Part I. Rulings — Internal Revenue Bulletin 2008-3

Section 42.—Low-Income Housing Credit

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of January 2008. See Rev. Rul. 2008-4, page 272.

26 CFR 1.42–16: Eligible basis reduced by federal grants.

Indian Housing Block Grant (IHBG) Program. This ruling advises taxpayers that certain rental assistance payments made to a building owner on behalf or in respect of a tenant under the Indian Housing Block Grant (IHBG) Program are not grants made with respect to a building or its operation under section 42(d)(5) of the Code.

Rev. Rul. 2008–6

Pursuant to § 1.42–16(b)(3) of the Income Tax Regulations, the Internal Revenue Service has determined that certain rental assistance payments made to a building owner on behalf or in respect of a tenant under the Indian Housing Block Grant Program authorized by the Na- tive American Housing Assistance and Self-Determination Act of 1996 (25 U.S.C. 4101 et seq .) are not grants made with respect to a building or its operation under § 42(d)(5) of the Internal Revenue Code. These rental assistance payments are provided under 24 C.F.R. 1000.103(b).

DRAFTING INFORMATION

The principal author of this revenue ruling is Christopher J. Wilson of the Office of Assistant Chief Counsel (Passthroughs and Special Industries). For further information regarding this revenue ruling, contact Mr. Wilson at (202) 622–3040 (not a toll-free call).

Section 280G.—Golden Parachute Payments

Federal short-term, mid-term, and long-term rates are set forth for the month of January 2008. See Rev. Rul. 2008-4, page 272.

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 January 2008. See Rev. Rul. 2008-4, page 272.

Section 412.—Minimum Funding Standards

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of January 2008. See Rev. Rul. 2008-4, page 272.

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 January 2008. See Rev. Rul. 2008-4, page 272.

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 January 2008. See Rev. Rul. 2008-4, page 272.

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 January 2008. See Rev. Rul. 2008-4, page 272.

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 January 2008. See Rev. Rul. 2008-4, page 272.

Section 642.—Special Rules for Credits and Deductions

Federal short-term, mid-term, and long-term rates are set forth for the month of January 2008. See Rev. Rul. 2008-4, page 272.

Section 807.—Rules for Certain Reserves

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of January 2008. See Rev. Rul. 2008-4, page 272.

Section 832.—Insurance Company Taxable Income

26 CFR 1.832–4: Gross income.

The salvage discount factors are set forth for 2007. These factors must be used to compute discounted estimated salvage recoverable for purposes of section 832 of the Code. See Rev. Proc. 2008-11, page 301.

Section 846.—Discounted Unpaid Losses Defined

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of January 2008. See Rev. Rul. 2008-4, page 272.

26 CFR 1.846–1: Application of discount factors.

Section 1091.—Loss From Wash Sales of Stock or Securities

26 CFR 1.1091–1: Losses from wash sales of stock or securities.

Loss from wash sales of stock or se- curities. This ruling provides that if an individual sells stock or securities for a loss and causes his or her IRA or Roth IRA to purchase substantially identical stock or securities within a specified period, the loss on the sale of the stock or securities is disallowed under section 1091 of the Code, and the individual’s basis in the IRA or Roth IRA is not increased by virtue of section 1091(d).

2008–3 I.R.B. 271 January 22, 2008

Rev. Rul. 2008–5

ISSUE

If an individual sells stock or securities for a loss and causes his or her individual retirement account or Roth IRA to purchase substantially identical stock or securities within 30 days before or after the sale, is the loss on the sale of the stock or securities disallowed?

FACTS

A, an individual, owns 100 shares of X Company stock with a basis of $1,000. On December 20, 2007, A sells the 100 shares of X Company stock for $600 (the “Sale”).

On December 21, 2007, A causes an individual retirement account (within the meaning of § 408) or a Roth IRA (within the meaning of § 408A), established for the exclusive benefit of A or A ’s beneficiaries, to purchase 100 shares of X Company stock for its then fair market value (the “Purchase”).

A executes the Sale and the Purchase with different, unrelated market participants.

A is not a dealer in stock or securities.

LAW AND ANALYSIS

Under § 408(a), the term “individual retirement account” means a trust created or organized in the United States for the exclusive benefit of an individual or his beneficiaries, but only if the written governing instrument creating the trust meets certain other requirements.

Under § 408(e)(1), generally, an individual retirement account is exempt from taxation.

Under §§ 408 and 72, any amount distributed from an individual retirement account is includible in the distributee’s gross income for the year of the distribution unless it is properly allocable to the account owner’s basis in the account. Under § 408A, a similar income inclusion rule applies to nonqualified distributions from a Roth IRA. An individual has basis in an individual retirement account only to the extent that the account includes nondeductible contributions.

Section 1091(a) provides that in the case of any loss claimed to have been sustained from any sale or other disposition of shares of stock or securities where it

appears that, within a period beginning 30 days before the date of such sale or disposition and ending 30 days after such date, the taxpayer has acquired (by purchase or by an exchange on which the entire amount of gain or loss was recognized by law), or has entered into a contract or option so to acquire, substantially identical stock or securities, then no deduction shall be allowed under § 165 unless the taxpayer is a dealer in stock or securities and the loss is sustained in a transaction made in the ordinary course of such business.

Section 1091(d) provides rules for determining the basis of stock or securities the acquisition of which resulted in the nondeductibility under § 1091 (or corresponding provisions of prior law) of the loss from the sale or other disposition of substantially identical stock or securities.

In Security First National Bank of Los Angeles, 28 BTA 289 (1933), the taxpayer sold bonds (at a market price) to a corporation of which the taxpayer was the sole shareholder. On the same day, in exchange for land, the corporation transferred the same bonds at the same price to a trust over which the taxpayer had absolute dominion and control. In finding that § 214(a)(5), the predecessor to § 1091(a), applied to disallow the loss, the court reasoned as follows:

The [taxpayer] did not personally reacquire substantially identical property and, strictly construed, the language of section 214(a)(5), above referred to, might not apply. However, the rule of strict construction should not be unduly pressed to permit easy evasion of a taxing statute. Carbon Steel Co. v. Lewellyn, 251 U.S. 501. Unless the respondent is right, a trust like this one could be used deliberately to accomplish the very thing which Congress intended to frustrate. ... Although title to the bonds was acquired by the trust, actual command over the property was still in the [taxpayer]. ...The difference between acquisition by him personally and acquisition by the trust amounts only to a refinement of title and may be disregarded so far as section 214(a)(5) is concerned. Security First National Bank, 28 BTA at 314 - 315. Applying this reasoning to the facts of this ruling, even though an individual retirement account is a tax-exempt trust, A has nevertheless acquired, for purposes of

§ 1091(a), 100 shares of X Company stock on December 21, 2007, by virtue of the Purchase. See also Shoenberg v. Commis- sioner, 77 F.2d 446 (8 ^th Cir. 1935).

HOLDING

The loss on the Sale of stock is disallowed under § 1091. A ’s basis in the individual retirement account or Roth IRA is not increased by virtue of § 1091(d). This ruling does not address any issues other than those specifically addressed herein. In particular, this ruling does not address (and no inference should be drawn with respect to) any issue arising under § 4975.

DRAFTING INFORMATION

The principal author of this revenue ruling is Roger E. Wade of the Office of Associate Chief Counsel (Financial Institutions & Products). For further information regarding this revenue ruling, contact Mr. Wade at (202) 622–3950 (not a toll-free call).

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 January 2008.

Rev. Rul. 2008–4

This revenue ruling provides various prescribed rates for federal income tax purposes for January 2008 (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

January 22, 2008 272 2008–3 I.R.B.

to pooled income funds described in section 642(c)(5) that have been in existence for less than 3 taxable years immediately preceding the taxable year in which the transfer was made.

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 determin

ing 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 deemed rate of return for transfers made during calendar year 2008

REV. RUL. 2008–4 TABLE 1

Applicable Federal Rates (AFR) for January 2008

Period for Compounding

Annual Semiannual Quarterly Monthly

Short-term

AFR 3.18% 3.16% 3.15% 3.14% 110% AFR 3.51% 3.48% 3.46% 3.46% 120% AFR 3.83% 3.79% 3.77% 3.76% 130% AFR 4.15% 4.11% 4.09% 4.08%

Mid-term

AFR 3.58% 3.55% 3.53% 3.52% 110% AFR 3.95% 3.91% 3.89% 3.88% 120% AFR 4.31% 4.26% 4.24% 4.22% 130% AFR 4.67% 4.62% 4.59% 4.58% 150% AFR 5.40% 5.33% 5.29% 5.27% 175% AFR 6.31% 6.21% 6.16% 6.13%

Long-term

AFR 4.46% 4.41% 4.39% 4.37% 110% AFR 4.91% 4.85% 4.82% 4.80% 120% AFR 5.36% 5.29% 5.26% 5.23% 130% AFR 5.81% 5.73% 5.69% 5.66%

REV. RUL. 2008–4 TABLE 2

Adjusted AFR for January 2008

Period for Compounding

Annual Semiannual Quarterly Monthly

Short-term adjusted 3.05% 3.03% 3.02% 3.01% AFR

Mid-term adjusted AFR 3.39% 3.36% 3.35% 3.34%

Long-term adjusted 4.25% 4.21% 4.19% 4.17% AFR

REV. RUL. 2008–4 TABLE 3

Rates Under Section 382 for January 2008

Adjusted federal long-term rate for the current month 4.25%

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.) 4.34%

2008–3 I.R.B. 273 January 22, 2008

REV. RUL. 2008–4 TABLE 4

Appropriate Percentages Under Section 42(b)(2) for January 2008 Appropriate percentage for the 70% present value low-income housing credit 7.93%

Appropriate percentage for the 30% present value low-income housing credit 3.40%

REV. RUL. 2008–4 TABLE 5

Rate Under Section 7520 for January 2008

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 4.4%

REV. RUL. 2008–4 TABLE 6

Deemed Rate for Transfers to New Pooled Income Funds During 2008

Deemed rate of return for transfers during 2008 to pooled income funds that have been in existence for less than 3 taxable years 4.8%

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 January 2008. See Rev. Rul. 2008-4, page 272.

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 January 2008. See Rev. Rul. 2008-4, page 272.

Section 7520.—Valuation Tables

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of January 2008. See Rev. Rul. 2008-4, page 272.

January 22, 2008 274 2008–3 I.R.B.