Bulletin No. 2004-21 — Internal Revenue Bulletin 2004-21

REG–128590–03, page 952. Proposed regulations under section 265 of the Code provide guidance regarding the consolidated return treatment of intercompany obligations that are treated as financing tax-exempt obligations. These regulations provide that, if a member of a consolidated group incurs or continues debt to a nonmember that is directly traceable to an intercompany obligation extended to a member of the group (the borrowing member) by another member of the group (the lending member), and section 265(a)(2) applies to disallow a deduction for the borrowing member’s interest expense incurred with respect to the intercompany obligation, then the lending member’s corresponding interest income will not be excluded under the intercompany transaction regulations.

Notice 2004–38, page 949. This notice announces that the Service and the Treasury Department will issue temporary and proposed regulations that will modify the definition of “qualified amended return” in regulations section 1.6664–2(c)(3).

Rev. Proc. 2004–30, page 950. This procedure provides automatic consent procedures for taxpayers to change their method of accounting for income from REMIC inducement fees to a safe harbor method set forth in T.D. 9128. Rev. Proc. 2002–9 modified and amplified.

Announcement 2004–44, page 957. This announcement solicits comments and suggestions regarding the scope and details of regulations that may be proposed under section 7701(f) of the Code that will address the application of sections 265(a)(2) and 246A in transactions involving related parties, pass-through entities, or other intermediaries.

(Continued on the next page)

Announcement 2004–46, page 964. This announcement is a settlement initiative for taxpayers to resolve transactions described in Notice 2000–44, 2000–2 C.B. 255, and substantially similar transactions (Son of Boss transactions).

EMPLOYEE PLANS

Announcement 2004–43, page 955. Alternative deficit reduction election; notice to Pension Benefit Guaranty Corporation (PBGC) and plan partici- pants and beneficiaries. This announcement describes how notice must be given to the Pension Benefit Guaranty Corporation and to plan participants and their beneficiaries under section 302(d)(12) of the Employee Retirement Income Security Act of 1974 when an employer elects to make an alternative deficit reduction contribution under section 412(1) of the Code. This announcement also provides special timing and transitional rules. Announcement 2004–38 modified.

EXEMPT ORGANIZATIONS

Announcement 2004–45, page 958. A list is provided of organizations now classified as private foundations.

ADMINISTRATIVE

Rev. Rul. 2004–49, page 939. Partnerships; amortization of intangibles. This ruling provides that if a section 197(f)(9) intangible is amortizable in the hands of a partnership, the anti-churning rules under section 1.197–2(h)(12)(vii)(A) of the regulations do not apply to curative or remedial reverse section 704(c) allocations of amortization. It also provides that if a section 197(f)(9) intangible was not amortizable in the hands of the partnership, then remedial, not curative, reverse section 704(c) allocations of amortization are permitted.

Notice 2004–37, page 947. Section 1504. This notice announces circumstances in which the failure to satisfy the value requirement of section 1504(a)(2)(B) of the Code will be disregarded under section 1504(a)(5)(C) and (D) in determining whether a corporation is treated as a member of an affiliated group. The notice also announces that regulations will be proposed and invites comments.

Announcement 2004–47, page 966. This document contains corrections to temporary regulations (T.D. 9118, 2004–15 I.R.B. 718) under section 337 of the Code that clarify that in computing the amount of stock loss attributable to the recognition of built-in gain, gain recognized on the disposition of an asset may be reduced by expenses directly attributable to the recognition of that gain.

May 24, 2004 2004-21 I.R.B.