SECTION 2. BACKGROUND

Section 3.01 of Rev. Proc. 2005–23 provides that a qualified plan will not be treated as having failed to satisfy the requirements of § 401(a) of the Internal Revenue Code merely because an amendment that was adopted before June 7, 2004, violated § 411(d)(6) by adding or expanding a provision under which a suspension of benefits occurs. This treatment applies only if a reforming amendment is adopted and the plan complies operationally with the reforming amendment. Section 3.03(1) of Rev. Proc. 2005–23 provides that the reforming amendment must provide for the payment of retroactive benefits to an affected plan participant with respect to benefits that had accrued as of the applicable amendment date for the original amendment. Section 3.03(2) of Rev. Proc. 2005–23 provides that the plan must be in operational compliance with the reforming amendment by January 1, 2006, with respect to benefits payable through December 31, 2005. Pursuant to section 3.04 of Rev. Proc. 2005–23, the plan must also provide an eligible participant, as described in section 3.04(2), with the opportunity to elect retroactively to commence the payment of benefits. The plan must

(d) Reasonableness of Officers’ Compensation: Form 1120, Schedule E, Com- pensation of Officers, must be completed when required by its instructions. The time devoted to business must be expressed as a percentage as opposed to “part” or “as needed.” This section does not apply to “golden parachute” payments, as defined under section 280G. This section will not apply to the extent that remuneration paid or incurred exceeds the $1 million-employee-remuneration limitation, if applicable.

(e) Repair Expenses: The amount claimed must be stated. This section does not apply, however, to any repair expenses properly characterized as capital expenditures or personal expenses.

(f) Taxes (other than foreign taxes): The amount claimed must be stated.

(3) Differences in book and income tax reporting.

(a) Form 1120, Schedule M–1, Recon- ciliation of Income (Loss) per Books With Income per Return, and

(b) Schedule M–3, Net Income (Loss) Reconciliation for Corporations With To- tal Assets of $10 Million or More, Form 1120: Column (b), Temporary Difference, and Column (c), Permanent Difference, of Part II, (reconciliation of income (loss) items) and Part III (reconciliation of expense/deduction items).

The information provided reasonably must be expected to apprise the Service of the nature of the potential controversy concerning the tax treatment of the item. If the information provided does not so apprise the Service, a Form 8275 or Form 8275-R, must be used to adequately disclose the item (see Part II of the instructions for those forms).

Note: An item reported on a line with a pre-printed description, shown on an attached schedule, or “itemized” on Schedule M–1 may represent the aggregate amount of several transactions producing that item ( i.e., a group of similar items, such as amounts paid or incurred for supplies by a taxpayer engaged in business). In some instances, the potentially controversial item may involve a portion of the amount disclosed on the schedule. The Service will not be reasonably apprised of the potential controversy by the amount disclosed. In these instances, the taxpayer must use Form 8275 or Form

8275-R regarding that portion of the item.

The combining of unlike items, whether on Schedule M–1 or Schedule M–3 (or on an attachment when directed by the instructions), will not constitute an adequate disclosure.

(4) Foreign Tax Items: (a) International Boycott Transactions: Transactions disclosed on Form 5713, International Boycott Report. Schedule A, International Boycott Factor (Sec- tion 999(c)(1)) ; Schedule B, Specifically Attributable Taxes and Income (Section 999(c)(2)) ; and Schedule C, Tax Effect of the International Boycott Provisions, must be completed when required by their instructions.

(b) Treaty-Based Return Position: Transactions and amounts under section 6114 or section 7701(b) as disclosed on Form 8833, Treaty-Based Return Posi- tion Disclosure Under Section 6114 or 7701(b) . (5) Other: (a) Moving Expenses: Complete Form 3903, Moving Expenses, and attach to the return.

(b) Employee Business Expenses: Complete Form 2106, Employee Business Expenses, or Form 2106-EZ, Unreim- bursed Employee Business Expenses, and attach to the return. This section does not apply to club dues, or to travel expenses for any non-employee accompanying the taxpayer on the trip.

(c) Fuels Credit: Complete Form 4136, Credit for Federal Tax Paid on Fuels, and attach to the return.

(d) Investment Credit: Complete Form 3468, Investment Credit, and attach to the return.