SECTION 5. PROCEDURES FOR

MAKING THE MARK-TO-MARKET ELECTIONS

.01 Elections effective for taxable years for which the original federal income tax return was filed before March 18, 1999. For a taxpayer to make a § 475(e) or (f) election that is effective for a taxable year for which the original federal income tax return was filed before March 18, 1999, the taxpayer must either:

(1) have properly reflected the application of § 475 (including any required § 481(a) adjustment) in the calculation of the taxpayer’s tax liability on its original federal income tax return for the election year; or

(2) have failed to properly reflect the application of § 475 (including any required § 481(a) adjustment) in the calculation of the taxpayer’s tax liability on its original federal income tax return for the election year, but clearly demonstrated on that return its intent to make the election for that year (for example, by a statement on, or attachment to, the return), and file an amended return for the election year on or before June 16, 1999, that properly reflects the application of § 475 (including any required § 481(a) adjustment).

.02 Elections effective for other taxable years beginning before January 1, 1999. For a taxpayer to make a § 475(e) or (f) election that is effective for a taxable year which begins before January 1, 1999, and for which the original federal income tax return is filed on or after March 18, 1999, the taxpayer must make the election by attaching a statement that satisfies the requirements in section 5.04 of this revenue procedure to an original federal income tax return for the election year that is timely filed (including extensions).

.03 Elections effective for a taxable year beginning on or after January 1, 1999.

(1) General procedure. Except as provided in section 5.03(2) of this revenue procedure, for a taxpayer to make a § 475(e) or (f) election that is effective for a taxable year beginning on or after January 1, 1999, the taxpayer must file a statement that satisfies the requirements in section 5.04 of this revenue procedure. The statement must be filed not later than the due

1999–7 I.R.B. 53 February 16, 1999

tained in this revenue procedure have been reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act (44 U.S.C. 3507) under control number 1545-1641. The collections of information in this revenue procedure are in sections 5 and 6 of this revenue procedure. This information is required by the IRS to facilitate monitoring taxpayers that make the elections under § 475(e) or (f). This information will be used if a taxpayer making the election is audited. The likely recordkeepers and respondents are businesses or other for-profit institutions.

The reporting burden for the collection of information in section 6.02 of this revenue procedure is reflected in the burden of Form 3115. The burden of the requirement to file amended returns in section 5.01 of this revenue procedure is reflected in the burden of Forms 1120X and 1040X. The estimated total annual reporting and/or recordkeeping burden for the collection of information described in section 5.01–5.04 of this revenue procedure is 500 hours.

The estimated annual burden per respondent/recordkeeper varies from 15 minutes to 1 hour, depending on individual circumstances, with an estimated average of 30 minutes. The estimated number of respondents and/or recordkeepers is 1,000. The estimated annual frequency of responses is once in the existence of each respondent.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by the Office of Management and Budget.

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 author of this revenue procedure is Jo Lynn Ricks of the Office of the Assistant Chief Counsel (Financial Institutions and Products). For further information regarding this revenue procedure, contact Ms. Ricks on (202) 622–3920 (not a toll-free call).

date (without regard to extensions) of the original federal income tax return for the taxable year immediately preceding the election year and must be attached either to that return or, if applicable, to a request for an extension of time to file that return.

(2) New taxpayers. A new taxpayer is a taxpayer for which no federal income tax return was required to be filed for the taxable year immediately preceding the election year. A new taxpayer makes the election by placing in its books and records no later than 2 months and 15 days after the first day of the election year a statement that satisfies the requirements in section 5.04 of this revenue procedure. To notify the Service that the election was made, the new taxpayer must attach a copy of the statement to its original federal income tax return for the election year.

.04 Required statement. The statement must describe the election being made, the first taxable year for which the election is effective, and, in the case of an election under § 475(f), the trade or business for which the election is made.