Censure Issued by Consent

Under Title 31, Code of Federal Regulations, Part 10, in lieu of a proceeding being instituted or continued, an attorney,

certified public accountant, enrolled agent, or enrolled actuary, may offer his or her consent to the issuance of a censure. Censure is a public reprimand.

The following individuals have consented to the issuance of a Censure:

Name Address Designation Date of Censure

Haynes, Gwenivar L. Ellenwood, GA Enrolled Agent August 1, 2003

Ritchie, Donald Milton, MA Enrolled Agent September 3, 2003

Bagley, Haywood Vista, CA Enrolled Agent September 4, 2003

Book, Robert L. Plymouth, MN Enrolled Agent September 15, 2003

parties must account for the resulting interest income and expense appropriately. To account for any differences in timing or amount between payments the property provider actually receives after the transaction and payments treated as being made to the property provider under the note from the assuming party, the property provider is treated as an obligor or obligee under a second loan, for which the property provider must account accordingly.

After careful consideration, the IRS and Treasury Department have concluded that the complexity presented by these proposed regulations is not necessary to prevent tax avoidance in these transactions. Since the publication of the proposed regulations, the Court of Appeals for the District of Columbia Circuit has held that the partnership used in a lease strip was not a valid partnership because the participants did not join together for a non-tax business purpose. Andantech L.L.C. v. Commissioner, Nos. 02–1213; 02–1215, (D.C. Cir. June 17, 2003), 2003 U.S. App. LEXIS 11908, aff’g in part and remanding for reconsideration of other issues T.C. Memo 2002–97 (2002). Also, in Nicole Rose v. Commissioner, 320 F.3d 282 (2d Cir. 2002) aff’g per curiam 117 T.C. 328 (2001), the United States Court of Appeals for the Second Circuit upheld the Tax Court’s determination that a lease transfer did not have economic substance.

In the opinion of the IRS and Treasury Department, the claimed tax treatment for lease strips improperly separates income from related deductions, and lease strips do not produce the tax consequences desired by the participants. See Notice 2003–55, 2003–34 I.R.B. 395.

Treatment of Obligation-Shifting Transactions

Announcement 2003–79

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Withdrawal of notice of proposed rulemaking.

SUMMARY: This document withdraws a proposed regulation (REG–209817–96) relating to the treatment of certain multiple-party financing transactions in which one party realizes income from leases or other similar agreements and another party claims deductions related to that income.

FOR FURTHER INFORMATION CONTACT: Pamela Lew, (202) 622–3950, (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

In Notice 95–53, 1995–2 C.B. 334, (modified and superseded by Notice 2003–55, 2003–34 I.R.B. 395), the IRS and Treasury Department stated that regulations under section 7701(1) would be issued to recharacterize lease strips to prevent tax avoidance. On December 27, 1996, a notice of proposed rulemaking (REG–209817–96, 1997–1 C.B. 754 [61 FR 68175]) relating to the treatment of certain obligation-shifting transactions was published in the Federal Register. An obligation-shifting transaction is a transaction in which the transferee (the assuming

party) assumes obligations or acquires property subject to obligations under an existing lease or similar agreement and the transferor (the property provider) or any other party has already received or retains the right to receive amounts that are allocable to periods after the transfer.

The proposed regulations recharacterize obligation-shifting transactions in a manner intended to reflect the economic substance of the transactions and to clearly reflect the income of the parties to the transaction. Under the recharacterization, the property provider and the assuming party must report the income from the underlying property allocable to their respective periods of ownership. This result is achieved by imputing a series of transactions to both the assuming party and the property provider that results in a rent-leveling process based on the constant rental accrual method described in § 1.467–3(d). The assuming party is required to recognize rental income for the period in which it owns the property or leasehold interest. The property provider must adjust its income for any differences between amounts it recognized and amounts it would have recognized if it had reported income on a level-rent basis for the periods that it owned the property or leasehold interest. To account for the difference between rental income the assuming party is required to recognize and rental income the assuming party actually receives, the proposed regulations treat the assuming party as issuing an interest-bearing note to the property provider as additional consideration for the obligation-shifting transaction. Both

December 15, 2003 1219 2003-50 I.R.B.

FOR FURTHER INFORMATION CONTACT: Deane M. Burke (202) 622–3070 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

The final regulations that are the subject of this correction are under section 1361 of the Internal Revenue Code.

Need for correction

As published, the final regulations (T.D. 9078), contain an error that may prove to be misleading and is in need of clarification.

Correction of Publication

Accordingly, the publication of the final regulations (T.D. 9078), which were the subject of FR Doc. 03–18040, is corrected as follows:

On page 42251, column 3, in the preamble under the paragraph heading “Sum- mary of Comments and Explanation of Provisions”, third paragraph, line 6, the language “revocable trust (QRT) for which an” is corrected to read “revocable trust for which an”.

Cynthia E. Grigsby, Acting Chief, Publications

and Regulations Branch, Legal Processing Division, Associate Chief Counsel (Procedure

and Administration) .

(Filed by the Office of the Federal Register on October 22, 2003, 8:45 a.m., and published in the issue of the Federal Register for October 23, 2003, 68 F.R. 60625)

Deletions From Cumulative List of Organizations Contributions to Which are Deductible Under Section 170 of the Code

Announcement 2003–82

The name of an organization that no longer qualifies as an organization described in section 170(c)(2) of the Internal Revenue Code of 1986 is listed below.

Generally, the Service will not disallow deductions for contributions made to a listed organization on or before the date of announcement in the Internal Revenue

- - - -

Withdrawal of Notice of Proposed Rulemaking

Accordingly, under the authority of 26 U.S.C. 7805, the notice of proposed rulemaking (REG–209817–96) that was published in the Federal Register on December 27, 1996 (61 FR 68175) is withdrawn.

Dale F. Hart, Acting Deputy Commissioner for

Services and Enforcement .

(Filed by the Office of the Federal Register on November 7, 2003, 8:45 a.m., and published in the issue of the Federal Register for November 10, 2003, 68 F.R. 63744)

Credit for Increasing Research Activities; Correction

Announcement 2003–80

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correction to notice of proposed rulemaking.

SUMMARY: This document contains corrections to proposed regulations (REG–133791–02, 2003–35 I.R.B. 493) that were published in the Federal Reg- ister on July 29, 2003 (68 FR 44499). This regulation relates to the computation and allocation of the credit for increasing research activities for members of a controlled group of corporations or a group of trades or businesses under common control.

FOR FURTHER INFORMATION CONTACT: Jolene J. Shiraishi at (202) 622–3120 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

The proposed regulations that are the subject of these corrections are under section 41 of the Internal Revenue Code.

Need for correction

As published, the notice of proposed rulemaking contains errors that may prove to be misleading and are in need of clarification.

Correction of Publication

Accordingly, the publication of the notice of proposed rulemaking (REG–133791–02; REG–105606–99), which was the subject of FR Doc. 03–17870, is corrected as follows:

1. On page 44500, column 1, in the preamble under the caption “ADDRESSES”, last paragraph, second line, the language “IRS Auditorium (7th Floor), Internal” is corrected to read “Room 4718, Internal”.

2. On page 44503, column 3, §1.41–6(d), paragraph (ii)(B)( 3 ) of Exam- ple 1, last line in column 3, the language “minimum). The group’s fixed-base” is corrected to read “maximum). The group’s fixed-base”.

3. On page 44504, column 3, §1.41–6(d), paragraph (ii)(B)( 3 ) of Ex- ample 2, column 3 fourth line from the bottom, the language “(the statutory minimum). The group’s fixed” is corrected to read “(the statutory maximum). The group’s fixed”.

Cynthia E. Grigsby, Acting Chief, Publications

and Regulations Branch, Legal Processing Division, Associate Chief Counsel (Procedure

and Administration) .

(Filed by the Office of the Federal Register on October 21, 2003, 8:45 a.m., and published in the issue of the Federal Register for October 22, 2003, 68 F.R. 60304)

Qualified Subchapter S Trust Election for Testamentary Trust; Correction

Announcement 2003–81

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correction to final regulations.

SUMMARY: This document contains a correction to final regulations (T.D. 9078, 2003–39 I.R.B. 630) that were published in the Federal Register on July 17, 2003 (68 FR 42251) relating to a qualified subchapter S trust election for testamentary trust.

EFFECTIVE DATE: This correction is effective July 17, 2003.

2003-50 I.R.B. 1220 December 15, 2003

Bulletin that an organization no longer qualifies. However, the Service is not precluded from disallowing a deduction for any contributions made after an organization ceases to qualify under section 170(c)(2) if the organization has not timely filed a suit for declaratory judgment under section 7428 and if the contributor (1) had knowledge of the revocation of the ruling or determination letter, (2) was aware that such revocation was imminent, or (3) was in part responsible for or was aware of the activities or omissions of the organization that brought about this revocation.

If on the other hand a suit for declaratory judgment has been timely filed, contributions from individuals and organizations described in section 170(c)(2) that are otherwise allowable will continue to be deductible. Protection under section 7428(c) would begin on May 7, 2001, and would end on the date the court first determines that the organization is not described in section 170(c)(2) as more particularly set forth in section 7428(c)(1). For individual contributors, the maximum deduction protected is $1,000, with a husband

and wife treated as one contributor. This benefit is not extended to any individual, in whole or in part, for the acts or omissions of the organization that were the basis for revocation.

Code Red Cross Training

San Ramon, CA

Section 7428(c) Validation of Certain Contributions Made During Pendency of Declaratory Judgment Proceedings

Announcement 2003–83

This announcement serves notice to potential donors that the organization listed below has recently filed a timely declaratory judgment suit under section 7428 of the Code, challenging revocation of its status as an eligible donee under section 170(c)(2).

Protection under section 7428(c) of the Code begins on the date that the notice of revocation is published in the Internal

Revenue Bulletin and ends on the date on which a court first determines that an organization is not described in section 170(c)(2), as more particularly set forth in section 7428(c)(1). In the case of individual contributors, the maximum amount of contributions protected during this period is limited to $1,000.00, with a husband and wife being treated as one contributor. This protection is not extended to any individual who was responsible, in whole or in part, for the acts or omissions of the organization that were the basis for the revocation. This protection also applies (but without limitation as to amount) to organizations described in section 170(c)(2) which are exempt from tax under section 501(a). If the organization ultimately prevails in its declaratory judgment suit, deductibility of contributions would be subject to the normal limitations set forth under section 170.

Julie Renee Phelan Foundation f.k.a. Assured Nonprofit Services, Inc.

Seattle, WA

December 15, 2003 1221 2003-50 I.R.B.