HIGHLIGHTS OF THIS ISSUE

These synopses are intended only as aids to the reader in identifying the subject matter covered. They may not be relied upon as authoritative interpretations.

SPECIAL ANNOUNCEMENT

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).

INCOME TAX

Rev. Rul. 2004–47, page 941. Section 265(a)(2); expenses and interest relating to tax- exempt income. This ruling deals with the application of section 265 of the Code to affiliated corporate groups when one member of the group borrows from outside the group and makes funds available to another member of the group that is a dealer in tax-exempt securities.

Rev. Rul. 2004–48, page 945. LIFO; price indexes; department stores. The March 2004 Bureau of Labor Statistics price indexes are accepted for use by department stores employing the retail inventory and last-in, first-out inventory methods for valuing inventories for tax years ended on, or with reference to, March 31, 2004.

T.D. 9128, page 943. Final regulations under sections 446, 860G, and 863 of the Code set out rules relating to the proper timing and source of income from fees received to induce taxpayers to become the holders of noneconomic residual interests in Real Estate Mortgage Investment Conduits (REMICs).

Announcements of Disbarments and Suspensions begin on page 966. Finding Lists begin on page ii. Index for January through May begins on page vi.