SECTION 5. AREAS UNDER

EXTENSIVE STUDY IN WHICH RULINGS OR DETERMINATION LETTERS WILL NOT BE ISSUED UNTIL THE SERVICE RESOLVES THE ISSUE THROUGH PUBLICATION OF A REVENUE RULING, REVENUE PROCEDURE, REGULATIONS OR OTHERWISE

.01 Section 61.—Gross Income Defined.—Whether amounts voluntarily deferred by a taxpayer under a

(34) Section 451.—General Rule for Taxable Year of Inclusion.—The tax consequences of a nonqualified deferred compensation arrangement using a grantor trust where the trust fails to meet the requirements of Rev. Proc. 92–64, 1992–2 C.B. 422. (35) Section 584.—Common Trust Funds.—Whether a common trust fund plan meets the requirements of § 584. (For § 584 plan drafting guidance, see Rev. Proc. 92–51, 1992–1 C.B. 988.)

(36) Section 642.—Special Rules for Credits and Deductions; Pooled Income Fund.—Whether a pooled income fund satisfies the requirements described in § 642(c)(5).

(37) Section 664.—Charitable Remainder Trusts.—Whether a charitable remainder trust that provides for annuity or unitrust payments for one or two measuring lives satisfies the requirements described in § 664.

(38) Sections 671 to 679.—Grantors and Others Treated as Substantial Owners.—In a nonqualified, unfunded deferred compensation arrangement described in Rev. Proc. 92–64, the tax consequences of the use of a trust, other than the model trust described in that revenue procedure.

(39) Section 816.—Life Insurance Company Defined.—Whether the requisite risk shifting and risk distribution necessary to constitute insurance are present for purposes of determining if a company is an ‘‘insurance company’’ under § 1.801–3(a), unless the facts of the transaction are within the scope of Rev. Rul. 78–338, 1978–2 C.B. 107, or Rev. Rul. 77–316, 1977–2 C.B. 53.

(40) Section 1502.—Regulations.— Whether a parent cooperative housing corporation (as defined in § 216(b)(1)) will be permitted to file a consolidated income tax return with its transferee subsidiary, if the transferee engages in commercial activity with respect to the real property interest transferred to it by the parent.

(41) Section 2055.—Transfers for Public, Charitable, and Religious Uses.—Whether a transfer to a pooled income fund described in § 642(c)(5) qualifies for a charitable deduction under § 2055(e)(2)(A).

(42) Section 2055.—Transfers for Public, Charitable, and Religious Uses.—Whether a transfer to a charitable remainder trust described in § 664 that provides for annuity or unitrust payments for one or two measuring lives qualifies for a charitable deduction under § 2055(e)(2)(A).

(43) Section 2522.—Charitable and Similar Gifts.—Whether a transfer to a pooled income fund described in § 642(c)(5) qualifies for a charitable deduction under § 2522(c)(2)(A).

(44) Section 2522.—Charitable and Similar Gifts.—Whether a transfer to a charitable remainder trust described in § 664 that provides for annuity or unitrust payments for one or two measuring lives qualifies for a charitable deduction under § 2522(c)(2)(A).

(45) Section 7701.—Definitions.— Whether what is generally known as a foreign corporation will be classified as a partnership for United States tax purposes, if the taxpayer requests classification as a partnership.

(46) Section 7701.—Definitions.— Whether a foreign partnership will be classified as an association for United States tax purposes, if the taxpayer requests classification as an association.

(47) Section 7701.—Definitions.— Whether a limited partnership lacks the corporate characteristics of limited liability and continuity of life if the limited partnership (i) is formed pursuant to a state limited partnership act that the Service has determined in a revenue ruling is a statute that corresponds to the Uniform Limited Partnership Act, and (ii) meets the other requirements contained in Rev. Proc. 92–88, 1992–2 C.B. 496. .02 General areas. (1) Any matter in which the determination requested is primarily one of fact, e.g ., market value of property, or whether an interest in a corporation is to be treated as stock or indebtedness.

(2) Situations where the requested ruling deals with only part of an integrated transaction. Generally, a letter ruling will not be issued on only part of an integrated transaction. If, however, a part of a transaction falls under a no-rule area, a letter ruling on other parts of the transaction may be issued. Before preparing the letter ruling request, a taxpayer should call the Branch having jurisdiction for the matters on which the taxpayer is seeking a letter ruling to discuss whether a letter ruling will be issued on part of the transaction.

(3) Situations where two or more items or sub-methods of accounting are interrelated. If two or more items or sub-methods of accounting are interrelated, ordinarily a letter ruling will not be issued on a change in accounting method involving only one of the items or sub-methods.

90

transfer is the result of solicitation by promoters, brokers, or investment houses, or (ii) the transferee corporation’s stock is issued in a form designed to render it readily tradable.

.15 Section 368.—Definitions Relating to Corporate Reorganizations.—The tax consequences under § 368 or other provisions of the Code with respect to a transaction in which one corporation owns stock in a second corporation, the first corporation is not an ‘‘80-percent distributee’’ of the second corporation under § 337(c), and the two corporations are combined.

.16 Section 451.—See section 5.04, above.

.17 Section 453.—See section 5.13, above.

.18 Section 671.—Trust Income, Deductions, and Credits Attributable to Grantors and Others as Substantial Owners.—Whether the grantor will be considered the owner of any portion of a trust when (i) substantially all of the trust corpus consists or will consist of insurance policies on the life of the grantor or the grantor’s spouse, (ii) the trustee or any other person has a power to apply the trust’s income or corpus to the payment of premiums on policies of insurance on the life of the grantor or the grantor’s spouse, (iii) the trustee or any other person has a power to use the trust’s assets to make loans to the grantor’s estate or to purchase assets from the grantor’s estate, and (iv) there is a right or power in any person that would cause the grantor to be treated as the owner of all or a portion of the trust under §§ 673 to 677.

.19 Section 721.—Nonrecognition of Gain or Loss on Contribution.— Whether § 721 applies to the contribution of widely held developed or undeveloped real property or interests therein; widely held oil and gas properties or interests therein; or any similarly held properties or interests to a partnership in exchange for an interest in the partnership when (i) the contribution is the result of solicitation by promoters, brokers, or investment houses, or (ii) the interest in the transferee partnership is issued in a form designed to render it readily tradable.

.20 Section 1239.—See section 5.13, above.

.21 Section 2503.—Taxable Gifts.— Whether the transfer of property to a trust will be a gift of a present interest in property when (i) the trust corpus

deferred-compensation plan maintained by an organization described in § 501 (other than a plan maintained by an eligible employer pursuant to the provisions of § 457) are currently includible in the taxpayer’s gross income.

.02 Sections 61 and 162.—Gross Income Defined; Trade or Business Expenses.—The tax consequences with respect to a salary reduction arrangement under which an employee receives and returns salary amounts to the employer. (Also §§ 3121, 3306, and 3401.) .03 Section 79.—Group-Term Life Insurance Purchased for Employees.— Whether life insurance provided for employees under a ‘‘retired lives reserve’’ plan will be considered groupterm insurance. (Also §§ 61, 72, 83, 101, 162, 264, and 641.) .04 Sections 83 and 451.—Property Transferred in Connection with Performance of Services; General Rule for Taxable Year of Inclusion.—When compensation is realized by a person who, in connection with the performance of services, is granted a nonstatutory option without a readily ascertainable fair market value to purchase stock at a price that is less than the fair market value of the stock on the date the option is granted.

.05 Section 104—Compensation for Injuries or Sickness.—Whether amounts received are excludable from gross income under § 104(a)(2) in situations affected by Commissioner v. Schleier, 515 U.S. (1995), 115 S.Ct. 2159. .06 Section 105.—Amounts Received Under Accident and Health Plans.—Whether a medical reimbursement plan, funded by employer contributions, containing a provision allowing unused amounts to be carried over and accumulated in an employee’s account qualifies as an accident and health plan under § 105.

.07 Section 107.—Rental value of parsonages.—Whether amounts distributed to a retired minister from a pension or annuity plan should be excludible from the minister’s gross income as a parsonage allowance under § 107.

.08 Section 162.—See section 5.02, above.

.09 Section 162.—Trade or Business Expenses.—Whether payments paid or accrued by a corporation to an exempt organization as described in § 501(c)(7) or § 501(c)(20) are deductible under § 162.

.10 Section 213.—Medical, Dental, etc., Expenses.—Whether amounts paid for medical insurance (or other medical care) extending substantially beyond the close of the taxable year may be deducted under § 213 in the year of payment, if the conditions of § 213(d)(7) are not satisfied.

.11 Section 302(b)(4) and (e).— Redemption from Noncorporate Shareholder in Partial Liquidation; Partial Liquidation Defined.—Whether a deemed surrender of stock as described in Rev. Rul. 90–13, 1990–1 C.B. 65, satisfies the requirements for a redemption, when:

(i) The corporation has outstanding more than one class of stock and there are priorities as to dividend or liquidating distributions or any other differences in stock rights, or

(ii) Either under the terms of the stock or as established contractually, there are outstanding any rights affecting the corporation’s stock, such as, but not limited to, warrants, options, convertible securities, shareholder agreements, or rights of first refusal.

.12 Section 306(b)(4).—Transactions N o t i n A v o i d a n c e . — W h e t h e r § 306(b)(4) applies to the distribution and disposition or redemption of ‘‘section 306 stock’’ that is subject to mandatory redemption.

.13 Sections 331, 453, and 1239.— The Tax Effects of Installment Sales of Property Between Entities with Common Ownership.—The tax effects of a transaction in which there is a transfer of property by a corporation to a partnership or other noncorporate entity (or the transfer of stock to such entity followed by a liquidation of the corporation) when more than a nominal amount of the stock of such corporation and the capital or beneficial interests in the purchasing entity (that is, more than 20 percent in value) is owned by the same persons, and the consideration to be received by the selling corporation or the selling shareholders includes an installment obligation of the purchasing entity.

.14 Section 351.—Transfer to Corporation Controlled by Transferor.— Whether § 351 applies to the transfer of widely held developed or undeveloped real property or interests therein; widely held oil and gas properties or interests therein; or any similarly held properties or interests to a corporation in exchange for shares of stock of such corporation when (i) the

91

consists or will consist substantially of insurance policies on the life of the grantor or the grantor’s spouse, (ii) the trustee or any other person has a power to apply the trust’s income or corpus to the payment of premiums on policies of insurance on the life of the grantor or the grantor’s spouse, (iii) the trustee or any other person has a power to use the trust’s assets to make loans to the grantor’s estate or to purchase assets from the grantor’s estate, (iv) the trust beneficiaries have the power to withdraw, on demand, any additional transfers made to the trust, and (v) there is a right or power in any person that would cause the grantor to be treated as the owner of all or a portion of the trust under §§ 673 to 677.

.22 Section 2514.—Powers of Appointment.—If the beneficiaries of a trust permit a power of withdrawal to lapse, whether § 2514(e) will be applicable to each beneficiary in regard to the power when (i) the trust corpus consists or will consist substantially of insurance policies on the life of the grantor or the grantor’s spouse, (ii) the trustee or any other person has a power to apply the trust’s income or corpus to the payment of premiums on policies of insurance on the life of the grantor or the grantor’s spouse, (iii) the trustee or any other person has a power to use the trust’s assets to make loans to the grantor’s estate or to purchase assets from the grantor’s estate, (iv) the trust beneficiaries have the power to withdraw, on demand, any additional transfers made to the trust, and (v) there is a right or power in any person that would cause the grantor to be treated as the owner of all or a portion of the trust under §§ 673 to 677.

.23 Section 2601.—Tax Imposed.— Whether a trust that is excepted from the application of the generationskipping transfer tax because it was irrevocable on September 25, 1985, will lose its excepted status if the situs of the trust is changed from the United States to a situs outside of the United States.

.24 Sections 3121, 3306, and 3401.—Definitions; Employment Taxes.—Who is the employer of an ‘‘employee-owner’’ as defined in § 269A(b)(2).

.25 Section 7701.—Definitions.— The classification of separately tradable instruments that are issued by a corporation as a unit, the components of which collectively contain the attributes of stock.