Part IV

You may skip Part IV if you are submitting official records or letters that show that your child lived with you for more than half the year in 2003.

If you need to provide more than one affidavit (Part IV) to show that your child lived with you for more than half of 2003, complete as many additional Forms 8836 as you need. On the additional Forms 8836, you do not have to enter your spouse’s name and SSN or your address.

Neither you nor your spouse may complete this part. A third party listed in Part IV who has records that show, or who personally knows, that you and your qualifying child lived together for part or all of 2003 must complete this part. The third party must complete all applicable information and sign Part IV under penalties of perjury. If the third party does not complete all applicable information in Part IV, the affidavit may not be accepted. Criminal penalties may be imposed for making a false statement.

Privacy Act and Paperwork Reduction Act Notice. The Privacy Act of 1974 and the Paperwork Reduction Act of 1980 require that when we ask you for information we must first tell you our legal right to ask for the information, why we are asking for it, and how it will be used. We must also tell you what could happen if we do not receive it and whether your response is voluntary, required to obtain a benefit, or mandatory under the law.

This notice applies to all papers you file with us. It also applies to any questions we need to ask you so we can complete, correct, or process your return; figure your tax; and collect tax, interest, or penalties.

Our legal right to ask for information is Internal Revenue Code sections 6001, 6011, and 6012(a), and their regulations. They say that you must file a return or statement with us for any tax for which you are liable. Your response is mandatory under these sections. Code section 6109 and its regulations say that you must provide your taxpayer identification number on what you file. This is so we know who you are, and can process your return and other papers.

You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as stated in Code section 6103.

We ask for tax return information to carry out the tax laws of the United States. We need it to figure and collect the right amount of tax.

We may give the information to the Department of Justice and to other Federal agencies, as provided by law. We may give it to cities, states, the District of Columbia, and U.S. commonwealths or possessions to carry out their tax laws. We may also disclose this information to other countries under a tax treaty, or to Federal and state agencies to enforce Federal nontax criminal laws and to combat terrorism.

If you do not file a return or give fraudulent information, you may be charged penalties and be subject to criminal prosecution.

Please keep this notice with your records. It may help you if we ask you for other information. If you have any questions about the rules for filing and giving information, please call or visit any Internal Revenue Service office.

The time needed to complete and file this form will vary depending on individual circumstances. The estimated average time is: Recordkeeping, 6 min.; Learning about the law, 11 min.; Preparing the form, 24 min.; Copying, assembling, and sending the form to the IRS, 20 min.

If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would be happy to hear from you. You can write to the Tax Products Coordinating Committee, Western Area Distribution Center, Rancho Cordova, CA 95743-0001. Do not send the form to this address. Instead, see Where To File on page 2.

Printed on recycled paper

2003–26 I.R.B. 1138 June 30, 2003

Announcement and Report Concerning Pre-Filing Agreements

Announcement 2003–43

Introduction

This announcement is issued pursuant to the Conference Report to H.R. 4577 (Pub. L. 106–554), The Community Renewal Tax Relief Act of 2000, which requires that the Secretary of the Treasury make publicly available an annual report relating to the Pre-Filing Agreement (“PFA”) program operations for the preceding calendar year. The Conference Report states that the report is to include: (1) the number of pre-filing agreements completed, (2) the number of applications received, (3) the number of applications withdrawn, (4) the types of issues which are resolved by completed agreements, (5) whether the program is being utilized by taxpayers who were previously subject to audit, (6) the average length of time required to complete an agreement, (7) the number, if any, and subject of technical advice and Chief Counsel advice memoranda issued to address issues arising in connection with any pre-filing agreement, (8) any model agreements, and (9) any other information the Secretary deems appropriate. This is the third annual report. It provides information concerning activity under the permanent PFA program (Rev. Proc. 2001–22, 2001–1 C.B. 745), during calendar year 2002.

Background

The Large and Mid-Size Business Division (“LMSB”) within the Internal Revenue Service serves corporations and partnerships with assets greater than $10 million. In 2002, approximately 150,000 corporations and partnerships filed returns reporting assets in this range. The returns filed by these taxpayers present a wide variety of complex issues. The largest of these taxpayers deal with the IRS on a continuous basis.

One of LMSB’s strategic initiatives is issue management. Through effective issue management, LMSB seeks to resolve issues of tax controversy on a more current basis. This includes, but is not limited to, increasing the efficiency of the examination process and seeking alternative issue resolution tools. The Pre-Filing Agreement program was designed to support

LMSB’s issue management strategy. LMSB believes the Pre-Filing Agreement program reduces taxpayer burden and makes more effective use of IRS resources by resolving or eliminating tax controversy before the tax return is filed.

The PFA program is designed to permit a taxpayer to resolve, before the filing of a return, the treatment of an issue that otherwise would likely be disputed in a post-filing examination. The PFA program is intended to produce agreement on factual issues and apply settled legal principles to those facts. A PFA is a specific matter closing agreement under § 7121 of the Internal Revenue Code and resolves the subject of the PFA for a specified taxable period. Execution of a PFA that resolves issues prior to filing permits taxpayers to avoid costs, burdens and delays that are frequently incident to post-filing examination disputes between taxpayers and the IRS.

PFA Program

As a result of the success of a pilot program, the IRS established a permanent PFA Program with the issuance of Rev. Proc. 2001–22. Although many of the procedures remained the same, there were some significant changes, including:

1. All taxpayers, both Coordinated Issue and Industry cases, within the jurisdiction of LMSB are eligible to participate;

2. More issues are considered appropriate;

3. There are fewer excludible circumstances;

4. Certain international issues are now considered appropriate; and

5. A user fee was implemented for those taxpayers accepted into the program.

PFA Process

The PFA process is managed and conducted by LMSB Industry Directors and field staff, with support from the Office of Pre-Filing and Technical Guidance in LMSB Headquarters. The PFA Program Manager receives all applications and, with the assistance of the Technical Advisors and the Office of Chief Counsel, ensures that the issues presented are appropriate for inclusion in the PFA program.

The Industry Director with jurisdiction over the taxpayer makes the final deci

sion whether to accept a taxpayer’s request for participation in the PFA program. The criteria for selecting a request include:

a. The suitability of the issue presented by the taxpayer;

b. The direct or indirect impact of a PFA upon other years, issues, taxpayers, or related cases;

c. The availability of IRS resources; d. The ability and willingness of the taxpayer to dedicate sufficient resources to the process;

e. The likelihood that the PFA may result in contrary positions with respect to an item or transaction (“whipsaw”); and

f. The probability of completing the examination of the issue and entering into a PFA by the target date.

For the cases selected, a mandatory orientation session for the examination team and the taxpayer is conducted. Subsequently, the taxpayer and examination team convene a joint planning meeting to reach agreement on a proposed timeframe, to identify and arrange for IRS access to relevant records and testimony, and to define the potential scope and nature of the PFA.

The examination team conducts the factual determination and issue development consistent with IRS auditing standards. Based upon an examination of the issue, the Team Manager prepares a PFA recommendation for the Industry Director. The Industry Director’s decision to execute a PFA Closing Agreement is based on the Team Manager’s recommendation and discussions with the PFA Program Manager, Chief Counsel attorneys, appropriate Technical Advisors and the taxpayer. Following Chief Counsel review to ensure that the proposed PFA conforms with guidance provided in Rev. Proc. 68–16 (regarding closing agreements), the Industry Director could execute a PFA if he or she determines that:

a. Entering into the PFA is consistent with the goals of the PFA program as stated in Rev. Proc. 2001–22;

b. The resolution in the PFA reflects settled legal principles and correctly applies those principles (or positions authorized under Delegation Order Nos. 236 or 247) to facts found by the examination team; and

c. There appears to be an advantage in having the issue(s) permanently and conclusively closed for the taxable period covered by the PFA, or that the taxpayer shows

June 30, 2003 1139 2003–26 I.R.B.

Pre-Filing Agreement Program Accomplishments

Statistical Overview of PFA Program — Calendar Year 2002

The table below reflects activity concerning those PFA requests which were received in calendar year 2001 and carried over into calendar year 2002.

good and sufficient reasons for desiring a closing agreement and that the United States would sustain no disadvantage through consummation of such an agreement (see § 301.7121–1(a) of the Procedure and Administration Regulations).

Program Oversight

A designated PFA Program Manager assigned to the Office of Pre-Filing and Technical Guidance in LMSB Headquarters provides oversight for the PFA program. The PFA Program Manager provides assistance to taxpayers, Industry Directors and Team Managers throughout the process.

Overview of PFA Applications Received in Calendar Year 2001 Totals Applications Pending Acceptance/Rejection on January 1, 2002 5 Applications In-Process on January 1, 2002 7 Applications Rejected in 2002 1 Applications Withdrawn in 2002 0 Applications for Which There Were Closing Agreements in 2002 7 Applications Pending Acceptance/Rejection on December 31, 2002 0 Applications in-Process on December 31, 2002 4

The table below reflects the status of PFA requests received in calendar year 2002.

Overview of PFA Applications Received in Calendar Year 2002 Totals Applications Received in 2002 44 Applications Accepted in 2002 25 Applications Rejected in 2002 14 Applications Withdrawn before Acceptance/Rejection in 2002 1 Applications Withdrawn after Acceptance in 2002 4 Applications for Which There Were Closing Agreements in 2002 5 Applications Pending Acceptance/Rejection on December 31, 2002 4 Applications in-Process on December 31, 2002 16

Description of Applications Received in Calendar Year 2002

The forty-four applications that were received for the PFA program in calendar year 2002 came from each LMSB industry segment and involved a variety of issues.

Number of Requests Received and Accepted by Industry Segment

Industry Segment Received Accepted Financial Services (FS) 6 3 Retailers, Food, Pharmaceuticals & Healthcare (RFP&H) 9 5 Natural Resources & Construction (NR&C) 16 9 Communications, Technology & Media (CT&M) 6 4 Heavy Manufacturing & Transportation (HM&T) 7 4 Total 44 25

2003–26 I.R.B. 1140 June 30, 2003

Types of Issues Received

Issue Received Original Issue Discount Issue Price 1 Fair Market Value of Assets Exchanged for Stock 2 Abandonment Loss 1 Sale of Assets - Amount of Built-in Gains and Built-in Losses 1 Sale of Assets &/or Stock 2 Allocation of Sales Price 1 Research & Experiment Credit 5 Sale - Leaseback 1 Bad Debts &/or Worthless Securities 3 Legal/Consulting Fees vs Lobbying 1 Bank Owned Life Insurance 1 Spin-off & Merger 1 Deduction for Dividends Paid to Employee Stock Ownership Plan 1 Investigatory Costs 3 Allocation of Losses 1 Restructuring 1 Period of Income Inclusion 1 Tax Motivated Transaction 2 Donation of Intangibles 2 Donation of Real Property 1 Qualified Conservation Donation 1 Liquidation 2 Synthetic Fuel Credit 9 Total 44

Reasons Why Applications Received in Calendar Year 2002 Were Not Accepted

Fourteen of the applications received in 2002 were not considered appropriate for the PFA program.

Reasons for Non-acceptance Applications Issue Not Suitable or Ineligible 6 International Issue Not Listed in Rev. Proc. 2001–22 2 Not Well-Settled Law 4 Tax Motivated Transaction 2 Total 14

Taxpayer Withdrawal (3)

In accordance with the procedures set forth in Section 8 of Rev. Proc. 2001–22, three taxpayers withdrew from the PFA process — 2 after their requests had been accepted and one prior to acceptance. In two cases, the withdrawals were necessitated, as indicated by the taxpayers, by their inability to devote sufficient resources required to successfully continue the PFA process. In the other instance, the taxpayer withdrew because of the reluctance of the Industry Director to reach agreement on all the issues in the taxpayer’s application.

IRS Withdrawal (2)

The Service withdrew from the PFA process in one case where, after significant factual development and legal analysis of all of the issues, the Service concluded that the issues did not involve well settled law. The Service withdrew from the PFA process in a second case where, after factual development, the Service determined that the issues were not suitable for the PFA program and would be more effectively considered during a post-filing examination.

PFAs Executed (12)

Twelve PFAs were completed in calendar year 2002, resulting in the execution of closing agreements.

The Office of Chief Counsel provided advice to the examination teams and assisted in the drafting and review of the PFA closing agreements. No Technical Advice or Chief Counsel Advice Memoranda were issued for issues addressed in the PFA process. The executed PFAs covered the following issues:

June 30, 2003 1141 2003–26 I.R.B.

Year Application

Received

PFAs Executed by Issue

Issue Number

2001 Tax Basis/Holding Period/Reorganization 1 2001 Bad Debts & Worthless Stock 1 2001 Accounting Method 1 2001 Reorganization & Basis of Stock 1 2001 Donation of Intangibles 2 2001 Gain on Sale of Assets 1 2002 Treatment of costs associated with acquiring another corporation 1 2002 Allocation of Sales Price 1 2002 Sale of Assets - Amount of Built-in Gains and Built-in Losses 1 2002 Spin-off & Merger 1 2002 Deduction for Dividends Paid to ESOP 1 Total 12

Tax Basis/Holding Period/Reorganization

The taxpayer requested a determination concerning the tax basis and holding period of stock acquired in a reorganization described in §§ 368(a)(1)(B) and 368(a)(2)(E). The parties entered into a closing agreement that established the amount of the taxpayer’s basis in the stock. The closing agreement also established the date that the taxpayer will have met the fiveyear holding period prescribed by § 355(d).

Bad Debts & Worthless Stock

The taxpayer and the IRS entered into a closing agreement stipulating that the entire debt owed by a subsidiary to the taxpayer had become worthless within the meaning of § 166(a)(1) during the taxpayer’s taxable year ending in 2002. In addition, the closing agreement stipulated that the taxpayer’s securities in the subsidiary had become worthless within the meaning of § 165(g)(3) during the taxpayer’s taxable year ending in 2002.

Accounting Method

The taxpayer requested a determination concerning the proper tax accounting treatment of rebates paid to customers. The taxpayer had acquired all the assets and liabilities of another corporation that used a different method of accounting for rebates than the taxpayer. In integrating the two accounting systems, the taxpayer wanted to use the method previously used by the ac

quired corporation. A closing agreement was executed allowing the taxpayer to use the desired method of accounting.

Reorganization & Basis of Stock

The taxpayer requested a determination concerning its basis in stock acquired in a reorganization described in § 368(a)(2)(E). The parties entered into a closing agreement whereby it was agreed that the taxpayer could determine its basis under § 1.358–6 as if the basis in the acquired stock was determined under § 362(b). In addition, the parties agreed to the amount of the basis.

Donation of Intangibles (2)

In each of these unrelated cases, taxpayers sought an agreement as to the fair market value of certain intellectual property donated to qualified organizations. In both instances, a closing agreement was reached specifying the fair market value of the property contributed. The closing agreement did not address the deductibility of the charitable contributions.

Gain on Sale of Assets

In this case, the taxpayer sold assets to an unrelated third party in a transaction described in § 1060. The purchaser paid cash and assumed liabilities in exchange for the assets. A closing agreement was executed establishing the amount of capital gain and ordinary loss to be reported from the transaction for each asset class under § 1060.

Treatment of Costs Associated with Acquiring another Corporation

Taxpayer requested a determination with respect to the treatment of certain costs associated with the acquisition of another corporation. A closing agreement was executed specifying, based on the facts, the amount deductible as ordinary and necessary business expenses under § 162, the amount allowable under § 195 as start-up expenditures and the amount required to be capitalized under § 263.

Allocation of Sales Price

In this case, the taxpayer sold assets to a third party. The taxpayer requested an agreement concerning the proper allocation of the sale proceeds among the assets sold. A factual determination was reached concerning the allocation of the sales proceeds and the amount and character of income, gain and loss to be reported.

Sale of Assets — Amount of Built-in Gains and Built-in Losses

The taxpayer requested a factual determination regarding the amount of built-in gains and built-in losses, as defined in §§ 1374(d)(3) and (d)(4), recognized from the sale of its qualified subchapter S subsidiaries (QSubs). Under § 1.1361–5, the sale of the QSubs was treated as a direct sale of the assets of the QSubs. The examination consisted of a review of the taxpayer’s computations and a review of the

2003–26 I.R.B. 1142 June 30, 2003

PFA Program Utilization

The PFA Program is available to all taxpayers under the jurisdiction of LMSB. During calendar year 2002, 44 taxpayers submitted PFA requests. These included both Coordinated Industry Case (CIC) taxpayers that are typically subject to examination on a continuing basis and Industry Case (IC) taxpayers that are subject to examination on a more limited basis. Of the 44 requests, 38 were from CIC taxpayers and 6 from IC taxpayers. For the twelve cases that resulted in closing agreements during calendar year 2002, 10 were with CIC taxpayers and 2 were with IC taxpayers.

Processing Statistics

The average elapsed time to resolve the 12 cases that resulted in closing agreements in calendar year 2002 (the applications of which were received in 2001 and 2002) and the 5 cases that were withdrawn in calendar year 2002 was 199.1 days.

books and records and other information provided by the taxpayer. A closing agreement was entered into specifying the amounts of gain and loss to be recognized.

Spin-off & Merger

The taxpayer distributed all of the issued and outstanding stock of a number of its wholly-owned subsidiaries to shareholders in complete redemption of their shares. Subsequent to the distribution, the subsidiaries merged into another corporation. An agreement was reached indicating the distribution satisfied the requirements of § 355, other than the business purpose requirement (which was not addressed by the closing agreement), and therefore, subject to satisfying the business purpose requirement, no gain or loss was recognized by any of the shareholders or any of the corporations as a result of the distribution and subsequent merger.

Deduction for Dividends Paid to ESOP

The taxpayer requested a determination regarding the treatment of dividends that were paid by the taxpayer to an Employee Stock Ownership Plan (ESOP) and were subject to a distribution/reinvestment election during the first 90 days of 2002. A closing agreement was executed stipulating the amount of dividends that qualified as applicable dividends under § 404(k) and therefore were deductible by the taxpayer.

Closing Agreements

A pro forma or model agreement does not exist for a PFA Closing Agreement. A PFA represents a specific matter closing agreement under § 7121. The closing agreements entered into under this program were prepared with assistance from the Office of Chief Counsel and conform to the guidance provided in Rev. Proc. 68–16.

Average Processing Time for Seventeen Range Average

Cases Closed in 2002 (Elapsed Days) (Elapsed Days)

Phase I - Application Screening Process 23–92 53.1 Phase II - PFA Evaluation Process 8–320 146.1 Total Time to Close a PFA Case 54–392 199.1

Average Processing Time for Seventeen

Range (Elapsed Days)

Cases Closed in 2002

Phase I — Application Screening Process

Phase I is the screening process to determine if an application is appropriate for inclusion in the PFA program. This screening process includes obtaining comments from various LMSB functions and Chief Counsel, the review of these comments and the acceptance/rejection of an application by the Industry Director. Of the 44 applications received during the calendar year 2002, 39 completed the Phase I Process. For these 39 applications, the average time from the date an application was received by the IRS until the Industry Director rendered a decision to accept or reject an application

was 65 days. For the 12 cases that resulted in closing agreements in 2002, the average time for Phase I was 52.8 days.

Phase II — PFA Evaluation Process

The second (and final) phase in the PFA program process was the evaluation phase. This phase began when the Industry Director accepted an application into the PFA program and ended when a PFA closing agreement was executed or the process ended in a withdrawal. The average elapsed time for the 12 cases that resulted in closing agreements and the 5 cases that were withdrawn in calendar year 2002 was 146.1 days.

Program Evaluation

The PFA Program Manager ensures that an evaluation of all of the PFA program cases, based on feedback from LMSB employees and taxpayer participants, is solicited. As a part of this program evaluation, LMSB and taxpayer participants were asked to provide the direct examination time expended to complete the PFA and an estimate of the direct examination time it would have taken to resolve the issue in a post-filing context. The table below indicates the results for those that responded to the solicitation:

Cumulative Hours Taxpayer LMSB

(Executed PFAs) (Hours) (Hours)

Actual - PFA Process 3,984 8,166 Estimated - Post-Filing Process 6,300 10,407 Estimated Savings 2,316 2,241 Estimated Savings Percentage (Average) 36.8% 21.5%

Cumulative Hours

(Executed PFAs)

Taxpayer

(Hours)

June 30, 2003 1143 2003–26 I.R.B.

Cumulative Hours Taxpayer LMSB

(Executed PFAs) (Hours) (Hours)

Estimated Savings Percentage (Range) 21.4%–85% (4.8)%–51.2%

Cumulative Hours

(Executed PFAs)

Taxpayer

(Hours)

endar year 2001, and the 11 cases that resulted in closing agreements under the pilot program.

Comparative Analysis — Processing Statistics

The average total time to conclude the 12 cases that resulted in closing agreements in calendar year 2002 was 235.4

Average Processing Time for PFAs

(Days)

days. The range was from 151 to 392 days. Illustrated below are the average elapsed time (in days) processing statistics for the 12 cases that resulted in closing agreements in calendar year 2002, the 7 cases that resulted in closing agreements in cal

Overall

Pilot (11 cases)

Program CY 2003

Program CY 2001

(7 cases)

(11 cases) (7 cases) (12 cases)

Phase I - Application Screening Process 38.3 46.6 52.8 Phase II - PFA Evaluation Process 242.2 126.1 182.6 Total Time to Complete a PFA 280.5 172.7 235.4

The increased processing time for 2002 can be attributed to the degree of complexity of the issues and the time necessary to develop the factual aspects of the issues. Generally, the more complex and examination intensive the issue is, the greater the time necessary to complete the process.

Pre-Filing Agreement Program Summary

The PFA program is now available to all LMSB taxpayers, including taxpayers that are not currently under examination. While the PFA program will continue to be limited to issues that involve settled legal principles, the list of recommended issues has been expanded, and now includes certain international issues. Generally, the operational procedures used during the PFA pilot program were adopted and enhanced in the permanent PFA program.

Overall, the PFA program is meeting the LMSB strategic program objectives as contained in its issue management strategic ini

tiative. Issues of potential controversy are being resolved more efficiently and on a more current basis yielding benefits to taxpayers and the IRS.

The principal author of this announcement is J. Michael Mann, in the Office of Pre-Filing and Technical Guidance, Large and Mid-Size Business Division. For further information regarding this announcement, contact Mr. Mann at (202) 283– 8424 (not a toll-free call).

Correction to Rev. Rul. 2003–50 — BLS Department Store Indexes for March 2003

Announcement 2003–44

PURPOSE

This announcement corrects a typographical error in Rev. Rul. 2003–50, 2003–21 I.R.B. 944, Bureau of Labor Sta

tistics, Department Store Inventory Price Indexes by Department Groups for March 2003. Line 14 (Notions), Column 2 (March 2003), incorrectly reads “797.7.” The correct figure is 797.1.

EFFECTIVE DATE

This announcement is effective for taxable years ended on, or with reference to, March 31, 2003.

EFFECT ON OTHER DOCUMENTS

Rev. Rul. 2003–50 is modified.

DRAFTING INFORMATION

The principal author of this announcement is Michael Burkom of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information regarding this announcement, contact Mr. Burkom at (202) 622–7718 (not a tollfree number).

2003–26 I.R.B. 1144 June 30, 2003

Revenue rulings and revenue procedures (hereinafter referred to as“rulings”) that have an effect on previous rulings use the following defined terms to describe the effect:

Amplified describes a situation where no change is being made in a prior published position, but the prior position is being extended to apply to a variation of the fact situation set forth therein. Thus, if an earlier ruling held that a principle applied to A, and the new ruling holds that the same principle also applies to B, the earlier ruling is amplified. (Compare with modified, below).

Clarified is used in those instances where the language in a prior ruling is being made clear because the language has caused, or may cause, some confusion. It is not used where a position in a prior ruling is being changed.

Distinguished describes a situation where a ruling mentions a previously published ruling and points out an essential difference between them.

Modified is used where the substance of a previously published position is being changed. Thus, if a prior ruling held that a principle applied to A but not to B, and the new ruling holds that it

The following abbreviations in current use and formerly used will appear in material published in the Bulletin.

A— Individual. Acq.— Acquiescence. B— Individual. BE— Beneficiary. BK— Bank. B.T.A.— Board of Tax Appeals. C— Individual. C.B.— Cumulative Bulletin. CFR— Code of Federal Regulations. CI— City. COOP— Cooperative. Ct.D.— Court Decision. CY— County. D— Decedent. DC— Dummy Corporation. DE— Donee. Del. Order— Delegation Order. DISC— Domestic International Sales Corporation. DR— Donor. E— Estate. EE— Employee.

applies to both A and B, the prior ruling is modified because it corrects a published position. (Compare with amplified and clarified, above).

Obsoleted describes a previously published ruling that is not considered determinative with respect to future transactions. This term is most commonly used in a ruling that lists previously published rulings that are obsoleted because of changes in law or regulations. A ruling may also be obsoleted because the substance has been included in regulations subsequently adopted.

Revoked describes situations where the position in the previously published ruling is not correct and the correct position is being stated in the new ruling.

Superseded describes a situation where the new ruling does nothing more than restate the substance and situation of a previously published ruling (or rulings). Thus, the term is used to republish under the 1986 Code and regulations the same position published under the 1939 Code and regulations. The term is also used when it is desired to republish in a single ruling a series of situations, names, etc., that were previously published over a period of time in separate rulings. If the

E.O.— Executive Order. ER— Employer. ERISA— Employee Retirement Income Security Act. EX— Executor. F— Fiduciary. FC— Foreign Country. FICA— Federal Insurance Contributions Act. FISC— Foreign International Sales Company. FPH— Foreign Personal Holding Company. F.R.— Federal Register. FUTA— Federal Unemployment Tax Act. FX— Foreign Corporation. G.C.M.— Chief Counsel’s Memorandum. GE— Grantee. GP— General Partner. GR— Grantor. IC— Insurance Company. I.R.B.— Internal Revenue Bulletin. LE— Lessee. LP— Limited Partner. LR— Lessor. M— Minor. Nonacq.— Nonacquiescence. O— Organization. P— Parent Corporation. PHC— Personal Holding Company.

new ruling does more than restate the substance of a prior ruling, a combination of terms is used. For example, modified and superseded describes a situation where the substance of a previously published ruling is being changed in part and is continued without change in part and it is desired to restate the valid portion of the previously published ruling in a new ruling that is self contained. In this case, the previously published ruling is first modified and then, as modified, is superseded.

Supplemented is used in situations in which a list, such as a list of the names of countries, is published in a ruling and that list is expanded by adding further names in subsequent rulings. After the original ruling has been supplemented several times, a new ruling may be published that includes the list in the original ruling and the additions, and supersedes all prior rulings in the series.

Suspended is used in rare situations to show that the previous published rulings will not be applied pending some future action such as the issuance of new or amended regulations, the outcome of cases in litigation, or the outcome of a Service study.

PO— Possession of the U.S. PR— Partner. PRS— Partnership. PTE— Prohibited Transaction Exemption. Pub. L.— Public Law. REIT— Real Estate Investment Trust. Rev. Proc.— Revenue Procedure. Rev. Rul.— Revenue Ruling. S— Subsidiary. S.P.R.— Statements of Procedural Rules. Stat.— Statutes at Large. T— Target Corporation. T.C.— Tax Court. T.D.— Treasury Decision. TFE— Transferee. TFR— Transferor. T.I.R.— Technical Information Release. TP— Taxpayer. TR— Trust. TT— Trustee. U.S.C.— United States Code. X— Corporation. Y— Corporation. Z— Corporation.

June 30, 2003 i 2003–26 I.R.B.

Numerical Finding List ¹

Bulletins 2003–1 through 2003–25

Announcements:

2003–1, 2003–2 I.R.B. 281 2003–2, 2003–3 I.R.B. 301 2003–3, 2003–4 I.R.B. 361 2003–4, 2003–5 I.R.B. 396 2003–5, 2003–5 I.R.B. 397 2003–6, 2003–6 I.R.B. 450 2003–7, 2003–6 I.R.B. 450 2003–8, 2003–6 I.R.B. 451 2003–9, 2003–7 I.R.B. 490 2003–10, 2003–7 I.R.B. 490 2003–11, 2003–10 I.R.B. 585 2003–12, 2003–10 I.R.B. 585 2003–13, 2003–11 I.R.B. 603 2003–14, 2003–11 I.R.B. 603 2003–15, 2003–11 I.R.B. 605 2003–16, 2003–12 I.R.B. 641 2003–17, 2003–15 I.R.B. 722 2003–18, 2003–13 I.R.B. 675 2003–19, 2003–15 I.R.B. 723 2003–20, 2003–15 I.R.B. 750 2003–21, 2003–17 I.R.B. 846 2003–22, 2003–17 I.R.B. 846 2003–23, 2003–16 I.R.B. 808 2003–24, 2003–16 I.R.B. 810 2003–25, 2003–17 I.R.B. 846 2003–26, 2003–18 I.R.B. 862 2003–27, 2003–18 I.R.B. 862 2003–28, 2003–19 I.R.B. 899 2003–29, 2003–20 I.R.B. 928 2003–30, 2003–20 I.R.B. 929 2003–31, 2003–20 I.R.B. 930 2003–32, 2003–20 I.R.B. 933 2003–33, 2003–21 I.R.B. 953 2003–34, 2003–21 I.R.B. 953 2003–35, 2003–21 I.R.B. 956 2003–36, 2003–25 I.R.B. 1093 2003–37, 2003–24 I.R.B. 1025 2003–38, 2003–24 I.R.B. 1029 2003–39, 2003–24 I.R.B. 1030 2003–41, 2003–25 I.R.B. 1098 2003–42, 2003–25 I.R.B. 1104

Court Decisions:

2077, 2003–19 I.R.B. 868

Notices:

2003–1, 2003–2 I.R.B. 257 2003–2, 2003–2 I.R.B. 257 2003–3, 2003–2 I.R.B. 258 2003–4, 2003–3 I.R.B. 294 2003–5, 2003–3 I.R.B. 294 2003–6, 2003–3 I.R.B. 298 2003–7, 2003–4 I.R.B. 310 2003–8, 2003–4 I.R.B. 310 2003–9, 2003–5 I.R.B. 369 2003–10, 2003–5 I.R.B. 369 2003–11, 2003–6 I.R.B. 422 2003–12, 2003–6 I.R.B. 422 2003–13, 2003–8 I.R.B. 513

1 A cumulative list of all revenue rulings, revenue

procedures, Treasury decisions, etc., published in

Internal Revenue Bulletins 2002–26 through 2002–52 is

in Internal Revenue Bulletin 2003–1, dated January 6, 2003.

Notices—Continued:

2003–14, 2003–8 I.R.B. 515 2003–15, 2003–9 I.R.B. 540 2003–16, 2003–10 I.R.B. 575 2003–17, 2003–12 I.R.B. 633 2003–18, 2003–14 I.R.B. 699 2003–19, 2003–14 I.R.B. 703 2003–20, 2003–19 I.R.B. 894 2003–21, 2003–17 I.R.B. 817 2003–22, 2003–18 I.R.B. 851 2003–23, 2003–17 I.R.B. 821 2003–24, 2003–18 I.R.B. 853 2003–25, 2003–18 I.R.B. 855 2003–26, 2003–18 I.R.B. 855 2003–27, 2003–19 I.R.B. 898 2003–28, 2003–22 I.R.B. 971 2003–29, 2003–20 I.R.B. 917 2003–30, 2003–25 I.R.B. 1044 2003–31, 2003–21 I.R.B. 948 2003–32, 2003–21 I.R.B. 949 2003–33, 2003–23 I.R.B. 990 2003–34, 2003–23 I.R.B. 990 2003–35, 2003–23 I.R.B. 992 2003–36, 2003–23 I.R.B. 992

Proposed Regulations:

REG–209500–86, 2003–2 I.R.B. 262 REG–113007–99, 2003–23 I.R.B. 1004 REG–104385–01, 2003–12 I.R.B. 634 REG–116641–01, 2003–8 I.R.B. 518 REG–125638–01, 2003–5 I.R.B. 373 REG–126016–01, 2003–7 I.R.B. 486 REG–126485–01, 2003–9 I.R.B. 542 REG–164754–01, 2003–22 I.R.B. 975 REG–103580–02, 2003–9 I.R.B. 543 REG–124069–02, 2003–7 I.R.B. 488 REG–131478–02, 2003–13 I.R.B. 669 REG–138882–02, 2003–8 I.R.B. 522 REG–139768–02, 2003–10 I.R.B. 583 REG–141097–02, 2003–16 I.R.B. 807 REG–141659–02, 2003–20 I.R.B. 927 REG–142605–02, 2003–23 I.R.B. 1010 REG–151043–02, 2003–3 I.R.B. 300 REG–152524–02, 2003–22 I.R.B. 979 REG–157302–02, 2003–24 I.R.B. 1021 REG–164464–02, 2003–2 I.R.B. 262

Revenue Procedures:

2003–1, 2003–1 I.R.B. 1 2003–2, 2003–1 I.R.B. 76 2003–3, 2003–1 I.R.B. 113 2003–4, 2003–1 I.R.B. 123 2003–5, 2003–1 I.R.B. 163 2003–6, 2003–1 I.R.B. 191 2003–7, 2003–1 I.R.B. 233 2003–8, 2003–1 I.R.B. 236 2003–9, 2003–8 I.R.B. 516 2003–10, 2003–2 I.R.B. 259 2003–11, 2003–4 I.R.B. 311 2003–12, 2003–4 I.R.B. 316 2003–13, 2003–4 I.R.B. 317 2003–14, 2003–4 I.R.B. 319 2003–15, 2003–4 I.R.B. 321 2003–16, 2003–4 I.R.B. 359

Revenue Procedures—Continued:

2003–17, 2003–6 I.R.B. 427 2003–18, 2003–6 I.R.B. 439 2003–19, 2003–5 I.R.B. 371 2003–20, 2003–6 I.R.B. 445 2003–21, 2003–6 I.R.B. 448 2003–22, 2003–10 I.R.B. 577 2003–23, 2003–11 I.R.B. 599 2003–24, 2003–11 I.R.B. 599 2003–25, 2003–11 I.R.B. 601 2003–26, 2003–13 I.R.B. 666 2003–27, 2003–13 I.R.B. 667 2003–28, 2003–16 I.R.B. 759 2003–29, 2003–20 I.R.B. 917 2003–30, 2003–17 I.R.B. 822 2003–31, 2003–17 I.R.B. 838 2003–32, 2003–16 I.R.B. 803 2003–33, 2003–16 I.R.B. 803 2003–34, 2003–18 I.R.B. 856 2003–35, 2003–20 I.R.B. 919 2003–36, 2003–18 I.R.B. 859 2003–37, 2003–21 I.R.B. 950 2003–38, 2003–24 I.R.B. 1017 2003–39, 2003–22 I.R.B. 971 2003–40, 2003–25 I.R.B. 1044 2003–41, 2003–25 I.R.B. 1047 2003–42, 2003–23 I.R.B. 993 2003–43, 2003–23 I.R.B. 998 2003–44, 2003–25 I.R.B. 1051

Revenue Rulings:

2003–1, 2003–3 I.R.B. 291 2003–2, 2003–2 I.R.B. 251 2003–3, 2003–2 I.R.B. 252 2003–4, 2003–2 I.R.B. 253 2003–5, 2003–2 I.R.B. 254 2003–6, 2003–3 I.R.B. 286 2003–7, 2003–5 I.R.B. 363 2003–8, 2003–3 I.R.B. 290 2003–9, 2003–4 I.R.B. 303 2003–10, 2003–3 I.R.B. 288 2003–11, 2003–3 I.R.B. 285 2003–12, 2003–3 I.R.B. 283 2003–13, 2003–4 I.R.B. 305 2003–14, 2003–4 I.R.B. 302 2003–15, 2003–4 I.R.B. 302 2003–16, 2003–6 I.R.B. 401 2003–17, 2003–6 I.R.B. 400 2003–18, 2003–7 I.R.B. 467 2003–19, 2003–7 I.R.B. 468 2003–20, 2003–7 I.R.B. 465 2003–21, 2003–8 I.R.B. 509 2003–22, 2003–8 I.R.B. 494 2003–23, 2003–8 I.R.B. 511 2003–24, 2003–10 I.R.B. 557 2003–25, 2003–13 I.R.B. 642 2003–26, 2003–10 I.R.B. 563 2003–27, 2003–11 I.R.B. 597 2003–28, 2003–11 I.R.B. 594 2003–29, 2003–11 I.R.B. 587 2003–30, 2003–13 I.R.B. 659 2003–31, 2003–13 I.R.B. 643 2003–32, 2003–14 I.R.B. 689 2003–33, 2003–13 I.R.B. 642

2003–26 I.R.B. ii June 30, 2003

Revenue Rulings—Continued:

2003–34, 2003–17 I.R.B. 813 2003–35, 2003–14 I.R.B. 687 2003–36, 2003–18 I.R.B. 849 2003–37, 2003–15 I.R.B. 717 2003–38, 2003–17 I.R.B. 811 2003–39, 2003–17 I.R.B. 811 2003–40, 2003–17 I.R.B. 813 2003–41, 2003–17 I.R.B. 814 2003–42, 2003–16 I.R.B. 754 2003–43, 2003–21 I.R.B. 935 2003–44, 2003–18 I.R.B. 848 2003–45, 2003–19 I.R.B. 876 2003–46, 2003–19 I.R.B. 878 2003–47, 2003–19 I.R.B. 866 2003–48, 2003–19 I.R.B. 863 2003–49, 2003–20 I.R.B. 903 2003–50, 2003–21 I.R.B. 944 2003–51, 2003–21 I.R.B. 938 2003–52, 2003–22 I.R.B. 960 2003–53, 2003–22 I.R.B. 969 2003–54, 2003–23 I.R.B. 982 2003–55, 2003–22 I.R.B. 961 2003–56, 2003–23 I.R.B. 985 2003–57, 2003–22 I.R.B. 959 2003–58, 2003–22 I.R.B. 959 2003–59, 2003–24 I.R.B. 1014 2003–60, 2003–23 I.R.B. 987 2003–61, 2003–24 I.R.B. 1015 2003–62, 2003–25 I.R.B. 1034 2003–63, 2003–25 I.R.B. 1037 2003–64, 2003–25 I.R.B. 1036 2003–65, 2003–25 I.R.B. 1035

Tax Conventions:

Ann. 2003–21, 2003–17 I.R.B. 846

Treasury Decisions:

9024, 2003–5 I.R.B. 365 9025, 2003–5 I.R.B. 362 9026, 2003–5 I.R.B. 366 9027, 2003–6 I.R.B. 413 9028, 2003–6 I.R.B. 415 9029, 2003–6 I.R.B. 403 9030, 2003–8 I.R.B. 495 9031, 2003–8 I.R.B. 504 9032, 2003–7 I.R.B. 471 9033, 2003–7 I.R.B. 483 9034, 2003–7 I.R.B. 453 9035, 2003–9 I.R.B. 528 9036, 2003–9 I.R.B. 533 9037, 2003–9 I.R.B. 535 9038, 2003–9 I.R.B. 524 9039, 2003–10 I.R.B. 561 9040, 2003–10 I.R.B. 568 9041, 2003–8 I.R.B. 510 9042, 2003–10 I.R.B. 564 9043, 2003–12 I.R.B. 611 9044, 2003–14 I.R.B. 690 9045, 2003–12 I.R.B. 610 9046, 2003–12 I.R.B. 614 9047, 2003–14 I.R.B. 676 9048, 2003–13 I.R.B. 644 9049, 2003–14 I.R.B. 685 9050, 2003–14 I.R.B. 693 9051, 2003–16 I.R.B. 755 9052, 2003–19 I.R.B. 879 9053, 2003–20 I.R.B. 914 9054, 2003–20 I.R.B. 909

Treasury Decisions—Continued:

9055, 2003–21 I.R.B. 945 9056, 2003–21 I.R.B. 940 9057, 2003–22 I.R.B. 964 9058, 2003–22 I.R.B. 962

June 30, 2003 iii 2003–26 I.R.B.

Finding List of Current Actions on Previously Published Items ²

Bulletins 2003–1 through 2003–25

Notices:

97–19 Modified by Rev. Proc. 2003–1, 2003–1 I.R.B. 1

97–32 Revoked by T.D. 9058, 2003–22 I.R.B. 962

2000–38 Modified by Notice 2003–20, 2003–19 I.R.B. 894

2001–26 Obsoleted by T.D. 9032, 2003–7 I.R.B. 471

2001–46 Modified by Notice 2003–6, 2003–3 I.R.B. 298

2001–69 Modified and superseded by Notice 2003–1, 2003–2 I.R.B. 257

2002–20 Superseded by Rev. Proc. 2003–36, 2003–18 I.R.B. 859

2002–27 Clarified by Notice 2003–3, 2003–2 I.R.B. 258

2002–40 Modified by Ann. 2003–18, 2003–13 I.R.B. 675

2002–46 Modified by Notice 2003–10, 2003–5 I.R.B. 369

Proposed Regulations:

REG–209500–86 Corrected by Ann. 2003–6, 2003–6 I.R.B. 450

REG–103829–99 Corrected by Ann. 2003–12, 2003–10 I.R.B. 585

REG–126485–01 Withdrawn by REG–126485–01, 2003–9 I.R.B. 542 Corrected by Ann. 2003–25, 2003–17 I.R.B. 846

REG–164754–01 Supplemented by REG–164754–01, 2003–22 I.R.B. 975

REG–131478–02 Corrected by Ann. 2003–24, 2003–16 I.R.B. 810

2 A cumulative list of current actions on previously

published items in Internal Revenue Bulletins

2002–26 through 2002–52 is in Internal Revenue

Bulletin 2003–1, dated January 6, 2003.

Proposed Regulations—Continued:

REG–143321–02 Corrected by Ann. 2003–12, 2003–10 I.R.B. 585

REG–164464–02 Corrected by Ann. 2003–6, 2003–6 I.R.B. 450

Revenue Procedures:

83–23 Supplemented by Rev. Proc. 2003–21, 2003–6 I.R.B. 448

84–37 Modified by Rev. Proc. 2003–1, 2003–1 I.R.B. 1

93–38 Obsoleted by Rev. Proc. 2003–15, 2003–4 I.R.B. 321

97–31 Modified by Rev. Proc. 2003–9, 2003–8 I.R.B. 516

98–13 Obsoleted by T.D. 9032, 2003–7 I.R.B. 471

98–55 Superseded by Rev. Proc. 2003–43, 2003–23 I.R.B. 998

2002–1 Superseded by Rev. Proc. 2003–1, 2003–1 I.R.B. 1

2002–2 Superseded by Rev. Proc. 2003–2, 2003–1 I.R.B. 76

2002–3 Superseded by Rev. Proc. 2003–3, 2003–1 I.R.B. 113

2002–4 Superseded by Rev. Proc. 2003–4, 2003–1 I.R.B. 123

2002–5 Superseded by Rev. Proc. 2003–5, 2003–1 I.R.B. 163

2002–6 Superseded by Rev. Proc. 2003–6, 2003–1 I.R.B. 191

2002–7 Superseded by Rev. Proc. 2003–7, 2003–1 I.R.B. 233

2002–8 Superseded by Rev. Proc. 2003–8, 2003–1 I.R.B. 236

Revenue Procedures—Continued:

2002–9 Modified and amplified by Rev. Proc. 2003–20, 2003–6 I.R.B. 445 Rev. Rul. 2003–3, 2003–2 I.R.B. 252 Rev. Rul. 2003–54, 2003–23 I.R.B. 982 Suspended in part by Notice 2003–36, 2003–23 I.R.B. 992

2002–20 Supplemented by Rev. Proc. 2003–26, 2003–13 I.R.B. 666

2002–22 Modified by Rev. Proc. 2003–3, 2003–1 I.R.B. 113

2002–29 Modified by Rev. Proc. 2003–10, 2003–2 I.R.B. 259

2002–37 Modified by Rev. Proc. 2002–34, 2002–18 I.R.B. 856

2002–39 Modified by Rev. Proc. 2002–34, 2002–18 I.R.B. 856

2002–47 Modified and superseded by Rev. Proc. 2003–44, 2003–25 I.R.B. 1051

2002–51 Superseded by Rev. Proc. 2003–31, 2003–17 I.R.B. 838

2002–52 Modified by Rev. Proc. 2003–1, 2003–1 I.R.B. 1

2002–53 Superseded by Rev. Proc. 2003–30, 2003–17 I.R.B. 822

2002–57 Superseded by Rev. Proc. 2003–28, 2003–16 I.R.B. 759

2002–67 Supplemented by Ann. 2003–3, 2003–4 I.R.B. 361

2002–75 Superseded by Rev. Proc. 2003–3, 2003–1 I.R.B. 113

2003–3 Amplified by Rev. Proc. 2003–14, 2003–4 I.R.B. 319

2003–7 Corrected by Ann. 2003–4, 2003–5 I.R.B 396

2003–30 Corrected by Ann. 2003–41, 2003–25 I.R.B. 1098

2003–26 I.R.B. iv June 30, 2003

Revenue Rulings:

53–131 Modified by Rev. Rul. 2003–12, 2003–3 I.R.B. 283

57–190 Obsoleted by Rev. Rul. 2003–18, 2003–7 I.R.B. 467

65–190 Revoked by Rev. Rul. 2003–3, 2003–2 I.R.B. 252

66–118 Distinguished by Rev. Rul. 2003–41, 2003–17 I.R.B. 814

68–345 Obsoleted by Rev. Rul. 2003–54, 2003–23 I.R.B. 982

69–372 Revoked by Rev. Rul. 2003–3, 2003–2 I.R.B. 252

70–140 Distinguished by Rev. Rul. 2003–51, 2003–21 I.R.B. 938

70–522 Distinguished by Rev. Rul. 2003–51, 2003–21 I.R.B. 938

79–70 Distinguished by Rev. Rul. 2003–51, 2003–21 I.R.B. 938

79–194 Distinguished by Rev. Rul. 2003–51, 2003–21 I.R.B. 938

86–88 Supplemented by Rev. Rul. 2003–46, 2003–19 I.R.B. 878

88–36 Supplemented by Rev. Rul. 2003–46, 2003–19 I.R.B. 878

92–19 Supplemented in part by Rev. Rul. 2003–24, 2003–10 I.R.B. 557

2000–49 Modified and superseded by Rev. Rul. 2003–49, 2003–20 I.R.B. 903

2002–80 Distinguished by Rev. Rul. 2003–43, 2003–21 I.R.B. 935

2003–2 Revoked by Rev. Rul. 2003–22, 2003–8 I.R.B. 494

Treasury Decisions:

9002 Corrected by Ann. 2003–8, 2003–6 I.R.B. 451

9021 Corrected by Ann. 2003–16, 2003–12 I.R.B. 641

Treasury Decisions—Continued:

9022 Supplemented by Ann. 2003–7, 2003–6 I.R.B. 450 Corrected by Ann. 2003–11, 2003–10 I.R.B. 585

9048 Corrected by Ann. 2003–23, 2003–16 I.R.B. 808

June 30, 2003 v *U.S. Government Printing Office 2003—496–919/60089 2003–26 I.R.B.