submitted files. This would create duplicate reporting resulting in penalty notices. See Part C, Record
Format Specifications and Record Layouts.
.06Form 8809, Application for Extension of Time To File Information Returns, is available as a fill-in form viathe FIRE System.
If you do not already have a User ID and password refer to Section 7. At the Main Menu, click “Extension of Time Request” and
then click “Fill-in Extension Form”. This option is only used to request an automatic 30-day extension and must be completed by the
due date of the return for each payer requesting an extension. Print the approval page for you records. Refer to Part D for additional
details.
Sec. 2. Electronic Filing Approval Procedure
.01Filers must obtain, or already have, a Transmitter Control Code (TCC) assigned prior to submitting files electronically. Refer
to Part A, Sec. 6, for information on how to obtain a TCC.
.02Once a TCC is obtained, electronic filers assign their own userID, password and PIN (Personal Identification Number) and do
not need prior or special approval. See Part B, Sec. 5, for more information on the PIN.
.03If a filer is submitting files for more than one TCC, it is notnecessary to create a separate logon and password for each TCC.
.04For all passwords, it is the user’s responsibility to rememberthe password and not allow the password to be compromised.
Passwords are user assigned at first logon and must be 8 alpha/numerics containing at least 1 uppercase, 1 lowercase, and 1 numeric.
However, filers who forget their password or PIN, can call attoll-free 1–866–455–7438 or outside the U.S. at 304–263–8700for
assistance. Users can change their passwords at any time from the main menu. The FIRE System may require users to change their
passwords on a yearly basis.
2008–30 I.R.B.201July 28, 2008

Sec. 3. Test Files
.01Filers are not required to submit a test file; however, the submission of a test file is encouraged for all new electronic filers to
test hardware and software. If filers wish to submit an electronic test file, itmustbe submitted to IRS/ECC-MTBno earlier than
November 1 of the current year, andno later thanFebruary 15, of the filing year.
.02IRS/ECC-MTB strongly encourages all electronic filers to submit a test. The test file must consist of a sample of each type of
record:
(a)Transmitter “T” Record
(b)Withholding Agent “W” Record
(c)Multiple Recipient “Q” Records(at least 11 recommended)
(d)Reconciliation “C” Record
(e)End of Transmission “F” Record
.03Use the Test Indicator“TEST”(upper case) in Field Positions 195–198 ofthe “T” Record to show this is a test file.
.04IRS/ECC-MTB will check the file to ensure it meets the specifications of this Revenue Procedure. For current filers, sending a
test file will provide the opportunity to ensure their software reflects all required programming changes. Filers are reminded that not
all validity, consistency, or math error tests will be conducted.
.05Filers who encounter problems while transmitting the electronic test file can contact IRS/ECC-MTBtoll-free at
1–866–455–7438 or outside the U.S. at 304–263–8700for assistance.
.06Within 5 days after your file has been sent, you will be notified via e-mail as to the acceptability of your file if you provide a
valid e-mail address on the “Verify Your FilingInformation” screen. If you are using e-mailfiltering software, configure your software
to accept e-mail from f
ire@irs.govand irs.e-helpmail@irs.gov. If the file is bad or you have not received an e-mail, within 5 days,
the filer must return to h
ttp://fire.irs.govto determine what the errors are in the file by clicking on CHECK FILE STATUS.
Sec. 4. Electronic Submissions
.01Electronically filed information may be submitted to IRS/ECC-MTB 24 hours a day, 7 days a week. Technical assistance will
be available Monday through Friday between 8:30 a.m. and 4:30 p.m. Eastern Standard Time by callingtoll-free at 1–866–455–7438
or outside the U.S. at 304–263–8700.
.02 The FIRE System will be down during the last week of December through the first week of January.This allows
IRS/ECC-MTB to update its systemto reflect current year changes.
.03If you are sending files larger than 10,000 records electronically, data compression is encouraged. If you are considering
sending files larger than 5 million records, please contact IRS/ECC-MTB for specifics. WinZip and PKZip are the only acceptable
compression packages. IRS/ECC-MTB cannot accept self-extracting zip files or compressed files containing multiple files. The time
required to transmit information returns electronically will vary depending upon the type of connection to the Internet and if data
compression is used.The time required to transmit a file can be reduced by as much as 95 percent by using compression.
.04Transmitters may create files using self assigned files name(s). Files submitted electronically will be assigned a new unique
file name by the FIRE System. The filename assigned by the FIRE System will consist of submission type (TEST, ORIG [original],
AMEN [amended return],and REPL [replacement]), the filer’s TCC and a four-digit number sequence. The sequence number will
be incremented for every file sent. For example, if it is your first original file for the calendar year and your TCC is 22000, the IRS
assigned filename would be ORIG.22000.0001.Record the filename.This information will be neededby IRS/ECC-MTB to identify
the file, if assistance is required.
.05If a file was submitted timely and is bad, the filer will have up to 60 days from the day the file was transmitted to transmit an
acceptable file. If an acceptable file is not received within 60 days, the payer could be subject to late filing penalties.
.06The following definitions have been provided to help distinguish between an amended return and a replacement:
•Anamended returnis an information return submitted by the transmitter to correct an information return that was previously
submitted to and processed by IRS/ECC-MTB, but contained erroneous information.(See Note.)
Note:Amended returns should only be submitted for records that have been submitted incorrectly, not the entire file.
•Areplacementis an information return file sent by the filer because the CHECK FILE STATUS option on the FIRE System
indicated the original/amended file was bad. After the necessarychanges have been made, the file must be transmitted through
the FIRE System. (See Note.)
Note: Filers should never transmit anything to IRS/ECC-MTB as a “Replacement” file unless the CHECK FILE STATUS
option on the FIRE System indicates the file is bad.
.07The TCC in the Transmitter “T” Record must be the TCC used to transmit the file; otherwise, the file will be considered an
error.
July 28, 20082022008–30 I.R.B.

Sec. 5. PIN Requirements
.01User will be prompted to create a PIN consisting of 10 numericswhen establishing their initial logon name and password.
.02The PIN is required each time an ORIGINAL, AMENDED, or REPLACEMENT file is sent electronically and is permission
to release the file. It is not needed for a TEST file. An authorized agent may enter their PIN, however, the payer is responsible for the
accuracy of the returns. The payer will be liable for penalties for failure to comply with filing requirements. If you forget your PIN,
please calltoll-free at 1–866–455–7438 or outside the U.S. at 304–263–8700for assistance.
Sec. 6. Electronic Filing Specifications
.01The FIRE System is designed exclusively for the filing of Forms 1042-S, 1098, 1099, 5498, 8027, and W-2G.
.02A transmitter must have a TCC (see Part A,Sec. 6) before a file can be transmitted.
.03Within 5 days, the results of the electronic transmission will be e-mailed to you providing you provide an accurate e-mail
address on the “Verify Your Filing Information” screen. If you are using e-mail filtering software, configure your software to accept
e-mail from f
ire@irs.govand irs.e-helpmail@irs.gov. If after receiving the e-mail it indicates that your file is bad, you must log into
the FIRE System and go to the CHECK FILE STATUS area of the FIRE System to determine what the errors are in your file.
Sec. 7. Connecting to the FIRE System
.01Point your browser to http://fire.irs.govto connect to the FIRE System.
.02Before connecting, have your TCC and TIN available.
.03Your browser must support SSL 128-bit encryption.
F
irsttimeconnectiontotheFIRESystem(If you have logged on previously, skip to Subsequent Connections to the FIRE
System.)
Click“Create New Account”.
Fill out the registration form and click“Submit”.
Enter yourUser ID(most users logon with their first and last name).
Enter and ver
ify yourpassword(the password is user assigned and must be 8 alpha/numerics,
containing
at least 1 uppercase, 1 lowercase and 1 numeric). FIRE may require you to change
the passwor
d once a year.
Click“Create”.
If you receive the message“Account Created”,click“OK”.
Enter and verify your 10-digit self-assigned PIN (Personal Identification Number).
Click“Submit”.
If you rece
ive the message“Your PIN has been successfully created!”,click“OK”.
Read the bulletin(s) and/or click“Click here to continue”.
S
ubsequentconnectionstotheFIRESystem
Click“Lo
gOn”.
Enter yourUser ID(most users logon with their first and last name).
Enter yourpassword(the password is user assigned and is case sensitive).
U
ploadi
ngyourfiletotheFIRESystem
At Menu O
ptions:
Click“Send Information Returns”
Enter yourTCC:
Enter yourTIN:
Click“Submit”.
2008–30 I.R.B.203July 28, 2008

Uploadingyourf
iletotheFIRESystem
The system will t
hen display the company name, address, city, state, ZIP Code, telephone
number, contact
and e-mail address. This information will be used to e-mail the transmitter
regarding this t
ransmission. Please verify your e-mail address is correct as this will be
increasingly u
sed to contact filers in the future. Update as appropriate and/or Click“Accept”.
Click one of the following:
Original File
Amended File
Test File(Th
is option will only be available November 1 through February
15.)
Replacement File(Click on the file to be replaced.)
Enter your 10-digit PIN.
Click“Submit”.
Click“Browse”to locate the file and open it.
Click“Upload”.
When the u
pload is complete, the screen will display the total bytes received and tell you the name of the file you just
uploaded
. Record this information.
If you have more files to upload for that TCC:
Click“File Another?”;otherwise,
Click“M
ain Menu”.
If you do not receive an e-mail in 5 business days or your e-mail indicates the file is bad, logback into the FIRE System and
click on CHECK FILE STATUS to view the results of your file.
CheckingyourFILESTATUS
At the Main Menu:
Click“Check File Status”.
Enter yourTCC:
Enter yourTIN:
Click“Search”.
If “Results” indicate:
“Good, Not Released”and you agree with the “Count of Payees”, you
are finished with this file. The file will automatically be released after 10
calendar days unless you contact us within this timeframe.
“Good, Released”—File has been released to our mainline processing.
“Bad”— Correct the errors and timely resubmit the file as a “replacement”.
“Not yet processed”—File has been received, but we do not have results
available yet. Please check back in a few days.
Click on the desired file for a detailed report of your transmission.
When you are finished, click onMain Menu.
Click“Log Out”
Close your Web Browser.
Sec. 8. Common Submission Problems and Questions
.01Publication 1187 is a format document,nota tax law document. Therefore, this publication cannot provide for all possible
reporting situations. For any given record entry, it is the responsibility of the filer to make sure that the relevant tax law is applied to
the record entry being made.
July 28, 20082042008–30 I.R.B.

FORMATERRORS
1. Incorrect TIN indicator in the “W” Record.
Be careful that the correct TIN Indicator is used. A U.S. withholding agent always has an EIN. Only a foreign withholding agent
that has entered into a Qualified Intermediary agreement with the IRS can have a QI-EIN. If the withholding agent is a foreign
company, then a foreign address must be entered in the withholding agent address fields.
2.Blank or invalid information in the Withholding Agent’s name and address fields.
The IRS error correction process requires that the “W” Recordbe checked for validity before the “Q” Record can be corrected.
Please ensure that the withholding agent’s Name, EIN, StreetAddress, City and State or Country is present along with the
appropriate Postal or ZIP Code. Withholding Agent’s Name Line-1mustcontain the withholding agent’s name.
3. Missing Recipient TIN in the “Q” Record.
A Recipient TINmustbe present in order to allow a reduction or exemption from withholding at the 30% tax rate. The only major
exceptions to this rule involve payments of portfolio interest, dividends, and certain royalty payments. If the recipient doesn’t have
a TIN, one must be applied for and provided to the withholding agent before a reduction or exemption of withholding is allowed.
4. Invalid recipient name and address information.
The recipient name entered in Recipient’s Name Line-1 must be the same name shown on the withholding certification document
provided to and retained by the withholding agent. Recipient’s Street Line-1 should only show the official street address. Use
Recipient’s Street Line-2 for additional internal distribution information such as mail stop numbers or attention information.
Follow the instructions for entry of foreign postal codes, cities and countries. Do not input all information in the City field.
Use the appropriate fields and codes.
5. Incorrect use of Recipient Code 20 (Unknown Recipient).
This Recipient Code may be usedonlyif no withholding certification document has been provided to and retained by the
withholding agent, or the withholding certification document provided to and retained has been determined by the withholding
agent to be incomplete or otherwise unreliable. If Recipient Code 20 is used then Recipient Name Line-1 must contain the words
“UNKNOWN RECIPIENT” and the other name and address fields must be blank.
6. Incorrect use of Recipient Code 20 and the Tax Rate and U.S. Tax Withheld fields.
If Recipient Code 20 is used, the Tax Rate and the U.S. Tax Withheld must always be 30%. Exemption Code 04 (treaty
exemption)CANNOT BE USED.
7. Incorrect use of Country Codes in the “Q” Record.
There are 3 places in the “Q” Record where country information must be entered. Generally, the information entered in these three
fields should be consistent. The country list in the Instructions for Form 1042-S is comprehensive.Do notuse any code that isn’t
on the list. Read the instructions for Form 1042-S regarding the use of “OC” and “UC”.Do notuse these two codes under any
circumstance other than those specifically indicated in the Instruction for Form 1042-S.
8. Incorrect reporting of Tax Rates in the “Q” Record.
A valid Tax Rate Table can be found in the Instructions for Forms1042-S. Please refer to table and only use the tax rates listed.
“Blended rates” are not allowed. If a tax rate for a given recipient changes during the year, two “Q” Records must be submitted.
9. Total amounts reported in the “C” Record do not equal the total amounts reported in the “Q” Records.
The total Gross Income and U.S. Tax Withheld reported in the “Q” Record must equal the Total Gross Income and Total U.S.
Tax Withheld reported in the corresponding “C” Record.
.02The following are the major errors associated with electronic filing:
N
ON-FORMATERRORS
1. SPAM filters are not set to receive e-mail from fire@irs.govand irs.e-helpmail@irs.gov.
If you want to receive e-mails concerning your files, processingresults, reminders and notices, set your SPAM filter to receive
e-mail from f
ire@irs.govand irs.e-helpmail@irs.gov.
2008–30 I.R.B.205July 28, 2008

2. Incorrect e-mail provided.
When the “Verify Your Filing Information” screen is displayed, make sure your correct e-mail is displayed. If not, please
update with the correct e-mail.
3. Transmitter does not check the FIRE Systemtodeterminewhythefileisbad.
The results of your file transfer are posted to the FIRE System within five business days. If the correct e-mail address was provided
on the “Verify Your Filing Information” screen when the file was sent, an e-mail will be sent regarding your FILE STATUS. If the
results in the e-mail indicate “Good, Released” and you agree with the “Count of Payees”, then you are finished with this file. If
you have any other results, please follow the instructions in the Check File Status option. If the file contains errors, you can get an
online listing of the errors. Date received and number of payee records are also displayed. If the file is good, but you do not want
the file processed, you must contact IRS/ECC-MTB within 10 calendar days from the transmission of your file.
4. Transmitter uses the TCC assigned for filing 1098, 1099, 5498 or W-2G Forms.
Use your Form 1042-S TCC which begins with “22” to transmit your 1042-S file, otherwise, it will be automatically considered
an error.
5. Incorrect file is not replaced timely.
If we have advised you your file is bad, correct the file and timely resubmit as a replacement.
6. Transmitter compresses several files into one.
Only compress one file at a time. For example, if you have 10 uncompressed files to send, compress each file separately and
send 10 separate compressed files.
7. Transmitter sends a file and CHECK FILE STATUS indicates that the file is good, but the transmitter wants to send a
replacement or amended file to replace the original/amended/replacement file.
Once a file has been transmitted, you cannot send a replacement file unless CHECK FILE STATUS indicates the file is bad
(5 business days after file was transmitted). If you do not want us to process the file, you must first contact ustoll-free at
1–866–455–7438 or outside the U.S. at 304–263–8700to see if this is a possibility.
8. Transmitter sends an original file that is good, and thensends an amended file for the entire file even though there are
only a few changes.
The amended file, containing the proper coding, should only contain the records needing correction, not the entire file.
9. File is formatted as EBCDIC.
All files submitted electronicallymust be in standard ASCII code.
10. Transmitter has one TCC number, but is filing for multiple companies, which TIN should be used when logging
into the system to send the file?
When sending the file electronically, youwill need to enter the TIN of the company assigned to the TCC. When you upload the
file, it will contain the TINs for the other companies that you are filing for. This is the information that will be passed forward.
11. Transmitter sent the wrong file, what should be done?
Call us as soon as possibletoll-free at 1–866–455–7438 or outside the U.S. at 304–263–8700.Wemaybeabletostopthefile
before it has been processed.Please do not send a replacement for a file that is marked as a good file.
Part C. Record Format Specifications and Record Layouts
Sec. 1. Transmitter “T” Record
.01This record identifies the entity preparing and transmitting the file. The transmitter and the withholding agent may be the same,
but they need not be.
.02ThefirstrecordofafileMUSTbe a Transmitter “T” Record. The “T” Record must appear on each electronic file; otherwise,
a replacement file may be requested.
.03The “T” Record is a fixed length of 820 positions.
.04All alpha characters entered in the “T” Record must be upper case.
Note 1: For all fields marked “Required”, the transmitter must provide the information described under Description and
Remarks. If required fields are not completed in accordance with these instructions,IRS will contact you to request a replace-
July 28, 20082062008–30 I.R.B.

ment file. For those fields not marked Required, a transmittermust allow for the field, but may be instructed to enter blanks
or zeroes in the indicated field position(s) and for the indicated length.All records have a fixed length of 820 positions.
Note 2: A copy of the current Instructions for Form 1042-S for this revision of the Publication 1187 is included at the end of
this publication. These instructions should be used for the proper coding of each field in this record where applicable. The
instructions are updated each year as required.Since Publication 1187 may not be revised every year, be sure to use the most
current instructions.
Note 3: Valid characters for all name and address fields are alpha, numeric, blank, ampersand (&), hyphen (-), comma (,),
apostrophe (’ ), forward slash (/), pound sign (#), period (.), and the percent (%). The percent [% (used as “in care of”)] is
valid in the first position only.
Record Name: Transmitter “T” Record
Field
Positions
Field Title
Length
Description and Remarks
1Record Type1
Required.Enter“T”.
2–5
Tax Year4
Required.Enter year for which income and withholding are being reported.
6–14Transmitter’s
Taxpayer
Identification
Number (TIN)
9
Required.Enter the Taxpayer Identification Number of the Transmitter. This can
be a Social Security Number (SSN), Individual Taxpayer Identification Number
(ITIN), Employer Identification Number (EIN) or Qualified Intermediary Number
(QI-EIN).DO NOT ENTER blanks, hyphens or alpha characters.ATIN
consisting of all the same digits (e.g., 111111111) is not acceptable.
15–54
Transmitter’s Name 40
Required.Enter name of transmitter of file. Abbreviate if necessary to fit
40-character limit. Omit punctuation ifpossible. Left-justify and blank fill.
Note: Do not use special characters in names or addresses that are unique to a language other than English. For example:
å=A,æ=A,ü=U,Ø=O,ň=N,etc.
55–94
Transmitter’s
Address
40
Required.Enter full mailing address of the transmitter. This will include number,
street, and apartment or suite number (P.O. Box can be used if mail is not delivered
to street address). Abbreviate as needed tofit 40-character limit. Omit punctuation
if possible. Left-justify and blank fill.
95–114
City20
Required.Enter the city or town (or other locality name) of transmitter. If
applicable, enter APO or FPO only. Left-justify and blank fill.
115–116
State Code2
Required if U.S. Transmitter.Enter only the two-alpha State Code. DO NOT
spell out the state name. See State Code Table Part A, Sec. 13.
117–118 Province Code2
Required if Foreign CountryCodeis“CA”(Canada).Enter only the two-alpha
character Province Code as shown in the Province Code table.DO NOT spell out
the Province Name. If foreign country other than Canada, blank fill.
Province CodeProvince
ABAlberta
BCBritish Columbia
MBManitoba
NBNew Brunswick
NLNewfoundland and Labrador
NSNova Scotia
NTNorthwest Territories
NUNunavut
ONOntario
PEPrince Edward Island
QCQuebec
SKSaskatchewan
YKYukon Territory
2008–30 I.R.B.207July 28, 2008

Record Name: Transmitter “T” Record
Field
Positions
Field Title
Length
Description and Remarks
119–120 Country Code2
Required if Foreign Transmitter. If Country Code is present, State Code field
MUST be blank.Enter only the two-alpha Country Code from the Country Code
table.DO NOT spell out the Country Name.
Note: COUNTRY CODES: The list of country codes provided in the current Instructions for Form 1042-S includes all
internationally recognized country codes and must be used to ensure the proper coding of the Country Code field. This list
is updated each year as required. Do not enter U.S. in the Country Code field.
121–129 Postal or ZIP Code 9
Required.Enter up to nine numeric characters for all U.S. addresses (including
territories, possessions and APO/FPO). For foreign addresses enter the
alpha/numeric foreign postal code, if applicable. Enter this code in the left most
position and blank fill the remaining positions.DO NOTuse hyphens or blanks
between numbers or letters (e.g., if the postal code is written as A6B 3C5 input as
A6B3C5). Left-justify.
130–169 Contact Name40
Required.Enter the name of the person to contact if any questions should arise
with the transmission.
170–189 Contact Telephone
Number
20
Required.Enter the contact person’s telephone number, and extension, if
applicable. If foreign, provide appropriate codes for overseas calls. Left-justify.
190–194 Transmitter Control
Code (TCC)
5Required.Enter the five-character alpha/numeric TCC assigned ONLY for Form
1042-S reporting. (The first two numbers will always be22.)All alpha characters
must be upper case.
195–198
Test Indicator4
Required if this is a test file.Enter the word “TEST”. Otherwise, enter blanks.
199Prior Year Indicator 1
Required.Enter a “P” only if reporting prior year data; otherwise, enter blank. Do
not enter a “P” for current year information.
200–810 Reserved
611
Enter blanks.
811–818 Record Sequence
Number
8
Required.Enter the number of the record as it appears within your file. The record
sequence number for the “T” record will always be “1” (one), since it is the first
record on your file and you can have only one “T” record in a file. Each record,
thereafter, must be incremented by one in ascending numerical sequence, i.e., 2,
3, 4, etc. Right-justify numbers with leading zeroes in the field. For example, the
“T” record sequence number would appear as “00000001” in the field, the first
“W” record would be “00000002”, the first “Q” record, “00000003”, the second
“Q” record, “00000004” and so on until you reach the final record of the file, the
“F” record.
819–820 Blank or Carriage
Return Line Feed
2Enter blanks or carriage returnline feed (CR/LF) characters.
Transmitter “T” Record Layout
Record
Type
Tax
Year
Transmitter’s
TIN
Transmitter’s
Name
Transmitter’s
Address
CityState Code Province
Code
1
2–5
6–14
15–5455–9495–114115–116
117–118
July 28, 20082082008–30 I.R.B.

Country
Code
Postal
or
ZIP
Code
Contact
Name
Contact
Telephone
Number
TCCTest
Indicator
Prior Year
Indicator
Reserved Record
Sequence
Number
Blank or
Carriage
Return
Line Feed
119–120 121–129 130–169170–189190–194
195–198
199200–810 811–818 819–820
Sec. 2. Withholding Agent “W” Record
.01The “W” Record identifies the Withholding Agent.
.02Enter a “W” Record after the initial “T” Record on the file, followed by the Recipient “Q” Records, and a Reconciliation “C”
Record. Donotreport for a withholding agent if there are no corresponding Recipient “Q” records.
.03Several “W” Records for different Withholding Agents may appear on the same Transmitter’s File.
.04Each “W” Record is a fixed length of 820 positions.
.05All alpha characters entered in the “W” Record must be uppercase.
Note 1: For all fields marked “Required”, the transmitter m
ustprovide the information described under Description and
Remarks. If required fields are not completed in accordance withthese instructions, your file may not process correctly. For
those fields not marked “Required”, a transmitter must allow for the field, but may be instructed to enter blanks or zeroes in
the indicated field position(s) and for the indicated length.All records have a fixed length of 820 positions.
Note 2: A copy of the current Instructions for Form 1042-S for this revision of the Publication 1187 is included at the end of
this publication. These instructions should be used for the proper coding of each field in this record where applicable. The list
of country codes in the instructions includes all recognized country codes andMUST be used for coding. The instructions are
updated each year as required.Since Publication 1187 may not be revised every year, be sure to use the most current instructions.
Note 3: Valid characters for all name and address fields are alpha, numeric, blank, ampersand (&), hyphen (-), comma (,),
apostrophe (’ ), forward slash (/), pound sign (#), period (.), and the percent (%). The percent [% (used as “in care of”)] is
valid in the first position only.
Record Name: Withholding Agent “W” Record
Field
Positions
Field Title
Length
Description and Remarks
1Record Type1
Required.Enter“W”.
2ReturnType
Indicator
1
Required.Enter the one position value below to identify whether the record is
Original or Amended.If submitting a replacement file, use the same indicator as
the file being replaced(e.g., if you are replacing an amended file the indicator
would be 1).Do not enter a blank or alpha character.
Acceptable Values are:
• 0 (Zero) = Original
•1=Amended
3ProRataBasis
Reporting
1
Required.Enter the one position value below to identify if reporting on a Pro
Rata Basis.
Acceptable Values are:
• 0 (Zero) = Not Pro Rata
• 1= Pro Rata Basis Reporting
4–12Withholding
Agent’s EIN
9
Required.Enter the nine-digit Employer Identification Number of the Withholding
Agent. DoNOTenter blanks, hyphens or alpha characters. An EIN consisting of
all the same digits (e.g., 111111111) is not acceptable. DoNOTenter the recipient’s
TIN in this field.
2008–30 I.R.B.209July 28, 2008

Record Name: Withholding Agent “W” Record
Field
Positions
Field Title
Length
Description and Remarks
Note: See current Instructions for Form 1042-S to determine when a Qualified Intermediary, Withholding Foreign
Partnership, or Withholding Foreign Trust must provide its QI-EIN, WP-EIN or WT-EIN in this field.
13Withholding
Agent’s EIN
Indicator
1
Required.Enter the Withholding Agent’s EIN indicator from the following values:
•0=EIN
• 1= QI-EIN, WP-EIN, WT-EIN
• 2= NQI-EIN
Note: Use EIN indicator 1 only if the Withholding Agent’s EIN begins with “98” A
NDthe Withholding Agent’s City, State
and Country Code fields indicate that the Withholding Agent is n
ota U.S. withholding agent.
14–53
Withholding
Agent’s Name
Line-1
40
Required.Enter the Withholding Agent’s Name as established when filing for the
EIN or QI-EIN which appears in position4–12 of the “W” Record. Left-justify
and blank fill.
Note: Do not use special characters in names or addresses that are unique to a language other than English. For example:
å=A,æ=A,ü=U,Ø=O,ň=N,etc.
54–93
Withholding
Agent’s Name
Line-2
40Enter supplementary withholding agent’s name information; otherwise, enter
blanks. Use this line for additional names (e.g., partners or joint owners), for trade
names, stage names, aliases or titles. Also use this line for “care of” or “via”.See
Note 3 at the beginning of the “W” Record.
94–133Withholding
Agent’s Name
Line-3
40See above.
134–173 Withholding
Agent’s Street
Line-1
40
Required.Enter the mailing address of the withholding agent. Street address
should include number, street, and apartment or suite number (or P.O. Box if mail is
not delivered to street address). Abbreviate as needed. Left-justify and blank fill.
174–213 Withholding
Agent’s Street
Line-2
40Enter supplementary withholding agentstreet address information. Otherwise,
blank fill.
214–253
Withholding
Agent’s City
40
Required.Enter the city or town (or other locality name). Enter APO or FPO
only if applicable.Do notenter a foreign postal code in the city field. Left-justify
and blank fill.
254–255
Withholding
Agent’s State Code
2
Required if Withholding Agent has a U.S. address.Enter the two-character State
Code abbreviation. If not a U.S. state, territory or APO/FPO identifiers, blank fill.
Do not use any of the two character Country Codes in the State Code field.
Note: If the withholding agent has a U.S. address, leave the country code in positions 258–259 blank.
256–257
Withholding
Agent’s Province
Code
2
Required if Foreign CountryCodeis“CA”(Canada).Enter only the two-alpha
character Province Code as shown in the Province Code Table. See “T” record
positions 117–118 for Province Code Table.DO NOT spell out the Province
Name. If foreign country other than Canada, blank fill.
258–259
Withholding
Agent’s Country
Code
2
Required if QI or NQI or other foreign withholding agent.Enter only the
two-alpha Country Code from the Country Code Table.DO NOT spell out the
Country Name.
Note: COUNTRY CODES: The list of country codes provided in the current Instructions for Form 1042-S includes all
internationally recognized country codes and MUST be used to ensure the proper coding of the Country Code field. This
list is updated each year as required. Do not enter U.S. in the Country Code field.
July 28, 20082102008–30 I.R.B.

Record Name: Withholding Agent “W” Record
Field
Positions
Field Title
Length
Description and Remarks
260–268 Postal or ZIP Code 9
Required.Enter up to nine numeric characters for all U.S. addresses (including
territories, possessions and APO/FPO). For foreign addresses enter the
alpha/numeric foreign postal code, if applicable. Enter this code in the left most
position and blank fill the remaining positions.DO NOTuse hyphens or blanks
between numbers or letters (e.g., if the postal code is written as A6B 3C5 input as
A6B3C5.) Left-justify.
269–272 Tax Year4
Required.Enter the four-digit year of the current tax year unless you entered a
“P” in the Prior Year Indicator Field of the“T” Record. All recipient “Q” Records
must report payments for this year only. Different tax years may not appear on
the same file.
273–317 Withholding Agent
Contact Name
45Required.Enter the name of the person IRS can contact if questions arise
concerning this filing. Left-justify and blank fill the remaining positions.
318–362 Withholding
Agent’s Department
Title
45Required.Enter the title of the contact person or the dept. which can handle
inquiries concerning this filing. Left-justify and blank fill the remaining positions.
363–382 Contact Telephone
Number and
Extension
20
Required.Enter the telephone number of a person to contact regarding electronic
files. Omit hyphens. If no extension is available, left-justify and fill unused
positions with blanks. If foreign, provide appropriate codes for overseas call.
383Final Return
Indicator
1
Required.Enter the one position value below to indicate whether you will be
filing Forms 1042-S in the future.
• 0 (Zero) = will be filing
• 1= will not be filing
384–810 Reserved427Enter blanks.
811–818 Record Sequence
Number
8
Required.Enter the number of the record as it appears within your file. The record
sequence number for the “T” record will always be “1” (one), since it is the first
record on your file and you can have only one “T” record in a file. Each record,
thereafter, must be incremented by one in ascending numerical sequence, i.e., 2,
3, 4, etc. Right-justify numbers with leading zeroes in the field. For example, the
“T” record sequence number would appear as “00000001” in the field, the first
“W” record would be “00000002”, the first “Q” record, “00000003”, the second
“Q” record, “00000004” and so on until you reach the final record of the file, the
“F” record.
819–820 Blank or Carriage
Return Line Feed
2Enter blanks or carriage returnline feed (CR/LF) characters.
Withholding Agent “W” Record Layout
Record
Type
Return
Type
Indicator
Pro Rata
Basis
Reporting
Withholding
Agent’s EIN
Withholding
Agent’s EIN
Indicator
Withholding
Agent’s
Name
Line-1
Withholding
Agent’s
Name
Line-2
12 34–1213
14–5354–93
2008–30 I.R.B.211July 28, 2008

Withholding
Agent’s Name
Line-3
Withholding
Agent’s Street
Line-1
Withholding
Agent’s Street
Line-2
Withholding
Agent’s City
Withholding
Agent’s State
Code
Withholding
Agent’s
Province Code
Withholding
Agent’s
Country Code
94–133134–173174–213
214–253254–255256–257258–259
Postal or
ZIP Code
Tax YearWithholding Agent
Contact Name
Withholding Agent’s
Department Title
Contact Telephone
Number and Extension
Final Return
Indicator
260–268269–272273–317318–362363–382383
ReservedRecord Sequence NumberBlank or Carriage Return Line Feed
384–810811–818819–820
Sec. 3. Recipient “Q” Record
.01The “Q” Record contains name and address information for the Recipient of Income, Non-Qualified Intermediary or Flow-
Through Entity if appropriate, Payer, and all data concerning the income paid and tax withheld that is required to be reported under
U.S. law. Each Recipient “Q” Record is treated as if it were a separate Form 1042-S.
.02Since the “Q” Record is restricted to one type of income and onetax rate, under certain circumstances it may be necessary to
submit more than one “Q” Record for the same recipient. Failure to provide multiple Recipient “Q” Records when necessary may
generate math computation errors during processing. This will result in IRS contacting you for correct information.
.03Following are some of the circumstances when more than one “Q” Record for a recipient would be required:
(a)Different types of income. For example, Recipient X derived income from Capital Gains (Income Code 09) and Industrial
Royalties (Income Code 10). A separate “Q” Record must be reported for each Income Code, providing Gross Income Paid
and U.S. Federal Tax Withheld pertaining to that Income Code.
(b)Change in Country Code during the year. For example, the Withholding Agent received notification via Form W-8BEN that
the recipient’s country of residence for tax purposes changed from country X to country Y. A separate “Q” Record must be
reported for each Country Code providing Gross Income Paid, Tax Rate, U.S. Federal Tax Withheld and Exemption Code,
if any. The amounts reported must be based on each country.
(c)Change in a country’s tax treaty rate during the year. For example, effective April 1, countryX changes its tax treaty rate
from 10% to 20%. A separate “Q” Record must be reported foreach of the tax rates. Provide the Gross Income Paid, Tax
Rate, and U.S. Federal Tax Withheld under each tax rate.
.04All recipient “Q” Records for a particular Withholding Agent must be written after the corresponding Withholding Agent “W”
Record, followed by a Reconciliation“C” Record, and before the “W” Record for another Withholding Agent begins.
.05All alpha characters entered inthe “Q” Record must be upper case.
.06The “Q” Record is a fixed length of 820 positions.
.07Report income and tax withheld in whole dollars only. Round up or down as appropriate. To round off amounts to the nearest
whole dollar, drop amounts under 50 cents and increase to the next whole dollar amounts of 50 to 99 cents. If you have to add two or
more amounts to figure the amount to be reported, include cents when adding and only round off the total figure to be reported.DO
NOTenter cents.
Note 1: For all fields marked “Required”, the transmitter must provide the information described under Description and
Remarks. If required fields are not completed in accordance with these instructions,IRS will contact you to request a replace-
ment file. For those fields not marked “Required”, a transmitter must allow for the field, but may be instructed to enter blanks
or zeroes in the indicated field position(s) and for the indicated length.All records have a fixed length of 820 positions.
Note 2: A copy of the current Instructions for Form 1042-S for this revision of the Publication 1187 is included at the end of
this publication. These instructions should be used for the proper coding of each field in this record where applicable. The
list of country codes in the instructions includes all recognized country codes and MUST be used for coding. The instructions
are updated each year as required. Since Publication 1187 may not be revised every year, be sure to use the most current
instructions.
July 28, 20082122008–30 I.R.B.

Note 3: Valid characters for all name and address fields are alpha, numeric, blank, ampersand (&), hyphen (-), comma (,),
apostrophe (’ ), forward slash (/), pound sign (#), period (.), and the percent (%). The percent [% (used as “in care of”)] is
valid in the first position only.
Record Name: Recipient “Q” Record
Field
Positions
Field Title
Length
Description and Remarks
1Record Type1
Required.Enter“Q”.
2Return Type
Indicator
1
Required.Enter the one position value below to identify whether the record is
Original or Amended.If submitting a replacement file, use the same indicator as the
file being replaced (e.g., if you are replacing an amended file, the indicator would be
1).Must be the same value as in the “W” Record. Values are:
• 0 (Zero) = Original
• 1= Amended
3Pro Rata Basis
Reporting
1
Required.Enter the one position value below to identify whether reporting Pro
Rata Basis. Must be the same value as in the “W” Record. Values are:
• 0 (Zero) = Not Pro Rata
•1=ProRataBasisReporting
4–5
Income Code2
Required.Enter the two-position value EXACTLY as it appears from the income
code table. The Income Code must accurately reflect the type of income paid.DO
NOTenter blanks or 00 (zeroes).
Note: Refer to the currentInstructions for Form 1042-S for more information.
6–17Gross Income12
Required.Enter the gross income amount in whole dollars only, rounding to the
nearest dollar(do not enter cents). For example, report $600.75 as 000000000601.
An income amount of zero cannot be shown.Numeric only, right-justify and zero
fill.
Note: Do not report negative amounts in any amount field.
18–29Withholding
Allowance
12
Used with Income Codes 15 through 19 ONLY.Enter the withholding allowance
amount in whole dollars only, rounding to the nearest dollar(do not enter cents).
Numeric only, right-justify and zero fill. Otherwise, enter blanks.
30–41Net Income12
Required if Dollar Amount is Entered in Withholding Allowance Field.Enter
the net income in whole dollars only, rounding to the nearest dollar(do not enter
cents). An amount other than zeromustbe shown. Numeric only, right-justify
and zero fill. Otherwise, enter blanks.
42–45
Tax Rate4
Required.Enter the correct Tax Rate applicable to the income in gross income field
or net income field, as appropriate. Enter the Tax Rate as a 2-digit whole number
and 2-digit decimal (e.g., Enter 39.6% as 3960, 15% as 1500 or 6% as 0600). See
Note below.
Note: The correct Tax Rate must be entered, even if withholding was at a lesser rate. See the current Instructions for
Form 1042-S.
46–47Exemption Code2
Required. Read Carefully.
• If the tax rate entered is 0%, enter the appropriate exemption code “01”through
“09” from the current Instructions for Form 1042-S.
• If the tax rate entered is 1% through 30%, enter “00”.
• If the tax rate entered is 33% or higher, blank fill.DO NOTenter “00”.
See the current Instructions for Form 1042-S for circumstances under which
Exemption Code “99” must be used.
2008–30 I.R.B.213July 28, 2008

Record Name: Recipient “Q” Record
Field
Positions
Field Title
Length
Description and Remarks
Note: If an incorrect amount of tax was withheld, report the amount that was actually withheld and use the correct
tax rate in field positions 42–45.
48–49Recipient’s Country
of Residence Code
for Tax Purposes
2
Required.Enter the two-character Country Code for which the recipient is a
resident for tax purposes and on which the tax treaty benefits are based, whether or
not you are applying a tax treaty benefit to this payment. The rate of tax withheld is
determined by this code.
Note: Do not enter U.S. in the Country Code field. Enter “OC” (other country) onlywhen the country of residence does
not appear on the list or the payment is made to an international organization.
50–59Reserved10Enter blanks.
60–71Amount Repaid12This field should be completed only if:
• you repaid a recipient an amount that was over-withheld and you are going to
reimburse yourself by reducing, by the amount of tax actually repaid, the amount
of any deposit made for a payment period in the calendar year following calendar
year of withholding. Otherwise, enter blanks.
72–91Recipient Account
Number
20Enter the account number assigned by the withholding agent to the recipient.Do
notenter the recipient’s U.S. or foreignTIN. If account numbers are NOT assigned,
then blank fill. This field may contain numeric, alpha characters, blanks or hyphens.
Left-justify and blank fill.
92–93Recipient Code2
Required.Enter the appropriate Recipient Code. Refer to the list of appropriate
codes in the current Instructions for Form 1042-S. No other codes or values are valid.
Note: If recipient code “20” is used then Recipient’s Name Line-1 must be “UNKNOWN” or “UNKNOWN RECIPIENT”
and Recipient’s Name Lines 2 and 3 must be BLANK. The tax rate must be 30%.
94–133Recipient’s Name
Line-1
40
Required.Provide the complete name of the recipient. If the recipient has a U.S.
TIN, enter the name as established when applying for the TIN. If recipient code “20”
is used then “UNKNOWN” or “UNKNOWN RECIPIENT” must be entered and
Recipient’s Name Lines 2 and 3 must be blank. See current Instructions for Form
1042-S for specifics on “UNKNOWN RECIPIENT” and “WITHHOLDING RATE
POOL”.See Note 3 at the beginning of the “Q” Record.
Note 1: A Non-Qualified Intermediary (NQI) canNEVER be entered as the recipient.
Note 2: Do not use special characters in names or addresses that are unique to a language other than English. For
example: å = A, æ = A,ü=U,Ø=O,ň=N,etc.
134–173 Recipient’s Name
Line-2
40Enter supplementary recipient name information including titles; otherwise, enter
blanks. Use this line for additional names (e.g., partners or joint owners), for trade
names, stage names, aliases or titles. Also use this line for “care of”, “Attn.” or
“via”.See Note 3 at the beginning of the “Q” Record.
174–213 Recipient’s Name
Line-3
40See above.
214–253
Recipient’s Street
Line-1
40
Required.Enter the mailing address of the recipient. Street address should include
number, street, apartment, or suite number (or P.O. Box if mail is not delivered to
street address). Abbreviate as needed. Left-justify and blank fill.SeeNote3atthe
beginning of the “Q” Record.
254–293
Recipient’s Street
Line-2
40Enter supplementary recipient street address information. If a P.O. Box is used in
addition to a street address enterit here; otherwise, blank fill.
294–333 Recipient’s City40
Required.Enter the city or town (or otherlocality name). Enter APO or FPO
only, if applicable. Do not enter a foreign postal code in the city field. Left-justify
and blank fill.
July 28, 20082142008–30 I.R.B.

Record Name: Recipient “Q” Record
Field
Positions
Field Title
Length
Description and Remarks
334–335
Recipient’s State2
Required if U.S. address.Enter the two-character State Code abbreviation. If no
U.S. state, territory or APO/FPO identifier is applicable then blank fill.Do not use
anyofthetwocharacter Country Codes in the State Code Field.
Note: If the recipient has a U.S. address, leave the provincecode in positions 336–337 and country code in positions
338–339 blank.
336–337 Recipient’s
Province Code
2
Required if Recipient Country Code in positions 338–339 is “CA”.Enter only
the two-alpha character Province Code as shown in the Province Code Table. See
“T” record positions 117–118 for Province Code Table.DO NOT spell out the
Province Name. If foreign country other than Canada, blank fill.
338–339 Recipient’s
Country Code
2
Required if the recipient has a foreign address.Enter the two-character Country
Code abbreviation.
Note 1: If the state code is entered in positions 334–335, leave this field blank.
Note 2: COUNTRY CODES: The list of country codes provided in the current Instructions for Form 1042-S includes
all internationally recognized country codes and MUST be used to ensure the proper coding of the Country Code field.
This list is updated each year as required.
Note 3: Enter “UC” (unknown country) o
nlyif the payment is to an unknown recipient. If you are making a payment to a
QI or QI withholding rate pool, enter the country code of the QI.
340–348 Postal or ZIP Code 9
Required.Enter up to nine numeric characters for all U.S. addresses (including
territories, possessions and APO/FPO). For foreign addresses enter the
alpha/numeric foreign postal code, if applicable. Enter this code in the left most
position and blank fill the remaining positions.DO NOTuse hyphens or blanks
between numbers or letters (e.g., if the postal code is written as A6B 3C5 input as
A6B3C5.) Left-justify.
349–357
Recipient’s U.S.
TIN
9
Enter the recipient’s nine-digit U.S. Taxpayer Identification Number (TIN).DO
NOTenter hyphens or alpha characters. IfTIN is not required under regulations,
blank fill. A TIN consisting of all the same digits (e.g., 111111111) is not acceptable.
Note: U.S. TINs are now required for most recipients. See current Instructions for Form 1042-S.
358
Recipient’s U.S.
TIN Type
1
Required.Enter the recipient’s U.S. TIN type indicator from the following values:
• 0 (Zero) = No TIN required
•1=SSN/ITIN
•2=EIN
• 3= QI-EIN, WP-EIN, WT-EIN
See current Instructions for Form 1042-S for when a TIN is not required.
359–370 U.S. Tax Withheld 12
Required.Enter the U.S. Federal tax withheld by you. Enter the amount in whole
dollars, rounding to the nearest dollar(do not enter cents). For example, report
$600.25 as 000000000600. Numeric only, right-justify and zero fill. If there was
no withholding, zero fill.
Note: If the U.S. tax withheld was either under or over reported, see Field Position 761 of the “Q” Record.
371–382 Withholding By
Other Agents
12
Required.If you are a withholding agent reporting Form 1042-S information
that has already been subject to withholding by another withholding agent, enter
the amount withheld by the other agent. Enter the amount in whole dollars,
rounding to the nearest dollar(do not enter cents). For example, report $600.25
as 000000000600. Numeric only, right-justify and zero fill.If there was no
withholding, zero fill.
2008–30 I.R.B.215July 28, 2008

Record Name: Recipient “Q” Record
Field
Positions
Field Title
Length
Description and Remarks
383–394 Total Withholding
Credit
12
Required.Enter the aggregate amount of tax withheld by you and any other
withholding agent in whole dollars, rounding to the nearest dollar(do not enter
cents). For example, report $600.25 as 000000000600. Numeric only, right-justify
andzerofill.If there was no withholding, zero fill.
395–400 Reserved
6
Enter blanks.
401–440 NQI/FLW-
THR/PTP Name
Line-1
40Provide the complete name of the NQI/FLW-THR or PTP Entity. It is very
important that the complete name of theNQI/FLW-THR or PTP entity be provided.
Left-justify and blank fill.See Note 3 at the beginning of the “Q” Record.
Note 1: If you are a nominee that is the withholding agent under Code Section 1446, enter the Publicly Traded
Partnership’s (PTP) name and other information in the NQI/FLW-THR fields; positions 401–666.
Note 2: All NQI/FLW-THR fields are REQUIRED if the NQI/FLW-THR entity is involved in the payment structure
WITH THE EXCEPTION OF THE NQI/FLW-THR TIN.
441–480 NQI/FLW-
THR/PTP Name
Line-2
40Enter supplementary information; otherwise, enter blanks. Use this line for
additional names (e.g., partners or joint owners), for trade names, stage names,
aliases or titles. Also use this line for “care of” or “via”.SeeNote3atthe
beginning of the “Q” Record.
481–520
NQI/FLW-
THR/PTP Name
Line-3
40See above.
521–522
Reserved2Enter blanks.
523–562
NQI/FLW-
THR/PTP Street
Line-1
40Enter the mailing address of the NQI/FLW-THR or PTP entity. Street address
should include number, street, apartment, or suite number (or P.O. Box if mail is not
delivered to street address). Abbreviate as needed. Left-justify and blank fill.
563–602
NQI/FLW-
THR/PTP Street
Line-2
40Enter supplementary NQI/FLW-THR orPTP entity street address information;
otherwise, blank fill.
603–642 NQI/FLW-
THR/PTP
City
40Enter the city or town (or other locality name). Left-justify and blank fill.
643–644
NQI/FLW-
THR/PTP State
Code
2Enter the two-alpha character state code(see table Part A, Sec. 13). If a state code
or APO/FPO is not applicable then blank fill.
645–646
NQI/FLW-
THR/PTP Province
Code
2Enter the two-alpha character Province Code abbreviation, if applicable. See “T”
record positions 117–118.
647–648 NQI/FLW-
THR/PTP Country
Code
2Enter the two-character Country Code abbreviation, where the NQI/FLW-THR or
PTP is located.EnterblanksiftheNQI/FLW-THRorPTPhasaU.S.address.
649–657
NQI/FLW-
THR/PTP Postal
Code or ZIP Code
9Enter the alpha/numeric foreign postal code or U.S. ZIP Code for all U.S. addresses
including territories, possessions and APO/FPO.Enter the code in the left most
position and blank fill the remaining positions.DO NOTuse hyphens or blanks
between numbers or letters. (e.g., if the postal code written as A6B 3C5 input as
A6B3C5.) Left-justify.
658–666
NQI/FLW-
THR/PTP U.S.
TIN
9Enter the NQI/FLW-THR or PTP nine-digit U.S. Taxpayer Identification Number
(TIN), if any. Do NOT enter hyphens or alpha characters.
July 28, 20082162008–30 I.R.B.

Record Name: Recipient “Q” Record
Field
Positions
Field Title
Length
Description and Remarks
667–706 Payer’s Name40Enter the name of the Payer of Income if different from the Withholding Agent.
Abbreviate as needed. If Withholding Agent and Payer are the same, blank fill.
707–715
Payer’s U.S. TIN9Enter the Payer’s U.S. Taxpayer Identification Number if there is an entry in the
Payer Name Field; otherwise, leave blank.
716–727 State Income Tax
Withheld
12If State Tax has been withheld, enter that amount, in whole dollars (do not enter
cents). Right-justify and zero fill. If no entry, zero fill.
728–737 Payer’s State Tax
Number
10Enter the employer’s state I.D. number assigned by the state.
738–739 Payer’s State Code 2Enter the two-character State Code abbreviation.
740–760 Special Data
Entries
21This field may be used for the filer’s own purposes, (e.g., Do Not Mail). If this
field is not used, enter blanks.
761U.S. Tax Withheld
Indicator
1
Required.Indicate if the U.S. tax withheld was correct or incorrect using the
following values:
• 0= Correctly reported
•1=Overwithheld
• 2= Under withheld
Note: Please refer to U.S. Tax Withheld positions 359–370.
762–783
Recipient’s Foreign
Tax I.D. Number
22Enter the recipient’s identifying number, if any, used in the country of residence for
tax purposes. Left-justify and fill unused positions with blanks.
784–810 Reserved27Enter blanks.
811–818 Record Sequence
Number
8
Required.Enter the number of the record as it appears within your file. The record
sequence number for the “T” record will always be “1” (one), since it is the first
record on your file and you can have only one “T” record in a file. Each record,
thereafter, must be incremented by one in ascending numerical sequence, i.e., 2, 3,
4, etc. Right-justify numbers with leading zeroes in the field. For example, the
“T” record sequence number would appear as “00000001” in the field, the first
“W” record would be “00000002”, the first “Q” record, “00000003”, the second
“Q” record, “00000004” and so on until you reach the final record of the file, the
“F” record.
819–820 Blank or Carriage
Return Line Feed
2Enter blanks or carriage return line feed (CR/LF) characters.
Recipient “Q” Record Layout
Record
Type
Return
Type
Indicator
Pro Rata
Basis
Reporting
Income
Code
Gross
Income
Withholding
Allowance
Net
Income
Tax Rate Exemption
Code
123
4–5
6–1718–2930–41
42–45
46–47
Recipient’s
Country of
Residence
Code for Tax
Purposes
ReservedAmount
Repaid
Recipient
Account
Number
Recipient
Code
Recipient’s
Name Line-1
Recipient’s
Name Line-2
Recipient’s
Name Line-3
48–4950–5960–7172–9192–9394–133134–173174–213
2008–30 I.R.B.217July 28, 2008

Recipient’s
Street Line-1
Recipient’s
Street Line-2
Recipient’s
City
Recipient’s
State
Recipient’s
Province
Code
Recipient’s
Country
Code
Postal or
ZIP Code
Recipient’s
U.S. TIN
214–253254–293
294–333
334–335
336–337338–339340–348
349–357
Recipient’s
U.S. TIN
Type
U.S. Federal
Tax
Withheld
Withholding
By Other
Agents
Total
Withholding
Credit
ReservedNQI/FLW-
THR/PTP
Name Line-1
NQI/FLW-
THR/PTP
Name Line-2
NQI/FLW-
THR/PTP
Name Line-3
358
359–370371–382383–394395–400401–440441–480
481–520
ReservedNQI/FLW-
THR/PTP
Street Line-1
NQI/FLW-
THR/PTP
Street Line-2
NQI/FLW-
THR/PTP
City
NQI/FLW-
THR/PTP
State Code
NQI/FLW-
THR/PTP Province
Code
521–522523–562563–602
603–642
643–644645–646
NQI/FLW-
THR/PTP
Country Code
NQI/FLW-
THR/PTP
Postal Code or
ZIP Code
NQI/FLW-
THR/PTP
U.S. TIN
Payer’s
Name
Payer’s
U.S.
TIN
State Income
Tax Withheld
Payer’s State
Tax Number
647–648
649–657658–666
667–706
707–715
716–727728–737
Payer’s
State Code
Special
Data
Entries
U.S. Tax
Withheld
Indicator
Recipient’s Foreign
Tax I.D. Number
ReservedRecord Sequence
Number
Blank or Carriage
Return Line Feed
738–739 740–760761
762–783
784–810811–818819–820
Sec. 4. Reconciliation “C” Record
.01The “C” Record is a fixed record length of 820 positions and all positions listed arerequired.The “C” Record is a summary
of the number of “Q” Records for each Withholding Agent, Gross Amount Paid, and Total U.S. Tax Withheld.
.02This record will be written after the last “Q” Record filed for a given withholding agent. For each “W” Record and group of
“Q” Records on the file, there must be a corresponding “C” Record.
.03All alpha characters entered inthe “C” Record must be upper case.
.04The “C” Record is a fixed length of 820 positions.
Record Name: Reconciliation “C” Record
Field
Positions
Field Title
Length
Description and Remarks
1Record Type1
Required.Enter“C”.
2–9Total “Q” Records 8
Required.Enter the total number of “Q” Records for this withholding agent.
Right-justify and zero fill.Do not enter all zeros. For example, 53 “Q” records are
entered as 00000053. See Part A, Sec. 4, Filing and Retention Requirements.
10–15
Blank6Enter blanks.
16–30Total Gross Amount
Paid
15Required.Enter the total gross income amount in whole dollars(do not enter
cents.)For example report $600.00 as 000000000000600. An income amount other
than zero must be shown. Right-justify and zero fill.
July 28, 20082182008–30 I.R.B.

Record Name: Reconciliation “C” Record
Field
Positions
Field Title
Length
Description and Remarks
31–45
Total U.S. Tax
Withheld
15Required.Enter the total U.S. Federal tax withheld amount in whole dollars(do
not enter cents.)For example report $600.00 as 000000000000600. Right-justify
and zero fill.
46–810
Reserved
765
Enter blanks.
811–818 Record Sequence
Number
8
Required.Enter the number of the record as it appears within your file. The record
sequence number for the “T” record will always be “1” (one), since it is the first
record on your file and you can have only one “T” record in a file. Each record,
thereafter, must be incremented by one in ascending numerical sequence, i.e., 2,
3, 4, etc. Right-justify numbers with leading zeroes in the field. For example, the
“T” record sequence number would appear as “00000001” in the field, the first
“W” record would be “00000002”, the first “Q” record, “00000003”, the second
“Q” record, “00000004” and so on until you reach the final record of the file, the
“F” record.
819–820 Blank or Carriage
Return Line Feed
2Enter blanks or carriage returnline feed (CR/LF) characters.
Reconciliation “C” Record Layout
Record
Type
Total “Q”
Records
BlankTotal Gross
Amount
Paid
Total U.S.
Tax
Withheld
ReservedRecord
Sequence
Number
Blank or
Carriage
Return Line
Feed
12–9
10–15
16–30
31–4546–810
811–818819–820
Sec. 5. End of Transmission “F” Record
.01The “F” Record is a fixed record length of 820 positions and all positions listed arerequired. The “F” Record is a summary
of the number of withholding agents and media count in the entire file.
.02This record will be written after the last “C” Record of the entire file. End the file with an End of Transmission “F” Record.
No data will be read after the “F” Record. Only a “C” Record may precede the “F” Record.
.03All alpha characters entered in the “F” Record must be upper case.
.04The “F” Record is a fixed length of 820 positions.
Record Name: End of Transmission “F” Record
Field
Positions
Field Title
Length
Description and Remarks
1Record Type1
Required.Enter“F”.
2–4Withholding Agent
Count
3
Required.Enter the total number of withholding agents on this file. This count
must be the same as the total number of “W” records. Right-justify and zero fill.
5–810Reserved
806
Enter blanks.
2008–30 I.R.B.219July 28, 2008

Record Name: End of Transmission “F” Record
Field
Positions
Field Title
Length
Description and Remarks
811–818 Record Sequence
Number
8
Required.Enter the number of the record as it appears within your file. The record
sequence number for the “T” record will always be “1” (one), since it is the first
record on your file and you can have only one “T” record in a file. Each record,
thereafter, must be incremented by one in ascending numerical sequence, i.e., 2,
3, 4, etc. Right-justify numbers with leading zeroes in the field. For example, the
“T” record sequence number would appear as “00000001” in the field, the first
“W” record would be “00000002”, the first “Q” record, “00000003”, the second
“Q” record, “00000004” and so on until you reach the final record of the file, the
“F” record.
819–820 Blank or Carriage
Return Line Feed
2Enter blanks or carriage returnline feed (CR/LF) characters.
End of Transmission “F” Record Layout
Record TypeWithholding Agent
Count
ReservedRecord Sequence
Number
Blank or
Carriage
Return
Line Feed
12–45–810811–818819–820
Part D. Extensions of Time and Waivers
Sec. 1. General — Extensions
.01An extension of time to file may be requested for Form 1042-S.
.02Submit Form 8809, Application for Extension of Time To File Information Returns, to IRS/ECC-MTB at the address listed in
.09 of this section. This form may be used to request an extension of time to file Form 1042-S submitted on paper or electronically to
the IRS. Use a separate Form 8809 for each method of filing information returns you intend to use,i.e., paper or electronically.
.03The fill-in Form 8809 may be completed online via the FIRE System. (See Part B, Sec. 7, for instructions on connecting to the
FIRE System.) At the Main Menu, click “Extension of Time Request” and then click “Fill-in Extension Form”. This option is only
used to request an automatic 30-day extension. If you are requesting an additional extension, you must submit a paper Form 8809.
Requests for an additional extension of time to file information returns are not automatically granted. Requests for additional time are
granted only in cases of extreme hardship or catastrophic event.The IRS will only send a letter of explanation approving or denying
your additional extension request. (Refer to .12 of this Section.)
.04To be considered, an extension request must be postmarked, transmitted or completed online by the due date of the returns;
otherwise, the request will be denied. (See Part A, Sec. 7.) If requesting an extension of time to file several types of forms, use
one Form 8809; however, Form 8809 or file must be postmarked no later than the earliest due date. For example, if requesting an
extension of time to file both Forms 1099-INT and 1042-S, submit Form 8809 on or before February 28, 2009.
.05 As soon as it is apparentthat a 30-day extension of time to file is needed, an extension request should be submitted. It may take
up to 30 days for IRS/ECC-MTB to respond to an extension request.IRS/ECC-MTB does not begin processing extension requests
until January.Extensions completed online via the FIRE System receive instant results.
.06Under certain circumstances, a request for an extension of time may be denied. When a denial letter is received, any additional
or necessary information may be resubmitted within 20 days.
.07Requesting an extension of time for multiple withholding agents(10 or less)may be done by completing the online fill-in form
via the FIRE System or mailing Form 8809 and attaching a list of the withholding agent names and associated TINs (EIN or SSN).
Each withholding agent must be completed online or included in the listing to ensure an extension is recorded for all withholding
agents. Form 8809 may be computer-generated or photocopied. Be sure to use the most recently updated version and include all the
pertinent information.
July 28, 20082202008–30 I.R.B.

Note: IRS encourages the withholding agent/transmitter community to utilize the online fill-in form in lieu of the paper Form
8809.
.08Withholding agents/transmitters requesting an extension of time to file for10 or more payersarerequiredto submit the ex-
tension online via the fill-in form or in a file electronically (see Sec. 3,for the record layout).
.09All requests for an extension of time filed on Form 8809 should be sent using the following address:
IRS-Enterprise Computing Center at Martinsburg
Information Reporting Program
Attn: Extension of Time Coordinator
240 Murall Drive
Kearneysville, WV 25430
Note: Due to the large volume of mail received by IRS/ECC-MTB and the time factor involved in processing Extension of
Time (EOT) requests, it is imperative that the attention line be present on all envelopes or packages containing Form 8809.
.10Requests for extensions of time to file postmarked by the United States Postal Service on or before the due date of the return
s,
and delivered by United States mail to IRS/ECC-MTB after the due date, are treated astimely under the “timely mailing as timely
filing” rule. A similar rule applies to designated private delivery services (PDSs). Notice 97–26, 1997–1 C.B. 388, provides
rules for
determining the date that is treated as the postmark date. For items delivered by a non-designated Private Delivery Service (P
DS),
the actual date of receipt by IRS/ECC-MTB will be used as the filing date. For items delivered bya designated PDS, but throug
ha
type of service not designated in Notice 2004–83, 2004–2 C.B.1030, the actual date of receipt by IRS/ECC-MTB will be used as
the
filing date. The timely mailing rule also applies to furnishing statements to recipients and participants.
.11Transmitters requesting an extension oftime for multiple withholding agents will receive one approval letter, accom
panied by
a list of withholding agents covered under that approval.
.12If an additional extension of time is needed, a second Form 8809 or file must be filed by the initial extended due date. Che
ck
line 7 on the form to indicate that an additional extension is being requested. A second 30-day extension will be approve
donlyin
cases of extreme hardship or catastrophic event.If requesting a second 30-day extension of time, submit the informati
on return
files as soon as prepared. Do not wait for IRS/ECC-MTB’s response to your second extension request.
.13If an extension request is approved, the approval letter should be kept on file.DO NOTsend the approval letter or cop
yofthe
approval letter to IRS/ECC-MTB or to the Ogden Service Center where the paper Forms 1042-S are filed.
.14Request an extension for only one tax year.
.15A signature is not required when requesting a 30-day extension. If a second 30-day extension is requested the Form 88
09must
be signed.
.16Failure to properly complete and sign Form 8809 may cause delays in processing the request or result in a denial. Ca
refully
read and follow the instructions on the back of Form 8809.
.17Form 8809 may be obtained by calling1–800–TAX–FORM (1–800–829–3676). The form is also availableat w
ww.irs.gov
.
Sec. 2. Specifications for Filing Extensions of Time Electronically
.01The specifications in Sec. 3 include the required 200-byte record layout for extensions of time to file requests submitted elec-
tronically. Also included are the instructions forthe information that is to be entered in the record.Filers are advised to read this
section in its entirety to ensure proper filing.
.02If a filer does not have an IRS/ECC-MTB assigned Transmitter Control Code (TCC), Form 4419, Application for Filing Infor-
mation Returns Electronically (FIRE),mustbe submitted to obtain a TCC. This numbermustbe used to submit an extension request
electronically. (See Part A, Sec. 6.)
.03For extension requests filed via an electronic file, the transmitter must fax Form 8809 or send an e-mail through the FIRE
System (f
ire@irs.govand irs.e-helpmail@irs.gov) the same day as the transmission. The e-mail should contain the same information
as the Form 8809 in order to mail a response, check the record count and form types in the file. The e-mail option is only used to
request the automatic 30-day extension. If you are requesting an additional extension, you must fax a signed Form 8809 the same day
as the transmission. Be sure to include the reason an additional extension is needed.
.04 Transmitters submitting an extension of time via an electronic file should not submit a list of withholding agents names
and TINs with Form 8809 or e-mail this information since this information is included on the electronic file. However, Line 6
of Form 8809 must be completed or the total number of records on the extension file must be included within the e-mail. The
fill-in Form 8809 c
annotbe used in lieu of the paper Form8809 for electronic files.
.05Do not submit extension requests filed electronically before January 3.
2008–30 I.R.B.221July 28, 2008

Sec. 3. Record Layout — Extension of Time
.01Positions 6 through 188 of the following record should contain information about the withholding agent for whom the extension
of time to file is being requested. Do not enter transmitter information in these fields.OnlyoneTCCmaybepresentinafile.
Record Layout for Extension of Time
Field
Positions
Field Title
Length
Description and Remarks
1–5
Transmitter
Control Code
5Required. Enter the five-digit Transmitter Control Code (TCC) issued by IRS.
Only one TCC per file is acceptable.
6–14Withholding
Agent’s TIN
9
Required. Must be the valid nine-digit TIN assigned to the withholding agent.Do
not enter blanks, hyphens or alpha characters.All zeros, ones, twos, etc., will
have the effect of an incorrect TIN. For foreign entities that are not required to have
a TIN, this field may be blank; however, the Foreign Entity Indicator, position
187,mustbe set to “X.”
15–54
Withholding
Agent’s Name
40
Required. Enter the name of the withholding agent whose TIN appears in positions
6–14. Left-justify information and fill unused positions with blanks.
55–94
Second
Withholding
Agent’s Name
40If additional space is needed, this field may be used to continue name line
information (e.g., c/o First National Bank); otherwise, enter blanks.
95–134
Withholding
Agent’s Address
40
Required. Enter the withholding agent’s address. Street address should include
number, street, apartment or suite number (or PO Box if mail is not delivered to
a street address).
135–174
Withholding
Agent’s City
40
Required. Enter withholding agent’s city, town, or post office.
Note: For foreign addresses, filers may use the payer city, state, and ZIP Code as a continuous 51-position field. Enter
information in the following order: city, province or state, postal code, and the name of the country.
175–176
Withholding
Agent’s State
2
Required.Enter the withholding agent’s valid U.S. Postal Service state
abbreviation. (Refer to Part A, Sec. 13.)
177–185
Withholding
Agent’s
ZIP Code
9
Required. Enter withholding agent’s ZIP Code. If using a five-digit ZIP Code,
left-justify information and fill unused positions with blanks.
186Document
Indicator
1
Required. Enter the appropriate document code that indicates the form for which
you are requesting an extension of time.
Code
4
D
ocument
1042-S
187Foreign Entity
Indicator
1Enter “X” if the withholding agent is a foreign entity.
Note: A foreign entity is not required to have a TIN.
188Recipient Request
Indicator
1Enter “X” if the extension request is to furnish statements to the recipients of the
information return.
Note: A separate file is required for this type of extension request. A file must either contain all blanks or all X’s in this field.
189–198 Blank10Enter blanks.
199–200 Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
July 28, 20082222008–30 I.R.B.

Extension of Time Record Layout
Transmitter
Control Code
Withholding
Agent’s TIN
Withholding
Agent’s Name
Second
Withholding
Agent’s Name
Withholding
Agent’s
Address
Withholding
Agent’s City
1–5
6–14
15–5455–9495–134135–174
Withholding
Agent’s State
Withholding
Agent’s ZIP
Code
Document
Indicator
Foreign
Entity
Indicator
Recipient
Request
Indicator
BlankBlank or
CR/LF
175–176177–185
186187188189–198199–200
Sec. 4. Extension of Time for Recipient Copies of Information Returns
.01Request anextension of time to furnish the statements to recipientsof Form 1042-S by submitting a letter to IRS/ECC-MTB
at the address listed in Part D, Sec. 1.09. The letter should contain the following information:
(a)Withholding Agent’s name
(b)TIN
(c)Address
(d)Type of return
(e)Specify that the extension request isto provide statements to recipients
(f)Reason for delay
(g)Signature of withholding agent or duly authorized person.
.02Requests for an extension of time to furnish statements to recipients of Form 1042-S are not automatically approved; however,
if approved, generally an extension will allow a maximum of 30 additional days from the due date. The request must be postmarked
bythedateonwhichthestatements are due to the recipients.
.03Generally, only the withholding agent may sign the letter requesting the extension for recipient copies. A transmitter must have
a contractual agreement with the withholding agents to submit extension requests on their behalf. This should be stated in your letter
of request for recipient copy extensions. If you are requesting an extension for multiple withholding agents electronically, you must
use the format specifications in Sec. 3.
.04Requests for a recipient extension of time to file for more than 10 withholding agents are required to be submitted electronically.
(See Sec. 3, for record layout.)
.05 The fill-in Form 8809 extension option cannot be used to request an extension to furnish statements to recipients.
Sec. 5. Form 8508, Request for Waiver From Filing Information Returns Electronically
.01If a withholding agent is required to file electronically but fails to do so and does not have an approved waiver on record, the
withholding agent will be subject to a penalty of $50 per return in excess of 250 unless reasonable cause is established. (For penalty
information, refer to the Penalty Section of theGeneral Instructions for Form 1042-S.)
.02If withholding agents are required to file original or amended returns electronically, but such filing would create an undue
hardship, they may request a waiver from these filing requirements by submitting Form 8508, Request for Waiver From Filing In-
formation Returns Electronically, to IRS/ECC-MTB. Form 8508 can be obtained on the IRS Website at w
ww.irs.govor by calling
toll-free 1–800–829–3676.
.03Even though a withholding agent may submit as many as 249 amended returns on paper, IRS/ECC-MTB encourages electronic
filing of amended returns. Once the 250 threshold has been met, filers are required to submit any returns of 250 or more electronically.
However, if a waiver for original documents is approved, any amended returns for the same type of returns will be covered under this
waiver.
.04Generally, only the withholding agent may sign Form 8508. A transmitter may sign if given power of attorney; however, a
letter signed by the payer stating this fact must be attached to Form 8508.
.05A transmitter must submit a separate Form 8508 for each withholding agent. Do not submit a list of withholding agents.
.06All information requested on Form 8508 must be provided to IRS/ECC-MTB for the request to be processed.
.07The waiver, if approved, will provide exemption from the electronic filing requirement for the current tax year only. Withhold-
ing agents may not apply for a waiver for more than one tax year.
.08Form 8508 may be photocopied or computer-generated as long as itcontains all the information requested on the original form.
2008–30 I.R.B.223July 28, 2008

.09Filers are encouraged to submit Form 8508 to IRS/ECC-MTB at least 45 days before the due date of the returns. Generally,
IRS/ECC-MTB does not process waiver requests until January. Waiver requests received prior to January are processed on a first
come, first served basis.
.10All requests for a waiver should be sent using the following address:
IRS-Enterprise Computing Center — Martinsburg
Information Reporting Program
240 Murall Drive
Kearneysville, WV 25430
.11Waivers are evaluated on a case-by-case basis and are approved ordenied based on criteria set forth in the regulations under
section 6011(e) of the Internal Revenue Code. The transmitter must allow a minimum of 30 days for IRS/ECC-MTB to respond to a
waiver request.
.12If a waiver request is approved, keep the approval letter on file.DO NOTsend a copy of the approved waiver to the Ogden
Service Center.
.13An approved waiver only applies to the requirement for filing Form 1042-S electronically. The withholding agent must timely
file information returns on the official IRS paper forms oran acceptable substitute form with the Ogden Service Center.
26 CFR 601.201: Rulings and determination letters.
(Also: §§ 170, 642(c), 2055, 2522, 1.642(c)–1, 1.170A–6, 20.2055–2, 25.2522(c)–3.)
Rev. Proc. 2008–45
SECTION 1. PURPOSE
This revenue procedure contains annotated sample declarations oftrust and alternate provisions that meet the requirements for an
inter vivos charitable lead unitrust (CLUT) providing for unitrust payments payable to one or more charitable beneficiaries for the
unitrust period followed by the distribution of trust assets to one or more noncharitable remaindermen.
SECTION 2. BACKGROUND
The Internal Revenue Service (Service) isissuing sample forms for CLUTs; annotations and alternate sample provisions are in-
cluded as further guidance. Inaddition to the sample trust instruments for inter vivos CLUTs that are included in this revenue procedure,
a sample is provided in a separate revenue procedure for a testamentary CLUT (see Rev. Proc. 2008–46).
SECTION 3. SCOPE
A CLUT is an irrevocable split-interest trust that provides for a specified amount to be paid to one or more charitable beneficiaries
during the term of the trust. The principal remaining in the trust at the end of the term is paid over to, or held in a continuing trust for,
a noncharitable beneficiary or beneficiaries identified in the trust. If the terms of a CLUT created during the donor’s life satisfy the
applicable statutory and regulatory requirements, a gift of the charitable lead unitrust interest will qualify for the gift tax charitable
deduction under § 2522(c)(2)(B) and/or the estate tax charitablededuction under § 2055(e)(2)(B). In certain cases, the gift of the
unitrust interest may also qualify for the income tax charitable deduction under § 170(a). The value of the remainder interest is a
taxable gift by the donor at the time of the donor’s contribution to the trust.
There are two types of inter vivos CLUTs: a “nongrantor CLUT” and a “grantor CLUT.” The income tax consequences are different
for each. A nongrantor CLUT is subject to the provisions of part I, subchapter J of chapter 1 of subtitle A of the Internal Revenue Code
(Code). Under the provisions of part I of subchapter J, a nongrantor CLUT is allowed a deduction under § 642(c)(1) in determining
its taxable income for any amount of gross income paid for purposes specified in § 170(c). Generally, the donor is not entitled to any
income tax charitable deduction.
Section 4 of this revenue procedure provides a sample declaration of trust for a nongrantor CLUT with a term of years unitrust
period that is created by an individual who is acitizen or resident of the United States. Section 5 of this revenue procedure provides
annotations to the provisions of the sample trust. Section 6 of this revenue procedure provides samples of certain alternate provisions
concerning: (.01) a unitrust period for the life of one individual; (.02)retention of the right to substitute the charitable lead beneficiary;
(.03) apportionment of the unitrust amount in the discretion of the trustee; and (.04) designation of an alternate charitable beneficiary in
the trust instrument. If a trust is substantially similar to the sample trust in section 4of this revenue procedure or properly integrates one
or more alternate provisions fromsection 6 into a document substantially similar to the sample trust in section 4, is a valid trust under
July 28, 20082242008–30 I.R.B.

applicable local law, and operates in a manner consistent with the terms of the instrument, and if all other deductibility requirements
are satisfied, the value of the charitable lead interest will be deductible under § 2522(c)(2)(B) and/or § 2055(e)(2)(B) and payments
of the unitrust amount to the charitable lead beneficiary will be deductible from the gross income of the trust to the extent provided
by § 642(c)(1). In addition, a nongrantor CLUT will qualify for thesafe harbor created under this revenue procedure if the trust
satisfies all of the requirements set forth in the preceding sentence, except that it definesthe unitrust amount as a varying percentage
amount for which the value is ascertainable at the creation of the trust and/or provides for a different disposition of trust assets upon
the termination of the unitrust period.
A CLUT is a grantor CLUT if the donor, who is a citizen or residentof the United States, is treated as the owner of the entire CLUT
under subpart E, part I of subchapter J, chapter 1, subtitle A. The value of the charitable lead unitrust interest in a grantor CLUT may
be deductible by the donor under § 170(a) for the year in which thedonor made the contribution to the trust, provided that the other
requirements of § 170(f)(2)(B) and the regulations thereunder are satisfied. During the term of the grantor CLUT, all trust income
and capital gains are taxed to the donor and the donor is entitled to no further charitable deduction for income tax purposes as the
charitable unitrust payments are madeto charitable organizations each year.
Section 7 of this revenue procedure provides a sample declaration of trust for a grantor CLUT that is created by an individual who
is a citizen or resident of the United States. Section 8 of this revenue procedure provides annotations to the provisions of the sample
trust. Section 9 of this revenue procedure provides samples of certain alternate provisions concerning: (.01) a unitrust period for
the life of one individual; (.02) retention of the right to substitute the charitable lead beneficiary; (.03) apportionment of the unitrust
amount in the discretion of the trustee; and (.04) designation of an alternate charitable beneficiary in the trust instrument. If a trust is
substantially similar to the sample trust in section 7 of this revenue procedure or properly integrates one or more alternate provisions
from section 9 into a document substantially similar to the sample trust in section 7, is a valid trustunder applicable local law, and
operates in a manner consistent with the terms of the instrument, and if all other requirements for deductibility are satisfied, the value
of the charitable lead unitrust interest will be deductible under §§ 170(a), 2522(c)(2)(B) and/or 2055(e)(2)(B). In addition, a grantor
CLUT will qualify for the safe harbor created under this revenue procedure if the trust satisfies all of the requirements set forth in the
preceding sentence, except that it: (i) reflects the choice of a different power or provision sufficient to make the donor the owner of
the entire CLUT under subpart E, part I, subchapter J, chapter 1, subtitle A, provided that the power or provision selected is consistent
with the requirements of a CLUT; (ii) defines the unitrust amount as a varying percentage amount for which the value is ascertainable
at the creation of the trust; and/or (iii) provides for a different disposition of trust assets upon the termination of the unitrust period.
Except as provided above, a trust that contains substantive provisions in addition to those provided in section 4 or section 7 of
this revenue procedure (other than properly integrated alternate provisions from section 6 or section 9, respectively, of this revenue
procedure or provisions necessary to establish a valid trust underapplicable local law that are not inconsistent with the applicable
federal tax requirements), or that omits any of the provisions of section 4 or section 7 of this revenue procedure (unless an alternate
provision from section 6 or section 9, respectively, of this revenue procedure is properly integrated), will not necessarily be ineligible
for the relevant charitable deduction(s), but neither will that trust(or contributions to it) be assured of qualification for the appropriate
charitable deductions. The Service generally will not issue a letter ruling on whether an inter vivos CLUT created by an individual
qualifies for income, estate, and/or gift tax charitable deductions.The Service, however, generally willissue letter rulings relating to
the tax consequences of the inclusion in a CLUT of substantive trust provisions other than those contained in sections 4, 6, 7, and 9
of this revenue procedure.
SECTION 4. SAMPLE INTER VIVOS NONGRANTOR CHARITABLE LEAD UNITRUST
On thisday of,20,I,(hereinafter “the Donor”), desiring to establish a
charitable lead unitrust within themeaning of Rev. Proc. 2008–45, herebyenter into this trust agreement with
as
the initial trustee (hereinafter “the Trustee”). This trust shall be known as the
Nongrantor Charitable Lead Unitrust.
All references to “section” or “§” in this instrument shallrefer to the Internal Revenue Code of 1986, 26 U.S.C. § 1,et seq.
1.Funding of Trust. The Donor hereby transfers and irrevocably assigns to the Trustee on the above date the property described
in Schedule A, and the Trustee accepts the property and agrees to hold, manage, and distribute the property under the terms set forth
in this trust instrument.
2.PaymentofUnitrustAmount. For each taxable year of the trust during the unitrust period, the Trustee shall pay to [designated
charitable recipient] a unitrust amount equal to [number representing the annual unitrustpercentage to be paid to the designated
charitable recipient] percent of the net fair market value of the assets of the trust, valued as of the first day of each taxable year of the
trust (hereinafter “the valuation date”). If [designated charitable recipient] is not an organization described in §§ 170(c), 2055(a), and
2522(a) at the time any payment is to be made to it, the Trustee shall instead distribute such payments to one or more organizations
described in §§ 170(c), 2055(a), and 2522(a) as the Trustee shall select, and in such proportions asthe Trustee shall decide, from
time to time, in the Trustee’s sole discretion. The term “the Charitable Organization” shall be used herein to refer collectively to the
organization(s) then constituting the charitable recipient, whether named in this paragraph or subsequently selected as the substitute
charitable recipient. During the trust term, no payment shall be made to any person other than the Charitable Organization. The
unitrust period is a term of [number of years of unitrust period] years. The first day of the unitrust period shall be the date property
is first transferred to the trust, and the last day ofthe unitrust period shall be the day preceding the [ordinal number corresponding
2008–30 I.R.B.225July 28, 2008

to the length of the unitrust period] anniversary of that date. The unitrust amount shall be paid in equal quarterly installments at the
end of each calendar quarter from income and, to the extent income is not sufficient, from principal. Any income of the trust for a
taxable year in excess of the unitrust amount shall be added to principal. If for any year the net fair market value of the trust assets
is incorrectly determined, then within a reasonable period after the correct value is finally determined, the Trustee shall pay to the
Charitable Organization (in the case of an undervaluation) or receive from the Charitable Organization (in the case of an overvaluation)
an amount equal to the difference between the unitrust amount(s) properly payable and the unitrust amount(s) actually paid.
3.Proration of Unitrust Amount. For a short taxable year and for the taxable year during which the unitrust period ends, the Trustee
shall prorate on a daily basis for the number of days of the unitrustperiod in that year, the unitrustamount described in paragraph 2,
or, if an additional contribution is made to the trust, the unitrust amount described in paragraph 5.
4.Distribution Upon Termination of Unitrust Period. At the termination of the unitrust period, the Trustee shall distribute all of
the then remaining principal and income of the trust (other than any amount due to the Charitable Organization under the provisions
above) to [remainder beneficiary].
5.Additional Contributions. If any additional contributions are made to the trust after the initial contribution, the unitrust amount
for the year in which any additional contribution is made shall be [same percentage used in paragraph 2] percent of the sum of (a)
the net fair market value of the trust assets as of the valuation date(excluding the assets so added and any post-contribution income
from, and appreciation on, such assets duringthat year) and (b) for each additional contribution during the year, the fair market value
of the assets so added as of the valuation date (including any post-contribution income from, and appreciation on, such assets through
the valuation date) multiplied by a fraction the numerator of which is the number of days in the period that begins with the date of
contribution and ends with the earlier of the last day of the taxable year or the last day of the unitrust period and the denominator of
which is the number of days in the period that begins with the first day of such taxable year and ends with the earlier of the last day
in such taxable year or the last day of the unitrust period. In a taxable year in which an additional contribution is made on or after the
valuation date, the assets so added shall be valued as of the date ofcontribution, without regard to any post-contribution income or
appreciation, rather thanas of the valuation date.
6.Prohibited Transactions. The Trustee shall not engage in any act of self-dealing within the meaning of § 4941(d), as modified
by § 4947(a)(2), and shall not make any taxable expenditures within the meaning of § 4945(d), as modified by § 4947(a)(2). The
Trustee shall not retain any excess business holdings that wouldsubject the trust to tax under § 4943, as modified by §§ 4947(a)(2)
and 4947(b)(3). In addition, the Trustee shall not acquire any assets that would subject the trust to tax under § 4944, as modified by
§§ 4947(a)(2) and 4947(b)(3), or retain assets which, if acquired by the Trustee, would subject the Trustee to tax under § 4944, as
modified by §§ 4947(a)(2) and 4947(b)(3).
7.Taxable Year. The taxable year of the trustshall be the calendar year.
8.Governing Law. The operation of the trust shall be governed by the laws of the State of
. However, the Trustee
is prohibited from exercising any power or discretion granted under said laws that would be inconsistent with the requirements for the
charitable deductions available to a charitable lead unitrust or for contributions to a charitable lead unitrust.
9.Limited Power of Amendment. This trust is irrevocable. However, the Trustee shall have the power, acting alone, to amend
the trust from time to time in any manner required for the sole purposeof ensuring that the unitrust interest passing to the Charitable
Organization is a unitrust interest under §§ 2055(e)(2)(B) and 2522(c)(2)(B) and the regulations thereunder and that payments of
the unitrust amount to the Charitable Organization will be deductible from the gross income of the trust to the extent provided by
§ 642(c)(1) and the regulations thereunder.
10.Investment of Trust Assets. Except as provided in paragraph 6 herein, nothingin this trust instrument shall be construed to
restrict the Trustee from investing the trust assets in a manner that could result in the annual realization of a reasonable amount of
income or gain from the sale or disposition of trust assets.
11.Retained Powers and Interests. Notwithstanding any other provision of this trust instrument to the contrary, no person shall
hold any power or possess any interest that would cause the Donor to be treated as the owner of any portion of the trust under the
provisions of subpart E, part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code.
SECTION 5. ANNOTATIONS REGARDING SAMPLE INTER VIVOS NONGRANTOR CHARITABLE
LEAD UNITRUST
.01Annotations for Introductory Paragraph and Paragraph 1, Funding of Trust, of the Sample Trust in
Section 4.
(1)Types of charitable lead trusts. An inter vivos charitable lead trust may be established as either a grantor charitable lead
trust or a nongrantor charitable lead trust. The sample trust in section 4 is an example of a nongrantor charitable lead trust.
The sample trust in section 7 is an example of a grantor charitable lead trust.
(2)Income taxation of nongrantor charitable lead trusts. A nongrantor CLUT is a complex trust that is taxable as a separate
entity under the provisions of subchapter J of the Code. The trustee of the trust must apply for a tax identification number
for the trust.
July 28, 20082262008–30 I.R.B.

(3)Deduction under § 642(c)(1) available for amounts paid for a charitable purpose. Under § 642(c)(1), a nongrantor CLUT
is allowed a deduction in computing its taxable income for any amount of gross income, without limitation, that under
the terms of the trust instrument is paid for a purpose specified in § 170(c) (determined without regard to § 170(c)(2)(A))
during the taxable year. This deduction is in lieu of the charitable deduction allowed by § 170. Section 642(c)(1) and
§ 1.642(c)–1(a). An amount paid to a corporation, trust, orcommunity chest, fund, or foundation otherwise described in
§ 170(c)(2) shall be considered paid for a purpose described in § 170(c) even though the corporation, trust, or community
chest, fund, or foundation is not created or organized in the United States, any state, the District of Columbia, or any pos-
session of the United States. Section 1.642(c)–1(a)(2). With regard to amounts of income paid to the charitable beneficiary
after the close of the taxable year in which the income was received (but on or before the last day of the next succeeding
taxable year), the trustee of a nongrantor CLUT may elect to take the charitable deduction for that payment for the year in
which the income was received, rather than for the year in which the payment was made. Section 642(c)(1). The election
is made by filing a statement with the income tax return for thetaxable year in which the charitable contribution is treated
as paid. See § 1.642(c)–1(b).
(4)Charitable lead beneficiary requirements. A deduction is allowed under § 642(c)(1) for any amount of the gross income of a
nongrantor CLUT that is paid for a purpose specified in § 170(c). Note that the class of permissible charitable recipients for
obtaining a deduction under § 642(c)(1) differs from the class of permissible charitable recipients for obtaining a deduction
under § 170(a). Compare § 170(c) and § 1.642(c)–1(a)(2).
(5)Unrelated business taxable income. Under § 681, a nongrantor charitable lead trust’s deduction under § 642(c)(1) is disal-
lowed in any year to the extent that the deduction is allocable to the trust’s unrelated business taxable income, as defined
in § 512, for that taxable year. See § 1.681(a)–2. However, a partial deduction is allowed under § 512(b)(11) for amounts
allocable to unrelated business taxable income. Section 512(b)(11). See § 512(b)(12) and § 1.681(a)–2(a).
(6)Computation of estate and gift tax charitable deductions. In general, the estate and gift taxcharitable deductions available
under §§ 2055(e)(2)(B) and 2522(c)(2)(B) with respect to contributions to a CLUT are equal to the present value of the
unitrust interest. Sections 20.2055–2(f)(1) and 25.2522(c)–3(d)(1). Section 7520 requires that a unitrust interest must be
valued using tables published by the Service. The method for valuing a charitable lead unitrust interest is set forth in the
regulations. See §§ 20.7520–2 and 25.7520–2.
(7)Trustee provisions. The trust instrument may name alternate or successor trustees and/or may include a process for the
appointment of unnamed alternate or successor trustees. In addition, the trust instrument may contain certain administrative
provisions relating to the trustee’s duties and powers.
(8)Identity of donor. For purposes of qualification under this revenue procedure, the donor may be an individual or a husband
and wife. Appropriate adjustments should be made to the introductory paragraph if a husband and wife are the donors.
Terms such as “grantor” or “settlor” may be substituted for “donor.”
.02Annotations for Paragraph 2, Payment of Unitrust Amount, of the Sample Trust in Section 4.
(1)Unitrust interest. To qualify for the applicable estate and gift tax charitable deductions, a nongrantor CLUT must provide
for the payment of a unitrust amount at least annually to a qualified charitable organization for each year during the unitrust
period. See §§ 2055(e)(2)(B) and 2522(c)(2)(B). A unitrust interest is the right pursuant to the instrument of transfer to
receive payment, not less often than annually, of a fixed percentage of the net fair market value, determined annually, of the
property that funds the unitrust interest. Payments of a unitrust interest may be paid for a specified term or for the life or
lives of certain individuals, each of whom must be living at the date of the transfer and can be ascertained as of such date.
Sections 20.2055–2(e)(2)(vii)(a) and 25.2522(c)–3(c)(2)(vii)(a). See section 5.02(4) for a discussion of the permissible
term of a nongrantor CLUT. An interest is a unitrust interest only if it is a unitrust interest in every respect. For example,
if an interest is expressed as the right to receive an annualpayment from a trust equal to the lesser of a sum certain or a
fixed percentage of the net fair market value of the trust assets (determined annually), the interest is not a unitrust interest.
Sections 20.2055–2(e)(2)(vii)(b) and 25.2522(c)–3(c)(2)(vii)(b). See Rev. Rul. 77–300, 1977–2 C.B. 352. In addition, an
interest is not a unitrust interest if the trustee has the discretion to commute and prepay the interest prior to the termination of
the unitrust period. Rev. Rul. 88–27, 1988–1 C.B. 331. If a charitable interest in the form of a unitrust interest is in trust and
the present value of the charitable interest on the date of gift exceeds 60 percent of the aggregate value of all amounts in the
trust, the charitable interest will not be considered a unitrustinterest unless the governing instrument of the trust prohibits
the acquisition and retention of assets that would give rise to a tax under § 4943 or 4944, as modified by §§ 4947(a)(2) and
4947(b)(3). Section 4947(b)(3) and § 53.4947–2(b)(1)(i). See §§ 20.2055–2(e)(2)(vii)(f) and 25.2522(c)–3(c)(2)(vii)(f).
These prohibitions are contained in the sample trust in section 4. See section 5.06 for a further discussion of the 60 percent
test.
(2)Payment requirements. CLUTs are not subject to any minimum or maximum payout requirements. The governing instru-
ment of a CLUT must provide for the payment to a charitable organization, not less often than annually, of a fixed percentage
of the net fair market value of the assets of the trust, valued annually. Alternatively, the governing instrument of a CLUT
may provide for a unitrust amount that is initially stated as a fixed percentage amount but increases or decreases during the
2008–30 I.R.B.227July 28, 2008

unitrust period, provided that the value of the unitrust interest is ascertainable at the time the trust is funded. The unitrust
payments may be made in cash or in kind. If the trustee distributes appreciated property in satisfaction of the required
unitrust payment, the trust will realize capital gain on the assets distributed to satisfy part or all of the unitrust payment and
the trust will be allowed a § 642(c)(1) deduction for the realized capital gains. Rev. Rul. 83–75, 1983–1 C.B. 114.
(3)Rule against perpetuities. An interest payable for a specified term of years may qualify as a unitrust interest even if the gov-
erning instrument contains a savings clause intended to ensure compliance with a rule against perpetuities. However, any
such savings clause must utilize a period of vesting of not morethan 21 years after the deaths ofmeasuring lives who are se-
lected to maximize, rather than limit, the term of the trust. Sections 20.2055–2(e)(2)(vii)(a) and 25.2522(c)–3(c)(2)(vii)(a).
(4)Permissible term. Paragraph 2, Payment of Unitrust Amount, of the sample trust in section 4 provides for payment of the
unitrust amount for a specified term of years. Alternatively, the trust instrument may provide for payment of the unitrust
amount for the life or lives of one or more measuring lives or for the life or lives of one or more measuring lives plus
a term of years. Rev. Rul. 85–49, 1985–1 C.B. 330. Only one or more of the following individuals may be used as
measuring lives: the donor, the donor’s spouse, and an individual who, with respect to all remainder beneficiaries (other
than charitable organizations described in § 170, 2055, or 2522), is either a lineal ancestor or the spouse of a lineal ancestor
of those beneficiaries. Each person used as a measuring life for the unitrust period must be living on the date assets are
transferred to the trust. Sections 20.2055–2(e)(2)(vii)(a) and 25.2522(c)–3(c)(2)(vii)(a). See section 6.01 for an alternate
provision that provides for a unitrust period based on the life of an individual.
(5)Permissible recipients. A CLUT must have one or more charitable lead beneficiaries. The failure to designate a specific
charitable beneficiary will not preclude the donor from receiving a charitable deduction if the trust instrument provides for
the selection by the trustee of a charitable beneficiary described in §§ 170(c), 2055(a), and 2522(a). Rev. Rul. 78–101,
1978–1 C.B. 301. If it is determined that a deduction under § 2055(a) will not be necessary in any event, all references to
§ 2055(a) in the trust instrument may be deleted. Note that if the donor is serving as trustee of the trust, the trustee’s power
to select the charitable beneficiaries will cause the gift of the unitrust interest to be incomplete for gift tax purposes and will
cause some or all of the trust property (depending on the date of the donor’s death) to be included in the donor’s gross estate.
See §§ 2035(a), 2036(a)(2), and 2038(a)(1) and § 25.2511–2(c). Further note that if the charitable beneficiary is a private
foundation and the donor is an officer or director of the private foundation or possesses certain decision making authority
in the private foundation, some or all of the trust property may be included in the donor’s gross estate. See § 2036(a)(2).
See section 6.02 for an alternate provision that provides for a donor’s retained right to substitute the charitable beneficiary.
See section 6.03 for an alternate provision that provides the trustee with the power to apportion the unitrust amount among
charitable beneficiaries. See section 6.04 for an alternate provision that provides for the designation of an alternate chari-
table beneficiary in the trust instrument.
(6)Payment of unitrust amount in installments. Paragraph 2, Payment of Unitrust Amount, of the sample trust in section 4
specifies that the unitrust amount is to be paid in equal quarterly installments at the end of each calendar quarter. Alterna-
tively, the trust instrument may specify that the unitrust amount is to be paid in annual or other equal or unequal installments
throughout the year. See §§ 20.2055–2(e)(2)(vii)(a) and 25.2522(c)–3(c)(2)(vii)(a). The amount of the charitable deduction
will be affected by the frequency of the payment, by whetherthe installments are equal or unequal, and by whether each
installment is payable at the beginning or end of the period. See §§ 25.2512–5 and 20.2031–7.
(7)Excess income. Trust income in excess of the amount required to pay the unitrust amount may be retained by the trust
or distributed currently to the charitable beneficiary. The sample trust in section 4 provides for the retention of excess
income by the trust. If, instead, the governing instrument ofa nongrantor charitable lead trust provides for the payment
of excess income to or for the use of the charitable beneficiary, no additional estate or gift tax charitable deductions are
available for the excess amounts of income distributed to the charitable beneficiary. See §§ 20.2055–2(e)(2)(vii)(d)and
25.2522(c)–3(c)(2)(vii)(d). However, the trust is entitled to a charitableincome tax deduction under § 642(c)(1) for any
amounts of excess income paid to the charitable beneficiary. See Situation 2 of Rev. Rul. 88–82, 1988–2 C.B. 336, for
the gift tax consequences of the payment of excess income to a noncharitable beneficiary. See section 5.06 for the private
foundation rules applicable to charitable lead trusts.
(8)Payment of part of unitrust for private purposes. In general, no part of a charitable lead unitrust interest may be payable for a
private purpose before the expiration of all charitable lead unitrust interests. However, there are two exceptions to this rule.
The first exception arises when the amount payable for a private purpose is in the form of a unitrust interest and the trust’s
governing instrument does not provide for any preference or priority in the payment of the private unitrust as opposed to the
charitable unitrust. The second exception arises when, under the trust’s governing instrument, the amount that may be paid
for a private purpose is payable only from a group of assets that is devoted exclusively to private purposes and to which
§ 4947(a)(2) is inapplicable by reason of § 4947(a)(2)(B). Note that an amount is not deemed to have been paid for a private
purpose if it was paid for full and adequate consideration in money or money’s worth. Sections 20.2055–2(e)(2)(vii)(e)and
25.2522(c)–3(c)(2)(vii)(e). See section 5.06 for the private foundation rules applicable to charitable lead trusts.
(9)Valuation date. Paragraph 2, Payment of Unitrust Amount, of the sample trust in section 4 specifies that the net fair market
value of trust assets is to be valued as of the first day of each taxable year of the trust. However, the value of the trust assets
may be determined on any one date during the taxable year ofthe trust, or by taking the average of valuations made on
July 28, 20082282008–30 I.R.B.

more than one date during the taxable year of the trust, so long as the same valuation date or dates and the same valuation
methods are used each year. If the governing instrument does notspecify the valuation date or dates, the trustee must select
the date or dates and indicate the selection on the first Form 1041,U.S. Income Tax Return for Estates and Trusts, that the
trust must file. Sections 20.2055–2(e)(2)(vii)(a) and 25.2522(c)–3(c)(2)(vii)(a). Note that if the valuation date is a date
other than the first day of each taxable year of the trust, it maybe necessary to modify the provisions in the sample trust
regarding: (i) the timing of the payment of the unitrust amount; (ii) the proration of the unitrust amount in a short taxable
year and the last taxable year of the unitrust period; and (iii) additional contributions.
(10)Ordering rules. A provision in the governing instrument of a charitable lead trust that provides for the payment to charity
to consist of different classes of income determined on a nonpro ratabasis will not be respected because such a provision
does not have economic effect independent of the income tax consequences of the payment. See § 1.642(c)–3(b)(2) and (3).
.03Annotation for Paragraph 3, Proration of Unitrust Amount, of the Sample Trust in Section 4.
(1)Prorating the unitrust amount. Paragraph 3, Proration of Unitrust Amount, of the s
ample trust in section 4 provides for the
proration of the unitrust amount in any short taxable year, including the last year
of the unitrust period.
.04Annotation for Paragraph 4, Distribution Upon Termination of Unitrust Period, of the Sample Trust in
Section 4.
(1)Generation-skipping transfer tax. The generation-skipping transfer (GST) tax may apply if a CLUT has or may have a
skip person, as defined in § 2613(a), as a remainder beneficiary. Under § 2651(f)(3), a charitable organization is deemed
to be in the same generation as the donor to a charitable lead trust. Therefore, the GST potential of a charitable lead trust is
dependent upon whether any noncharitable beneficiary is a skip person. GST tax liability is determined by multiplying the
taxable amount by the applicable rate. The applicable rate isthe inclusion ratio multiplied by the maximum federal estate
tax rate. Section 2641(a). Note that the rules set forth in § 2642(e) for determining the inclusion ratio of certain charitable
lead trusts do not apply to CLUTs.
.05Annotation for Paragraph 5, Additional Contributions, of the Sample Trust in Section 4.
(1)Identity of additional contributors. For purposes of qualification under this revenue procedure, only a donor or a donor’s
estate may make an additional contribution to the trust. See section 5.01(8) of this revenue procedure for examples of who
may be a donor of a CLUT.
(2)Option to prohibit additional contributions. Paragraph 5, Additional Contributions, of the sample trust in section 4 provides
rules for determining the unitrust amount payable in a year during which an additional contribution is made to the trust.
However, paragraph 5 of the trust instrument may instead be drafted to prohibit contributions to the trust after the initial
contribution.
(3)Proration of additional contributions. Paragraph 5, Additional Contributions, of the sample trust in section 4 provides a
formula for determining the unitrust amount in each year that an additional contribution is made to the CLUT. The formula
incorporates a proration provision for additions made in a short taxable year.
(4)Valuation date in year of additional contribution. Paragraph 2, Payment of Unitrust Amount, of the sample trust in section
4 specifies a January 1 valuation date for the trust. The formula contained in paragraph 5, Additional Contributions, of the
sample trust may be used when January 1 or any other single date during the taxable year is selected as the valuation date for
a CLUT. Note, however, that if a single date other than January 1 is selected as the valuation date for a CLUT, the formulas
in both paragraphs 2 and 5 of the sample trust for computing the unitrust amount will be deficient unless the trust instrument
addresses the possibility that the unitrust period may end before the valuation date, for instance, by providing that in a year
in which the unitrust period ends before the valuation date, the valuation date for purposes of paragraph 2 and paragraph 5
shall be the last day of the unitrust period. In addition, if the trust instrument is drafted to provide for the valuation of trust
assets by averaging the valuations as of multiple specified dates during the trust year, the additional contributions formula
must be modified.
.06Annotation for Paragraph 6, Prohibited Transactions, of the Sample Trust in Section 4.
(1)Prohibitions against certain investments and excess business holdings. Prohibitions against retaining any excess business
holdings within the meaning of § 4943, as modified by §§ 4947(a)(2) and 4947(b)(3), and against investments that jeop-
ardize the exempt purpose of the trust within the meaning of § 4944, as modified by §§ 4947(a)(2) and 4947(b)(3), are
generally required. The sample trust in section 4 contains prohibitions against §§ 4943 and 4944 transactions. If the present
value of the charitable interest does not exceed 60 percent of theaggregate value of all amounts in the trust, the trust instru-
ment does not provide for the payment of any of the income interest to a noncharitable beneficiary, and the trust instrument
does not provide for the payment of excess income to a noncharitable beneficiary, the references to §§ 4943 and 4944 may
2008–30 I.R.B.229July 28, 2008

be removed from the trust instrument. Section 4947(b)(3) and § 53.4947–2(b)(1)(i). See §§ 20.2055–2(e)(2)(vii)(f)and
25.2522(c)–3(c)(2)(vii)(f). See section 5.02(7) for a discussion of the payment of excess trust income to a noncharitable
beneficiary. See section 5.02(8) for a discussion of the payment of part of the unitrust for a private purpose.
.07Annotation for paragraph 7, Taxable Year, of the Sample Trust in Section 4.
(1)Calendar year. The taxable year of a charitable lead trust must be a calendar year. Section 644(a).
.08Annotation for paragraph 10, Investment of Trust Assets, of the Sample Trust in Section 4.
(1)Capital gains. Gains from the sale or exchange of capital assets may be allocated to the income or the principal of the trust.
If the governing instrument is silent, capital gains are allocated in accordance with local law. Even if gains are allocated
to principal, they will be deductible under § 642(c)(1) if they are paid to the charitable beneficiary as part of a charitable
unitrust payment. Rev. Rul. 83–75, 1983–1 C.B. 114.
.09Annotation for paragraph 11, Retained Powers and Interests, of the Sample Trust in Section 4.
(1)Trust not a grantor trust. Paragraph 11, Retained Powers and Interests, ofthe sample trust in section 4 prohibits any person
from holding any power or possessing any interest that wouldcause the donor to be treated asthe owner of the trust under
subpart E, part I, subchapter J, chapter 1, subtitle A of the Code. This prohibition should be included only in nongrantor
charitable lead trusts. See section 7 for a sample grantor CLUT.
SECTION 6. ALTERNATE PROVISIONS FOR SAMPLE INTER VIVOS NONGRANTOR CHARITABLE
LEAD UNITRUST
.01Unitrust Period for theLife of One Individual.
(1)Explanation. As an alternative to establishing a CLUT for a term of years, the trust instrument of a nongrantor CLUT may
provide for payment of the unitrust amount for the life or lives of an individual or individuals. However, only one or more
of the following individuals may be used as measuring lives: the donor, the donor’s spouse, and an individual who, with
respect to all remainder beneficiaries (other than charitable organizations described in § 170, 2055, or 2522), is either a lineal
ancestor or the spouse of a lineal ancestor of those beneficiaries. A trust will satisfy the requirement that each measuring
life is a lineal ancestor (or the spouse of a lineal ancestor) of all noncharitable remainder beneficiaries if there is a less
than 15 percent probability at the time of the contribution to the trust that individuals who are not lineal descendants of an
individual who is a measuring life will receive any trust principal. The probability must be computed under the applicable
tables in § 20.2031–7. Sections 20.2055–2(e)(2)(vii)(a) and 25.2522(c)–3(c)(2)(vii)(a).
(2)Instruction for use. Replace the fifth and sixth sentences of paragraph 2, Payment of Unitrust Amount, of the sample trust
in section 4 with the following sentences:
The unitrust period is the lifetime of [designated measuring life]. The first day of the unitrust period shall be the date
property is first transferred to the trust and the last day of the unitrust period shall be the date of death of [designated
measuring life].
.02Retention of the Right to Substitute the Charitable Lead Beneficiary.
(1)Explanation. The donor to a nongrantor CLUT may retain the right to substitute another charitable beneficiary for the
charitable beneficiary named in the trustinstrument. Note, however, that the retention of this right will cause the gift of
the unitrust interest to be incomplete for gift tax purposes and will cause some or all of the trust property (depending upon
the date of the donor’s death) to be included in the donor’s gross estate. See §§ 2035(a), 2036(a)(2), and 2038(a)(1) and
§ 25.2511–2(c).
(2)Instruction for use. Replace the third sentence of paragraph 2, Payment of Unitrust Amount, of the sample trust in section
4 with the following two sentences:
Notwithstanding the preceding sentences, the Donor reserves the right to designateas the charitable recipient, at any time
and from time to time, in lieu of [designated charitable recipient], one or more organizations described in §§ 170(c),
2055(a), and 2522(a) and shall make any such designation by giving written notice to the Trustee. The term “the Charita-
ble Organization” shall be used herein to refer collectively to the organization(s) then constituting the charitable recipient,
whether named in this paragraph or subsequently selected as the substitute charitable recipient.
July 28, 20082302008–30 I.R.B.

.03Apportionment of the Unitrust Amount in the Discretion of the Trustee.
(1)Explanation. The donor or the trustee of a nongrantor charitable leadtrust may be granted the power to apportion the unitrust
payment from time to time among a class of qualifying charitable beneficiaries. See § 674(b)(4). A power to apportion the
unitrust amount among a class of qualifying charitable beneficiaries that is retained by the donor or the donor’s spouse will
not cause the donor to be treated as the owner of the trust for income tax purposes. Section 674(b)(4). Note, however, that
a retained power of apportionment by the donor, but not the donor’s spouse, will cause the gift of the unitrust interest to be
incomplete for gift tax purposes and will cause some or all of the trust property to be included in the donor’s gross estate.
See §§ 2035(a), 2036(a)(2), and 2038(a)(1) and § 25.2511–2(c).
(2)Instruction for use. Replace the first three sentences of paragraph 2, Payment of Unitrust Amount, of the sample trust in
section 4 with the following two sentences:
For each taxable year of the trust duringthe unitrust period, the Trustee shall pay to one or more members of a class
comprised of organizations described in §§ 170(c), 2055(a),and 2522(a) (hereinafter, collectively “the Charitable Or-
ganization”) a unitrust amount equal to [number representing the annual unitrust percentage to be paid to the Charitable
Organization] percent of the net fair market value of the assets of the trust, valued as of the first day of each taxable year
of the trust (hereinafter “the valuation date”). The Trustee may pay the unitrust amount to one or more members of the
class, in equal or unequal shares, as the Trustee, in the Trustee’s sole discretion, from time to time may deem advisable.
.04Designation of an Alternate CharitableBeneficiary in the Trust Instrument.
(1)Explanation. The sample trust in section 4 provides that, in the event the charitable beneficiary designated in the trust
instrument is not an organization described in §§ 170(c), 2055(a), and 2522(a) at the time any payment is to be made to
it, the trustee shall distribute such payments to one or moreorganizations described in §§ 170(c), 2055(a), and 2522(a) as
the trustee shall select. As an alternative, the trust instrument may specifically designate one or more alternate charitable
beneficiaries.
(2)Instruction for use. Replace the second sentence in paragraph 2, Paymentof Unitrust Amount, of the sample trust in section
4 with the following two sentences:
If [designated charitable recipient] is not an organization described in §§ 170(c), 2055(a), and 2522(a) at the time any
payment is to be made to it, the Trustee shall instead distribute such payments to [designated substitute charitable re-
cipient]. If neither [designated charitable recipient]nor[designated substitutecharitable recipient] is an organization
described in §§ 170(c), 2055(a), and 2522(a) at the time any payment is to be made to it, the Trustee shall distribute such
payments to one or more organizations described in §§ 170(c), 2055(a), and 2522(a) as the Trustee shall select, and in
such proportions as the Trustee shall decide, from time to time, in the Trustee’s sole discretion.
SECTION 7. SAMPLE INTER VIVOS GRANTOR CHARITABLE LEAD UNITRUST
On thisday of,20,I,(hereinafter “the Donor”), desiring to establish a
charitable lead unitrust within themeaning of Rev. Proc. 2008–45, herebyenter into this trust agreement with
as
the initial trustee (hereinafter “the Trustee”). This trust shall be known as the
Grantor Charitable Lead Unitrust.
All references to “section” or “§” in this instrument shallrefer to the Internal Revenue Code of 1986, 26 U.S.C. § 1,et seq.
1.Funding of Trust. The Donor hereby transfers and irrevocably assigns to the Trustee on the above date, the property described
in Schedule A, and the Trustee accepts the property and agrees to hold, manage, and distribute the property under the terms set forth
in this trust instrument.
2.PaymentofUnitrustAmount. For each taxable year of the trust during the unitrust period, the Trustee shall pay to [designated
charitable recipient] a unitrust amount equal to [number representing the annual unitrustpercentage to be paid to the designated
charitable recipient] percent of the assets of the trust, valued as of the first day of each taxable year of the trust (hereinafter “the
valuation date”). If [designated charitable recipient] is not an organization described in §§ 170(c), 2055(a), and 2522(a) at the time
any payment is to be made to it, the Trustee shall instead distributesuch payments to one or more organizations described in §§ 170(c),
2055(a), and 2522(a) as the Trustee shall select, and in such proportions as the Trustee shall decide, from time to time, in the Trustee’s
sole discretion. The term “the Charitable Organization” shall be used herein to refer collectively to the organization(s) then constituting
the charitable recipient, whether named in this paragraph or subsequently selected as the substitute charitable recipient. During the
trust term, no payment shall be made to any person other than the Charitable Organization. The unitrust period is a term of [number
of years of unitrust period] years. The first day of the unitrust period shall be the date property is first transferred to the trust, and
the last day of the unitrust period shall be the day preceding the [ordinal number corresponding to the length of the unitrust period]
anniversary of that date. The unitrust amount shall be paid in equal quarterly installments at the end of each calendar quarter from
income and, to the extent income is not sufficient, from principal. Any income of the trust for a taxable year in excess of the unitrust
amount shall be added to principal. If for any year the net fair market value of the trust assets is incorrectly determined, then within
a reasonable period after the correct value is finally determined, the Trustee shall pay to the Charitable Organization (in the case of
2008–30 I.R.B.231July 28, 2008

an undervaluation) or receive from the Charitable Organization (in the case of an overvaluation) an amount equal to the difference
between the unitrust amount(s) properly payable and the unitrust amount(s) actually paid.
3.Proration of Unitrust Amount. For a short taxable year, including the taxable year during which the unitrust period ends, the
Trustee shall prorate on a daily basis for the number of days of theunitrust period in that year, the unitrust amount described in
paragraph 2, or, if an additional contribution is made to the trust, the unitrust amount described in paragraph 5.
4.Distribution Upon Termination of Unitrust Period. At the termination of the unitrust period, the Trustee shall distribute all of
the then remaining principal and income of the trust (other than any amount due to the Charitable Organization under the provisions
above) to [remainder beneficiary].
5.Additional Contributions. If any additional contributions are made to the trust after the initial contribution, the unitrust amount
for the year in which any additional contribution is made shall be [same percentage used in paragraph 2] percent of the sum of (a)
the net fair market value of the trust assets as of the valuation date(excluding the assets so added and any post-contribution income
from, and appreciation on, such assets duringthat year) and (b) for each additional contribution during the year, the fair market value
of the assets so added as of the valuation date (including any post-contribution income from, and appreciation on, such assets through
the valuation date) multiplied by a fraction the numerator of which is the number of days in the period that begins with the date of
contribution and ends with the earlier of the last day of the taxable year or the last day of the unitrust period and the denominator of
which is the number of days in the period that begins with the first day of such taxable year and ends with the earlier of the last day
in such taxable year or the last day of the unitrust period. In a taxable year in which an additional contribution is made on or after the
valuation date, the assets so added shall be valued as of the date ofcontribution, without regard to any post-contribution income or
appreciation, rather thanas of the valuation date.
6.Prohibited Transactions. The Trustee shall not engage in any act of self-dealing within the meaning of § 4941(d), as modified
by § 4947(a)(2), and shall not make any taxable expenditures within the meaning of § 4945(d), as modified by § 4947(a)(2). The
Trustee shall not retain any excess business holdings that wouldsubject the trust to tax under § 4943, as modified by §§ 4947(a)(2)
and 4947(b)(3). In addition, the Trustee shall not acquire any assets that would subject the trust to tax under § 4944, as modified by
§§ 4947(a)(2) and 4947(b)(3), or retain assets which, if acquired by the Trustee, would subject the Trustee to tax under § 4944, as
modified by §§ 4947(a)(2) and 4947(b)(3).
7.Taxable Year. The taxable year of the trustshall be the calendar year.
8.Governing Law. The operation of the trust shall be governed by the laws of the State of
. However, the Trustee
is prohibited from exercising any power or discretion granted under said laws that would be inconsistent with the requirements for the
charitable deductions available for contributions to a charitable lead unitrust.
9.Limited Power of Amendment. This trust is irrevocable. However, the Trustee shall have the power, acting alone, to amend
the trust from time to time in any manner required for the sole purposeof ensuring that the unitrust interest passing to the Charitable
Organization is a unitrust interest under §§ 170(f)(2)(B), 2055(e)(2)(B), and 2522(c)(2)(B) and the regulations thereunder.
10.Investment of Trust Assets. Except as provided in paragraph 6 herein, nothingin this trust instrument shall be construed to
restrict the Trustee from investing the trust assets in a manner that could result in the annual realization of a reasonable amount of
income or gain from the sale or disposition of trust assets.
11.Retained Powers and Interests. During the Donor’s life, [individual other than the donor, the trustee, or a disqualified person
as defined in § 4946(a)(1)] shall have the right, exercisable only in a nonfiduciary capacity and without the consent or approval of any
person acting in a fiduciary capacity,toacquireanypropertyheldinthetrustbysubstituting other property of equivalent value.
SECTION 8. ANNOTATIONS REGARDING SAMPLE INTER VIVOS GRANTOR CHARITABLE LEAD
UNITRUST
.01Annotations for Introductory Paragraph and Paragraph 1, Fundin
gofTrust,oftheSampleTrustin
Section 7.
(1)Types of charitable lead trusts. An inter vivos charitable lead trust may be established as either a grantor charitable lead
trust or a nongrantor charitable lead trust.The sample trust in section 7 is an exampleof a grantor charitable lead trust. The
sample trust in section 4 is an example of a nongrantor charitable lead trust. In order for the donor to a charitable lead trust
to claim an income tax charitable deduction under § 170(a) for the year of the donor’s contribution to the trust, the trust
must be structured as a grantor charitablelead trust. See § 170(f)(2)(B). The rules governing grantor charitable lead trusts
are similar to those relating to nongrantor charitable lead trusts. The most significant difference is the income tax treatment
of the trust income. A charitable lead trust is a grantor charitable lead trust if thedonor to the trust is treated as the owner of
the entire trust for income tax purposes. See section 8.09 fora discussion of the types of powers that may be used to create
a grantor charitable lead trust.
(2)Income taxation of grantor charitable lead trusts. The donor to a grantor charitable lead unitrust may claim a federal
income tax charitable deduction under § 170(a) for the year inwhich assets are irrevocably transferred to the trust. During
the charitable lead unitrust period, thedonor is taxed on all income earned by the trust and does not receive any charitable
deduction under § 170 for the unitrust payments to the charitable beneficiary as they are made. In addition, the trust does
July 28, 20082322008–30 I.R.B.

not receive a charitable deduction under § 642(c)(1). See § 1.671–4 for the income tax reportingrequirements for a grantor
charitable lead unitrust.
(3)Income tax deductibility limitations. The donor to a grantor charitable lead trust may claim an income tax charitable de-
duction under § 170(a) equal to the present value of all future payments that are to be made to the charitable beneficiary.
Section 1.170A–6(c). However, a contribution of a charitable income interest in property for which a deduction is allowable
under § 170(a) is considered to be made “for the use of” rather than “to” a charitable organization. Section 1.170A–8(a)(2).
Because the charitable lead interest of a grantor charitable lead trust is considered to be made “for the use of” the chari-
table beneficiary, the income tax charitable deduction available to an individual taxpayer isgenerally limited as set forth
in § 170(b)(1)(B) to 30 percent of the taxpayer’s contribution base as defined in §170(b)(1)(G). However, if the property
contributed to the CLUT is capital gain property as defined in § 170(b)(1)(C)(iv), the individual taxpayer’s income tax
charitable deduction generally is limitedassetforthin§170(b)(1)(D)to20percent of the taxpayer’s contribution base.
Section 170(b)(1)(D). See §§ 1.170A–8(c) and (d). In addition,the amount of a charitable contribution of certain types of
property may be reduced under § 170(e). See § 1.170A–4.
(4)Charitable lead beneficiary requirements. A deduction is allowed under § 170(a) for contributions to a grantor CLUT only
if the charitable lead beneficiary is an organization described in § 170(c). Note that the class of permissible charitable
recipients for obtaining a deduction under § 170(a) differs fromthe class of permissible charitable recipients for obtaining
a deduction under § 642(c)(1). Compare § 170(c) and § 1.642(c)–(1)(a)(2).
(5)Computation of charitable deduction. In general, the income, estate, and gift tax charitable deductions available under
§§ 170(a), 2055(e)(2)(B), and 2522(c)(2)(B) with respect to contributions to a CLUT are equal to the present value of the
unitrust interest. Sections 1.170A–6(c)(3)(ii), 20.2055–2(f)(1), and 25.2522(c)–3(d)(1). Section 7520 generally requires
that a unitrust interest must be valued using tables published by the Service. The method for valuing a charitable lead
unitrust interest is set forth in the regulations. See §§ 1.7520–2, 20.7520–2, and 25.7520–2. If, however, the circumstances
surrounding the transfer to a charitable lead trust suggest that the charitable beneficiary might not receive the beneficial
enjoyment of the unitrust interest, an income tax deduction will be allowed only for the minimum possible amount that
the charity will receive. Section 1.170A–6(c)(3)(iii). If at any time the donor ceases to be treated as the owner of the trust
under subpart E, part I, subchapter J, chapter 1, subtitle A of the Code, the donor shall be considered to have received an
amount of income equal to the amount of any deduction the donor received under § 170(a) for thecontribution to the trust,
reduced by the discounted value (as of the date of the contribution to the trust) of all amounts of income earned by the trust
and taxable to the donor before the time that the donor ceased to be treatedas the owner of the trust under subpart E, part
I, subchapter J, chapter 1, subtitleA of the Code. Section 170(f)(2)(B).
(6)Trustee provisions. The trust instrument may name alternate or successor trustees and/or may include a process for the
appointment of unnamed alternate or successor trustees. In addition, the trust instrument may contain certain other admin-
istrative provisions relating to the trustee’s duties and powers.
(7)Identity of donor. For purposes of qualification under this revenue procedure, the donor to a charitable lead unitrust may be
an individual or a husband and wife. Appropriate adjustments should be made to the introductory paragraph if a husband
and wife are the donors. Terms such as “grantor” or “settlor” may be substituted for “donor.”
.02Annotations for Paragraph 2, Payment of Unitrust Amount, of the Sample Trust in Section 7.
(1)Unitrust interest. To qualify for the applicable charitable deductions, a grantor CLUT must provide for the payment of
a unitrust amount at least annually to a qualified charitable organization for each year during the unitrust period. See
§§ 170(c), 2055(e)(2)(B), and 2522(c)(2)(B). A unitrust interest is the right pursuant to the instrument of transfer to re-
ceive payment, not less often than annually, of a fixed percentage of the net fair market value, determined annually, of the
property that funds the unitrust interest. Payments of a unitrust interest may be paid for a specified term or for the life or
lives of certain individuals, each of whom must be living at the date of the transfer and can be ascertained as of such date.
Sections 20.2055–2(e)(2)(vii)(a) and 25.2522(c)–3(c)(2)(vii)(a). See section 8.02(4) for a discussion of the permissible
term of a grantor CLUT. An interest is a unitrust interest only if it is a unitrust interest in every respect. For example, if an
interest is expressed as the right to receive an annual payment from a trust equal to the lesser of a sum certain or a fixed
percentage of the net fair market value of the trust assets (determined annually), the interest is not a unitrust interest. See
§§ 1.170A–6(c)(2)(ii)(B), 20.2055–2(e)(2)(vii)(b), and 25.2522(c)–3(c)(2)(vii)(b). See Rev. Rul. 77–300, 1977–2 C.B.
352. In addition, an interest is not a unitrust interest if the trustee has the discretion to commute and prepay the interest
prior to the termination of the unitrust period. Rev. Rul. 88–27, 1988–1 C.B. 331. If a charitable interest in the form of a
unitrust interest is in trust and the present value of the charitable interest on the date of gift exceeds 60 percent of the aggre-
gate value of all amounts in the trust, the charitable interest will not be considered a unitrust interest unless the governing
instrument of the trust prohibits the acquisition and retention of assets that would give rise to a tax under § 4943 or 4944, as
modified by §§ 4947(a)(2) and 4947(b)(3). Section 4947(b)(3)(A) and § 53.4947–2(b)(1)(i). See §§ 1.170A–6(c)(2)(ii)(E),
20.2055–2(e)(2)(vii)(f), and 25.2522(c)–3(c)(2)(vii)(f). These prohibitions are contained in the sample trust in section 7.
See section 8.06 for a further discussion of the 60 percent test.
2008–30 I.R.B.233July 28, 2008

(2)Payment requirements. CLUTs are not subject to any minimum or maximum payout requirements. The governing instru-
ment of a CLUT must provide for the payment to a charitable organization, not less often than annually, of a fixed percentage
of the net fair market value of the assets of the trust, valued annually. Alternatively, the governing instrument of a CLUT
may provide for a unitrust amount that is initially stated as a fixed percentage amount but increases or decreases during the
unitrust period, provided that the value of the unitrust interest is ascertainable at the time the trust is funded. The unitrust
payments may be made in cash or in kind. If the trustee distributes appreciated property in satisfaction of the required
unitrust payment, the donor will realize capital gain on the assets distributed to satisfy part or all of the unitrust payment.
(3)Rule against perpetuities. An interest payable for a specified term of years may qualify as a unitrust interest even if the
governing instrument contains a savings clause intended to ensure compliance with a rule against perpetuities. However,
any such savings clause must utilize a period of vesting ofnot more than 21 years after the deaths of measuring lives who
are selected to maximize, rather than limit, the term of the trust. Sections 1.170A–6(c)(2)(ii)(A), 20.2055–2(e)(2)(vii)(a),
and 25.2522(c)–3(c)(2)(vii)(a).
(4)Permissible term. Paragraph 2, Payment of Unitrust Amount, of the sample trust in section 7 provides for payment of the
unitrust amount for a specified term of years. Alternatively, the trust instrument may provide for payment of the unitrust
amount for the life or lives of one or more measuring lives or for the life or lives of one or more measuring lives plus a term of
years. Rev. Rul. 85–49, 1985–1 C.B. 330. Only one or more of the following individuals may be used as measuring lives:
the donor, the donor’s spouse, and an individual who, with respect to all remainder beneficiaries (other than charitable
organizations described in § 170, 2055, or 2522), is eithera lineal ancestor or the spouse of a lineal ancestor of those
beneficiaries. Each person used as a measuring life for the unitrust period must be living on the date assets are transferred
to the trust. Sections 1.170A–6(c)(2)(ii)(A), 20.2055–2(e)(2)(vii)(a) and 25.2522(c)–3(c)(2)(vii)(a). See section 9.01 for
an alternate provision that provides for a unitrust period based on the life of an individual.
(5)Permissible recipients. A CLUT must have one or more charitable lead beneficiaries. The failure to designate a specific
charitable beneficiary will not preclude the donor from receiving a charitable deduction if the trust instrument provides for
the selection by the trustee of a charitable beneficiary described in §§ 170(c), 2055(a), and 2522(a). Rev. Rul. 78–101,
1978–1 C.B. 301. If it is determined that a deduction under § 2055(a) will not be necessary in any event, all references to
§ 2055(a) in the trust instrument may be deleted. Note that if the donor is serving as trustee of the trust, the trustee’s power
to select the charitable beneficiaries will cause the gift of the unitrust interest to be incomplete for gift tax purposes and will
cause some or all of the trust property (depending on the date of the donor’s death) to be included in the donor’s gross estate.
See §§ 2035(a), 2036(a)(2), and 2038(a)(1), and § 25.2511–2(c).Further note that if the charitable beneficiary is a private
foundation and the donor is an officer or director of the private foundation or possesses certain decision making authority
in the private foundation, some or all of the trust property may be included in the donor’s gross estate. See § 2036(a)(2).
See section 9.02 for an alternate provision that provides for a donor’s retained right to substitute the charitable beneficiary.
See section 9.03 for an alternate provision that provides the trustee with the power to apportion the unitrust amount among
charitable beneficiaries. See section 9.04 for an alternate provision that provides for the designation of an alternate chari-
table beneficiary in the trust instrument.
(6)Payment of unitrust amount in installments. Paragraph 2, Payment of Unitrust Amount, of the sample trust in section 7
specifies that the unitrust amount is to be paid in equal quarterly installments at the end of each calendar quarter. Alterna-
tively, the trust instrument may specify that the unitrust amount is to be paid in annual or other equal or unequal installments
throughout the year. See §§ 1.170A–6(c)(2)(ii)(A), 20.2055–2(e)(2)(vii)(a), and 25.2522(c)–3(c)(2)(vii)(a). The amount
of the charitable deduction will be affected by the frequency of the payment, by whether the installments are equal or un-
equal, and by whether each installment is payable at the beginning or end of the period. See §§ 1.170A–6, 25.2512–5, and
20.2031–7.
(7)Excess income. Trust income in excess of the amount required to pay the unitrust amount may be retained by the trust or
distributed to the charitablebeneficiary. The sample trust in section 7 provides for the retention of excess income by the
trust. If, instead, the governing instrument of a grantor charitable lead trust provides for the payment of excess income to
or for the use of the charitable beneficiary, the donor will receive an income tax charitable deduction each year for amounts
paid to a charitable beneficiary to the extent that such amounts exceed the unitrust amount. Section 1.170A–6(d)(2)(ii).
However, the donor is not entitled to any additional estate or gift tax charitable deductions for the excess amounts of income
distributed to the charitable beneficiary. See §§ 20.2055–2(e)(2)(vii)(d) and 25.2522(c)–3(c)(2)(vii)(d
). See Situation 2 of
Rev. Rul. 88–82, 1988–2 C.B. 336, for the gift tax consequences of the payment of excess income to a noncharitable
beneficiary. See section 8.06 for the private foundation rules applicable tocharitable lead trusts.
(8)Payment of part of unitrust for private purposes. In general, no part of a charitable lead unitrust interest may be payable
for a private purpose before the expiration of all charitable lead unitrust interests. However, there are two exceptions to
this rule. The first exception arises when the amount payable for a private purpose is in the form of a unitrust interest and
the trust’s governing instrument does not provide for any preference or priority in the payment of the private unitrust as
opposed to the charitable unitrust. The second exception arises when, under the trust’s governing instrument, the amount
that may be paid for a private purpose is payable only from agroup of assets that is devoted exclusively to private pur-
poses and to which § 4947(a)(2) is inapplicable by reason of § 4947(a)(2)(B). Note that an amount is not deemed to have
July 28, 20082342008–30 I.R.B.

been paid for a private purpose if it was paid for full and adequate consideration in money or money’s worth. Sections
1.170A–6(c)(2)(ii)(E), 20.2055–2(e)(2)(vii)(e), and 25.2522(c)–3(c)(2)(vii)(e). See section 8.06 for the private foundation
rules applicable to charitable lead trusts.
(9)Valuation date. Paragraph 2, Payment of Unitrust Amount, of the sample trust in section 7 specifies that the net fair market
value of trust assets is to be valued as of the first day of each taxable year of the trust. However, the value of the trust assets
may be determined on any one date during the taxable year ofthe trust, or by taking the average of valuations made on
more than one date during the taxable year of the trust, so long as the same valuation date or dates and the same valuation
methods are used each year. If the governing instrument does notspecify the valuation date or dates, the trustee must select
the date or dates and indicate the selection on the first Form 1041,U.S. Income Tax Return for Estates and Trusts, that the
trust must file. Sections 1.170A–6(c)(2)(ii)(A), 20.2055–2(e)(2)(vii)(a), and 25.2522(c)–3(c)(2)(vii)(a). Note that if the
valuation date is a date other than the first day of each taxable year of the trust, it may be necessary to modify the provisions
in the sample trust regarding: (i) the timing of the payment ofthe unitrust amount; (ii) the proration of the unitrust amount
in a short taxable year and the last taxable year of the unitrust period; and (iii) additional contributions.
.03Annotation for Paragraph 3, Proration of Unitrust Amount, of the Sample Trust in Section 7.
(1)Prorating the unitrust amount. Paragraph 3, Proration of Unitrust Amount, of t
he sample trust in section 7 provides for the
proration of the unitrust amount in any short taxable year, including the last y
ear of the unitrust period.
.04Annotation for Paragraph 4, Distribution Upon Termination of Unitrust Period, of the Sample Trust in
Section 7.
(1)Generation-skipping transfer tax. The GST tax may apply if a CLUT has or may have a skip person, as defined in § 2613(a),
as a remainder beneficiary. Under § 2651(f)(3), a charitable organization is deemed to be in the same generation as the donor
of a charitable lead trust. Therefore, the GST potential of a charitable lead trust is dependentupon whether any noncharitable
beneficiary is a skip person. GST tax liability is determined by multiplying the taxable amount by the applicable rate. The
applicable rate is the inclusion ratio multiplied by the maximum federal estate tax rate. Section 2641(a). Note that the rules
set forth in § 2642(e) for determining the inclusion ratio of certain charitable lead trusts do not apply to CLUTs.
.05Annotation for Paragraph 5, Additional Contributions, of the Sample Trust in Section 7.
(1)Identity of additional contributors. For purposes of qualification under this revenue procedure, only a donor or a donor’s
estate may make an additional contribution to the trust. See section 8.01(7) of this revenue procedure for examples of who
may be a donor of a CLUT.
(2)Option to prohibit additional contributions. Paragraph 5, Additional Contributions, of the sample trust in section 7 provides
rules for determining the unitrust amount payable in a year during which an additional contribution is made to the trust.
However, paragraph 5 of the trust instrument may instead be drafted to prohibit contributions to the trust after the initial
contribution.
(3)Proration of additional contributions. Paragraph 5, Additional Contributions, of the sample trust in section 7 provides a
formula for determining the unitrust amount in each year that an additional contribution is made to the CLUT. The formula
incorporates a proration provision for additions made in a short taxable year.
(4)Valuation date in year of additional contribution. Paragraph 2, Payment of Unitrust Amount, of the sample trust in section
7 specifies a January 1 valuation date for the trust. The formula contained in paragraph 5, Additional Contributions, of the
sample trust may be used when January 1 or any other single date during the taxable year is selected as the valuation date for
a CLUT. Note, however, that if a single date other than January 1 is selected as the valuation date for a CLUT, the formulas
in both paragraphs 2 and 5 of the sample trust for computing the unitrust amount will be deficient unless the trust instrument
addresses the possibility that the unitrust period may end before the valuation date, for instance, by providing that in a year
in which the unitrust period ends before the valuation date, the valuation date for purposes of paragraph 2 and paragraph 5
shall be the last day of the unitrust period. In addition, if the trust instrument is drafted to provide for the valuation of trust
assets by averaging the valuations as of multiple specified dates during the trust year, the additional contributions formula
must be modified.
.06Annotation for Paragraph 6, Prohibited Transactions, of the Sample Trust in Section 7.
(1)Prohibitions against certain investments and excess business holdings. Prohibitions against retaining any excess business
holdings within the meaning of § 4943, as modified by §§ 4947(a)(2) and 4947(b)(3), and against investments that jeop-
ardize the exempt purpose of the trust within the meaning of § 4944, as modified by §§ 4947(a)(2) and 4947(b)(3) are
generally required. The sample trust in section 7 contains prohibitions against §§ 4943 and 4944 transactions. If the present
2008–30 I.R.B.235July 28, 2008

value of the charitable interest does not exceed 60 percent of theaggregate value of all amounts in the trust, the trust instru-
ment does not provide for the payment of any of the income interest to a noncharitable beneficiary, and the trust instrument
does not provide for the payment of excess income to a noncharitable beneficiary, the references to §§ 4943 and 4944
may be removed from the trust instrument. Section 4947(b)(3)(A) and § 53.4947–2(b)(1)(i). See §§ 1.170A–6(c)(2)(ii)(E),
20.2055–2(e)(2)(vii)(f), and 25.2522(c)–3(c)(2)(vii)(f). See section 8.02(7) for a discussion of the payment of excess trust
income to a noncharitable beneficiary. See section 8.02(8)for a discussion of the payment of part of the unitrust for a
private purpose.
.07Annotation for paragraph 7, Taxable Year, of the Sample Trust in Section 7.
(1)Calendar year. The taxable year of a charitable lead trust must be a calendar year. Section 644(a).
.08Annotation for paragraph 10, Investment of Trust Assets, of the Sample Trust in Section 7.
(1)Capital gains. Gains from the sale or exchange of capital assets may be allocated to the income or the principal of the trust.
If the governing instrument is silent, capital gains are allocated in accordance with local law.
.09Annotation for Paragraph 11, Retained Powers and Interests, of the Sample Trust in Section 7.
(1)Power to substitute trust assets. The donor to a CLUT may claim an income tax charitable deduction under § 170(a) if the
donor is treated as the owner of the entire CLUT under the provisions of subpart E, part I, subchapter J, chapter 1, subtitle A
of the Code. Paragraph 11, Retained Powers and Interests, of the sample trust in section 7 creates a grantor CLUT through
the use of a power to substitute trust assets under § 675(4) that is held by a person other than the donor, the trustee, or
a disqualified person as defined in § 4946(a)(1), and is exercisable only in a nonfiduciary capacity. The circumstances
surrounding the administration of a CLUT will determine whether a § 675(4) substitution power is exercised in a fiduciary
or nonfiduciary capacity. This is a question of fact. Note, that the exercise of a § 675(4) power may result in an act of
self-dealing under § 4941.
(2)Otherpowersorprovisionstocreateagrantortrust. As noted above, the sample trust in section 7 includes a § 675(4)
power that is held by someone other than donor, the trustee, ora disqualified person as defined in § 4946(a)(1), and that
may be exercised only in a nonfiduciary capacity. The CLUTinstrument may instead incorporate a power or provision,
other than the one provided in the sample trust in section 7, that will cause the donor to be treated as the owner of the entire
CLUT under the provisions of subpart E, part I, subchapter J, chapter 1, subtitle A of the Code. See § 671et seq. However,
practitioners should exercise caution when choosing a particular power or provision because certain methods of creating a
grantor trust may have unforeseen tax consequences.
SECTION 9. ALTERNATE PROVISIONS FOR SAMPLE INTER VIVOS GRANTOR CHARITABLE
LEAD UNITRUST
.01Unitrust Period for theLife of One Individual.
(1)Explanation. As an alternative to establishing a CLUT for a term of years, the trust instrument of a grantor CLUT may
provide for payment of the unitrust amount for the life or lives of an individual or individuals. However, only one or more
of the following individuals may be used as measuring lives: the donor, the donor’s spouse, and an individual who, with
respect to all remainder beneficiaries (other than charitable organizations described in § 170, 2055, or 2522), is either a lineal
ancestor or the spouse of a lineal ancestor of those beneficiaries. A trust will satisfy the requirement that each measuring
life is a lineal ancestor (or the spouse of a lineal ancestor) of all noncharitable remainder beneficiaries if there is a less
than 15 percent probability at the time of the contribution to the trust that individuals who are not lineal descendants of an
individual who is a measuring life will receive any trust principal. The probability must be computed under the applicable
tables in § 20.2031–7. Sections 1.170A–6(c)(2)(ii)(A), 20.2055–2(e)(2)(vii)(a), and 25.2522(c)–3(c)(2)(vii)(a).
(2)Instruction for use. Replace the fifth and sixth sentences of paragraph 2, Payment of Unitrust Amount, of the sample trust
in section 7 with the following sentences:
The unitrust period is the lifetime of [designated measuring life]. The first day of the unitrust period shall be the date
property is first transferred to the trust, and the last day of the unitrust period shall be the date of death of [designated
measuring life].
.02Retention of the Right to Substitute the Charitable Lead Beneficiary.
(1)Explanation. The donor to a grantor CLUT may retain the right to substitute another charitable beneficiary for the charitable
beneficiary named in the trust instrument and still claim a deduction under § 170(a) in the year of the transfer to the CLUT.
July 28, 20082362008–30 I.R.B.

Note, however, that the retention of this right will cause the gift of the unitrust interest to be incomplete for gift tax purposes
and will cause some or all of the trust property (depending on the date of the donor’s death) to be included in the donor’s
gross estate. See §§ 2035, 2036(a)(2), and 2038(a)(1) and § 25.2511–2(c). See section 8.01(3) for a discussion of the
income tax deductibility limitations applicable to contributions to a grantor CLUT.
(2)Instruction for use. Replace the third sentence of paragraph 2, Payment of Unitrust Amount, of the sample trust in section
7 with the following two sentences:
Notwithstanding the preceding sentences, the Donor reserves the right to designateas the charitable recipient, at any time
and from time to time, in lieu of [designated charitable recipient named above], one or more organizations described
in §§ 170(c), 2055(a), and 2522(a) and shall make any such designation by giving written notice to the Trustee. The
term “the Charitable Organization” shall be used herein to refer collectively to the organization(s) then constituting the
charitable recipient, whether named in this paragraph or subsequentlyselected as the substitute charitable recipient.
.03Apportionment of the Unitrust Amount in the Discretion of the Trustee.
(1)Explanation. The donor or the trustee of a grantor charitable lead trust may be granted the power to apportion the unitrust
payment from time to time among a class of qualifying charitable beneficiaries. Note that a retained power of apportionment
by the donor will cause the gift of the unitrust interest to be incomplete for gift tax purposes and will cause some or all of the
trust property to be included in the donor’s gross estate. See §§ 2035(a), 2036(a)(2), and 2038(a)(1), and § 25.2511–2(c).
(2)Instruction for use. Replace the first three sentences of paragraph 2, Payment of Unitrust Amount, of the sample trust in
section 7 with the following two sentences:
For each taxable year of the trust duringthe unitrust period, the Trustee shall pay to one or more members of a class
comprised of organizations described in §§ 170(c), 2055(a),and 2522(a) (hereinafter, collectively “the Charitable Or-
ganization”) a unitrust amount equal to [number representing the annual unitrust percentage to be paid to the Charitable
Organization] percent of the net fair market value of the assets of the trust, valued as of the first day of each taxable year
of the trust (hereinafter the “valuation date”). The Trustee may pay the unitrust amount to one or more members of the
class, in equal or unequal shares, as the Trustee, in the Trustee’s sole discretion, from time to time may deem advisable.
.04Designation of an Alternate CharitableBeneficiary in the Trust Instrument.
(1)Explanation. The sample trust in section 7 provides that, if the charitable beneficiary designated in the trust instrument is
not an organization described in §§ 170(c), 2055(a), and 2522(a) at the time any payment is to be made to it, the trustee
shall distribute such payments to one or more organizations described in §§ 170(c), 2055(a), and 2522(a) as the trustee shall
select. As an alternative, the trust instrument may specificallydesignate one or more alternate charitable beneficiaries. See
section 8.01(3) for a discussion of the income tax deductibility limitations applicable to contributions to a grantor CLUT.
(2)Instruction for use. Replace the second sentence in paragraph 2, Paymentof Unitrust Amount, of the sample trust in section
7 with the following two sentences:
If [designated charitable recipient] is not an organization described in §§ 170(c), 2055(a), and 2522(a) at the time any
payment is to be made to it, the Trustee shall instead distribute such payments to [designated substitute charitable re-
cipient]. If neither [designated charitable recipient]nor[designated substitutecharitable recipient] is an organization
described in §§ 170(c), 2055(a), and 2522(a) at the time any payment is to be made to it, the Trustee shall distribute such
payments to one or more organizations described in §§ 170(c), 2055(a), and 2522(a) as the Trustee shall select, and in
such proportions as the Trustee shall decide, from time to time, in the Trustee’s sole discretion.
SECTION 10. DRAFTING INFORMATION
The principal author of this revenue procedure is Stephanie N.Bland of the Office of Associate Chief Counsel (Passthroughs
& Special Industries). For further information regarding this revenue procedure, contact Stephanie N. Bland at (202) 622–3130 or
James F. Hogan at (202) 622–3090.
2008–30 I.R.B.237July 28, 2008

26 CFR 601.201: Rulings and determination letters.
(Also: §§ 642(c), 2055, 1.642(c)–1, 20.2055–2.)
Rev. Proc. 2008–46
SECTION 1. PURPOSE
This revenue procedure contains an annotated sample declaration of trus
t and alternate provisions that meet the requirements for a
testamentary charitable lead unitrust (CLUT) providing for unitrust
payments payable to one or more charitable beneficiaries for the
unitrust period followed by the distribution of trust assets to one or m
ore noncharitable remaindermen.
SECTION 2. BACKGROUND
The Internal Revenue Service (Service) isissuing sample forms for CLUTs; annotations and alternate sample provisions are in-
cluded as further guidance. In addition to the sample trust instrument for a testamentary CLUT that is included in this revenue proce-
dure, samples are provided in a separate revenue procedure for grantor and nongrantor inter vivos CLUTs (see Rev. Proc. 2008–45).
SECTION 3. SCOPE
A CLUT is an irrevocable split-interest trust that provides for a specified amount to be paid to one or more charitable beneficiaries
during the term of the trust. The principal remaining in the trust at the end of the term is paid over to, or held in a continuing trust for,
a noncharitable beneficiary or beneficiaries identified in the trust. If the terms of a CLUT created on the decedent’s death satisfy the
applicable statutory and regulatory requirements, the value of the charitable lead unitrust interest will be deductible by the decedent’s
estate under § 2055(e)(2)(B) and payments of the unitrust amount tothe charitable lead beneficiary will be deductible from the gross
income of the trust to the extent provided by § 642(c)(1).
A testamentary CLUT is subject to the provisions of part I, subchapter J of chapter 1 of subtitle A of the Internal Revenue Code
(Code). Under the provisions of part I of subchapter J, a CLUT is allowed a deduction under § 642(c)(1) in determining its taxable
income for any amount of gross income paid for purposes specified in § 170(c).
Section 4 of this revenue procedure provides a sample declaration of trust for a testamentary CLUT with a term of years unitrust
period that is created by a decedent who was a citizen or resident of the United States. Section 5 of this revenue procedure provides
annotations to the provisions of the sample trust. Section 6 of this revenue procedure provides samples of certain alternate provisions
concerning: (.01) a unitrust period for thelife of one individual; (.02) apportionment of the unitrust amount in the discretion of the
trustee; and (.03) designation of an alternate charitable beneficiary in the trust instrument. If a trust is substantially similar to the sample
trust in section 4 of this revenue procedure or properly integrates one or more alternate provisions from section 6 into a document
substantially similar to the sample trust in section 4, is a valid trust under applicable local law, and operates in a manner consistent
with the terms of the instrument, and if all other deductibility requirements are satisfied, the value of the charitable lead interest will
be deductible by the decedent’s estate under §2055(e)(2)(B) and payments of the unitrust amount to the charitable lead beneficiary
will be deductible from the gross income ofthe trust to the extent provided by § 642(c)(1). In addition, a testamentary CLUT will
qualify for the safe harbor created under thisrevenue procedure if the trust satisfies all of the requirements set forth in the preceding
sentence, except that it defines the unitrust amount as a varying percentage amount for whichthe value is ascertainable at the creation
of the trust and/or provides for a different disposition of trust assets upon the termination of the unitrust period.
Except as provided above, a trust that contains substantive provisions in addition to those provided in section 4 of this revenue
procedure (other than properly integrated alternate provisions from section 6 of this revenue procedure or provisions necessary to
establish a valid trust under applicable local law that are not inconsistent with the applicable federal tax requirements), or that omits
any of the provisions of section 4 of this revenue procedure (unless analternate provision from section 6 of this revenue procedure is
properly integrated), will not necessarily be ineligible for the relevant charitable deduction(s), but neither will that trust (or contribu-
tions to it) be assured of qualification for the appropriate charitable deductions. The Service generally will not issue a letter ruling on
whether a testamentary CLUT qualifies for income and estate tax charitable deductions. The Service,however, generally will issue
letter rulings relating to the tax consequences of the inclusion in a CLUT of substantive trust provisions other than those contained in
sections 4 and 6 of this revenue procedure.
SECTION 4. SAMPLE TESTAMENTARY CHARITABLE LEAD UNITRUST
I give, devise, and bequeath [property bequeathed] to my Trustee in trust to be administered under this provision. I intend
this bequest to establish a charitable lead unitrust, within the meaning of Rev. Proc. 2008–46. This trust shall be known as the
Charitable Lead Unitrust, and I hereby designateas the initial trustee (hereinafter “the Trustee”).
All references to “section” or “§” in this instrument shallrefer to the Internal Revenue Code of 1986, 26 U.S.C. § 1,et seq.
July 28, 20082382008–30 I.R.B.

1.PaymentofUnitrustAmount. For each taxable year of the trust during the unitrust period, the Trustee shall pay to [designated
charitable recipient] a unitrust amount equal to [number representing the annual unitrustpercentage to be paid to the designated
charitable recipient] percent of the net fair market value of the assets of the trust, valued as of the first day of each taxable year of the
trust (hereinafter “the valuation date”). If [designated charitable recipient] is not an organization described in §§ 170(c) and 2055(a)
at the time any payment is to be made to it, the Trustee shall insteaddistribute such payments to one or more organizations described
in §§ 170(c) and 2055(a) as the Trustee shall select, and in such proportions as the Trustee shall decide, from time to time, in the
Trustee’s sole discretion. The term “the Charitable Organization” shall be used herein to refer collectively to theorganization(s) then
constituting the charitable recipient, whether named in this paragraph or subsequently selected as the substitute charitable recipient.
During the trust term, no payment shall be made to any person other than the Charitable Organization. The unitrust period is a term
of [number of years of unitrust period] years. The first day of the unitrust period shall be the date of my death, and the last day of
the unitrust period shall be the day preceding the [ordinal number corresponding to the length of the unitrust period] anniversary of
that date. The unitrust amount shall be paid in equal quarterly installments at the end of each calendar quarter from income and, to
the extent income is not sufficient, from principal. Any income of the trust for a taxable year in excess of the unitrust amount shall be
added to principal. If for any year the net fair market value of the trust assets is incorrectly determined, then within a reasonable period
after the correct value is finally determined, the Trustee shall pay to the Charitable Organization (in the case of an undervaluation)
or receive from the Charitable Organization (in the case of an overvaluation) an amount equal to the difference between the unitrust
amount(s) properly payable and the unitrust amount(s) actually paid.
2.Deferral Provision. The obligation to pay the unitrust amount shall commence with the date of my death, but payment of the
unitrust amount may be deferred from this date until the end of the taxable year in which the trust is completely funded. Within
a reasonable time after the end of the taxable year in which the trust is completely funded, the Trustee must pay to the Charitable
Organization the difference between any unitrust amounts actually paid and the unitrust amounts payable, plus interest. The interest
for any period shall be computed at the § 7520 rate of interest in effect for the date of my death. All interest shall be compounded
annually.
3.Proration of Unitrust Amount. For any short taxable year, including the taxable year in which the unitrust period ends, the
Trustee shall prorate the unitrust amount on a daily basis for the number of days of the unitrust period in that taxable year.
4.Distribution Upon Termination of Unitrust Period. At the termination of the unitrust period, the Trustee shall distribute all of
the then remaining principal and income of the trust (other than any amount due to the Charitable Organization under the provisions
above) to [remainder beneficiary].
5.Additional Contributions. No additional contributions shall be made to the trust after the initial contribution. The initial contri-
bution, however, shall be deemed to consist of all property passing to the trust by reason of my death.
6.Prohibited Transactions. The Trustee shall not engage in any act of self-dealing within the meaning of § 4941(d), as modified
by § 4947(a)(2), and shall not make any taxable expenditures within the meaning of § 4945(d), as modified by § 4947(a)(2). The
Trustee shall not retain any excess business holdings that wouldsubject the trust to tax under § 4943, as modified by §§ 4947(a)(2)
and 4947(b)(3). In addition, the Trustee shall not acquire any assets that would subject the trust to tax under § 4944, as modified by
§§ 4947(a)(2) and 4947(b)(3), or retain assets which, if acquired by the Trustee, would subject the Trustee to tax under § 4944, as
modified by §§ 4947(a)(2) and 4947(b)(3).
7.Taxable Year. The taxable year of the trustshall be the calendar year.
8.Governing Law. The operation of the trust shall be governed by the laws of the State of
. However, the Trustee
is prohibited from exercising any power or discretion granted under said laws that would be inconsistent with the requirements for the
charitable deductions available to a charitable lead unitrust or for contributions to a charitable lead unitrust.
9.Limited Power of Amendment. This trust is irrevocable. However, the Trustee shall have the power, acting alone, to amend
the trust from time to time in any manner required for the sole purposeof ensuring that the unitrust interest passing to the Charitable
Organization is a unitrust interest under § 2055(e)(2)(B) and the regulations thereunder and that payments of the unitrust amount to the
Charitable Organization will be deductible from the gross income of the trust to the extent provided by § 642(c)(1) and the regulations
thereunder.
10.Investment of Trust Assets. Except as provided in paragraph 6 herein, nothingin this trust instrument shall be construed to
restrict the Trustee from investing the trust assets in a manner that could result in the annual realization of a reasonable amount of
income or gain from the sale or disposition of trust assets.
SECTION 5. ANNOTATIONS REGARDING SAMPLE TESTAMENTARY CHARITABLE LEAD
UNITRUST
.01Annotations for Introductory Paragraph of the Sample Trust.
(1)Income taxation of testamentary charitable lead trusts. A testamentary CLUT is a complex trust that is taxable as a separate
entity under the provisions of subchapter J of the Code. The trustee of the trust must apply for a tax identification number
for the trust.
2008–30 I.R.B.239July 28, 2008

(2)Deduction under § 642(c)(1) available for amounts paid for a charitable purpose. Under § 642(c)(1), a testamentary CLUT
is allowed a deduction in computing its taxable income for any amount of gross income, without limitation, that under the
terms of the trust instrument is paid for a purpose specified in §170(c) (determined without regard to § 170(c)(2)(A)) during
the taxable year. Section 642(c)(1) and § 1.642(c)–1(a). An amount paid to a corporation, trust, or community chest, fund,
or foundation otherwise described in § 170(c)(2) shall be considered paid for a purpose described in § 170(c) even though
the corporation, trust, or community chest, fund, or foundation is not created or organized in the United States, any state, the
District of Columbia, or any possession of the United States. Section 1.642(c)–1(a)(2). With regard to amounts of income
paid to the charitable beneficiary after the close of the taxable year in which the income was received (but on or before the
last day of the next succeeding taxable year), the trustee of a testamentary CLUT may elect to take the charitable deduction
for that payment for the year in which the income was received, rather than for the year in which the payment was made.
Section 642(c)(1). The election is made by filing a statement with the income tax return for the taxable year in which the
charitable contribution is treated as paid. See § 1.642(c)–1(b).
(3)Charitable lead beneficiary requirements. A deduction is allowed under § 642(c)(1) for any amount of the gross income
of a testamentary CLUT that is paid for a purpose specified in § 170(c). Note that the class of permissible charitable
recipients for obtaining a deduction under § 642(c)(1) differs from the class of permissible charitable recipients for obtaining
a deduction under § 170(a). Compare § 170(c) and § 1.642(c)–1(a)(2).
(4)Unrelated business taxable income. Under § 681, a testamentary charitable leadtrust’s deduction under § 642(c)(1) is
disallowed in any year to the extent that the deduction is allocable to the trust’s unrelated business taxable income, as
defined in § 512, for that taxable year. See § 1.681(a)–2. However, a partial deduction is allowed under § 512(b)(11) for
amounts allocable to unrelated business taxable income. Section 512(b)(11). See § 512(b)(12) and § 1.681(a)–2(a).
(5)Computation of estate tax charitable deduction. In general, the estate tax charitable deduction available under
§ 2055(e)(2)(B) with respect to contributions to a CLUT is equal to the present value of the unitrust interest. Section
20.2055–2(f)(1). Section 7520 requires that a unitrust interest must be valued using tables published by the Service. The
method for valuing a charitable lead unitrust interest is setforth in the regulations. See § 20.7520–2. If estate or other
death taxes are paid from the assets used to fund a testamentary CLUT, the amount deductible under § 2055 is the amount
that passes to charity, reduced by the amount of estate or death taxes paid. Section 2055(c).
(6)Trustee provisions. The trust instrument may name alternate or successor trustees and/or may include a process for the
appointment of unnamed alternate or successor trustees. In addition, the trust instrument may contain certain administrative
provisions relating to the trustee’s duties and powers.
.02Annotations for Paragraph 1, Payment of Unitrust Amount, of the Sample Trust.
(1)Unitrust interest. To qualify for an estate tax charitable deduction, a CLUT must provide for the payment of a unitrust
amount at least annually to a qualified charitable organization for each year during the unitrust period. See § 2055(e)(2)(B).
A unitrust interest is the right pursuant to the instrument of transferto receive payment, not less often than annually, of a
fixed percentage of the net fair market value, determined annually, of the property that funds the unitrust interest. Payments
of a unitrust interest may be paid for a specified term or for the life or lives of certain individuals, each of whom must
be living at the date of the decedent’s death and can be ascertained as of such date. Section 20.2055–2(e)(2)(vii)(a). See
section 5.02(4) for a discussion of the permissible term of a testamentary CLUT. An interest is a unitrust interest only if it
is a unitrust interest in every respect. Forexample, if an interest is expressed as the right to receive an annual payment from
a trust equal to the lesser of a sum certain or a fixed percentageof the net fair market value of the trust assets (determined
annually), the interest is not a unitrust interest. Section 20.2055–2(e)(2)(vii)(b). See Rev. Rul. 77–300, 1977–2 C.B.
352. In addition, an interest is not a unitrust interest if the trustee has the discretion to commute and prepay the interest
prior to the termination of the unitrust period. Rev. Rul. 88–27, 1988–1 C.B. 331. If a charitable interest in the form of
a unitrust interest is in trustand the present value of the charitable interest on the appropriate valuation date exceeds 60
percent of the aggregate value ofall amounts in the trust, the charitable interest will not be considered a unitrust interest
unless the governing instrument of the trust prohibits the acquisition and retention of assets that would give rise to a tax
under § 4943 or 4944, as modified by §§ 4947(a)(2) and 4947(b)(3). Section 4947(b)(3)(A)and § 53.4947–2(b)(1)(i). See
§ 20.2055–2(e)(2)(vii)(f). These prohibitions are contained in the sample trust. See section 5.07 for a further discussion of
the 60 percent test.
(2)Payment requirements. CLUTs are not subject to any minimum or maximum payout requirements. The governing instru-
ment of a CLUT must provide for the payment to a charitable organization, not less often than annually, of a fixed percentage
of the net fair market value of the assets of the trust, valued annually. Alternatively, the governing instrument of a CLUT
may provide for a unitrust amount that is initially stated as a fixed percentage amount but increases or decreases during the
unitrust period, provided that the value of the unitrust interest is ascertainable atthe time of the decedent’s death. The uni-
trust payments may be made in cash or in kind. If the trustee distributes appreciated property insatisfaction of the required
unitrust payment, the trust will realize capital gain on the assets distributed to satisfy part or all of the unitrust payment and
the trust will be allowed a § 642(c)(1) deduction for the realized capital gains. Rev. Rul. 83–75, 1983–1 C.B. 114. See
July 28, 20082402008–30 I.R.B.

section 5.03 for a discussion of the deferral of the requirement to pay the unitrust amount until the end of the taxable year
in which the trust is completely funded.
(3)Rule against perpetuities. An interest payable for a specified term of years may qualify as a unitrust interest even if the
governing instrument contains a savings clause intended to ensure compliance with a rule against perpetuities. However,
any such savings clause must utilize a period of vesting ofnot more than 21 years after the deaths of measuring lives who
are selected to maximize, rather than limit, the term of the trust. Section20.2055–2(e)(2)(vii)(a).
(4)Permissible term. Paragraph 1, Payment of Unitrust Amount, of the sample trust provides for payment of the unitrust amount
for a specified term of years. Alternatively, the trust instrument may provide for payment of the unitrust amount for the life
or lives of one or more measuring lives or for the life or lives of one or more measuring lives plus a term of years. Rev. Rul.
85–49, 1985–1 C.B. 330. Only one or more ofthe following individuals may be usedas measuring lives: the decedent’s
spouse and an individual who, with respect to all remainder beneficiaries (other than charitable organizations described in
§ 170 or 2055), is either a lineal ancestor or the spouse of a lineal ancestor of those beneficiaries. Each person used as a
measuring life for the unitrust period must be living on thedecedent’s date of death. Section 20.2055–2(e)(2)(vii)(a). See
section 6.01 for an alternate provision that providesfor a unitrust period based on the life of an individual.
(5)Permissible recipients. A CLUT must have one or more charitable lead beneficiaries. The failure to designate a specific
charitable beneficiary will not preclude the decedent’s estate from receiving a charitable deduction if the trust instrument
provides for the selection by the trustee of a charitable beneficiary described in §§ 170(c) and 2055(a). Rev. Rul. 78–101,
1978–1 C.B. 301. See section 6.02 for analternate provision that provides thetrustee with the power to apportion the
unitrust amount among charitable beneficiaries. See section 6.03 for an alternate provision that provides for the designation
of an alternate charitable beneficiary in the trust instrument.
(6)Payment of unitrust amount in installments. Paragraph 1, Payment of Unitrust Amount, of the sample trust specifies that
the unitrust amount is to be paid in equal quarterly installments at the end of each calendar quarter. Alternatively, the trust
instrument may specify that the unitrust amount is to be paid in annual or other equal or unequal installments throughout
the year. See § 20.2055–2(e)(2)(vii)(a). The amount of the charitable deduction will be affected by the frequency of the
payment, by whether the installments are equal or unequal,and by whether each installment is payable at the beginning or
end of the period. See § 20.2031–7.
(7)Excess income. Trust income in excess of the amount required to pay the unitrust amount may be retained by the trust
or distributed currently to the charitable beneficiary. The sample trust provides for the retention of excess income by the
trust. If, instead, the governing instrument provides for the payment of excess income to or for the use of the charitable
beneficiary, no additional estate tax charitable deduction is available for the excess amounts of income distributed to the
charitable beneficiary. See § 20.2055–2(e)(2)(vii)(d). However, the trust is entitled to a charitable income tax deduction
under § 642(c)(1) for any amounts of excess income paid to thecharitable beneficiary. See Situation 2 of Rev. Rul. 88–82,
1988–2 C.B. 336, for the transfer tax consequences of the payment of excess income to a noncharitable beneficiary. See
section 5.07 for the private foundation rules applicable to charitable lead trusts.
(8)Payment of part of unitrust for private purposes. In general, no part of a charitable lead unitrust interest may be payable for a
private purpose before the expiration of all charitable lead unitrust interests. However, there are two exceptions to this rule.
The first exception arises when the amount payable for a private purpose is in the form of a unitrust interest and the trust’s
governing instrument does not provide for any preference or priority in the payment of the private unitrust as opposed to the
charitable unitrust. The second exception arises when, under the trust’s governing instrument, the amount that may be paid
for a private purpose is payable only from a group of assets that is devoted exclusively to private purposes and to which
§ 4947(a)(2) is inapplicable by reason of § 4947(a)(2)(B). Note that an amount is not deemed to have been paid for a private
purpose if it was paid for full and adequate consideration in money or money’s worth. Section 20.2055–2(e)(2)(vii)(e). See
section 5.07 for the private foundation rules applicable to charitable lead trusts.
(9)Valuation date. Paragraph 1, Payment of Unitrust Amount, of the sample trust specifies that the net fair market value of
trust assets is to be valued as of the first day of each taxable year of the trust. However, the value of the trust assets may be
determined on any one date during the taxable year of the trust, or by taking the average of valuations made on more than
one date during the taxable year of the trust, so long as the same valuation date or dates and the same valuation methods are
used each year. If the governing instrument does not specify the valuation date or dates, the trustee must select the date or
dates and indicate the selection on the first Form 1041,U.S. Income Tax Return for Estates and Trusts, that the trust must
file. Section 20.2055–2(e)(2)(vii)(a). Note that if the valuation date is a date other than the first day of each taxable year
of the trust, it may be necessary to modify the provisions in the sample trust regarding (i) the timing of the payment of the
unitrust amount and (ii) the proration of the unitrust amount in a short taxable year and the last taxable year of the unitrust
period.
(10)Ordering rules. A provision in the governing instrument of a charitable lead trust that provides for the payment to charity
to consist of different classes of income determined on a nonpro ratabasis will not be respected because such a provision
does not have economic effect independent of the income tax consequences of the payment. See § 1.642(c)–3(b)(2) and (3).
2008–30 I.R.B.241July 28, 2008

.03Annotations for Paragraph 2, Deferral Provision, of the Sample Trust.
(1)Deferral of requirement to pay unitrust amount. The deferral provision in paragraph 2 of the sample trust authorizes the
trustee to defer the payment of the unitrust amount until the end of the taxable year of the trust in which the trust is com-
pletely funded.
(2)Interest on unitrust payments. The deferral provision in paragraph 2 of the sample trust provides for the payment of interest,
compounded annually, with respect to any underpayment of theunitrust amount during the period of estate administration.
The sample trust requires that interest be computed at the § 7520 rate in effect on the date of the decedent’s death. To the
extent that interest payable under state law exceeds the applicable § 7520 rate, the payment of interest at the rate prescribed
by state law will be deemed to satisfy the interest payment requirement set forth in the trust instrument.
.04Annotation for Paragraph 3, Proration of Unitrust Amount, of the Sample Trust.
(1)Prorating the unitrust amount. Paragraph 3, Proration of Unitrust Amount, of the sample trust provides for the proration of
the unitrust amount in any short taxable year, including the last year of the unitrust period.
.05Annotation for Paragraph 4, Distribution Upon Termination of Unitrust Period, of the Sample Trust.
(1)Generation-skipping transfer tax. The generation-skipping transfer (GST) tax may apply if a CLUT has or may have a skip
person, as defined in § 2613(a), as a remainder beneficiary. Under § 2651(f)(3), a charitable organization is deemed to be in
the same generation as the decedent/donor of acharitable lead trust. Therefore, the GST potential of a charitable lead trust is
dependent upon whether any noncharitable beneficiary is a skip person. GST tax liability is determined by multiplying the
taxable amount by the applicable rate. The applicable rate isthe inclusion ratio multiplied by the maximum federal estate
tax rate. Section 2641(a). Note that the rules set forth in § 2642(e) for determining the inclusion ratio of certain charitable
lead trusts do not apply to CLUTs.
.06Annotation for Paragraph 5, Additional Contributions, of the Sample Trust.
(1)Additions to the trust. For purposes of qualification under this revenue procedure, the trust instrument must contain a
provision that prohibits additional contributions. A CLUT that permits additional contributions will not qualify for safe
harbor treatment under this revenue procedure.
.07Annotation for Paragraph 6, Prohibited Transactions, of the Sample Trust.
(1)Prohibitions against certain investments and excess business holdings. Prohibitions against retaining any excess business
holdings within the meaning of § 4943, as modified by §§ 4947(a)(2) and 4947(b)(3), and against investments that jeop-
ardize the exempt purpose of the trust within the meaning of § 4944, as modified by §§ 4947(a)(2) and 4947(b)(3), are
generally required. The sample trust contains prohibitionsagainst §§ 4943 and 4944 transactions. If the present value of
the charitable interest does not exceed 60percent of the aggregate value of all amounts in the trust, the trust instrument
does not provide for the payment of any of the income interest to a noncharitable beneficiary, and the trust instrument does
not provide for the payment of excess income to a noncharitable beneficiary, the references to §§ 4943 and 4944 may be
removed from the trust instrument. Section 4947(b)(3) and §§ 53.4947–2(b)(1)(i) and 20.2055–2(e)(2)(vii)(f). See section
5.02(7) for a discussion of the payment of excess trust incometo a noncharitable beneficiary. See section 5.02(8) for a
discussion of the payment of part of the unitrust for a private purpose.
.08Annotation for paragraph 7, Taxable Year, of the Sample Trust.
(1)Calendar year. The taxable year of a charitable lead trust must be a calendar year. Section 644(a).
.09Annotation for paragraph 10, Investment of Trust Assets, of the Sample Trust.
(1)Capital gains. Gains from the sale or exchange of capital assets may be allocated to the income or the principal of the trust.
If the governing instrument is silent, capital gains are allocated in accordance with local law. Even if gains are allocated
to principal, they will be deductible under § 642(c)(1) if they are paid to the charitable beneficiary as part of a charitable
unitrust payment. Rev. Rul. 83–75, 1983–1 C.B. 114.
July 28, 20082422008–30 I.R.B.

SECTION 6. ALTERNATE PROVISIONS FOR SAMPLE TESTAMENTARY CHARITABLE LEAD
UNITRUST
.01Unitrust Period for theLife of One Individual.
(1)Explanation. As an alternative to establishing a CLUT for a term of years, the trust instrument of a testamentary CLUT may
provide for payment of the unitrust amount for the life or lives of an individual or individuals. However, only one or more
of the following individuals may be used as measuring lives: the decedent’s spouse and an individual who, with respect to
all remainder beneficiaries (other than charitable organizations described in § 170 or 2055), is either a lineal ancestor or the
spouse of a lineal ancestor of those beneficiaries. A trust will satisfy the requirement that each measuring life is a lineal
ancestor (or the spouse of a lineal ancestor) of all noncharitable remainder beneficiaries if on the decedent’s date of death
there is a less than 15 percent probability that individuals whoare not lineal descendants of an individual who is a measuring
life will receive any trust principal. The probability must be computed under the applicable tables in § 20.2031–7. Section
20.2055–2(e)(2)(vii)(a).
(2)Instruction for use. Replace the fifth and sixth sentences of paragraph 1, Payment of Unitrust Amount, of the sample trust
with the following sentences:
The unitrust period is the lifetime of [designated measuring life]. The first day of the unitrust period shall be the date of
my death, and the last day of the unitrust period shall be the date of death of [designated measuring life].
.02Apportionment of the Unitrust Amount in the Discretion of the Trustee.
(1)Explanation. The trustee of a testamentary charitable lead trust maybe granted the power to apportion the unitrust payment
from time to time among a class of qualifying charitable beneficiaries. See §674(b)(4).
(2)Instruction for use. Replace the first three sentences of paragraph 1, Payment of Unitrust Amount, of the sample trust with
the following two sentences:
For each taxable year of the trust duringthe unitrust period, the Trustee shall pay to one or more members of a class
comprised of organizations described in §§ 170(c) and 2055(a) (hereinafter, collectively “the Charitable Organization”) a
unitrust amount equal to [number representing the annual unitrust percentage to be paid to the Charitable Organization]
percent of the net fair market value of the assets of the trust, valued as of the first day of each taxable year of the trust
(hereinafter “the valuation date”). The Trustee may pay the unitrust amount to one or more members of the class, in
equal or unequal shares, as the Trustee, in the Trustee’s sole discretion, from time to time may deem advisable.
.03Designation of an Alternate CharitableBeneficiary in the Trust Instrument.
(1)Explanation. The sample trust provides that, in the event the charitable beneficiary designated in the trust instrument is not
an organization described in §§ 170(c) and 2055(a) at the time any payment is to be made to it, the trustee shall distribute
such payments to one or more organizations described in §§ 170(c) and 2055(a) as the trustee shall select. As an alternative,
the trust instrument may specifically designate one or more alternate charitable beneficiaries.
(2)Instruction for use. Replace the second sentence in paragraph 1, Payment of Unitrust Amount, of the sample trust with the
following two sentences:
If [designated charitable recipient] is not an organization described in §§ 170(c) and 2055(a) at the time any payment
is to be made to it, the Trustee shall instead distribute such payments to [designated substitute charitable recipient]. If
neither [designated charitable recipient] nor [designated substitute charitable recipient] is an organization described in
§§ 170(c) and 2055(a) at the time any payment is to be made to it, the Trustee shall distribute such payments to one or
more organizations described in §§ 170(c) and 2055(a) as the Trustee shall select, and in such proportions as the Trustee
shall decide, from time to time, inthe Trustee’s sole discretion.
SECTION 7. DRAFTING INFORMATION
The principal author of this revenue procedure is Stephanie N.Bland of the Office of Associate Chief Counsel (Passthroughs
& Special Industries). For further information regarding this revenue procedure, contact Stephanie N. Bland at (202) 622–3130 or
James F. Hogan at (202) 622–3090.
2008–30 I.R.B.243July 28, 2008

Part IV. Items o
fGeneralInterest
Announcement of Disciplinary Sanctions From the Office
of Professional Responsibility
Announcement 2008-68
TheOfficeofProfessionalResponsi-
bility (OPR) announcesrecent disciplinary
sanctions involving attorneys, certified
public accountants, enrolled agents, en-
rolled actuaries, enrolled retirement plan
agents, and appraisers. These individuals
are subject to the regulations governing
practice before the Internal Revenue Ser-
vice (IRS), which are set out in Title 31,
Code of Federal Regulations, Part 10, and
which are published in pamphlet form as
Treasury Department Circular No. 230.
The regulations prescribe the duties and
restrictions relating to such practice and
prescribe the disciplinary sanctions for
violating the regulations.
The disciplinary sanctions to be im-
posed for violation of the regulations are:
Disbarred from practice before the
IRS—An individual who is disbarred is
not eligible to represent taxpayers before
the IRS.
Suspended from practice before the
IRS—An individual who is suspended is
not eligible to represent taxpayers before
the IRS during the term of the suspension.
Censured in practice before the
IRS—Censure is a public reprimand. Un-
like disbarment or suspension, censure
does not affect an individual’s eligibility
to represent taxpayers before the IRS, but
OPR may subject the individual’s future
representations to conditions designed to
promote high standards of conduct.
Monetary penalty—A monetary
penalty may be imposed on an individual
who engages in conduct subject to sanc-
tion or on an employer, firm, or entity
if the individual was acting on its behalf
and if it knew, or reasonably should have
known, of the individual’s conduct.
Disqualification of appraiser—An
appraiser who is disqualified is barred
from presenting evidence or testimony in
any administrative proceeding before the
Department of the Treasury or the IRS.
Under the regulations, attorneys, cer-
tified public accountants, enrolled agents,
enrolled actuaries, and enrolled retirement
plan agents may not assist, or accept assis-
tance from, individuals who are suspended
or disbarred with respect to matters consti-
tuting practice (i.e., representation) before
the IRS, and they may not aid or abet sus-
pended or disbarred individuals to practice
before the IRS.
Disciplinary sanctions are described in
these terms:
Disbarred by decision after hearing,
Suspended by decision after hearing,
Censured by decision after hearing,
Monetary penalty imposed after hear-
ing, and Disqualified after hearing—An
administrative law judge (ALJ) conducted
an evidentiary hearing upon OPR’s com-
plaint alleging violation of the regulations
and issued a decision imposing one of
these sanctions. After 30 days from the
issuance of the decision, in the absence of
an appeal, the ALJ’s decision became the
final agency decision.
Disbarred by default decision, Sus-
pended by default decision, Censured by
default decision, Monetary penalty im-
posed by default decision, and Disqual-
ified by default decision—An ALJ, after
findingthatnoanswertoOPR’scomplaint
had been filed, granted OPR’s motion for a
default judgment and issued a decision im-
posing one of these sanctions.
Disbarment by decision on appeal,
Suspended by decision on appeal, Cen-
sured by decision on appeal, Monetary
penalty imposed by decision on ap-
peal, and Disqualified by decision on
appeal—The decision of the ALJ was
appealed to the agency appeal authority,
acting as the delegate of the Secretary
of the Treasury, and the appeal authority
issued a decision imposing one of these
sanctions.
Disbarred by consent, Suspended by
consent, Censured by consent, Mone-
tary penalty imposed by consent, and
Disqualified by consent—In lieu of a
disciplinary proceeding being instituted
or continued, an individual offered a con-
sent to one of these sanctions and OPR
accepted the offer. Typically, an offer
of consent will provide for: suspension
for an indefinite term; conditions that the
individual must observe during the sus-
pension; and the individual’s opportunity,
after a stated number of months, to file
with OPR a petition for reinstatement af-
firming compliance with the terms of the
consent and affirming current eligibility
to practice (i.e., an active professional
license or active enrollment status). An
enrolled agent or an enrolled retirement
plan agent may also offer to resign in order
to avoid a disciplinary proceeding.
Suspended by decision in expedited
proceeding, Suspended by default de-
cision in expedited proceeding, Sus-
pended by consent in expedited pro-
ceeding—OPR instituted an expedited
proceeding for suspension (based on cer-
tain limited grounds, including loss of a
professional license and criminal convic-
tions).
OPR has authority to disclose the
grounds for disciplinary sanctions in these
situations: (1) an ALJ or the Secretary’s
delegate on appeal has issued a decision
on or after September 26, 2007, which was
theeffectivedateofamendmentstothe
regulations that permit making such deci-
sions publicly available; (2) the individual
has settled a disciplinary case by signing
OPR’s “consent to sanction” form, which
requires consenting individuals to admit to
one or more violations of the regulations
and to consent to the disclosure of the in-
dividual’s own return information related
to the admitted violations (for example,
failure to file Federal income tax returns);
or (3) OPR has issued a decision in an
expedited proceeding for suspension.
Announcements of disciplinary sanc-
tions appear in the Internal Revenue Bul-
letin at the earliest practicable date. The
sanctions announced below are alphabet-
ized first by the names of states and sec-
ond by the last names of individuals. Un-
less otherwise indicated, section numbers
(e.g., §10.51) refer to the regulations.
July 28, 20082442008–30 I.R.B.

City & StateNameProfessionalDisciplinary SanctionEffective Date(s)
Designation
California
BakersfieldBaisden, Lowell A.CPASuspended by decision
in expedited proceeding
under §10.82 (revocation
of CPA license)
Indefinite from
June 10, 2008
Trabuco CanyonMattila, William J.CPASuspended by default
decision in expedited
proceeding under §10.82
(revocation of CPA
license)
Indefinite from
April 25, 2008
Connecticut
StamfordRichichi, JosephAttorneySuspended by decision
in expedited proceeding
under §10.82 (conviction
under 26 U.S.C. §7201,
tax evasion)
Indefinite from
June 18, 2008
Georgia
Bernhard, Matthew B.,
See New Jersey
Illinois
Fifer, Micheal L.,
See Michigan
ChicagoGregory, Edward A.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(attorney disbarment)
Indefinite from
June 3, 2008
Nasharr, III, Anthony J. AttorneySuspended by consentIndefinite from
June 16, 2008
NapervilleHolman, James W.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(suspension of attorney
license)
Indefinite from
April 25, 2008
Indiana
GaryHarris, WillieAttorneySuspended by default
decision in expedited
proceeding under §10.82
(conviction under 18
U.S.C. §1343 and 2, wire
fraud, 18 U.S.C. §371,
conspiracy to commit
theft of government
funds, and 26 U.S.C.
§7206, willfully filing
false tax return)
Indefinite from
April 24, 2008
2008–30 I.R.B.245July 28, 2008

City & StateNameProfessionalDisciplinary SanctionEffective Date(s)
Designation
Michigan
CantonFifer, Michael L.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(attorney disbarment in
Illinois)
Indefinite from
May 13, 2008
New Jersey
LivingstonRhoades, Robert W.AttorneySuspended by decision
in expedited proceeding
under §10.82 (attorney
disbarment)
Indefinite from
June 16, 2008
Florham ParkLambert, BernardAttorneySuspended by decision
in expedited proceeding
under §10.82 (attorney
disbarment)
Indefinite from
June 18, 2008
NewarkBernhard, Matthew B. AttorneySuspended by default
decision in expedited
proceeding under §10.82
(attorney disbarment in
Georgia)
Indefinite from
June 3, 2008
SomerspointGindhart, Joseph G.AttorneySuspended by consentIndefinite from
June 16, 2008
New Mexico
ClovisHarrison, Lloyd W.CPASuspended by decision
in expedited proceeding
under §10.82 (revocation
of CPA license)
Indefinite from
June 2, 2008
New York
BronxShemin, Paul S.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(attorney disbarment)
Indefinite from
June 18, 2008
New CityFox, Hyman B.CPASuspended by default
decision in expedited
proceeding under §10.82
(conviction under 18
U.S.C. §371, conspiracy
to commit tax fraud, 26
U.S.C. 7201, tax evasion,
and 18 U.S.C. §1347,
health care fraud
Indefinite from
May 15, 2008
North Dakota
DickinsonBuresh, Eugene F.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(attorney disbarment)
Indefinite from
June 2, 2008
July 28, 20082462008–30 I.R.B.

City & StateNameProfessionalDisciplinary SanctionEffective Date(s)
Designation
North Dakota (Continued)
SteeleNemec, Talisa A.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(suspension of attorney
license)
Indefinite from
June 2, 2008
Oklahoma
Oklahoma CityVaughn, Jr., Robert M. AttorneySuspended by consentIndefinite from
April 1, 2008
Pennsylvania
HarrisburgHopstetter, Robert A.AttorneySuspended by consentIndefinite from
April 15, 2008
WynnewoodGoldner, Andrew P.CPASuspended by decision
in expedited proceeding
under §10.82 (revocation
of CPA license)
Indefinite from
May 20, 2008
Rhode Island
SmithfieldKalmer, IrwinCPASuspended by decision
in expedited proceeding
under §10.82 (conviction
under 26 U.S.C. §7206(1),
willfully making and
subscribing a false income
tax return)
Indefinite from
May 23, 2008
South Carolina
ColumbiaPaulin, Michael A.CPASuspended by decision
in expedited proceeding
under §10.82 (revocation
of CPA license)
Indefinite from
June 2, 2008
Pawleys IslandWicker, Rex E.CPASuspended by default
decision in expedited
proceeding under §10.82
(suspension of CPA
license)
Indefinite from
May 20, 2008
SpartanburgTullis, Rodman C.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(attorney disbarment)
Indefinite from
June 2, 2008
Tennessee
ChattanoogaCrutchfield, William W. AttorneySuspended by decision
in expedited proceeding
under §10.82 (attorney
disbarment)
Indefinite from
May 20, 2008
2008–30 I.R.B.247July 28, 2008

City & StateNameProfessionalDisciplinary SanctionEffective Date(s)
Designation
Tennessee (Continued)
DunlapBessling, Warren A.Enrolled AgentSuspended by consentIndefinite from
April 15, 2008
Texas
DallasTidemann, Patricia J.Enrolled AgentResigned pursuant
to§10.61inlieuof
a proceeding being
instituted or continued
Indefinite from
June 11, 2008
Utah
LaytonOliver, D. BruceAttorneySuspended by default
decision in expedited
proceeding under §10.82
(suspension of attorney
license)
Indefinite from
June 2, 2008
Virginia
ChesterfieldConnelly, Colin C.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(revocation of attorney
license)
Indefinite from
June 2, 2008
NorfolkScialdone, Claude M.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(suspension of attorney
license)
Indefinite from
June 2, 2008
RoanokeAdkins, Jr., Henry L.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(revocation of attorney
license)
Indefinite from
June 2, 2008
West Virginia
WilliamsonWard, Lafe P.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(annulment of attorney
license)
Indefinite from
June 2, 2008
Wisconsin
WauwatosaGrade, Daniel R.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(revocation of attorney
license)
Indefinite from
May 20, 2008
July 28, 20082482008–30 I.R.B.

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 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 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.
2008–30 I.R.B.iJuly 28, 2008

Numerical Finding List
1
Bulletins 2008–27 through 2008–30
Announcements:
2008-62, 2008-27 I.R.B.74
2008-63, 2008-28 I.R.B.114
2008-64, 2008-28 I.R.B.114
2008-66, 2008-29 I.R.B.164
2008-67, 2008-29 I.R.B.164
2008-68, 2008-30 I.R.B.244
Notices:
2008-55, 2008-27 I.R.B.11
2008-56, 2008-28 I.R.B.79
2008-57, 2008-28 I.R.B.80
2008-58, 2008-28 I.R.B.81
2008-59, 2008-29 I.R.B.123
2008-60, 2008-30 I.R.B.178
2008-61, 2008-30 I.R.B.180
2008-62, 2008-29 I.R.B.130
2008-65, 2008-30 I.R.B.182
Proposed Regulations:
REG-129243-07, 2008-27 I.R.B.32
REG-149405-07, 2008-27 I.R.B.73
REG-101258-08, 2008-28 I.R.B.111
REG-121698-08, 2008-29 I.R.B.163
Revenue Procedures:
2008-32, 2008-28 I.R.B.82
2008-33, 2008-28 I.R.B.93
2008-34, 2008-27 I.R.B.13
2008-35, 2008-29 I.R.B.132
2008-37, 2008-29 I.R.B.137
2008-38, 2008-29 I.R.B.139
2008-39, 2008-29 I.R.B.143
2008-40, 2008-29 I.R.B.151
2008-41, 2008-29 I.R.B.155
2008-42, 2008-29 I.R.B.160
2008-43, 2008-30 I.R.B.186
2008-44, 2008-30 I.R.B.187
2008-45, 2008-30 I.R.B.224
2008-46, 2008-30 I.R.B.238
Revenue Rulings:
2008-32, 2008-27 I.R.B.6
2008-33, 2008-27 I.R.B.8
2008-34, 2008-28 I.R.B.76
2008-35, 2008-29 I.R.B.116
2008-36, 2008-30 I.R.B.165
2008-37, 2008-28 I.R.B.77
2008-40, 2008-30 I.R.B.166
2008-41, 2008-30 I.R.B.170
2008-42, 2008-30 I.R.B.175
Treasury Decisions:
9401, 2008-27 I.R.B.1
9409, 2008-29 I.R.B.118
1
A cumulative list of all revenue rulings, revenueprocedures, Treasury decisions, etc., publishedin Internal Revenue Bulletins 2008–1 through 2008–26 is in Internal Revenue Bulletin
2008–26, dated June 30, 2008.
July 28, 2008ii2008–30 I.R.B.

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2008–27 through 2008–30
Notices:
99-48
Superseded by
Rev. Proc. 2008-40, 2008-29 I.R.B.151
2000-9
Obsoleted by
Rev. Proc. 2008-41, 2008-29 I.R.B.155
2004-2
Amplified by
Notice 2008-59, 2008-29 I.R.B.123
2004-50
Amplified by
Notice 2008-59, 2008-29 I.R.B.123
2006-88
Modified and superseded by
Notice 2008-60, 2008-30 I.R.B.178
2007-22
Amplified by
Notice 2008-59, 2008-29 I.R.B.123
Proposed Regulations:
REG-151135-07
Hearing scheduled by
Ann. 2008-64, 2008-28 I.R.B.114
Revenue Procedures:
92-25
Superseded by
Rev. Proc. 2008-41, 2008-29 I.R.B.155
92-83
Obsoleted by
Rev. Proc. 2008-37, 2008-29 I.R.B.137
2001-42
Superseded by
Rev. Proc. 2008-39, 2008-29 I.R.B.143
2002-9
Modified and amplified by
Rev. Proc. 2008-43, 2008-30 I.R.B.186
2006-29
Superseded by
Rev. Proc. 2008-34, 2008-27 I.R.B.13
2006-34
Superseded by
Rev. Proc. 2008-44, 2008-30 I.R.B.187
2007-19
Superseded by
Rev. Proc. 2008-39, 2008-29 I.R.B.143
Revenue Procedures— Continued:
2007-42
Superseded by
Rev. Proc. 2008-32, 2008-28 I.R.B.82
2007-43
Superseded by
Rev. Proc. 2008-33, 2008-28 I.R.B.93
2007-70
Modified by
Ann. 2008-63, 2008-28 I.R.B.114
2008-12
Modified and superseded by
Rev. Proc. 2008-35, 2008-29 I.R.B.132
Revenue Rulings:
67-213
Amplified by
Rev. Rul. 2008-40, 2008-30 I.R.B.166
71-234
Modified by
Rev. Proc. 2008-43, 2008-30 I.R.B.186
77-480
Modified by
Rev. Proc. 2008-43, 2008-30 I.R.B.186
91-17
Amplified by
Rev. Proc. 2008-41, 2008-29 I.R.B.155
Rev. Proc. 2008-42, 2008-29 I.R.B.160
Superseded in part by
Rev. Proc. 2008-40, 2008-29 I.R.B.151
2005-6
Amplified by
Rev. Proc. 2008-38, 2008-29 I.R.B.139
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2008–1 through 2008–26 is in Internal Revenue Bulletin 2008–26, dated June 30, 2008.
2008–30 I.R.B.iiiJuly 28, 2008

INDEX
Internal Revenue Bulletins 2008–27 through
2008–30
The abbreviation and number in parenthesis following the index entry
refer to the specific item; numbers in roman and italic type following
the parenthesis refers to the Internal Revenue Bulletin in which the item
may be found and the page number on which it appears.
Key to Abbreviations:
AnnAnnouncement
CDCourt Decision
DODelegation Order
EOExecutive Order
PLPublic Law
PTEProhibited Transaction Exemption
RPRevenue Procedure
RRRevenue Ruling
SPRStatement of Procedural Rules
TCTax Convention
TDTreasury Decision
TDOTreasury Department Order
EMPLOYEE PLANS
Application of section 457(f) tocertain arrangements regarding
part-year compensation (Notice 62) 29,130
Definition of “outside director” (RR 32) 27,6
Full funding limitations, weighted average interest rates, seg-
ment rates for:
July 2008 (Notice 65) 30,182
Multiemployer plan funding guidance, hearing scheduled for
REG–151135–07 (Ann 64) 28,114
Proposed Regulations:
26 CFR 1.432; multiemployer planfunding guidance, hearing
scheduled for REG–151135–07 (Ann 64) 28,114
26 CFR 1.6060–1, amended; 1.6107–1, revised; 1.6109–2,
amended; 1.6694–0, –1, –2, revised; 1.6694–3, –4,
amended; 1.6695–1, revised; 1.6695–2, amended;
1.6696–1, revised; 301.7701–15, amended; tax re-
turn preparer penalties under sections 6694 and 6695
(REG–129243–07) 27,32
Tax return preparer penalties under sections 6694 and 6695
(REG–129243–07) 27,32
Trusts, qualification, Puerto Rico (RR 40) 30,166
EMPLOYMENT TAX
Proposed Regulations:
31.6060–1, added; 31.6107–1, added; 31.6109–2, added;
31.6694–1 thru –4, added; 31.6695–1, added; 31.6696–1,
added; 31.7701–1, added; tax return preparer penalties
under sections 6694 and 6695 (REG–129243–07) 27,32
Publications:
1141, General Rules and Specifications for Substitute Forms
W-2 and W-3, revised (RP 33) 28,93
EMPLOYMENT TAX—Cont.
4436, General Rules and Specifications for Substitute Form
941 and Schedule B (Form 941), revised (RP 32) 28,82
Substitute forms:
W-2 and W-3, general rules and specifications (RP 33) 28,93
941 and Schedule B (Form 941), general rules and specifica-
tions (RP 32) 28,82
Tax return preparer penalties under sections 6694 and 6695
(REG–129243–07) 27,32
ESTATE TAX
Charitable lead unitrust (CLUT):
Inter vivos, sample forms (RP 45) 30,224
Testamentary, sample form (RP 46) 30,238
Proposed Regulations:
20.6060–1, added; 20.6107–1, added; 20.6109–1, added;
20.6694–1 thru –4, added; 20.6695–1, added; 20.6696–1,
added; 20.7701–1, added; tax return preparer penalties
under sections 6694 and 6695 (REG–129243–07) 27,32
Tax return preparer penalties under sections 6694 and 6695
(REG–129243–07) 27,32
Transfer tax valuation of interest in a restricted management ac-
count (RMA) (RR 35) 29,116
EXCISE TAX
Charitable remainder trusts (CRTs), division into two or more
separate and equal CRTs (RR 41) 30,170
Proposed Regulations:
40.6060–1, added; 40.6107–1, added; 40.6109–1, added;
40.6694–1 thru –4, added; 40.6695–1, added; 40.6696–1,
added; 40.7701–1, added; 41.6060–1, added; 41.6107–1,
added; 41.6109–2, added; 41.6694–1 thru –4, added;
41.6695–1, added; 41.6696–1, added; 41.7701–1,
added; 44.6060–1, added; 44.6107–1, added; 44.6109–1,
added; 44.6694–1 thru –4, added; 44.6695–1, added;
44.6696–1, added; 44.7701–1, added; 53.6060–1, added;
53.6107–1, added; 53.6109–1, added; 53.6694–1 thru –4,
added; 53.6695–1, added; 53.6696–1, added; 53.7701–1,
added; 54.6060–1, added; 54.6107–1, added; 54.6109–1,
added; 54.6694–1 thru –4, added; 54.6695–1, added;
54.6696–1, added; 54.7701–1, added; 55.6060–1, added;
55.6107–1, added; 55.6109–1, added; 55.6694–1 thru –4,
added; 55.6695–1, added; 55.6696–1, added; 55.7701–1,
added; 56.6060–1, added; 56.6107–1, added; 56.6109–1,
added; 56.6694–1 thru –4, added; 56.6695–1, added;
56.6696–1, added; 56.7701–1, added; 156.6060–1, added;
156.6107–1, added; 156.6109–1, added; 156.6694–1
thru –4, added; 156.6695–1, added; 156.6696–1, added;
156.7701–1, added; 157.6060–1, added; 157.6107–1,
added; 157.6109–1, added; 157.6694–1 thru –4, added;
157.6695–1, added; 157.6696–1, added; 157.7701–1,
added; 301.7701–15, amended; tax return preparer penal-
ties under sections 6694 and 6695 (REG–129243–07) 27,
32
July 28, 2008iv2008–30 I.R.B.

EXCISE TAX—Cont.
Tax return preparer penalties under sections 6694 and 6695
(REG–129243–07) 27,32
EXEMPT ORGANIZATIONS
Charitable remainder trusts (CRTs), division into two or more
separate and equal CRTs (RR 41) 30,170
Declaratory judgment suits (Ann 67)29, 164
Proposed Regulations:
26 CFR 1.6060–1, amended; 1.6107–1, revised; 1.6109–2,
amended; 1.6694–0, –1, –2, revised; 1.6694–3, –4,
amended; 1.6695–1, revised; 1.6695–2, amended;
1.6696–1, revised; 301.7701–15, amended; tax re-
turn preparer penalties under sections 6694 and 6695
(REG–129243–07) 27,32
Revocations (Ann 62) 27,74; (Ann 66) 29,164
Tax return preparer penalties under sections 6694 and 6695
(REG–129243–07) 27,32
GIFT TAX
Charitable lead unitrust (CLUT),inter vivos, sample forms (RP
45) 30,224
Proposed Regulations:
25.6060–1, added; 25.6107–1, added; 25.6109–1, added;
25.6694–1 thru –4, added; 25.6695–1, added; 25.6696–1,
added; 25.7701–1, added; 26.6060–1, added; 26.6107–1,
added; 26.6109–1, added; 26.6694–1 thru –4, added;
26.6695–1, added; 26.6696–1, added; 26.7701–1, added;
tax return preparer penalties under sections 6694 and 6695
(REG–129243–07) 27,32
Tax return preparer penalties under sections 6694 and 6695
(REG–129243–07) 27,32
Transfer tax valuation of interest in a restricted management ac-
count (RMA) (RR 35) 29,116
INCOME TAX
Accounting methods, rolling average inventory (RP 43) 30,186
Bonds, procedures for requesting a refund of arbitrage rebate and
similar payments on tax-exempt bonds (RP 37) 29,137
Charitable lead unitrust (CLUT):
Inter vivos, sample forms (RP 45) 30,224
Testamentary, sample form (RP 46) 30,238
Charitable remainder trusts (CRTs), division into two or more
separate and equal CRTs (RR 41) 30,170
Corporations, accumulated adjustments account (AAA) and key-
man life insurance (RR 42) 30,175
Credits:
Electricity produced from certain renewable resources, sec-
tion 45 tax credit (Notice 60) 30,178
Increasing research activities (TD 9401) 27,1;
(REG–149405–07) 27,73
INCOME TAX—Cont.
Low-income housing credit:
Emergency housing relief, Wisconsin severe storms, tor-
nadoes, and flooding (Notice 61) 30,180
Indiana severe storms and flooding (Notice 56) 28,79
Iowa severe storms, tornadoes, and flooding (Notice 58)
28,81
Satisfactory bond, “bond factor” amounts for the period:
January through September 2008 (RR 36) 30,165
Declaratory judgment suits (Ann 67)29, 164
Definition of “outside director” (RR 32) 27,6
Disaster relief, China earthquake, qualified disaster (Notice 57)
28,80
Disciplinary actionsinvolving attorneys,certified public accoun-
tants, enrolled agents, and enrolled actuaries (Ann 68) 30,244
Disclosure or use of information by preparers of returns (TD
9409) 29,118; (REG–121698–08) 29,163
Expenses, optional standard mileage rates, update (Ann 63) 28,
114
Forms:
1042-S, Foreign Person’s U.S. Source Income Subject to
Withholding, specifications for filing electronically (RP
44) 30,187
8027, Employer’s Annual Information Return of Tip Income
and Allocated Tips, specifications for filing electronically
(RP 34) 27,13
Guidance to tax return preparers:
Consents to disclose and consents to use tax return in-
formation in the Form 1040 series (TD 9409) 29,118;
(REG–121698–08) 29,163
Consents to disclose and consents to use tax return informa-
tion in the Form 1040 series, update to Rev. Proc. 2008-12
(RP 35) 29,132
Health Savings Accounts (HSAs), additional guidance (Notice
59) 29,123
Insurance companies:
Life insurance contracts:
Automatic waiver (RP 42) 29,160
Closing agreement (RP 40) 29,151
Modified endowment contracts (MECs), closing agree-
ments (RP 39) 29,143
Qualified additional benefits (QABs), closing agreement
(RP 38) 29,139
Variable contracts, closing agreement (RP 41) 29,155
Interest:
Investment:
Federal short-term, mid-term, and long-term rates for:
July 2008 (RR 33) 27,8
Law school Loan Repayment Assistance Program (LRAP), ex-
clusion from gross income (RR 34) 28,76
Life insurance:
Premiums by S corporation, effect on accumulated adjust-
ments account (AAA) (RR 42) 30,175
Statutory reserves, meaning formulti-state taxpayers (RR 37)
28,77
2008–30 I.R.B.vJuly 28, 2008

INCOME TAX—Cont.
Proposed Regulations:
26 CFR 1.41–6, –8, amended; 1.41–9, added; alternative sim-
plified credit under section 41(c)(5) (REG–149405–07) 27,
73
26 CFR 1.642(c)–3, amended; 1.643(a)–5, amended; guid-
ance under sections 642 and 643 (income ordering rules)
(REG–101258–08) 28,111
26 CFR 1.6060–1, amended; 1.6107–1, revised; 1.6109–2,
amended; 1.6694–0, –1, –2, revised; 1.6694–3, –4,
amended; 1.6695–1, revised; 1.6695–2, amended;
1.6696–1, revised; 301.7701–15, amended; tax re-
turn preparer penalties under sections 6694 and 6695
(REG–129243–07) 27,32
26 CFR 301.7216–3, amended; disclosure or use of informa-
tion by preparers of returns (REG–121698–08) 29,163
Publications:
1141, General Rules and Specifications for Substitute Forms
W-2 and W-3, revised (RP 33) 28,93
1187, Specifications for Filing Form 1042-S, Foreign Per-
son’s U.S. Source Income Subject to Withholding, Elec-
tronically, revised (RP 44) 30,187
1239, Specifications for Filing Form 8027, Employer’s An-
nual Information Return of Tip Income and Allocated Tips,
Electronically (RP 34) 27,13
4436, General Rules and Specifications for Substitute Form
941 and Schedule B (Form 941), revised (RP 32) 28,82
Regulations:
26 CFR 1.41–0, –1, –6, –8, amended; 1.41–0T, –6T, –8T,
–9, –9T added; alternative simplified credit under section
41(c)(5) (TD 9401) 27,1
26 CFR 301.7216–3, amended; 301.7216–3T, added; disclo-
sure or use of information by preparers of returns (TD 9409)
29,118
Revocations, exempt organizations (Ann 62) 27,74;(Ann66)
29,164
Stocks, auction rate preferred stock, regulated investment com-
panies (RICs), debt instruments (Notice 55) 27,11
Substitute forms:
W-2 and W-3, general rules and specifications (RP 33) 28,93
941 and Schedule B (Form 941), general rules and specifica-
tions (RP 32) 28,82
Tax return preparer penalties under sections 6694 and 6695
(REG–129243–07) 27,32
Trusts, ordering of distributions from charitable lead trusts
(REG–101258–08) 28,111
July 28, 2008vi2008–30 I.R.B.

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