Internal Revenue Bulletin 1997-24 (PDF rendition): IRS Revenue Rulings

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

INCOME TAX
Rev. Rul. 97–26, page 4.
LIFO; price indexes; department stores.The April
1997 Bureau of Labor Statistics price indexes are
accepted for use by department stores employing the
retail inventor y and last-in, first-out inventor y methods
for valuing inventories for tax years ended on, or with
reference to, April 30, 1997.
T.D. 8717, page 5.
Final regulations under section 708 of the Code relate to
the termination of a partnership upon the sale or
exchange of 50 percent or more of the total interest in
partnership capital and profits within a 12-month period.
EMPLOYEE PLANS
Rev. Proc. 97–29, page 9.
SIMPLE IRAs; prototypes; amendments.This proce-
dure describes model amendments for SIMPLE IRAs;
guidance to drafters of prototype SIMPLE IRAs on
obtaining opinion letters; permissive amendments to
sponsors of nonSIMPLE IRAs; the opening of a prototype
program for SIMPLE IRA Plans; and transitional relief for
users of SIMPLE IRAs and SIMPLE IRA Plans that have
not been approved by the Ser vice.
EXEMPT ORGANIZATIONS
Announcement 97–58, page 13.
A list is given of organizations now classified as private
foundations.
ADMINISTRATIVE
Announcement 97–59, page 13.
T.D. 8719, 1997–23 I.R.B. 4, relating to the procedure
for requesting a change in accounting method and the
standards for granting an extension of time to request a
change in accounting method, is corrected.
Announcement 97–60, page 14.
Payors are permitted to include the telephone number in
any conspicuous place on substitute Forms 1099,
1098, 5498, and W–2G.
Finding Lists begin on page 18.
Announcement of Disbarments and Suspensions begins on page 15.
Bulletin No. 1997–24
June 16, 1997
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be relied
upon as authoritative interpretations.

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

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

Part I. Rulings and Decisions Under the Internal Revenue Code of 1986
Section 472.—Last-in, First-out
Inventories
26 CFR 1.472–1: Last-in, first-out inventories.
LIFO; price indexes; department
stores.The April 1997 Bureau of Labor
Statistics price indexes are accepted for
use by department stores employing the
retail inventory and last-in, first-out in-
ventory methods of valuing inventories
for tax years ended on, or with refer-
ences to, April 30, 1997.
Rev. Rul. 97–26
The following Department Store In-
ventory Price Indexes for April 1997
were issued by the Bureau of Labor
Statistics on May 15, 1997. The indexes
are accepted by the Internal Revenue
Service, under § 1.472–1(k) of the In-
come Tax Regulations and Rev. Proc.
86–46, 1986–2 C.B. 739, for appropriate
application to inventories of department
stores employing the retail inventory
and last-in, first-out inventory methods
for tax years ended on, or with reference
to, April 30, 1997.
The Department Store Inventory Price
Indexes are prepared on a national basis
and include (a) 23 major groups of
departments, (b) three special combina-
tions of the major groups - soft goods,
durable goods, and miscellaneous goods,
and (c) a store total, which covers all
departments, including some not listed
separately, except for the following:
candy, foods, liquor, tobacco, and con-
tract departments.
BUREAU OF LABOR STATISTICS, DEPARTMENT STORE
INVENTORY PRICE INDEXES BY DEPARTMENT GROUPS
(January 1941 = 100, unless otherwise noted)
Groups
Apr.
1996
Apr.
1997
Percent Change
from Apr. 1996
to Apr. 1997
1
1.Piece Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .528.6533.00.8
2.Domestics and Draperies . . . . . . . . . . . . . . . . . . . . . . . . .655.0653.620.2
3.Women’s and Children’s Shoes . . . . . . . . . . . . . . . . . . . .658.2661.30.5
4.Men’s Shoe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .899.6904.80.6
5.Infants’ Wear. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .640.9640.60.0
6.Women’s Underwear . . . . . . . . . . . . . . . . . . . . . . . . . . . .538.5546.31.4
7.Women’s Hosiery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .285.7294.43.0
8.Women’s and Girls’ Accessories . . . . . . . . . . . . . . . . . . .554.9561.01.1
9.Women’s Outerwear and Girls’ Wear . . . . . . . . . . . . . . .430.9439.82.1
10.Men’s Clothing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .625.7622.220.6
11.Men’s Furnishings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .590.3598.91.5
12.Boys’ Clothing and Furnishings. . . . . . . . . . . . . . . . . . . .491.2498.61.5
13.Jewelry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1036.31026.221.0
14.Notions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .785.1799.21.8
15.Toilet Articles and Drugs . . . . . . . . . . . . . . . . . . . . . . . . .883.3912.53.3
16.Furniture and Bedding . . . . . . . . . . . . . . . . . . . . . . . . . . .672.2667.520.7
17.Floor Coverings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .571.1586.92.8
18.Housewares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .802.9815.91.6
19.Major Appliances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .246.8241.922.0
20.Radio and Television . . . . . . . . . . . . . . . . . . . . . . . . . . . .79.676.623.8
21.Recreation and Education
2
. . . . . . . . . . . . . . . . . . . . . . . .113.7110.223.1
22.Home Improvements
2
. . . . . . . . . . . . . . . . . . . . . . . . . . . .125.7131.44.5
23.Auto Accessories
2
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107.3107.30.0
Groups 1 - 15: Soft Goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . .608.2614.61.1
Groups 16 - 20: Durable Goods . . . . . . . . . . . . . . . . . . . . . . . .468.8466.920.4
Groups 21 - 23: Misc. Goods
2
. . . . . . . . . . . . . . . . . . . . . . . . . .114.1112.421.5
Store Total
3
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .560.1562.60.4
1
Absence of a minus sign before percentage change in this column signifies price increase.
2
Indexes on a January 1986=100 base.
3
The store total index covers all departments, including some not listed separately, except for the following: candy, foods,
liquor, tobacco, and contract departments.
4

DRAFTING INFORMATION
The principal author of this revenue
ruling is Stan Michaels of the Office of
Assistant Chief Counsel (Income Tax
and Accounting). For further information
regarding this revenue ruling, contact
Mr. Michaels on (202) 622–4970 (not a
toll-free call).
Section 708.—Continuation of
Partnership
26 CFR 1.708–1: Continuation of partnership.
T.D. 8717
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1 and 301
Termination of a Partnership Under
Section 708(b)(1)(B)
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations.
SUMMARY: This document contains fi-
nal regulations relating to the termina-
tion of a partnership upon the sale or
exchange of 50 percent or more of the
total interest in partnership capital and
profits within a 12-month period. The
final regulations affect all partnerships
thatterminateundersection
708(b)(1)(B).
DATES: These regulations are effective
May 9, 1997.
For applicability dates, see Effective
Dates under Supplementary Information.
FORFURTHERINFORMATION
CONTACT: Steven R. Schneider, (202)
622–3060 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
On May 13, 1996, a notice of pro-
posed rulemaking (PS–5–96 [1996–1
C.B. 877]) was published in theFederal
Register(61 FR 21985) containing pro-
posed amendments to the Income Tax
Regulations (26 CFR part 1) under
section 708 of the Internal Revenue
Code (Code). The notice of proposed
rulemaking also contained proposed
amendments to other sections of the
Income Tax Regulations to reflect the
amendments to the regulations under
section 708. Written comments respond-
ing to this notice were received. A
public hearing was held on September 5,
1996, pursuant to the notice published in
theFederal Registeron May 13, 1996.
After consideration of all comments re-
ceived, the proposed amendments are
adopted as revised by this Treasury
decision.
Explanation of Provisions
Section 708(b)(1)(B) provides that,
for purposes of section 708(a), a part-
nership shall be considered terminated if
within a 12-month period there is a sale
or exchange of 50 percent or more of
the total interest in partnership capital
and profits. The existing regulations un-
der § 1.708–1(b)(1)(iv) provide that, if
a partnership is terminated by a sale or
exchange of an interest, the following is
deemed to occur: The partnership dis-
tributes its properties to the purchaser
and the other remaining partners in
proportion to their respective interests in
the partnership properties; and, immedi-
ately thereafter, the purchaser and the
other remaining partners contribute the
properties to a new partnership, either
for the continuation of the business or
for its dissolution and winding up. The
final regulations adopt the proposed
regulations and change the mechanics of
a termination under section 708(b)(1)(B)
so that the following is deemed to occur
on a termination: The partnership con-
tributes all of its assets and liabilities to
a new partnership in exchange for an
interest in the new partnership; and,
immediately thereafter, the partnership
liquidates by distributing interests in the
new partnership to the purchaser and the
other remaining partners, followed by
the continuation of the business by the
new partnership or its dissolution and
winding up. The final regulations also
clarify certain aspects of the proposed
regulations in response to comments
received.
One commentator requested clarifica-
tion of the section 704(c) consequences
of a termination. The proposed regula-
tions provide for a section 704(b) capital
account ‘‘book up’’ upon the deemed
contribution of assets by the terminated
partnership to the new partnership and
also upon the deemed distribution in
liquidation of the terminated partnership.
This would have resulted in a new layer
of section 704(c) property. The final
regulations amend the regulations under
section 704(b) to provide that the
deemed contribution of assets to a new
partnership and the distribution of the
new partnership interests to the partners
of the terminated partnership are disre-
garded for purposes of maintaining capi-
tal accounts. As a result, the termination
of a partnership does not change the
capital accounts of the partners or the
books of the partnership and the deemed
contribution of assets to a new partner-
ship does not create additional section
704(c) property. The final regulations
also provide that the new partnership is
not bound by the section 704(c) method
used by the terminated partnership.
A commentator requested clarification
of whether a termination under the new
section 708(b)(1)(B) construct will trig-
ger recapture of investment tax credit
under section 47. Although not specifi-
cally addressed in the regulations, a
section 708(b)(1)(B) termination no
longer triggers recapture of the invest-
ment tax credit under the ‘‘mere change
in form’’ exception in § 1.47–3(f) of the
regulations.
Commentators also requested guid-
ance on whether a section 1491 excise
tax may be triggered upon a section
708(b)(1)(B) termination of a foreign
partnership with U.S. partners. This is-
sue is currently under study and the IRS
and Treasury welcome comments from
interested taxpayers and practitioners.
One commentator requested clarifica-
tion of whether the distribution of the
interests in the new partnership will be
subject to section 731(c). The section
731(c) final regulations, December 26,
1996 (61 FR 67936), provide that the
deemed distribution of partnership inter-
ests under § 1.708–1(b)(1)(iv) does not
trigger the application of section 731(c).
Several commentators suggested that
partnerships should be allowed to apply
the final regulations to terminations un-
der section 708(b)(1)(B) occurring on or
after the date the proposed regulations
were filed with the Federal Register. In
response, the final regulations provide
that the regulations may be applied to
terminations occurring on or after May
9, 1996, provided that the partnership
and its partners apply the regulations to
the termination in a consistent manner.
The final regulations also provide an
example illustrating the mechanics of a
termination under section 708(b)(1)(B).
In addition, the final regulations provide
that the new partnership retains the TIN
of the terminated partnership. However,
if the new partnership has already ap-
plied for a new TIN, the partnership
should continue to use the new TIN.
Finally, the regulations make several
revenue rulings obsolete. The holdings
of revenue rulings 87–50 and 87–51
(dealing with the effect of terminations
under section 708(b)(1)(B) on lower-tier
5

partnerships) and revenue rulings 86–73
and 88–42 (dealing with the effect of a
§ 754 election made by the terminating
partnership) are now incorporated, with-
out substantive change, into the regula-
tions under § 1.708–1. Additionally, the
final regulations make revenue ruling
93–90 (dealing with minimum gain
chargeback in a section 708(b)(1)(B)
termination)obsoletebecausethe
§ 704(b) capital account ‘‘book up’’ that
is the subject of the revenue ruling is
eliminated.
Effective Date
These regulations apply to termina-
tions of partnerships under section
708(b)(1)(B) occurring on or after May
9, 1997; however, these regulations may
be applied to terminations occurring on
or after May 9, 1996, provided that the
partnership and its partners apply these
regulations to the termination in a con-
sistent manner.
Effect on Other Documents
The following publications are obso-
lete as of May 9, 1997:
Rev. Rul. 86–73, 1986–1 C.B. 282
Rev. Rul. 87–50, 1987–1 C.B. 157
Rev. Rul. 87–51, 1987–1 C.B. 158
Rev. Rul. 88–42, 1988–1 C.B. 265
Rev. Rul. 93–90, 1993–2 C.B. 238
Special Analyses
It has been determined that this Trea-
sury decision is not a significant regula-
tory action as defined in EO 12866.
Therefore, a regulatory assessment is not
required. It has also been determined
that section 553(b) of the Administrative
Procedure Act (5 U.S.C. chapter 5) does
not apply to these regulations, and be-
cause the regulation does not impose a
collection of information on small enti-
ties, the Regulatory Flexibility Act (5
U.S.C. chapter 6) does not apply. There-
fore, a Regulatory Flexibility Analysis is
not required. Pursuant to section 7805(f)
of the Internal Revenue Code, the notice
of proposed rulemaking preceding these
regulations was submitted to the Small
Business Administration for comment on
its impact on small business.
Drafting Information
The principal author of these regula-
tions is Steven R. Schneider of the
Office of Assistant Chief Counsel
(Passthroughs and Special Industries),
IRS. However, other personnel from the
IRS and Treasury Department partici-
pated in their development.
*****
Adoption of Amendments to the Regula-
tions
Accordingly, 26 CFR parts 1 and 301
are amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 continues to read in part as
follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.704–1 is amended as
follows:
1. Paragraph(b)(2)(iv)(d)(1)is
amended by revising the second sen-
tence.
2. Paragraph (b)(2)(iv)(l) is amended
removing the last three sentences and
adding four sentences in their place.
3. Paragraph (b)(5)Example 13(v) is
amended by removing all text following
the third sentence and adding four sen-
tences in its place.
The revisions and additions read as
follows:
§ 1.704–1 Partner’s distributive share.
*****
(b) * * *
(2) * * *
(iv) * * *
(d) * * *
(1) * * * SeeExample 13(i) of
paragraph (b)(5) of this section. * * *
*****
(l) * * * If the transfer of an interest
in a partnership causes a termination of
thepartnershipundersection
708(b)(1)(B), the capital account of the
transferee partner and the capital ac-
counts of the other partners of the
terminated partnership carry over to the
new partnership that is formed as a
result of the termination of the partner-
ship under § 1.708–1(b)(1)(iv). More-
over, the deemed contribution of assets
and liabilities by the terminated partner-
ship to a new partnership and the
deemed liquidation of the terminated
partnership that occur under § 1.708–
1(b)(1)(iv) are disregarded for purposes
of paragraph (b)(2)(iv) of this section.
See Example 13 of paragraph (b)(5) of
this section and the example in
§ 1.708–1(b)(1)(iv). The previous three
sentences apply to terminations of part-
nerships under section 708(b)(1)(B) oc-
curring on or after May 9, 1997; how-
ever, the sentences may be applied to
terminations occurring on or after May
9, 1996, provided that the partnership
and its partners apply the sentences to
the termination in a consistent manner.
*****
(5) * * *
Example 13. * * *
(v) * * * Immediately preceding the construc-
tive liquidation, the capital accounts of Z and LK
equal $11,000 each (LK having inherited Y’s
$11,000 capital account) and the book value of the
G Corp. securities is $22,000 (original purchase
price of securities). Under paragraph (b)(2)(iv)(l)
of this section, the deemed contribution of assets
and liabilities by the terminated partnership to the
new partnership and the deemed liquidation of the
terminated partnership that occur under § 1.708–
1(b)(1)(iv) in connection with the constructive
liquidation of the terminated partnership are disre-
garded in the maintenance and computation of the
partners’ capital accounts. As a result, the capital
accounts of Z and LK in the new partnership
equal $11,000 each (their capital accounts in the
terminated partnership immediately prior to the
termination), and the book value of the G Corp.
securities remains $22,000 (its book value imme-
diately prior to the termination). ThisExample
13(v) applies to terminations of partnerships under
section 708(b)(1)(B) occurring on or after May 9,
1997; however, thisExample 13(v) may be applied
to terminations occurring on or after May 9, 1996,
provided that the partnership and its partners apply
thisExample 13(v) to the termination in a consis-
tent manner.
*****
Par. 3. Section 1.704–3 is amended as
follows:
1. Paragraph (a)(2) is amended by
adding two sentences at the end of the
paragraph.
2. Paragraph (a)(3)(i) is amended by
adding three sentences at the end of the
paragraph.
The additions read as follows:
§ 1.704–3 Contributed property.
(a) * * *
(2) * * * A new partnership formed
as the result of the termination of a
partnership under section 708(b)(1)(B) is
not required to use the same method as
the terminated partnership with respect
to section 704(c) property deemed con-
tributed to the new partnership by the
terminated partnership under § 1.708–
1(b)(1)(iv). The previous sentence ap-
plies to terminations of partnerships un-
der section 708(b)(1)(B) occurring on or
after May 9, 1997; however, the sen-
tence may be applied to terminations
occurring on or after May 9, 1996,
provided that the partnership and its
partners apply the sentence to the termi-
nation in a consistent manner.
(3) * * *
(i) * * * Property deemed contributed
to a new partnership as the result of the
termination of a partnership under sec-
tion 708(b)(1)(B) is treated as section
704(c) property in the hands of the new
6

partnership only to the extent that the
property was section 704(c) property in
the hands of the terminated partnership
immediately prior to the termination.
See § 1.708–1(b)(1)(iv) for an example
of the application of this rule. The
previous two sentences apply to termi-
nations of partnerships under section
708(b)(1)(B) occurring on or after May
9, 1997; however, the sentences may be
applied to terminations occurring on or
after May 9, 1996, provided that the
partnership and its partners apply the
sentences to the termination in a consis-
tent manner.
*****
Par. 4. Section 1.704–4 is amended
by revising paragraphs (a)(4)(ii) and
(c)(3) to read as follows:
§ 1.704–4 Distribution of contributed
property.
(a) * * *
(4) * * *
(ii)Section 708(b)(1)(B) terminations.
A termination of the partnership under
section 708(b)(1)(B) does not begin a
new five-year period for each partner
with respect to the built-in gain and
built-in loss property that the terminated
partnership is deemed to contribute to
the new partnership under § 1.708–
1(b)(1)(iv). See § 1.704–3(a)(3)(ii) for
the definitions of built-in gain and
built-in loss on section 704(c) property.
This paragraph (a)(4)(ii) applies to ter-
minations of partnerships under section
708(b)(1)(B) occurring on or after May
9, 1997; however, this paragraph
(a)(4)(ii) may be applied to terminations
occurring on or after May 9, 1996,
provided that the partnership and its
partners apply this paragraph (a)(4)(ii)
to the termination in a consistent man-
ner.
*****
(c) * * *
(3)Section 708(b)(1)(B) terminations.
Section 704(c)(1)(B) and this section do
not apply to the deemed distribution of
interests in a new partnership caused by
the termination of a partnership under
section 708(b)(1)(B). A subsequent dis-
tribution of section 704(c) property by
the new partnership to a partner of the
new partnership is subject to section
704(c)(1)(B) to the same extent that a
distribution by the terminated partner-
ship would have been subject to section
704(c)(1)(B). See also § 1.737–2(a) for
a similar rule in the context of section
737. This paragraph (c)(3) applies to
terminations of partnerships under sec-
tion 708(b)(1)(B) occurring on or after
May 9, 1997; however, this paragraph
(c)(3) may be applied to terminations
occurring on or after May 9, 1996,
provided that the partnership and its
partners apply this paragraph (c)(3) to
the termination in a consistent manner.
*****
Par. 5. Section 1.708–1 is amended as
follows:
1. Paragraph (b)(1)(ii) is amended by
adding three sentences after the third
sentence.
2. Paragraph (b)(1)(iv) is revised.
3. Paragraph (b)(1)(v) is added.
The additions and revisions read as
follows:
§ 1.708–1 Continuation of partnership.
*****
(b) * * *
(1) * * *
(ii) * * * Moreover, if the sale or
exchange of an interest in a partnership
(upper-tier partnership) that holds an
interest in another partnership (lower-
tier partnership) results in a termination
of the upper-tier partnership, the upper-
tier partnership is treated as exchanging
its entire interest in the capital and
profits of the lower-tier partnership. If
the sale or exchange of an interest in an
upper-tier partnership does not terminate
the upper-tier partnership, the sale or
exchange of an interest in the upper-tier
partnership is not treated as a sale or
exchange of a proportionate share of the
upper-tier partnership’s interest in the
capital and profits of the lower-tier
partnership. The previous two sentences
apply to terminations of partnerships
under section 708(b)(1)(B) occurring on
or after May 9, 1997; however, the
sentences may be applied to termina-
tions occurring on or after May 9, 1996,
provided that the partnership and its
partners apply the sentences to the ter-
mination in a consistent manner. * * *
*****
(iv) If a partnership is terminated by
a sale or exchange of an interest, the
following is deemed to occur: The part-
nership contributes all of its assets and
liabilities to a new partnership in ex-
change for an interest in the new part-
nership; and, immediately thereafter, the
terminated partnership distributes inter-
ests in the new partnership to the pur-
chasing partner and the other remaining
partners in proportion to their respective
interests in the terminated partnership in
liquidation of the terminated partnership,
either for the continuation of the busi-
ness by the new partnership or for its
dissolution and winding up. In the latter
case, the new partnership terminates in
accordance with (b)(1)(i) of this section.
This paragraph (b)(1)(iv) applies to ter-
minations of partnerships under section
708(b)(1)(B) occurring on or after May
9, 1997; however, this paragraph
(b)(1)(iv) may be applied to termina-
tions occurring on or after May 9, 1996,
provided that the partnership and its
partners apply this paragraph (b)(1)(iv)
to the termination in a consistent man-
ner. The provisions of this paragraph
(b)(1)(iv) are illustrated by the following
example:
Example. (i) A and B each contribute $10,000
cash to form AB, a general partnership, as equal
partners. AB purchases depreciable Property X for
$20,000. Property X increases in value to $30,000,
at which time A sells its entire 50 percent interest
to C for $15,000 in a transfer that terminates the
partnership under section 708(b)(1)(B). At the time
of the sale, Property X had an adjusted tax basis
of $16,000 and a book value of $16,000 (original
$20,000 tax basis and book value reduced by
$4,000 of depreciation). In addition, A and B each
had a capital account balance of $8,000 (original
$10,000 capital account reduced by $2,000 of
depreciation allocations with respect to Property
X).
(ii) Following the deemed contribution of assets
and liabilities by the terminated AB partnership to
a new partnership (new AB) and the liquidation of
the terminated AB partnership, the adjusted tax
basis of Property X in the hands of new AB is
$16,000. See Section 723. The book value of
Property X in the hands of new partnership AB is
also $16,000 (the book value of Property X
immediately before the termination) and B and C
each have a capital account of $8,000 in new AB
(the balance of their capital accounts in AB prior
to the termination). See § 1.704–1(b)(2)(iv)(l)
(providing that the deemed contribution and liqui-
dation with regard to the terminated partnership
are disregarded in determining the capital accounts
of the partners and the books of the new partner-
ship). Additionally, under § 301.6109–1(d)(2)(iii)
of this chapter, new AB retains the taxpayer
identification number of the terminated AB part-
nership.
(iii) Property X was not section 704(c) property
in the hands of terminated AB and is therefore not
treated as section 704(c) property in the hands of
new AB, even though Property X is deemed
contributed to new AB at a time when the fair
market value of Property X ($30,000) was differ-
ent from its adjusted tax basis ($16,000). See
§ 1.704–3(a)(3)(i) (providing that property con-
tributed to a new partnership under § 1.708–
1(b)(1)(iv) is treated as section 704(c) property
only to the extent that the property was section
704(c) property in the hands of the terminated
partnership immediately prior to the termination).
(v) If a partnership is terminated by a
sale or exchange of an interest in the
partnership, a section 754 election (in-
cluding a section 754 election made by
the terminated partnership on its final
return) that is in effect for the taxable
year of the terminated partnership in
which the sale occurs, applies with
respect to the incoming partner. There-
7

fore, the bases of partnership assets are
adjusted pursuant to sections 743 and
755 prior to their deemed contribution
to the new partnership. This paragraph
(b)(1)(v) applies to terminations of part-
nerships under section 708(b)(1)(B) oc-
curring on or after May 9, 1997; how-
ever, this paragraph (b)(1)(v) may be
applied to terminations occurring on or
after May 9, 1996, provided that the
partnership and its partners apply this
paragraph (b)(1)(v) to the termination in
a consistent manner.
*****
Par. 6. Section 1.737–2 is amended as
follows:
1. Paragraph (a) is revised.
2. In paragraph (d)(1), the first sen-
tence is revised and one sentence is
added after the first sentence.
The additions and revisions read as
follows:
§ 1.737–2 Exceptions and special rules.
(a)Section 708(b)(1)(B) terminations.
Section 737 and this section do not
apply to the deemed distribution of
interests in a new partnership caused by
the termination of a partnership under
section 708(b)(1)(B). A subsequent dis-
tribution of property by the new partner-
ship to a partner of the new partnership
that was formerly a partner of the
terminated partnership is subject to sec-
tion 737 to the same extent that a
distribution from the terminated partner-
ship would have been subject to section
737. See also § 1.704–4(c)(3) for a
similar rule in the context of section
704(c)(1)(B). This paragraph (a) applies
to terminations of partnerships under
section 708(b)(1)(B) occurring on or
after May 9, 1997; however, this para-
graph (a) may be applied to terminations
occurring on or after May 9, 1996,
provided that the partnership and its
partners apply this paragraph (a) to the
termination in a consistent manner.
*****
(d) * * * (1) * * * Any portion of the
distributed property that consists of
property previously contributed by the
distributee partner (previously contrib-
uted property) is not taken into account
in determining the amount of the excess
distributionorthepartner ’snet
precontribution gain. The previous sen-
tence applies on or after May 9, 1997.
* * *
*****
Par. 7. In section 1.743–1, paragraph
(d) is added to read as follows:
§ 1.743–1 Optional adjustment to basis
of partnership property.
*****
(d)Section 708(b)(1)(B) terminations.
A partner with a special basis adjust-
ment in property held by a partnership
thatterminatesundersection
708(b)(1)(B) will continue to have the
same special basis adjustment with re-
spect to property deemed contributed by
the terminated partnership to the new
partnership under § 1.708–1(b)(1)(iv),
regardless of whether the new partner-
ship makes a section 754 election. This
paragraph (d) applies to terminations of
partnerships under section 708(b)(1)(B)
occurring on or after May 9, 1997;
however, this paragraph (d) may be
applied to terminations occurring on or
after May 9, 1996, provided that the
partnership and its partners apply this
paragraph (d) to the termination in a
consistent manner.
Par. 8. In § 1.761–1, paragraph (e) is
added to read as follows:
§ 1.761–1 Terms defined.
*****
(e)Distribution of partnership inter-
est. For purposes of section 708(b)(1)(B)
and § 1.708–1(b)(1)(iv), the deemed
distribution of an interest in a new
partnership by a partnership that termi-
nates under section 708(b)(1)(B) is not a
sale or exchange of an interest in the
new partnership. However, the deemed
distribution of an interest in a new
partnership by a partnership that termi-
nates under section 708(b)(1)(B) is
treated as an exchange of the interest in
the new partnership for purposes of
section 743. This paragraph (e) applies
to terminations of partnerships under
section 708(b)(1)(B) occurring on or
after May 9, 1997; however, this para-
graph (e) may be applied to terminations
occurring on or after May 9, 1996,
provided that the partnership and its
partners apply this paragraph (e) to the
termination in a consistent manner.
PART 301—PROCEDURE AND
ADMINISTRATION
Par. 9. The authority citation for part
301 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par.10. Section301.6109–1is
amended by adding paragraph (d)(2)(iii)
as follows:
§ 301.6109–1 Identifying numbers.
*****
(d) * * *
(2) * * *
(iii)SpecialruleforSection
708(b)(1)(B) terminations. A new part-
nership that is formed as a result of the
termination of a partnership under sec-
tion 708(b)(1)(B) will retain the em-
ployer identification number of the ter-
minated partnership. This paragraph
(d)(2)(iii) applies to terminations of
partnerships under section 708(b)(1)(B)
occurring on or after May 9, 1997;
however, this paragraph (d)(2)(iii) may
be applied to terminations occurring on
or after May 9, 1996, provided that the
partnership and its partners apply this
paragraph (d)(2)(iii) to the termination
in a consistent manner.
*****
Margaret Milner Richardson,
Commissioner of Internal Revenue.
Approved May 1, 1997.
Donald C. Lubick,
Acting, Assistant Secretary of the
Treasury (Tax Policy).
(Filed by the Office of the Federal Register on
May 8, 1997, 8:45 a.m., and published in the issue
of the Federal Register for May 9, 1997, 62 F.R.
25498)
8

Part III. Administrative, Procedural, and Miscellaneous
26 CFR 601.201: Rulings and determination let-
ters.
Rev. Proc. 97–29
SECTION 1. PURPOSE
This revenue procedure (1) provides a
model amendment that may be used,
prior to January 1, 1999, by a sponsor
of a prototype individual retirement ac-
count or annuity (IRA) to establish a
SIMPLE IRA (an IRA designed to ac-
cept contributions under a SIMPLE IRA
Plan described in § 408(p)) of the Inter-
nal Revenue Code; (2) provides guid-
ance on obtaining opinion letters to
drafters of prototype SIMPLE IRAs; (3)
provides permissive amendments to
sponsors of nonSIMPLE IRAs (IRAs
that are designed to accept contributions
other than under SIMPLE IRA Plans);
(4) announces the opening of a program
for prototype SIMPLE IRA Plans; and
(5) provides transitional relief for users
of SIMPLE IRAs and SIMPLE IRA
Plans that have not been approved by
the Internal Revenue Service.
SECTION 2. BACKGROUND AND
GENERAL INFORMATION
.01 Code§ 408(p),addedby
§ 1421(a) of the Small Business Job
Protection Act of 1996 (‘‘SBJPA’’), Pub.
L. No. 104–188, describes a new type of
retirement arrangement, a SIMPLE IRA
Plan, which, generally, may be used by
small employers who maintain no other
qualified plans. Under a SIMPLE IRA
Plan, an employer makes contributions
to a SIMPLE IRA.
.02 Subsections (a) and (b) of § 408
set forth general requirements for indi-
vidual retirement accounts and indi-
vidual retirement annuities, respectively.
.03 Rev. Proc. 87–50, 1987–2 C.B.
647, provides the procedures for a spon-
soring organization or a mass submitter
(a ‘‘prototype sponsor’’) to apply to the
Service for an opinion letter on whether
a prototype nonSIMPLE IRA meets the
requirements of § 408(a) or (b).
.04 Section 408(p)(1) requires that a
SIMPLE IRA established for use with a
particular employer’s SIMPLE IRA Plan
only accept contributions from that em-
ployer pursuant to its SIMPLE IRA Plan
or from another employer pursuant to
that employer’s SIMPLE IRA Plan.
However, a SIMPLE IRA established by
or for a particular employee may also
accept that employee’s rollovers or
transfers of property from another
SIMPLE IRA of that employee.
.05 In 1996, the Service released
Forms 5305–S and 5305–SA, model
SIMPLE IRAs for use as trust or custo-
dial accounts, respectively. A prototype
sponsor that wants to offer Service-
approved SIMPLE IRAs may (1) use
one or both of these model SIMPLE
IRAs, (2) use the model amendment
procedure contained in section 3, or (3)
apply for an opinion letter pursuant to
section 4.
.06 In 1996, the Service also released
two model SIMPLE IRA Plans, Form
5305–SIMPLE(SavingsIncentive
Match Plan for Employees of Small
Employers (SIMPLE)—for Use With a
Designated Financial Institution) and
Form 5304–SIMPLE (Savings Incentive
Match Plan for Employees of Small
Employers (SIMPLE)—Not Subject to
the Designated Financial Institution
Rules).
.07 Notice 97–6, 1997–2 I.R.B. 26
(January 13, 1997), contains questions
and answers relating to the implementa-
tion and operation of SIMPLE IRA
Plans described in § 408(p), including
the election and notice requirements
regarding these plans. The Service in-
tends to supplement Notice 97–6 with
additional guidance.
.08 Rev. Proc. 97–8, 1997–1 I.R.B.
187 (January 6, 1997), provides guid-
ance to taxpayers for complying with
the user-fee program as it pertains to
matters under the jurisdiction of the
Assistant Commissioner (Employee
Plans and Exempt Organizations).
SECTION 3. ADOPTION OF MODEL
AMENDMENT
.01 Procedural requirements. A proto-
type sponsor with an approved prototype
nonSIMPLE IRA may create an ap-
proved prototype SIMPLE IRA using
the model amendment procedure in this
section 3 by complying with section
3.02 and .03 below. Following the
model amendment procedure results in
two approved prototype IRAs: (1) an
existing unchanged prototype non-
SIMPLE IRA and (2) a newly estab-
lished prototype SIMPLE IRA.
.02 Use of model language. In order
tocreateanapprovedprototype
SIMPLE IRA using the model amend-
ment, the prototype sponsor must use an
Eligible IRA as a basis and follow the
instructions in the Appendix. An ‘‘Eli-
gible IRA’’ is a prototype nonSIMPLE
IRA that either (1) has a favorable
opinion letter dated after January 31,
1990, or (2) has a favorable opinion
letter dated on or before that date and
has adopted the minimum distribution
language contained in section 6 of Rev.
Proc. 92–38, 1992–1 C.B. 859. The
model language must be adopted on a
word-for-word basis unless otherwise
specified in the Appendix.
.03Application to the Service.
(1)Opinion letter request.A proto-
type sponsor must request an opinion
letter from the Service on the SIMPLE
IRA in order to establish a prototype
SIMPLE IRA using an Eligible IRA.
The Service will not accept an opinion
letter request submitted pursuant to this
section 3 by a prototype sponsor after
December 31, 1998.
(2)Information required.The pro-
totype sponsor must apply for the opin-
ion letter using Form 5306, Application
for Approval of Prototype or Employer
Sponsored Individual Retirement Ac-
count, with ‘‘SIMPLE IRA model
amendment’’ written on the top of the
form and the file folder number of the
Eligible IRA written on line 2c(3). The
prototype sponsor should not complete
Part II of the form and should not
submit either the Eligible IRA or the
SIMPLE IRA to the Service pursuant to
this model amendment procedure.
(3)Certification.The prototype
sponsor must certify that the model
language contained in the Appendix has
been added on a word-for-word basis to
an Eligible IRA (as defined in section
3.02) and that no other changes have
been made.
(4)Address.The prototype sponsor
must mail the application to: Internal
Revenue Service, Attention CP:E:EP,
P.O. Box 14073, Ben Franklin Station,
Washington, DC 20044.
(5)Mass submitters.Mass submit-
ters must provide the information and
certification described in section 3.03(2)
and (3), above, on behalf of each spon-
soring organization that is an identical
adopter of the mass submitter and that
wishes to use this model amendment
procedure to establish a SIMPLE IRA.
(6)User fee.The prototype spon-
sor must pay a user fee of $50 for each
prototype SIMPLE IRA established pur-
suant to this section 3. This fee can be
paid by money order or check only and
must accompany each application. The
9

money order or check must be made
payable to the Internal Revenue Service.
.04New opinion letter.After verify-
ing the information provided by the
applicant on each Eligible IRA, the
Service will issue a new opinion letter
on each prototype SIMPLE IRA to the
prototype sponsor.
.05Reliance.An individual who uses
a SIMPLE IRA that has received an
opinion letter pursuant to section 3.04
and who complies with the terms of the
SIMPLE IRA may rely upon the opinion
letter that the SIMPLE IRA is qualified
under § 408(p). However, the opinion
letter may not be relied on with respect
to whether the SIMPLE IRA Plan, under
which contributions are made to the
SIMPLE IRA, satisfies the requirements
of § 408(p).
.06Disclosure statements.A proto-
type sponsor that amends an Eligible
IRA pursuant to this section 3 must
change the corresponding disclosure
statement, required pursuant to § 408(i),
to reflect the contents of the SIMPLE
IRA. The prototype sponsor must dis-
tribute the amended disclosure statement
to each individual using the SIMPLE
IRA.
SECTION 4. OPINION LETTERS FOR
NONMODEL SIMPLE IRAS
.01Prototype program.A prototype
sponsor may apply to the Service for an
opinion letter on a SIMPLE IRA sub-
mitted pursuant to this section 4. The
same procedures and user fees apply to
a submission for an opinion letter for a
SIMPLE IRA as those that apply for a
nonSIMPLE IRA, with the exception
described in section 4.02. (See Rev.
Procs. 87–50 and 97–8.)
.02No opinion letters.The Service
will not issue an opinion letter to a
prototype sponsor on a SIMPLE IRA
that, by its terms, can be used either as
a SIMPLE IRA or a nonSIMPLE IRA.
.03Sample language.Sample lan-
guage (also known as Listing of Re-
quired Modifications, or LRMs) that the
Service finds acceptable for SIMPLE
IRAs and nonSIMPLE IRAs may be
obtained by writing to the Service at:
Internal Revenue Service, 1111 Constitu-
tion Avenue NW, Attention CP:E:EP,
Room 6550, Washington, DC 20224.
‘‘LRM Request’’ should be clearly
printed on the envelope. Alternatively, a
request for LRMs may be faxed to
Nancy Arrington at (202) 622–6199.
SECTION 5. PERMISSIVE
AMENDMENTS FOR NONSIMPLE
IRAS
.01Amendment for all nonSIMPLE
IRAs.
(1)Background.An employer’s
contribution under a SIMPLE IRA Plan
must be deposited into an employee’s
SIMPLE IRA. A SIMPLE IRA Plan
contributiondepositedintoa
nonSIMPLE IRA could result in adverse
tax consequences to the employee. Simi-
lar adverse tax consequences could oc-
cur if, prior to the expiration of the
2-year period beginning on the date an
employee first participated in any
SIMPLE IRA Plan maintained by the
employee’s employer, the employee rolls
over or transfers to a nonSIMPLE IRA
funds from the employee’s SIMPLE
IRA.
(2)Permissive amendment.A pro-
totypenonSIMPLEIRA maybe
amended by the prototype sponsor to
prohibit the deposits described in section
5.01(1) that could result in adverse tax
consequences to an employee. Prototype
sponsors and individuals who use this
amended nonSIMPLE IRA do not lose
reliance on a current opinion letter be-
cause of this amendment. Therefore, a
prototype sponsor that amends its
nonSIMPLE IRA as suggested in this
paragraphshouldnotsubmitthe
amended nonSIMPLE IRA to the Ser-
vice for a new opinion letter.
.02Amendment for spousal non-
SIMPLE IRAs.
(1)Background.Section 1427(a) of
the SBJPA amended § 219(c) to in-
crease from $250 to $2,000 the maxi-
mum deductible amount that can be
contributed to nonSIMPLE IRAs estab-
lished for certain married individuals.
This increase applies to an individual’s
taxable years that begin after December
31, 1996.
(2)Permissive amendment.Section
6.03 of Rev. Proc. 87–50 states that an
amendment to an approved IRA solely
to facilitate IRA contributions up to the
maximum amount deductible under
§ 219 will not affect the status of the
IRA and should not be submitted to the
Service. Accordingly, a prototype spon-
sor that amends a nonSIMPLE IRA
solely to reflect the increase in the
deductible limit for spousal nonSIMPLE
IRAs does not lose reliance on its
current favorable opinion letter and
should not submit the document to the
Service for an opinion letter on the
amendment.
.03Disclosure statements.A proto-
typesponsorthatamendsits
nonSIMPLE IRA as suggested in sec-
tions 5.01(2) or 5.02(2) must change the
corresponding disclosure statement, re-
quired pursuant to § 408(i), to reflect
the amendment(s) to the nonSIMPLE
IRA. The prototype sponsor must dis-
tribute the amended disclosure statement
to individuals using the amended
nonSIMPLE IRA.
SECTION 6. PROTOTYPE SIMPLE
IRA PLAN PROGRAM
.01New prototype program.The Ser-
vice will issue an opinion letter on the
form of a prototype SIMPLE IRA Plan
submitted by a sponsoring organization
or mass submitter (as these terms are
defined in Rev. Proc. 87–50) provided
that the requirements of § 408(p) and
this section 6 are satisfied.
.02User fees.The user fees and
address for a SIMPLE IRA Plan proto-
type submission are the same as for a
prototype simplified employee pension
(SEP) submission, as listed in Rev. Proc.
97–8.
.03Sample language.Sample lan-
guage that the Service finds acceptable
for use in a SIMPLE IRA Plan may be
obtained by writing to the address indi-
cated in section 4.03.
.04Application form.The Service an-
ticipates that an application form will be
developed to accommodate a request for
an opinion letter on a SIMPLE IRA
Plan. Until a new form is available,
applicants must use Form 5306–SEP,
Application for Approval of Prototype
Simplified Employee Pension—SEP,
writing ‘‘SIMPLE IRA Plan Request’’
on top of the form and answering all
questions except 3, 7 and 8 (relating to
items unique to SEPs).
.05No opinion letters.The Service
will not issue an opinion letter to a
prototype sponsor for a SIMPLE IRA
Plan that combines a SIMPLE IRA Plan
and a SIMPLE IRA in the same docu-
ment.
SECTION 7. TRANSITIONAL RELIEF
.01SIMPLE IRAs.A SIMPLE IRA
must be established for an employee
prior to the first date a SIMPLE IRA
Plan contribution is required to be de-
posited into the employee’s SIMPLE
IRA. An employee or employer who
establishes a trust, custodial account or
annuity contract as a SIMPLE IRA in
1997 using a document that has not
been approved for use as a SIMPLE
IRA by the Service is deemed to have
used a document that has been approved
10

for this use by the Service provided the
conditions in (1) through (4) below are
satisfied:
(1) The employee or employer
used a document provided by a proto-
type sponsor to establish the ‘‘SIMPLE
IRA.’’
(2) On or before December 31,
1997, the prototype sponsor applies to
the Service for an opinion letter on the
document described in section 7.01(1).
The prototype sponsor must apply for
the opinion letter using the procedures
contained in either section 3 or section 4
of this revenue procedure.
(3) The employee or employer
adopts the approved document within
120 days after the later of: (a) the date
the Service issues a favorable opinion
letter on the document to the prototype
sponsor, and (b) if the prototype sponsor
seeks approval of the document from
one or more state insurance departments
not later than 90 days after the Service
issues a favorable opinion letter on the
document, the date the document is
approved by all such state insurance
departments. If, as a result of amend-
ments to the document required by a
state insurance department, the prototype
sponsor applies to the Service for an
opinion letter on the amended document
within 90 days after it is approved by
such state insurance department, the date
in (a) in the preceding sentence is the
date the Service issues a favorable opin-
ion letter on the amended document.
(4) The employer making contribu-
tions to the SIMPLE IRA, the employee
on whose behalf contributions are made,
and the trustee, custodian or issuer of
the SIMPLE IRA comply in operation
with § 408(p) for the period beginning
on the date the first SIMPLE IRA Plan
contribution was deposited into a trust,
custodial account or annuity contract
established under the original document
through the date the employee or em-
ployer adopts the approved document.
.02SIMPLE IRA Plans.An employer
must establish a SIMPLE IRA Plan
using a document that meets the require-
ments of § 408(p). An employer who
establishes a plan as a SIMPLE IRA
Plan in 1997 using a document that has
not been approved for use as a SIMPLE
IRA Plan by the Service is deemed to
have established a SIMPLE IRA Plan
using a document that has been ap-
proved for this use by the Service
provided the conditions in (1) through
(4) below are satisfied:
(1) The employer used a document
provided by a prototype sponsor to
establish the ‘‘SIMPLE IRA Plan.’’
(2) On or before December 31,
1997, the prototype sponsor applies to
the Service for an opinion letter on the
document described in section 7.02(1).
The prototype sponsor must apply for
the opinion letter using the procedures
contained in section 6 of this revenue
procedure.
(3) Within 120 days after the Ser-
vice issues a favorable opinion letter on
the document to the prototype sponsor,
the employer adopts the approved docu-
ment.
(4) The employer making contribu-
tions under the SIMPLE IRA Plan, the
employees on whose behalf contribu-
tions are made, and the trustees, custodi-
ans or issuers of the SIMPLE IRAs
established for use with the SIMPLE
IRA Plan comply in operation with
§ 408(p) for the period beginning on
the date the document was first used by
the employer as a SIMPLE IRA Plan
and through the date the employer
adopts the approved document.
SECTION 8. EFFECT ON OTHER
DOCUMENTS
Section 6.06 of Rev. Proc. 97–8 is
modified by sections 3.03(6) and 6.02 of
this revenue procedure, and section 6.02
of Rev. Proc. 87–50 is modified by
sections 3 and 4.02 of this revenue
procedure.
SECTION 9. PAPERWORK
REDUCTION ACT
The collections of information con-
tained in this revenue procedure have
been reviewed and approved by the
Office of Management and Budget in
accordance with the Paperwork Reduc-
tion Act (44 U.S.C. § 3507) under con-
trol number 1545–1543.
An agency may not conduct or spon-
sor, and a person is not required to
respond to, a collection of information
unless the collection of information dis-
plays a valid control number.
The collections of information in this
revenue procedure are in sections
3.03(2), 3.03(3), 3.03(5), 4.01, 4.03,
6.01 and 6.03. This information is re-
quired to ascertain whether the request
meets the requirements of § 408(p) so
that an opinion letter can be issued to
the applicant. The likely respondents are
(1) businesses or other for-profit institu-
tions and (2) not-for-profit institutions.
The estimated total annual reporting
burden is 25,870 hours.
The estimated annual burden per re-
spondent varies from 0.5 hours to 16
hours, depending on individual circum-
stances, with an estimated average of
8.07 hours. The estimated number of
respondents is 3,205.
The estimated annual frequency of
responses is three requests per applicant.
Books or records relating to a collection
of information must be retained as long
as their contents may become material
in the administration of any internal
revenue law. Generally, an application
for an opinion letter for a prototype plan
is treated as an application for a deter-
mination letter and is subject to the
disclosure rules of § 6104.
DRAFTING INFORMATION
The principal author of this revenue
procedure is Roger Kuehnle of the Em-
ployee Plans Division. For further infor-
mation regarding this revenue procedure,
please contact the Employee Plans Divi-
sion’s taxpayer assistance telephone ser-
vice at (202) 622–6074/75 (not toll-free
numbers) between 1:30 and 3:30 p.m.,
Eastern Time, Monday through Thurs-
day.
APPENDIX
Model Language
1. To establish a SIMPLE IRA using
an Eligible IRA and the model amend-
ment described in section 3, a prototype
sponsor must follow the procedures in
that section and the instructions below.
A prototype sponsor that replaces one or
more of the words ‘‘contribution,’’ ‘‘par-
ticipant’’ and ‘‘trustee’’ in the model
language, as authorized by sections 3, 4,
5, and 6 in this appendix, is considered
to have adopted the model language on
a word-for-word basis.
2. The document must be identified
as a SIMPLE IRA.
3. The prototype sponsor must delete
the applicable sections in the Eligible
IRA document dealing with acceptable
contributions (from any source) and add
the following (if different terms are used
in the Eligible IRA document, the words
‘‘contribution’’ and ‘‘participant’’ must
be replaced by the other terms used in
lieu of these terms):
This SIMPLE IRA will accept
only cash contributions made on
behalf of the participant pursuant
to the terms of a SIMPLE IRA
Plan described in section 408(p) of
11

the Internal Revenue Code. [The
following sentence is optional on
the part of the prototype sponsor:
‘‘A rollover contribution or a
transfer of assets from another
SIMPLE IRA of the participant
will also be accepted.’’] No other
contributions will be accepted.
4. The prototype sponsor must add
the following paragraph to the Eligible
IRA document (if different terms are
used in the Eligible IRA document, the
words ‘‘contribution,’’ ‘‘participant’’ and
‘‘trustee’’ must be replaced by the other
terms used in lieu of these terms):
If contributions made on behalf of
the participant pursuant to a
SIMPLE IRA Plan maintained by
the participant’s employer are re-
ceived directly by the trustee from
the employer, the trustee will pro-
vide the employer with the sum-
mary description required by sec-
tion 408(l)(2) of the Internal
Revenue Code.
5. If the document is to be used with
respect to a SIMPLE IRA by a trustee,
custodian or issuer that is a designated
financial institution within the meaning
of § 408(p)(7), the prototype sponsor
must add the following paragraph to the
Eligible IRA document (if different
terms are used in the Eligible IRA
document, the words ‘‘contribution’’ and
‘‘participant’’ must be replaced by the
other terms used in lieu of these terms):
If this SIMPLE IRA is maintained
by a designated financial institu-
tion (within the meaning of sec-
tion 408(p)(7) of the Internal Rev-
enue Code) under the terms of a
SIMPLE IRA Plan of the partici-
pant’s employer, the participant
must be permitted to transfer the
participant’s balance without cost
or penalty (within the meaning of
section 408(p)(7)) to another IRA.
(For further information concerning the
obligations of a designated financial
institution, see Q&As J–1 through J–5
in Notice 97–6. Note that if a trustee,
custodian or issuer with respect to a
SIMPLE IRA is not a designated finan-
cial institution, the employer must per-
mit the participant to select the financial
institution to which the employer will
make contributions. (See Q&A E–4 in
Notice 97–6.))
6. The prototype sponsor must add
the following paragraph to the Eligible
IRA document (if different terms are
used in the Eligible IRA document, the
words ‘‘contribution’’ and ‘‘participant’’
must be replaced by the other terms
used in lieu of these terms):
Prior to the expiration of the
2-year period beginning on the
date the participant first partici-
pated in any SIMPLE IRA Plan
maintained by the participant’s
employer, any rollover or transfer
by the participant of funds from
this SIMPLE IRA must be made
to another SIMPLE IRA of the
participant. Any distribution of
funds to the participant during this
2-year period may be subject to a
25-percent additional tax if the
participant does not roll over the
amount distributed into a SIMPLE
IRA. After the expiration of this
2-year period, the participant may
roll over or transfer funds to any
IRA of the participant that is
qualified under section 408(a) or
(b) of the Internal Revenue Code.
7. The prototype sponsor must delete
any definition of compensation con-
tained in the Eligible IRA document.
12

Part IV. Items of General Interest
Foundations Status of Certain
Organizations
Announcement 97–58
The following organizations have
failed to establish or have been unable
to maintain their status as public chari-
ties or as operating foundations. Accord-
ingly, grantors and contributors may not,
after this date, rely on previous rulings
or designations in the Cumulative List
of Organizations (Publication 78), or on
the presumption arising from the filing
of notices under section 508(b) of the
Code. This listing doesnotindicate that
the organizations have lost their status
as organizations described in section
501(c)(3), eligible to receive deductible
contributions.
Former Public Charities. The follow-
ing organizations (which have been
treated as organizations that are not
private foundations described in section
509(a) of the Code) are now classified
as private foundations:
Aberdeen Area Tribal Chairmans Health
Board, Aberdeen, SD
America’s Child, Cranston, RI
Andhra Adventists Association,
Hyattsville, MD
Association of Black Automotive
Employees Inc., Detroit, MI
Associates of Chicago Urban Day
School, Chicago, IL
Athletic Booster Club of Malibu High
School, Malibu, CA
Attorney Access, Inc., Buffalo, NY
Baldwin Parents in Partnership for
School Age Child Care, Baldwin, NY
Cat Tails, Inc., Lebanon, MO
Christian Oasis Inc., Pineville, LA
Christian Renewal Inc., Bozeman, MT
Christian Works Incorporated, Mission
Hills, CA
Church of Jesus Christ the Divine,
Lebanon, IL
Ciudad De Los Ninos Orphans
Outreach, Seattle, WA
Clubhouse A Childrens Museum,
Tarzana, CA
College Park Community Watch,
Raleigh, NC
Community Alliance Rehabilitation
Services, Omaha, NE
Colorado Animal Refuge Inc., Calhan,
CO
Contemplative Medical Center,
Incorporated, Bethlehem, CT
Design News Engineering Education
Foundation, Newton, MA
Ella Mae Smith Foundation, Chicago, IL
Environomic Research Institute Inc.,
Miami, FL
Evelyn Pacheco Scholarship Fund Inc.,
Raynham, MA
Family Defense Law Project, Inc., New
York, NY
Farms for Life Corporation, Amherst,
VA
Fortress Health Care Systems, Inc.,
Clinton, MD
Friends of Rachel Carson National
Wildlife Refuge, Saco, ME
Future Considerations USA, Falmouth,
ME
Gaylord Area Junior Golf Association
Inc., Gaylord, MI
Goodridge Enterprise Center Inc., York,
PA
Human Services Inc., Jackson Heights,
NY
Infinite Sun Recycling, Kansas City,
MO
Jera Foundation, Minneapolis, MN
Joy Kare Inc., Central Islip, NY
Little Italy Lodge OSIA 2286
Foundation Inc., Baltimore, MD
Long Bridge Ordinary Foundation,
Bena, VA
Los Angeles Police Equestrian Fund,
Los Angeles, CA
Lost Mountain Center for the Guitar,
Carlsborg, WA
Louise Enrichment Group Home, Inc.,
Louise, TX
Love Inc. of South Sacramento County,
Elk Grove, CA
Lowcountry Releaf Inc., Charleston, SC
Lutheran Young Adults of Texas, Austin,
TX
Maine for Me Scholarships, Bangor, ME
Moses Lake Alano Club Foundation,
Moses Lake, WA
Mother Lode Ombudsman, Inc., Sonora,
CA
Motion Dance Troupe, Charlotte, NC
Mountain Recovery Home for Women,
Crestline, CA
Mountains Education Program, Pacific
Palisades, CA
Mount Hamilton Athletic League, San
Jose, CA
Northwest Environmental Protection
Association, Seattle, WA
Northwest Viking Softball Boosters of
Guilford County North Carolina,
Greensboro, NC
100th Street Concerts Association
Incorporated, New York, NY
Owen Frost Ministries, Nyssa, OR
Oxford Recovery Club of Washington
Inc., Silver Spring, MD
Peers Unlimited Inc., Columbus, OH
Project Lift Incorporated, Coronado, CA
Project Tiny Tim Fund, Spokane, WA
PTA Washington—Glenwood
Elementary, Tacoma, WA
PTA Washington—Harmony Elementary
PTA 3-6-11, Tacoma, WA
Rainbow Theatre, Inc., Stamford, CT
Soldier Ministries, Inc., Springville, AL
Students Dictionary Foundation Inc.,
Bloomington, IL
Sunrise of Tennessee, Inc., Nashville,
TN
Upstate Prison Ministries, Inc.,
Pottersville, NY
Wisconsin Visual Arts Ltd., Milwaukee,
WI
Your Family and Mine Foundation,
Phoenix, AZ
If an organization listed above sub-
mits information that warrants the re-
newal of its classification as a public
charity or as a private operating founda-
tion, the Internal Revenue Service will
issue a ruling or determination letter
with the revised classification as to
foundation status. Grantors and con-
tributors may thereafter rely upon such
ruling or determination letter as pro-
vided in section 1.509(a)–7 of the
Income Tax Regulations. It is not
the practice of the Service to announce
such revised classification of foundation
status in the Internal Revenue Bulletin.
Requirements Respecting the
Adoption of Change of Accounting
Method; Extensions of Time To
Make Elections; Correction
Announcement 97–59
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Correction to temporary
regulations.
Summary: This document contains cor-
rections to the temporary regulations
(T.D. 8719 [1997–23 I.R.B. 4]) which
were published in theFederal Register
for Thursday, May 15, 1997 (62 FR
26740). The regulations relate to the
procedure for requesting a change in
accounting method and the standards for
granting anextension of time to request
a change in accounting method. The
regulations provide for a longer period
131997–24 I.R.B.

of time for filing an application for
change in accounting method with the
Commissioner.
EFFECTIVE DATE: May 15, 1997.
FORFURTHERINFORMATION
CONTACT: Cheryl L. Oseekey at (202)
622–4970 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
The temporary regulations that are the
subject of this correction are under
section 446 of the Internal Revenue
Code.
Need for Correction
As published, the temporary regula-
tions contain two errors which may
prove to be misleading and are in need
of clarification.
Correction of Publication
Accordingly, the publication of the
temporary regulations which are the
subject of FR Doc. 97–12514 is cor-
rected as follows:
§ 1.446–1T [Corrected]
Paragraph 1. On page 26741, column
1, § 1.446–1T, paragraph (e)(3)(i)(B) is
corrected to read as follows:
*****
(e) * * *
(3) * * *
(i) * * *
(B) For any form 3115 filed on or
after May 15, 1997, to secure the Com-
missioner’s consent to a taxpayer’s
change in method of accounting the
taxpayer must file the Form 3115 with
the Commissioner during the taxable
year in which the taxpayer desires to
make the change in method of account-
ing.
*****
§ 601.204T [Corrected]
Par. 2. On page 26741, column 2,
§ 601.204T, paragraph (b)(2) is cor-
rected by removing the last sentence.
Dale D. Goode,
Federal Register Liaison Officer
Ass’t Chief Counsel (Corporate).
(Filed by the Office of the Federal Register on
May 23, 1997, 8:45 a.m., and published in the
issue of the Federal Register for May 27, 1997, 62
F.R. 28630)
Telephone Numbers on Substitute
Statements to Recipients—Forms
W–2G, 1098, and 1099
Announcement 97–60
The 1997 Instructions for Forms
1099, 1098, 5498, and W–2G indicate
that payors should include on statements
to recipients the telephone number of a
person to contact. On the official Inter-
nal Revenue Service forms, this number
is included in the filer name and address
area on statements to recipients. How-
ever, on substitute forms, payors are
permitted to include the telephone num-
ber in any conspicuous place on the
statements.
141997–24 I.R.B.

Announcement of the Disbarment, Suspension, or Consent to Voluntary
Suspension of Attorneys, Certified Public Accountants, Enrolled Agents, and
Enrolled Actuaries From Practice Before the Internal Revenue Service
Under 31 Code of Federal Regula-
tions, Part 10, an attorney, certified pub-
lic accountant, enrolled agent, or en-
rolled actuary, in order to avoid the
institution or conclusion of a proceeding
for his disbarment or suspension from
practice before the Internal Revenue Ser-
vice, may offer his consent to suspension
from such practice. The Director of
Practice, in his discretion, may suspend
an attorney, certified public accountant,
enrolled agent, or enrolled actuary in
accordance with the consent offered.
Attorneys, certified public accoun-
tants, enrolled agents, and enrolled actu-
aries are prohibited in any Internal Rev-
enue Service matter from directly or
indirectly employing, accepting assis-
tance from, being employed by or shar-
ing fees with, any practitioner disbarred
or suspended from practice before the
Internal Revenue Service.
To enable attorneys, certified public
accountants, enrolled agents, and en-
rolled actuaries to identify practitioners
under consent suspension from practice
before the Internal Revenue Service, the
Director of Practice will announce in the
Internal Revenue Bulletin the names and
addresses of practitioners who have
been suspended from such practice, their
designation as attorney, certified public
accountant, enrolled agent, or enrolled
actuary and date or period of suspen-
sion. This announcement will appear in
the weekly Bulletin at the earliest practi-
cable date after such action and will
continue to appear in the weekly Bulle-
tins for five successive weeks or for as
many weeks as is practicable for each
attorney, certified public accountant, en-
rolled agent, or enrolled actuary so
suspended and will be consolidated and
published in the Cumulative Bulletin.
The following individuals have been
placed under consent suspension from
practice before the Internal Revenue
Service:
NameAddressDesignationDate of Suspension
Bert Jr., Earol L.Severna Park, MDCPAFebruary 1, 1997 to July 31, 1997
Bernard, Lucius P.Corte Medera, CAAttorneyMarch 10, 1997 to March 9, 2000
Parker, David A.Willmar, MNCPAApril 13, 1997 to April 12, 2000
Sheldon, DonaldNashville, TNCPAApril 24, 1997 to September 23, 1997
Grandt, Lawrence E.Barrington, ILCPAApril 24, 1997 to January 23, 1998
Reese, Rex E.Alexandria, VAAttorneyMay 1, 1997 to April 30, 1999
Glasl, John E.Emporium, PACPAMay 1, 1997 to September 30, 1997
Coulter, Diane E.Monroeville, PACPAMay 1, 1997 to April 30, 1998
Groves, J. RandallMatthews, NCAttorneyMay 1, 1997 to October 31, 1998
Lupiloff, StevenBloomfield, MIAttorneyIndefinite from May 6, 1997
Wilson, Robert L.Spring Hill, FLCPAMay 7, 1997 to October 6, 1998
Sloop, Wayne F.Winston-Salem, NCCPAIndefinite from May 7, 1997
Wilnewic, Mark V.Crystal Lake, ILCPAMay 8, 1997 to November 7, 1997
Lenihan, MichaelCincinnati, OHCPAMay 14, 1997 to July 13, 1997
Bergmann, FrederickTampa, FLCPAJune 1, 1997 to May 30, 1999
Farmer, CraigArlington Hghts, ILCPAJune 1, 1997 to August 31, 1997
Denny, RichardPine Bluff, ARCPAJune 1, 1997 to July 31, 1997
15

Announcement of the Expedited Suspension of Attorneys, Certified Public
Accountants, Enrolled Agents, and Enrolled Actuaries From Practice Before the
Internal Revenue Service
Under title 31 of the Code of Federal
Regulations, section 10.76, the Director
of Practice is authorized to immediately
suspend from practice before the Inter-
nal Revenue Service any practitioner
who, within five years, from the date
the expedited proceeding is instituted,
(1) has had a license to practice as an
attorney, certified public accountant, or
actuary suspended or revoked for cause;
or (2) has been convicted of any crime
under title 26 of the United States Code
or, of a felony under title 18 of the
United States Code involving dishonesty
or breach of trust.
Attorneys, certified public accoun-
tants, enrolled agents, and enrolled actu-
aries are prohibited in any Internal Rev-
enue Service matter from directly or
indirectly employing, accepting assis-
tance from, being employed by, or shar-
ing fees with, any practitioner disbarred
or suspended from practice before the
Internal Revenue Service.
To enable attorneys, certified public
accountants, enrolled agents, and en-
rolled actuaries to identify practitioners
under expedited suspension from prac-
tice before the Internal Revenue Service,
the Director of Practice will announce in
the Internal Revenue Bulletin the names
and addresses of practitioners who have
been suspended from such practice, their
designation as attorney, certified public
accountant, enrolled agent, or enrolled
actuary, and date or period of suspen-
sion. This announcement will appear in
the weekly Bulletin at the earliest practi-
cable date after such action and will
continue to appear in the weekly Bulle-
tins for five successive weeks or for as
many weeks as is practicable for each
attorney, certified public accountant, en-
rolled agent, or enrolled actuary so
suspended and will be consolidated and
published in the Cumulative Bulletin.
The following individuals have been
placed under suspension from practice
before the Internal Revenue Service by
virtue of the expedited proceeding pro-
visions of the applicable regulations:
NameAddressDesignationDate of Suspension
Dally, Candace L.Winston-Salem, NCCPAIndefinite from April 16, 1997
Mellor, Gary D.Norton, KSAttorneyIndefinite from April 16, 1997
Gottesman, MiltonNew York, NYCPAIndefinite from April 16, 1997
Wiener, JamesGermantown, NYAttorneyIndefinite from April 16, 1997
Lunblad, GeraldSacramento, CACPAIndefinite from April 16, 1997
Driscoll, Robert J.Denver, COAttorneyIndefinite from April 16, 1997
Alico, Kenneth N.Orchard Park, NYCPAIndefinite from April 16, 1997
Mack, Roland G.Hyattsville, MDCPAIndefinite from May 1, 1997
16

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as ‘‘rulings’’)
that have an effect on previous rulings
use the following defined terms to de-
scribe the effect:
Amplifieddescribes a situation where
no change is being made in a prior
published position, but the prior position
is being extended to apply to a variation
of the fact situation set forth therein.
Thus, if an earlier ruling held that a
principle applied to A, and the new
ruling holds that the same principle also
applies to B, the earlier ruling is ampli-
fied. (Compare withmodified, below).
Clarifiedis used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously
published ruling and points out an es-
sential difference between them.
Modifiedis used where the substance
of a previously published position is
being changed. Thus, if a prior ruling
held that a principle applied to A but not
to B, and the new ruling holds that it
applies to both A and B, the prior ruling
is modified because it corrects a pub-
lished position. (Compare withamplified
andclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered de-
terminative with respect to future trans-
actions. This term is most commonly
used in a ruling that lists previously
published rulings that are obsoleted be-
cause of changes in law or regulations.
A ruling may also be obsoleted because
the substance has been included in regu-
lations subsequently adopted.
Revokeddescribes situations where
the position in the previously published
ruling is not correct and the correct
position is being stated in the new
ruling.
Supersededdescribes a situation
where the new ruling does nothing more
than restate the substance and situation
of a previously published ruling (or
rulings). Thus, the term is used to
republish under the 1986 Code and
regulations the same position published
under the 1939 Code and regulations.
The term is also used when it is desired
to republish in a single ruling a series of
situations, names, etc., that were previ-
ously published over a period of time in
separate rulings. If the new ruling does
more than restate the substance of a
prior ruling, a combination of terms is
used. For example,modifiedandsuper-
sededdescribes a situation where the
substance of a previously published rul-
ing is being changed in part and is
continued without change in part and it
is desired to restate the valid portion of
the previously published ruling in a new
ruling that is self contained. In this case
the previously published ruling is first
modified and then, as modified, is su-
perseded.
Supplementedis used in situations in
which a list, such as a list of the names
of countries, is published in a ruling and
that list is expanded by adding further
names in subsequent rulings. After the
original ruling has been supplemented
several times, a new ruling may be
published that includes the list in the
original ruling and the additions, and
supersedes all prior rulings in the series.
Suspendedis used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The following abbreviations in current use and
formerly used will appear in material published in
the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C.—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contribution Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign Corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statements of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.
17

Numerical Finding List
1
Bulletin 1997–1 through 1997–23
Announcements:
97–1, 1997–2 I.R.B.63
97–2, 1997–2 I.R.B.63
97–3, 1997–2 I.R.B.63
97–4, 1997–3 I.R.B.14
97–5, 1997–3 I.R.B.15
97–6, 1997–4 I.R.B.11
97–7, 1997–4 I.R.B.12
97–8, 1997–4 I.R.B.12
97–9, 1997–5 I.R.B.27
97–10, 1997–10 I.R.B.64
97–11, 1997–6 I.R.B.19
97–12, 1997–7 I.R.B.55
97–13, 1997–8 I.R.B.38
97–14, 1997–8 I.R.B.38
97–15, 1997–9 I.R.B.23
97–16, 1997–9 I.R.B.23
97–17, 1997–9 I.R.B.23
97–18, 1997–10 I.R.B.67
97–19, 1997–10 I.R.B.68
97–20, 1997–11 I.R.B.22
97–21, 1997–11 I.R.B.23
97–22, 1997–12 I.R.B.47
97–23, 1997–11 I.R.B.23
97–24, 1997–11 I.R.B.24
97–25, 1997–12 I.R.B.47
97–26, 1997–12 I.R.B.48
97–27, 1997–13 I.R.B.30
97–28, 1997–14 I.R.B.15
97–29, 1997–14 I.R.B.16
97–30, 1997–14 I.R.B.16
97–31, 1997–14 I.R.B.16
97–32, 1997–14 I.R.B.17
97–33, 1997–15 I.R.B.8
97–34, 1997–15 I.R.B.8
97–35, 1997–15 I.R.B.9
97–36, 1997–15 I.R.B.10
97–37, 1997–15 I.R.B.10
97–38, 1997–15 I.R.B.10
97–39, 1997–16 I.R.B.27
97–40, 1997–16 I.R.B.28
97–41, 1997–16 I.R.B.28
97–42, 1997–17 I.R.B.19
97–43, 1997–17 I.R.B.19
97–44, 1997–17 I.R.B.19
97–45, 1997–17 I.R.B.20
97–46, 1997–18 I.R.B.53
97–47, 1997–19 I.R.B.94
97–48, 1997–20 I.R.B.8
97–49, 1997–20 I.R.B.8
97–50, 1997–20 I.R.B.8
97–51, 1997–20 I.R.B.9
97–52, 1997–21 I.R.B.22
97–53, 1997–21 I.R.B.22
97–54, 1997–22 I.R.B.23
97–55, 1997–22 I.R.B.23
97–56, 1997–23 I.R.B.17
97–57, 1997–23 I.R.B.18
Notices:
97–1, 1997–2 I.R.B.22
97–2, 1997–2 I.R.B.22
97–3, 1997–1 I.R.B.8
97–4, 1997–2 I.R.B.24
97–5, 1997–2 I.R.B.25
97–6, 1997–2 I.R.B.26
97–7, 1997–1 I.R.B.8
97–8, 1997–4 I.R.B.7
97–9, 1997–2 I.R.B.35
Notices—Continued
97–10, 1997–2 I.R.B.41
97–11, 1997–2 I.R.B.50
97–12, 1997–3 I.R.B.11
97–13, 1997–6 I.R.B.13
97–14, 1997–8 I.R.B.23
97–15, 1997–8 I.R.B.23
97–16, 1997–9 I.R.B.15
97–17, 1997–10 I.R.B.34
97–18, 1997–10 I.R.B.35
97–19, 1997–10 I.R.B.40
97–20, 1997–10 I.R.B.52
97–21, 1997–11 I.R.B.9
97–22, 1997–13 I.R.B.9
97–23, 1997–14 I.R.B.8
97–24, 1997–16 I.R.B.6
97–25, 1997–16 I.R.B.8
97–26, 1997–17 I.R.B.6
97–27, 1997–17 I.R.B.7
97–28, 1997–18 I.R.B.45
97–29, 1997–20 I.R.B.6
97–30, 1997–20 I.R.B.6
97–31, 1997–21 I.R.B.5
97–32, 1997–21 I.R.B.8
97–33, 1997–22 I.R.B.22
Proposed Regulations:
REG–209332–80, 1997–14 I.R.B.9
REG–209040–88, 1997–7 I.R.B.34
REG–209121–89, 1997–11 I.R.B.15
REG–208288–90, 1997–11 I.R.B.14
REG–209494–90, 1997–8 I.R.B.24
REG–208172–91, 1997–10 I.R.B.59
REG–209672–93, 1997–6 I.R.B.15
REG–209709–94 1997–13 I.R.B.12
REG–209729–94, 1997–11 I.R.B.19
REG–209762–95, 1997–3 I.R.B.12
REG–209785–95, 1997–18 I.R.B.46
REG–209817–96, 1997–7 I.R.B.41
REG–209824–96, 1997–11 I.R.B.19
REG–254394–96, 1997–14 I.R.B.14
REG–209823–96, 1997–18 I.R.B.47
REG–209828–96, 1997–6 I.R.B.15
REG–209830–96, 1997–15 I.R.B.7
REG–209834–96, 1997–4 I.R.B.9
REG–209837–96, 1997–23 I.R.B.8
REG–209839–96, 1997–8 I.R.B.26
REG–242996–96, 1997–9 I.R.B.18
REG–246018–96, 1997–8 I.R.B.30
REG–247678–96, 1997–6 I.R.B.17
REG–247862–96, 1997–8 I.R.B.32
REG–248770–96, 1997–8 I.R.B.33
REG–249819–96, 1997–7 I.R.B.50
REG–252231–96, 1997–7 I.R.B.52
REG–252233–96, 1997–9 I.R.B.19
REG–252665–96, 1997–12 I.R.B.46
REG–253578–96, 1997–19 I.R.B.93
REG–105299–97, 1997–23 I.R.B.8
Public Law:
105–2, 1997–18 I.R.B.14
Railroad Retirement Quarterly Rate:
1997–21 I.R.B.4
Revenue Procedures:
97–1, 1997–1 I.R.B.11
97–2, 1997–1 I.R.B.64
97–3, 1997–1 I.R.B.84
97–4, 1997–1 I.R.B.96
97–5, 1997–1 I.R.B.132
97–6, 1997–1 I.R.B.153
97–7, 1997–1 I.R.B.185
Revenue Procedures—Continued
97–8, 1997–1 I.R.B.187
97–9, 1997–2 I.R.B.56
97–10, 1997–2 I.R.B.59
97–11, 1997–6 I.R.B.13
97–12, 1997–4 I.R.B.7
97–13, 1997–5 I.R.B.18
97–14, 1997–5 I.R.B.20
97–15, 1997–5 I.R.B.21
97–16, 1997–5 I.R.B.25
97–17, 1997–9 I.R.B.15
97–18, 1997–10 I.R.B.53
97–19, 1997–10 I.R.B.55
97–20, 1997–11 I.R.B.10
97–21, 1997–12 I.R.B.44
97–22, 1997–13 I.R.B.9
97–23, 1997–17 I.R.B.7
97–24, 1997–16 I.R.B.10
97–24A, 1997–20 I.R.B.7
97–25, 1997–17 I.R.B.8
97–26, 1997–17 I.R.B.17
97–27, 1997–21 I.R.B.10
97–28, 1997–23 I.R.B.9
Revenue Rulings:
97–1, 1997–2 I.R.B.10
97–2, 1997–2 I.R.B.7
97–3, 1997–2 I.R.B.5
97–4, 1997–3 I.R.B.6
97–5, 1997–4 I.R.B.5
97–6, 1997–4 I.R.B.4
97–7, 1997–5 I.R.B.14
97–8, 1997–7 I.R.B.4
97–9, 1997–9 I.R.B.4
97–10, 1997–10 I.R.B.31
97–11, 1997–10 I.R.B.5
97–12, 1997–11 I.R.B.5
97–13, 1997–16 I.R.B.4
97–14, 1997–11 I.R.B.5
97–15, 1997–12 I.R.B.42
97–16, 1997–13 I.R.B.4
97–17, 1997–14 I.R.B.5
97–18, 1997–15 I.R.B.4
97–19, 1997–18 I.R.B.11
97–20, 1997–19 I.R.B.4
97–21, 1997–18 I.R.B.8
97–22, 1997–20 I.R.B.5
97–23, 1997–22 I.R.B.18
97–24, 1997–22 I.R.B.17
97–25, 1997–23 I.R.B.4
Social Security Domestic Coverage Threshold:
1997–9, I.R.B.17
Tax Conventions:
1997–17 I.R.B.5
Treasury Decisions:
8688, 1997–3 I.R.B.7
8689, 1997–3 I.R.B.9
8690, 1997–5 I.R.B.5
8691, 1997–5 I.R.B.16
8692, 1997–3 I.R.B.4
8693, 1997–6 I.R.B.9
8694, 1997–6 I.R.B.11
8695, 1997–4 I.R.B.5
8696, 1997–6 I.R.B.4
8697, 1997–2 I.R.B.11
8698, 1997–7 I.R.B.29
8699, 1997–6 I.R.B.4
8700, 1997–7 I.R.B.5
8701, 1997–7 I.R.B.23
8702, 1997–8 I.R.B.4
1
See footnote at end of list.
18

Numerical Finding List—Continued
Bulletins 1997–1 through 1997–23
Treasury Decisions—Continued
8703, 1997–8 I.R.B.18
8704, 1997–8 I.R.B.12
8705, 1997–8 I.R.B.16
8706, 1997–9 I.R.B.11
8707, 1997–7 I.R.B.17
8708, 1997–10 I.R.B.14
8709, 1997–9 I.R.B.5
8710, 1997–13 I.R.B.4
8711, 1997–12 I.R.B.35
8712, 1997–12 I.R.B.4
8713, 1997–14 I.R.B.4
8714, 1997–15 I.R.B.5
8715, 1997–18 I.R.B.5
8716, 1997–19 I.R.B.5
8718, 1997–22 I.R.B.4
8719, 1997–23 I.R.B.4
8720, 1997–23 I.R.B.6
1
A cumulative list of all Revenue Rulings,
Revenue Procedures, Treasury Decisions, etc.,
published in Internal Revenue Bulletins 1996–27
through 1996–53 will be found in Internal
Revenue Bulletin 1997–1, dated January 6, 1997.
19

Finding List of Current Action on
Previously Published Items
1
Bulletin 1997–1 through 1997–23
*Denotes entry since last publication
Revenue Procedures:
66–3
Modified by
97–11, 1997–6 I.R.B.13
87–21
Modified by
97–11, 1997–6 I.R.B.13
92–20
Modified by
97–1, 1997–1 I.R.B.11
92–20
Modified by
97–10, 1997–2 I.R.B.59
92–90
Superseded by
97–1, 1997–1 I.R.B.11
94–52
Revoked by
97–11, 1997–6 I.R.B.13
96–1
Superseded by
97–1, 1997–1 I.R.B.11
96–2
Superseded by
97–2, 1997–1 I.R.B.64
96–3
Superseded by
97–3, 1997–1 I.R.B.84
96–4
Superseded by
97–4, 1997–1 I.R.B.96
96–5
Superseded by
97–5, 1997–1 I.R.B.132
96–6
Superseded by
97–6, 1997–1 I.R.B.153
96–7
Superseded by
97–7, 1997–1 I.R.B.185
96–8
Superseded by
97–8, 1997–1 I.R.B.187
96–24
96–24A
Superseded by
97–24, 1997–16 I.R.B.10
96–37
Obsoleted by
97–26, 1997–17 I.R.B.17
97–2
Amplified by
97–21, 1997–12 I.R.B.44
Revenue Procedures—Continued
97–3
Amplified by
97–23, 1997–17 I.R.B.7
Revenue Rulings:
70–480
Revoked by
97–6, 1997–4 I.R.B.4
72–527
Obsoleted by
8704, 1997–8 I.R.B.12
74–59
Revoked by
8708, 1997–10 I.R.B.14
92–19
Supplemented in part by
97–2, 1997–2 I.R.B.7
96–12
Superseded by
97–3, 1997–1 I.R.B.84
96–13
Modified by
97–1, 1997–1 I.R.B.11
96–22
Superseded by
97–3, 1997–1 I.R.B.84
96–34
Superseded by
97–3, 1997–1 I.R.B.84
96–39
Superseded by
97–3, 1997–1 I.R.B.84
96–43
Superseded by
97–3, 1997–1 I.R.B.84
96–56
Superseded by
97–3, 1997–1 I.R.B.84
1
A cumulative finding list for previously published
items mentioned in Internal Revenue Bulletins
1996–27 through 1996–53 will be found in Inter-
nal Revenue Bulletin 1997–1, dated January 6,
1997.
20

NOTES
21

NOTES
22

INTERNAL REVENUE BULLETIN
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Superintendent of Documents
First Class Mail
Postage and Fees Paid
GPO
Permit No. G–26
U.S. Government Printing Office
Washington, DC 20402
Official Business
Penalty for Private Use, $300

INTERNAL REVENUE BULLETIN
The Introduction on page 3 describes the purpose and content of this publication. The weekly Internal Revenue Bulletin is
sold on a yearly subscription basis by the Superintendent of Documents. Current subscribers are notified by the Superintendent
of Documents when their subscriptions must be renewed.
CUMULATIVE BULLETINS
The contents of this weekly Bulletin are consolidated semiannually into a permanent, indexed, Cumulative Bulletin. These
are sold on a single copy basis andare notincluded as part of the subscription to the Internal Revenue Bulletin. Subscribers to
the weekly Bulletin are notified when copies of the Cumulative Bulletin are available. Certain issues of Cumulative Bulletins
are out of print and are not available. Persons desiring available Cumulative Bulletins, which are listed on the reverse, may
purchase them from the Superintendent of Documents.
HOW TO ORDER
Check the publications and/or subscription(s) desired on the reverse, complete the order blank, enclose the proper remittance,
detach entire page, and mail to the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402.
Please allow two to six weeks, plus mailing time, for delivery.
Internal Revenue Service
Washington, DC 20224
Official Business
Penalty for Private Use, $300