HIGHLIGHTS OF THIS ISSUE

These synopses are intended only as aids to the reader in identifying the subject matter covered. They may not be relied upon as authoritative interpretations.

INCOME TAX

T.D. 9323, page 1240. Final regulations under section 871 of the Code relate to the exclusion from gross income of portfolio interest paid to a nonresident alien individual or foreign corporation. The regulations clarify how the portfolio interest rules apply with respect to interest paid to certain partnerships or trusts that have foreign partners, beneficiaries, or owners. The regulations also retroactively remove the rule in regulations section 1.1441–1(b)(7)(iii) that would impose interest under section 6601 when no underlying tax liability is due.

REG–144859–04, page 1245. Proposed regulations under section 1367(b)(2) of the Code provide rules regarding the definition of open account debt and the adjustments in basis of any indebtedness of an S corporation to a shareholder for shareholder advances and repayments on advances of open account debt. The regulations affect shareholders of S corporations and are necessary to provide guidance needed to comply with the applicable tax law. A public hearing is scheduled for July 31, 2007.

EMPLOYEE PLANS

Announcement 2007–47, page 1260. Nonbank trustees; section 1.408–2(e) of the regulations. This announcement contains a list of entities previously approved to act as nonbank trustees and nonbank custodians within the meaning of section 1.408–2(e) of the regulations. In addition, the announcement contains instructions on how errors in the list may be corrected. Announcement 2006–45 updated and superseded.