INCOME TAX

REG–110896–98, page 1226. Proposed regulations under section 664(b) of the Code concern the characterization of distributions from charitable remainder trusts. The proposed regulations reflect changes made to income tax rates, including the rates applicable to capital gains and certain dividends, by the Taxpayer Relief Act of 1997, the Internal Revenue Service Restructuring and Reform Act of 1998, and the Jobs and Growth Tax Relief Reconciliation Act of 2003. A public hearing is scheduled for March 9, 2004.

REG–160330–02, page 1230. Proposed regulations under section 704(c) of the Code provide guidance with respect to the tax treatment of installment obligations and property acquired pursuant to a contract under sections 704(c) and 737.

Notice 2003–81, page 1223. Option; foreign currency. This notice describes a transaction in which a taxpayer claims a loss upon the assignment of a section 1256 contract to a charity, but fails to report the recognition of gain when the taxpayerÊs obligation under an offsetting non-section 1256 contract terminates. The notice identifies the described transaction and those that are substantially similar to that transaction as listed transactions. The notice holds that the taxpayer must either recognize gain when the option is assumed by the charity or must recognize the premium at the time the taxpayerÊs obligations under the option contract terminate.