SECTION 8. GENERAL PROVISIONS

These provisions apply to any Taxpayer who has elected to participate in any of the resolution methodologies set forth in this revenue procedure.

The Arbitrator will not be prohibited from receiving a salary, partnership share, or corporate distribution established by prior independent agreement. The Arbitrator and the firm are not disqualified from representing the Electing Taxpayer or any other parties involved in the arbitration in any matter unrelated to the transactions or issues that are the particular subject matter of the arbitration.

.08 The arbitration will be conducted using Final Offer Arbitration, also known as “baseball” arbitration. Because the parties may continue negotiations during the arbitration proceeding, the final settlement offers (“Final Offers”) proposed by each party shall be clearly labeled as such. The Final Offers of both parties shall result in a concession by the Electing Taxpayer of between 50% and 90% of the capital loss reported by the Electing Taxpayer on the sale of the stock. The Final Offers will identify the corporation that the party contends is entitled to the tax benefits associated with the deduction resulting from the assumed liabilities, indicate whether that corporation is a member of the Electing Taxpayer’s consolidated group (including any successor to such group), and state the means for eliminating any duplication in the tax benefits associated with the Contingent Liability Transaction. In addition, the Final Offers shall make clear whether any penalty is proposed and accepted or rejected. Not more than 10 days after submission of the memorandums supporting their respective positions (“Memorandum in Support”), see Section 7.12 below, the parties shall submit their Final Offers.

.09 Only the following issue will be submitted to the Arbitrator:

Which of the two Final Offers presented by the parties best reflects the hazards of litigating the Electing Taxpayer’s entitlement to a capital loss deduction from the sale of stock received as part of the Contingent Liability Transaction?

.10 The Arbitrator is not permitted to make any conclusions of law or provide reasoning that represents an interpretation of the law; however, it is necessary for the Arbitrator to refer to the existing applicable law in considering the submitted issue. Legal guidance will be provided by the parties for purposes of establishing context, limited to guidance on the specific arguments presented in the Fast Track Dispute

Resolution Procedure - Contingent Liability Cases. With respect to factual information, the Electing Taxpayer may only submit to the Arbitrator for consideration material that was previously provided to LMSB and Appeals in the Fast Track Dispute Resolution Procedure - Contingent Liability Cases. The Service may also present facts developed under Section 7.02. The Arbitrator is not permitted to make any findings of fact, except for resolving the issue stated in Section 7.09.

.11 The parties to the arbitration will be the Electing Taxpayer and the Commissioner. The Electing Taxpayer may choose to have the representation of counsel or an authorized representative assist in preparing for and conducting the arbitration proceeding. The Office of Chief Counsel will represent the Commissioner in the arbitration proceeding.

.12 Within 60 days of the date the proposed arbitrator is selected, the parties will submit to the Administrator for submission to the Arbitrator, the administrative record developed prior to and during the Fast Track Dispute Resolution Procedure — Contingent Liability Cases and a stipulation of facts based on the record. The Service is permitted to include additional factual information developed pursuant to Section 7.02 in these submissions. In addition, each party will submit the legal guidance on which it intends to rely as set forth in section 6 of the Arbitration Agreement. The legal guidance will consist of a list of citations or copies of relevant cases and legal authority. Each party will also submit a Memorandum in Support, not to exceed 30 pages, stating each party’s respective legal and factual contentions. The memorandum shall be typed only on one side of opaque unglazed paper, 8 1/2 inches wide by 11 inches long. All pages shall have margins on both sides of each page that are no less than 1 inch wide, and margins on the top and bottom of each page that are no less than 3/4 inch wide. Text and footnotes shall appear in consistent typeface no smaller than 12 characters per inch, with double spacing between each line of text and single spacing between each line of indented quotations and footnotes. Quotations in excess of five lines shall be set off from the surrounding text and indented.

.13 The Administrator will ensure that each party receives the materials submitted by the opposing party. Any objections

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whether the taxpayer has reported the disclosed items properly for income tax purposes. The collection of information is required to obtain the benefits described in this revenue procedure. The likely respondents are businesses or other for-profit institutions.

The estimated total annual reporting burden is 7,500 hours.

The estimated annual burden per respondent is an average of 50 hours, depending on individual circumstances. The estimated number of respondents is 150.

The estimated frequency of responses is one time per respondent.

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.

CONTACT INFORMATION

For information regarding this revenue procedure, call Jo Ann Prager, Manager at (202) 283–8445 (not a toll-free call). Ms. Prager may also be reached by fax at (202) 283–8406 or electronically at the following email address: otsa@irs.gov. Please include “Revenue Procedure 2002–67” in the subject line of any electronic communication.

.01 Any issue that is not resolved through the resolution methodologies set forth in this revenue procedure will be resolved using normal audit and deficiency procedures.

.02 If applicable, a settlement entered into as a result of any of the resolution methodologies set forth in this revenue procedure will be reported to the Joint Committee on Taxation in accordance with section 6405.

.03 Any Taxpayer electing to participate in any of the resolution methodologies set forth in this revenue procedure agrees to waive the prohibition against ex parte communications between Appeals employees and other Service employees, provided by section 1001(a) of the Internal Revenue Service Restructuring and Reform Act of 1998, for purposes of pursuing settlement under this revenue procedure.

.04 The Binding Arbitration Procedure set forth in this revenue procedure is confidential. Any dispute resolution communication related to the arbitration proceeding is confidential and may not be disclosed by any party, nonparty participant, or arbitrator except as provided under 5 U.S.C. § 574. A dispute resolution communication includes all oral or written communications prepared for purposes of a dispute resolution proceeding. See 5 U.S.C. § 571(5).

.05 The results of any settlement reached through the resolution methodologies set forth in this revenue procedure, including the decision of the Arbitrator, may not be used as precedent by any Taxpayer and will not be binding on, or otherwise control, the parties for taxable years not covered by a specific matters closing agreement executed by the parties.

.06 Service and Treasury employees who participate in any way in the settlement procedures described in this revenue procedure and, pursuant to section 6103(n) of the Internal Revenue Code of 1986, as amended, any person under contract to the Service, including the Arbitrator, that the Service invites to participate will be subject to the confidentiality and disclosure provisions of the Code, including sections 6103, 7213, and 7431. See also 5 U.S.C. § 574.

.07 A Taxpayer that elects to participate in any of the resolution methodologies set forth in this revenue procedure consents to the disclosure by the Service of the Taxpayer’s returns and return informa

tion incident to the settlement procedures provided in this revenue procedure to the Arbitrator and any participant identified in any list of participants provided for in the Arbitration Agreement, to any participant for the Taxpayer identified in writing by the Taxpayer subsequent to execution of the Agreement, and to any persons, including witnesses, who participate in the arbitration proceeding on behalf of either party.

.08 Any Taxpayer electing to participate in any of the resolution methodologies set forth in this revenue procedure acknowledges that employees of the Service and all other Treasury employees involved in these proceedings are bound by section 7214(a)(8) and must report information concerning violations of any revenue law to the Secretary.

.09 The Commissioner is not precluded or impeded under section 7605(b) or any administrative provisions adopted by the Commissioner from conducting a later examination or inspection of records with respect to any taxable year of a participating Taxpayer by inspecting information, documents and materials supplied in connection with this revenue procedure.