Bulletin No. 2007-41 October 9, 2007

clear decommissioning funds that do not qualify under section 468A. The election is available in both section 338 and 1060 transactions (in a section 1060 transaction, the election affects allocation of amount realized and basis rather than ADSP and AGUB).

REG–143397–05, page 790. Proposed regulations contain rules on the application of section 704(c)(1)(B) and 737 of the Code to distributions of property after two partnerships engage in an assets-over merger. The regulations provide that section 704(c)(1)(B) applies to newly created section 704(c) gain or loss in property contributed by the transferor partnership to the continuing partnership in an assets-over merger, but does not apply to newly created reverse section 704(c) gain or loss resulting from a revaluation of property in the continuing partnership. They also provide that for purposes of section 737(b), net precontribution gain includes newly created section 704(c) gain or loss in property contributed by the transferor partnership to the continuing partnership in an asset-over merger, but does not include newly created reverse section 704(c) gain or loss resulting from a revaluation of property in the continuing partnership. A public hearing is scheduled for December 5, 2007.

Notice 2007–78, page 780. This notice provides transition relief and additional guidance on the application of section 409A of the Code to nonqualified deferred compensation plans. The notice generally extends to December 31, 2008, the deadline to adopt documents that comply with section 409A, subject to limited requirements regarding the timely written designation of a time and form of payment. The notice also provides guidance addressing certain issues raised by the application to employment agreements and cashout features of section 409A and the final regulations, and the application of section 409A(b) to certain trusts and other arrangements to pay for nonqualified deferred compensation.

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