SECTION 5. REVOCATION OR

TERMINATION OF THE ELECTION AND PUBLIC COMMENTS

Section 1161(a) of the Taxpayer Relief Act authorizes the Secretary to prescribe regulations regarding the election to remain a domestic trust. The regulations will incorporate the rules contained in this notice and provide guidance with respect to when the occurrence of certain significant changes in circumstances related to the trust will terminate the election (for example, changes in the trustees from United States persons to foreign persons). The regulations will also contain procedures for revoking the election. The Service and the

Any other type of trust that is not required to file a Form 1041 for the taxable year, but that is required to file an information return (for example, Form 5227) for the 1997 or 1998 taxable year must attach the statement to the trust’s information return for the 1997 or 1998 taxable year. However, the statement must be attached to an information return that is filed no later than the due date for filing the trust’s information return for the 1998 taxable year, plus extensions. The election will be effective for the 1997 taxable

1998–18 I.R.B. 13 May 4, 1998

(44 U.S.C. 3507) under control number 1545–1600. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number.

The collections of information in this notice are in section 4 headed Procedure for Making the Election. This information is required by the IRS to assure compliance with the provisions of the Small Business Job Protection Act of 1996 and the Taxpayer Relief Act of 1997. The likely respondents are trusts.

The estimated total annual reporting burden is 250,000 hours.

The estimated average annual burden per respondent is 30 minutes.

The estimated number of respondents is 500,000.

The estimated annual frequency of responses is once.

Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.

DRAFTING INFORMATION

The principal authors of this notice are Eliana Dolgoff and James A. Quinn of the Office of Assistant Chief Counsel (Passthroughs & Special Industries). For further information regarding this notice contact Ms. Dolgoff or Mr. Quinn on (202) 622-3060 (not a toll-free call). For further information about the international tax consequences of the election that is the subject of this notice contact Trina Dang of the Office of the Associate Chief Counsel (International) on (202) 622-3880.

Weighted Average Interest Rate Update

Notice 98–26

Notice 88–73 provides guidelines for determining the weighted average interest rate and the resulting permissible range of interest rates used to calculate current liability for the purpose of the full funding limitation of § 412(c)(7) of the Internal Revenue Code as amended by the Omnibus Budget Reconciliation Act of 1987 and as further amended by the Uruguay Round Agreements Act, Pub. L. 103–465 (GATT).

The average yield on the 30-year Treasury Constant Maturities for March 1998 is 5.95 percent.

The following rates were determined for the plan years beginning in the month shown below.

90% to 106% 90% to 110% Weighted Permissible Permissible Month Year Average Range Range April 1998 6.67 6.00 to 7.07 6.00 to 7.34

Drafting Information

The principal author of this notice is Donna Prestia of the Employee Plans Division. For further information regarding this notice, call (202) 622-6076 between 2:30 and 3:30 p.m. Eastern time (not a toll-free number). Ms. Prestia’s number is (202) 622-7377 (also not a toll-free number).

Renewable Electricity Production Credit, Publication of Inflation Adjustment Factor and Reference Prices for Calendar Year 1998

Notice 98–27

This notice publishes the inflation adjustment factor and reference prices for calendar year 1998 for the renewable electricity production credit under § 45(a) of the Internal Revenue Code. The 1998 inflation adjustment factor and reference prices are used in determining the availability of the credit. The 1998 inflation

adjustment factor and reference prices apply to calendar year 1998 sales of kilowatt-hours of electricity produced in the United States or a possession thereof from qualified energy resources.

BACKGROUND

Section 45(a) provides that the renewable electricity production credit for any tax year is an amount equal to the product of 1.5 cents multiplied by the kilowatthours of specified electricity produced by the taxpayer and sold to an unrelated person during the tax year. This electricity must be produced from qualified energy resources and at a qualified facility during the 10-year period beginning on the date the facility was originally placed in service.

Section 45(b)(1) provides that the amount of the credit determined under § 45(a) is reduced by an amount that bears the same ratio to the amount of the credit as (A) the amount by which the reference price for the calendar year in which the sale occurs exceeds 8 cents bears to (B) 3 cents. Under § 45(b)(2), the 1.5 cents in

§ 45(a) and the 8 cents in § 45(b)(1) are each adjusted by multiplying the amount by the inflation adjustment factor for the calendar year in which the sale occurs.

Section 45(c)(1) defines qualified energy resources as wind and closed-loop biomass. Section 45(c)(3) defines a qualified facility as any facility owned by the taxpayer that originally is placed in service after December 31, 1993 (December 31, 1992, in the case of a facility using closed-loop biomass to produce electricity), and before July 1, 1999.

Section 45(d)(2)(A) requires the Secretary to determine and publish in the Federal Register each calendar year the inflation adjustment factor and the reference prices for the calendar year. The inflation adjustment factor and the reference prices for the 1998 calendar year were published in the Federal Register on April 1, 1998, (62 Fed. Reg. 15917).

Section 45(d)(2)(B) defines the inflation adjustment factor for a calendar year as the fraction the numerator of which is the GDP implicit price deflator for the preceding calendar year and the denomi

May 4, 1998 14 1998–18 I.R.B.

nator of which is the GDP implicit price deflator for the calendar year 1992. The term “GDP implicit price deflator” means the most recent revision of the implicit price deflator for the gross domestic product as computed and published by the Department of Commerce before March 15 of the calendar year.

Section 45(d)(2)(C) provides that the reference price is the Secretary’s determination of the annual average contract price per kilowatt hour of electricity generated from the same qualified energy resource and sold in the previous year in the United States. Only contracts entered into after December 31, 1989, are taken into account.

INFLATION ADJUSTMENT FACTOR AND REFERENCE PRICES

The inflation adjustment factor for calendar year 1998 is 1.1240. The reference prices for calendar year 1998 are 4.95 cents per kilowatt-hour for facilities producing electricity from wind energy resources and 0 cents per kilowatt-hour for facilities producing electricity from closed-loop biomass energy resources. The reference price for electricity produced from closed-loop biomass, as defined in § 45(c)(2), is based on a determination under § 45(d)(2)(C) that in calendar year 1997 there were no sales of electricity generated from closed-loop biomass energy resources under contracts entered into after December 31, 1989.

PHASE-OUT CALCULATION

Because the 1998 reference prices for electricity produced from wind and closed-loop biomass energy resources do not exceed 8 cents per kilowatt hour multiplied by the inflation adjustment factor, the phaseout of the credit provided in § 45(b)(1) does not apply to electricity produced from wind or closed-loop biomass energy resources sold during calendar year 1998.

CREDIT AMOUNT

As required by § 45(b)(2), the 1.5¢ amount in § 45(a)(1) is adjusted by multiplying such amount by the inflation adjustment factor for the calendar year in which the sale occurs. If any amount as increased under the preceding sentence is not a multiple of 0.1¢, such amount is

rounded to the nearest multiple of 0.1¢. Under the calculation required by § 45(b)(2), the renewable electricity production credit for calendar year 1998 is 1.7¢ per kilowatt hour on the sale of electricity produced from closed-loop biomass and wind energy resources.

DRAFTING INFORMATION CONTACT

The principal author of this notice is David A. Selig of the Office of Assistant Chief Counsel (Passthroughs and Special Industries). For further information regarding this notice contact Mr. Selig at (202) 622-3040 (not a toll-free call).

26 CFR 601.105: Examination of returns and claims for refund, credit or abatement; determination of correct tax liability. (Also Part I, Section 2512; Section 25.2512–1.)

Rev. Proc. 98–34