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. 97–9, page 4. Medical and dental expenses. Amounts paid to obtain a controlled substance (such as marijuana), in violation of federal law, are not deductible expenses for medical care under section 213 of the Code.

T.D. 8709, page 5. REG–242996–96, page 18. Final, temporary, and proposed regulations under section 1275 of the Code relate to the federal income tax treatment of inflation-indexed debt instruments. A public hearing will be held on the proposed regulations on April 30, 1997.

REG–252233–96, page 19. Proposed regulations under section 368 of the Code provide certain reorganizations, transfers by the acquiring corporation of target assets or stock to certain controlled corporations, and transfers of target assets to partnerships, will not disqualify the transaction from satisfying the continuity of interest and business enterprise requirements. A public hearing will be held on May 7, 1997.

EMPLOYEE PLANS

Notice 97–16, page 15. Weighted average interest rate update. Guidelines are set forth for determining for February 1997, the weighted average interest rate and the resulting permissible range of interest rates used to calculate current liability for purposes of the full funding limitation of section 412(c)(7) of the Code as amended by the Omnibus Budget Reconciliation Act of 1987 and by the Uruguay Round Agreements Act (GATT).

Finding Lists begin on page 26. Monthly Index for February on page 28.