SECTION 4. ELECTION

PROCEDURES

.01 In General . If income accruing in an eligible plan would otherwise be subject to current United States income taxation, a beneficiary of the eligible plan may elect for the beneficiary’s taxable year (the “current year”) and all subsequent years to defer United States income tax on the beneficiary’s share of income accrued in the plan until that income is distributed to the beneficiary. Beneficiaries shall make the election by attaching to their timely filed (including extensions) United States federal income tax return for the current year, a statement that includes the following information:

(i) A statement that the taxpayer is claiming the benefit of Article XVIII(7) of the Convention under this revenue procedure;

(ii) The name of the trustee of the plan and the plan account number, if any; and

(iii) The balance in the plan at the beginning of the current year.

.02 Reporting . Beneficiaries shall attach a copy of the statement required in paragraph 4.01 to their timely filed (including extensions) United States federal income tax return for each year subsequent to the current year, until the tax year in which a final distribution is made from the plan (or from any transferee plan within the meaning of paragraph 4.03).

.03 Rollovers . If an eligible plan for which an election has been made pursuant to paragraph 4.01 (“transferor plan”) is rolled over to another eligible plan (“transferee plan”) in a transfer that does not result in the current imposition of Canadian income tax ( e.g., a transfer such as that described in Revenue Ruling 89–95), the previous election is deemed to carry over to the transferee plan.

.04 Transferee Plan Reporting . In the case of a transferee plan, in addition to a copy of the statement required for the transferor plan under paragraph 4.02, in the tax year of the transfer (“transfer year”), beneficiaries shall attach an additional statement that includes the following information:

(i) A statement that the taxpayer is claiming the benefit of Article XVIII(7) of the Convention under this revenue procedure;

(ii) The name of the trustee of the transferee plan and the plan account number, if any;

(iii) The name of the trustee of the transferor plan and the plan account number, if any;

(iv) The total amount of income accrued in the transferor plan on which United States income tax was deferred under either Article XVIII(7) or former Article XXIX(5); and

(v) The initial balance in the transferee plan.

Beneficiaries of a transferee plan shall attach a copy of the statement required in paragraph 4.02 (transferor plan) and a copy of the statement required in this paragraph 4.04 (transferee plan) to their timely filed (including extensions) United States federal income tax return for each year subsequent to the transfer year, until the tax year in which a final distribution is made from the transferee plan.

.05 Multiple Plans . An individual who is a beneficiary of more than one eligible plan must make a separate election and file a separate statement for each eligible plan.

.06 Extension Of Time For Making Elections . An extension of time for making an election under paragraph 4.01 may be available under the procedures applicable under sections 301.9100–1 and 301.9100–3 of the Procedure and Administration Regulations.

April 15, 2002 745 2002–15 I.R.B.

thereto, payments made pursuant to the agreements will be applied by the Service in accordance with the terms of the agreements.

(2) In all other cases, the Service will apply payments, whether paid in installments or in a lump sum and whether paid pursuant to the offer or a collateral agreement, to periods in the order of priority that the Service determines will serve its best interest. The payment will be applied to satisfy the liability for successive periods in descending order of priority until the payment is absorbed. If the amount applied to a period is less than the liability for the period, the amount will be applied to tax, penalty, and interest, in that order, until the amount is absorbed.

.04 If any part of a payment is applied to interest under the rules set forth in this revenue procedure, the amount applied to interest is treated for purposes of § 163 of the Code as interest paid in the year in which the payment is made. Under § 163, interest paid or accrued in a taxable year may be deducted in calculating taxable income for the year except to the extent such interest is personal interest as defined in § 163(h) and § 1.163–9T(b)(2) of the Income Tax Regulations or is otherwise disallowed under applicable provisions of the Internal Revenue Code and Income Tax Regulations.