Bulletin No. 2006-3 January 17, 2006

Notice 2006–4, page 307. This notice addresses the application of section 409A of the Code to outstanding stock rights and specifically the determination, for purposes of the exclusion from coverage under section 409A for certain stock rights, of whether a stock right has an exercise price equal to or greater than the fair market value of the underlying stock at the date of grant. For stock rights issued before January 1, 2005, the notice provides that the determination will be made in accordance with the rules governing incentive stock options. For stock rights issued on or after January 1, 2005, but before the effective date of final regulations, the notice reiterates the standard set forth in Notice 2005–1 that the determination of fair market value may be made using any reasonable valuation method.

Rev. Proc. 2006–11, page 309. Simplified service cost and simplified production method change procedures. This document provides procedures under which a taxpayer may use either the advance consent procedures of Rev. Proc. 97–27 or the automatic consent procedures of Rev. Proc. 2002–9 to request a change in method of accounting to comply with section 1.263A–1T or 1.263A–2T for the taxpayer’s first taxable year ending on or after August 2, 2005. Rev. Procs. 97–27 and 2002–9 modified.

Rev. Proc. 2006–12, page 310. This document provides procedures under which certain taxpayers may obtain automatic consent for a taxable year ending on or after December 31, 2005, and for certain earlier taxable years, to change to a method of accounting provided in regulations sections 1.263(a)–4, 1.263(a)–5, or 1.167(a)–3(b). Rev. Procs. 97–27 and 2002–9 modified and amplified. Rev. Procs. 2004–23 and 2005–9 superseded for certain taxable years.

(Continued on the next page)