INCOME TAX

T.D. 9204, page 1279. Final regulations under section 143 of the Code provide rules for calculating the effective rate of mortgage interest. Specifically, the regulations provide that amounts paid for pool mortgage insurance are to be excluded from the calculation of the effective rate of mortgage interest (which results in a lower effective rate of mortgage interest). Generally, interest on bonds issued by state and local governments is excluded from gross income. However, this exclusion does not apply to non-qualified private activity bonds. A qualified mortgage bond or a qualified veterans’ mortgage bond (together, “qualified mortgage revenue bonds”) may be a qualified bond. A bond may only be a qualified mortgage revenue bond if the effective rate of mortgage interest on the mortgages provided with the bond proceeds does not exceed the yield on the bonds by more than 1.125 percentage points.

T.D. 9205, page 1267. REG–134030–04, page 1339. Temporary and proposed regulations under section 41 of the Code provide rules for the computation and allocation of the credit for increasing research activities in the case of a controlled group of corporations or a group of trades or businesses under common control. The regulations also provide rules for making and revoking an election to compute the research credit using the alternative incremental research credit rules. A public hearing on the proposed regulations is scheduled for October 19, 2005. REG–133791–02 withdrawn.

Finding Lists begin on page ii.