INCOME TAX

Rev. Rul. 2001–59, page 585. Bank bad debts; clarification of the conformity method. This ruling provides guidance to banks using the conformity election as to what steps are necessary to assign a loan as a loss asset. Also, the conclusive presumption of worthlessness will apply to loans erroneously charged off if the charge-offs are not substantially in excess of those warranted by reasonable business judgment.

Rev. Rul. 2001–60, page 587. Golf course greens land preparation costs. The costs of land preparation undertaken by a taxpayer in the original construction or reconstruction of push-up or natural soil golf course greens are not depreciable. However, the costs of land preparation undertaken by a taxpayer in the original construction or reconstruction of modern golf course greens that is so closely associated with depreciable assets, such as a network of underground drainage tiles or pipes, that the land preparation will be retired, abandoned, or replaced contemporaneously with those depreciable assets are depreciable. Rev. Rul. 55–290 modified and superseded. Rev. Proc. 99–49 modified and amplified.

Rev. Proc. 2001–56, page 590. This procedure provides optional methods for determining the value of the use of demonstration automobiles provided to employees by automobile dealerships. The optional methods include (1) a simplified method for the full exclusion of qualified automobile demonstration use, (2) a simplified method for the partial exclusion of nonqualified demonstration automobile use, and (3) a simplified method for the full inclusion of nonqualified demonstration automobile use.