Part IV. Items of General Interest

2041(a)(1) and 2514(a), the lapse or release of a pre-1942 power is not subject to transfer tax.

The scope of the term ‘‘taxable transfer’’, as used in § 25.2511-1(c)(2), a related provision governing the disclaimer of interests created in taxable transfers made prior to January 1, 1977, was considered in the Eighth Circuit decision in United States v. Irvine, 981 F.2d 991 (8th Cir. 1992), rev’d, 114 S.Ct 1473 (1994), and in Ordway v. United States, 908 F.2d 890 (11th Cir. 1991). In these cases, the disclaimant argued that a disclaimer that did not satisfy the requirements of § 25.2511- 1(c)(2) was nonetheless effective for estate and gift tax purposes because the trust interest that was disclaimed was created pursuant to a transfer in trust made prior to the enactment of the federal gift tax. Accordingly, the disclaimant argued that the interest was not created in a ‘‘taxable transfer’’ prior to January 1, 1977, the regulation did not apply and the disclaimer had only to be effective under state law to avoid federal tax. The Service argued in both cases that the term ‘‘taxable transfer’’ references a generic completed gift under § 25.25112 of the regulations. The Eleventh Circuit agreed with the Service in Ordway, while the Eighth Circuit disagreed in Irvine . The Supreme Court did not resolve this issue in its review of Irvine . The Court concluded that even if § 25.2511-2 did not apply, the disclaimer caused the transfer of an interest that had not been timely disclaimed, and the transfer was subject to gift tax. In view of the conflicting Eighth and Eleventh Circuit decisions in Irvine and Ordway, the Treasury and the IRS believe that it is appropriate to clarify the regulations.

2. Disclaimer of Jointly-owned Property

The current regulations provide, in general, that in order to be a qualified disclaimer under section 2518, a surviving joint tenant’s disclaimer of both an interest passing to the joint tenant on the creation of the tenancy, and the survivorship interest in the joint tenancy or tenancy by the entirety, must be made within 9 months after the transfer creating the tenancy. Further, a joint tenant cannot make a qualified disclaimer of any portion of a joint interest attributable to consideration furnished by that tenant.

Notice of Proposed Rulemaking

Disclaimer of Interests and Powers

REG-208215-91

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking.

SUMMARY: This document contains proposed regulations relating to the treatment of disclaimers for estate and gift tax purposes. The regulations propose to clarify certain provisions governing the disclaimer of property interests and powers and, in addition, to conform the regulations to court decisions holding the current regulation invalid with respect to the disclaimer of joint property interests. The proposed regulations will affect persons who disclaim interests, powers or interests in jointly owned property after the effective date of these regulations.

DATES: Written comments and requests for a public hearing must be received by November 19, 1996.

ADDRESSES: Send submissions to: CC:DOM:CORP:R (REG-208215-91), room 5226, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand delivered between the hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:R (REG-208215-91), Courier’s Desk Internal Revenue Service, 1111 Constitution Avenue NW, Washington, DC. Alternately, taxpayers may submit comments electronically via the Internet by selecting the ‘‘Tax Regs’’ option of the IRS Home Page, or by submitting comments directly to the IRS Internet site at http:\www.irs.ustreas.gov\prod\tax_regs\ comments.html.

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, Dale Carlton, (202) 6223090; concerning submissions, Michael Slaughter, (202) 622-7190 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

This document proposes to amend the Estate and Gift Tax Regulations (26 CFR parts 20 and 25) under sections 2041, 2046, 2056, 2511, 2514, and

2518, relating to the disclaimer of interests in property and powers over property.

1. Interests and powers subject to the disclaimer rules

Under section 2518(a), if a person makes a qualified disclaimer, then for transfer tax purposes, the interest disclaimed is treated as never having passed to the person disclaiming. Under section 2518(b)(2)(A), in order to have a qualified disclaimer, an interest must be disclaimed within 9 months of the date of ‘‘the transfer creating the interest’’ in the person disclaiming. A person to whom any interest passes by reason of the exercise or lapse of a general power of appointment must disclaim the interest passing within 9 months after the exercise or lapse.

The current regulations provide that section 2518 applies to the disclaimer of interests or powers created pursuant to ‘‘taxable transfers’’ made after December 31, 1976. They further provide that the 9-month period within which the disclaimer must be made is to be determined with reference to the ‘‘taxable transfer’’ creating the interest in the disclaimant. The term ‘‘taxable transfer’’ was incorporated into the regulation based on a statement in the legislative history underlying the enactment of section 2518. H.R. Conf. Rep. No. 1515, 94th Cong., 2d Sess. 623 (1976). Because the reference point under the regulation is the ‘‘taxable transfer’’ creating the interest, the existing regulation could be viewed as implying that the disclaimer of an interest created in a transfer that is outside the scope of the estate or gift tax need not comply with the requirements of section 2518. For example, if the disclaimed property constitutes an interest in foreign situs property created pursuant to a transfer by a nonresident alien donor or decedent, the transfer by the nonresident alien would not be within the scope of the gift tax or estate tax. However, a disclaimer of such an interest would have to comply with section 2518; otherwise, there could be transfer tax consequences to the disclaimant.

Similarly, the regulations do not specifically address the disclaimer of a property interest passing as a result of the lapse or release of a general power of appointment created on or before October 21, 1942. Under sections

145 1996–38 I.R.B.

Section 25.2518-2(c)(4)(ii) provides a special rule with respect to joint tenancies and tenancies by the entirety in real property created after 1976 but prior to 1982. During that period, section 2515 applied in determining the gift tax consequences of the creation of a joint tenancy with right of survivorship or tenancy by the entirety in real property between husband and wife. Under section 2515, the creation of the tenancy was not treated as a gift subject to gift tax unless the parties elected to treat the creation of the tenancy as a gift. Rather, a transfer subject to gift tax occurs on the termination of the tenancy (other than by reason of the death of one of the tenants) if the proceeds of termination are not divided according to the consideration furnished by each party to the tenancy. Under § 25.2518-2(c)(4)(ii), in general, an interest in a tenancy created between 1976 and 1982 can be disclaimed within 9 months of the date of death of the first joint tenant to die, provided no election was made under section 2515 to treat the creation of the tenancy as a gift. The disclaimant can disclaim up to the portion of the tenancy included in the decedent’s gross estate under section 2040.

Section 2515 was enacted in the Internal Revenue Code of 1954, effective for tenancies created after December 31, 1954, and was repealed with respect to tenancies created after December 31, 1981, by the Economic Recovery Tax Act of 1981. The Technical and Miscellaneous Revenue Act of 1988 added section 2523(i)(3) which provides that, where the spouse of a donor is not a citizen of the United States, the principles of section 2515, as such section was in effect before its repeal, shall apply (except for the provisions providing for an election), in determining the gift tax consequences of the creation of a joint tenancy or tenancy by the entirety in real property between husband and wife.

Although section 2515 was effective for tenancies created after 1954 and before 1982, and, in addition, the principles of section 2515 are currently effective for tenancies created on or after July 14, 1988, where the donee spouse is not a citizen, the special rule in the current regulation applies only to tenancies subject to section 2515 created after 1976 and before 1982.

The validity of the current regulations with respect to joint interests that are unilaterally severable has been the subject of repeated litigation. In Kennedy v.

Commissioner, 804 F.2d 1332 (7th Cir. 1986), the court held that the surviving spouse’s survivorship interest in the decedent’s one-half interest in jointly held real property was created on the decedent’s death since, prior to that time, the decedent could have unilaterally severed the interest and defeated the spouse’s survivorship right in that interest. Accordingly, the court held that the survivorship interest could be disclaimed within 9 months of the decedent’s death. The court concluded that the current regulations are invalid to the extent that they require a survivorship interest in a severable joint tenancy to be disclaimed within 9 months of the creation of the tenancy. In Estate of Dancy v. Commis- sioner, 872 F.2d 84 (4th Cir. 1989) (involving personal property), and McDonald v. Commissioner, 853 F.2d 1494 (8th Cir. 1988) (involving real property), the courts also held the regulations invalid.

In McDonald, the Eighth Circuit remanded the case to the Tax Court to determine if the disclaimer was otherwise qualified under section 2518. On remand, the Service argued that since the joint property was attributable entirely to consideration furnished by the disclaiming spouse, the spouse could not disclaim any interest in the property under section 2518. The Tax Court rejected this argument in McDonald v. Commissioner, T.C.M. 1989-140.

The Service announced in A.O.D. CC-1990-06 (Feb. 7, 1990) that it will follow these decisions.

3. Disclaimer of Joint Bank Accounts

For gift tax purposes, the creation of a joint bank account is treated as an incomplete transfer since, generally, the contributing joint tenant may unilaterally withdraw contributed funds without the consent of the other joint tenant. Accordingly, unless a noncontributing joint tenant has withdrawn the funds, the transfer to a joint bank account does not become complete before the death of the first joint tenant.

Explanation of Provisions

1. Interests and powers subject to the disclaimer rules

The proposed amendment clarifies that the application of section 2518, or the commencement of the 9-month period, is not dependent on the actual imposition of a transfer tax when the interest to be disclaimed is created. The

proposed amendment substitutes the statutory language of section 2518(b)(2)(A), ‘‘transfer creating the interest,’’ for ‘‘taxable transfer’’ as the reference point for determining the scope of the regulations as well as when the time period for making the disclaimer commences. Under the proposed amendment, the term ‘‘transfer creating the interest’’ includes any inter vivos transfer that would be a completed gift under the gift tax regulations, whether or not a gift tax liability arises on the transfer and whether or not the transfer comes within the scope of the gift tax. Similarly, the amendment clarifies that, for testamentary transfers, the transfer creating the interest occurs on the date of the decedent’s death, whether or not an estate tax is imposed on the transfer and whether or not the transfer comes within the scope of the estate tax. The amendment also clarifies that, in the case of a disclaimer of an interest passing pursuant to the exercise, lapse, or release of a general power of appointment, the disclaimer must be made within 9 months of the exercise, lapse, or release of the power, regardless of whether the exercise, lapse, or release is subject to estate or gift tax. The proposed regulations make conforming changes to the estate and gift tax regulations.

2. Disclaimer of Jointly-owned Property

The proposed amendments would revise the regulations to provide that, in general, if a joint tenancy may be unilaterally severed by either party, then a surviving joint tenant may disclaim the one-half survivorship interest in property held in joint tenancy with right of survivorship within 9 months of the death of the first joint tenant to die, even if the surviving joint tenant provided some or all of the consideration for the creation of the tenancy.

The rationale of the courts in Dancy, Kennedy, and McDonald does not apply to joint interests that cannot be unilaterally severed under applicable state law, such as interests held in tenancy by the entirety. In tenancies by the entirety, the donee spouse’s joint interest in the property that cannot be unilaterally severed is created on the date the tenancy is created. Therefore, the proposed amendment to the regulations would reaffirm that any interest in a nonseverable cotenancy, including the survivorship interest, must be disclaimed within 9 months of the date of the creation of the tenancy. However, the Service requests comments on whether or under what circumstances (e.g., tenancy by the entirety ownership of a personal residence) the rule applicable to unilaterally severable interests should apply to interests that are not unilaterally severable.

The proposed amendments would extend the special rule in § 25.25182(c)(4)(ii) to tenancies created after December 31, 1954, and on or before December 31, 1981, the entire period during which section 2515 was in effect. In addition, the special rule would be expanded to include tenancies created on or after July 14, 1988, where the spouse of the donor is not a United States citizen. Under section 2523(i)(3), the creation of such tenancies is also subject to the rules of former section 2515. The special rule reflects the gift tax treatment of the creation of a joint tenancy or tenancy by the entirety that was subject to section 2515. The relief afforded by the special rule will apply to all tenancies that were subject on creation to section 2515. Under the special rule, the amount that the surviving joint tenant can disclaim is dependent on the amount that is includible in the decedent’s gross estate.

3. Disclaimer of Joint Bank Accounts

The proposed regulations provide specific rules to address the disclaimer of joint bank accounts. Because the transfer creating the interest in the funds remaining in the bank account at the death of the first joint tenant to die occurs at that tenant’s death, the 9-month period for making the qualified disclaimer commences on the death of the first joint tenant.

The proposed regulations also clarify that a surviving joint tenant cannot disclaim any portion of the account attributable to that survivor’s contribution to the account. These contributed funds are property owned by the survivor during the cotenancy and the survivor cannot disclaim property the survivor has always owned and never transferred. Further, the proposed regulations clarify that this rule applies even if only one-half of the property is included in the decedent’s gross estate under section 2040(b) because the joint tenants are married.

The proposed regulations also clarify the estate tax treatment of a disclaimed interest in a joint bank account. State law generally treats a disclaimant as predeceasing the decedent with respect

to the disclaimed interest. The disclaimed interest in a joint bank account (the creation of which is treated as an incomplete gift under the gift tax regulations), would lose its character as joint property and pass through the decedent’s probate estate. Accordingly, under such circumstances, the interest disclaimed is subject to inclusion in the decedent’s gross estate under section 2033, rather than section 2040(a) (providing for inclusion based on the contribution of each tenant) or section 2040(b) (providing for inclusion of one-half the property in the case of certain joint tenancies between spouses). The balance of the account not subject to the disclaimer retains its character as joint property and is includible in the decedent’s gross estate under either section 2040(a) or section 2040(b).

These rules are also made applicable to joint brokerage accounts, since the transfer tax treatment of these accounts generally parallels the treatment of joint bank accounts. See Rev. Rul. 69-148, 1969-1 C.B. 226.

Proposed Effective dates

The amendments to § § 25.2518-1(a) and 25.2518-2(c)(3) (substituting the statutory language in section 2518(b)(2)(A) ‘‘transfer creating the interest,’’ for ‘‘taxable transfer’’) and conforming changes to § § 20.2041-3(d)(6)(i), 20.2046-1, 20.2056(d)-2(a) and (b), 25.2511-1(c)(1), 25.2514-3(c)(5), are proposed to be effective for transfers creating the interest or power to be disclaimed made after the date of publication as final regulations in the Federal Register. However, Treasury and the IRS do not view these amendments as prescribing any new rules for applying section 2518.

The amendments to § 25.2518-2(c)(4) (relating to the disclaimer of joint property and bank accounts) are proposed to be effective for disclaimers made after the date these regulations are published in the Federal Register as final regulations.

Special Analyses

It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in E.O. 12866. Therefore, a regulatory assessment is not required. It has also been determined that section 553(b) of the Administrative Procedures Act (5 U.S.C. chapter 5) does not apply to these regulations and because the regulations

do not impose 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 Internal Revenue Code, this notice of proposed rulemaking will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

Comments and Requests for a Public Hearing

Before these proposed regulations are adopted as final regulations, consideration will be given to any written comments (a signed original and eight (8) copies) that are submitted timely to the IRS. All comments will be available for public inspection and copying. A public hearing may be scheduled if requested in writing by any person that timely submits written comments. If a public hearing is scheduled, notice of the date, time, and place of the hearing will be published in the Federal Register.

Drafting Information

The principal author of these regulations is Dale Carlton, Office of the Assistant Chief Counsel (Passthroughs and Special Industries). However, personnel from other offices of the IRS and Treasury Department participated in their development.

Proposed Amendments to the Regula- tions

Accordingly, 26 CFR parts 20 and 25 are proposed to be amended as follows:

PART 20—ESTATE TAX; ESTATES OF DECEDENTS DYING AFTER AUGUST 16, 1954

Paragraph 1. The authority citation for part 20 continues to read in part:

Authority: 26 U.S.C. 7805 * * * Par. 2. Section 20.2041-3 is amended as follows:

1. Paragraph (d)(6)(i) is amended by revising the first sentence and by adding a new second sentence.

2. Paragraph (d)(6)(iii) is added. The additions and revisions read as follows:

§ 20.2041-3 Powers of appointment created after October 21, 1942.

- - - - (d) * * *

(6)(i) A disclaimer or renunciation of a general power of appointment created

147 1996–38 I.R.B.

1. Paragraph (c)(5) is amended by revising the first sentence and adding a new second sentence.

2. A new paragraph (c)(7) is added. The additions and revisions read as follows:

§ 25.2514-3 Powers of appointment created after October 21, 1942.

- - - - (c) - * *

(5) - * * A disclaimer or renunciation of a general power of appointment created in a transfer made after December 31, 1976, is not considered a release of the power for gift tax purposes if the disclaimer or renunciation is a qualified disclaimer as described in section 2518 and the corresponding regulations. For rules relating to when a transfer creating the power occurs, see § 25.25182(c)(3). * * *

- - - - (7) The first and second sentences of

paragraph (5) of § 25.2514-3(c) are effective for transfers creating the power to be disclaimed made after the date of publication as final regulations in the Federal Register.

- - - - Par. 8. Section 25.2518-1 is amended

as follows:

1. Paragraph (a)(1) is revised.

2. In paragraph (a)(2), the third, fourth, and fifth sentences of the Ex- ample are revised and a new sentence is added after the third sentence.

3. A new paragraph (a)(3) is added. The additions and revisions read as follows:

§ 25.2518-1 Qualified disclaimers of property; In general.

(a) - * * (1) In general. The rules described in § § 25.2518-1 through 25.2518-3 apply to the qualified disclaimer of an interest in property which is created in the person disclaiming by a transfer made after December 31, 1976. In general, a qualified disclaimer is an irrevocable and unqualified refusal to accept the ownership of an interest in property. For rules relating to the determination of when a transfer creating an interest occurs, see § 25.2518-2(c)(3) and (4).

(2) - * * The transfer creating the remainder interest in the trust occurred in 1968. See § 25.2511-1(c)(2). Therefore, section 2518 does not apply to the disclaimer of the remainder interest because the transfer creating the interest was made prior to January 1, 1977. If,

in a transfer made after December 31, 1976, is not considered to be the release of the power if the disclaimer or renunciation is a qualified disclaimer as described in section 2518 and the corresponding regulations. For rules relating to when the transfer creating the power occurs, see § 25.2518-2(c)(3). * * *

---

(iii) The first and second sentences of paragraph (d)(6)(i) of this section are effective for transfers creating the power to be disclaimed made after the date of publication as final regulations in the Federal Register.

- - - -

Par. 3. Section 20.2046-1 is revised to read as follows:

§ 20.2046-1 Disclaimed property.

(a) This section shall apply to the disclaimer or renunciation of an interest in the person disclaiming by a transfer made after December 31, 1976. For rules relating to when the transfer creating the interest occurs, see § 25.25182(c)(3) and (c)(4) of chapter 12. If a qualified disclaimer is made with respect to such a transfer, the Federal estate tax provisions are to apply with respect to the property interest disclaimed as if the interest had never been transferred to the person making the disclaimer. See section 2518 and the corresponding regulations for rules relating to a qualified disclaimer.

(b) The first and second sentences of this section are effective for transfers creating the interest to be disclaimed made after the date of publication as final regulations in the Federal Register.

Par. 4. Section 20.2056(d)-2 is amended as follows:

1. Paragraph (a) is amended by revising the first sentence and adding a new sentence after the first sentence, and paragraph (b) is revised.

2. A new paragraph (c) is added. The additions and revisions read as follows:

§ 20.2056(d)-2 Marital deduction; ef- fect of disclaimers of post-December 31, 1976 transfers.

(a) - * * If a surviving spouse disclaims an interest in property passing to such spouse from the decedent created in a transfer made after December 31, 1976, the effectiveness of the disclaimer will be determined by section 2518 and the corresponding regulations. For rules relating to when the transfer creating the

interest occurs, see § 25.2518-2(c)(3) and (c)(4) of chapter 12. - - (b) Disclaimer by a person other than a surviving spouse. If an interest in property passes to a person other than the surviving spouse from a decedent, and the interest is created in a transfer made after December 31, 1976, and (1) The person other than the surviving spouse makes a qualified disclaimer with respect to such interest, and

(2) The surviving spouse is entitled to such interest in property as a result of such disclaimer, the disclaimed interest is treated as passing directly from the decedent to the surviving spouse. For rules relating to when the transfer creating the interest occurs, see § 25.25182(c)(3) and (c)(4) of chapter 12. (c) Effective date. The first and second sentences of paragraphs (a) and (b) of this section are effective for transfers creating the interest to be disclaimed made after the date of publication as final regulations in the Federal Register.

PART 25—GIFT TAX; GIFTS MADE AFTER DECEMBER 31, 1954

Par. 5. The authority citation for part 25 is amended by adding an entry in numerical order to read as follows:

Authority: 26 U.S.C. 7805 - - Section 25.2518-2 is also issued under 26 U.S.C. 2518(b). - - Par. 6. Section 25.2511-1 is amended as follows:

1. In paragraph (c)(1), the fourth sentence is revised.

2. A new paragraph (c)(3) is added. The additions and revisions read as follows:

§ 25.2511-1 Transfers in general.

- - - -

(c)(1) * * * However, in the case of a transfer creating an interest in property (within the meaning of § 25.25182(c)(3) and (c)(4)) made after December 31, 1976, this paragraph (c)(1) shall not apply to the donee if, as a result of a qualified disclaimer by the donee the interest passes to a different donee. * * *

- - - - (3) The fourth sentence of paragraph

(c)(1) of this section is effective for transfers creating an interest to be disclaimed made after the date of publication as final regulations in the Federal Register.

- - - - Par. 7. Section 25.2514-3 is amended

as follows:

1996–38 I.R.B. 148

interest to which the disclaimant succeeds by right of survivorship, regardless of the portion of the property attributable to consideration furnished by the disclaimant and regardless of the portion of the property that is included in the decedent’s gross estate under section 2040. See § 25.2518-2(c)(5), Example (7).

(ii) Interests that are not unilaterally severable. Except as provided in paragraph (c)(4)(iii) of this section with respect to interests created after 1954 and before 1982 and certain interests created after July 14, 1988, if an interest in joint property with right of survivorship or an interest held as a tenant by the entirety is not unilaterally severable under local law, a qualified disclaimer of the interest or any portion of the interest must be made no later than 9 months after the transaction creating the tenancy. A tenant by the entirety or other cotenant who cannot unilaterally sever the interest under applicable local law cannot make a qualified disclaimer of any portion of the joint interest to the extent attributable to consideration furnished by that tenant even if the disclaimer is made within 9 months of the creation of the tenancy. See § 25.25182(c)(5), Example (8). (iii) Tenancies in real property be- tween spouses created before 1982 and certain tenancies in real property be- tween spouses created on or after July 14, 1988. In the case of a joint tenancy between spouses or a tenancy by the entirety in real property created after 1954 and before 1982 where no election was made under section 2515, or a joint tenancy between spouses or a tenancy by the entirety in real property created on or after July 14, 1988, to which section 2523(i)(3) applies (relating to the creation of a tenancy where the spouse of the donor is not a United States citizen), the surviving spouse must make a qualified disclaimer no later than 9 months after the death of the first spouse to die. The surviving spouse may disclaim any portion of the joint interest that is includible in the decedent’s gross estate under section 2040. See § 25.2518-2(c)(5), Examples (9) and (10) .

(iv) Special rule for joint bank and brokerage accounts established between spouses or between persons other than husband and wife. In the case of a transfer to a joint bank account or a joint brokerage account, if a transferor may unilaterally withdraw the transferor’s own contributions from the ac

however, W had caused the gift to be incomplete by also retaining the power to designate the person or persons to receive the trust principal at death, and, as a result, no transfer (within the meaning of § 25.2511-1(c)(2)) of the remainder interest was made at the time of the creation of the trust, section 2518 would apply to any disclaimer made after W’s death with respect to an interest in the trust property.

(3) Section 25.2518-1(a)(1) is effective for transfers creating the interest to be disclaimed made after the date of publication as final regulations in the Federal Register.

- - - - Par. 9. Section 25.2518-2 is amended

as follows:

1. Paragraph (c)(3) is redesignated as paragraph (c)(3)(i).

2. Newly designated paragraph (c)(3)(i) is amended as follows:

a. In the first, eighth, and eleventh sentences, the word ‘‘taxable’’ is removed in each place it appears.

b. In the third and ninth sentences, the language ‘‘taxable transfer’’ is removed and ‘‘transfer creating an interest’’ is added in each place it appears.

c. The fourth, fifth, sixth, and seventh sentences are revised.

d. A new sentence is added after the fourth sentence.

3. A new paragraph (c)(3)(ii) is added.

4. Paragraph (c)(4) is revised.

5. In paragraph (c)(5), Example (7) is revised.

6. In paragraph (c)(5), Example (9) is redesignated as Example (13) and newly designated Example (13) is revised.

7. In paragraph (c)(5), Example (8) is redesignated as Example (9) and newly designated Example (9) is revised.

8. In paragraph (c)(5), Example (10) is redesignated as Example (12) and the first sentence of newly designated Ex- ample (12) is revised.

9. In paragraph (c)(5), new Examples (8), (10), (11), (14), and (15), are added.

The additions and revisions read as follows:

§ 25.2518-2 Requirements for a quali- fied disclaimer.

- - - - (c) - * *

(3)(i) - * * With respect to transfers made by a decedent at death or transfers that become irrevocable at death, the transfer creating the interest occurs on the date of the decedent’s death, even if an estate tax is not imposed on the

transfer. For example, a bequest of foreign-situs property by a nonresident alien decedent is regarded as a transfer creating an interest in property even if the transfer would not be subject to estate tax. If there is a transfer creating an interest in property during the transferor’s lifetime and such interest is later included in the transferor’s gross estate for estate tax purposes (or would have been included if such interest were subject to estate tax), the 9-month period for making the qualified disclaimer is determined with reference to the earlier transfer creating the interest. In the case of a general power of appointment, the holder of the power has a 9-month period after the transfer creating the power in which to disclaim. If a person to whom any interest in property passes by reason of the exercise, release, or lapse of a general power desires to make a qualified disclaimer, the disclaimer must be made within a 9-month period after the exercise, release, or lapse regardless of whether the exercise, release, or lapse is subject to estate or gift tax. * * *

(ii) Sentences 1, 3 through 10, and 12 of paragraph (c)(3)(i) of this section are effective for transfers creating the interest to be disclaimed made after the date of publication as final regulations in the Federal Register.

(4) Joint property — (i) Interests that are unilaterally severable. Except as provided in paragraph (c)(4)(iv) of this section with respect to joint bank accounts and joint brokerage accounts, in the case of an interest in a joint tenancy with right of survivorship or a tenancy by the entirety that either joint tenant can sever unilaterally under local law, a qualified disclaimer of the interest to which the disclaimant succeeds as donee upon creation of the tenancy must be made no later than 9 months after the creation of the tenancy. A qualified disclaimer of the survivorship interest to which the survivor succeeds by operation of law upon the death of the first joint tenant to die must be made no later than 9 months after the death of the first joint tenant to die. See, however, section 2518(b)(2)(B) for a special rule in the case of disclaimers by persons under age 21. Except as provided in paragraph (c)(4)(iii) of this section (with respect to certain tenancies in real property created after 1954 and before 1982 and certain tenancies created on or after July 14, 1988), the interest that may be disclaimed within 9 months after the death of the first joint tenant to die is the

149 1996–38 I.R.B.

count without the consent of the other cotenant, the transfer creating the survivor’s interest in a decedent’s share of the account occurs on the death of the deceased cotenant. Accordingly, if a surviving joint tenant desires to make a qualified disclaimer with respect to funds contributed by a deceased cotenant, the disclaimer must be made within 9 months of the cotenant’s death. The surviving joint tenant may not disclaim any portion of the joint account attributable to consideration furnished by that surviving joint tenant. See § 25.2518-2(c)(5), Examples 13, 14 and 15, regarding the treatment of disclaimed interests under sections 2518, 2033 and 2040. (v) Effective date. This paragraph (c)(4) is effective for disclaimers made after the date of publication as final regulations in the Federal Register.

(5) Examples. * * *

- - - - Example (7). On February 1, 1990, A purchased

real property with A’s funds. Title to the property was conveyed to ‘‘A and B, as joint tenants with right of survivorship.’’ Under applicable state law, the joint interest is unilaterally severable by either tenant. B dies on May 1, 1997, and is survived by A. On January 1, 1998, A disclaims the one-half survivorship interest in the property to which A succeeds as a result of B’s death. Assuming that the other requirements of section 2518(b) are satisfied, A has made a qualified disclaimer of the one-half survivorship interest (but not the interest retained by A upon the creation of the tenancy, which may not be disclaimed by A). The result is the same whether or not A and B are married and regardless of the proportion of consideration furnished by A and B in purchasing the property.

Example (8). On March 1, 1997, A purchases a parcel of real property that is conveyed to A and A’s spouse, B, as tenants by the entirety. A provides the consideration for the purchase. Under applicable state law, the tenancy cannot be unilaterally severed by either tenant. In order to be a qualified disclaimer, any disclaimer by B of B’s interest in the property must be made within 9 months of the creation of the tenancy (i.e., within 9 months of March 1, 1997). Since A provided the entire consideration for the property and the tenancy is not unilaterally severable, A may not disclaim any interest in the tenancy.

Example (9). On March 1, 1977, H and W purchase a tract of vacant land which is conveyed to them as tenants by the entirety. The entire consideration is paid by H. H does not elect, under section 2515, to have the transaction treated as a transfer for purposes of Chapter 12. H dies on June 1, 1997. W can disclaim one-half of the joint interest because this is the interest includible in H’s gross estate under section 2040(b). Assuming that W’s disclaimer is received by the executor of H’s estate no later than 9 months after June 1, 1997, and the other requirements of section 2518(b) are satisfied, W’s disclaimer of one-half of the property would be a qualified disclaimer because the transfer which created W’s interest is treated as not occurring until H’s death, since no election was made under section 2515. The result would be the same if the property was held in

joint tenancy with right of survivorship that was unilaterally severable under local law.

Example (10). Assume the same facts as in example (9) except that the land was purchased on March 1, 1989, and W is not a United States citizen. W has until 9 months after June 1, 1997, to make a qualified disclaimer, and can disclaim the entire joint interest because this is the interest includible in H’s gross estate under section 2040(a). The result would be the same if the property was held in joint tenancy with right of survivorship that was unilaterally severable under local law.

Example (11). In 1986, spouses A and B purchased a personal residence taking title as joint tenants with right of survivorship. Under applicable state law, the interest in the tenancy may be unilaterally severed by either party. B dies on July 10, 1997. A wishes to disclaim the one-half undivided interest to which A would succeed by right of survivorship. If A makes the disclaimer, the property interest would pass under B’s will to their child C. C, an adult, and A resided in the residence at B’s death and will continue to reside there in the future. A continues to own a one-half undivided interest in the property. Assuming that the other requirements of section 2518(b) are satisfied, A may make a qualified disclaimer with respect to the one-half undivided survivorship interest in the residence if A delivers the written disclaimer to the personal representative of B’s estate by April 10, 1998, since A is not deemed to have accepted the interest or any of its benefits prior to that time and A’s occupancy of the residence after B’s death is consistent with A’s retained undivided ownership interest.

Example (12). H and W, husband and wife, reside in state X, a community property state. * * *

Example (13). On July 1, 1990, A opens a bank account that is held jointly with B, A’s spouse, and transfers $50,000 of A’s money to the account. A and B are United States citizens. A can regain the entire account without B’s consent. The transfer is not a completed gift under § 25.2511-1(h)(4). A dies on August 15, 1997, and B disclaims the entire amount in the bank account on October 15, 1997. Assuming that the remaining requirements of section 2518(b) are satisfied, B made a qualified disclaimer under section 2518(a) because the disclaimer was made within 9 months after A’s death at which time B had succeeded to full dominion and control over the account. Under state law, B is treated as predeceasing A with respect to the disclaimed interest. The disclaimed account balance passes through A’s probate estate and is no longer joint property includible in A’s gross estate under section 2040. The entire account is, instead, includible in A’s gross estate under section 2033. The result would be the same if A and B were not married.

Example (14). The facts are the same as Example (13), except that B, rather than A, dies on August 15, 1997. A may not make a qualified disclaimer with respect to any of the funds in the bank account, because A furnished the funds for the entire account and A did not relinquish dominion and control over the funds.

Example (15). The facts are the same as Example (13), except that B disclaims 40 percent of the funds in the account. Since, under state law, B is treated as predeceasing A with respect to the disclaimed interest, the 40 percent portion of the account balance that was disclaimed passes as part of A’s probate estate, and is no longer characterized as joint property. This 40 percent portion of the account balance is, therefore, includible in A’s gross estate under section 2033. The remaining 60

percent of the account balance that was not disclaimed retains its character as joint property and, therefore, is includible in A’s gross estate as provided in section 2040(b). Therefore, 30 percent (1/2 x 60 percent) of the account balance is includible in A’s gross estate under section 2040(b), and a total of 70 percent of the aggregate account balance is includible in A’s gross estate. If A and B were not married, then the 40 percent portion of the account subject to the disclaimer would be includible in A’s gross estate as provided in section 2033 and the 60 percent portion of the account not subject to the disclaimer would be includible in A’s gross estate as provided in section 2040(a), because A furnished all of the funds with respect to the account.

Margaret Milner Richardson, Commissioner of Internal Revenue.

(Filed by the Office of the Federal Register on August 20, 1996, 8:45 a.m., and published in the issue of the Federal Register for August 21, 1996, 61 F.R. 43197)

Telephone Numbers on Statements—Forms W–2G, 1098, 1099, and 8308—Penalty Waiver

Announcement 96–88

The Taxpayer Bill of Rights 2 (P.L. 104–168) requires payers to provide the telephone number of a person to contact on certain statements to recipients, generally Copy B of the forms listed below. This number must provide direct access to an individual who can answer questions about the statement. This new requirement applies to the 1996 forms due to recipients by January 31, 1997. Because the legislation was enacted after the 1996 forms were printed, a failure to include a phone number on the 1996 statements will be considered to have arisen from an event beyond the control of the filer. As a result, the penalty under section 6722 of the Internal Revenue Code will be waived for reasonable cause if the next statement required to be provided (generally for 1997) includes the phone number. Although the penalty will be waived for 1996, payers are encouraged to enter the telephone number anywhere they choose on the recipient statements. The law requires that the information be entered on Forms W–2G, 1098, 1099–A, 1099–B, 1099–DIV, 1099–G (excluding state or local income tax refunds), 1099–INT, 1099–MISC (excluding fishing boat proceeds), 1099–OID, 1099– PATR and 1099–S. However, payers also are encouraged to furnish the telephone number on other Forms 1099. The 1997 revisions of the forms listed above will require that the telephone number be included in the filer name

1996–38 I.R.B. 150

ACTION: Correction to notice of proposed rulemaking.

SUMMARY: This document contains corrections to the notice of proposed rulemaking (INTL–062–90; INTL– 0032–93; INTL–52–86; INTL–52–94

[1996–19 I.R.B. 26]) which was published in the Federal Register for Monday, April 22, 1996 (61 FR 17614). The notice of proposed rulemaking relates to the withholding of income tax under sections 1441 and 1442 on certain U.S. source income paid to foreign persons, the related tax deposit and reporting requirements under section 1461, and the related collection, refunds, and credits of withheld tax under sections 1461 through 1463 and section 6402. In addition, the notice of proposed rulemaking also relates to the statutory exemption under sections 871(h) and 881(c) for portfolio interest. The notice of proposed rulemaking proposes to remove certain temporary employment tax regulations under the Interest and Dividend Compliance Act of 1983 and to amend existing regulations under sections 6041A and 6050N. The notice of proposed rulemaking also proposes changes to proposed regulations contained in project number INTL–52–86, published on February 29, 1988 (53 FR 5991) under sections 6041, 6042, 6045, and 6049. The document proposes related changes to the regulations under sections 163(f), 165(j), 3401, 3406, 6114, and 6413 and proposes further changes to the proposed regulations under section 6109 contained in project number IL–0024–94 published on June 8, 1995 (60 FR 30211). The document proposes to remove certain regulations under income tax treaties.

FOR FURTHER INFORMATION CONTACT: Philip Garlett, (202) 622–3880 for questions on proposed regulations under sections 1441, 1442, 1461, 1462, 1463, 3401, 6402, and 6413; Gwendolyn Stanley, (202) 622–3860 for questions on payments to partnerships; Carl Cooper, (202) 622–3840 for questions on proposed regulations under section 163(f), 165(j), 871(h) and 881(c) and on withholding agreements; Teresa Burridge Hughes, (202) 622–3880 for questions on proposed regulations under section 6041 through 6049, 6050N; Teresa Burridge Hughes, (202) 622– 3880 and Renay France, (202) 622–4910 for questions on proposed regulations under section 3406; Elissa Shendalman, (202) 622–3870 on proposed regulations under sections 6045 and 6049 relating to

and address area. The telephone number is not required on Copy A of paper forms nor on magnetic media filed with the IRS.

The telephone number also must be provided on Form 8308, Report of a Sale or Exchange of Certain Partnership Interests, required to be furnished after 1996. Form 8308 is being revised accordingly.

Employee Plans and Exempt Organizations; Requests for Certain Determination Letters and Applications For Recognition of Exemption

Announcement 96–92

PURPOSE

This is to announce new ‘‘Where to File’’ instructions for applications for employee plans determination letters and other letters and exempt organizations applications for recognition of exemption from federal income tax, previously sent to the Atlanta and Baltimore Key District Offices of Internal Revenue.

BACKGROUND

The Internal Revenue Service is in the process of centralizing the filing of requests for determination and other letters and applications for recognition of tax exemption. Currently, plan sponsors and organizations file with one of seven district offices depending on the geographic location of the plan’s or organization’s principal office or place of business. Announcement 95–51, published in Internal Revenue Bulletin 1995–25 at page 132, announced that centralization will be phased in by district.

The Service is also consolidating the volume submitter and regional prototype programs that are presently maintained by each individual region. Plans previously approved by a key district office, whose determination letter processing program is being transferred to Cincinnati, will be reviewed using the same criteria and procedures used by the original district office. New guidelines are being developed that will combine the features and procedures currently in use by the districts. Guidelines for the revised volume submitter and regional prototype programs will be explained in a future announcement.

INSTRUCTIONS

Beginning September 1, 1996, letter requests and applications previously sent

to the key district offices in Atlanta, Georgia, and Baltimore, Maryland, should be sent to the Internal Revenue Service Center in Covington, Kentucky, at the address shown below. (For a period of time, requests and applications mistakenly sent to the Atlanta and Baltimore Key District Offices will be forwarded.) The new address applies to requests for determination letters, regional prototype notification letters and volume submitter advisory letters, on the qualified status of employee plans under sections 401, 403(a), and 409, and the exempt status of any related trust under section 501 of the Internal Revenue Code, applications for recognition of tax exemption on Form 1023 and Form 1024, and other letter applications for recognition of qualification or exemption. The affected plan sponsors and organizations are those whose principal office or place of business is located in Alabama, Arkansas, Delaware, District of Columbia, Florida, Georgia, Louisiana, Maryland, Mississippi, New Jersey, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia, or any U.S. possession or foreign country. These requests or applications should be sent to:

Internal Revenue Service P.O. Box 192 Covington, KY 41012–0192

Until further notice, plans and organizations in all other locations will continue to file their requests or applications in accordance with the instructions in Section 7 of Revenue Procedure 96–8, published in Internal Revenue Bulletin 1996–1 at page 187, and the instructions on Form 8717, User Fee for Employee Plan Determination Letter Request, or Form 8718, User Fee for Exempt Organization Determination Letter Request.

General Revision of Regulations Relating to Withholding of Tax on Certain U.S. Source Income Paid to Foreign Persons and Related Collection, Refunds, and Credits; Revision of Information Reporting and Backup Withholding Regulations; and Removal of Regulations Under Part 35a and of Certain Regulations Under Income Tax Treaties; Correction

Announcement 96–93

AGENCY: Internal Revenue Service (IRS), Treasury.

151 1996–38 I.R.B.

the reporting of payments made in a currency other than the U.S. dollar or transactions subject to section 988; Lilo Hester, (202) 874–1490 for questions on proposed regulations under section 6109; David F. Bergkuist, (202) 622– 3860 for questions on proposed regulations under section 6114 (numbers are not toll-free).

SUPPLEMENTARY INFORMATION:

Background

The notice of proposed rulemaking that is the subject of these corrections are under sections 163(f), 165(j), 871, 881, 1441, 1442, 1461, 1462, 1463, 3401, 3406, 6041, 6041A, 6042, 6045, 6049, 6050N, 6109, 6114, 6402, and 6413 of the Internal Revenue Code.

Need for Correction

As published, the notice of proposed rulemaking (INTL–062–90; INTL– 0032–93; INTL–52–86; INTL–52–94) contain errors which may prove to be misleading and are in need of clarification.

Correction of Publication

Accordingly, the publication of the notice of proposed rulemaking (INTL– 062–90; INTL–0032–93; INTL–52–86; INTL–52–94) which is the subject of FR Doc. 96–8936 is corrected as follows:

1. On page 17619, column 1, in the preamble following the paragraph heading ‘‘ Section 1.165–12 Denial of Deduc- tion for Losses on Registration-Required Obligations Not in Registered Form ’’, the last line in the first paragraph is corrected to read ‘‘in Section 35a.9999– 4T, A–5 that the person is not a U.S. person.’’ and the italicized heading preceding the second paragraph is removed.

2. On page 17621, column 1, in the preamble following the paragraph heading ‘‘ Section 1.1441–1 Requirement for the Withholding of Tax on Payments to Foreign Persons ’’, line 16 from the top of the column, the language ‘‘continue to apply trusts. See § 1.1441–’’ is corrected to read ‘‘continue to apply to trusts. See § 1.1441–’’.

3. On page 17621, column 3, in the preamble following the paragraph heading ‘‘ Section 1.1441–1 Requirement for the Withholding of Tax on Payments to Foreign Persons ’’, the second full paragraph, line 3 from the bottom of the paragraph, the language ‘‘§ 1.9999–

5(b), A9 and that are proposed’’ is corrected to read ‘‘§ 35a.9999–5(b), A–9 and that are proposed’’.

4. On page 17626, column 3, in the preamble following the paragraph heading ‘‘ Section 1.1441–4 Certain Exemp- tions From Withholding ’’ the first full paragraph, line 11, the language ‘‘(which expired on February, 1993). A’’ is corrected to read ‘‘(which expired on February 2, 1993). A’’.

5. On page 17628, column 2, in the preamble under the paragraph heading ‘‘ Section 1.1441–7 General Provisions Relating to Withholding Agents ’’, the italicized second paragraph from the bottom of the column, is corrected to read as follows:

Section 1.1441–7(b)(3) of the existing regulations is proposed to be removed, pending comments on the continuing necessity of providing guidance on taxfree covenant bonds.

6. On page 17630, column 2, in the preamble under the paragraph heading ‘‘ Section 1.1461–1 Deposit and Return of Tax Withheld ’’, the last two paragraphs under that paragraph heading are merged.

7. On page 17632, column 1, in the preamble following the paragraph heading ‘‘ Section 31.3401(a)(6)–1(e) Income Exempt From Income Tax ’’, line 18 from the top of the column, the language ‘‘withholding certificate should to be’’ is corrected to read ‘‘withholding certificate should be’’.

§ 1.871–14 [Corrected]

8. On page 17633, column 2, § 1.871–14(a), line 4 from the top of the column, the language ‘‘871(h) or 882(a) if such interest is’’ is corrected to read ‘‘871(b) or 882(a) if such interest is’’.

§ 1.1441–1 [Corrected]

9. On page 17635, column 1, § 1.1441–1(b), line 10, the language ‘‘of tax and for the withholding agent’’ is corrected to read ‘‘of tax and for which the withholding agent’’.

10. On page 17636, column 2, § 1.1441–1(c)(6)(ii)(B), line 17 from the top of the column, the language ‘‘payments made to a single foreign entity ’’ is corrected to read ‘‘payments made to a single foreign entity’’.

11. On page 17637, column 3, § 1.1441–1(e)(3)(ii)(E), line 1, the language ‘‘If the information is not assuming’’ is corrected to read ‘‘If the qualified intermediary is not assuming’’.

12. On page 17638, column 2, § 1.1441–1(e)(4)(ii)(B), line 10, the language ‘‘1(c)(2)(ii) or the taxpayer identifying’’ is corrected to read ‘‘1(c)(2)(i) or the taxpayer identifying’’.

13. On page 17641, column 2, § 1.1441–1(f)(3)(i), line 4, the language ‘‘is presumed made to a U.S. person if the’’ is corrected to read ‘‘is presumed made to a U.S. person unless the’’.

§ 1.1441–3 [Corrected]

14. On page 17645, column 3, § 1.1441–3(e)(2), line 17, the language ‘‘dollar amounts withheld from year to’’ is corrected to read ‘‘dollar amounts withheld and from year to’’.

§ 1.1441–4 [Corrected]

15. On page 17647, column 2, § 1.1441–4(b)(2)(ii) introductory text, line 6, the language ‘‘the penalties of perjury, and contain the’’ is corrected to read ‘‘penalties of perjury, and contain the’’.

16. On page 17648, column 2, § 1.1441–4(f)(2), line 3, the language ‘‘a date that is 60 days after the date these’’ is corrected to read ‘‘the date that is 60 days after the date these’’.

§ 1.1441–6 [Corrected]

17. On page 17649, column 3, § 1.1441–6(b)(1), line 22 from the top of the column, the language ‘‘meaning of section 267(b) and 707(b),’’ is corrected to read ‘‘meaning of section 267(b) or 707(b),’’.
18. On page 17649, column 3, § 1.1441–6(b)(1), lines 31 and 32 from the top of the column, the language ‘‘this chapter. See paragraph (d) of this section for circumstances under which’’ is corrected to read ‘‘this chapter. See § 1.1441–1(e)(4)(v) for circumstances under which’’.

§ 1.1461–2 [Corrected]

19. On page 17656, column 3, § 1.1461–2(a)(2)(ii), line 8, the language ‘‘must provide a copy or such receipt to’’ is corrected to read ‘‘must provide a copy of such receipt to’’.

§ 1.6041–1 [Corrected]

20. On page 17657, column 3, § 1.6041–1(a)(1)(ii), line 14, the language ‘‘royalties); or section 6050P(a) or (b)’’ is corrected to read ‘‘royalties); or section 6050P(a) and (b)’’.

§ 1.6041–4 [Corrected]

21. On page 17658, column 2, § 1.6041–4(b)(1), line 8, the language

1996–38 I.R.B. 152

‘‘middleman. The term middleman ’’ is corrected to read ‘‘middleman and the term middleman ’’.

22. On page 17658, column 3, § 1.6041–4(d), line 10, the language ‘‘furnished such certification or’’ is corrected to read ‘‘furnished required certification or’’.

§ 1.6045–1 [Corrected]

El Coqui Sports and Prevention League,

School Trust, Waynesboro, PA Frontiers Associates Inc., Norfolk, VA Full Life Incorporated, Annapolis, MD Garabed Zambak Memorial Fund,

Lancaster, PA Environmental Compliance Oversight

Corporation, Trevose, PA EVT High School Alumni Association

Inc., Baltimore, MD Faces of Hope Foundation, Washington,

DC Fairview Village Nursing Center,

23. On page 17660, column 3, amendatory instruction 4. under ‘‘ Par. 34. ’’, is corrected to read as follows:

24. Revising paragraph (g)(1) heading; removing paragraph (g)(1) introductory text; and revising paragraphs (g)(1)(i) and (g)(2) through (g)(4).

25. On page 17661, column 2, § 1.6045–1(g)(4)(ii), last line in the column, the language ‘‘holds a valid Form W–8 on a date that’’ is corrected to read ‘‘holds a valid Form W–8 on the date that’’.

§ 1.6049–4 [Corrected]

25. On page 17662, column 1, § 1.6049–4(c)(1)(ii)(A)(6), line 2 from the top of the column, the language ‘‘established on or before a date that is 60’’ is corrected to read ‘‘established on or before the date that is 60’’.

§ 1.6049–5 [Corrected]

26. On page 17664, column 1, § 1.6049–5(g)(2), line 2, the language ‘‘holds a valid Form W–8 on a date that’’ is corrected to read ‘‘holds a valid Form W–8 on the date that’’.

§ 1.6050N–1 [Corrected]

27. On page 17664, column 3, § 1.6050N–1(e)(2), line 2, the language ‘‘holds a valid Form W–8 on a date that’’ is corrected to read ‘‘holds a valid Form W–8 on the date that’’.

§ 31.3406(g)–1 [Corrected]

28. On page 17665, column 2, § 31.3406(g)–1(e), line 10, the language ‘‘evidence described in § 1.6049– 5(2)(ii)’’ is corrected to read ‘‘evidence described in § 1.6049–5(c)(2)(ii)’’.

§ 301.6114–1 [Corrected]

29. On page 17666, column 2, amendatory instruction 3. under ‘‘ Par. 49. ’’ is corrected to read as follows:

30. Revising paragraphs (c)(1) and (d)(4)(v).

The revisions read as follows:

§ 301.6114–1 [Corrected]

30. On page 17666, column 3, § 301.6114–1(a)(1)(ii), line 7 from the top of the column, the language ‘‘under the penalties of perjury (as well’’ is corrected to read ‘‘under penalties of perjury (as well’’.

Cynthia E. Grigsby, Chief, Regulations Unit, Assistant Chief Counsel (Corporate).

(Filed by the Office of the Federal Register on August 14, 1996, 8:45 a.m., and published in the issue of the Federal Register for August 15, 1996, 61 F.R. 42401)

Foundations Status of Certain Organizations

Announcement 96–94

The following organizations have failed to establish or have been unable to maintain their status as public charities or as operating foundations. Accordingly, grantors and contributors may not, after this date, rely on previous rulings or designations in the Cumulative List of Organizations (Publication 78), or on the presumption arising from the filing of notices under section 508(b) of the Code. This listing does not indicate that the organizations have lost their status as organizations described in section 501(c)(3), eligible to receive deductible contributions.

Former Public Charities . The following organizations (which have been treated as organizations that are not private foundations described in section 509(a) of the Code) are now classified as private foundations: Adventists Womens Coalition, Walla

Lewisberry, PA Family Information Resource Support

Team Place Inc., Annandale, VA Familyland Foundation, Inc., Ft. Myers,

FL Family Visions Inc., Penn Hills, PA Fauquier Alliance for Recreation,

Warrenton, VA Fauquier Veterans Memorial Committee

Inc., Warrenton, VA Fellowship of Friends of African

Descent, Philadelphia, PA Finefrock & Stumpfs Charlotte Street

Gym, Lancaster, PA Fire Streak Ministry, Coatesville, PA First Atlantic Inc., Laurel, MD Fish, Williamsburg, VA Foundation for Animal Rights Advocacy

Inc., Newark, NJ Foundation for Plastic Surgery,

Annandale, VA Francisville Community Development

Corporation, Philadelphia, PA Frederick Non-Profit Building Supply

Inc., Frederick, MD Freedoms Choice Inc., Vienna, VA Friends of Carter Barron Cultural Arts

Society, Washington, DC Friends of Jerusalem Inc., Washington,

DC Friends of John Castaldi Foundation

Inc., Philadelphia, PA Friends of the Palette Place Art Gallery

Inc., New Brunswick, NJ Friends of Saint Andrews Elementary

Walla, WA American Counsel Scholarship

Foundation Inc., Roseland, NJ Center for Military History, Los

Angeles, CA Creative Experiences and Children, St.

Springfield, PA George Pittas Childrens Foundation Inc.,

Paul, MN Delmiro Garcia Scholarship Foundation,

Rockville, MD George Washington Carver Vocational

Technical High Schl Foundation Inc., Baltimore, MD Giles County Sheriffs Office Canteen,

Pearisburg, VA Glebe Farm Group, Strausburg, VA Global Awareness Society, Bloomsburg,

PA Go Direct, Inc., Stillwater, OK Golden Tornado Foundation Inc., Butler,

San Antonio, TX Eastern Shore of Virginia Foundation,

Franktown, VA East Hills Rehabilitation & Fitness

Institute Inc., Johnstown, PA Ecomedia, Washington, DC Educational Research Institute,

Philadelphia, PA El Campo Memorial Hospital

Foundation, Inc., El Campo, TX

PA Good News Ministries of America,

Philadelphia, PA

153 1996–38 I.R.B.

Gopal Charities Food for Life

tion status in the Internal Revenue Bulletin.

The following organization, which has been treated as a private operating foundation described in section 4942(j)(3) of the Code, has now been classified as an organization that is not a private operating foundation. Grantors and contributors may no longer rely upon rulings or determinations that this organization is a private operating foundation. The organization is: Citizen Policy Research Inc., East

Harwich, MA

Incorporated, Linthicum, MD High West Center of Environmental

Policy Studies, Flagstaff, AZ Information Center for Education,

Dallas, TX Peanut Batter Players, Boulder, CO Pros for Kids, Inc., Scottsdale, AZ Rock County Club, Inc., Beloit, WI Shared Medical Research Foundation,

If an organization listed above submits information that warrants the renewal of its classification as a public charity or as a private operating foundation, the Internal Revenue Service will issue a ruling or determination letter with the revised classification as to foundation status. Grantors and contributors may thereafter rely upon such ruling or determination letter as provided in section 1.509(a)–7 of the Income Tax Regulations. It is not the practice of the Service to announce such revised classification of founda

Tarzana, CA Sound of Sight Inc., Broomfield, CO Tom Moore Community Music

Foundation, Inc., Houston, TX

1996–38 I.R.B. 154