Part IV - Items of General

Interest

ADMINISTRATIVE APPEAL OF ADVERSE DETERMINATION OF TAX-EXEMPT STATUS OF BOND ISSUE

PROPOSED REVENUE PROCEDURE

TABLE OF CONTENTS

Revenue rulings and revenue procedures (hereinafter referred to as “rulings”) that have an effect on previous rulings use the following defined terms to describe the effect:

Amplified describes a situation where no change is being made in a prior published position, but the prior position is being extended to apply to a variation of the fact situation set forth therein. Thus, if an earlier ruling held that a principle applied to A, and the new ruling holds that the same principle also applies to B, the earlier ruling is amplified. (Compare with modified, below).

Clarified is used in those instances where the language in a prior ruling is being made clear because the language has caused, or may cause, some confusion. It is not used where a position in a prior ruling is being changed.

Distinguished describes a situation where a ruling mentions a previously published ruling and points out an essential difference between them.

Modified is used where the substance of a previously published position is being changed. Thus, if a prior ruling held that a principle applied to A but not to B, and the new ruling holds that it ap

The following abbreviations in current use and for- merly used will appear in material published in the Bulletin.

A —Individual. Acq. —Acquiescence. B —Individual. BE —Beneficiary. BK —Bank. B.T.A. —Board of Tax Appeals. C. —Individual. C.B. —Cumulative Bulletin. CFR —Code of Federal Regulations. CI —City. COOP —Cooperative. Ct.D. —Court Decision. CY —County. D —Decedent. DC —Dummy Corporation. DE —Donee. Del. Order —Delegation Order. DISC —Domestic International Sales Corporation. DR —Donor. E —Estate. EE —Employee.

plies to both A and B, the prior ruling is modified because it corrects a published position. (Compare with amplified and clarified, above).

Obsoleted describes a previously published ruling that is not considered determinative with respect to future transactions. This term is most commonly used in a ruling that lists previously published rulings that are obsoleted because of changes in law or regulations. A ruling may also be obsoleted because the substance has been included in regulations subsequently adopted.

Revoked describes situations where the position in the previously published ruling is not correct and the correct position is being stated in the new ruling.

Superseded describes a situation where the new ruling does nothing more than restate the substance and situation of a previously published ruling (or rulings). Thus, the term is used to republish under the 1986 Code and regulations the same position published under the 1939 Code and regulations. The term is also used when it is desired to republish in a single ruling a series of situations, names, etc., that were previously published over a period of time in separate rulings. If the

E.O. —Executive Order. ER —Employer. ERISA —Employee Retirement Income Security Act. EX —Executor. F —Fiduciary. FC —Foreign Country. FICA —Federal Insurance Contribution Act. FISC —Foreign International Sales Company. FPH —Foreign Personal Holding Company. F.R. —Federal Register. FUTA —Federal Unemployment Tax Act. FX —Foreign Corporation. G.C.M. —Chief Counsel’s Memorandum. GE —Grantee. GP —General Partner. GR —Grantor. IC —Insurance Company. I.R.B. —Internal Revenue Bulletin. LE —Lessee. LP —Limited Partner. LR —Lessor. M —Minor. Nonacq. —Nonacquiescence. O —Organization. P —Parent Corporation.

new ruling does more than restate the substance of a prior ruling, a combination of terms is used. For example, modified and superseded describes a situation where the substance of a previously published ruling is being changed in part and is continued without change in part and it is desired to restate the valid portion of the previously published ruling in a new ruling that is self contained. In this case the previously published ruling is first modified and then, as modified, is superseded.

Supplemented is used in situations in which a list, such as a list of the names of countries, is published in a ruling and that list is expanded by adding further names in subsequent rulings. After the original ruling has been supplemented several times, a new ruling may be published that includes the list in the original ruling and the additions, and supersedes all prior rulings in the series.

Suspended is used in rare situations to show that the previous published rulings will not be applied pending some future action such as the issuance of new or amended regulations, the outcome of cases in litigation, or the outcome of a Service study.

PHC —Personal Holding Company. PO —Possession of the U.S. PR —Partner. PRS —Partnership. PTE —Prohibited Transaction Exemption. Pub. L. —Public Law. REIT —Real Estate Investment Trust. Rev. Proc. —Revenue Procedure. Rev. Rul. —Revenue Ruling. S —Subsidiary. S.P.R. —Statements of Procedral Rules. Stat. —Statutes at Large. T —Target Corporation. T.C. —Tax Court. T.D. —Treasury Decision. TFE —Transferee. TFR —Transferor. T.I.R. —Technical Information Release. TP —Taxpayer. TR —Trust. TT —Trustee. U.S.C. —United States Code. X —Corporation. Y —Corporation. Z —Corporation.

December 7, 1998 22 1998–49 I.R.B.

Revenue Rulings—Continued

98–44, 1998–37 I.R.B. 4 98–45, 1998–38 I.R.B. 4 98–46, 1998–39 I.R.B. 10 98–47, 1998–39 I.R.B. 4 98–48, 1998–39 I.R.B. 6 98–49, 1998–40 I.R.B. 4 98–50, 1998–40 I.R.B. 7 98–51, 1998–43 I.R.B. 4 98–52, 1998–45 I.R.B. 4 98–53, 1998–46 I.R.B. 12 98–54, 1998–46 I.R.B. 14 98–55, 1998–47 I.R.B. 5 98–56, 1998–47 I.R.B. 5

Tax Conventions:

1998–43 I.R.B. 6

Treasury Decisions:

8771, 1998–29 I.R.B. 6 8772, 1998–31 I.R.B. 8 8773, 1998–29 I.R.B. 4 8774, 1998–30 I.R.B. 5 8775, 1998–31 I.R.B. 4 8776, 1998–33 I.R.B. 6 8777, 1998–34 I.R.B. 4 8778, 1998–36 I.R.B. 4 8779, 1998–36 I.R.B. 11 8780, 1998–39 I.R.B. 14 8781, 1998–40 I.R.B. 4 8782, 1998–41 I.R.B. 5 8783, 1998–41 I.R.B. 4 8784, 1998–42 I.R.B. 4 8785, 1998–42 I.R.B. 5 8786, 1998–44 I.R.B. 4 8787, 1998–46 I.R.B. 5 8788, 1998–45 I.R.B. 6

Numerical Finding List ¹

Bulletins 1998–29 through 48

Announcements:

98–62, 1998–29 I.R.B. 13 98–68, 1998–29 I.R.B. 14 98–69, 1998–30 I.R.B. 16 98–70, 1998–30 I.R.B. 17 98–71, 1998–30 I.R.B. 17 98–72, 1998–31 I.R.B. 14 98–73, 1998–31 I.R.B. 14 98–74, 1998–31 I.R.B. 15 98–75, 1998–31 I.R.B. 15 98–76, 1998–32 I.R.B. 64 98–77, 1998–34 I.R.B. 30 98–78, 1998–34 I.R.B. 30 98–79, 1998–34 I.R.B. 31 98–80, 1998–34 I.R.B. 32 98–81, 1998–36 I.R.B. 35 98–82, 1998–35 I.R.B. 17 98–83, 1998–36 I.R.B. 36 98–84, 1998–38 I.R.B. 30 98–85, 1998–38 I.R.B. 30 98–86, 1998–38 I.R.B. 31 98–87, 1998–40 I.R.B. 11 98–88, 1998–41 I.R.B. 14 98–89, 1998–40 I.R.B. 11 98–90, 1998–42 I.R.B. 22 98–91, 1998–40 I.R.B. 12 98–92, 1998–41 I.R.B. 15 98–93, 1998–43 I.R.B. 10 98–94, 1998–43 I.R.B. 32 98–95, 1998–44 I.R.B. 13 98–96, 1998–44 I.R.B. 18 98–97, 1998–44 I.R.B. 18 98–98, 1998–44 I.R.B. 18 98–99, 1998–46 I.R.B. 34 98–100, 1998–46 I.R.B. 42 98–101, 1998–45 I.R.B. 27 98–102, 1998–45 I.R.B. 28 98–103, 1998–47 I.R.B. 12 98–104, 1998–47 I.R.B. 13 98–106, 1998–48 I.R.B. 10 98–107, 1998–48 I.R.B. 10 98–108, 1998–48 I.R.B. 12

Court Decisions:

2063, 1998–36 I.R.B. 13 2064, 1998–37 I.R.B . 4 2065, 1998–39 I.R.B. 7

Notices:

98–36, 1998–29 I.R.B. 8 98–37, 1998–30 I.R.B. 13 98–38, 1998–34 I.R.B. 7 98–39, 1998–33 I.R.B. 11 98–40, 1998–35 I.R.B. 7 98–41, 1998–33 I.R.B. 12 98–42, 1998–33 I.R.B. 12 98–43, 1998–33 I.R.B. 13 98–44, 1998–34 I.R.B. 7 98–45, 1998–35 I.R.B. 7 98–46, 1998–36 I.R.B. 21 98–47, 1998–37 I.R.B. 8 98–48, 1998–39 I.R.B. 17 98–49, 1998–38 I.R.B. 5 98–50, 1998–44 I.R.B. 10

1 A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 1998–1 through 1998–28 will be found in Internal Revenue Bulletin 1998–29, dated July 20, 1998.

Notices—Continued

98–51, 1998–44 I.R.B. 11 98–52, 1998–46 I.R.B. 16 98–53, 1998–46 I.R.B. 24 98–54, 1998–46 I.R.B. 25 98–55, 1998–46 I.R.B. 26 98–56, 1998–47 I.R.B. 9 98–57, 1998–47 I.R.B. 9

Railroad Retirement Quarterly Rate:

1998–31 I.R.B. 7

Proposed Regulations:

REG–209446–82, 1998–36 I.R.B. 24 REG–209060–86, 1998–39 I.R.B. 18 REG–209769–95, 1998–41 I.R.B. 8 REG–209813–96, 1998–35 I.R.B. 9 REG–246256–96, 1998–34 I.R.B. 9 REG–104641–97, 1998–29 I.R.B. 9 REG–104565–97, 1998–39 I.R.B. 21 REG–106177–97, 1998–37 I.R.B. 33 REG–109708–97, 1998–45 I.R.B. 29 REG–115446–97, 1998–36 I.R.B. 23 REG–116608–97, 1998–29 I.R.B. 12 REG–118926–97, 1998–39 I.R.B. 23 REG–118966–97, 1998–39 I.R.B. 29 REG–119227–97, 1998–30 I.R.B. 13 REG–122488–97, 1998–42 I.R.B. 19 REG–101363–98, 1998–40 I.R.B. 10 REG–102023–98, 1998–48 I.R.B. 6 REG–106221–98, 1998–41 I.R.B. 10 REG–110332–98, 1998–33 I.R.B. 18 REG–110403–98, 1998–29 I.R.B. 11 REG–115393–98, 1998–39 I.R.B. 34

Revenue Procedures:

98–40, 1998–32 I.R.B. 6 98–41, 1998–32 I.R.B. 7 98–42, 1998–28 I.R.B. 9 98–43, 1998–29 I.R.B. 8 98–44, 1998–32 I.R.B. 11 98–45, 1998–34 I.R.B. 8 98–46, 1998–36 I.R.B. 21 98–47, 1998–37 I.R.B. 8 98–48, 1998–38 I.R.B. 7 98–49, 1998–37 I.R.B. 9 98–50, 1998–38 I.R.B. 8 98–51, 1998–38 I.R.B. 20 98–52, 1998–37 I.R.B. 12 98–53, 1998–40 I.R.B. 9 98–54, 1998–43 I.R.B. 7 98–55, 1998–46 I.R.B. 27 98–56, 1998–46 I.R.B. 33 98–57, 1998–48 I.R.B. 5

Revenue Rulings:

98–34, 1998–31 I.R.B. 12 98–35, 1998–30 I.R.B. 4 98–36, 1998–31 I.R.B. 6 98–37, 1998–32 I.R.B. 5 98–38, 1998–32 I.R.B. 4 98–39, 1998–33 I.R.B. 4 98–40, 1998–33 I.R.B. 4 98–41, 1998–35 I.R.B. 6 98–42, 1998–35 I.R.B. 5 98–43, 1998–36 I.R.B. 9

1998–49 I.R.B. 23 December 7, 1998

Revenue Rulings—Continued

93–81 Obsoleted by 98–37, 1998–32 I.R.B. 5

3–91 Obsoleted by 98–37, 1998–32 I.R.B. 5

93–92 Obsoleted by 98–37, 1998–32 I.R.B. 5

93–93 Obsoleted by 98–37, 1998–32 I.R.B. 5

94–5 Obsoleted by 98–37, 1998–32 I.R.B. 5

94–6 Obsoleted by 98–37, 1998–32 I.R.B. 5

94–30 Obsoleted by 98–37, 1998–32 I.R.B. 5

94–51 Obsoleted by 98–37, 1998–32 I.R.B. 5

94–79 Obsoleted by 98–37, 1998–32 I.R.B. 5 95–2 Obsoleted by 98–37, 1998–32 I.R.B. 5

95–9 Obsoleted by 98–37, 1998–32 I.R.B. 5 97–37 Obsoleted by 98–39, 1998–33 I.R.B. 4

Finding List of Current Action on Previously Published Items ¹

Bulletins 1998–29 through 48

*Denotes entry since last publication

Notices:

87–13 Modified by 98–49, 1998–38 I.R.B. 5

87–16 Modified by 98–49, 1998–38 I.R.B. 5

Revenue Procedures:

83–58 Obsoleted by 98–37, 1998–32 I.R.B. 5

88–17 Clarified, modified, and superseded by 98–54, 1998–43 I.R.B. 7

94–23 Amplified and superseded by 98–55, 1998–46 I.R.B. 27

97–40 Amplified and superseded by 98–55, 1998–46 I.R.B. 27 97–60 Superseded by 98–50, 1998–38 I.R.B. 8 97–61 Superseded by 98–51, 1998–38 I.R.B. 20 98–14 Modified by 98–53, 1998–40 I.R.B. 9

Revenue Rulings:

57–271 Obsoleted by 98–37, 1998–32 I.R.B. 5

67–301 Modified by 98–41, 1998–35 I.R.B. 6

70–225 Obsoleted by 98–44, 1998–37 I.R.B. 4

71–277 Obsoleted by 98–37, 1998–32 I.R.B. 5

71–434 Obsoleted by 98–37, 1998–32 I.R.B. 5

71–574 Obsoleted by 98–37, 1998–32 I.R.B. 5

72–75 Obsoleted by 98–37, 1998–32 I.R.B. 5 72–120 Obsoleted by 98–37, 1998–32 I.R.B. 5

1 A cumulative finding list for previously published items mentioned in Internal Revenue Bulletins 1998–1 through 1998–28 will be found in Internal Revenue Bulletin 1998–29, dated July 20, 1998.

Revenue Rulings—Continued

72–121 Obsoleted by 98–37, 1998–32 I.R.B. 5 72–122 Obsoleted by 98–37, 1998–32 I.R.B. 5 74–77 Obsoleted by 98–37, 1998–32 I.R.B. 5 75–19 Obsoleted by 98–37, 1998–32 I.R.B. 5 76–562 Obsoleted by 98–37, 1998–32 I.R.B. 5 77–214 Obsoleted by 98–37, 1998–32 I.R.B. 5 79–106 Obsoleted by 98–37, 1998–32 I.R.B. 5 83–113 Obsoleted by 98–37, 1998–32 I.R.B. 5 85–143 Obsoleted by 98–37, 1998–32 I.R.B. 5 88–8 Obsoleted by 98–37, 1998–32 I.R.B. 5 88–76 Obsoleted by 98–37, 1998–32 I.R.B. 5

88–79 Obsoleted by 98–37, 1998–32 I.R.B. 5

93–4 Obsoleted by 98–37, 1998–32 I.R.B. 5 93–5 Obsoleted by 98–37, 1998–32 I.R.B. 5

93–6 Obsoleted by 98–37, 1998–32 I.R.B. 5

93–30 Obsoleted by 98–37, 1998–32 I.R.B. 5

93–38 Obsoleted by 98–37, 1998–32 I.R.B. 5

93–49 Obsoleted by 98–37, 1998–32 I.R.B. 5

93–50 Obsoleted by 98–37, 1998–32 I.R.B. 5

93–53 Obsoleted by 98–37, 1998–32 I.R.B. 5

December 7, 1998 24 1998–49 I.R.B.

Internal Revenue Bulletins 1998–1 Through 1998–48

The abbreviation and number in parenthesis following the index entry refer to the specific item; numbers in roman and italic type following the parenthesis refer to the Internal Revenue Bulletin in which the item may be found and the page number on which it appears.

Key to Abbreviations: RR Revenue Ruling RP Revenue Procedure TD Treasury Decision CD Court Decision PL Public Law EO Executive Order DO Delegation Order TDO Treasury Department Order TC Tax Convention SPR Statement of Procedural

Rules PTE Prohibited Transaction

Exemption

26 CFR 31.6302–1(f)(4), 31.6302–1T, added; federal employment tax deposits de minimis rule (TD 8771) 29, 6 Student FICA exception (RP 16) 5, 19 Worker classification; section 530; Tax

Court review (Notice 43) 33, 13

Regulations:

Magnetic media; electronic filing:

1998 Form W–4 specifications (RP 26) 13, 26 1998 Form 8027 (RP 52) 37, 12 Proposed regulations:

26 CFR 31.3121(v)(2)–1, revised; FICA and FUTA taxation of amounts under employee benefit plans (REG– 209484–87; REG–209807–95) 8, 40 26 CFR 31.3221–4, added; exception from supplemental annuity tax on railroad employers (REG–209769– 95) 41, 8 26 CFR 31.6053–1, –4; electronic tip reports (REG–104691–97) 11, 13 26 CFR 31.6302–1(f)(4), revised; federal employment tax deposits de minimis rule (REG–110403–98) 29, 11 Railroad retirement; rate determination;

quarterly beginning April 1, 1998 and July 1, 1998 31, 7 Regulations:

26 CFR 20.2041–3, 20.2056(d)–2, amended; 20.2046–1, revised; property interests and disclaimer (TD 8744) 7, 20 26 CFR 20.2044–1(e), added; 20.2044– 1T, removed; 20.2056(b)–7, revised; 20.2056(b)–7T, removed; 20.2056(b)– 10, revised; 20.2056(b)–10T, removed; certain property for which marital deduction was previously allowed (TD 8779) 36, 11 26 CFR 25.2702–5, –7, amended; qualified prsonal residence trust, sale of residence (TD 8743) 7, 26 26 CFR 25.2511–1, 25.2514–3, 25.2518–1, –2, amended; property interests and disclaimers (TD 8744) 7, 20 Revocable trust; election (RP 13) 4, 21 Special use value; farms; interest rates

(RR 22) 19, 5 Underpayment interest, interest expense

deduction, estates (RP 15) 4, 25 Valuation of compensatory stock options

(RP 34) 18, 15

3, added; 48.4101–2, amended; 48.4101–3, 48.6427–10, –11, added; kerosene tax, aviation fuel tax, tax on heavy trucks and trailers (REG– 119227–97) 30, 13 26 CFR 53.4958; 301.6213–1, 301.6501(e)–1, 301.6501(n)–1, 301.7422–1, amended; 53.4958–0 through –7 and intermediary sections, added; failure by certain charitable organizations to meet certain qualification requirements, taxes on excess benefit transactions (REG–246256– 96) 34, 9 26 CFR 54.4980B–1, added; group health plans continuation coverage requirements (REG–209485–86) 11, 21 Regulations:

26 CFR 40.0–1(a), amended; 40.6011(a) –1(a)(2)(iii), 40.5302(c)– 1, amended, 40.6302(c)–2(b)(2)(iii), added; deposits of excise taxes (TD 8740) 3, 4 26 CFR 40.6011(a)–1(b)(2)(vi), amended; 48.4082–5T, removed; 48.4082–5, added; 48.4081–1, amended; 48.4082–5T, redesignated; 48.6416(b)(4)–1, removed; 48.6421– 3(d)(2), amended; 48.6427–3(d)(2), amended; 48.6715–1(a)(3), revised; 48.6715–2T, removed; gasoline and diesel fuel excise tax; special rules for Alaska, definitions (TD 8748) 8, 24 Regulations:

26 CFR 48.4081–1T, 48.4082–6T through –10T and intermediary sections, 48.4091–3T, 48.4101–2T, –3T, 48.6427–10T, –11T, added; 145.4052– 1, amended; kerosene, aviation fuel, heavy trucks and trailers tax (TD 8774) 30, 5

Advance pricing agreements, small busi ness taxpayers (Notice 10) 6, 9

Nonstatutory stock option, transfer (RR

21. 18, 7 Qualifying income interest, disposition

(RR 8) 7, 24 Valuation of compensatory stock options

26 CFR 1.6045–1T, –2T, removed; 1.6045–1, –2, amended; 301.6011–2, amended; 301.6011–2T, removed; magnetic filing requirements for information returns (TD 8772) 31, 8

Ad valorem tax, export clause (Ct.D.

2064. 37, 4 Bows and arrows; taxable and nontaxable

articles (RR 5) 2, 20 Deposit of excise taxes, amendment (No tice 36) 29, 8 Federal excise taxes for consular officers

and employees, exemption (RR 24) 19, 6 Proposed regulations:

26 CFR 40.0–1T, added; 40.6011(a)– 1T, added; 40.6302(c)–2T, added; deposits of excise taxes (REG– 102894–97) 3, 59 26 CFR 48.4052–1, added; 48.4081–1, amended; 48.4082–6 through –10 and intermediary sections, 48.4091–

(RP 34) 18, 15

1998–49 I.R.B. 25 December 7, 1998

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