SECTION 3. SCOPE AND

OBJECTIVE

Section 4 of this revenue procedure provides a sample declaration of trust for a QPRT with one transferor for a term equal to the lesser of the life of the term holder or a term of years. Section 5 provides annotations to the provisions in the sample trust. Section 6 provides samples of certain alternate provisions concerning: (.01) additions to the trust to purchase a personal residence, and (.02) disposition of trust assets on cessation of its qualification as a QPRT.

The Internal Revenue Service will recognize a trust as a QPRT meeting all of the requirements of § 2702(a)(3)(A) and § 25.2702–5(c) if (i) the trust instrument is substantially similar to the sample in section 4 of this revenue procedure or if the trust agreement properly integrates one or more alternate provisions from section 6 of this revenue procedure into a document sub

to Forms 3115, Application for Change in Accounting Method, filed under either the automatic consent procedures of Rev. Proc. 2002–9 or the advance consent procedures of Rev. Proc. 97–27, 1997–1 C.B. 680, as modified and amplified by Rev. Proc. 2002– 19, that request consent to change to either the simplified service cost method or the simplified production method, for selfconstructed assets under §§ 1.263A– 1(h)(2)(i)(D) and 1.263A–2(b)(2)(i)(D). A. Pending Applications . The national office will continue to process pending applications. However, due to the uncertainty surrounding the types of property that qualify as eligible property under §§ 1.263A–1(h)(2)(i)(D) and 1.263A– 2(b)(2)(i)(D), the national office expects that it will require additional time to process applications filed under the advance consent procedures, and that resolution of these applications will be delayed. Further, the national office may review copies of applications filed with the national office under Rev. Proc. 2002–9 (the automatic consent procedures that are generally effective for taxable years ending on or after December 31, 2001) on or before May 8, 2003, to determine whether the taxpayer’s proposed change to the simplified service cost method or the simplified production method is appropriate. If an application filed under the automatic consent procedures is reviewed by the national office, the taxpayer will be notified by the national office of the outcome of the review.

B. Future Applications . After May 8, 2003, the Service will not accept applications filed under the automatic consent procedures of Rev. Proc. 2002–9 that request consent to change to either the simplified service cost method or the simplified production method for self-constructed assets under §§ 1.263A–1(h)(2)(i)(D) and 1.263A–2(b)(2)(i)(D). Instead, taxpayers will be required to file applications to make these changes under the advanced consent procedures of Rev. Proc. 97–27. Notwithstanding section 6.02(3) of Rev. Proc. 2002–9, if the taxpayer has filed a copy of the Form 3115 with the national office on or before May 8, 2003, but has not yet attached the original of the Form 3115 to its timely filed (including extensions) federal income tax return, for purposes of this notice the taxpayer will be deemed to have a pending application provided, however, that pursuant to section 6.02(3) of Rev.

Proc. 2002–9, the taxpayer files the original Form 3115 with its timely filed (including extensions) federal income tax return.

EFFECT ON OTHER DOCUMENTS

Rev. Proc. 2002–9 is suspended in part.

REQUEST FOR COMMENTS

The Service requests comments on issues relating to the qualifications for eligible property under §§ 1.263A– 1(h)(2)(i)(D) and 1.263A–2(b)(2)(i)(D). In addition, the Service requests comments on the simplified service cost method in general. For example, the Service requests comments on the ability of small taxpayers to use the simplified service cost method given that small taxpayers may not have costs separated into departments or functions. Comments should be submitted by July 7, 2003, to: Internal Revenue Service P.O. Box 7604 Ben Franklin Station Washington, DC 20044 Attn: CC:PA:T:CRU(ITA) Room 5529 or electronically via the Service internet site at: Notice.Comments@irscounsel.treas.gov (the Service comments e-mail address). All comments will be available for public inspection and copying.

DRAFTING INFORMATION

The principal author of this notice is Scott Rabinowitz of the Office of the Associate Chief Counsel (Income Tax and Accounting). For further information regarding this notice, contact Mr. Rabinowitz at (202) 622–4970 (not a toll-free call).

26 CFR 601.201: Rulings and determination let- ters. (Also Part I, § 2702; 25.2702–5.)

Rev. Proc. 2003–42