Internal Revenue Bulletin 1996-40 (PDF rendition): IRS Announcements

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SPECIAL ANNOUNCEMENT
Announcement 96–100, page 10.
CO–24–96, 1996–30 I.R.B., the notice of a public
hearing relating to the carryover and carryback of losses
to consolidated returns, is corrected.
EMPLOYEE PLANS
Rev. Rul. 96–47, page 7.
Participant consent; significant detriment.Based on
the facts and circumstances described in the revenue
ruling, the loss of the right to choose among a broad
range of investment alternatives with materially different
risk and return characteristics is a significant detriment
that invalidates a participant’s consent to an immediate
distribution.
Rev. Rul. 96–48, page 4.
Nondiscrimination and coverage; rollover.The nondis-
crimination, actual deferral percentage, and actual con-
tribution percentage tests of a qualified plan are not
affected by a qualified rollover to that plan prior to the
individual who makes the rollover meeting the plan’s age
and service requirements. In addition, the rollover will
not trigger the minimum nonintegrated benefit or mini-
mum nonintegrated contribution requirements of section
416(c) of the Code.
EXEMPT ORGANIZATIONS
Announcement 96–101, page 11.
A list is given of organizations now classified as private
foundations.
TAX CONVENTIONS
Page 8.
The bilateral agreements between the United States and
the Republic of Fiji, providing for the reciprocal tax
exemption of income from the international operation of
ships and/or aircraft, are set forth.
ADMINISTRATIVE
Del. Order 155 (Rev. 4), page 9.
This order gives authority to sign recommendation let-
ters for nonsuit settlements to the Regional Counsel and
District Counsel in the field and to the Deputy Associate
Chief Counsel and Assistant Chief Counsel in the
National Office.
Announcement 96–95, page 10.
Waiver or reimbursement of expenses of a regulated
investment company.Comments are requested on
what effect the allocation of a waiver or reimbursement
or the allocation of certain differences in advisory fees
to specific shares of a regulated investment company
should have on the deduction for dividends paid.
Announcement 96–102, page 12.
T.D. 8675, 1996–29 I.R.B. 5, relating to the modifica-
tion of debt instruments, is corrected.
Announcement 96–103, page 13.
T.D. 8677, 1996–30 I.R.B. 7, relating to the deductions
and losses of members and also the carryover and
carryback of losses to consolidated returns, is cor-
rected.
Finding Lists begin on page 17.
Announcements of Disbarments and Suspensions begin on page 14.
Bulletin No. 1996–40
September 30, 1996
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 Service is to
collect the proper amount of tax revenue at the least
cost; serve the public by continually improving the
quality of our products and services; and perform 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 Service 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 Service to
carry 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
perform 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
Service, charged with the duty of interpreting the
law, to try to find the true meaning of the statutory
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 Service also has the responsibility of applying
and administering the law in a reasonable,
practical manner. Issues should only be raised by
examining officers 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 Service position.
Administration should be both reasonable and
vigorous. It should be conducted with as little
delay as possible and with great courtesy and
considerateness. It should never try 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 Service and for publishing Treasury 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 Service to publish in the Bulletin all
substantive rulings necessary to promote a uniform
application of the tax laws, including all rulings that
supersede, revoke, modify, or amend any of those
previously published in the Bulletin. All published rulings
apply retroactively unless otherwise 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
Service field offices, identifying details and information
of a confidential nature are deleted to prevent unwar-
ranted 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 proce-
dures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be consid-
ered, 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.—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
Treasury’s Office of the Assistant Secretary (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 401.—Qualified Pension,
Profit-Sharing, and Stock Bonus
Plans
26 CFR 1.401(a)(4)–1: Nondiscrimination require-
ments of § 401(a)(4)
(Also, §§ 410, 416; 1.410(b)–6, 1.416–1.)
Nondiscrimination and coverage;
rollover.The nondiscrimination, actual
deferral percentage, and actual contribu-
tion percentage tests of a qualified plan
are not affected by a qualified rollover
to that plan prior to the individual who
makes the rollover meeting the plan’s
age and service requirements. In addi-
tion, the rollover will not trigger the
minimum nonintegrated benefit or mini-
mum nonintegrated contribution require-
ments of section 416(c) of the Code.
Rev. Rul. 96–48
ISSUES
(1) If, under a qualified retirement
plan, employees who have not satisfied
the minimum age and service require-
ments for participation for a plan year
are permitted to make ‘‘rollover contri-
butions’’ to the plan’s trust, to what
extent are such employees taken into
account for purposes of the minimum
coverage requirements of § 410(b) of
the Internal Revenue Code and the non-
discrimination requirements of §§ 401-
(a)(4), 401(k)(3), and 401(m)(2)?
(2) Are the employees described in
Issue 1 participants for purposes of the
minimum contribution and benefit re-
quirements of § 416(c)?
FACTS
Employer X maintains Plan A, a
profit-sharing plan qualified under
§ 401(a) that includes a qualified cash
or deferred arrangement, as defined in
§ 1.401(k)–1(a)(4)(i) of the Income Tax
Regulations, and that provides for
matching contributions and nonelective
contributions. Plan A does not accept
after-tax employee contributions. Em-
ployer X consists of Division M and
Division N. Employees of Division M
are eligible to participate in Plan A, i.e.,
to make salary deferral contributions
and receive allocations of matching and
nonelective contributions, when they
have completed one year of service with
Employer X. Employees of Division M
who have satisfied Plan A’s minimum
one year of service requirement are also
permitted to make rollover contributions
to Plan A’s trust. Effective January 1,
1997, Plan A is amended to permit all
employees of Division M, including em-
ployees who have not completed one
year of service, to make rollover contri-
butions to Plan A’s trust at any time
following commencement of employ-
ment. Plan A defines a rollover contribu-
tion as a rollover contribution under
§ 402(c), 403(a)(4), or 408(d)(3)(A)(ii),
or a direct rollover under § 401(a)(31).
LAW AND ANALYSIS (ISSUE 1)
MINIMUM COVERAGE
REQUIREMENTS OF § 410(b)
Section 410(b) describes minimum
coverage requirements that a plan must
satisfy in order to be qualified under
§ 401(a). Under § 1.410(b)–7(c)(1), a
plan that consists of (1) elective contri-
butions under a section 401(k) plan (as
defined in § 1.410(b)–9), (2) employee
and matching contributions under a sec-
tion 401(m) plan (as defined in
§ 1.410(b)–9), and (3) nonelective con-
tributions (which are contributions that
are neither elective, employee, nor
matching contributions) is treated as
three separate plans, each of which must
separately satisfy the requirements of
§ 410(b). Under § 1.410(b)–6(b), if a
plan applies minimum age and service
eligibility conditions permissible under
§ 410(a)(1) (including any entry date
conditions under § 410(b)(4)(C)) and
excludes all employees who do not meet
those conditions from benefiting under
the plan, then all employees who fail to
satisfy those conditions are excludable
employees for purposes of determining
whether the plan satisfies § 410(b).
With respect to the portion of Plan A
that is a section 401(k) plan,
§ 1.410(b)–3(a)(2)(i) provides that an
employee is treated as benefiting under
the plan for a plan year if and only if
the employee is an eligible employee
under the plan for the plan year, as
defined in § 1.401(k)–1(g)(4). In gen-
eral, under § 1.401(k)–1(g)(4), an em-
ployee is an eligible employee only if
the employee is directly or indirectly
eligible to make a cash or deferred
election under the plan for all or a
portion of the plan year.
Section 1.401(k)–1(a)(3)(i) defines a
cash or deferred election as any election
by an employee to have the employer
either provide an amount to the em-
ployee in cash or another taxable benefit
that is not currently available, or con-
tribute an amount to a trust, or provide
an accrual or other benefit, under a plan
deferring the receipt of compensation.
An election to make a rollover contribu-
tion under Plan A is not a cash or
deferred election. Consequently, the em-
ployees who are not eligible to make
salary deferral contributions for a plan
year because they have not met Plan A’s
minimum one year of service require-
ment are not eligible employees within
the meaning of § 1.401(k)–1(g)(4) and
are not treated as benefiting under the
portion of Plan A that is a section
401(k) plan even though they are eli-
gible to make rollover contributions un-
der Plan A.
With respect to the portion of Plan A
that is a section 401(m) plan,
§ 1.410(b)–3(a)(2)(i) provides that an
employee is treated as benefiting under
the plan for a plan year if and only if
the employee is an eligible employee
under the plan for the plan year, as
defined in § 1.401(m)–1(f)(4). In gen-
eral, under § 1.401(m)–1(f)(4), an em-
ployee is an eligible employee only if
the employee is directly or indirectly
eligible to make an employee contribu-
tion or to receive an allocation of
matching contributions under the plan
for the plan year.
Section 1.401(m)–1(f)(6) defines em-
ployee contribution to mean any manda-
tory or voluntary contribution to the
plan that is treated at the time of
contribution as an after-tax employee
contribution. The rollover contributions
that are permitted under Plan A are not
after-tax contributions and therefore are
not employee contributions for purposes
of § 401(m). Consequently, the employ-
ees who are not eligible to receive
allocations of matching contributions for
a plan year because they have not met
Plan A’s minimum one year of service
requirement are not eligible employees
within the meaning of § 1.401(m)–
1(f)(4) and are not treated as benefiting
under the portion of Plan A that is a
section 401(m) plan even though they
are eligible to make rollover contribu-
tions under Plan A.
With respect to the portion of Plan A
that is treated as a separate plan consist-
ing of nonelective contributions,
§ 1.410(b)–3(a)(1) provides that an em-
ployee is treated as benefiting under the
plan for a plan year if and only if the
employee receives an allocation for the
plan year that is taken into account
under § 1.401(a)(4)–2(c)(2)(ii) in deter-
mining whether the plan satisfies the
4

nondiscriminatory amount requirement
of § 1.401(a)(4)–1(b)(2). As provided in
§ 1.401(a)(4)–11(b)(1), rollover contri-
butions are not taken into account in
determining whether a plan satisfies the
nondiscriminatory amount requirement
of § 1.401(a)(4)–1(b)(2). Consequently,
the employees who do not receive allo-
cations of nonelective contributions for
a plan year because they have not
satisfied Plan A’s minimum one year of
service requirement are not treated as
benefiting under the portion of Plan A
that is treated as a separate plan consist-
ing of nonelective contributions even
though they make (or are eligible to
make) rollover contributions under Plan
A.
Thus, the employees who have not
met Plan A’s minimum one year of
service requirement for participation for
a plan year are not treated as benefit-
ing under any of the three portions of
Plan A that must separately satisfy the
requirements of § 410(b) even though
such employees make (or are eligible to
make) rollover contributions under Plan
A. Therefore, under § 1.410(b)–6(b),
these employees are excludable employ-
ees for purposes of applying the require-
ments of § 410(b) to Plan A.
NONDISCRIMINATION
REQUIREMENTS OF §§ 401(a)(4),
401(k)(3), AND 401(m)(2)
In order to be qualified under
§ 401(a), a plan must satisfy the nondis-
crimination requirements of § 401(a)(4).
Among these requirements are the non-
discriminatory amount of contributions
or benefits requirement of § 1.401(a)(4)–
1(b)(2) and the nondiscriminatory avail-
ability of benefits, rights, and features
requirement of § 1.401(a)(4)–1(b)(3).
As provided in § 1.401(a)(4)–
1(b)(2)(ii)(B), the nondiscriminatory
amount requirement that applies to a
section 401(k) plan is the actual deferral
percentage (ADP) test in § 401(k)(3).
The nondiscriminatory amount require-
ment that applies to a section 401(m)
plan is the actual contribution percent-
age (ACP) test in § 401(m)(2). Under
§ 1.401(k)–1(b)(2), only eligible em-
ployees are taken into account in the
ADP test. Likewise, under § 1.401(m)–
1(b)(1), only eligible employees are
taken into account in the ACP test. As
noted above, the employees who are
eligible to make rollover contributions,
but not to make salary deferral contribu-
tions or to receive matching contribu-
tions, under Plan A are not eligible
employees with respect to the portion of
Plan A that is a section 401(k) plan or
the portion of Plan A that is a section
401(m) plan. Thus, these employees are
not included in either the ADP test or
the ACP test.
In general, only employees within the
meaning of § 1.401(a)(4)–12 (‘‘benefit-
ing employees’’) are tested in applying
the nondiscrimination requirements of
§ 401(a)(4) to a plan. Under § 1.401-
(a)(4)–12, an employee is a benefiting
employee for a given plan year for
purposes of the nondiscrimination re-
quirements of § 401(a)(4) if and only if
the employee benefits under the plan for
the plan year within the meaning of
§ 1.410(b)–3. As noted above, employ-
ees do not benefit under a plan within
the meaning of § 1.410(b)–3 merely
because they make (or are eligible to
make) rollover contributions under the
plan, since such contributions are not
taken into account in determining
whether a plan satisfies the nondiscrimi-
natory amount requirement of § 1.401-
(a)(4)–1(b)(2). Thus, employees who
make (or are eligible to make) rollover
contributions under Plan A, but who do
not receive allocations of nonelective
contributions for a plan year, are not
tested in applying the nondiscriminatory
amount of contributions or benefits re-
quirement to the portion of Plan A that
is treated as a separate plan consisting
of nonelective contributions.
The right to make a rollover contribu-
tion is an ‘‘other right or feature’’ under
§ 1.401(a)(4)–4(e)(3)(iii)(I) that must
satisfy the nondiscriminatory availability
of benefits, rights, and features require-
ment of § 1.401(a)(4)–1(b)(3). Under
§ 1.401(a)(4)–4, the tests of whether a
benefit, right, or feature is made avail-
able in a nondiscriminatory manner are
generally applied to benefiting employ-
ees. However, § 1.401(a)(4)–4(d)(2)
also requires a plan to satisfy a separate
test with respect to benefits, rights, and
features provided to nonexcludable em-
ployees with accrued benefits who are
not currently benefiting under the plan
(frozen participants). As noted above,
employees are not benefiting employees
merely because they make (or are eli-
gible to make) rollover contributions
under a plan. In addition, the employees
who make (or are eligible to make)
rollover contributions under Plan A, but
who have not met Plan A’s minimum
one year of service requirement for
participation for a plan year, are not
frozen participants. Thus, with respect to
employees who are not benefiting em-
ployees under Plan A for a plan year
and who are not frozen participants, the
regulations under § 401(a)(4) do not
provide guidance for determining
whether a benefit, right, or feature avail-
able to such employees, such as the
right to make rollover contributions,
satisfies the nondiscriminatory availabil-
ity of benefits, rights, and features re-
quirement of § 1.401(a)(4)–1(b)(3).
Section 1.401(a)(4)–1(d) provides that
the Commissioner may, in revenue rul-
ings, notices, and other guidance pub-
lished in the Internal Revenue Bulletin,
provide any additional guidance that
may be necessary or appropriate in
applying the nondiscrimination require-
ments of § 401(a)(4), including addi-
tional safe harbors and alternative meth-
ods and procedures for satisfying those
requirements. Pursuant to this authority,
the following rule is provided.
A plan must separately satisfy the
nondiscriminatory availability require-
ment of § 1.401(a)(4)–1(b)(3) with re-
spect to each benefit, right, or feature
that is made available under the plan to
employees who do not benefit under the
plan for a plan year within the meaning
of § 1.410(b)–3 and who are not frozen
participants within the meaning of
§ 1.401(a)(4)–4(d)(2). (Such employees
are hereinafter referred to as ‘‘limited
participants’’.) A plan will separately
satisfy this requirement if the benefit,
right, or feature is made available to
limited participants in a manner that,
under all of the relevant facts and
circumstances, does not discriminate sig-
nificantly in favor of nonexcludable em-
ployees who are highly compensated
employees within the meaning of
§ 414(q). For purposes of satisfying this
requirement, whether an employee is
treated as an excludable employee is
determined under § 1.410(b)–6 based on
any minimum age and service require-
ments that are applied under the plan as
a condition on the availability of the
benefit, right, or feature.
If either of the following two safe
harbors is satisfied, a benefit, right, or
feature will be treated as made available
in a manner that does not discriminate
significantly in favor of nonexcludable
employees who are highly compensated
employees. The first safe harbor will
automatically be satisfied if the plan,
within the meaning of § 1.401(a)(4)–12,
meets the following requirements. The
limited participants to whom the benefit,
right, or feature is currently available,
within the meaning of § 1.401(a)(4)–
4(b), are all those, and only those,
5

employees who are excluded from par-
ticipation solely on account of failure to
satisfy the plan’s minimum age and
service requirements, and the benefit,
right, or feature also satisfies the effec-
tive availability requirement of
§ 1.401(a)(4)–4(c). Thus, a plan would
automatically satisfy this safe harbor if
it allowed rollovers by all employees
who will participate once they satisfy
the plan’s minimum age and service
rules (and not by any other employees
who are excluded from participation in
the plan). A plan will not fail to satisfy
this design-based safe harbor merely
because it limits the availability of the
benefit, right, or feature to those em-
ployees who have satisfied any lesser
uniform minimum age and service re-
quirements. The second safe harbor will
be satisfied if the benefit, right, or
feature is one that will satisfy
§ 1.401(a)(4)–4(b) and (c) either (1)
when the benefit, right, or feature is
treated as available only to employees
who are limited participants (i.e., as if it
were not available to other employees to
whom the benefit, right, or feature is, in
fact, available) or (2) when the benefit,
right, or feature is treated as available to
both limited participants and all other
employees to whom the benefit, right, or
feature is, in fact, available under the
plan.
Applying this rule to Plan A, the right
of employees who have not satisfied
Plan A’s minimum one year of service
requirement for participation for a plan
year to make rollover contributions must
separately satisfy the nondiscriminatory
availability requirement of § 1.401(a)-
(4)–1(b)(3). The limited participants to
whom the right to make rollover contri-
butions under Plan A is currently avail-
able, within the meaning of § 1.401(a)-
(4)–4(b), are all those, and only those,
employees who are excluded from par-
ticipation solely on account of failure to
satisfy the plan’s minimum one year of
service requirement, and, absent other
relevant facts and circumstances, the
right of such limited participants to
make rollover contributions also satisfies
the effective availability requirement of
§ 1.401(a)(4)–4(c). (The right to make
rollover contributions does not fail to be
currently and effectively available to an
employee merely because the employee
does not have an amount that is eligible
to be rolled over.) Plan A thus satisfies
the requirements of the design-based
safe harbor described above. Plan A is
therefore treated as separately satisfying
the nondiscriminatory availability re-
quirement of § 1.401(a)(4)– 1(b)(3)
with respect to the right of employees
who have not satisfied Plan A’s mini-
mum one year of service requirement
for participation for a plan year to make
rollover contributions.
HOLDINGS (ISSUE 1)
1. Plan A is not precluded from treat-
ing as excludable, for purposes of
§ 410(b), all employees who have not
completed one year of service (as re-
quired by the plan for participation)
merely because Plan A permits rollover
contributions to be made by such em-
ployees.
2. Employees who are eligible to
make rollover contributions, but who
have not satisfied Plan A’s minimum
one year of service requirement for
participation for a plan year, are not
taken into account in applying the ADP
test in § 401(k)(3) to the portion of
Plan A that is a section 401(k) plan, the
ACP test in § 401(m)(2) to the portion
of Plan A that is a section 401(m) plan,
or the nondiscrimination in amount of
contributions or benefits requirement un-
der § 401(a)(4) to the portion of Plan A
that consists of nonelective contribu-
tions.
3. Plan A must separately satisfy the
nondiscriminatory availability require-
ment of § 1.401(a)(4)–1(b)(3) with re-
spect to the right of employees who
have not satisfied the minimum one year
of service requirement for participation
for a plan year to make rollover contri-
butions to the plan. Plan A is treated as
separately satisfying this requirement
because it satisfies the requirements of
the design-based safe harbor described
in this revenue ruling.
LAW AND ANALYSIS (ISSUE 2)
Section 416(c) generally requires each
non-key employee who is a participant
in a defined benefit or defined contribu-
tion plan to accrue a minimum benefit
or receive a minimum contribution un-
der the plan in any year the plan is
top-heavy. Section 1.416–1, Q&A M–4
and Q&A M–10, describes which em-
ployees must receive the top-heavy
minimums. In general, each non-key
employee who is a participant in a
top-heavy plan must receive the mini-
mum if, in the case of a defined contri-
bution plan, the participant has not sepa-
rated from service by the end of the
plan year, or, in the case of a defined
benefit plan, the participant has at least
1,000 hours of service for the accrual
computation period. Non-key employees
may not fail to receive the top-heavy
minimum by virtue of being excluded
from participation because their com-
pensation is less than a stated amount or
because of failure to make mandatory
employee contributions or elective con-
tributions.
Employees who have not satisfied the
minimum age and service requirements
for plan participation for a plan year are
not participants for purposes of § 416(c)
merely because they make (or are eli-
gible to make) rollover contributions
under a plan. Such employees, therefore,
are not required to accrue minimum
benefits or receive minimum allocations
for years in which a plan is top-heavy.
HOLDING (ISSUE 2)
For purposes of the minimum contri-
bution and benefit requirements of
§ 416(c), employees are not participants
for a plan year merely because they
make (or are eligible to make) rollover
contributions under Plan A.
DRAFTING INFORMATION
The principal author of this revenue
ruling is James Flannery of the Em-
ployee Plans Division. For further infor-
mation regarding this revenue ruling,
please contact the Employee Plans Divi-
sion’s taxpayer assistance telephone ser-
vice between the hours of 1:30 p.m. and
4 p.m. Eastern Time, Monday through
Thursday, by calling (202) 622–6074/
6075, or Mr. Flannery on (202) 622–
6214. (These telephone numbers are not
toll-free numbers.)
Section 410.—Minimum Coverage
Requirements
26 CFR 1.410(b)–6: Excludable employees.
Whether an employee who has not satisfied the
minimum age and service requirements for partici-
pation in a plan that is qualified under § 401(a) of
the Internal Revenue Code, but who has the right
to make a rollover contribution to the plan’s trust,
is an excludable employee for purposes of apply-
ing the minimum coverage requirements of
§ 410(b) to the plan. See Rev. Rul. 96–48,
page 4.
Section 411.—Minimum Vesting
Standards
26 CFR 1.411(a)–11: Restriction and valuation of
distributions.
Participant consent; significant det-
riment.Based on the facts and circum-
stances described in the revenue ruling,
the loss of the right to choose among a
6

broad range of investment alternatives
with materially different risk and return
characteristics is a significant detriment
that invalidates a participant’s consent to
an immediate distribution.
Rev. Rul. 96–47
ISSUE
Does a defined contribution plan that
allows participants who have not termi-
nated employment to direct the invest-
ment of their accounts and that offers a
broad range of investment choices sat-
isfy the consent requirements of
§ 411(a)(11) of the Internal Revenue
Code if the accounts of former employ-
ees who do not consent to an immediate
distribution of their account balances are
required to be invested in a money
market fund?
FACTS
Plan A, a profit-sharing plan, allows
each participant who has not terminated
employment to choose the manner in
which his or her account is invested
among the plan’s investment alterna-
tives. The choices include a broad range
of investment alternatives, including a
money market fund and several other
funds with materially different risk and
return characteristics.
Plan A provides that a participant who
terminates employment prior to normal
retirement date will receive his or her
vested account balance at normal retire-
ment date unless the participant elects,
upon termination of employment or any
time thereafter, to receive an immediate
distribution of the vested account balance.
Plan A also provides that upon termina-
tion of employment the participant may
no longer choose among investment alter-
natives and the participant’s account will
automatically be invested in the money
market fund until distributed.
LAW AND ANALYSIS
Section 411(a)(11) sets forth consent
requirements that must be satisfied with
respect to certain distributions in order
for a plan to be qualified under
§ 401(a). Under § 411(a)(11), if the
present value of a participant’s
nonforfeitable benefit exceeds $3,500,
the plan must provide that the benefit is
not immediately distributable without
the participant’s consent.
Section 1.411(a)–11(c)(2)(i) of the In-
come Tax Regulations provides that con-
sent to a distribution is not valid if,
under the plan, a significant detriment is
imposed on any participant who does
not consent to the distribution. That
regulation further provides that whether
or not a significant detriment is imposed
is determined based on the particular
facts and circumstances.
Based on the facts and circumstances
applicable to Plan A, the loss of the
right to choose among a broad range of
investment alternatives with materially
different risk and return characteristics
is a significant detriment, within the
meaning of § 1.411(a)–11(c)(2)(i), that
is imposed by Plan A on a participant
who does not consent to a distribution.
Therefore, Plan A permits an immediate
distribution without a valid consent.
HOLDING
Plan A fails to satisfy § 411(a)(11)
because a participant’s benefit is imme-
diately distributable under the plan with-
out the participant’s valid consent.
EFFECT OF PRIOR
DETERMINATION LETTER
A plan that has received a determina-
tion letter on a provision inconsistent
with this revenue ruling, and that satis-
fies the conditions for reliance set forth
in section 22.04(1) through (4) of Rev.
Proc. 96–6, 1996–1 I.R.B. 151, may
continue to rely on that determination
letter for the period described in Rev.
Proc. 96–6. Such a plan, however, is not
entitled to the extended reliance provi-
sions of Rev. Proc. 89–9, 1989–1 C.B.
780, and Rev. Proc. 89–13, 1989–1 C.B.
801, as modified by Rev. Proc. 93–9,
1993–1 C.B. 474, and Rev. Proc. 93–
39, 1993–2 C.B. 513, with respect to the
guidance in this revenue ruling. A plan
that is amended to comply with this
revenue ruling will not lose its other-
wise applicable extended reliance pe-
riod.
DRAFTING INFORMATION
The principal author of this revenue
ruling is James Flannery of the Em-
ployee Plans Division. For further infor-
mation regarding this revenue ruling,
please contact the Employee Plans Divi-
sion’s taxpayer assistance telephone ser-
vice between the hours of 1:30 p.m. and
4 p.m. Eastern Time, Monday through
Thursday, by calling (202) 622–6074/
6075, or Mr. Flannery on (202) 622–
6214. (These telephone numbers are not
toll-free numbers.)
Section 416.—Special Rules for
Top-Heavy Plans
26 CFR 1.416–1: Questions and answers on top-
heavy plans.
Whether an employee who has not satisfied the
minimum age and service requirements for partici-
pation in a plan that is qualified under § 401(a) of
the Internal Revenue Code, but who has the right
to make a rollover contribution to the plan’s trust,
is a participant for purposes of the minimum
contribution or benefit requirements of § 416(c).
See Rev. Rul. 96–48, page 4.
7

Part II. Treaties and Tax Legislation
Subpart A.—Tax Conventions
FIJI
REPUBLIC OF FIJI
MINISTRY OF
FOREIGN AFFAIRS
SUVA
AUGUST 12, 1996
The Ministry of Foreign Affairs of the
Government of the Republic of Fiji
presents its compliments to the Embassy
of the United States of America and has
the honour to refer to the latter’s Note
No. 64 of June 19, 1996, the text of
which reads as follows:
‘‘The Embassy of the United States
of America presents its compliments
to the Ministry of Foreign Affairs of
the Government of the Republic of
Fiji and has the honour to propose
that the two governments conclude an
agreement to exempt from income tax
on a reciprocal basis, income derived
by residents of the other country from
the international operation of ships
and aircraft. The terms of the agree-
ment are as follows:
The Government of the United
States of America, in accordance with
section 872(B) and 883(A) of the
Internal Revenue Code, agrees to ex-
empt from tax gross income derived
from the international operation of
ships or aircraft by individuals who
are residents of Fiji (other than
United States citizens) and corpora-
tions which are incorporated in Fiji.
The Government of the Republic of
Fiji agrees to exempt from tax gross
income derived from the international
operation of ships or aircraft by indi-
viduals who are residents of the
United States of America (other than
Fiji citizens) and corporations which
are incorporated in the United States
of America.
In the case of a Fiji corporation,
the exemption shall apply only if the
corporation meets one of the follow-
ing conditions:
(I) The corporation’s stock is pri-
marily and regularly traded on an
established securities market in Fiji,
another country which grants an
equivalent exemption to U.S. cor-
porations, or the United States,
OR
(II) More than 50 percent of the
value of the corporation’s stock is
owned directly or indirectly by in-
dividuals who are residents of Fiji
or of another foreign country which
grants an equivalent exemption to
U.S. corporations or by a corpora-
tion organized in a country which
grants an equivalent exemption to
U.S. corporations and whose stock
is primarily and regularly traded on
an established securities market in
that country, another country which
grants an equivalent exemption to
U.S. corporations, or the United
States.
For the purpose of exemption from
the U.S. tax, Subparagraph (II) will
be considered to be satisfied if the
corporation is a ‘‘controlled foreign
corporation’’ under the Internal Rev-
enue Code.
In the case of a U.S. corporation,
the exemption shall apply only if the
corporation meets the ownership re-
quirements under Fiji law.
In this agreement:
(A) The terms ‘‘contracting state’’,
and ‘‘other contracting state’’ mean
the Sovereign Democratic Republic
of Fiji or the United States of
America, the governments of which
have concluded this agreement.
(B) Gross income includes all in-
come derived from international
operation of ships or aircraft, in-
cluding:
(I) Income from the rental on a
full (time or voyage) basis of
ships or aircraft used in interna-
tional transport;
(II) Income from the rental on a
bareboat basis of ships or aircraft
used in international transport;
(III) Income from the rental of
containers and related equipment
used in international transport
that is incidental to income from
the international operation of
ships and aircraft; and
(IV) Gains from the sale or
other alienation of ships or air-
craft used in international trans-
port derived by a person prima-
rily engaged in the international
operation of ships or aircraft.
In the application of this agreement
by a contracting state, any term not
defined in this agreement shall, unless
the context otherwise requires, have
the meaning which it has under the
laws of that state relating to the taxes
to which this agreement applies.
The Embassy proposes that if the
foregoing is acceptable to the Govern-
ment of the Republic of Fiji, this note
and the Ministry’s note in reply shall
constitute an agreement. This agree-
ment shall enter into force on the date
of the Ministry’s note in reply and
shall have effect in respect of income
derived on or after January 1, 1996,
and during all prior years for which
the relevant statute of limitations re-
mains open on that date.
This agreement shall continue into
force until the Government of either
contracting state gives written notice
of termination of the agreement to the
Government of the other contracting
state through the diplomatic channel.
The Embassy of the United States
of America avails itself of this oppor-
tunity to renew to the Ministry of
Foreign Affairs of the Government of
the Republic of Fiji the assurances of
its highest consideration.’’
The Ministry has the further honour
to confirm that the Government of the
Republic of Fiji accepts that the Embas-
sy’s above-quoted Note and this Note in
reply from the Ministry shall constitute
an agreement between the two govern-
ments to exempt from income tax on a
reciprocal basis, income derived by resi-
dents of the other country from the
international operation of ships and air-
craft.
The Ministry of Foreign Affairs of the
Government of the Republic of Fiji
avails itself of this opportunity to renew
to the Embassy of the United States of
America the assurances of its highest
consideration.
8

Part III. Administrative, Procedural, and Miscellaneous
Delegation Order No. 155 (Rev. 4)
Delegation of Authority
AGENCY: Internal Revenue Service
ACTION: Delegation of Authority
SUMMARY: This delegation order is
revised to give authority to sign recom-
mendation letters for nonsuit settlements
to the Regional Counsel and District
Counsel in the field and to the Deputy
Associate Chief Counsel and Assistant
Chief Counsel in the National Office. In
addition, it has been expanded in scope
to cover nonrefund matters. The text of
the delegation order appears below.
EFFECTIVE DATE: August 15, 1996.
FOR FURTHER INFORMATION CON-
TACT: Sara M. Coe, CC:DOM:FS:PROC,
Room 4135, 1111 Constitution Avenue,
NW, Washington, DC 20224, (202) 622–
7940 (not a toll-free call).
Recommendation Letters to the De-
partment of Justice Concerning
Settlement Offers Covering Persons
or Periods Not in Suit Authority:For
matters under their respective jurisdic-
tions, to sign recommendation letters to
the Department of Justice concerning
Settlement Offers related to pending
refund cases or any other cases or
matters referred to the Department of
Justice for prosecution or defense with
respect to persons or periods not in suit.
Delegated to:
Chief Counsel
Associate Chief Counsel
Deputy Associate Chief Counsel
Authority:For matters under their
respective jurisdictions, to sign recom-
mendation letters concerning Settlement
Offersrelatedto pending refund cases
or any other cases or matters referred to
the Department of Justice for prosecu-
tion or defense with respect to: (a)
periods not in suit ending prior to the
date of the resulting settlement agree-
ment; (b) tax consequences for periods
not in suit ending after the date of the
settlement agreement that necessarily re-
sult from the settlement of the periods
in suit; (c) issues conceded in full by
the taxpayer for periods not in suit
ending after the date of the settlement
agreement; (d) persons not in suit for
the periods described in (a); and (e)
persons not in suit for the items de-
scribed in (b) and (c).
Delegated to:
Regional Counsel
District Counsel
Assistant Chief Counsel
In exercising both of the above au-
thorities, the advice of the Chief of
Appeals and/or District Director with
jurisdiction over the nonsuit persons or
periods should be obtained and consid-
ered.
Redelegation:The authority del-
egated herein may not be redelegated.
Sources of Authority:26 CFR
301.7122–1, 26 CFR 301.7701–9. To the
extent that authority previously exer-
cised consistent with this order may
require ratification, it is hereby approved
and ratified. This order supersedes Del-
egation Order No. 155 (Rev. 3), effec-
tive October 1, 1991.
Dated: August 15, 1996.
Michael P. Dolan,
Deputy Commissioner.
(Filed by the Ofice of the Federal Register on
September 5, 1996, 8:45 a.m., and published in
the issue of the Federal Register for September 6,
1996, 61 F.R. 47235)
9

Part IV. Items of General Interest
Request for Comments on the
Effect Under Rev. Proc. 96–47 of a
Waiver or Reimbursement of an
Expense of a Regulated Investment
Company.
Announcement 96–95
Rev. Proc. 96–47, 1996–39 I.R.B. 10,
describes certain situations in which
distributions made to shareholders of a
regulated investment company (RIC)
may vary and nevertheless be deductible
as dividends under § 562 of the Internal
Revenue Code. The Service understands
that in some instances a person may
waive or reimburse an expense of a RIC
and the benefit of the waiver or reim-
bursement may be allocated to specific
shares. In addition, various groups of
shares may be allocated different in-
vestment advisory fees under a perfor-
mance-based fee contract. This an-
nouncement solicits public comment on
what effect, if any, these allocations
should have under §§ 561 and 562.
BACKGROUND
Section 852(b)(2)(D) allows a RIC a
deduction for dividends paid (as defined
in § 561 with certain modifications).
Section 561 defines the deduction for
dividends paid and applies the rules of
§ 562 to determine which dividends are
eligible for the deduction for dividends
paid. Section 562(c) provides that the
amount of any distribution is not consid-
ered a dividend for purposes of comput-
ing the dividends paid deduction under
§ 561 unless the distribution is pro rata,
does not prefer any share of stock of a
class over any other share of stock of
that same class, and does not prefer one
class of stock over another class except
to the extent that one class is entitled
(without reference to waivers of their
rights by shareholders) to the preference.
The legislative history to the 1986
amendment to section 562(c) explains
that any difference in the investment
advisory fee charged to shares of a RIC
results in a preference.See2 H.R. Conf.
Rep. No. 841, 99th Cong., 2d Sess.
II–246,reprinted at1986–3 (Vol. 4)
C.B. 246.
Many RICs have issued groups of
shares that represent interests in the
same portfolio of securities but have
different arrangements for shareholder
services or the distribution of shares or
both (Qualified Groups). Because the
fees for these arrangements and services
may vary, shareholders with equivalent
investments in the same fund may re-
ceive different distributions. To permit
open-end management investment com-
panies to issue these groups of shares,
the Securities and Exchange Commis-
sion has adopted Rule 18f–3, 17 C.F.R.
270.18f–3, under the Investment Com-
pany Act of 1940, 15 U.S.C. 80a–1 to
–64.
Under Rev. Proc. 96–47, variations in
distributions to shareholders of different
Qualified Groups that exist solely as a
result of the allocation of expenses in
accordance with the revenue procedure
do not prevent the distributions from
being dividends under § 562. Occasion-
ally, the person providing services to a
RIC waives some or all of its fees for
those services. In addition, occasionally
a person other than the person providing
particular services reimburses the RIC
for some or all of the fees that the RIC
incurred for those services. Rev. Proc.
96–47 is silent as to the treatment of
distributions to shareholders that differ
in part as a result of the allocation of
the benefit of a waiver or reimburse-
ment.
Rule 18f–3 also permits a group of
shares to be allocated disproportionate
advisory fees to the extent that any
difference in amount allocated ‘‘is the
result of the application of the same
performance fee provisions in the advi-
sory contract of the company to the
different investment performance [net of
other expenses]’’ of each group. Rev.
Proc. 96–47 does not apply to variations
in distributions that are due to
performance-based advisory fees.
REQUEST FOR COMMENTS
Where there is an allocation of a
waiver or reimbursement or of differing
advisory fees under a performance-based
contract, the Service requests comments
on what effect, if any, the allocation
should have under §§ 561 and 562. In
addition to other matters that commenta-
tors are interested in addressing, com-
ments on the following questions may
be particularly helpful:
(1) What are the common situations
in which expenses of a RIC are waived
or reimbursed? In what situations, if
any, is a waiver or reimbursement a
legal necessity?
(2) What restrictions, if any, limit the
ability of a person to waive or reim-
burse an expense of a RIC?
(3) What accounting methods are
used to determine the proper allocation
of a waiver or reimbursement?
(4) Should the benefit of a waiver or
reimbursement of an expense be re-
quired to be allocated in a manner that
does not differ from how the unwaived
expense would have been allocated?
(5) Does the answer to (4) above
vary depending on whether a waiver or
reimbursement is made by a person
unrelated to the RIC’s investment advi-
sor, by a person related to the RIC’s
investment advisor, or by the RIC’s
investment advisor itself?
(6) For purposes of §§ 561 and 562,
what is the appropriate treatment of
variations in distributions that arise as a
result of allocation of the investment
advisory fee under a contract that com-
pensates the advisor on the basis of
applying the same performance-fee pro-
visions to different groups of shares?
METHOD OF MAKING COMMENTS
Comments should be submitted in
writing on or before November 22, 1996
to: CC:DOM:CORP:R (Announcement
96–95), Room 5226, Internal Revenue
Service, POB 7604, Ben Franklin Sta-
tion, Washington, DC 20044. In the
alternative, comments may be hand de-
livered to CC:DOM:CORP:R (An-
nouncement 96–95), Courier’s Desk, In-
ternal Revenue Service, 1111 Consti-
tution Ave., NW, Washington, DC. Alter-
natively, taxpayers may submit com-
ments electronically via the IRS Internet
site at http://www.irs.ustreas.gov/prod/
tax_regs/comments.html. All comments
will be available for public inspection
and copying.
DRAFTING INFORMATION
The principal author of this announce-
ment is Arnold Golub of the Office of
Assistant Chief Counsel (Financial Insti-
tutions and Products). For further infor-
mation regarding this announcement,
contact Mr. Golub at (202) 622–3950
(not a toll-free call).
Public Hearing on Consolidated
Returns—Limitations on the Use of
Certain Losses and Deductions;
Correction
Announcement 96–100
AGENCY: Internal Revenue Service
(IRS), Treasury.
101996–40 I.R.B.

ACTION: Correction to the notice of
public hearing.
SUMMARY: This document contains a
correction to the notice of public hear-
ing (CO–24–96 [1996–30 I.R.B. 22])
which was published in the Federal
Register on Thursday, June 27, 1996 (61
FR 33393). The notice of public hearing
generally relates to the carryover and
carryback of losses to consolidated and
separate return years.
FOR FURTHER INFORMATION CON-
TACT: David Friedel (202) 622–7550
(not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
The notice of public hearing that is
the subject of this correction is under
section 1502 of the Internal Revenue
Code.
Need for Correction
As published, the notice of public
hearing (CO–24–96) contains an error
which may prove to be misleading and
is in need of clarification.
Correction of Publication
Accordingly, the publication of the
notice of public hearing (CO–24–96)
which is the subject of FR Doc. 96–
15826 is corrected as follows:
On page 33394, column 2, in the
preamble, under the heading “Comments
and Public Hearing”, in the second
paragraph, line 2, the language ‘‘for
Monday, September 16, 1996, at 10’’ is
corrected to read “for Thursday, October
17, 1996, at 10”.
Cynthia E. Grigsby,
Chief, Regulations Unit,
Assistant Chief Counsel (Corporate).
(Filed with the Office of the Federal Register on
September 10, 1996, 8:45 a.m., and published in
the issue of the Federal Register for September 11,
1996, 61 F.R. 47838)
Foundations Status of Certain
Organizations
Announcement 96–101
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:
Alliance for Educational Enhancement,
Shreveport, LA
Alternative Coping Resources Inc.,
Jacksonville, FL
America Family Center Inc., Miami, FL
American Institute for Medieval Studies
Inc., Gainesville, FL
American Legal Ethics Institute Inc.,
Charleston, SC
American Medical Relief Association
Incorporated, Winter Haven, FL
Americare Research Institute Inc.,
Miami, FL
Anchors Aweigh Club Inc., Key West,
FL
Animal Aid for Vermilion Area Inc.,
Abbeville, LA
Artist Foundation of Broward Inc.,
Hollywood, FL
Arts Alliance Center Inc., Orange Park,
FL
Arts Renaissance, Minneapolis, MN
Asian American AIDS Foundation,
Chicago, IL
Assistcare, Inc., West Palm Beach, FL
Association of Workers To Acquire
Resources for Education, Port Royal,
SC
Astronomical Society of Bay County,
Panama City, FL
Atlanta Center for Torah Inc., Ft.
Lauderdale, FL
Awareness Information Discovery
Services Inc., Sunrise, FL
Baby Love Pregnancy Crisis Center
Inc., Spring Hill, FL
Basinger Ministries Inc., Okeechobee,
FL
Baton Rouge National Senior Sports
Classic Inc., Baton Rouge, LA
Bayou Council on Promoting Esteem
Inc., Thibodaux, LA
Beaches Sea Turtle Patrol Inc.,
Jacksonville Beach, FL
Beaufort Alliance for the Mentally Ill,
Port Royal, SC
B. E. Enterprenue, Nashatah, WI
Boca Raton Police Athletic League Inc.,
Boca Raton, FL
Brevard Youth Soccer League Inc.,
Merritt Island, FL
Cameron Cares Inc. Concerned Adults
Responding to the Extra Special,
Cameron, LA
Center for Cetacean Studies Inc.,
Madeira Beach, FL
Charleston Leadership Foundation Inc.,
Charleston, SC
Children of the King, Conway, SC
Childrens Academy Daycare Center,
Jackson, MS
Childrens Home Literacy Council Inc.,
Ft. Myers, FL
Christian Action Services Association
Inc., Orange Park, FL
Christian Fellowship Alive Ministries
Inc., Lakeland, FL
Christian Golfers International Inc.,
Largo, FL
Christian Missionary Research &
Advocacy Association Inc.,
Gainesville, FL
Citizens for Water Inc., Deleon Springs,
FL
College Assist Inc., West Palm Beach,
FL
College Hill Homes Resident
Management Corp, Tampa, FL
Columbia Classical Ballet Company,
Columbia, SC
Combat and Transport Aircraft Museum,
Broussard, LA
Community and Friends Inc.,
Charleston, SC
Company Inc. Westlake Powers
Theatrical Productions, Ft. Myers, FL
Connections for At-Risk Runaway and
Homeless Youth, Columbia, SC
Cooper City Civic Association Inc.,
Cooper City, FL
Cornerstone Family Counseling Center
Inc., Shreveport, LA
Covenant Life Family Ministries Inc.,
Panama City, FL
Crime Busters, New Orleans, LA
Crown Foundation Inc., Gainesville, FL
D’Iberville Babe Ruth League Inc.,
D’Iberville, MS
Day and Nite Lovin Care Center of
Laurel Inc., Laurel, MS
Dayspring Maternity Home Inc.,
Melbourne, FL
Dennis Ministries Inc., Ocala, FL
Dispair to Victory Ministries, Baton
Rouge, LA
Dominican Republic Educational
Foundation Inc., Port Charlotte, FL
Drew Kids Inc., West Palm Beach, FL
Drugs Off the Street, New Orleans, LA
East Hillsborough Law Enforcement
Appreciation Association Inc., Plant
City, FL
111996–40 I.R.B.

El-Shadi Literacy Center, Greenville,
MS
Elijah House of Florida Inc., Sanibel,
FL
Faith in Children, Oceanside, CA
Faith Refuge, Inc., Shreveport, LA
Feed My Lambs Inc., Deland, FL
Fibromyalgia Polymyalgia Outreach of
Polk County Inc., Lakeland, FL
1st New York Volunteer Engineer
Regiment Association, Jacksonville,
FL
Florence Family Fling Inc., Florence,
SC
Florida Adoption & Childrens Center
Inc., Miami, FL
Florida AIDS Foundation Inc., Miami,
FL
Florida Association for the Gifted Inc.,
Fort Lauderdale, FL
Florida Association of Suicidology Inc.,
Boca Raton, FL
Florida District 10 Little League
Baseball Inc., Ft. Lauderdale, FL
Florida Events for the Disadvantaged
Inc., Orlando, FL
Florida Fellowship Inc., Tallahassee, FL
Florida School of Addiction Studies
Alumni Association Inc., Titusville,
FL
Florida Womens Foundation Inc., San
Antonio, FL
Floridawatch Institute Inc., Gainesville,
FL
Foundation for Civic Development Inc.,
Picayune, MS
Free Enterprise Partnership of Florida
Inc., Jacksonville, FL
Friends of the Cultural Center Inc.,
Chalmette, LA
Gainesville Area Sports Support Inc.,
Gainesville, FL
Gateway to Heaven Inc., Morton, MS
Gibbs-Puckett Book Foundation
Incorporated, Winter Park, FL
GMAA Grover Loening Scholarship
Fund Inc., Sunrise, FL
Gods Community Out Reach Center
Inc., Miami, FL
Gospel Truth Foundation Inc., Metairie,
LA
Greater Homestead Florida City
Chamber of Commerce Charitable
Trust Inc., Homestead, FL
Greater Miami Haitian Federation Inc.,
Miami, FL
Green Horizon Land Trust Incorporated,
Lake Wales, FL
Gretna Food Distribution Center Inc.,
Gretna, LA
Heartbreaker Boxing of America Inc.,
Daytona Beach, FL
Hollywood Performing Arts Inc.,
Hallandale, FL
Hope for the Deaf, Inc., Petal, MS
Hospital Jesus is the Rock and
Development Center Inc., Miami, FL
Humane Society of Walton County
Florida Inc., Defuniak, FL
Inter-Faith Mass Choir Incorporated,
Grenada, MS
International Genetic Epidemiology
Society Inc., New Orleans, LA
Irish Politicians Foundation Inc.,
Pensacola, FL
Jazz Society of Baton Rouge, Baton
Rouge, LA
Jehovah Shalom Personal Care Home
Inc., Jackson, MS
Jennie Moore Relief Fund, Mt. Pleasant,
SC
John Mark Ministries Inc., Fernandina
Beach, FL
Jordan Park Resident Management
Corporation, St. Petersburg, FL
Lifeline Foundation Inc., Jersey City, NJ
Life Through the Word Inc., Paterson,
NJ
Lindenwold Baseball Athletic
Association, Lindenwold, NJ
Listening Ear Inc., Harrisonburg, VA
Little Lambs Day Care Center Plus Inc.,
Weehawken, NJ
Love All People Outreach Ministry
Incorporated, Edgewater, NJ
Lucretia Mott Center Inc., Philadelphia,
PA
Major Thomas B. McGuire Jr
Foundation Inc., Woodbury, NJ
Mahima Inc., Lewisdale, MD
Manassas Society for the Preservation of
Black Heritage Inc., Manassas, VA
Manufactured Housing Educational
Institute Inc., Arlington, VA
Mario B. Magno Scholarship Fund Inc.,
Washington, DC
Med Insight Incorporated, St. Cloud,
MN
Paraclete Ministries Inc., Eustis, FL
Parent Connection of Tampa Bay Inc.,
Brandon, FL
Park Way Housing Inc., Jacksonville, FL
Zimbabwe Child Survival &
Development Foundation,
Washington, DC
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 contribu-
tors may thereafter rely upon such rul-
ing or determination letter as provided
in section 1.509(a)–7 of the Income Tax
Regulations. It is not the practice of the
Service to announce such revised classi-
fication of foundation status in the Inter-
nal Revenue Bulletin.
Modifications of Debt Instruments;
Correction
Announcement 96–102
AGENCY: Internal Revenue Service
(IRS), Treasury
ACTION: Correction to final regula-
tions.
SUMMARY: This document contains a
correction to final regulations (T.D.
8675 [1996–29 I.R.B. 5]) which were
published in theFederal Registeron
Wednesday, June 26, 1996 (61 FR
32926). The final regulations relate to
the modification of debt instruments.
EFFECTIVE DATE: September 24,
1996
FOR FURTHER INFORMATION CON-
TACT: Thomas J. Kelly, (202) 622–
3930 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
The final regulations that are the
subject of this correction are under
section 1001 of the Internal Revenue
Code.
Need for Correction
As published, the final regulations
(T.D. 8675) contain an error which may
prove to be misleading and are in need
of clarification.
Correction of Publication
Accordingly, the publication of the
final regulations (T.D. 8675) which are
the subject of FR Doc. 96–15830 is
corrected as follows:
§ 1.1001–3 [Corrected]
On page 32935, column 3, § 1.1001–3
(g), paragraph (iv) of Example 5., line 8,
the language ‘‘(e)(4)(i)(E) of this section
and is a significant’’ is corrected to read
‘‘(e)(4)(i)(C) of this section and is a
significant’’.
Cynthia E. Grigsby,
Chief, Regulations Unit,
Assistant Chief Counsel (Corporate).
(Filed by the Office of the Federal Register on
September 10, 1996, 8:45 a.m., and published in
the issue of the Federal Register for September 11,
1996, 61 F.R. 47822)
121996–40 I.R.B.

Consolidated Returns—Limitations
on the Use of Certain Losses and
Deductions; Correction
Announcement 96–103
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Correction to the final and
temporary regulations.
SUMMARY: This document contains
corrections to the final and temporary
regulations (T.D. 8677 [1996–30 I.R.B.
7]) which were published in theFederal
Registeron Thursday, June 27, 1996
(61 FR 33321). The final and temporary
regulations relate to the deductions and
losses of members and also to the
carryover and carryback of losses to
consolidated and separate return years
and to the built-in deduction rules.
EFFECTIVE DATE: June 27, 1996
FOR FURTHER INFORMATION CON-
TACT: David Friedel (202) 622–7550
(not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
The final and temporary regulations
that are the subject of these corrections
are under section 1502 of the Internal
Revenue Code.
Need for Correction
As published, the final and temporary
regulations (T.D. 8677) contain errors
which may prove to be misleading and
are in need of clarification.
Correction of Publication
Accordingly, the publication of the
final and temporary regulations (T.D.
8677) which are the subject of FR Doc.
96–15823 is corrected as follows:
1. On page 33322, column 3, under
the authority citation for Part 1, the
entry ‘‘Section 1.1502–1T also issued
under 26 U.S.C. 1502’’ is corrected to
read ‘‘Section 1.1502–1 also issued un-
der 26 U.S.C. 1502’’.
2. On page 33322, column 3, under
the authority citation for Part 1, the
entry ‘‘Section 1.1502–79T also issued
under 26 U.S.C. 1502’’ is corrected to
read ‘‘Section 1.1502–79 also issued
under 26 U.S.C. 1502’’.
Cynthia E. Grigsby,
Chief, Regulations Unit,
Assistant Chief Counsel (Corporate).
(Filed by the Office of the Federal Register on
September 10, 1996, 8:45 a.m., and published in
the issue of the Federal Register for September 11,
1996, 61 F.R. 47821)
131996–40 I.R.B.

Announcement of the Disbarment, Suspension, and Consent to Voluntary
Suspension of Attorneys, Certified Public Accountants, Enrolled Agents and
Enrolled Actuaries From Practice Before the Internal Revenue Service
Under Section 330, Title 31 of the
United States Code, the Secretary of the
Treasury, after due notice and opportu-
nity for hearing, is authorized to sus-
pend or disbar from practice before the
Internal Revenue Service any person
who has violated the rules and regula-
tions governing the recognition of attor-
neys, certified public accountants, en-
rolled agents or enrolled actuaries to
practice before the Internal Revenue
Service.
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 under suspension from practice be-
fore the Internal Revenue Service.
To enable attorneys, certified public
accountants, enrolled agents and en-
rolled actuaries to identify such dis-
barred or suspended practitioners, 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 the date of disbarment or
period of suspension. This announce-
ment will appear in the weekly Bulletin
for five successive weeks or as long as
it is practicable for each attorney, certi-
fied public accountant, enrolled agent or
enrolled actuary so suspended or dis-
barred and will be consolidated and
published in the Cumulative Bulletin.
After due notice and opportunity for
hearing before an administrative law
judge, the following individuals have
been disbarred from further practice be-
fore the Internal Revenue Service:
NameAddressDesignationEffective Date
Styvaert, RichardSan Diego, CACPAJuly 5, 1996
Davis Jr., George L.Washington, D.C.Enrolled AgentAugust 15, 1996
Under 31 Code of Federal Regula-
tions, Part 10, an enrolled agent in order
to avoid the institution or conclusion of
a proceeding for his disbarment or sus-
pension from practice before the Internal
Revenue Service, may offer his resigna-
tion from such practice. The Director of
Practice, in his discretion, may suspend
an enrolled agent 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 enrolled agent who
has resigned from practice before the
Internal Revenue Service.
To enable attorneys, certified public
accountants, enrolled agents and en-
rolled actuaries to identify former en-
rolled agents who have resigned from
practice before the Internal Revenue
Service, the Director of Practice will
announce in the Internal Revenue Bulle-
tin the names and addresses of former
enrolled agents who have resigned from
such practice, and date of resignation.
This announcement will appear in the
weekly Bulletin at the earliest prac-
ticable 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
enrolled agent who has resigned, and
will be consolidated and published in
the Cumulative Bulletin.
The following individual has offered
his resignation as an enrolled agent:
NameAddressDate of Resignation
Marchioli, AnthonyDallas, TXJuly 12, 1996
Under 31 Code of Federal Regula-
tions, Part 10, an attorney, certified pub-
lic accountant, enrolled agent or enrolled
actuary, in order to avoid the institution
or conclusion of a proceeding for his
disbarment or suspension from practice
before the Internal Revenue Service,
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 sus-
pended 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:
14

NameAddressDesignationDate of Suspension
Berry, James R.Columbus, MOCPAJune 5, 1996 to December 4, 1997
Rohner Jr., Richard E.Burr Ridge, ILCPAJune 10, 1996 to June 9, 1997
Bova, Robert J.Tampa, FLCPAJune 10, 1996 to March 9, 1997
Rines, Robert L.Concord, NHAttorneyJune 17, 1996 to December 16, 1998
Kimball, RandyRancho Cucamonga, CA CPAJuly 1, 1996 to December 31, 1996
Cole, ShermanOklahoma City, OKCPAJuly 1, 1996 to March 31, 1997
Barretta, Samuel N.Southfield, MIAttorneyAugust 1, 1996 to December 31, 1999
Harris, Luis F.Orlando, FLCPAAugust 1, 1996 to October 31, 1996
Vourvoulias, JamesPark Ridge, ILCPAAugust 1, 1996 to October 31, 1996
Swan, Roy E.Salem, ORCPAAugust 1, 1996 to January 31, 1997
Hamilton, Barry K.Twins Falls, IDCPAAugust 1, 1996 to September 30, 1996
Horton, GretaRichland, VACPAIndefinite from August 2, 1996
Addabbo, Marie P.Manchester, CTEnrolled AgentSeptember 1, 1996 to May 31, 1997
Crouch Jr., Richard E.Miss’nViejo, CACPASeptember 1, 1996 to February 28, 1999
Sanders Jr., Wilfred A.Orlando, FLCPASeptember 1, 1996 to August 31, 1998
Perkins, Nancy F.Apple Valley, MNCPASeptember 1, 1996 to November 30, 1996
Nichols, Oliver R.Meriden, CTCPASeptember 1, 1996 to May 31, 1997
Winiemko, Ronald C.Sterl’g Hts, MIAttorneySeptember 1, 1996 to February 28, 1999
Pallman, William F.Guilford, CTCPASeptember 30, 1996 to January 29, 1997
Gannon, Martin C.Wallingford, CTCPASeptember 30, 1996 to December 29, 1996
Andrews, Craig A.Hicksville, OHCPASeptember 30, 1996 to September 29, 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 Internal
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
Bower, Lewis H.Tampa, FLCPAIndefinite from May 30, 1996
Reiss, Irvin L.Newton, PACPAIndefinite from June 4, 1996
Reynolds, Mark E.Brownsburg, INAttorneyIndefinite from July 1, 1996
Moore, Philip J.Rome, GACPAIndefinite from July 10, 1996
Broek, Kevin J.Omaha, NECPAIndefinite from July 10, 1996
Bein, WilliamBeachwood, OHAttorneyIndefinite from August 1, 1996
Henry, GregoryBradford, PAAttorneyIndefinite from August 1, 1996
Sadler, George A.Houston, TXAttorneyIndefinite from August 1, 1996
Fuhr IV, John HenryDallas, TXCPAIndefinite from August 1, 1996
Rakov, Harris J.Mahwah, NJAttorneyIndefinite from August 1, 1996
Perkell, Mark E.S. Burlington, VTAttorneyIndefinite from August 1, 1996
Darrah, Robert J.Neola, IACPAIndefinite from August 21, 1996
Constantino, Enrico J.Bay Shore, NYAttorneyIndefinite from August 27, 1996
VanLoan, Jonathan A.Frazer, PAAttorneyIndefinite from August 27, 1996
Bennett, John J.Milford, CTAttorneyIndefinite from August 27, 1996
Lavin-Munch, Carole A.Merrionette Pk, ILCPAIndefinite from August 27, 1996
16

Numerical Finding List
1
Bulletins 1996–27 through 1996–39
Announcements:
96–61, 1996–27 I.R.B.72
96–62, 1996–28 I.R.B.55
96–63, 1996–29 I.R.B.18
96–64, 1996–29 I.R.B.18
96–65, 1996–29 I.R.B.18
96–66, 1996–29 I.R.B.19
96–67, 1996–30 I.R.B.27
96–68, 1996–31 I.R.B.45
96–69, 1996–32 I.R.B.38
96–70, 1996–32 I.R.B.40
96–71, 1996–33 I.R.B.16
96–72, 1996–33 I.R.B.16
96–73, 1996–33 I.R.B.18
96–74, 1996–33 I.R.B.19
96–75, 1996–34 I.R.B.29
96–76, 1996–34 I.R.B.29
96–77, 1996–35 I.R.B.15
96–78, 1996–35 I.R.B.15
96–79, 1996–35 I.R.B.15
96–80, 1996–35 I.R.B.16
96–81, 1996–36 I.R.B.13
96–82, 1996–36 I.R.B.14
96–83, 1996–36 I.R.B.14
96–84, 1996–36 I.R.B.14
96–85, 1996–37 I.R.B.20
96–86, 1996–37 I.R.B.21
96–87, 1996–37 I.R.B.21
96–88, 1996–38 I.R.B.150
96–89, 1996–37 I.R.B.22
96–90, 1996–37 I.R.B.22
96–91, 1996–37 I.R.B.23
96–92, 1996–38 I.R.B.151
96–93, 1996–38 I.R.B.151
96–94, 1996–38 I.R.B.153
96–96, 1996–39 I.R.B.41
96–97, 1996–39 I.R.B.41
96–98, 1996–39 I.R.B.42
96–99, 1996–39 I.R.B.42
Court Decisions:
2058, 1996–34 I.R.B.13
2059, 1996–34 I.R.B.10
2060, 1996–34 I.R.B.5
Notices:
96–36, 1996–27 I.R.B.11
96–37, 1996–31 I.R.B.29
96–38, 1996–31 I.R.B.29
96–39, 1996–32 I.R.B.8
96–40, 1996–33 I.R.B.11
96–41, 1996–35 I.R.B.6
96–42, 1996–35 I.R.B.6
96–43, 1996–36 I.R.B.7
96–44, 1996–36 I.R.B.7
96–45, 1996–39 I.R.B.7
96–46, 1996–39 I.R.B.7
96–47, 1996–39 I.R.B.8
96–48, 1996–39 I.R.B.8
Proposed Regulations:
CO–9–96, 1996–34 I.R.B.20
CO–24–96, 1996–30 I.R.B.22
CO–25–96, 1996–31 I.R.B.30
CO–26–96, 1996–31 I.R.B.31
FI–28–96, 1996–31, I.R.B.33
FI–32–95, 1996–34 I.R.B.21
FI–48–95, 1996–31 I.R.B.36
Proposed Regulations—Continued
FI–59–94, 1996–30 I.R.B.23
GL–7–96, 1996–33 I.R.B.13
IA–26–94, 1996–30 I.R.B.24
IA–29–96, 1996–33 I.R.B.14
IA–292–84, 1996–28 I.R.B.38
INTL–4–95, 1996–36 I.R.B.8
PS–22–96, 1996–33 I.R.B.15
PS–39–93, 1996–34 I.R.B.27
REG–209827–96, 1996–37 I.R.B.19
REG–208215–91, 1996–38 I.R.B.145
Public Laws:
104–117, 1996–34 I.R.B.19
104–134, 1996–38 I.R.B.7
104–168, 1996–38 I.R.B.8
Railroad Retirement Quarterly Rate
1996–29 I.R.B.14
Revenue Procedures:
96–36, 1996–27 I.R.B.11
96–37, 1996–29 I.R.B.16
96–39, 1996–33 I.R.B.11
96–40, 1996–32 I.R.B.8
96–41, 1996–32 I.R.B.9
96–42, 1996–32 I.R.B.14
96–43, 1996–35 I.R.B.6
96–44, 1996–35 I.R.B.7
96–45, 1996–35 I.R.B.12
96–46, 1996–38 I.R.B.144
96–47, 1996–39 I.R.B.10
96–48, 1996–39 I.R.B.10
Revenue Rulings:
96–33, 1996–27 I.R.B.4
96–34, 1996–28 I.R.B.4
96–35, 1996–31 I.R.B.4
96–36, 1996–30 I.R.B.6
96–37, 1996–32 I.R.B.4
96–38, 1996–33 I.R.B.4
96–39, 1996–34 I.R.B.4
96–42, 1996–35 I.R.B.4
96–43, 1996–36 I.R.B.4
96–44, 1996–38 I.R.B.4
96–45, 1996–39 I.R.B.5
96–46, 1996–39 I.R.B.5
Tax Conventions:
1996–28 I.R.B. 36
1996–36 I.R.B.6
Treasury Decisions:
8673, 1996–27 I.R.B.4
8674, 1996–28 I.R.B.7
8675, 1996–29 I.R.B.5
8676, 1996–30 I.R.B.4
8677, 1996–30 I.R.B.7
8678, 1996–31 I.R.B.11
8679, 1996–31 I.R.B.4
8680, 1996–33 I.R.B.5
8681, 1996–37 I.R.B.17
8682, 1996–37 I.R.B.4
1
A cumulative list of all Revenue Rulings, Rev-
enue Procedures, Treasury Decisions, etc., pub-
lished in Internal Revenue Bulletins 1996–1
through 1996–26 will be found in Internal Rev-
enue Bulletin 1996–27, dated July 1, 1996.
17

Finding List of Current Action on
Previously Published Items
1
Bulletins 1996–27 through 1996–39
*Denotes entry since last publication
Revenue Procedures:
80–27
Modified by
96–40, 1996–32 I.R.B.8
87–32
Modified by
TD 8680, 1996–33 I.R.B.5
92–20
Modified by
TD 8680, 1996–33 I.R.B.5
95–29
Superseded by
96–36, 1996–27 I.R.B.11
95–29A
Superseded by
96–36, 1996–27 I.R.B.11
95–30
Superseded by
96–42, 1996–32 I.R.B.14
1
A cumulative finding list for previously published
items mentioned in Internal Revenue Bulletins
1996–1 through 1996–26 will be found in Internal
Revenue Bulletin 1996–27, dated July 1, 1996.
18