Bulletin No. 2006-41 October 10, 2006

A public hearing is scheduled for November 7, 2006. Simultaneously with the publication of these proposed regulations in the Federal Register, the following revenue rulings are being declared obsolete: Rev. Ruls. 72–238 and 73–558.

Notice 2006–78, page 675. This notice announces the phase-out of the qualified hybrid motor vehicle credit and the new advanced lean burn technology motor vehicle credit for passenger automobiles and light trucks manufactured by Toyota Motor Corporation that are purchased for use or lease in the United States beginning on October 1, 2006.

Notice 2006–84, page 677. This notice concludes that income from performing services at the U.S. Naval Base at Guantanamo Bay is not income earned in a restricted country (Cuba) for purposes of the limitation set forth in section 911(d)(8)(A) of the Code and thus, an individual working at Guantanamo Bay is eligible for the section 911 foreign earned income exclusion, provided that the other requirements of that section are met.

Notice 2006–85, page 677. This notice announces that the IRS and Treasury intend to issue regulations under section 367(b) to address certain triangular reorganizations involving foreign corporations. The regulations will apply to triangular reorganizations where either the parent corporation or its subsidiary are foreign and where the subsidiary acquires from the parent, in exchange for property, parent stock that is used to acquire the stock or assets of a target corporation. The regulations will treat the transfer of property from the subsidiary to its parent as a distribution of property under section 301(c) and make corresponding adjustments.

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Notice 2006–86, page 680. This notice provides interim guidance under section 152(c)(4) of the Code, the rule for determining which taxpayer may claim a qualifying child when two or more taxpayers claim the same child. It clarifies that, unless the special rule in section 152(e) applies, the tie-breaking rule in section 152(c)(4) applies to the head of household filing status, the child and dependent care credit, the child tax credit, the earned income credit, the exclusion for dependent care assistance, and the dependency deduction as a group, rather than on a section-by-section basis.

October 10, 2006 2006–41 I.R.B.