SECTION 1. PURPOSE AND

NATURE OF CHANGES

.01 The purpose of this revenue procedure is to update Rev. Proc. 98–3, 1998–1 I.R.B. 100, as amplified and modified by subsequent revenue procedures, by providing a revised list of those areas of the Internal Revenue Code under the jurisdiction of the Associate Chief Counsel (Domestic) and the Associate Chief Counsel (Employee Benefits and Exempt Organizations) relating to issues on which the Internal Revenue Service will not issue letter rulings or determination letters. For a list of areas under the jurisdiction of the Associate Chief Counsel (International) relating to international issues on which the Service will not issue letter rulings or determination letters, see Rev. Proc. 99–7, this Bulletin. For a list of areas under the jurisdiction of the Assistant Commissioner (Employee Plans and Exempt Organizations) relating to issues, plans or plan amendments on which the Service will not issue letter rulings and determination letters, see, respectively, section 8 of Rev. Proc. 99–4, this Bulletin, and section 3.02 of Rev. Proc. 99–6, this Bulletin. .02 Changes (1) Old section 3.01(23), dealing with the tax consequences under §§ 337, 368, and other sections of certain combining transactions, has been deleted in order to provide taxpayers with current advice as to the Service’s position on this matter.

(2) New section 4.01(42), dealing with § 1362, has been added to the ordinarily no-rule area to indicate that the Service generally will not issue rulings providing relief to S corporations with regard to certain late elections where the S corporation is eligible to seek relief under the procedures provided by sections 4 and 5 of Rev. Proc. 98–55, 1998–46 I.R.B. 27.

(3) New section 4.01(48), dealing with § 2702, has been added to the ordinarily no-rule area to indicate that the Service generally will not issue rulings as to whether annuity interests are § 2702(b) qualified interests where either (i) the amount of the annual annuity is more than 50 percent of the initial net fair market value of the property transferred to the

trust, or (ii) the present value of the remainder interest is less than 10 percent of the initial net fair market value. This norule provision is added to provide taxpayers with current advice as to the Service’s practice in this area.

(4) Old section 5.19, dealing with the tax effect of the Small Business Job Protection Act on § 457 deferred compensation plans, has been modified: (i) to provide that the Service will consider certain requests for rulings in this area subject to the limitations in section 4 of Rev. Proc. 98–40, 1998–32 I.R.B. 6, and (ii) to delete the exception to this no-rule area for plans based on the law in effect prior to SBJPA enactment. See Rev. Proc. 98–40.

(5) New section 5.20, dealing with § 457, has been added to the under study no-rule area to indicate that the Service will not rule as to the tax treatment of any § 457 plan where the plan provides that a loan from plan assets may be made to plan participants or beneficiaries. See Rev. Proc. 98–40.

(6) New section 5.21, dealing with § 664, has been added to the under study no-rule area to indicate that the Service will not rule as to whether a trust that will calculate the unitrust amount under § 664(d)(3) qualifies as a § 664 charitable remainder trust when a grantor, a trustee, a beneficiary, or a person related or subordinate to such persons can control the timing of the trust’s receipt of trust income from a partnership or a deferred annuity contract to take advantage of the difference between trust income under § 643(b) and income for federal income tax purposes for the benefit of the unitrust recipient. See Rev. Proc. 97–23, 1997–1 C.B. 654. (7) New section 5.26, has been added to the under study no-rule area to indicate that the Service will not rule as to the tax consequences under § 1374, dealing with tax on certain built-in gains, in certain situations where an S corporation disposes of timber, wood products, coal, or iron ore that the S corporation acquired from a C corporation, or formerly held as a C corporation. See Rev. Proc. 98–56, 1998–46 I.R.B. 33. (8) New section 5.31, dealing with §§ 3121, 3306, and 3401, has been added to the under study no-rule area to indicate that the Service will not rule as to who is the employer of employees of certain dis

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described in Rev. Rul. 83–51, 1983–1 C.B. 48. (Also §§ 61, 451, 461, 856, 1001, and 7701.) (10) Section 170.—Charitable, Etc., Contributions and Gifts.—Whether a taxpayer who advances funds to a charitable organization and receives therefor a promissory note may deduct as contributions, in one taxable year or in each of several years, amounts forgiven by the taxpayer in each of several years by endorsement on the note.

(11) Section 213.—Medical, Dental, Etc., Expenses.—Whether a capital expenditure for an item that is ordinarily used for personal, living, or family purposes, such as a swimming pool, has as its primary purpose the medical care of the taxpayer or the taxpayer’s spouse or dependent, or is related directly to such medical care.

(12) Section 264(b).—Certain Amounts Paid in Connection with Insurance Contracts.—Whether “substantially all” the premiums of a contract of insurance are paid within a period of 4 years from the date on which the contract is purchased. Also, whether an amount deposited is in payment of a “substantial number” of future premiums on such a contract.

(13) Section 264(c)(1).—Certain Amounts Paid in Connection with Insurance Contracts.—Whether § 264(c)(1) applies.

(14) Section 269.—Acquisitions Made to Evade or Avoid Income Tax.—Whether an acquisition is within the meaning of § 269.

(15) Section 274.—Disallowance of Certain Entertainment, Etc., Expenses.— Whether a taxpayer who is traveling away from home on business may, in lieu of substantiating the actual cost of meals, deduct a fixed per-day amount for meal expenses that differs from the amount prescribed in the revenue procedure providing optional rules for substantiating the amount of travel expenses for the period in which the expense was paid or incurred, such as Rev.Proc. 96–64, 1996–2 C.B. 427, or its successor, Rev. Proc. 97– 59, 1997–2 C.B. 593. (16) Section 302.—Distributions in Redemption of Stock.—Whether § 302(b) applies when the consideration given in redemption by a corporation consists entirely or partly of its notes payable, and

See Rev. Proc. 99–1, page 6, this Bulletin, particularly section 7 captioned “Under What Circumstances Does the Service Have Discretion to Issue Letter Rulings and Determination Letters?” for general instructions and other situations in which the Service will not or ordinarily will not issue letter rulings or determination letters.

With respect to the items listed, revenue rulings or revenue procedures may be published in the Internal Revenue Bulletin from time to time to provide general guidelines regarding the position of the Service.

Additions or deletions to this revenue procedure as well as restatements of items listed will be made by modification of this revenue procedure. Changes will be published as they occur throughout the year and will be incorporated annually in a new revenue procedure published as the third revenue procedure of the year. These lists should not be considered allinclusive. Decisions not to rule on individual cases (as contrasted with those that present significant pattern issues) are not reported in this revenue procedure and will not be added to subsequent revisions.

.02 Scope of Application This revenue procedure does not preclude the submission of requests for technical advice to the National Office from the Office of a District Director of the Internal Revenue or a Chief, Appeals Office.