Part I. Rulings — Internal Revenue Bulletin 2006-49

Section 42.—Low-Income Housing Credit

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of December 2006. See Rev. Rul. 2006-61, page 1028.

Section 280G.—Golden Parachute Payments

Federal short-term, mid-term, and long-term rates are set forth for the month of December 2006. See Rev. Rul. 2006-61, page 1028.

Section 382.—Limitation on Net Operating Loss Carryforwards and Certain Built-In Losses Following Ownership Change

The adjusted applicable federal long-term rate is set forth for the month of December 2006. See Rev. Rul. 2006-61, page 1028.

Section 412.—Minimum Funding Standards

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of December 2006. See Rev. Rul. 2006-61, page 1028.

Section 467.—Certain Payments for the Use of Property or Services

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of December 2006. See Rev. Rul. 2006-61, page 1028.

Section 468.—Special Rules for Mining and Solid Waste Reclamation and Closing Costs

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of December 2006. See Rev. Rul. 2006-61, page 1028.

Section 482.—Allocation of Income and Deductions Among Taxpayers

Federal short-term, mid-term, and long-term rates are set forth for the month of December 2006. See Rev. Rul. 2006-61, page 1028.

Section 483.—Interest on Certain Deferred Payments

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of December 2006. See Rev. Rul. 2006-61, page 1028.

Section 642.—Special Rules for Credits and Deductions

Federal short-term, mid-term, and long-term rates are set forth for the month of December 2006. See Rev. Rul. 2006-61, page 1028.

Section 807.—Rules for Certain Reserves

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of December 2006. See Rev. Rul. 2006-61, page 1028.

Section 846.—Discounted Unpaid Losses Defined

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month

of December 2006. See Rev. Rul. 2006-61, page 1028.

Section 1274.—Determi- nation of Issue Price in the Case of Certain Debt Instru- ments Issued for Property

(Also Sections 42, 280G, 382, 412, 467, 468, 482, 483, 642, 807, 846, 1288, 7520, 7872.)

Federal rates; adjusted federal rates; adjusted federal long-term rate and the long-term exempt rate. For purposes of sections 382, 642, 1274, 1288, and other sections of the Code, tables set forth the rates for December 2006.

Rev. Rul. 2006–61

This revenue ruling provides various prescribed rates for federal income tax purposes for December 2006 (the current month). Table 1 contains the short-term, mid-term, and long-term applicable federal rates (AFR) for the current month for purposes of section 1274(d) of the Internal Revenue Code. Table 2 contains the short-term, mid-term, and long-term adjusted applicable federal rates (adjusted AFR) for the current month for purposes of section 1288(b). Table 3 sets forth the adjusted federal long-term rate and the long-term tax-exempt rate described in section 382(f). Table 4 contains the appropriate percentages for determining the low-income housing credit described in section 42(b)(2) for buildings placed in service during the current month. Table 5 contains the federal rate for determining the present value of an annuity, an interest for life or for a term of years, or a remainder or a reversionary interest for purposes of section 7520. Finally, Table 6 contains the 2007 interest rate for sections 846 and 807.

2006–49 I.R.B. 1028 December 4, 2006

REV. RUL. 2006–61 TABLE 1

Applicable Federal Rates (AFR) for December 2006

Period for Compounding

Annual Semiannual Quarterly Monthly

Short-term

AFR 4.97% 4.91% 4.88% 4.86% 110% AFR 5.47% 5.40% 5.36% 5.34% 120% AFR 5.98% 5.89% 5.85% 5.82% 130% AFR 6.48% 6.38% 6.33% 6.30%

Mid-term

AFR 4.73% 4.68% 4.65% 4.64% 110% AFR 5.22% 5.15% 5.12% 5.10% 120% AFR 5.70% 5.62% 5.58% 5.56% 130% AFR 6.17% 6.08% 6.03% 6.00% 150% AFR 7.14% 7.02% 6.96% 6.92% 175% AFR 8.36% 8.19% 8.11% 8.05%

Long-term

AFR 4.90% 4.84% 4.81% 4.79% 110% AFR 5.39% 5.32% 5.29% 5.26% 120% AFR 5.89% 5.81% 5.77% 5.74% 130% AFR 6.39% 6.29% 6.24% 6.21%

REV. RUL. 2006–61 TABLE 2

Adjusted AFR for December 2006

Period for Compounding

Annual Semiannual Quarterly Monthly

Short-term adjusted 3.42% 3.39% 3.38% 3.37% AFR

Mid-term adjusted AFR 3.59% 3.56% 3.54% 3.53%

Long-term adjusted 4.14% 4.10% 4.08% 4.07% AFR

REV. RUL. 2006–61 TABLE 3

Rates Under Section 382 for December 2006

Adjusted federal long-term rate for the current month 4.14%

Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted federal long-term rates for the current month and the prior two months.) 4.22%

REV. RUL. 2006–61 TABLE 4

Appropriate Percentages Under Section 42(b)(2) for December 2006 Appropriate percentage for the 70% present value low-income housing credit 8.12%

Appropriate percentage for the 30% present value low-income housing credit 3.48%

December 4, 2006 1029 2006–49 I.R.B.

REV. RUL. 2006–61 TABLE 5

Rate Under Section 7520 for December 2006

Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years, or a remainder or reversionary interest 5.8%

REV. RUL. 2006–61 TABLE 6

Applicable rate of interest for 2007 for purposes of section 846 and 807 3.97%

Explanation of Provisions

These regulations relate to the provisions for obtaining a private letter ruling and the tolling of the time for providing disclosure under §1.6011–4 and section 6111 and for maintaining a list under section 6112 during the time the request for a ruling is pending. Because the IRS and Treasury Department believe that the removal of the tolling provision will promote effective tax administration, these regulations eliminate the tolling of the time for providing disclosure and for maintaining the list when a taxpayer or a potential material advisor requests a private letter ruling. Proposed regulations removing the tolling provision are being issued concurrently with these temporary regulations. Taxpayers and potential material advisors may still request a ruling on a transaction under the regular procedures for requesting a ruling, provided the ruling request is not factual or hypothetical, but the time for providing disclosure or for maintaining a list will not be tolled. The removal of the tolling provision is effective for all ruling requests received on or after November 1, 2006.

Special Analyses

It has been determined that these regulations are not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations. For applicability of the Regulatory Flexibility Act, please refer to the cross-reference notice of proposed rulemaking published elsewhere in this issue of the Bulletin. Pursuant to section 7805(f) of the Internal Revenue Code, this regulation will be submitted to

Section 1288.—Treatment of Original Issue Discount on Tax-Exempt Obligations

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of December 2006. See Rev. Rul. 2006-61, page 1028.

Section 6011.—General Requirement of Return, Statement, or List

26 CFR 1.6011–4: Requirement of statement disclos- ing participation in certain transactions by taxpay- ers.

26 CFR 301.6111–3T: Disclosure of reportable transactions (temporary).

26 CFR 301.6112–1: Requirement to prepare, main- tain, and furnish lists with respect to potentially abu- sive tax shelters.

T.D. 9295

DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Parts 1 and 301

AJCA Modifications to the Section 6011, 6111, and 6112 Regulations

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final and temporary regulations.

SUMMARY: This document contains temporary and final regulations under sections 6011, 6111, and 6112 of the Internal Revenue Code that modify the rules relating

to the disclosure of reportable transactions and the list maintenance requirements. These regulations affect taxpayers participating in reportable transactions under section 6011, material advisors responsible for disclosing reportable transactions under section 6111, and material advisors responsible for keeping lists under section 6112. These temporary and final regulations are being issued concurrently with proposed regulations (REG–103038–05, REG–103039–05, and REG–103043–05) under sections 6011, 6111, and 6112 published elsewhere in the Bulletin.

DATES: Effective Date: These regulations are effective November 1, 2006.

FOR FURTHER INFORMATION CONTACT: Tara P. Volungis or Charles Wien, 202–622–3070 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

This document amends 26 CFR parts 1 and 301 by modifying the rules relating to the disclosure of reportable transactions under sections 6011 and 6111 and the list maintenance rules under section 6112. On February 28, 2003, the IRS issued final regulations under sections 6011, 6111, and 6112 (T.D. 9046, 2003–1 C.B. 615) (the February 2003 regulations). The February 2003 regulations were published in the Federal Register (68 FR 10161) on March 4, 2003. On December 29, 2003, the IRS issued final regulations under section 6011 and 6112 (T.D. 9108, 2004–1 C.B. 429) (the December 2003 regulations). The December 2003 regulations were published in the Federal Register (68 FR 75128) on December 30, 2003.

2006–49 I.R.B. 1030 December 4, 2006

Par. 5. Section 301.6111–3T is added to read as follows:

§301.6111–3T Disclosure of reportable transactions (temporary).

(a) through (g) [Reserved]. (h) Rulings . If a potential material advisor requests a ruling as to whether a specific transaction is a reportable transaction on or before the date that disclosure would otherwise be required under this section, the Commissioner in his discretion may determine that the submission satisfies the disclosure rules under this section for that transaction if the request fully discloses all relevant facts relating to the transaction which would otherwise be required to be disclosed under this section. The potential obligation of the person to disclose the transaction under this section (or to maintain or furnish the list under §301.6112–1) will not be suspended during the period that the ruling request is pending.

(i) Effective date —(1) [Reserved]. (2) Tolling provision . Paragraph (h) of this section applies to ruling requests received on or after November 1, 2006. The applicability of this section expires on or before November 2, 2009.

Par. 6. Section 301.6112–1 is amended by revising paragraph (i) to read as follows:

§301.6112–1 Requirement to prepare, maintain, and furnish lists with respect to potentially abusive tax shelters.

- - - (i) [Reserved]. For further guidance, see §301.6111–3T(h).

Mark E. Matthews, Deputy Commissioner for Services and Enforcement.

Approved October 25, 2006.

Eric Solomon, Acting Deputy Assistant Secretary of the Treasury (Tax Policy).

(Filed by the Office of the Federal Register on November 1, 2006, 8:45 a.m., and published in the issue of the Federal Register for November 2, 2006, 71 F.R. 64458)

the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

Drafting Information

The principal authors of these regulations are Tara P. Volungis and Charles Wien, Office of the Associate Chief Counsel (Passthroughs and Special Industries). However, other personnel from the IRS and Treasury Department participated in their development.

- - - -

Amendments to the Regulations

Accordingly, 26 CFR parts 1 and 301 are amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation for part 1 is amended by adding an entry in numerical order to read, in part, as follows:

Authority: 26 U.S.C. 7805 * * * Section 1.6011–4T also issued under 26 U.S.C. 6011 * * * Par. 2. Section 1.6011–4 is amended by:

Revising paragraphs (f)(1) and (f)(3).
Redesignating the text of paragraph (h) as (h)(1) and adding a heading.
Adding paragraph (h)(2). The revisions and additions read as follows:

§1.6011–4 Requirement of statement disclosing participation in certain transactions by taxpayers.

- - - (f) - - - (1) [Reserved]. For further guidance, see §1.6011–4T(f)(1).

(2) - * (3) [Reserved]. For further guidance, see §1.6011–4T(f)(1).

- - - (h) Effective date —(1) In general . - * * (2) [Reserved]. For further guidance, see §1.6011–4T(h)(2).

Par. 3. Section 1.6011–4T is added to read as follows:

§1.6011–4T Requirement of statement disclosing participation in certain transactions by taxpayers (temporary).

(a) through (e) [Reserved]. For further guidance, see §1.6011–4(a) through (e).

(f) Rulings and protective disclo- sures —(1) Rulings . If a taxpayer requests a ruling on the merits of a specific transaction on or before the date that disclosure would otherwise be required under this section, and receives a favorable ruling as to the transaction, the disclosure rules under this section will be deemed to have been satisfied by that taxpayer with regard to that transaction, so long as the request fully discloses all relevant facts relating to the transaction which would otherwise be required to be disclosed under this section. If a taxpayer requests a ruling as to whether a specific transaction is a reportable transaction on or before the date that disclosure would otherwise be required under this section, the Commissioner in his discretion may determine that the submission satisfies the disclosure rules under this section for the taxpayer requesting the ruling for that transaction if the request fully discloses all relevant facts relating to the transaction which would otherwise be required to be disclosed under this section. The potential obligation of the taxpayer to disclose the transaction under this section will not be suspended during the period that the ruling request is pending.

(f)(2) through (g) [Reserved]. For further guidance, see §1.6011–4(f)(2) through (g).

(h) Effective date —(1) [Reserved]. For further guidance, see §1.6011–4(h)(1).

(2) Tolling provision . Paragraph (f)(1) of this section applies to ruling requests received on or after November 1, 2006. The applicability of this section expires on or before November 2, 2009.

PART 301—PROCEDURE AND ADMINISTRATION

Par. 4. The authority citation for part 301 is amended by adding an entry in numerical order to read, in part, as follows:

Authority: 26 U.S.C. 7805 * * * Section 301.6111–3T also issued under 26 U.S.C. 6111 * * *

December 4, 2006 1031 2006–49 I.R.B.

Section 7520.—Valuation Tables

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of December 2006. See Rev. Rul. 2006-61, page 1028.

Section 7872.—Treatment of Loans With Below-Market Interest Rates

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of December 2006. See Rev. Rul. 2006-61, page 1028.

2006–49 I.R.B. 1032 December 4, 2006