SECTION 2. APPLICATION

.01 QUALIFICATIONS The following modified and supplemented list of Indian tribal entities, including Indian tribes, bands, communities, villages, and groups of Indians, as well as Alaska Natives, represents Indian tribal governments and is subject to these qualifications:

(1) The list does not include Indian tribal subdivisions because the determination of which entities qualify as subdivisions is discussed in Rev. Proc. 84–36, 1984–1 C.B. 510, as modified by Rev. Proc. 86–17, 1986–1 C.B. 550. (2) Temporary Regulation section 305.7701–1(a) defines “governmental functions” for purposes of defining an Indian tribal government or political subdivision thereof. Tribal entities not appearing on this list may apply for a ruling on whether they qualify pursuant to all applicable procedural rules set forth in the Statement of Procedural Rules (26 CFR Part 601), and guidelines set forth in Rev. Proc. 84–37, 1984–1 C.B. 513, as modified by Rev. Proc. 86–17, 1986–1 C.B. 550, and Rev. Proc. 2001–1, 2001–1 C.B. 1. (3) Inclusion on a published list does not necessarily establish that a tribe qualifies for a particular tax benefit. For example, when a tribal entity seeks exemption from

A–7. In the following three situations, no part of the amount paid is treated as interest for federal tax purposes:

• The total amount paid will not exceed $3,000;

• All of the payments will be made on or before November 13, 2002; or

• The total amount paid will not exceed $250,000, and all of the payments will be made on or before May 13, 2003. In all other cases, there is a possibility that a portion of each payment will be treated as interest for federal tax purposes. Sections 483 and 1274 of the Internal Revenue Code determine whether a portion of a payment is treated as interest and, if so, the amount of interest allocable to a payment. In some cases, even a quota holder that uses the cash receipts and disbursements method of accounting may have to include this interest in income prior to receipt of any payment (for example, if the total payments exceed $250,000 and the cash method election under § 1274A is unavailable). Except in the three situations described above, therefore, you should consult your tax advisor to determine whether any portion of the amount to be received is treated as interest for federal tax purposes and, if so, when the interest is includible in income.

Q–8. For an individual quota holder, does gain or loss resulting from the ex- change of a quota qualify for farm income averaging?

A–8. No. A peanut quota is considered an interest in land, and farm income averaging is not available for gain or loss arising from the sale or other disposition of land.

Q–9. Are the payments under the Act subject to information reporting?

A–9. Yes. Because a peanut quota is considered an interest in land, the total amount to be received under a contract generally will be reported by USDA on Form 1099–S for 2002 if the amount is $600 or more. In addition, any portion of a payment treated as interest for federal tax purposes in an amount of $600 or more generally will be reported by USDA on Form 1099–INT for the year in which the payment is made.

Q–10. Is the buyout of the peanut quo- tas under the Act an involuntary conver- sion of the quotas?

A–10. No, it is not an involuntary conversion.

DRAFTING INFORMATION

The principal author of this notice is Robert Basso of the Office of Associate Chief Counsel (Income Tax and Accounting). For further information regarding Q & A–7 of this notice, contact Pamela Lew of the Office of Associate Chief Counsel (Financial Institutions and Products) at (202) 622–3950 (not a toll-free call). For further information regarding the remainder of this notice, contact Mr. Basso at (202) 622–4950 (not a toll-free call).

26 CFR 601.201: Rulings and determination letters.

(Also Part I, Sections 103(c), 105(e), 117(b)(2)(A), 164,

170, 403(b)(1)(A)(ii), 454(b)(2), 511(a)(2)(B), 2055,

2106(a)(2), 2522, 4041(g), 4216, 4253(i), 4483(a),

4911, 4940(c), 4941(d), 4942(f), 4945(f), 4946(c).)

Rev. Proc. 2002–64