Bulletin No. 2004-37 — Internal Revenue Bulletin 2004-37

T.D. 9148, page 460. Final regulations under section 83 of the Code provide that the transfer of a compensatory stock option to a related person will not be treated as an arm’s length transaction, meaning that section 83 will continue to apply and the original holder of the option may realize further compensation income at the time of exercise of the option. The regulations also provide a definition of a related person.

REG–108637–03, page 472. Proposed regulations under section 1275 of the Code provide rules for the accrual of original issue discount (OID) on certain real estate mortgage investment conduit (REMIC) regular interests. The regulations provide guidance to REMICs, REMIC regular interest holders and information reporters regarding the accrual of OID. A public hearing is scheduled for November 17, 2004.

REG–154077–03, page 476. Proposed regulations under section 860F of the Code discuss the definition of partnership item for purposes of applying the unified partnership audit procedures to real estate mortgage investment conduits (REMICs).

REG–129706–04, page 478. Proposed regulations under section 368 of the Code provide that in order to qualify as a tax-free reorganization, a transaction must meet certain requirements. One such requirement is that the owners of the corporation being acquired exchange their interests in the acquired corporation for a substantial interest in the acquiring corporation. These regulations explain the circumstances in which the determination will be made of whether the owners of the acquired corporation have exchanged their interests for a substantial interest in the acquiring corporation by reference to the signing date value of the acquiring corporation stock to be issued in the transaction.

(Continued on the next page)

REG–136481–04, page 480. Proposed regulations under section 861 of the Code describe the proper basis for determining the source of compensation for labor or personal services performed partly within and partly without the United States. REG–208254–90 withdrawn.