Bulletin No. 1997–2 January 13, 1997

of the stock of a C corporation, and (2) to elect to own a qualified subchapter S subsidiary (QSSS). This notice also provides temporary guidance on the manner in which a QSSS election must be made and the effective date of the election.

Notice 97–5, page 25. Electing small business corporations and banks. This notice provides guidance on the effect of the qualified subchapter S subsidiary (QSSS) election under section 1361(b)(3) on banks affiliated with nonbanks; the application of the S corporation passive investment income rule of section 1362(d)(3); the application of the interest expense disallowance rules of section 265; and an automatic change in method of accounting for bad debts.

EMPLOYEE PLANS

Rev. Proc. 97–9, page 55. Cash or deferred arrangements; amendments; SIMPLEs. This procedure describes how an employer that maintains a qualified cash or deferred arrangement may make the necessary amendment for its qualified cash or deferred arrangement to meet the provision for a savings incentive match plan pursuant to section 1422 of the Small Business Job Protection Act of 1996.

Announcement 97–2, page 62. Schedule Q; determination letter requests; section 401(a)(26). The instructions for completing Schedule Q for plan years beginning after December 31, 1996, are being changed.

Notice 97–2, page 22. Cash or deferred arrangements; nondiscrimination. With respect to cash or deferred arrangements, the notice gives transitional relief for certain nondiscrimination tests for the 1997 plan year and describes methods for the determination and distribution of excess contributions.

(Continued on page 4)