Part III. — Internal Revenue Bulletin 2004-11

Federal Tax Treatment of Benefits Received Under the Smallpox Emergency Personnel Protection Act of 2003

Notice 2004–17

I. PURPOSE

This notice provides guidance regarding the Federal income and employment tax treatment of benefits received under the Smallpox Emergency Personnel Protection Act of 2003 (SEPPA).

II. BACKGROUND

On December 13, 2002, the President announced that, in light of the threat of bioterrorism, a smallpox vaccine would be made available on a voluntary basis to medical professionals, emergency personnel, and others who may be first responders in a smallpox emergency. To implement that decision, the Secretary of Health and Human Services (the Secretary), on January 24, 2003, issued a Declaration Regarding Administration of Smallpox Countermeasures. The Declaration provides that certain countermeasures should be taken for the prevention or treatment of smallpox, or to control or treat the adverse effects of smallpox vaccination. The Declaration recommends the administration of the smallpox vaccine, on a voluntary basis, to specified categories of individuals.

The Smallpox Emergency Personnel Protection Act of 2003 (SEPPA), Pub. L. No. 108–20, 117 Stat. 638, authorizes the Secretary, through the Smallpox Vaccination Injury Compensation Program, to provide benefits to eligible individuals who sustain covered injuries as a result of the administration of covered countermeasures (including the smallpox vaccine) or as a result of accidental contact with such persons. In general, SEPPA authorizes the payment of or a reimbursement for medical items and services as reasonable and necessary to treat a covered injury, the payment of employment income lost as a result of a covered injury, and the payment of a death benefit with respect to

an eligible individual whose death results from a covered injury.

III. FEDERAL TAX TREATMENT OF BENEFITS

Payments received under SEPPA by eligible individuals for covered injuries are excluded from gross income for Federal income tax purposes (except for amounts attributable to, and not in excess of, deductions allowed under § 213 (relating to medical, etc. expenses) for any prior taxable year). Additionally, such payments do not constitute wages and are not subject to withholding for FICA, FUTA, and Federal income tax withholding purposes, and do not constitute net earnings from self-employment for SECA purposes.

In addition, a payor is not required to issue Forms 1099 and Forms W–2 under §§ 6041 and 6051 for SEPPA payments it makes to eligible individuals (or their survivors, in the case of death benefits).

DRAFTING INFORMATION

The principal author of this notice is Barbara E. Pie of the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). For further information regarding this notice, contact Barbara Pie at (202) 622–6080 or Sheldon Iskow at (202) 622–4920 (not toll-free calls).

Request for Comments Concerning the Treatment of Amounts Required to Be Capitalized in Certain Transactions to Which Section 1.263(a)–5 Applies

Notice 2004–18

On December 22, 2003, the Treasury Department and Internal Revenue Service issued final regulations (T.D. 9107, 2004–7 I.R.B. 447 [69 FR 436]) under § 263(a) of the Internal Revenue Code requiring capitalization of certain amounts that facilitate the creation or acquisition of an intangible asset and under § 167

providing a 15-year safe harbor amortization period for certain intangible assets described in § 263(a). The final regulations under § 263(a) also provide guidance on the treatment of amounts required to be capitalized under § 263(a) in certain acquisitions of a trade or business. For example, § 1.263(a)–5(g)(2) provides that amounts required to be capitalized by an acquirer in an acquisition, merger, or consolidation that is not described in § 368 are added to the basis of the acquired assets (in the case of a transaction that is treated as an acquisition of the assets of the target for federal income tax purposes) or the acquired stock (in the case of a transaction that is treated as an acquisition of the stock of the target for federal income tax purposes).

The final regulations under § 263(a) do not address the treatment of amounts required to be capitalized in certain other transactions to which the regulations apply (for example, amounts required to be capitalized in tax-free transactions, costs of a target in a taxable stock acquisition, and stock issuance costs). The preamble to the final regulations states that the Service and Treasury Department intend to issue separate guidance to address the treatment of these amounts and will consider at that time whether such amounts should be eligible for the 15-year safe harbor amortization period described in § 1.167(a)–3(b).

The Service and Treasury Department are aware that there is continuing controversy as to the proper treatment of certain costs that facilitate certain tax-free and taxable transactions and other restructurings and that are required to be capitalized under § 263(a) and § 1.263(a)–5. The Service and Treasury Department also are aware that, under current law, capitalized costs that facilitate tax-free and taxable transactions that are similar may be treated differently. For example, § 1.263(a)–5(g)(2) provides that the acquirer’s capitalized transaction costs that facilitate a taxable asset acquisition increase the basis of the acquired assets. Some commentators, however, have expressed differing views as to how an acquirer’s capitalized transaction costs that facilitate a tax-free asset acquisition are treated. In addition, the Service and Treasury Department are

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whether, as a policy matter, capitalized costs that facilitate a tax-free transaction should be treated in the same manner as the capitalized costs that facilitate a similar taxable transaction.

(3) Consistent treatment of all capi- talized costs that facilitate a transaction. The Service and Treasury Department request comments regarding whether, as a policy matter, capitalized costs that facilitate a transaction, regardless of the type of cost and the party to the transaction that incurs such cost, should be treated similarly.

DATES: Written and electronic comments must be submitted by April 19, 2004.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (Notice 2004–18), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to: CC:PA:LPD:PR (Notice 2004–18), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, N.W., Washington, DC. Alternatively, taxpayers may send submissions electronically directly to the Service at: Notice.com- ments@irscounsel.treas.gov All materials submitted will be available for public inspection and copying.

FOR FURTHER INFORMATION CONTACT: Concerning submissions, Guy Traynor (202) 622–7180; concerning this notice, Andrew J. Keyso, (202) 622–4800 (not toll-free numbers).

Foreign Tax Credit Abuse

Notice 2004–19

PURPOSE

The purpose of this notice is to describe the approach that the Treasury Department and the Internal Revenue Service (IRS) are using to address transactions involving inappropriate foreign tax credit results and to withdraw Notice 98–5, 1998–1 C.B. 334, because Treasury and the IRS do not intend to issue regulations in the form described in that notice.

aware that, under current law, similar costs may be treated differently depending on which party incurs the costs. Commentators have suggested that capitalized transaction costs incurred by an acquirer and target to facilitate a tax-free stock acquisition may be treated differently.

To reduce the prospect of future controversy, the Service and Treasury Department intend to propose regulations to address the treatment of amounts that facilitate certain tax-free and taxable transactions and other restructurings and that are required to be capitalized under § 263(a) and § 1.263(a)–5. The Service and Treasury Department intend to develop a set of rules that are clear and administrable.

The Service and Treasury Department are considering the treatment of capitalized costs that facilitate the following transactions:

(1) Tax-free asset acquisitions and dispositions (for example, reorganizations under § 368(a)(1)(A), (C), (D), (G));

(2) Taxable asset acquisitions and dispositions (see § 1.263(a)–5(g) for the treatment of certain transaction costs in taxable asset acquisitions);

(3) Tax-free stock acquisitions and dispositions (for example, reorganizations under § 368(a)(1)(B));

(4) Taxable stock acquisitions and dispositions (see § 1.263(a)–5(g) for the treatment of certain transaction costs in taxable stock acquisitions);

(5) Tax-free distributions of stock (for example, distributions of stock to which § 305(a) or § 355(a) applies);

(6) Tax-free distributions of property (for example, distributions to which §§ 332 and 337 apply);

(7) Taxable distributions of property (for example, distributions to which §§ 331 and 336 apply and distributions of stock to which § 311 applies);

(8) Organizations of corporations, partnerships, and entities that are disregarded as separate from their owner (for example, transfers described in § 351 or § 721);

(9) Corporate recapitalizations (for example, reorganizations under § 368(a)(1)(E));

(10) Reincorporations of corporations in a different state (for example, in a reorganization under § 368(a)(1)(F)); and

(11) Issuances of stock. There are specific issues raised by each of these types of transactions. The Service

and Treasury Department previously have requested comments more generally on the treatment of capitalized costs that facilitate certain of these transactions. In this notice, the Service and Treasury Department request additional comments, including comments focusing on the following issues.

ISSUES ON WHICH COMMENTS ARE REQUESTED

(1) Treatment of capitalized costs. Section 263(a) and the regulations thereunder require that certain amounts that facilitate the transactions listed above be capitalized. The Service and Treasury Department request comments regarding whether the particular capitalized costs that facilitate transactions for which the Service and Treasury Department are considering guidance should (a) increase the basis of a particular asset or assets (and, if the basis of multiple assets should be increased, the methodology for allocating the costs among the assets), (b) be treated as giving rise to a new asset the basis of which may not be amortized, (c) be treated as giving rise to a new asset the basis of which may be amortizable, (d) reduce an amount realized, or (e) be treated as an adjustment to equity. To the extent that capitalized costs should be treated as giving rise to a new asset the basis of which may be amortizable, the Service and Treasury Department request comments regarding the appropriate amortizable useful life. For example, an appropriate amortizable useful life might be 15 years, a useful life consistent with that afforded to certain intangibles under § 1.167(a)–3(b) and § 197. Additionally, if such costs are treated as giving rise to a new, amortizable asset, the Service and Treasury Department also request comments as to the treatment of such costs if a specific event ( e.g., a liquidation) occurs prior to the expiration of the amortization period.

(2) Consistent treatment of capital- ized costs that facilitate similar taxable and tax-free transactions. The regulations promulgated under § 263(a) provide rules regarding the treatment of amounts that facilitate a taxable acquisition of stock and assets and a taxable disposition of assets. The Service and Treasury Department request comments regarding

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ministration’s Fiscal Year 2004 Revenue Proposals, at 103 (Feb. 2003); American Jobs Creation Act, H.R. 2896, 108 ^th Cong. § 3022 (2003); Jumpstart Our Business Strength Act, S. 1637, 108 ^th Cong. § 456 (2003).

The Administration’s FY 2005 Budget also includes a proposal for broad regulatory authority to address transactions that involve inappropriate separation of foreign taxes from the related foreign income in cases where foreign taxes are imposed on any person with respect to income of an entity. The regulations that would be issued under this proposed authority may provide for the disallowance of a credit for all or a portion of the foreign taxes or for the allocation of the foreign taxes among the participants in the transaction in a manner that is more consistent with the underlying economics of the transaction. The Administration’s FY 2005 Budget proposal to expand existing regulatory authority is intended to provide additional mechanisms for Treasury and the IRS to address the second class of transactions described in Notice 98–5 as well as other abusive transactions involving foreign tax credits.

Treasury and the IRS will use existing authority under section 901 and other provisions of the Code to address transactions or structures that produce inappropriate foreign tax credit results. The 2004 business plan for published guidance includes regulations addressing the allocation of foreign taxes by a partnership under section 704. In particular, the regulations will address situations involving special allocations of foreign taxes among the partners that are inconsistent with the allocation of the related foreign income. Treasury and the IRS expect to issue these regulations shortly. Treasury and the IRS also are working on guidance under section 901 concerning the application of the legal liability rule of § 1.901–2(f) in certain circumstances, including, for example, in the case of consolidated tax reporting systems in foreign countries. These regulations are intended to provide rules that make the allocation of foreign taxes imposed on the combined income of two or more persons more consistent with each person’s respective share of the foreign income to which the tax relates.

Notice 2004–20, issued concurrently with this notice, identifies as a listed transaction for purposes of the tax shelter

BACKGROUND

Notice 98–5 announced that Treasury and IRS intended to issue regulations that would apply an economic profit test to address abusive tax-motivated transactions that generate foreign tax credits that can be used to reduce residual U.S. tax on other foreign source income. Part II of Notice 98–5 describes two classes of transactions that create the potential for foreign tax credit abuse. The first class includes transactions that effectively transfer a foreign tax liability through the acquisition of an asset that generates an income stream subject to foreign gross basis taxes such as withholding taxes. The second class includes cross-border tax arbitrage transactions that effectively permit the duplication of tax benefits. Notice 98–5 contemplated that regulations would apply an economic profit test to disallow credits for foreign taxes generated in an arrangement such as those described above if the reasonably expected economic profit were determined to be insubstantial compared to the value of the foreign tax credits expected to be obtained as a result of the arrangement. Notice 2003–76, 2003–49 I.R.B. 1181, and its predecessors identified transactions that are the same as or substantially similar to transactions described in Part II of Notice 98–5 as listed transactions for purposes of the tax shelter disclosure, registration, and list maintenance requirements of § 1.6011–4 of the Income Tax Regulations and §§ 301.6111–2 and 301.6112–1 of the Procedure and Administration Regulations.

DISCUSSION

Treasury and the IRS do not intend to issue regulations in the form described in Notice 98–5. Accordingly, Notice 98–5 is withdrawn. Consistent with this withdrawal, Notice 2003–76 is modified by eliminating the reference to Notice 98–5 in the identification of listed transactions. Accordingly, transactions will not be considered listed transactions for purposes of §§ 1.6011–4(b)(2), 301.6111–2(b)(2), and 301.6112–1(b)(2) solely because they are the same as or substantially similar to the transactions or arrangements described in Part II of Notice 98–5. No inference is intended, however, as to whether such transactions are otherwise subject to the disclo

sure requirements of section 6011, the registration requirements of section 6111, or the list maintenance requirements of section 6112 .

Treasury and the IRS remain concerned about transactions that involve inappropriate foreign tax credit results. The tax benefits claimed in these transactions are inconsistent with the purposes of the foreign tax credit provisions, including the foreign tax credit limitation of section 904, which are intended to reduce or eliminate double taxation of income.

The IRS will continue to scrutinize abusive transactions that are designed to generate foreign tax credits. In appropriate circumstances, the IRS will challenge the claimed tax consequences of such transactions under the following principles of existing law: the substance over form doctrine, the step transaction doctrine, debtequity principles, section 269, the partnership anti-abuse rules of § 1.701–2, and the substantial economic effect rules of § 1.704–1.

Treasury also has proposed legislative changes to address transactions involving inappropriate foreign tax credit results. Section 901(k), which was enacted in 1997, disallows a credit for certain foreign taxes paid with respect to a dividend if the recipient of the dividend does not meet certain holding period requirements or is under an obligation to make related payments with respect to substantially similar or related property. The Administration’s FY 2005 Budget includes a proposal to expand section 901(k) to apply to foreign taxes with respect to income or gain other than dividends (such as interest, rents, and royalties), disallowing a credit for foreign withholding taxes if the recipient of the income or gain does not meet certain holding period requirements with respect to the asset generating the income or is under an obligation to make related payments with respect to substantially similar or related property. See Department of the Treasury, General Explanation of the Administration’s Fiscal Year 2005 Revenue Proposals at 113 (Feb. 2004). This proposed expansion of section 901(k) addresses the first class of transactions described in Notice 98–5. This proposal was also included in the Administration’s FY 2004 Budget and has been incorporated in pending proposed legislation. See Department of the Treasury, General Explanation of the Ad

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disclosure, registration, and list maintenance regulations a purported stock acquisition that is intended to generate credits for foreign taxes paid on gain that is not subject to tax in the United States. That notice provides that the IRS will challenge the purported foreign tax credit results where a domestic corporation purportedly acquires the stock of a foreign target corporation, makes a 338 election, and then, pursuant to a prearranged plan, sells all or substantially all of the target corporation’s assets in a transaction that generates a taxable gain for foreign tax purposes (but not for U.S. tax purposes). Treasury and the IRS also are considering amending § 1.338–9(d) (concerning the allocation of foreign taxes of a target that accrue after the stock acquisition and section 338 election) to address cases in which the target is liquidated (either in a liquidation under local law or by making an election under § 301.7701–3 to treat the target as a disregarded entity) before the end of its foreign taxable year and to address the allocation of foreign taxes imposed on post-acquisition sales in order to prevent inappropriate foreign tax credit results. Treasury and the IRS anticipate that such amendments only would apply prospectively.

In addition, Treasury and the IRS are working on modifications to the tax shelter disclosure regulations of § 1.6011–4(b) (identifying transactions subject to the disclosure requirements) to ensure that the regulations require appropriate reporting of potentially abusive transactions involving foreign tax credits. In particular, Treasury and the IRS are considering revisions to the tax shelter disclosure regulations to require reporting of transactions that effectively separate foreign taxes from the related foreign income, including transactions that create a mismatch in the timing of recognition for U.S. tax purposes of foreign taxes and the related foreign income.

EFFECT ON OTHER DOCUMENTS

Notice 98–5 is withdrawn. Notice 2003–76 is modified by eliminating the reference to Notice 98–5 in the identification of listed transactions. Effective for taxable years for which the due date of the return (including extensions, whether or not actually requested) is after February 17, 2004, transactions will not be consid

ered listed transactions for purposes of §§ 1.6011–4(b)(2) and 301.6112–1(b)(2) solely because they are the same as or substantially similar to the transactions or arrangements described in Part II of Notice 98–5. Effective for offers made after February 17, 2004, transactions will not be considered listed transactions for purposes of § 301.6111–2(b)(2) solely because they are the same as or substantially similar to the transactions or arrangements described in Part II of Notice 98–5. No inference is intended, however, as to whether such transactions are otherwise subject to the disclosure requirements of section 6011, the registration requirements of section 6111, or the list maintenance requirements of section 6112.

DRAFTING INFORMATION

The principal author of this notice is Ginny Chung of the Office of Associate Chief Counsel (International). For further information regarding this notice, contact Ms. Chung at (202) 622–3850 (not a tollfree call).

Abusive Foreign Tax Credit Intermediary Transaction

Notice 2004–20

The Internal Revenue Service and the Treasury Department are aware of a type of transaction, described below, in which, pursuant to a prearranged plan, a domestic corporation purports to acquire stock in a foreign target corporation and make an election under section 338 of the Internal Revenue Code before selling all or substantially all of the target corporation’s assets in a transaction that is subject to foreign income tax. This notice alerts taxpayers and their representatives that these transactions are tax avoidance transactions and identifies these transactions, and substantially similar transactions, as listed transactions for purposes of § 1.6011–4(b)(2) of the Income Tax Regulations and §§ 301.6111–2(b)(2) and 301.6112–1(b)(2) of the Procedure and Administration Regulations. This notice also alerts parties involved with these transactions to certain responsibilities that may arise from their involvement with these transactions.

FACTS

The transaction generally involves four parties: a person or persons (X) that plans to sell the stock or assets of a foreign corporation or group of foreign corporations (Target) that is not engaged in a U.S. trade or business, a domestic corporation that acts as an intermediary (Midco), and a person or persons (Y) that plans to purchase the assets of Target. Pursuant to a prearranged plan, the parties undertake the following steps. X purports to sell the stock of Target to Midco. Midco then makes an election under section 338 to treat the stock purchase as resulting in a deemed sale by Target (Old Target) of its assets and an acquisition of those assets by a deemed new corporation, New Target, providing New Target with a stepped-up basis in the assets. Midco then may cause New Target to liquidate, either in a liquidation under local law or by making an election under § 301.7701–3 to treat New Target as a disregarded entity. As a result of the liquidation (or deemed liquidation), Midco inherits New Target’s assets with a stepped-up basis. Shortly thereafter, pursuant to the prearranged plan, Y purchases all or substantially all of New Target’s assets. Alternatively, if Midco does not liquidate New Target (or elect to treat New Target as a disregarded entity), New Target pays a dividend to Midco after the asset sale.

The asset sale generates a taxable gain for foreign tax purposes (but not for U.S. tax purposes), and Midco claims a credit under section 901 with respect to the foreign income tax imposed on the asset sale. If Midco does not liquidate New Target (or elect to treat New Target as a disregarded entity), Midco claims a credit under section 902 for the foreign income tax imposed on the asset sale when New Target pays a dividend.

DISCUSSION

The transaction described above does not produce the tax benefits claimed by Midco. The transaction is intended to shift the foreign tax credits to Midco through the purported acquisition of assets that, when sold pursuant to a prearranged plan, triggers a foreign tax on built-in gain that is not subject to U.S. tax. The tax benefits purportedly derived from the transaction by Midco are inconsistent with the

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purposes of the foreign tax credit provisions, including the foreign tax credit limitation of section 904, which are intended to reduce or eliminate double taxation of income.

The Service will challenge the purported tax results to Midco of the transaction described in this notice by applying principles of existing law. See Notice 2001–16, 2001–1 C.B. 730 (announcing that the Service may challenge the purported tax consequences of a purported sale of stock to a tax-indifferent intermediary corporation that then purports to sell the target’s assets). For example, the Service may challenge the purported tax results to Midco under the step transaction doctrine or the substance over form doctrine. “A sale by one person cannot be transformed for tax purposes into a sale by another by using the latter as a conduit through which to pass title. To permit the true nature of a transaction to be disguised by mere formalisms, which exist solely to alter tax liabilities, would seriously impair the effective administration of the tax policies of Congress.” Commissioner v. Court Holding Co., 324 U.S. 331, 334 (1945) (citations omitted). Cf. Aiken Industries, Inc. v. Commissioner, 56 T.C. 925 (1971) (treating interest payments to a conduit entity as paid directly to the beneficial owner). Accordingly, Midco would not be treated for U.S. tax purposes as having purchased the stock of Target. The Service also may challenge the purported tax results to Midco of this transaction under the provisions of section 269 applicable to acquisitions made with the principal purpose of evading or avoiding income tax, or by applying agency principles to disregard Midco’s ownership of Target.

Transactions that are the same as, or substantially similar to, the transaction described in this notice are identified as “listed transactions” for purposes of § 1.6011–4(b)(2), § 301.6111–2(b)(2), and § 301.6112–1(b)(2) effective February 17, 2004, the date this notice was released to the public. In addition, independent of their classification as “listed transactions” for purposes of §§ 1.6011–4(b)(2), 301.6111–2(b)(2), and 301.6112–1(b)(2), transactions that are the same as, or substantially similar to, the transaction described in this notice may already be subject to the disclosure requirements of section 6011 (§ 1.6011–4), the tax shelter

registration requirements of section 6111 (§ 301.6111–1T and § 301.6111–2), or the list maintenance requirements of section 6112 (§ 301.6112–1). For purposes of the disclosure requirements of section 6011, only a taxpayer that acted as an intermediary ( i.e., Midco) in the listed transaction described in this notice will be considered to have participated in the transaction within the meaning of § 1.6011–4(c)(3). No inference is intended, however, as to whether the other parties to such a transaction have participated in a transaction that is the same as or substantially similar to the transactions described in Notice 2001–16. Persons who are required to register these tax shelters under section 6111 but have failed to do so may be subject to the penalty under section 6707(a). Persons who are required to maintain lists of investors under section 6112 but have failed to do so (or who fail to provide those lists when requested by the Service) may be subject to the penalty under section 6708(a). In addition, the Service may impose penalties on parties involved in these transactions or substantially similar transactions, including the accuracy-related penalty under section 6662.

DRAFTING INFORMATION

2004 Calendar Year Resident Population Estimates

Notice 2004–21

This notice informs (1) state and local housing credit agencies that allocate low-income housing tax credits under § 42 of the Internal Revenue Code and (2) states and other issuers of tax-exempt private activity bonds under § 141, of the proper population figures to be used for calculating the 2004 calendar year population-based component of the state housing credit ceiling (Credit Ceiling) under § 42(h)(3)(C)(ii), the 2004 calendar year volume cap (Volume Cap) under

§ 146, and the 2004 volume limit (Volume Limit) under § 142(k)(5).

The population figures both for the population-based component of the Credit Ceiling and for the Volume Cap are determined by reference to § 146(j). That section provides generally that determinations of population for any calendar year are made on the basis of the most recent census estimate of the resident population of a state (or issuing authority) released by the Bureau of the Census before the beginning of such calendar year. Section 142(k)(5) provides that the Volume Limit is based on the State population.

The population-based component of the Credit Ceiling and the Volume Cap are adjusted for inflation pursuant to §§ 42(h)(3)(H) and 146(d)(2), respectively. The adjustments for the 2004 calendar year were published in Rev. Proc. 2003–85, 2003–49 I.R.B. 1184. Section 3.07 of Rev. Proc. 2003–85 provides that, for calendar years beginning in 2004, the amounts used under § 42(h)(3)(C)(ii) to calculate the Credit Ceiling is the greater of $1.80 multiplied by the State population (see the resident population figures provided below) or $2,075,000. Further, section 3.15 of Rev. Proc. 2003–85 provides that the amounts used under § 146(d)(1) to calculate the Volume Cap for calendar year 2004 is the greater of $80 multiplied by the State population (see the resident population figures provided below) or $233,795,000.

The proper population figures for calculating the Credit Ceiling, the Volume Cap, and the Volume Limit for the 2004 calendar year are the estimates of the resident population of the 50 states, the District of Columbia, and Puerto Rico released by the Bureau of the Census on December 18, 2003, in Press Release CB03–197. The proper population figures for calculating the Credit Ceiling, the Volume Cap, and the Volume Limit for the 2004 calendar year for the insular areas (American Samoa, Guam, Northern Mariana Islands, and U.S. Virgin Islands) are the figures released electronically by the Bureau of the Census on July 17, 2003, and referenced in Census Bureau Tip Sheet TP03–14, dated July 11, 2003. For convenience, these estimates are reprinted below.

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Resident Population Figures

Alabama 4,500,752 Alaska 648,818 American Samoa 57,844 Arizona 5,580,811 Arkansas 2,725,714

California 35,484,453 Colorado 4,550,688 Connecticut 3,483,372

Delaware 817,491 D.C. 563,384

Florida 17,019,068

Georgia 8,684,715 Guam 163,593

Hawaii 1,257,608

Idaho 1,366,332 Illinois 12,653,544 Indiana 6,195,643 Iowa 2,944,062

Kansas 2,723,507 Kentucky 4,117,827

Louisiana 4,496,334

Maine 1,305,728 Maryland 5,508,909 Massachusetts 6,433,422 Michigan 10,079,985 Minnesota 5,059,375 Mississippi 2,881,281 Missouri 5,704,484 Montana 917,621

Nebraska 1,739,291 Nevada 2,241,154 New Hampshire 1,287,687 New Jersey 8,638,396 New Mexico 1,874,614 New York 19,190,115 North Carolina 8,407,248 North Dakota 633,837 Northern Mariana Islands 76,129

Ohio 11,435,798 Oklahoma 3,511,532 Oregon 3,559,596

Pennsylvania 12,365,455 Puerto Rico 3,878,532

Rhode Island 1,076,164

South Carolina 4,147,152 South Dakota 764,309

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Tennessee 5,841,748 Texas 22,118,509

U.S. Virgin Islands 108,814 Utah 2,351,467 Vermont 619,107 Virginia 7,386,330

Washington 6,131,445 West Virginia 1,810,354 Wisconsin 5,472,299 Wyoming 501,242

(808) 539–2874 or Susan Reaman at (202) 622–3040 (not toll-free calls).

The principal authors of this notice are Christopher J. Wilson, Office of the Associate Chief Counsel (Passthroughs and Special Industries) and Timothy L. Jones,

Office of the Division Counsel/Associate Chief Counsel (Tax-Exempt and Government Entities). For further information regarding this notice, contact Mr. Wilson at

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