SECTION 3. GUIDANCE FOR 2004

.01 Generally .

After reviewing the comments received and working further to develop procedures as outlined in Notice 2003–79, the Treasury Department and the IRS have concluded that it is appropriate to issue more detailed guidance setting forth the specific procedures to be used for information reporting in proposed form in order to provide interested parties an opportunity to comment. In order to allow for the issuance of proposed procedures and the consideration of comments before such procedures are finalized, the Treasury Department and the IRS are extending to 2004 information reporting the simplified procedures that were provided in Notice 2003–79 for 2003 information reporting. Section 3.02 of this notice provides guidance regarding whether a security

is readily tradable on an established securities market in the United States for purposes of section 1(h)(11). Section 3.03 summarizes guidance for 2004 information reporting of a distribution with respect to a security issued by a foreign corporation. Section 3.04 provides guidance for 2004 for recipients of Form 1099–DIV.

.02 Readily Tradable .

Notice 2003–79 provided guidance for 2003 regarding whether certain securities other than common or ordinary stock are considered readily tradable on an established securities market in the United States for purposes of section 1(h)(11). Upon further review, the Treasury Department and the IRS have concluded that the guidance provided in Notice 2003–79 regarding this determination should be extended to future years. Accordingly, for 2004 and future years, a security (or an American depositary receipt in respect of such security) issued by a foreign corporation that is other than ordinary or common stock (such as preferred stock) will be considered readily tradable on an established securities market in the United States for purposes of the 2003 Act if the security is listed on a national securities exchange that is registered under section 6 of the Securities Exchange Act of 1934 (15 U.S.C. § 78f) or on the Nasdaq Stock Market as described in Notice 2003–71.

.03 Persons Required to File Form 1099–DIV .

The rules for 2003 information reporting of a distribution with respect to a security issued by a foreign corporation that are described in detail in sections 3.01 through 3.07 of Notice 2003–79 will also apply for 2004 information reporting. Those rules are outlined in the following summary. For 2004, a person required to make a return under section 6042 shall report a distribution with respect to such a security in Box 1b of Form 1099–DIV as a qualified dividend if:

1. either the security with respect to which the distribution is made is a common or an ordinary share, or a public SEC filing contains a statement that the security will be, should

2004–45 I.R.B. 793 November 8, 2004

cedures in proposed form. This will provide interested parties an opportunity to provide specific comments before the procedures are issued in final form to be effective for information reporting for future years.