INCOME TAX

Rev. Rul. 2007–37, page 1390. Cancellation of distributorship agreement. This ruling holds that the cancellation of an agreement to distribute a manufacturer’s products may be a sale or exchange of property. The gain may be capital gain or treated as capital gain and may be subject to recapture.

REG–149856–03, page 1394. Proposed regulations provide rules under section 152(e) of the Code relating to a claim that a child is a dependent by parents who are divorced, legally separated under a decree of separate maintenance, separated under a written separation agreement, or who live apart at all times during the last 6 months of the calendar year.

Notice 2007–47, page 1393. Deductibility of lodging expenses. This notice announces that the Service and the Department of the Treasury intend to amend regulations section 1.262–1(b)(5) to provide that the costs of a taxpayer’s lodging not incurred while traveling away from home may qualify as deductible expenses under section 162 of the Code and thus would not be nondeductible personal expenses. The notice also provides interim guidance on the criteria that apply to determine whether these costs are deductible expenses pending the issuance of the amended regulations.