Internal Revenue Bulletin 2003-48 (PDF rendition): IRS Revenue Rulings

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

Bulletin No. 2003-48
December 1, 2003
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
INCOME TAX
Rev. Rul. 2003–120, page 1154.
Life insurance companies; computation of required interest.
This ruling provides that a life insurance company calculates
„required interest‰ under section 812(b)(2)(A) of the Code using
the mean of the amount of the reserve at the beginning of the
taxableyearandtheamountofthereserveattheendofsuch
year.
Rev. Rul. 2003–121, page 1153.
LIFO; price indexes; department stores.
The September
2003 Bureau of Labor Statistics pric
e indexes are accepted
for use by department stores employ
ing the retail inventory
and last-in, first-out inventory m
ethods for valuing inventories
for tax years ended on, or with refe
rence to, September 30,
2003.
REG–146692–03, page 1164.
Section 103(a) of the Code provides that, generally, interest on
bonds issued by state and local governments is excluded from
gross income. „Qualified mortgage revenue bonds‰ may also
be qualified bonds. A bond may only be a qualified mortgage
revenuebondiftheeffectiverateofmortgageinterestonthe
mortgages provided with the bond proceeds does not exceed
the yield on the bonds by more that 1.125 percentage points.
The proposed regulations provide rules for calculating the ef-
fective rate of mortgage interest. Specifically, the proposed
regulations provide that amounts paid for pool mortgage insur-
ance are to be excluded from the calculation (which results in
a lower effective rate of mortgage interest). A public hearing
is scheduled for January 28, 2004.
Rev. Proc. 2003–84, page 1159.
Optional election to make monthly 706(a) computations.
This procedure allows certain partnerships that invest in
tax-exempt obligations to make an election that enables the
partners to take into account monthly the inclusions required
under sections 702 and 707(c) of the Code and provides
rules for partnership income tax reporting under section 6031
for such partnerships. Rev. Proc. 2002–68 modified and
superseded.
EXEMPT ORGANIZATIONS
Announcement 2003–74, page 1171.
This announcement is a public notice
of the suspension of the
federal tax exemption under sectio
n 501(p) of the Code of cer-
tain organizations that have been d
esignated as supporting or
engaging in terrorist activity or
supporting terrorism. Contribu-
tions made to these organizati
ons during the period that the or-
ganizationÊs tax-exempt sta
tus is suspended are not deductible
for federal tax purposes.
Announcement 2003–76, page 1171.
Zaire Unlimited of Calumet Park, IL, no longer qualifies as an
organization to which contributions are deductible under sec-
tion 170 of the Code.
(Continued on the next page)
Anno
uncements of Disbarments and Suspensions begin on page 1168.
Finding Lists begin on page ii.

EMPLOYMENT TAX
Notice 2003–66, page 1159.
2004 social security contribution and benefit base; domes-
tic employee coverage threshold.The Commissioner of the
Social Security Administration has announced (1) the OASDI
contribution and benefit base for remuneration paid in 2004
and self-employment income earned in taxable years beginning
in 2004, and (2) the domestic employee coverage threshold
amount for 2004.
ADMINISTRATIVE
T.D. 9093, page 1156.
Final regulations under section 7701 of the Code contain spe-
cial rules regarding the entity classification of certain foreign
business entities, including a special rule that terminates the
grandfathered status of certain foreign business entities upon
a 50-percent change of control, and a special rule that clarifies
and further modifies the relevancy rules relating to certain for-
eign eligible entities.
Announcement 2003–78, page 1172.
This announcement contains a withdrawal of proposed regula-
tion section 301.7701-3(h), which provided a rule that would
have operated to change the classification of a foreign disre-
garded entity if a so-called "extraordinary transaction" occurred
one day before or within one year after the election to treat the
entity as disregarded. REG-110385-99 partially withdrawn.
December 1, 20032003-48 I.R.B.

The IRS Mission
Provide AmericaÊs taxpayers top quality service by helping
them understand and meet their tax responsibilities and by
applying the tax law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bul-
letin contents are consolidated semiannually into Cumulative
Bulletins, which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement are not published; however, statements of internal
practices and procedures that affect the rights and duties of
taxpayers are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers
or technical advice to Service field offices, identifying details
and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decision
s 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 Other Related Items, and Subpart B, Leg-
islation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the TreasuryÊs Office of the Assistant Sec-
retary (Enforcement).
Part IV.—Items of Gener
al Interest.
This part includes noti
ces of proposed rulemakings, disbar-
ment and suspension l
ists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.*
The content
s of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S.Government Printing Office, Washington, DC 20402.
* Beginning with Internal Revenue Bulletin 2003–43, we are publishing the index at the end of the month, rather than at the beginning.
2003-48 I.R.B.December 1, 2003

Part I. Rulings and Decisions Under the Internal Revenue Code of 1986
Section 171.—Amortizable
Bond Premium
May a partner in a partnership that invests in tax-
exempt obligations make monthly allocations of part-
nership items under section 706(a)? See Rev. Proc.
2003-84, page 1159.
Section 472.—Last-in,
First-out Inventories
26 CFR 1.472–1: Last-in, first-out inventories.
LIFO; price indexes; department
stores.The September 2003 Bureau of
Labor Statistics price indexes are accepted
for use by department stores employing
the retail inventory and last-in, first-out
inventory methods for valuing inventories
for tax years ended on, or with reference
to, September 30, 2003.
Rev. Rul. 2003–121
The following Department Store In-
ventory Price Indexes for September
2003 were issued by the Bureau of La-
bor Statistics. The indexes are accepted
by the Internal Revenue Service, under
§ 1.472–1(k) of the Income Tax Regula-
tions and Rev. Proc. 86–46, 1986–2 C.B.
739, for appropriate application to in-
ventories of department stores employing
the retail inventory and last-in, first-out
inventory methods for tax years ended on,
or with reference to, September 30, 2003.
The Department Store Inventory Price
Indexes are prepared on a national basis
and include (a) 23 major groups of depart-
ments, (b) three special combinations 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, ex-
cept for the following: candy, food, liquor,
tobacco, and contract departments.
BUREAU OF LABOR STATISTICS, DEPARTMENT STORE
INVENTORY PRICE INDEXES BY DEPARTMENT GROUPS
(January 1941 = 100, unless otherwise noted)
GroupsSept. 2002Sept. 2003
Percent Change
from Sept. 2002
to Sept. 2003
¹
1. PieceGoods .............................................484.6482.6-0.4
2. DomesticsandDraperies..................................574.2559.7-2.5
3. Women’sandChildren’sShoes ............................658.0651.9-0.9
4. Men’sShoes.............................................886.9847.3-4.5
5. Infants’Wear ............................................618.5611.8-1.1
6. Women’sUnderwear......................................548.2517.8-5.5
7. Women’sHosiery ........................................343.2355.53.6
8. Women’s and Girls’ Accessories...........................549.2584.66.4
9. Women’sOuterwearandGirls’Wear .......................385.7377.3-2.2
10. Men’sClothing ..........................................561.1542.3-3.4
11. Men’sFurnishings........................................593.8579.8-2.4
12. Boys’ClothingandFurnishings............................446.2448.20.4
13. Jewelry..................................................896.7875.9-2.3
14. Notions .................................................809.1788.2-2.6
15. ToiletArticlesandDrugs..................................971.4980.40.9
16. Furniture and Beddin
g ....................................
625.9620.7-0.8
17. FloorCoverings..........................................601.1588.6-2.1
18. Housewares..............................................748.9717.2-4.2
19. MajorAppliances.........................................222.2210.3-5.4
20. RadioandTelevision......................................47.744.7-6.3
21. Recreation and Education
2
.................................85.481.9-4.1
22. Home Improve
ments
2
.....................................
124.9123.9-0.8
23. Automotive Accessories
2
..................................112.0111.7-0.3
Groups1–15:SoftGoods........................................578.4568.8-1.7
Groups16–20:DurableGoods...................................407.9391.4-4.0
2003-48 I.R.B.1153December 1, 2003

BUREAU OF LABOR STATISTICS, DEPARTMENT STORE
INVENTORY PRICE INDEXES BY DEPARTMENT GROUPS
(January 1941 = 100, unless otherwise noted)
GroupsSept. 2002Sept. 2003
Percent Change
from Sept. 2002
to Sept. 2003
¹
Groups 21–23: Misc. Goods
2
....................................96.093.5-2.6
Store Total
3
..............................................515.8504.3-2.2
1
Absence of a minus sign before the percentage change in this column signifies a price increase.
2
Indexes on a January 1986 = 100 base.
3
The store total index covers all departments, including some no
t listed separately, except for the following: candy, food, liquor,
tobacco and contract departments.
DRAFTING INFORMATION
The principal author of this revenue rul-
ing is Denise Carmichael of the Office
of Associate Chief Counsel (Income Tax
and Accounting). For further informa-
tion regarding this revenue ruling, contact
Ms. Carmichael at (202) 622–6888 (not a
toll-free call).
Section 702.—Income and
Credits of Partner
May a partner in a partnership that invests in tax-
exempt obligations make monthly allocations of part-
nership items under section 706(a)? See Rev. Proc.
2003-84, page 1159.
Section 704.—Partner’s
Distributive Share
May a partner in a partnership that invests in tax-
exempt obligations make monthly allocations of part-
nership items under section 706(a)? See Rev. Proc.
2003-84, page 1159.
Section 706.—Taxable Years
of Partner and Partnership
May a partner in a partnership that invests in tax-
exempt obligations make monthly allocations of part-
nership items under section 706(a)? See Rev. Proc.
2003-84, page 1159.
Section 708.—Continuation
of Partnership
May a partner in a partnership that invests in tax-
exempt obligations make monthly allocations of part-
nership items under section 706(a)? See Rev. Proc.
2003-84, page 1159.
Section 812.—Definition
of Company’s Share and
Policyholders’ Share
Life insurance companies; computa-
tion of required interest.This ruling pro-
vides that a life insurance company cal-
culates “required interest” under section
812(b)(2)(A) of the Code using the mean
of the amount of the reserve at the begin-
ning of the taxable year and the amount of
the reserve at the end of such year.
Rev. Rul. 2003–120
ISSUE
What is the amount of reserves used
to calculate “required interest” under sec-
tion 812(b)(2)(A) of the Internal Revenue
Code?
FACTS
IC is a life insurance company subject
to tax under Part I of subchapter L of the
Internal Revenue Code (§§ 801–818). For
purposes of determining its life insurance
company taxable income, IC computes the
amount of the section 807(c)(1) life insur-
ance reserves under section 807(d)(2), us-
ing the greater of the applicable Federal in-
terest rate or the prevailing State assumed
rate. For purposes of this revenue ruling,
assume that the applicable Federal interest
rate for the contracts is 6.0% and that the
applicable Federal interest rate exceeds the
prevailing State assumed rate for the con-
tracts.
On January 1, 200x, the opening
balance of IC’s life insurance reserves
(determined under section 807(d)(2))
equaled $1,000,000x. On December 31,
200x, the closing balance of IC’s life in-
surance reserves for the contracts totaled
$1,224,434x.
LAW AND ANALYSIS
To prevent a life insurance company
from realizing a double benefit for tax-pre-
ferred investment income (tax-exempt in-
terest and dividends providing a dividends-
received deduction) used to fund the com-
pany’s liabilities to policyholders, sections
807 and 805 require the company to adjust
certain income and deduction items for the
policyholders’ share of such tax preferred
income.
To determine the increase or decrease
in reserves for a taxable year, a life in-
surance company reduces its end-of-year
reserves by the “policyholders’ share” of
tax-exempt interest. Section 807(a) and
(b). The company’s deduction under sec-
tion 805(a)(2) for a net increase in re-
serves, therefore, is reduced by the pol-
icyholders’ share of tax exempt interest.
Conversely, if there is a net decrease in re-
serves, the company’s gross income under
section 803(a)(2) is increased by the pol-
icyholders’ share of tax exempt interest.
The adjustments effectively deny the com-
pany any exclusion for the policyholders’
share of tax-exempt interest.
December 1, 200311542003-48 I.R.B.

Section 805(a)(4) prevents a double
benefit with regard to dividends eligible
for the dividends-received deduction by
limiting a life insurance company’s de-
duction for dividends (other than “100
percent dividends” as defined in section
805(a)(4)(C)) received by the company.
The deduction is limited to the “com-
pany’s share” of the dividends received.
Seesection 805(a)(4)(A)(ii). No divi-
dends-received deduction is allowed for
the policyholders’ share of dividends re-
ceived.
Section 812 provides the mechanism to
calculate the life insurance company’s and
policyholders’ respective shares of net in-
vestment income. For purposes of sec-
tion 805(a)(4), the company’s share is the
percentage obtained by dividing (1) the
company’s share of the net investment in-
come for the taxable year, by (2) the net
investment income for the year. Section
812(a)(1). The policyholders’ share is the
excess of 100 percent over the company’s
percentage share. Section 812(a)(2).
The first step in applying section 812
is to determine, under section 812(d), the
amount of the life insurance company’s
“gross investment income” for the taxable
year. Next, “net investment income” for
the taxable year is calculated under sec-
tion 812(c). Except as otherwise provided
insection812(c)(2)withregardtoincome
attributable to assets held in a segregated
asset account for variable contracts, the
net investment income for a taxable year
equals 90% of gross investment income
for the year. Under section 812(b)(1), the
life insurance company’s share of net in-
vestment income is the excess (if any) of
the net investment income for the taxable
year over the sum of the “policy interest”
for the taxable year and the “gross invest-
ment income’s proportionate share of pol-
icyholder dividends” for the taxable year.
The policyholders’ share of net investment
income, therefore, is the portion of net in-
vestment income equal to the lesser of (1)
the sum of policy interest and gross invest-
ment income’s proportionate share of pol-
icyholder dividends for the taxable year or
(2) the total net investment income.
Section 812(b)(2) provides that policy
interest equals the sum of—
(A) required interest (at the greater of
the prevailing State assumed rate or the
applicable Federal interest rate) on sec-
tion 807(c) reserves (other than unearned
premiums and unpaid losses under section
807(c)(2));
(B) the deductible portion of excess in-
terest;
(C) the deductible portion of any
amount (whether or not a policyholder
dividend) that is not taken into account
under section 812(b)(2)(A) or (B) and that
is credited either to (i) a policyholder’s
fund under a pension plan contract for
employees (other thanretired employees),
or (ii) a deferred annuity contract before
the annuity stating date; and
(D) interest on amounts left on deposit
with the company.
If neither the prevailing State assumed in-
terest rate nor the applicable Federal in-
terest rate is used in determining the re-
serve for a contract, required interest is cal-
culated using another appropriate interest
rate.
Although required interest is a signifi-
cant component of policy interest, section
812(b)(2) provides no guidance (other than
the interest rates) regarding the method
of calculating required interest. The leg-
islative history that accompanied the en-
actment of section 812 in 1984, however,
states that “the formula used for purposes
of determining the policyholders’ share is
based generally on the proration formula
used under prior law in computing gain
or loss from operations (i.e., by reference
to ‘required interest’).”SeeH. Rep. No.
432, Pt. 2, 98
th
Cong., 2d Sess. 1430–31
(1984); S. Prt. 169, Vol. I, 98
th
Cong. 2d
Sess. 557–59 (1984).
Under section 809(a)(2) of pre-1984
law, a life insurance company’s required
interest for any taxable year equaled the
sum of the products obtained by multiply-
ing (i) each rate of interest required, or
assumed by the taxpayer, in calculating
the reserves described in section 810(c) of
pre-1984 law [now section 807(c)], by (ii)
the means of the amount of the reserves
computed at that rate at the beginning
and the end of the taxable year.See also
section 1.809–2(d) of the Income Tax Reg-
ulations.
1
As the formula in section 812 is
based generally on the proration formula
used under former section 809(a)(2), re-
quired interest under section 812(b)(2)(A)
is calculated using mean reserves. Ac-
cordingly, required interest under section
812(b)(2)(A) equals the sum of products
obtained by multiplying (i) the mean of
the beginning-of-year and end-of-year re-
serves under section 807(c)(1)–(6) (other
than section 807(c)(2)) by (ii) the appli-
cable interest rate (the prevailing State
assumed interest rate, the applicable Fed-
eral interest rate, or another appropriate
interest rate).
The opening balance of IC’s sec-
tion 807(c)(1) life insurance reserves is
$1,000,000x and the closing balance of
the reserves is $1,224,434x. The mean of
the reserves is $1,112,217x . Therefore,
the required interest on the life insurance
reserves is $66,733x [$1,112,217x 6% =
$66,733x].
HOLDING
Required interest under § 812(b)(2)(A)
is calculated using the mean of the amount
of the reserve at the beginning of the tax-
able year and the amount of the reserve at
the end of such year.
DRAFTING INFORMATION
The principal author of this revenue rul-
ing is Stephen Hooe of the Office of As-
sociate Chief Counsel (Financial Institu-
tions and Products). For further informa-
tion regarding this revenue ruling, con-
tact Mr. Hooe at (202) 622–7595 (not a
toll-free call).
Section 851.—Definition
of Regulated Investment
Company
May a partner in a partnership that invests in tax-
exempt obligations make monthly allocations of part-
nership items under section 706(a)? See Rev. Proc.
2003-84, page 1159.
1
If provisions of pre-1984 law are incorporated into a current life insurance company tax provision, the regulations under the pre-1984 law may serve as an interpretative guide to the provision
in the absence of any contrary guidance in the legislative history.SeeH. Rep. 432, at 1401; S. Prt. 169, at 524.
2003-48 I.R.B.1155December 1, 2003

Section 852.—Taxation
of Regulated Investment
Companies and Their
Shareholders
May a partner in a partnership that invests in tax-
exempt obligations make monthly allocations of part-
nership items under section 706(a)? See Rev. Proc.
2003-84, page 1159.
Section 1275.—Other
Definitions and Special Rules
May a partner in a partnership that invests in tax-
exempt obligations make monthly allocations of part-
nership items under section 706(a)? See Rev. Proc.
2003-84, page 1159.
Section 6001.—Notice
or Regulations Requiring
Records, Statements, and
Special Returns
26 CFR 1.706–1: Taxable Years of partner and part-
nership.
May a partner in a partnership that invests in tax-
exempt obligations make monthly allocations of part-
nership items under section 706(a)? See Rev. Proc.
2003-84, page 1159.
Section 6031.—Return of
Partnership Income
26 CFR 1.6031(a)–1T: Return of partnership income.
May a partner in a partnership that invests in tax-
exempt obligations make monthly allocations of part-
nership items under section 706(a)? See Rev. Proc.
2003-84, page 1159.
Section 6229.—Period
of Limitations for Making
Assessments
May a partner in a partnership that inv
ests in tax-
exempt obligations make monthly all
ocations of part-
nership items under section 706(a)?
See Rev. Proc.
2003-84, page 1159.
Section 6231.—Definitions
and Special Rules
May a partner in a partnership that invests in tax-
exempt obligations make monthly allocations of part-
nership items under section 706(a)? See Rev. Proc.
2003-84, page 1159.
Section 6233.—Extension
to Entities Filing Partnership
Returns, etc.
May a partner in a partnership that invests in tax-
exempt obligations make monthly allocations of part-
nership items under section 706(a)? See Rev. Proc.
2003-84, page 1159.
Section 6698.—Failure to
File Partnership Return
May a partner in a partnership that invests in tax-
exempt obligations make monthly allocations of part-
nership items under section 706(a)? See Rev. Proc.
2003-84, page 1159.
Section 6722.—Failure
to Furnish Correct Payee
Statements
May a partner in a partnership that invests in tax-
exempt obligations make monthly allocations of part-
nership items under section 706(a)? See Rev. Proc.
2003-84, page 1159.
Section 7701.—Definitions
26 CFR 301.7701–3: Classification of certain busi-
ness entities.
T.D. 9093
DEPARTMENT OF
THE TREASURY
Internal Revenue Service
26 CFR Part 301
Special Rules for Certain Foreign
Business Entities
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations.
SUMMARY: This document contains final
regulations providing rules regarding the
application of the general entity classifica-
tion rules to certain foreign business enti-
ties, in particular providing a rule that ter-
minates the grandfathered status of certain
foreign business entities upon a 50 percent
change of ownership and a special rule that
clarifies and further modifies the rules re-
lating to whether the classification of cer-
tain foreign eligible entities is relevant for
Federal tax purposes.
EFFECTIVE DATES: These regulations
are effective as of October 22, 2003.
FOR FURTHER INFORMATION
CONTACT: Ronald M. Gootzeit, (202)
622–3860 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
On December 18, 1996, Treasury
and IRS published in theFederal Reg-
ister(T.D. 8697, 1997–1 C.B. 215 [61
FR 66584]) final regulations relating
to the classification of business enti-
ties under section 7701 (check-the-box
regulations). On November 29, 1999,
Treasury and the IRS published in the
Federal Registeranoticeofproposed
rulemaking (REG–110385–99, 1999–2
C.B. 670 [64 FR 66591] proposing to
amend §§301.7701–2 and 301.7701–3
of the current check-the-box regulations
(proposed regulations). A public hearing
on the proposed regulations was held on
January 31, 2000. In addition, written
comments were received. Most of the
written and oral comments related to
proposed §301.7701–3(h), which pro-
vided a rule that would have operated
to change the classification of a foreign
disregarded entity if a so-called “extra-
ordinary transaction” occurred one day
before or within one year after the election
to treat the entity as disregarded. On June
26, 2003, Treasury and the IRS issued
Notice 2003–46, 2003–28 I.R.B. 53, an-
nouncing the intention to withdraw this
extraordinary transaction rule of proposed
§301.7701–3(h) and to finalize the remain-
ing provisions of the proposed regulations.
With the publication of a notice of
withdrawal (REG-110385–99, published
as Announcement 2003–78) elsewhere
in this issue of the Bulletin, proposed
§301.7701–3(h) is withdrawn. This Trea-
sury decision adopts without substantive
change the remaining provisions of the
proposed regulations. The final regula-
tions thus adopt the following provisions
from the proposed regulations: (1) the rule
that terminates the grandfathered status
of certain foreign business entities when
there has been a 50 percent change of
ownership of such entity; (2) the provision
clarifying that a foreign eligible entity
withrespecttowhichanentityclassifi-
cation election is made and which is not
December 1, 200311562003-48 I.R.B.

otherwise relevant for Federal tax pur-
poses is deemed so relevant only on the
effective date specified on a Form 8832,
“Entity Classification Election”; and (3)
the modifications to the classification
rules for certain foreign eligible entities
that have never been relevant or are no
longer relevant for Federal tax purposes.
Explanation of Provisions
A.Grandfathered Foreign Per Se Entities
The check-the-box regulations allow
certain foreign business entities that were
in existence and treated as partnerships
prior to the date the check-the-box regula-
tions were proposed (PS–43–95, 1996–1
C.B. 865 [61 FR 21989]) and that would
otherwise be classified asper secor-
porations under §301.7701–2(b)(8)(i) to
remain classified as partnerships if the con-
ditions enumerated in §301.7701–2(d)(1)
are satisfied. These rules also provide that
the occurrence of certain events results in
a termination of this grandfathered sta-
tus. See §301.7701–2(d)(3)(i). The final
regulations adopt the rule in the proposed
regulations at §301.7701–2(d)(3)(i) that
provides an additional event resulting in
the termination of an entity’s grandfa-
thered status. Under this rule, an entity’s
grandfathered status is terminated on the
date when one or more persons who were
not owners of the entity as of Novem-
ber 29, 1999, own in the aggregate a 50
percent or greater interest in the entity.
Consistent with the proposed regulations,
the final regulations provide that this rule
will apply as of the date the final regula-
tions are published in the federal register;
therefore, if persons that were not owners
of a grandfathered entity on November
29, 1999, obtain a greater than 50 percent
ownership interest between November 29,
1999, and October 22, 2003, the grandfa-
thered entity will cease to have that status
on October 22, 2003.
Several commentators requested clari-
fication as to whether this rule takes into
account changes in direct ownership only
or also changes in indirect ownership, and
they suggested that the rule should take
into account only changes in direct owner-
ship. Treasury and the IRS believe that for
purposes of grandfathered foreignper se
entities a rule that took only direct changes
of ownership into account could be eas-
ily circumvented in inappropriate cases.
Therefore, this rule has not been modi-
fied in these final regulations. Some com-
mentators requested that the rule be limited
to significant changes in ownership within
a specified period of time. For example,
one commentator suggested that the rule
be limited to situations where persons ob-
tained a 50 percent or greater ownership
interest within a 12-month period. The fi-
nal regulations do not adopt this suggestion
because Treasury and the IRS believe that
an entity should retain grandfathered sta-
tus only if there have been no significant
changes in the ownership of that entity.
B.Relevance of Classification
The check-the-box regulations provide
that if the classification of a foreign eligi-
ble entity that was previously relevant for
Federal tax purposes ceases to be relevant
for 60 consecutive months and then sub-
sequently becomes relevant again, the en-
tity’s classification at the start of the sub-
sequent period of relevance will be deter-
mined under the default classification rules
(60-month rule).
These final regulations adopt the two
rules in the proposed regulations that re-
late to the application of the 60-month rule.
First, these final regulations adopt the rule
providing that the classification of a for-
eign eligible entity that files an entity clas-
sification election is deemed to be rele-
vant for Federal tax purposes on the effec-
tive date of the election for purposes of the
60-month rule. Second, these final regula-
tions adopt the rule providing that the clas-
sification of a foreign eligible entity whose
classification has never been relevant for
Federal tax purposes will initially be de-
termined pursuant to the default classifi-
cation provisions of §301.7701–3(b)(2) at
the time the classification of the entity first
becomes relevant.
Commentators generally agreed with
and supported the approach taken in the
proposed regulations with respect to the
relevance issues, and several commen-
tators requested that these provisions
be retroactive when finalized. These
final regulations do not adopt the sug-
gestion that these provisions be applied
retroactively because Treasury and the
IRS believe that it is not in the interest of
sound tax administration.
One commentator requested that the
provisions be revised to clarify that it is
the Federal tax classification of the foreign
eligible entity, and not the entity itself,
that is deemed to be relevant. Treasury
and the IRS have adopted this clarifying
change in these final regulations.
One commentator requested that the
regulations clarify why the classification
of a foreign eligible entity, not otherwise
relevant, that files Form 8832,“Entity
Classification Election”, is deemed rele-
vant only on the date the entity classifica-
tion election is effective. The commenta-
tor neither suggested what the period of
deemed relevance should be if not limited
to one day nor suggested a principle for
when the deemed relevance should termi-
nate such that the 60-month rule would
be triggered. In the interest of certainty
and administrability of the application of
the 60-month rule, Treasury and the IRS
have retained the limitation of deemed
relevance to the day on which the entity’s
classification is effective.
One commentator requested further
guidance on when and under what cir-
cumstances the classification of a foreign
eligible entity that was previously rel-
evant ceases to be relevant under the
60-month rule. Treasury and the IRS be-
lieve §301.7701–3(d)(1) and (3) provide
sufficient guidance on when an entity’s
classification becomes relevant and, ac-
cordingly, when an entity’s classification
ceases to be relevant.
One commentator suggested that the
regulations be revised to provide that an
election by a non-relevant foreign entity
to continue its current classification may
be filed at any time within the 60-month
period starting on the day after the date
of the most recent election for that entity,
and that such election will start a new
60-month period. Section 301.7701–3(c)
provides that an eligible entity may elect
to be classified other than as provided
under the default classification rules of
§301.7701–3(b), or to change its elec-
tion. Allowing an eligible entity whose
classification is not relevant to renew its
election for purposes of the 60-month rule
would frustrate the policies underlying
that rule. Accordingly, the suggestion was
not adopted.
One commentator requested clarifica-
tion and examples regarding the determi-
nation of the classification of a foreign
2003-48 I.R.B.1157December 1, 2003

eligible entity whose classification was
never relevant or whose classification
has not been relevant for 60 months and
therefore has lapsed under the 60-month
rule. In either case (assuming in the latter
case that no election is made following
the lapse of the classification), the entity’s
classification initially will be determined
under the default classification rules of
§301.7701–3(b)(2) when the classification
of the entity becomes relevant. Under
the general rules of §301.7701–3(c), an
eligible entity may elect at such time to
be classified other than as provided under
the default classification rules, and may
elect at some later time to change its clas-
sification. Treasury and the IRS do not
believe at this time that further guidance
or examples are needed to illustrate these
general rules.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a significant
regulatory action as defined in Executive
Order 12866. Therefore, a regulatory as-
sessment is not required. It also has been
determined that section 553(b) of the Ad-
ministrative Procedure Act (5 U.S.C. chap-
ter 5) does not apply to these final regu-
lations, and because these regulations do
not impose a collection of information on
small entities, the Regulatory Flexibility
Act (5 U.S.C. chapter 6) does not apply.
Therefore, a Regulatory Flexibility Analy-
sis is not required.
Drafting Information
The principal authors of these regula-
tions are Aaron A. Farmer and Ronald M.
Gootzeit, Office of Associate Chief Coun-
sel (International). However, other person-
nel from the Treasury and the IRS partici-
pated in their development.
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 301 is pro-
posedtobeamendedasfollows:
PART 301—PROCEDURE AND
ADMINISTRATION
Par. 1. The authority citation for part
301 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 301.7701–2 is amended
by:
1. Removing the language “or” at the
end of paragraph (d)(3)(i)(B).
2. Removing the period at the end of
paragraph (d)(3)(i)(C) and adding “; or” in
its place.
3. Adding paragraph (d)(3)(i)(D).
4. Adding a sentence at the end of para-
graph (e).
The additions read as follows:
§301.7701–2 Business entities;
definitions.
*****
(d) * * *
(3) * * *
(i) * * *
(D) The date any person or persons,
who were not owners of the entity as of
November 29, 1999, own in the aggregate
a 50 percent or greater interest in the entity.
*****
(e)Effective date. * * * However, para-
graph (d)(3)(i)(D) of this section applies
on or after October 22, 2003.
Par. 3. Section 301.7701–3 is amended
as follows:
1. The text of paragraph (d)(1) follow-
ing the paragraph heading is redesignated
as paragraph (d)(1)(i), and a paragraph
heading is added for paragraph (d)(1)(i).
2. Paragraph (d)(1)(ii) is added.
3. Paragraph (d)(2) is revised.
4. Paragraphs (d)(3) and (d)(4) are
added.
The revision and additions read as fol-
lows:
§301.7701–3 Classification of certain
business entities.
*****
(d)Special rules for foreign eligible
entities—(1)Definition of relevance—(i)
General rule.***
(ii)Deemed relevance—(A)General
rule. For purposes of this section, except
as provided in paragraph (d)(1)(ii)(B) of
this section, the classification for Federal
tax purposes of a foreign eligible entity
that files Form 8832,“Entity Classifi-
cation Election”, shall be deemed to be
relevant only on the date the entity classi-
fication election is effective.
(B)Exception. If the classification of
a foreign eligible entity is relevant within
the meaning of paragraph (d)(1)(i) of
this section, then the rule in paragraph
(d)(1)(ii)(A) of this section shall not apply.
(2)Entities the classification of which
has never been relevant. If the classifica-
tion of a foreign eligible entity has never
been relevant (as defined in paragraph
(d)(1) of this section), then the entity’s
classification will initially be determined
pursuant to the provisions of paragraph
(b)(2) of this section when the classifica-
tion of the entity first becomes relevant
(as defined in paragraph (d)(1)(i) of this
section).
(3)Special rule when classification is
no longer relevant. If the classification of
a foreign eligible entity is not relevant (as
defined in paragraph (d)(1) of this section)
for 60 consecutive months, then the en-
tity’s classification will initially be deter-
mined pursuant to the provisions of para-
graph (b)(2) of this section when the clas-
sification of the foreign eligible entity be-
comes relevant (as defined in paragraph
(d)(1)(i) of this section). The date that the
classification of a foreign entity is not rele-
vant is the date an event occurs that causes
theclassificationtonolongerberelevant,
or, if no event occurs in a taxable year
that causes the classification to be relevant,
then the date is the first day of that taxable
year.
(4)Effective date. Paragraphs (d)(1)(ii),
(d)(2), and (d)(3) of this section apply on
or after October 22, 2003.
*****
Robert E. Wenzel,
Deputy Commissioner for
Services and Enforcement.
Approved October 8, 2003.
Pamela F. Olson,
Assistant Secretary of the Treasury.
(Filed by the Office of the Federal Register on October 21,
2003, 8:45 a.m., a
nd published in the issue of the Federal
Register for October 22, 2003, 68 F.R. 60286)
December 1, 200311582003-48 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous
Social Security Contribution and
Benefit Base for 2004
Notice 2003–66
Under authority contained in the So-
cial Security Act (“the Act”), the Commis-
sioner, Social Security Administration, has
determined and announced (68 F.R. 60437,
dated October 22, 2003) that the contri-
bution and benefit base for remuneration
paid in 2004, and self-employment income
earned in taxable years beginning in 2004
is $87,900.
“Old-Law” Contribution and Benefit
Base
General
The “old-law” contribution and bene-
fit base for 2004 is $65,100. This is the
base that would have been effective under
the Act without the enactment of the 1977
amendments. We compute the base under
section 230(b) of the Act as it read prior to
the 1977 amendments.
The “old-law” contribution and benefit
base is used by:
(a) The Railroad Retirement program
to determine certain tax liabilities and tier
II benefits payable under that program to
supplement the tier I payments which cor-
respond to basic Social Security benefits,
(b) The Pension Benefit Guaranty
Corporation to determine the maximum
amount of pension guaranteed under the
Employee Retirement Income Security
Act (as stated in section 230(d) of the
Social Security Act),
(c) Social Security to determine a year
of coverage in computing the special min-
imum benefit, as described earlier, and
(d) Social Security to determine a year
of coverage (acquired whenever earnings
equal or exceed 25 percent of the “old-law”
base for this purpose only) in computing
benefits for persons who are also eligible
to receive pensions based on employment
not covered under section 210 of the Act.
Domestic Employee Coverage
Threshold
General
The minimum amount a domestic
worker must earn so that such earnings are
covered under Social Security or Medicare
is the domestic employee coverage thresh-
old. For 2004, this threshold is $1,400.
Section 3121(x) of the Internal Revenue
Code provides the formula for increasing
the threshold.
Computation
Under the formula, the domestic em-
ployee coverage threshold amount for
2004 shall be equal to the 1995 amount
of $1,000 multiplied by the ratio of the
national average wage index for 2002 to
that for 1993. If the resulting amount is
not a multiple of $100, it shall be rounded
to the next lower multiple of $100.
Domestic Employee Coverage Threshold
Amount
Multiplying the 1995 domestic em-
ployee coverage threshold amount
($1,000) by the ratio of the national
average wage index for 2002 ($33,252.09)
to that for 1993 ($23,132.67) produces
the amount of $1,437.45. We then round
this amount to $1,400. Accordingly, the
domestic employee coverage threshold
amount is $1,400 for 2004.
(Filed by the Office of the Federal Register on October 21,
2003, 8:45 a.m., and published in the issue of the Federal
Register for October 22, 2003, 68 F.R. 60437)
26 CFR 601.105: Examination of returns and claims
for refund, credit or abatement; determination of
correct tax liability.
(Also: §§ 171, 702, 704, 706, 708, 851, 852,
1275, 6229, 6231, 6233, 6698, 6722; 1.706–1,
1.6001–1(a), 1.6031(a)–1T.)
Rev. Proc. 2003–84
SECTION 1. PURPOSE
This revenue procedure allows certain
partnerships that invest in tax-exempt obli-
gations to make an election that enables
the partners to take into account monthly
the inclusions required under §§ 702 and
707(c) of the Internal Revenue Code and
provides rules for partnership income tax
reporting under § 6031 for such partner-
ships.
SECTION 2. BACKGROUND
A partnership may be used to create the
economic equivalent of a variable-rate tax-
exempt bond. To create this instrument, a
sponsor purchases a tax-exempt obligation
and transfers the tax-exempt obligation to
an entity that qualifies as a partnership
for federal tax purposes (tax-exempt-bond
partnership). The tax-exempt-bond part-
nership issues two classes of equity inter-
ests: interests that are entitled to a pre-
ferred variable return on its capital (vari-
able-rate interests) and interests that are
entitled to all of the remaining income of
the partnership (inverse interest). The vari-
able return on the variable-rate interests
tracks current short-term exempt yields.
Under § 702(b), tax-exempt interest in-
come received by a partnership retains its
character when the partnership allocates
the income to a partner.
Under § 706(a), a partner generally in-
cludes in income for a taxable year the
partner’s allocable share of items of part-
nership income, gain, loss, deduction, and
credit for the partnership’s taxable year
ending within or with the partner’s taxable
year. A partner must also include in in-
come for a taxable year guaranteed pay-
ments under § 707(c) that are taken into ac-
count by the partnership under its method
of accounting in the partnership’s taxable
year ending within or with the partner’s
taxable year. Moreover, for each taxable
year in which a partnership has income, de-
ductions, or credits, § 6031(a) and (b) re-
quires the partnership to file a Form 1065,
U.S. Return of Partnership Income,andto
issue Schedules K–1 (Form 1065) to each
partner.
Annual inclusion of income under
§ 706(a) can be incompatible with the
needs of money market funds and of
medium- and long-term bond funds that
invest in obligations that produce interest
that is exempt from tax. For example, if a
regulated investment company’s (RIC’s)
taxable year does not correspond to the
taxable year of a tax-exempt-bond partner-
ship in which it holds an interest, the RIC
2003-48 I.R.B.1159December 1, 2003

may not be allocated sufficient tax-exempt
interest income from the partnership to
pay exempt-interest dividends quarterly.
See§852.
To resolve this problem, many tax-ex-
empt-bond partnerships attempted to make
an election under § 761(a) to be excluded
from the provisions of subchapter K. A
tax-exempt-bond partnership is not eligi-
ble to elect to be wholly or partially ex-
cluded from subchapter K, however, and
an attempted election has no effect. Two
of the requirements for eligibility to make
an election under § 761(a) are that the part-
ners must own the partnership property as
co-owners and the partners must be able
to compute their income without the ne-
cessity of computing partnership taxable
income.See§ 1.761–2(a)(1) and (2) of
the Income Tax Regulations. If a business
entity (classified as a partnership) owns
a tax-exempt bond and issues member-
ship interests that apportion the benefits
and burdens of that bond to its members
in a manner that differs significantly from
direct investment in the bond, the hold-
ers of those membership interests do not
satisfy the requirement that they own the
partnership property as co-owners.Cf.
§ 301.7701–4(c) of the Procedure and Ad-
ministration Regulations. Moreover, if one
class of partners has a right to partnership
income that is superior to the right of an-
other class of partners, then the net partner-
ship income or loss allocated to the part-
ners with inferior rights to partnership in-
come can be determined only by comput-
ing the net income or loss of the partner-
ship and then by reducing that net income
by income allocable to partners with supe-
rior rights to partnership income. Such a
partnership does not meet the requirement
of § 1.761–2(a)(1) that the members of the
organization be able to compute their in-
comes without the necessity of computing
partnership income.
To assist tax-exempt-bond partner-
ships to meet the needs of the market for
tax-exempt obligations within the require-
ments of the Internal Revenue Code, the
Internal Revenue Service (Service) has
issued two revenue procedures. Rev. Proc.
2002–16, 2002–1 C.B. 572, was issued
to allow money market fund partners in
tax-exempt-bond partnerships to take into
account on a monthly basis their distribu-
tive shares of partnership items (monthly
closing) if the partnership made an effec-
tive election under that revenue procedure
(monthly closing election).
Rev. Proc. 2002–68, 2002–2 C.B.
753, modified and superseded Rev. Proc.
2002–16 to extend the monthly closing
election to all partners in tax-exempt-bond
partnerships and established a transition
rule. The transition rule provides that for
any taxable year beginning before January
1, 2004, the Service will not challenge a
partnership’s or a partner’s tax treatment
that is consistent with an election to be ex-
cluded from the provisions of subchapter K
under § 761(a), provided that the partner-
shipwouldbeaneligible partnership as de-
fined in Rev. Proc. 2002–68 and the part-
ners’ inclusion of income, gain, loss, de-
duction and credits is consistent with that
permitted under the revenue procedure.
In Rev. Proc. 2002–68, the Service
also requested comments on simplified in-
come tax reporting procedures for some or
all of the eligible tax-exempt-bond partner-
ships. This revenue procedure is issued in
response to comments received.
SECTION 3. SUMMARY OF MAJOR
CHANGES
This revenue procedure modifies and
supersedes Rev. Proc. 2002–68 by ma
k-
ing the following changes:
.01 Section 4 of this revenue proc
edure
expands the definition of tax-e
xempt-bond
partnerships that are eligibl
etomakea
monthly closing election and p
rovides that
all partners must consent to t
he election.
.02 Section 5.01 of this revenu
e proce-
dure provides that a monthly c
losing elec-
tion is made by including a
binding provi-
sion to that effect in the p
artnership’s gov-
erning documents.
.03 Section 8 of this reven
ue proce-
dure provides that a part
nership that has a
monthly closing electio
nineffectforthe
partnership’s entire
taxable year and that
meets the other requi
rements of section 8
of this revenue proc
edure is not required to
file a Form 1065 or to
issue Schedules K–1
(Form 1065) to its p
artners for the taxable
year.
.04 Section 9.02(
3) of this revenue pro-
cedure provides g
randfathering rules.
SECTION 4. SCOPE
This revenue procedure applies to el-
igible partnerships (described in section
4.01 of this revenue procedure) that make a
monthly closing election (described in sec-
tion 5 of this revenue procedure).
.01Eligible Partnership.Anentityisan
eligible partnership for a calendar month if
all of the following conditions are met:
(1) As of the election test date and as of
every operational test date that occurs on or
before the end of such calendar month, the
partnership satisfies both the income test
and the expense test. The test dates are
describedinsection4.05ofthisrevenue
procedure, and the income test and the ex-
pensetestaredescribedinsection4.02and
section 4.03, respectively.
(2) The entity is a partnership for fed-
eral tax purposes;
(3) All allocations of income, gain, loss,
deduction, and credit of the partnership are
made in accordance with § 704(b); and
(4) A written partnership agreement
(or other governing document) provides
that —
(a) the entity is making the monthly
closing election under this revenue proce-
dure; and,
(b) all partners consent to the election.
.02Income test. At least 95 percent of
the partnership’s gross income (computed
without regard to items described in sec-
tion 4.04 of this revenue procedure) is or is
reasonably expected to be from:
(1) interest on tax-exempt obliga-
tions as defined in § 1275(a)(3) and
§ 1.1275–1(e);
(2) exempt-interest dividends as de-
fined in § 852(b)(5) that are paid by a RIC
as defined in § 851(a); and
(3) gain from the sale, redemption, or
other disposition of assets generating the
income described in section 4.02(1) and
(2) of this revenue procedure and income
from the temporary investment (for a pe-
riod no greater than 7 months) of the pro-
ceeds of the disposition, but only if the as-
sets that are sold, redeemed, or disposed
are original assets of the partnership. For
this purpose, an asset is an original asset
of the partnership if the asset is contributed
to the partnership or is acquired with cap-
italcontributedtothepartnership(andnot
with the proceeds of the sale, redemption,
or other disposition of a partnership asset).
December 1, 200311602003-48 I.R.B.

.03Expense test. Substantially all of
the partnership’s expenses and deduc-
tions (computed without regard to items
describedinsection4.04ofthisrevenue
procedure) are properly allocable to:
(1) producing, collecting, managing,
protecting, and conserving the income
described in section 4.02(1), (2), or (3)
of this revenue procedure or the assets
generating the income;
(2) acquiring, managing, conserving,
maintaining, or disposing of property held
for the production of the income described
in section 4.02(1), (2), or (3) of this rev-
enue procedure; and
(3) servicing the equity in the partner-
ship.
.04Exclusion. For the purposes of sec-
tions 4.02 and 4.03 of this revenue proce-
dure, reasonable amounts charged to per-
sons requesting information from the part-
nership under section 8.03 of this revenue
procedure and the costs of collecting, man-
aging, computing, and supplying the infor-
mation are not taken into account.
.05Test Dates and Test Periods.Thein-
cometestdescribedinsection4.02ofthis
revenue procedure and the expense test de-
scribedinsection4.03ofthisrevenuepro-
cedure must be satisfied both as of the first
day of the first month for which the part-
nership’s monthly closing election is effec-
tive (the election test date) and, beginning
with the fourth month after the partner-
ship’s monthly closing election becomes
effective, on the last day of each month (the
operational test date). The partnership de-
termines whether the income test and the
expense test are satisfied as of the elec-
tion test date by reference to the election
test period. The partnership determines
whether the income test and expense test
are satisfied as of each operational test date
by reference to the operational test period.
In applying the income and expense tests
for a test period, a termination of the part-
nership under § 708(b)(1)(B) during that
period is ignored.
(1)The Election Test Period. The elec-
tion test period differs depending upon
how long the partnership has been in exis-
tence (determined from its start-up date).
A partnership’s start-up date is the later
of the date the entity had more than one
owner and the date the entity had more
than ade minimisamount of assets.
(a) If, on the election test date, the part-
nership has been in existence for at least 6
full calendar months, then the test period
is the longer of the 6 full calendar months
preceding the election test date and the
portion of the partnership’s taxable year
that precedes the election test date; and
(b) If, on the election test date, the part-
nership has not been in existence for at
least 6 full calendar months, then the elec-
tion test period is the first 6 full calendar
months of the partnership’s existence.
(2)The Operational Test Period.The
operational test period is the 3-calendar-
month period consisting of the calendar
month within which the operational test
date falls and the preceding 2 calendar
months.
SECTION 5. MAKING THE MONTHLY
CLOSING ELECTION
.01Manner of Making the Election.An
eligible partnership makes a monthly clos-
ing election by providing in the entity’s
governing documents that—
(a) the partnership is making a monthly
closing election that is effective as pro-
vided under section 5.02 of this revenue
procedure, and
(b) all partners consent to the election.
.02Effective Date of the Election.The
monthly closing election is effective on the
later of:
(a) the start-up date of the partnership
(as defined in section 4.05(1) of this rev-
enue procedure), or
(b) the first day of the month in which
theprovisiondescribedinsection5.01of
this revenue procedure is first included in
the entity’s governing documents.
.03Terminations under § 708(b)(1)(B).
A termination of the partnership under
§ 708(b)(1)(B) does not terminate the
monthly closing election and does not
cause the partnership to close its books
under § 1.706–1(c) other than as described
in section 6 of this revenue procedure.
SECTION 6. MONTHLY CLO
SING OF
THE BOOKS
If, at the end of any calendar month,
an eligible partnership has a monthly clos-
ing election in effect, then, with respect
to each partner, the partnership must close
its books as described in § 1.706–1(c)(2)
as if each partner had sold its entire in-
terest in the partnership on the last day
of that month. Each partner must include
in its taxable income for that month both
the partner’s distributive share of items de-
scribed in § 702(a) with respect to the part-
ner that were earned by the partnership
since either the last closing of the books
or the first day of the partnership’s taxable
year (whichever is later) and any guaran-
teed payments under § 707(c) to the part-
ner that are taken into account by the part-
nership since the last closing of the books.
If a partner is on a 52–53 week taxable
year, then the provisions of § 1.441–2(e)
apply as if the last day of the month were
the last day of the partnership’s taxable
year.
SECTION 7. TERMINATION OF
MONTHLY CLOSING ELECTION AND
RE-ELECTION AFTER TERMINATION
.01 A partnership’s monthly closing
election terminates as of the first day of
the month during which a partnership
first fails to be an eligible partnership a
s
defined in section 4.01 of this revenue
procedure.
.02 If the partnership’s monthly closing
election terminates, the partnershi
pmay
not make another monthly closing ele
ction
without the consent of the Commissi
oner.
.03 A partnership’s monthly closing
election may be revoked only with th
e
consent of the Commissioner.
SECTION 8. REPORTING
REQUIREMENTS
.01Initial Filing Requirement.Apart-
nership must file an abbreviated Form
1065,U.S. Return of Partnership Income,
for the first taxable year during which the
monthly closing election was in effect.
The abbreviated Form 1065 must be filed
by the date that the partnership’s income
tax return for that taxable year would
ordinarily be due and must be signed by a
person with the authority to sign the part-
nership’s Form 1065. The words “Filed
in Accordance with Rev. Proc. 2003–84”
must be typed or printed across the top of
the form. The partnership is required to
provide only the following information on
the abbreviated Form 1065:
(1) A statement that the partnership has
made an election under this revenue proce-
dure to which all present and future part-
ners consent;
2003-48 I.R.B.1161December 1, 2003

(2) Identification of the partnership by
name, address, and EIN;
(3) The name, title, address, and phone
number of the contact person from whom
partners, beneficial owners, middlemen,
and the Internal Revenue Service may re-
quest information about the partnership;
(4) The issue date of the partnership in-
terests and the CUSIP (Committee on Uni-
form Securities Identification Procedures)
number or other identification of each class
of partnership interest;
(5) A statement that the entity’s govern-
ing documents expressly provide that the
entity is making a monthly closing elec-
tion; and
(6) The effective month of the election
and the start-up date of the partnership.
Seesection 4.05(1) of this revenue proce-
dure for a definition of the start-up date.
.02Annual Filing Requirements.
(1)Elimination of Annual Filing Re-
quirements. A partnership is not required
tofileaForm1065,U.S. Return of Part-
nership Income, or to issue Schedules K–1
(Form 1065) to its partners for any taxable
year if the following requirements are sat-
isfied:
(a) The partnership’s monthly closing
election is effective for the partnership’s
entire taxable year;
(b) The partnership makes the initial fil-
ing described in section 8.01 of this rev-
enue procedure;
(c) A written partnership agreement
(or other governing document) provides
that —
(i) the entity and its partners will com-
ply with the reporting requirements of sec-
tions 8.02 and 8.03, and 8.04 of this rev-
enue procedure in lieu of complying with
the requirements of § 6031(a) through (d),
and,
(ii) all partners consent to such report-
ing; and
(d) The partnership complies with the
requirements of sections 8.03 and 8.04 of
this revenue procedure.
(2)Effect of Elimination of Annual Fil-
ing Requirement. An entity that is not re-
quired to file a partnership return under this
revenue procedure is not required to file a
partnership return under § 6031(a) and, as
a result, is not a partnership as defined un-
der § 6231(a)(1). Consequently, the entity
and its members will not be subject to the
provisions of subchapter C of chapter 63.
An abbreviated Form 1065 used to make
the initial filing described in section 8.01
of this revenue procedure is not considered
to be a partnership return for purposes of
§ 6233.
(3)Monthly Closing Election Effective
for Portion of Taxable Year. A partnership
that makes a monthly closing election that
is effective after the first day of its taxable
year must comply withthe partnership re-
porting rules of § 6031(a) for that taxable
year (but is still permitted to close its books
on a monthly basis). If the partnership also
makes the initial filing described in sec-
tion 8.01 of this revenue procedure by the
due date for its return for the first full tax-
able year during which the monthly clos-
ingelectionisineffect,thenthepartner-
ship qualifies for elimination of annual fil-
ing requirements under section 8.01 of this
revenue procedure for subsequent taxable
years.
(4)Annual Reporting Required.Fail-
ure to qualify for the elimination of annual
filing requirements under section 8.02(1)
of this revenue procedure does not ter-
minate the partnership’s monthly closing
election. However, a partnership that fails
to satisfy all of the requirements of sec-
tion 8.02(1) of this revenue procedure is re-
quired to file a complete (not abbreviated)
Form 1065 and to issue Schedules K–1
(Form 1065) to its partners as required by
§ 6031(a). A partnership that fails to file a
Form 1065 or to issue Schedules K–1 as re-
quired is subject to the applicable penalties
under §§ 6698 and 6722 for failure to file
a partnership return and to furnish payee
statements, as well as any other applicable
penalties. Moreover, if a partnership is re-
quired to file a return under § 6031(a) but
fails to do so, the period of limitations on
assessment of tax attributable to items of
that partnership remains open indefinitely
under § 6229(a).
.03Requests for Information.Within
45 days of a request by the Service or a
partner (or a beneficial owner or a nomi-
nee of a beneficial owner), the partnership
must make available all the information
necessary to compute a partner’s taxable
income, tax-exempt income, gain, loss, de-
duction, or credit, including sufficient in-
formation for a partner to determine the
portion of the tax-exempt interest that may
be subject to the alternative minimum tax
and information regarding each partner’s
share of any bond premium amortization
under § 171, any market or original issue
discount, and capital gain or loss.
.04Nominee and Beneficial Ownership
Reporting.
(1) If an eligible electing partnership
complies with the requirements of sections
8.02 and 8.03 of this revenue procedure,
the nominee reporting requirements of
§ 6031(c) and the regulations thereunder
do not apply. In place of those require-
ments, the partnership and the partners
must comply with this section 8.04.See
§ 1.6001–1(a) and (e) for rules that apply
to recordkeeping requirements.
(2) Any person on whose behalf another
person holds as a nominee an interest in an
eligible partnership (a beneficial owner),
other than a beneficial owner for which the
relevant advisor or manager agrees to com-
ply with section 8.04(3) of this revenue
procedure, shall notify the partnership of
its beneficial ownership status and provide
the partnership with:
(a) its name, address, and taxpayer
identification number and the name, ad-
dress, and taxpayer identification number
of its nominee; and
(b) the name of the partnership, its
CUSIP number or other information suf-
ficient to identify the partnership interest,
and the amount of the partnership interest.
(3)InthecaseofagroupofRICsthat
is managed or advised by a common, or af-
filiated, manager or advisor (the manager),
the manager may elect to be responsible
for collecting, retaining, and providing the
Service upon demand the beneficial own-
ership information. To make such an elec-
tion, the manager must provide each eligi-
ble partnership in which any of the RICs
has an equity interest a statement indicat-
ing that it is responsible for collecting, re-
taining, and providing the Service upon
demand the beneficial ownership informa-
tion that otherwise would be required to
be provided directly to the eligible partner-
ships by the beneficial owners. In addition,
the manager must provide the partnership
with:
(a) its name, address, and taxpayer
identification number and contact infor-
mation for the person from whom the
Service can request beneficial ownership
information; and
(b) the name of the partnership, its
CUSIP number or other information suffi-
cient to identify the partnership interests,
December 1, 200311622003-48 I.R.B.

and the amount of the partnership inter-
ests.
SECTION 9 EFFECTIVE DATE AND
TRANSITION RULES
.01In General. This revenue procedure
is effective on November 5, 2003.
.02Grandfathering Rules.
(1) If, prior to January 1, 2004, under
the provisions of Rev. Proc. 2002–16 or
Rev. Proc. 2002–68, a partnership made
an effective Monthly Closing election and
a partner consented to the election, then the
partnership and the partner may continue
to comply with either Rev. Proc. 2002–16
or Rev. Proc. 2002–68, as applicable, ex-
cept that monthly statements are not re-
quired.
(2) Except as provided in section
9.02(4) of this revenue procedure, if,
prior to January 1, 2004, under the pro-
visions of Rev. Proc. 2002–16 or Rev.
Proc. 2002–68, a partnership made an
effective Monthly Closing election and a
partner consented to the election and if
the partnership and partner consistently
report the transaction in a manner that i
s
consistent with an election to be exclud
ed
from the provisions of subchapter K und
er
§ 761(a), then the Service will not cha
l-
lenge that treatment. If section 9.02
(4) of
this revenue procedure causes this p
ara-
graph (2) to cease to apply, the pa
rtner and
partnership remain eligible fo
ranyrelief
described in paragraph (1) abo
ve that they
are otherwise entitled to enjo
y.
(3) Except as provided in secti
on
9.02(4) of this revenue proced
ure, if
a partnership’s start-up dat
eisbefore
January 1, 2004, the Servi
ce will not
challenge the partnershi
p’s or its partners’
tax treatment that is con
sistent with an
electiontobeexcludedf
rom the provi-
sions of subchapter K un
der § 761(a) for
any taxable year durin
g all of which the
entityisaneligibl
e partnership as defined
in section 4.01 of th
is revenue procedure
(without regard to
section 4.01(4) of this
revenue procedure
).Seesection 4.05(1) of
this revenue procedure for the definition
of a partnership’s start-up date.
(4) If, on or after January 1, 2005, a
partnership acquires new assets, then, as of
thefirstdayofthemonthinwhichthenew
assets are acquired, the partnership is no
longer eligible for the grandfathering rule
provided in section 9.02(2) or (3) of this
revenue procedure. For purposes of the
preceding sentence, none of the following
is treated as the acquisition of a new asset
by the partnership:
(a) The receipt of payment (including
temporary investment of that payment) on,
or in respect of, a sale, redemption, or other
disposition of an asset of the partnership;
(b) The receipt of a contribution in cash
(including temporary investment of that
cash) to fund expenses of the partnership
described in section 4.03 of this revenue
procedure or to fund distributions to part-
ners in respect of accrued but unpaid tax-
exempt interest (including accrued but un-
paid tax-exempt original issue discount);
or
(c) The acquisition of an asset pursuant
to a plan to keep the principal balance of
the assets in the partnership stable by rein-
vesting principal payments.
(5) For purposes of section 9.02(4) of
this revenue procedure)—
(a) An investment is temporary if it is
held for 7 months or less; and
(b) If an asset was acquired with reason-
able certainty it would be a temporary in-
vestment but, due to unforeseeable circum-
stances, it is held for more than 7 months,
then, for purposes of section 9.02(4) of this
revenue procedure, it is treated as acquired
on the first day that it has been held for
more than 7 months.
SECTION 10 EFFECT ON OTHER
DOCUMENTS
Rev. Proc. 2002–68 is modif
ied and
superseded.
SECTION 11 PAPERWORK
REDUCTION ACT
The collection of information con-
tained in this revenue procedure has been
reviewed and approved by the Office
of Management and Budget in accor-
dance with the Paperwork Reduction Act
(44 U.S.C. 3507) under control number
1545–1768. An agency may not conduct
or sponsor, and a person is not required to
respond to, a collection of information un-
less the collection of information displays
a valid OMB control number.
Thecollectionofinformationisinsec-
tion 8 of this revenue procedure. The col-
lection of information is required to ob-
tain a benefit, and is required to inform the
Service which partnerships are making the
monthly closing election. The likely re-
spondents are businesses.
The estimated total annual reporting
and recordkeeping burden is 500 hours.
The estimated annual burden per re-
spondent/recordkeeper is 1/2 hour. The es-
timated number of respondents and record-
keepers is 1,000.
The estimated annual frequency of re-
sponses (used for reporting requiremen
ts
only) is once.
Books or records relating to a collectio
n
of information must be retained as long
as their contents may become material
in
the administration of any interna
lrevenue
law. Generally tax returns and ta
xreturn
information are confidential,
as required
by 26 U.S.C. 6103.
DRAFTING INFORMATION
The principal author of this rev-
enue procedure is David A. Shulman
of the Office of Associate Chief Counsel
(Passthroughs and Special Industries). For
further information regarding this revenue
procedure, contact Mr. Shulman at (202)
622–3070 (not a toll-free call).
2003-48 I.R.B.1163December 1, 2003

Part IV. Items of General Interest
Notice of Proposed Rulemaking
and Notice of Public Hearing
Mortgage Revenue Bonds
REG–146692–03
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemaking
and notice of public hearing.
SUMMARY: This document contains pro-
posed regulations that provide guidance re-
garding the limitation on the effective rate
of mortgage interest for purposes of mort-
gage revenue bonds issued by State and lo-
cal governments. This document also con-
tains a notice of public hearing on these
proposed regulations.
DATES: Written or electronic comments
must be received by January 7, 2004. Out-
lines of topics to be discussed at the pub-
lic hearing scheduled for January 28, 2004,
at 10 a.m., must be received by January 7,
2004.
ADDRESSES: Send submissions to
CC:PA:LPD:PR(REG–146692–03),
room 5203, Internal Revenue Service,
POB 7604, Ben Franklin Station, Wash-
ington, DC 20044. Submissions may be
hand delivered Monday through Friday
between the hours of 8 a.m. and 4 p.m.
to CC:PA:LPD:PR (REG–146692–03),
Courier’s Desk, Internal Revenue Service,
1111 Constitution Avenue, NW, Wash-
ington, DC. Alternatively, taxpayers may
submit comments electronically to the
IRS Internet site atwww.irs.gov/regs.The
public hearing will be held in the Audi-
torium, Internal Revenue Building, 1111
Constitution Avenue, NW, Washington,
DC.
FOR FURTHER INFORMATION
CONTACT: Concerning the regulations,
Michael P. Brewer, (202) 622–3980; con-
cerning submissions of comments, the
hearing, and requests to be placed on the
building access list to attend the meeting,
Treena V. Garrett, (202) 622–3401 (not
toll-free numbers).
SUPPLEMENTARY INFORMATION:
Background
Section 103(a) of the Internal Revenue
Code of 1986 (Code) provides that, gen-
erally, interest on any State or local bond
is not included in gross income. However,
this exclusion does not apply to any private
activity bond that is not a qualified bond.
A.Mortgage Revenue Bonds
Section 141(e)(1) provides that a qual-
ified mortgage bond or a qualified veter-
ans’ mortgage bond (together, mortgage
revenue bonds) issued under section 143
maybeaqualifiedbond.
Sections 143(a)(2)(A)(ii) and 143(b)
provide, in part, that for an issue to be
an issue of qualified mortgage bonds
or qualified veterans’ mortgage bonds,
respectively, the issue must satisfy the
requirements of section 143(g). Section
143(g)(1) provides that an issue will meet
the requirements of section 143(g) if the
issue satisfies the requirements of section
143(g)(2) and, in the case of an issue 95
percent or more of the net proceeds of
which are to be used to provide residences
for veterans, if the issue satisfies the re-
quirements of section 143(g)(3).
Section 143(g)(2)(A) provides that an
issue will meet the requirements of section
143(g)(2) only if the excess of (1) the ef-
fective interest rate on the mortgages pro-
vided under the issue, over (2) the yield on
the issue, is not greater than 1.125 percent-
age points.
Section 143(g)(2)(B)(i) provides that
in determining the effective rate of interest
on any mortgage for purposes of section
143(g)(2), all fees, charges, and other
amounts borne by the mortgagor that are
attributable to the mortgage or the bond
issue are taken into account.
Section 143(g)(2)(B)(ii) provides that,
for purposes of determining the effective
rate of mortgage interest, the following
items (among others) shall be treated as
borne by the mortgagor: (1) All points or
similar charges paid by the seller of the
property; and (2) the excess of the amounts
received from any person other than the
mortgagor by any person in connection
with the acquisition of the mortgagor’s in-
terest in the property over the usual and
reasonable acquisition costs of a person ac-
quiring like property when owner-financ-
ing is not provided through the use of mort-
gage revenue bonds.
Section 143(g)(2)(B)(iii) provides that,
for purposes of determining the effective
rate of mortgage interest, the following
items shall not be taken into account: (1)
Any expected rebate of arbitrage profits;
and (2) any application fee, survey fee,
credit report fee, insurance charge, or simi-
lar amount to the extent such amount does
not exceed amounts charged in such area
in cases when owner-financing is not pro-
vided through the use of mortgage revenue
bonds. The exclusion for application fees,
survey fees, credit report fees, insurance
charges, or similar amounts does not ap-
ply to origination fees, points, or similar
amounts.
In the case of an issue 95 percent or
more of the net proceeds of which are to
be used to provide residences for veter-
ans, section 143(g)(3)provides that certain
earnings on nonpurpose investments must
either be paid or credited to mortgagors, or
paid to the United States, in certain circum-
stances.
In the Tax Reform Act of 1986, Pub. L.
No. 99–514 (the 1986 Act), Congress re-
organized sections 103 and 103A of the In-
ternal Revenue Code of 1954 (1954 Code)
regarding tax-exempt bonds into sections
103 and 141 through 150 of the Code.
Congress intended that to the extent not
amended by the 1986 Act, all principles
of pre-1986 Act law would continue to ap-
ply to the reorganized provisions. 2 H.R.
Conf. Rep. No. 841, 99th Cong., 2d Sess.
II–686 (1986), 1986–3 (Vol. 4) C.B. 686.
Interpreting section 103A(i)(2)(B)(iii)
of the 1954 Code, which is substantially
identical to section 143(g)(2)(B)(iii) of the
Code, §6a.103A–2(i)(2)(ii)(C) of the Tem-
porary Income Tax Regulations provides
the following: “For example, amounts
paid for FHA, VA, or similar private
mortgage insurance on an individual’s
mortgage need not be taken into account
so long as such amounts do not exceed the
amounts charged in the area with respect
to a similar mortgage that is not financed
with qualified mortgage bonds. Premiums
charged for pool mortgage insurance will
be considered amounts in excess of the
usual and reasonable amounts charged for
December 1, 200311642003-48 I.R.B.

insurance in cases where owner financing
is not provided through the use of qual-
ified mortgage bonds.” Pool mortgage
insurance is not defined in the regulations.
B.Qualified Guarantees
Under §1.148–4(f), for purposes of
computing yield on an issue, fees paid
for a qualified guarantee for the issue are
treated as additional interest on the issue.
In general, a guarantee is a qualified guar-
antee if: (1) As of the date the guarantee
is obtained, the issuer reasonably expects
that the present value of the fees for the
guarantee will be less than the present
value of the expected interest savings on
the issue as a result of the guarantee; (2)
the arrangement creates a guarantee in sub-
stance; and (3) the fees for the guarantee
do not exceed a reasonable, arm’s-length
charge for the transfer of credit risk. The
regulations provide that the guarantee of a
loan of proceeds of an issue, as opposed to
a guarantee of the issue, may constitute a
qualified guarantee, but this rule does not
apply to guarantees of mortgages financed
with mortgage revenue bonds.
Explanation of Provisions
A.Pool Mortgage Insurance
Recently, questions have arisen regard-
ing whether an issuer should be required to
treat the portion of the interest payments
on a pool of mortgages used to pay fees
for a guarantee of a pass-through secu-
rity backed by the pool of mortgages as
an amount borne by the mortgagors that
must be taken into account in determining
the effective rate of interest on the mort-
gages for purposes of section 143(g). Tak-
ing the guarantee fees into account results
in a higher effective rate of interest on the
mortgages than if the fees were not taken
into account.
The IRS and Treasury Department have
determined that the guarantee fees should
not be treated as amounts borne by the
mortgagors that must be taken into account
in determining the effective rate of inter-
est on the mortgages for purposes of sec-
tion 143(g). An issuer may achieve sub-
stantially the same result as not taking the
guarantee fees into account in computing
the effective rate of interest on the mort-
gages by substituting a qualified guarantee
on the bonds for the guarantee of the pool
of mortgages. If an issuer does not take
the mortgage guarantee fees into account
in computing the effective rate of interest
on the mortgages, the difference between
the bond yield and the effective rate on the
mortgages is reduced because the effective
rate on the mortgages is reduced. A qual-
ified guarantee of the bonds accomplishes
the same result by increasing bond yield,
rather than reducing the effective rate of
interest on the mortgages. Issuers should
not be required to change the form of their
transactions in these circumstances.
Accordingly, to the extent the amounts
charged for a guarantee of a pool of mort-
gages do not exceed amounts charged in
the area in cases when owner-financing is
not provided through the use of mortgage
revenue bonds, the proposed regulations
provide that such amounts are not treated
as borne by the mortgagors and are not
taken into account in determining the ef-
fective rate of interest on the mortgages for
purposes of section 143(g).
B.Proposed Regulations
The proposed regulations create a new
§1.143(g)–1. The proposed regulations
providethatanissuesatisfiestherequire-
ments of section 143(g) only if the issue
meets the requirements of §1.143(g)–1(b)
and, in the case of an issue 95 percent or
more of the net proceeds of which are to
be used to provide residences for veter-
ans, the issue also meets the requirements
of §1.143(g)–1(c). The requirements of
section 143(g) and the proposed regula-
tions are applicable in addition to the re-
quirements of section 148 and §§1.148–0
through 1.148–11.
The proposed regulations provide that
an issue shall be treated as meeting the
requirements of §1.143(g)–1(b) only if the
excess of (1) the effective rate of interest on
the mortgages financed by the issue, over
(2) the yield on the issue, is not greater over
the term of the issue than 1.125 percentage
points.
In determining the effective rate of in-
terest on any mortgage, the proposed reg-
ulations provide that all fees, charges, and
other amounts borne by the mortgagor that
are attributable to the mortgage or to the
bond issue are taken into account. Such
amounts include points, commitment fees,
origination fees, servicing fees, and pre-
payment penalties paid by the mortgagor.
The proposed regulations provide that
items that are treated as borne by the mort-
gagor and are taken into account in cal-
culating the effective rate of interest also
include: (1) All points, commitment fees,
origination fees, or similar charges borne
by the seller of the property; and (2) the ex-
cess of any amounts received from any per-
son other than the mortgagor by any person
in connection with the acquisition of the
mortgagor’s interest in the property over
the usual and reasonable acquisition costs
of a person acquiring like property where
owner-financing is not provided through
the use of mortgage revenue bonds.
The proposed regulations further pro-
vide that the following items are not treated
as borne by the mortgagor and are not
taken into account in calculating the ef-
fective rate of interest: (1) Any expected
rebate of arbitrage profit; and (2) any ap-
plication fee, survey fee, credit report fee,
insurance charge or similar settlement or
financing cost to the extent such amount
does not exceed amounts charged in the
area in cases where owner-financing is not
provided through the use of mortgage rev-
enue bonds.
With respect to insurance charges,
the proposed regulations provide that
amounts paid for Federal Housing Ad-
ministration, Veterans’ Administration, or
similar private mortgage insurance on an
individual’s mortgage, or amounts paid
for pool mortgage insurance on a pool
of mortgages, are not taken into account
so long as such amounts do not exceed
the amounts charged in the area with
respect to a similar mortgage, or pool
of mortgages, that is not financed with
mortgage revenue bonds. Moreover, for
this purpose, amounts paid for pool mort-
gage insurance include amounts paid to an
entity (for example, the Government Na-
tional Mortgage Association, the Federal
National Mortgage Association, the Fed-
eral Home Loan Mortgage Corporation, or
other mortgage insurer) to directly guar-
antee the pool of mortgages financed with
the bonds, or to guarantee a pass-through
security backed by the pool of mortgages
financed with the bonds.
The proposed regulations do not pro-
vide guidance regarding all aspects of
the application of section 143(g)(2). The
proposed regulations provide that to the
extent not inconsistent with the 1986
Act or subsequent law, the provisions of
2003-48 I.R.B.1165December 1, 2003

§6a.103A–2(i)(2) (other than paragraphs
(i)(2)(i) and (i)(2)(ii)(A) through (C))
apply to provide additional rules relating
to compliance with the requirement that
the effective rate of mortgage interest not
exceed the bond yield by more than 1.125
percentage points.
The proposed regulations also do not
provide guidance regarding the application
of section 143(g)(3). The proposed reg-
ulations provide that to the extent not in-
consistent with the 1986 Act or subsequent
law, the provisions of §6a.103A–2(i)(4)
apply to provide guidance regarding the
application of section 143(g)(3).
Proposed Effective Dates
The proposed regulations will apply to
bonds sold on or after the date of publi-
cation of final regulations in theFederal
Register, that are subject to section 143.
Issuers may also apply the proposed regu-
lations in whole, but not in part, to bonds
sold on or after November 5, 2003, and be-
fore the date of publication of final regu-
lations in theFederal Register,thatare
subject to section 143. In addition, is-
suers may apply the proposed regulations
in whole, but not in part, to any bonds
that are sold before November 5, 2003, and
subject to section 143. Finally, subject to
the applicable effective dates for the corre-
sponding statutory provisions, issuers may
apply the proposed regulations in whole,
but not in part, to any bonds that are sub-
ject to section 103A(i) of the 1954 Code.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a significant
regulatory action as defined in Executive
Order 12866. Therefore, a regulatory as-
sessment is not required. It has also been
determined that section 553(b) of the Ad-
ministrative Procedure Act (5 U.S.C. chap-
ter 5) does not apply to these regulations,
and because the regulations do not im-
pose a collection of information on small
entities, the Regulatory Flexibility Act (5
U.S.C. chapter 6) does not apply. Pursuant
to section 7805(f) of the Code, this notice
of proposed rulemaking will be submitted
to the Chief Counsel for Advocacy of the
Small Business Administration for com-
ment on its impact on small business.
Comments and Public Hearing
Before these proposed regulations are
adopted as final regulations, consideration
will be given to any written comments that
are submitted timely (preferably a signed
original and eight copies) to the IRS. The
IRS and Treasury Department request
comments on all aspects of the proposed
regulations. Comments are also requested
on the clarity of the proposed regulations
and how they may be made easier to un-
derstand. All comments will be available
for public inspection and copying.
A public hearing has been scheduled
for January 28, 2004, at 10 a.m. in the Au-
ditorium, Internal Revenue Building, 1111
Constitution Avenue, NW, Washington,
DC. Because of access restrictions, visi-
tors will not be admitted beyond the lobby
more than 30 minutes before the hear-
ing starts. For information about having
your name placed on the building access
list to attend the hearing, see the “FOR
FURTHER INFORMATION CONTACT”
section of this preamble.
The rules of 26 CFR 601.601(a)(3) ap-
ply to the hearing.
Persons who wish to present oral com-
ments at the hearing must submit written
comments by January 7, 2004, and submit
an outline of the topics to be discussed and
the amount of time to be devoted to each
topic by January 7, 2004.
A period of 10 minutes will be allotted
to each person for making comments.
An agenda showing the scheduling of
the speakers will be prepared after the
deadline for receiving outlines has passed.
Copies of the agenda will be available free
of charge at the hearing.
Drafting Information
The principal authors of these regula-
tions are Timothy L. Jones and Michael P.
Brewer, Office of Associate Chief Counsel
(Tax-Exempt and Government Entities),
IRS, and Bruce M. Serchuk, Office of Tax
Policy, Treasury Department. However,
other personnel from the IRS and Treasury
Department participated in their develop-
ment.
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 1 is proposed
to be 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 1.143(g)–1 is added to
read as follows:
§1.143(g)–1 Requirements related to
arbitrage.
(a)In general. Under section 143, for
an issue to be an issue of qualified mort-
gage bonds or qualified veterans’ mort-
gage bonds (together, mortgage revenue
bonds), the requirements of section 143(g)
must be satisfied. An issue satisfies the re-
quirements of section 143(g) only if such
issue meets the requirements of paragraph
(b)ofthissectionand,inthecaseofan
issue 95 percent or more of the net pro-
ceeds of which are to be used to provide
residences for veterans, such issue also
meets the requirements of paragraph (c) of
this section. The requirements of section
143(g) and this section are applicable in
addition to the requirements of section 148
and §§1.148–0 through 1.148–11.
(b)Effectiverateofmortgageinterest
not to exceed bond yield by more than
1.125 percentage points—(1)Maximum
yield. An issue shall be treated as meeting
the requirements of this paragraph (b)
only if the excess of the effective rate of
interest on the mortgages financed by the
issue, over the yield on the issue, is not
greater over the term of the issue than
1.125 percentage points.
(2)Effective rate of interest.(i)Inde-
termining the effective rate of interest on
any mortgage for purposes of this para-
graph (b), there shall be taken into account
all fees, charges, and other amounts borne
by the mortgagor that are attributable to
the mortgage or to the bond issue. Such
amounts include points, commitment fees,
origination fees, servicing fees, and pre-
payment penalties paid by the mortgagor.
(ii) Items that shall be treated as borne
by the mortgagor and shall be taken into
account in calculating the effective rate of
interest also include:
December 1, 200311662003-48 I.R.B.

(A) All points, commitment fees, origi-
nation fees, or similar charges borne by the
seller of the property; and
(B) The excess of any amounts received
from any person other than the mortgagor
by any person in connection with the ac-
quisition of the mortgagor’s interest in the
property over the usual and reasonable ac-
quisition costs of a person acquiring like
property when owner-financing is not pro-
vided through the use of mortgage revenue
bonds.
(iii) The following items shall not be
treated as borne by the mortgagor and shall
not be taken into account in calculating the
effective rate of interest:
(A) Any expected rebate of arbitrage
profit under paragraph (c) of this section;
and
(B) Any application fee, survey fee,
credit report fee, insurance charge or
similar settlement or financing cost to
the extent such amount does not exceed
amounts charged in the area in cases when
owner-financing is not provided through
the use of mortgage revenue bonds. For ex-
ample, amounts paid for Federal Housing
Administration, Veterans’ Administration,
or similar private mortgage insurance on
an individual’s mortgage, or amounts paid
for pool mortgage insurance on a pool of
mortgages, are not taken into account so
long as such amounts do not exceed the
amounts charged in the area with respect to
a similar mortgage, or pool of mortgages,
that is not financed with mortgage revenue
bonds. For this purpose, amounts paid for
pool mortgage insurance include amounts
paid to an entity (for example, the Gov-
ernment National Mortgage Association,
the Federal National Mortgage Associ-
ation (FNMA), the Federal Home Loan
Mortgage Corporation, or other mortgage
insurer) to directly guarantee the pool of
mortgages financed with the bonds, or to
guarantee a pass-through security backed
by the pool of mortgages financed with
the bonds.
(C) The following example illustrates
the provisions of this paragraph (b)(2)(iii):
Example. Housing Authority X issues bonds in-
tended to be qualified mortgage bonds under sec-
tion 143(a). At the time the bonds are issued, X
enters into an agreement with a group of mortgage
lending institutions (lenders) under which the lenders
agree to originate and service mortgages that meet
certain specified requirements. After originating a
specified amount of mortgages, each lender issues a
“pass-though security” (each, a PTS) backed by the
mortgages and sells the PTS to X. Under the terms of
the PTS, the lender pays X an amount equal to the reg-
ular monthly payments on the mortgages (less certain
fees), whether or not received by the lender (plus any
prepayments and liquidation proceeds in the event of
a foreclosure or other disposition of any mortgages).
FNMA guarantees the timely payment of principal
and interest on each PTS. From the payments received
from each mortgagor, the lender pays a fee to FNMA
for its guarantee of the PTS. The amounts paid to
FNMA do not exceed the amounts charged in the area
with respect to a similar pool of mortgages that is not
financed with mortgage revenue bonds. Under this
paragraph (b)(2)(iii), the fees for the gua
rantee pro-
vided by FNMA are an insurance charge because the
guarantee is pool mortgage insurance. Because the
amounts charged for the guarantee do not e
xceed the
amounts charged in the area with respect to a similar
pool of mortgages that is not financed with mortgage
revenue bonds, the amounts charged for
the guarantee
are not taken into account in computing the effective
rate of interest on the mortgages financed with X’s
bonds.
(3)Additional rules.Totheexten
tnot
inconsistent with the Tax Reform
Act of
1986, Public Law 99–514 (the 198
6Act),
or subsequent law, §6a.103A–2
(i)(2)
(other than paragraphs (i)(
2)(i) and
(i)(2)(ii)(A) through (C)
)ofthischap-
ter applies to provide add
itional rules
relating to compliance wi
th the require-
ment that the effective r
ate of mortgage
interest not exceed the
bond yield by more
than 1.125 percentage p
oints.
(c)Arbitrage and inve
stment gains to
be used to reduce cost
s of owner-financ-
ing.Asprovidedinse
ction 143(g)(3), cer-
tain earnings on non
purpose investments
must either be paid
or credited to mort-
gagors, or paid to t
he United States, in cer-
tain circumstan
ces. To the extent not in-
consistent wit
h the 1986 Act or subsequent
law, §6a.103A–2(i)(4) of this chapter ap-
plies to provide guidance relating to com-
pliance with this requirement.
(d)Effective Dates—(1)In general.Ex-
cept as otherwise provided in this section,
§1.143(g)–1 applies to bonds sold on or
after the date of publication of final reg-
ulations in theFederal Register,thatare
subject to section 143. Issuers may apply
§1.143(g)–1, in whole, but not in part, to
bonds sold on or after November 5, 2003,
and before the date of publication of final
regulations in theFederal Register,that
are subject to section 143.
(2)Permissive retroactive application
in whole. Except as provided in paragraph
(d)(4) of this section, an issuer may apply
§1.143(g)–1, in whole, but not in part, to
any bonds that are sold before November
5, 2003, and subject to section 143.
(3)Bonds subject to the Internal Rev-
enue Code of 1954. Except as provided in
paragraph (d)(4) of this section, and sub-
ject to the applicable effective dates for the
corresponding statutory provisions, an is-
suer may apply §1.143(g)–1, in whole, but
not in part, to anybonds that are subject
to section 103A(i) of the Internal Revenue
Code of 1954.
(4)Special rule for pre-July 1, 1993,
bonds. To the extent that an issuer ap-
plies this section to any bonds pursuant to
paragraph (d)(2) or (d)(3) of this section,
§6a.103A–2(i)(3) of this chapter also ap-
plies to the bonds if the bonds were issued
before July 1, 1993.
Mark E. Matthews,
Deputy Commissioner for Services
and Enforcement.
(Filed by the Office of the
Federal Register on November 4,
2003, 8:45 a.m., and published in the issue of the Federal
Register for November 5, 2003, 68 F.R. 62549)
2003-48 I.R.B.1167December 1, 2003

Announcement of Disciplinary Actions Involving Attorneys,
Certified Public Accountants, Enrolled Agents, and Enrolled
Actuaries — Suspensions, Censures, Disbarments, and
Resignations
Announcement 2003-71
Under Title 31, Code of Federal Regu-
lations, Part 10, attorneys, certified public
accountants, enrolled agents, and enrolled
actuaries may not accept assistance from,
or assist, any person who is under disbar-
ment or suspension from practice before
the Internal Revenue Service if the assis-
tance relates to a matter constituting prac-
tice before the Internal Revenue Service
and may not knowingly aid or abet another
person to practice before the Internal Rev-
enue Service during a period of suspen-
sion, disbarment, or ineligibility of such
other person.
To enable attorneys, certified public
accountants, enrolled agents, and enrolled
actuaries to identify persons to whom
these restrictions apply, the Director, Of-
fice of Professional Responsibility will
announce in the Internal Revenue Bulletin
their names, their city and state, their pro-
fessional designation, the effective date
of disciplinary action, and the period of
suspension. This announcement will ap-
pear in the weekly Bulletin at the earliest
practicable date after such action and will
continue to appear in the weekly Bulletins
for five successive weeks.
Disbarments From Practice Before the Internal Revenue
Service After Notice and an Opportunity for a Proceeding
Under Title 31, Code of Federal Regu-
lations, Part 10, after notice and an oppor-
tunity for a proceeding before an adminis-
trative law judge, the following individuals
have been disbarred from practice before
the Internal Revenue Service:
NameAddressDesignationEffective Date
Loy, Michael F.Pittsburgh, KSCPAJuly 23, 2003
Consent Suspensions From Practice Before the Internal
Revenue Service
Under Title 31, Code of Federal Regu-
lations, Part 10, an attorney, certified pub-
lic accountant, enrolled agent, or enrolled
actuary, in order to avoid institution or con-
clusion of a proceeding for his or her dis-
barment or suspension from practice be-
fore the Internal Revenue Service, may of-
fer his or her consent to suspension from
such practice. The Director, Office of Pro-
fessional Responsibility, in his discretion,
may suspend an attorney, certified public
accountant, enrolled agent or enrolled ac-
tuary in accordance with the consent of-
fered.
The following individuals have been
placed under consent suspension from
practice before the Internal Revenue Ser-
vice:
NameAddressDesignationDate of Suspension
Gillis, Robert F.Jacksonville,FLEnrolled AgentJuly 1, 2003
to
January 31, 2004
Ziedins, AivarsCastle Rock, COEnrolled AgentIndefinite
from
July 1, 2003
December 1, 200311682003-48 I.R.B.

NameAddressDesignationDate of Suspension
A. N. HebeshaVisalia, CAEnrolled AgentIndefinite
from
July 11, 2003
Stafford, Robert M.Allston, MACPAIndefinite
from
July 14, 2003
Carnahan, Larry K.Ashland, KYAttorneyIndefinite
from
July 18, 2003
McAlarney, Nancy A.Kissimmee,FLEnrolled AgentIndefinite
from
July 24, 2003
Rahman, ErnestMelville, NYEnrolled AgentIndefinite
from
July 31, 2003
Oleksy, Dennis L.Cary, ILEnrolled AgentIndefinite
from
August 12, 2003
Witti, Mary E.Boulder City, NVEnrolled AgentIndefinite
from
September 1, 2003
Lau, WillieHowell, NJEnrolled AgentIndefinite
from
September 1, 2003
Couch, Leslie L.Kihei, HIEnrolled AgentIndefinite
from
September 5, 2003
Khoudary, NicholasEast Brunswick, NJEnrolled AgentIndefinite
from
September 15, 2003
Solomon, DorothyLos Angeles, CAEnrolled AgentIndefinite
from
October 6, 2003
McMahon, AngelaToms River, NJEnrolled AgentIndefinite
from
October 20, 2003
Lee, Chun HyongLakewood, WACPAIndefinite
from
October 22, 2003
2003-48 I.R.B.1169December 1, 2003

Expedited Suspensions From Practice Before the Internal
Revenue Service
Under Title 31, Code of Federal Regu-
lations, Part 10, the Director, Office of Pro-
fessional Responsibility, is authorized to
immediately suspend from practice before
the Internal Revenue Service any practi-
tioner 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 sus-
pended or revoked for cause or (2) has been
convicted of certain crimes.
The following individuals have been
placed under suspension from practice
before the Internal Revenue Service by
virtue of the expedited proceeding provi-
sions:
NameAddressDesignationDate of Suspension
Daniels, MarioFlint, MICPAIndefinite
from
September 4, 2003
Hertz, KevinMcAllen, TXCPAIndefinite
from
October 1, 2003
Roselli, AntonioTopsfield, MACPAIndefinite
from
October 17, 2003
Moran, Maxine C.San Clemente, CACPAIndefinite
from
October 17, 2003
Muscio, Richard J.Solana Beach, CACPAIndefinite
from
October 17, 2003
Yates, James L.LaPlata, MDCPAIndefinite
from
October 21, 2003
Censure Issued by Consent
Under Title 31, Code of Federal Reg-
ulations, Part 10, in lieu of a proceeding
being instituted or continued, an attorney,
certified public accountant, enrolled agent,
or enrolled actuary, may offer his or her
consent to the issuance of a censure. Cen-
sure is a public reprimand.
The following individuals have con-
sented to the issuance of a Censure:
NameAddressDesignationDate of Censure
Haynes, Gwenivar L.Ellenwood, GAEnrolled AgentAugust 1, 2003
Ritchie, DonaldMilton, MAEnrolled AgentSeptember 3, 2003
Bagley, HaywoodVista, CAEnrolled AgentSeptember 4, 2003
Book, Robert L.Plymouth, MNEnrolled AgentSeptember 15, 2003
December 1, 200311702003-48 I.R.B.

Suspension of Tax-Exempt Status
of Organizations Identified With
Terrorism
Announcement 2003–74
I. Purpose
This announcement is a public notice
of the suspension under section 501(p) of
the Internal Revenue Code of the federal
tax exemption of certain organizations that
have been designated as supporting or en-
gaging in terrorist activity or supporting
terrorism. Contributions made to an organ-
ization during the period that the organiza-
tion’s tax-exempt status is suspended are
not deductible for federal tax purposes.
II. Background
The federal government has designated
a number of organizations as supporting or
engaging in terrorist activity or supporting
terrorism under the Immigration and Na-
tionality Act, the International Emergency
Economic Powers Act, and the United Na-
tions Participation Act of 1945. Federal
law prohibits most contributions to orga-
nizations that have been so designated.
Section 501(p) of the Code was enacted
as part of the Military Family Tax Relief
Act of 2003 (P.L. 108–121), effective
November 11, 2003. Section 501(p)(1)
suspends the exemption from tax un-
der section 501(a) of any organization
describedinsection501(p)(2).Anorgan-
ization is described in section 501(p)(2)
if the organization is designated or oth-
erwise individuallyidentified (1) under
certain provisions of the Immigration and
Nationality Act as a terrorist organization
or foreign terrorist organization; (2) in or
pursuant to an Executive Order which is
relatedtoterrorismandissuedunderthe
authority of the International Emergency
Economic Powers Act or section 5 of the
United Nations Participation Act of 1945
for the purpose of imposing on such or-
ganization an economic or other sanction;
or(3)inorpursuanttoanExecutiveOrder
issued under the authority of any federal
law, if the organization is designated or
otherwise individually identified in or pur-
suant to the Executive Order as supporting
or engaging in terrorist activity (as defined
in the Immigration and Nationality Act)
or supporting terrorism (as defined in
the Foreign Relations Authorization Act)
and the Executive Order refers to section
501(p)(2).
Under section 501(p)(3) of the Code,
suspension of an organization’s tax ex-
emption begins on the date of the first pub-
lication of a designation or identification
with respect to the organization, as de-
scribed above, or the date on which sec-
tion 501(p) was enacted, whichever is later.
This suspension continues until all desig-
nations and identifications of the organiza-
tion are rescinded under the law or Execu-
tive Order under which such designation or
identification was made.
Under section 501(p)(4) of the Code,
no deduction is allowed under any pro-
vision of the Internal Revenue Code for
any contribution to an organization during
any period in which the organization’s
tax exemption is suspended under section
501(p). Thus, for example, no chari-
table contribution deduction is allowed
under section 170 (relating to the in-
come tax), section 545(b)(2) (relating to
undistributed personal holding company
income), section 556(b)(2) (relating to
undistributed foreign personal holding
company income), section 642(c) (relating
to charitable set asides), section 2055 (re-
lating to the estate tax), section 2106(a)(2)
(relating to the estate tax for nonresident
aliens) and section 2522 (relating to the
gift tax) for contributions made to the
organization during the suspension period.
Prior to the effective date of suspen-
sion of exemption under section 501(p),
the three organizations listed below were
designated under Executive Order 13224,
entitled "Blocking Property and Prohibit-
ing Transactions With Persons Who Com-
mit, Threaten To Commit, or Support Ter-
rorism.” Contributions made to these orga-
nizations in violation of the Executive Or-
der prior to this suspension are not tax de-
ductible under the Internal Revenue Code.
III. Notice of Suspensions and
Nondeductibility of Contributions
Organizations whose tax exemption has
been suspended under section 501(p) and
the effective date of such suspension are
listed below. Contributions made to these
organizations during the period of suspen-
sion are not deductible for federal tax pur-
poses.
Benevolence International Foundation,
Inc.
Palos Hills, Illinois
Effective Date: November 11, 2003
Global Relief Foundation, Inc.
Bridgeview, Illinois
Effective Date: November 11, 2003
Holy Land Foundation for Relief and
Development
Richardson, Texas
Effective Date: November 11, 2003
IV. Federal Tax Filings
An organization whose exempt status
has been suspended under section 501(p)
does not file Form 990 and is required to
file the appropriate Federal income tax re-
turns for the taxable periods beginning on
the date of the suspension. The organi-
zation must continue to file all other ap-
propriate federal tax returns, including em-
ployment tax returns, and may also have to
file federal unemployment tax returns.
V. Contact Information
For additional information regarding
the designation or identification of an or-
ganization described insection 501(p)(2),
contact the Compliance Division at the Of-
fice of Foreign Assets Control of the U.S.
Treasury Department at 202–622–2490.
Additional information is also available
for download from the Office’s Internet
Home Page atwww.treas.gov/ofac.
For additional information regarding
the suspension of the federal tax ex-
emption of an organization under section
501(p), contact Robert Fontenrose at (202)
283–9484 at the Internal Revenue Service.
Deletions From Cumulative List
of Organizations Contributions
to Which are Deductible Under
Section 170 of the Code
Announcement 2003–76
The name of an organization that no
longer qualifies as an organization de-
scribedinsection170(c)(2)oftheInternal
Revenue Code of 1986 is listed below.
Generally, the Service will not disallow
deductions for contributions made to a
listed organization on or before the date
2003-48 I.R.B.1171December 1, 2003

of announcement in the Internal Revenue
Bulletin that an organization no longer
qualifies. However, the Service is not
precluded from disallowing a deduction
for any contributions made after an or-
ganization ceases to qualify under section
170(c)(2) if the organization has not timely
filed a suit for declaratory judgment under
section 7428 and if the contributor (1) had
knowledge of the revocation of the ruling
or determination letter, (2) was aware that
such revocation was imminent, or (3) was
in part responsible for or was aware of the
activities or omissions of the organization
that brought about this revocation.
If on the other hand a suit for declara-
tory judgment has been timely filed, con-
tributions from individuals and organiza-
tions described in section 170(c)(2) that
are otherwise allowable will continue to
be deductible. Protection under section
7428(c) would begin on October 28, 2002,
and would end on the date the court first
determines that the organization is not de-
scribed in section 170(c)(2) as more partic-
ularly set forth in section 7428(c)(1). For
individual contributors, the maximum de-
duction protected is $1,000, with a hus-
band and wife treated as one contributor.
This benefit is not extended to any indi-
vidual, in whole or in part, for the acts or
omissions of the organization that were the
basis for revocation.
Zaire Unlimited
Calumet Park, IL
Partial Withdrawal of Proposed
Regulations Relating to Changes
in Entity Classification
Announcement 2003–78
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Partial withdrawal of notice of
proposed rulemaking.
SUMMARY: This document withdraws a
portion of a notice of proposed rulemak-
ing (REG–110385–99, 1999–2 C.B. 670)
published on November 29, 1999, address-
ing certain transactions that occur within a
specified period before or after a foreign
entity changed its classification to disre-
garded-entity status.
EFFECTIVE DATES: The withdrawal of
proposed §301.7701–3(h) is effective Oc-
tober 22, 2003.
FOR FURTHER INFORMATION
CONTACT: Ronald M. Gootzeit, (202)
622–3860 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
On December 18, 1996, Treasury and
IRS published in theFederal Register
final regulations (T.D. 8697, 1997–1
C.B. 215 [61 FR 66584]) relating to the
classification of business entities under
section 7701 (check-the-box regulations).
On November 29, 1999, Treasury and
the IRS published in theFederal Reg-
istera notice of proposed rulemaking
(REG–110385–99, 1999–2 C.B. 670
[64 FR 66591]) proposing to amend
§§301.7701–2 and 301.7701–3 of the
current check-the-box regulations (pro-
posed regulations). A public hearing on
the proposed regulations was held on
January 31, 2000. In addition, written
comments were received. Most of the
written and oral comments related to pro-
posed §301.7701–3(h), which provided a
rule that would have operated to change
the classification of a foreign disregarded
entity if a so-called “extraordinary trans-
action” occurred one day before or within
one year after the election to treat the entity
as disregarded. In general, commentators
criticized the approach adopted in this
rule as overly broad and expressed con-
cern that it would mitigate the increased
certainty promoted by the check-the-box
regulations in 1996.
After considering the comments re-
ceived, Treasury and the IRS issued
Notice 2003–46, 2003–28 IRB 53, on
June 26, 2003, announcing the intention
to withdraw the extraordinary transaction
rule in proposed §301.7701–3(h) and to
finalize the remaining provisions of the
proposed regulations addressing grand-
fathered entities and the relevancy of
classification status.
With the publication of this document,
proposed §301.7701–3(h) is withdrawn.
Final regulations (T.D. 9093) adopting
without substantive change the portions
of the proposed regulations relating to
grandfathered entities and the relevancy
of classification status are being published
on page 1156 of this issue of the Bulletin.
These final regulations do not adopt the
extraordinary transaction rule in proposed
§301.7701–3(h).
Drafting Information
The principal author of this withdrawal
notice is Ronald M. Gootzeit, Office of
Associate Chief Counsel (International).
However, other personnel from Treasury
and the IRS participated in its develop-
ment.
*****
Partial Withdrawal of a Notice of
Proposed Rulemaking
Accordingly, under the authority of 26
U.S.C. 7805, §301.7701–3(h) of the notice
of proposed rulemaking published in the
Federal Registeron November 29, 1999,
(64 FR 66591) is withdrawn.
Robert E. Wenzel,
Deputy Commissioner for
Services and Enforcement.
(Filed by the Office of
the Federal Register on October 21,
2003, 8:45 a.m., and published in the issue of the Federal
Register for October 22, 2003, 68 F.R. 60305)
December 1, 200311722003-48 I.R.B.

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the ef-
fect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is be-
ingextendedtoapplytoavariationofthe
fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that the
same principle also applies to B, the earlier
ruling is amplified. (Compare withmodi-
fied,below).
Clarifiedis used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confusion.
It is not used where a position in a prior
ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
withamplifiedandclarified,above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
beingstatedinanewruling.
Supersededdescribes a situation where
the new ruling does nothing more than re-
state the substance and situation of a previ-
ously published ruling (or rulings). Thus,
the term is used to republish under the
1986 Code and regulations the same po-
sition published under the 1939 Code and
regulations. The term is also used when
it is desired to republish in a single rul-
ing a series of situations, names, etc., that
were previously published over a period of
time in separate rulings. If the new rul-
ing does more than restate the substance
of a prior ruling, a combination of terms
is used. For example,modifiedandsu-
persededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is self
contained. In this case, the previously pub-
lished ruling is first modified and then, as
modified, is superseded.
Supplementedis used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names in
subsequent rulings. After the original rul-
ing has been supplemented several times, a
new ruling may be published that includes
the list in the original ruling and the ad-
ditions, and supersedes all prior rulings in
the series.
Suspendedis used in rare situations
to show that the previous published rul-
ings will not be applied pending some
future action such as the issuance of new
or amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The 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 Contributions 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.—Statement 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.
2003-48 I.R.B.iDecember 1, 2003

Numerical Finding List
1
Bulletins 2003–27 through 2003–48
Announcements:
2003-45, 2003-28 I.R.B.73
2003-46, 2003-30 I.R.B.222
2003-47, 2003-29 I.R.B.124
2003-48, 2003-28 I.R.B.73
2003-49, 2003-32 I.R.B.339
2003-50, 2003-30 I.R.B.222
2003-51, 2003-37 I.R.B.555
2003-52, 2003-32 I.R.B.345
2003-53, 2003-32 I.R.B.345
2003-54, 2003-40 I.R.B.761
2003-55, 2003-38 I.R.B.597
2003-56, 2003-39 I.R.B.694
2003-57, 2003-37 I.R.B.555
2003-58, 2003-40 I.R.B.746
2003-59, 2003-40 I.R.B.746
2003-60, 2003-45 I.R.B.1049
2003-61, 2003-42 I.R.B.890
2003-62, 2003-41 I.R.B.821
2003-63, 2003-45 I.R.B.1015
2003-64, 2003-43 I.R.B.934
2003-65, 2003-43 I.R.B.935
2003-66, 2003-45 I.R.B.1049
2003-67, 2003-44 I.R.B.1005
2003-68, 2003-45 I.R.B.1050
2003-69, 2003-46 I.R.B.1086
2003-70, 2003-46 I.R.B.1090
2003-71, 2003-46 I.R.B.1090
2003-72, 2003-47 I.R.B.1146
2003-73, 2003-47 I.R.B.1149
2003-74, 2003-48 I.R.B.1171
2003-76, 2003-48 I.R.B.1171
2003-78, 2003-48 I.R.B.1172
Notices:
2003-38, 2003-27 I.R.B.9
2003-39, 2003-27 I.R.B.10
2003-40, 2003-27 I.R.B.10
2003-41, 2003-28 I.R.B.49
2003-42, 2003-28 I.R.B.49
2003-43, 2003-28 I.R.B.50
2003-44, 2003-28 I.R.B.52
2003-45, 2003-29 I.R.B.86
2003-46, 2003-28 I.R.B.53
2003-47, 2003-30 I.R.B.132
2003-48, 2003-30 I.R.B.133
2003-49, 2003-32 I.R.B.294
2003-50, 2003-32 I.R.B.295
2003-51, 2003-33 I.R.B.361
2003-52, 2003-32 I.R.B.296
2003-53, 2003-33 I.R.B.362
2003-54, 2003-33 I.R.B.363
Notices— Continued:
2003-55, 2003-34 I.R.B.395
2003-56, 2003-34 I.R.B.396
2003-57, 2003-34 I.R.B.397
2003-58, 2003-35 I.R.B.429
2003-59, 2003-35 I.R.B.429
2003-60, 2003-39 I.R.B.643
2003-61, 2003-42 I.R.B.851
2003-62, 2003-38 I.R.B.576
2003-63, 2003-38 I.R.B.577
2003-64, 2003-39 I.R.B.646
2003-65, 2003-40 I.R.B.747
2003-66, 2003-48 I.R.B.1159
2003-67, 2003-40 I.R.B.752
2003-68, 2003-41 I.R.B.824
2003-69, 2003-42 I.R.B.851
2003-70, 2003-43 I.R.B.916
2003-71, 2003-43 I.R.B.922
2003-72, 2003-44 I.R.B.964
2003-73, 2003-45 I.R.B.1017
2003-74, 2003-47 I.R.B.1097
Proposed Regulations:
REG-209377-89, 2003-36 I.R.B.521
REG-208199-91, 2003-40 I.R.B.756
REG-106486-98, 2003-42 I.R.B.853
REG-108639-99, 2003-35 I.R.B.431
REG-106736-00, 2003-28 I.R.B.60
REG-108524-00, 2003-42 I.R.B.869
REG-115037-00, 2003-44 I.R.B.967
REG-140378-01, 2003-41 I.R.B.825
REG-107618-02, 2003-27 I.R.B.13
REG-122917-02, 2003-27 I.R.B.15
REG-128203-02, 2003-41 I.R.B.828
REG-131997-02, 2003-33 I.R.B.366
REG-133791-02, 2003-35 I.R.B.493
REG-138495-02, 2003-37 I.R.B.541
REG-138499-02, 2003-37 I.R.B.541
REG-140808-02, 2003-38 I.R.B.582
REG-140930-02, 2003-38 I.R.B.583
REG-141402-02, 2003-43 I.R.B.932
REG-141669-02, 2003-34 I.R.B.408
REG-142538-02, 2003-38 I.R.B.590
REG-143679-02, 2003-38 I.R.B.592
REG-144908-02, 2003-38 I.R.B.593
REG-146893-02, 2003-44 I.R.B.967
REG-157164-02, 2003-44 I.R.B.1004
REG-162625-02, 2003-35 I.R.B.500
REG-163974-02, 2003-38 I.R.B.595
REG-108676-03, 2003-36 I.R.B.523
REG-112039-03, 2003-35 I.R.B.504
REG-113112-03, 2003-40 I.R.B.760
REG-116914-03, 2003-32 I.R.B.338
REG-121122-03, 2003-37 I.R.B.550
REG-129709-03, 2003-35 I.R.B.506
Proposed Regulations— Continued:
REG-130262-03, 2003-37 I.R.B.553
REG-132483-03, 2003-34 I.R.B.410
REG-132760-03, 2003-43 I.R.B.933
REG-146692-03, 2003-48 I.R.B.1164
Revenue Procedures:
2003-45, 2003-27 I.R.B.11
2003-46, 2003-28 I.R.B.54
2003-47, 2003-28 I.R.B.55
2003-48, 2003-29 I.R.B.86
2003-49, 2003-29 I.R.B.89
2003-50, 2003-29 I.R.B.119
2003-51, 2003-29 I.R.B.121
2003-52, 2003-30 I.R.B.134
2003-53, 2003-31 I.R.B.230
2003-54, 2003-31 I.R.B.236
2003-55, 2003-31 I.R.B.242
2003-56, 2003-31 I.R.B.249
2003-57, 2003-31 I.R.B.257
2003-58, 2003-31 I.R.B.262
2003-59, 2003-31 I.R.B.268
2003-60, 2003-31 I.R.B.274
2003-61, 2003-32 I.R.B.296
2003-62, 2003-32 I.R.B.299
2003-63, 2003-32 I.R.B.304
2003-64, 2003-32 I.R.B.306
2003-65, 2003-32 I.R.B.336
2003-66, 2003-33 I.R.B.364
2003-67, 2003-34 I.R.B.397
2003-68, 2003-34 I.R.B.398
2003-69, 2003-34 I.R.B.403
2003-70, 2003-34 I.R.B.406
2003-71, 2003-36 I.R.B.517
2003-72, 2003-38 I.R.B.578
2003-73, 2003-39 I.R.B.647
2003-74, 2003-43 I.R.B.923
2003-75, 2003-45 I.R.B.1018
2003-76, 2003-43 I.R.B.924
2003-77, 2003-44 I.R.B.964
2003-78, 2003-45 I.R.B.1029
2003-79, 2003-45 I.R.B.1036
2003-80, 2003-45 I.R.B.1037
2003-81, 2003-45 I.R.B.1046
2003-82, 2003-47 I.R.B.1097
2003-83, 2003-47 I.R.B.1099
2003-84, 2003-48 I.R.B.1159
Revenue Rulings:
2003-70, 2003-27 I.R.B.3
2003-71, 2003-27 I.R.B.1
2003-72, 2003-33 I.R.B.346
2003-73, 2003-28 I.R.B.44
2003-74, 2003-29 I.R.B.77
2003-75, 2003-29 I.R.B.79
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2003-1 through 2003-26 is in Internal Revenue Bulletin 2003-27,
dated July 7, 2003.
December 1, 2003ii2003-48 I.R.B.

Revenue Rulings— Continued:
2003-76, 2003-33 I.R.B.355
2003-77, 2003-29 I.R.B.75
2003-78, 2003-29 I.R.B.76
2003-79, 2003-29 I.R.B.80
2003-80, 2003-29 I.R.B.83
2003-81, 2003-30 I.R.B.126
2003-82, 2003-30 I.R.B.125
2003-83, 2003-30 I.R.B.128
2003-84, 2003-32 I.R.B.289
2003-85, 2003-32 I.R.B.291
2003-86, 2003-32 I.R.B.290
2003-87, 2003-29 I.R.B.82
2003-88, 2003-32 I.R.B.292
2003-89, 2003-37 I.R.B.525
2003-90, 2003-33 I.R.B.353
2003-91, 2003-33 I.R.B.347
2003-92, 2003-33 I.R.B.350
2003-93, 2003-33 I.R.B.346
2003-94, 2003-33 I.R.B.357
2003-95, 2003-33 I.R.B.358
2003-96, 2003-34 I.R.B.386
2003-97, 2003-34 I.R.B.380
2003-98, 2003-34 I.R.B.378
2003-99, 2003-34 I.R.B.388
2003-100, 2003-34 I.R.B.385
2003-101, 2003-36 I.R.B.513
2003-102, 2003-38 I.R.B.559
2003-103, 2003-38 I.R.B.568
2003-104, 2003-39 I.R.B.636
2003-105, 2003-40 I.R.B.696
2003-106, 2003-44 I.R.B.936
2003-107, 2003-41 I.R.B.815
2003-108, 2003-44 I.R.B.963
2003-109, 2003-42 I.R.B.839
2003-110, 2003-46 I.R.B.1083
2003-111, 2003-45 I.R.B.1009
2003-112, 2003-45 I.R.B.1007
2003-113, 2003-44 I.R.B.962
2003-114, 2003-45 I.R.B.1012
2003-115, 2003-46 I.R.B.1052
2003-116, 2003-46 I.R.B.1083
2003-117, 2003-46 I.R.B.1051
2003-118, 2003-47 I.R.B.1095
2003-119, 2003-47 I.R.B.1094
2003-120, 2003-48 I.R.B.1154
2003-121, 2003-48 I.R.B.1153
Social Security Contribution and Benefit
Base; Domestic Employee Coverage
Threshhold:
2003-66, 2003-48 I.R.B.1159
Tax Conventions:
2003-58, 2003-40 I.R.B.746
2003-59, 2003-40 I.R.B.746
2003-62, 2003-41 I.R.B.821
2003-63, 2003-45 I.R.B.1015
Treasury Decisions:
9061, 2003-27 I.R.B.5
9062, 2003-28 I.R.B.46
9063, 2003-36 I.R.B.510
9064, 2003-36 I.R.B.508
9065, 2003-36 I.R.B.515
9066, 2003-36 I.R.B.509
9067, 2003-32 I.R.B.287
9068, 2003-37 I.R.B.538
9069, 2003-37 I.R.B.525
9070, 2003-38 I.R.B.574
9071, 2003-38 I.R.B.560
9072, 2003-37 I.R.B.527
9073, 2003-38 I.R.B.570
9074, 2003-39 I.R.B.601
9075, 2003-39 I.R.B.608
9076, 2003-38 I.R.B.562
9077, 2003-39 I.R.B.634
9078, 2003-39 I.R.B.630
9079, 2003-40 I.R.B.729
9080, 2003-40 I.R.B.696
9081, 2003-35 I.R.B.420
9082, 2003-41 I.R.B.807
9083, 2003-40 I.R.B.700
9084, 2003-40 I.R.B.742
9085, 2003-41 I.R.B.775
9086, 2003-41 I.R.B.817
9087, 2003-41 I.R.B.781
9088, 2003-42 I.R.B.841
9089, 2003-43 I.R.B.906
9090, 2003-43 I.R.B.891
9091, 2003-44 I.R.B.939
9092, 2003-46 I.R.B.1055
9093, 2003-48 I.R.B.1156
2003-48 I.R.B.iiiDecember 1, 2003

Findings List of Current Actions on
Previously Published Items
1
Bulletins 2003-27 through 2003-48
Notices:
87-5
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
87-66
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
87-79
Modified by
Notice 2003-65, 2003-40 I.R.B.747
89-79
Modified and superseded by
Rev. Proc. 2003-47, 2003-28 I.R.B.55
89-94
Modified by
Notice 2003-50, 2003-32 I.R.B.295
94-46
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
95-18
Modified by
Notice 2003-70, 2003-43 I.R.B.916
95-50
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
95-53
Modified and superseded by
Notice 2003-55, 2003-34 I.R.B.395
2001-4
Section III.C. superseded for 2004 and subsequent
calendar years by
Rev. Proc. 2003-64, 2003-32 I.R.B.306
2001-70
Amplified by
Notice 2003-45, 2003-29 I.R.B.86
2001-74
Amplified by
Notice 2003-45, 2003-29 I.R.B.86
2002-1
Amplified by
Notice 2003-49, 2003-32 I.R.B.294
2003-12
Obsoleted by
T.D. 9090, 2003-43 I.R.B.891
REG-141402-02, 2003-43 I.R.B.932
Notices— Continued:
2003-36
Modified by
Notice 2003-59, 2003-35 I.R.B.429
Proposed Regulations:
REG-EE-86-88 (LR-279-81)
Withdrawn by
REG-122917-02, 2003-27 I.R.B.15
REG-105606-99
Withdrawn by
REG-133791-02, 2003-35 I.R.B.493
REG-110385-99
Partially withdrawn by
Ann. 2003-78, 2003-48 I.R.B.1172
Revenue Procedures:
66-3
Revoked by
Rev. Proc. 2003-74, 2003-43 I.R.B.923
66-50
Modified, amplified, and superseded by
Rev. Proc. 2003-62, 2003-32 I.R.B.299
68-23
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
68-41
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
70-6
Modified and superseded, in part by
Notice 2003-70, 2003-43 I.R.B.916
77-12
Amplified, modified, and superseded by
Rev. Proc. 2003-51, 2003-29 I.R.B.121
80-4
Modified and amplified by
Notice 2003-70, 2003-43 I.R.B.916
81-40
Modified and superseded by
Rev. Proc. 2003-62, 2003-32 I.R.B.299
84-71
Revoked by
Rev. Proc. 2003-74, 2003-43 I.R.B.923
85–56
Revoked by
Rev. Proc. 2003-74, 2003-43 I.R.B.923
87–21
Revoked by
Rev. Proc. 2003-74, 2003-43 I.R.B.923
Revenue Procedures— Continued:
89-12
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
89-21
Superseded by
Rev. Proc. 2003-53, 2003-31 I.R.B.230
89-31
Obsoleted by
REG-108524-00, 2003-42 I.R.B.869
90-19
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
90-32
Section4supersededby
Rev. Proc. 2003-55, 2003-31 I.R.B.242
Section5supersededby
Rev. Proc. 2003-56, 2003-31 I.R.B.249
Section6supersededby
Rev. Proc. 2003-57, 2003-31 I.R.B.257
Section7supersededby
Rev. Proc. 2003-59, 2003-31 I.R.B.268
Section8supersededby
Rev. Proc. 2003-60, 2003-31 I.R.B.274
91-11
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
91-13
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
91-39
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
92-33
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
92-35
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
92–39
Superseded in part by
Rev. Proc. 2003-78, 2003-43 I.R.B.1029
92-66
Obsoleted by
REG-108524-00, 2003-42 I.R.B.869
92-88
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2003-1 through 2003-26 is in Internal Revenue Bulletin 2003-27, dated July 7, 2003.
December 1, 2003iv2003-48 I.R.B.

Revenue Procedures— Continued:
93-17
Obsoleted by
REG-132483-03, 2003-34 I.R.B.410
94-46
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
94-52
Revoked by
Rev. Proc. 2003-74, 2003-43 I.R.B.923
95-10
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
95-11
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
95-39
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
96-17
Modified and superseded by
Rev. Proc. 2003-69, 2003-34 I.R.B.403
96-30
Modified and amplified by
Rev. Proc. 2003-48, 2003-29 I.R.B.86
96-38
Obsoleted by
Rev. Proc. 2003-71, 2003-36 I.R.B.517
97-11
Revoked by
Rev. Proc. 2003-74, 2003-43 I.R.B.923
2000-12
Modified by
Rev. Proc. 2003-64, 2003-32 I.R.B.306
2000-15
Superseded by
Rev. Proc. 2003-61, 2003-32 I.R.B.296
2000-20
Modified by
Rev. Proc. 2003-72, 2003-38 I.R.B.578
2001-19
Amplified by
Rev. Proc. 2003-75, 2003-45 I.R.B.1018
2001-40
Superseded by
Rev. Proc. 2003-83, 2003-47 I.R.B.1099
2002-9
Modified by
T.D. 9090, 2003-43 I.R.B.891
REG-141402-02, 2003-43 I.R.B.932
Revenue Procedures— Continued:
Rev. Proc. 2003-45, 2003-27 I.R.B.11
Amplified and modified by
Rev. Proc. 2003-50, 2003-29 I.R.B.119
Modified and amplified by
Rev. Proc. 2003-63, 2003-32 I.R.B.304
Rev. Rul. 2003-81, 2003-30 I.R.B.126
2002-13
Revoked by
Rev. Proc. 2003-68, 2003-34 I.R.B.398
2002-14
Amplified by
Rev. Proc. 2003-75, 2003-45 I.R.B.1018
2002-29
Modified by
Rev. Proc. 2003-72, 2003-38 I.R.B.578
2002-33
Amplified and modified by
Rev. Proc. 2003-50, 2003-29 I.R.B.119
2002-34
Superseded by
Rev. Proc. 2003-52, 2003-30 I.R.B.134
2002-38
Modified by
Rev. Proc. 2003-79, 2003-45 I.R.B.1036
2002-39
Modified by
Rev. Proc. 2003-79, 2003-45 I.R.B.1036
2002-45
Revoked by
Rev. Proc. 2003-68, 2003-34 I.R.B.398
2002-60
Superseded by
Rev. Proc. 2003-73, 2003-39 I.R.B.647
2002-61
Superseded by
Rev. Proc. 2003-76, 2003-43 I.R.B.924
2002-63
Superseded by
Rev. Proc. 2003-80, 2003-45 I.R.B.1037
2002-68
Modified and superseded by
Rev. Proc. 2003-84, 2003-48 I.R.B.1159
2003-3
Modified by
Rev. Proc. 2003-48, 2003-29 I.R.B.86
2003-15
Modified and superseded by
Rev. Proc. 2003-49, 2003-29 I.R.B.89
2003-28
Modified by
Ann. 2003-35, 2003-38 I.R.B.597
Revenue Procedures— Continued:
2003-44
Modified by
Rev. Proc. 2003-72, 2003-38 I.R.B.578
2003-49
Supplemented by
Rev. Proc. 2003-81, 2003-45 I.R.B.1046
Revenue Rulings:
53-56
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
54-139
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
54-396
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
55-105
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
55-372
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
56-128
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
56-160
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
56-212
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
56-220
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
56-271
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
56-344
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
56-448
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
56-451
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
56-586
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
2003-48 I.R.B.vDecember 1, 2003

Revenue Rulings— Continued:
56-680
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
56-681
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
57-116
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
57-296
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
57-542
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
58-92
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
58-618
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
59-108
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
59-120
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
59-122
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
59-233
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
59-326
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
59-356
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
59-400
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
59-412
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
60-49
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
60-246
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
Revenue Rulings— Continued:
60-262
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
60-307
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
61-96
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
63-157
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
63-224
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
63-248
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
64-147
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
64-177
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
64-285
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
65-110
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
65-260
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
65-273
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
66-4
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
66-23
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
66-610
Partially obsoleted by
Rev. Rul. 2003-105, 2003-40 I.R.B.696
66-290
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
67-186
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
Revenue Rulings— Continued:
67-189
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
67-326
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
68-309
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
68-388
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
68-434
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
68-477
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
68-522
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
68-608
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
68-640
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
68-641
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
69-18
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
69-20
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
69-241
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
69-361
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
69-426
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
69-485
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
69-517
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
December 1, 2003vi2003-48 I.R.B.

Revenue Rulings— Continued:
70-6
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
70-111
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
70-229
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
70-230
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
70-264
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
70-286
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
70-378
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
70-409
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
70-496
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
71-13
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
71-384
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
71-440
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
71-453
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
71-454
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
71-495
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
71-518
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
71-565
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
Revenue Rulings— Continued:
71-582
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
72-61
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
72-116
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
72-212
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
72-357
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
72-472
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
72-526
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
72-599
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
72-603
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
73-46
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
73-119
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
73-182
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
73-257
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
73-277
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
73-473
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
73-490
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
73-498
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
Revenue Rulings— Continued:
74-6
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
74-59
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
74-73
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
74-83
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
74-87
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
74-211
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
74-376
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
74-476
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
74-521
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
74-610
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
75-53
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
75-54
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
75-105
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
75-106
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
75-107
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
75-111
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
75-134
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
2003-48 I.R.B.viiDecember 1, 2003

Revenue Rulings— Continued:
75-160
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
75-174
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
75-179
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
75-212
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
75-248
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
75-298
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
75-341
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
75-426
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
75-468
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
75-515
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
75-561
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
76-44
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
76-67
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
76-90
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
76-225
Revoked by
T.D. 9068, 2003–37 I.R.B.538
76-239
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
76-329
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
Revenue Rulings— Continued:
76-347
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
76-535
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
77-41
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
77-81
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
77-150
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
77-256
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
77-284
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
77-321
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
77-343
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
77-405
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
77-456
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
77-482
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
77-483
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
78-89
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
78-287
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
78-420
Obsoleted by
Rev. Rul. 2003-105, 2003-40 I.R.B.696
78-441
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
Revenue Rulings— Continued:
79-29
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
79-50
Obsoleted by
Rev. Rul. 2003-105, 2003-40 I.R.B.696
79-71
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
79-82
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
79-104
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
79-116
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
79-314
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
79-410
Amplified by
Rev. Rul. 2003-90, 2003-33 I.R.B.353
79-424
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
80-78
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
80-79
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
80-101
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
80-167
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
80-170
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
80-358
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
81-190
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
81-225
Clarified and amplified by
Rev. Rul. 2003-92, 2003-33 I.R.B.350
December 1, 2003viii2003-48 I.R.B.

Revenue Rulings— Continued:
81-247
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
82-164
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
82-226
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
83-101
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
83-119
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
84-28
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
84-30
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
85-55
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
85-136
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
86-52
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
87-1
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
87-95
Superseded by
Rev. Rul. 2003-109, 2003-42 I.R.B.839
88-7
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
89-72
Obsoleted by
Rev. Rul. 2003-99, 2003-34 I.R.B.388
94-56
Superseded by
Rev. Rul. 2003-109, 2003-42 I.R.B.839
2002-78
Supplemented and superseded by
Rev. Rul. 2003-118, 2003-47 I.R.B.1095
2002-79
Supplemented and superseded by
Rev. Rul. 2003-119, 2003-47 I.R.B.1094
Revenue Rulings— Continued:
2003-58
Distinguished by
Rev. Rul. 2003-102, 2003-38 I.R.B.559
Treasury Decisions:
9033
Removed by
T.D. 9065, 2003-36 I.R.B.515
9083
Corrected by
Ann. 2003-60, 2003-45 I.R.B.1049
2003-48 I.R.B.ixDecember 1, 2003
*U.S. Government Printing Office: 2003—304–774/60111