Part III. Administrative, Procedural, and Miscellaneous

tional) at (202) 622-3880 (not a toll-free call).

Former Indian Reservations in Oklahoma

Notice 98–45

This notice defines “former Indian reservations in Oklahoma” for purposes of § 168(j)(6) of the Internal Revenue Code, as amended by the Taxpayer Relief Act of 1997 (the Act), Pub. L. No. 105– 34, 111 Stat. 788.

BACKGROUND

Sections 13321 and 13322 of the Omnibus Budget Reconciliation Act of 1993, Pub. L. No. 103–66, 1993-3 C.B. 1, 146– 151, amended the Internal Revenue Code by adding two provisions to the Code to establish two Indian reservation-based federal tax incentives. Section 45A generally provides an Indian employment credit for certain wages and health insurance costs paid or incurred by an employer whose employees are enrolled members of an Indian tribe or the spouses of enrolled members of an Indian tribe who perform substantially all their services for the taxpayer within an Indian reservation and have a principal place of abode on or near such reservation. Section 168(j) generally provides more favorable depreciation for qualified Indian reservation property (that is, certain depreciable property used predominantly in the active conduct of a trade or business within an Indian reservation and not regularly used or located outside the reservation). Section 45A applies to wages and health insurance costs paid or incurred after December 31, 1993, in a taxable year that begins on or before December 31, 2003. Section 168(j) applies to property placed in service after December 31, 1993, and on or before December 31, 2003. Section 45A(c)(7) states that the term “Indian reservation” has the meaning given the term by § 168(j)(6). Section 168(j)(6) (prior to its amendment by the Act) provided that, for purposes of § 168(j), the term “Indian reservation”

Effective Date of Consolidated Overall Foreign Loss Provisions

Notice 98–40

This notice announces that Treasury and the Service intend to issue regulations permitting taxpayers to elect to delay the effective date of Treas. Reg. § 1.1502–9T, published in the Federal Register on January 12, 1998 (63 F.R. 1740), and modified on March 16, 1998 (63 F.R. 12641).

On January 12, 1998, Treasury and the Service published in the Federal Regis- ter final, temporary and proposed regulations (the “January 1998 regulations”) relating to limitations on the use of certain tax credits and related attributes by corporations filing consolidated income tax returns. In general, the January 1998 regulations relate to the separate return limitation year (“SRLY”) provisions for general business credits, alternative minimum tax credits, foreign tax credits and overall foreign loss accounts. The January 1998 regulations were generally applicable to consolidated return years beginning on or after January 1, 1997.

On March 16, 1998, Treasury and the Service published in the Federal Regis- ter final, temporary, and proposed regulations (the “March 1998 regulations”) modifying the effective date of the January 1998 regulations. The March 1998 regulations provide that the provisions of the January 1998 regulations will apply for consolidated return years for which the due date (without extensions) of the income tax return is after March 13, 1998. In lieu of applying this effective date, however, the March 1998 regulations permit a consolidated group to choose to apply the effective date provisions under the January 1998 regulations. The March 1998 regulations provide that taxpayers making this choice must apply all those effective date provisions for all relevant years. Thus, under the March 1998 regulations, such taxpayers are not permitted to apply one provision of the January 1998 regulations ( e.g., the general business credit effective date) and not another ( e.g., the foreign tax credit effective date).

On May 7, 1998, a public hearing was held regarding the proposed January and

March regulations. At the hearing and in written submissions, commentators expressed concern regarding the effective dates contained in the January 1998 and March 1998 regulations with respect to the overall foreign loss account provisions of Treas. Reg. § 1.1502–9T. The commentators’ principal concern was that these effective dates resulted in adverse tax consequences not anticipated by taxpayers with respect to business transactions that occurred prior to the issuance of the January 1998 regulations. Treasury and the Service now believe that certain of these consequences are inappropriate.

Accordingly, this notice announces that Treasury and the Service intend to issue regulations permitting taxpayers to elect not to apply Treas. Reg. § 1.1502–9T (the overall foreign loss account provisions) to consolidated return years beginning before January 1, 1998. A taxpayer that chooses under the March 1998 regulations to apply the effective date provisions under the January 1998 regulations may also make the election under this notice.

To make the election under this notice, a taxpayer must write “Election Pursuant to Notice 98–40” across the top of page 1 of an original or amended tax return for each consolidated return year subject to the election. For the first consolidated return year to which the overall foreign loss provisions of Treas. Reg. § 1.1502–9T apply ( i.e., the first year beginning on or after January 1, 1998), such taxpayer must write “Notice 98–40 Election in Effect in Prior Years” across the top of page 1 of the consolidated tax return for that year. For purposes of applying Treas. Reg. § 1.1502–9T with respect to such year, any member with a balance in an overall foreign loss account from a separate return limitation year on the first day of such year shall be treated as joining the group on such first day.

Treasury and the Service intend to amend the regulations under section 1502 to incorporate the guidance set forth in this notice. Until the regulations are amended, taxpayers may rely on the guidance set forth in this notice.

For further information regarding this notice, contact Trina Dang of the Office of Associate Chief Counsel (Interna

1998–35 I.R.B. 7 August 31, 1998

means a reservation, as defined in either section 3(d) of the Indian Financing Act of 1974, 25 U.S.C. § 1452(d), or section 4(10) of the Indian Child Welfare Act of 1978, 25 U.S.C. § 1903(10). Section 3(d) of the Indian Financing Act of 1974 defines reservation to include “former Indian reservations in Oklahoma.”

Section 1604(c) of the Act (generally effective as of January 1, 1994) amended the definition of “Indian reservation” under section 168(j)(6). Under the amendment, only lands within the jurisdictional area of an Oklahoma Indian tribe (as determined by the Secretary of the Interior) that are recognized by such Secretary as an area eligible for trust land status under 25 CFR Part 151 as in effect on August 5, 1997 (the date of enactment), are “former Indian reservations in Oklahoma.”

DETERMINATION OF SECRETARY OF THE INTERIOR AS TO THE MEANING OF FORMER INDIAN RESERVATIONS

The Secretary of the Interior has determined that, for purposes of section 168(j)(6), lands that are within the jurisdictional area of an Oklahoma Indian tribe are those lands within the boundaries of the last treaties, Executive Orders, fed

eral agreements, federal statutes, and Secretarial Orders with the Oklahoma tribes. The Secretary of the Interior also has determined that any lands within the boundaries of the last treaties, Executive Orders, federal agreements, federal statutes, and Secretarial Orders with the Oklahoma tribes are lands eligible for trust land status under 25 CFR Part 151.

The areas of Oklahoma located outside the boundaries of the last treaties, Executive Orders, federal agreements, federal statutes, and Secretarial Orders with the Oklahoma tribes are (1) the Cherokee Outlet, (2) No Man’s Land (also known as the Panhandle), (3) the historic Greer County, and (4) those former Seminole and Creek domain lands in central Indian Territory that were deemed to be “unassigned lands.” The location of those areas in Oklahoma that are outside the boundaries of the last treaties, Executive Orders, federal agreements, federal statutes, and Secretarial Orders with the Oklahoma Indian tribes can best be described in terms of entire present-day counties that are ineligible (Alfalfa, Beaver, Cimarron, Garfield, Grant, Greer, Harmon, Harper, Jackson, Major, Texas, Woods, and Woodward) and present-day counties that are split by the boundaries, that is, part of the county is eligible and part of the

county is not eligible (Beckham, Canadian, Cleveland, Ellis, Kay, Kingfisher, Logan, Noble, Oklahoma, Pawnee and Payne).

ADDITIONAL INFORMATION

The Arkansas-Oklahoma District of the Internal Revenue Service will make available a plain language description of the boundary for each split county. Written requests should include the name of the applicable split county and be sent to the following address: Internal Revenue Service, 55 North Robinson Street, Mail Stop 4030-OKC, Attention: RSC, Oklahoma City, OK 73102. The plain language description is also available on the Internet at http://www.irs.ustreas.gov/prod/hot/ atn/oklahoma.html.

DRAFTING INFORMATION CONTACT

The principal author of this notice is Winston H. Douglas of the Office of the Assistant Chief Counsel (Passthroughs and Special Industries). For further information regarding this notice contact Mr. Douglas on (202) 622-3110 (not a tollfree call). For information concerning the boundaries, contact the Arkansas-Oklahoma District office on (405) 297-4690 (not a toll-free call).

August 31, 1998 8 1998–35 I.R.B.