Part IV. Items of General Interest

Notice of Proposed Rulemaking by Cross-Reference to Temporary Regulation

Time and Manner for Electing Capital Asset Treatment for Certain Self-Created Musical Works

REG–153589–06

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to temporary regulation.

SUMMARY: In this issue of the Bulletin, the IRS is issuing a temporary regulation (T.D. 9379) that provides the time and manner for making an election to treat the sale or exchange of musical compositions or copyrights in musical works created by the taxpayer (or received by the taxpayer from the works’ creator in a transferred basis transaction) as the sale or exchange of a capital asset. The temporary regulation reflects changes to the law made by the Tax Increase Prevention and Reconciliation Act of 2005 and the Tax Relief and Health Care Act of 2006. The temporary regulation affects taxpayers making the election under section 1221(b)(3) of the Internal Revenue Code (Code) to treat gain or loss from such a sale or exchange as capital gain or loss. The text of the temporary regulation also serves as the text of this proposed regulation.

DATES: Written or electronic comments and requests for a public hearing must be received by May 8, 2008.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG–153589–06), room 5203, Internal Revenue Service, PO Box 7604, Ben Franklin Station, Washington, D.C. 20044. Submissions may be hand delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to: CC:PA:LPD:PR (REG–153589–06), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, N.W.,

Washington, D.C., or sent electronically via the Federal eRulemaking Portal at www.regulations.gov (IRS REG–153589–06).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulation, Jamie Kim, (202) 622–4950; concerning submission of comments or requesting a hearing, Richard.A.Hurst@irscounsel.treas.gov, (202) 622–7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background and Explanation of Provisions

Temporary regulation in this issue of the Bulletin amends the Income Tax Regulations (26 CFR Part 1) relating to section 1221(b)(3) of the Internal Revenue Code (Code). The temporary regulation provides rules regarding the time and manner for making an election under section 1221(b)(3) to treat the sale or exchange of certain musical compositions or copyrights in musical works as the sale or exchange of a capital asset. The text of the temporary regulation also serves as the text of this proposed regulation. The preamble to the temporary regulation explains the amendments.

Special Analyses

It has been determined that this notice of proposed rulemaking is 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 this regulation, and because the regulation does not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Internal Revenue Code, this regulation has been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

Comments and Requests for a Public Hearing

Before this proposed regulation is adopted as a final regulation, consideration will be given to any written comments (a signed original and eight (8) copies) or electronic comments that are submitted timely to the IRS. The IRS and Treasury Department request comments on the clarity of the proposed rules and how they can be made easier to understand. All comments will be available for public inspection and copying. A public hearing will be scheduled if requested in writing by any person that timely submits written comments. If a public hearing is scheduled, notice of the date, time, and place for the public hearing will be published in the Federal Register .

Drafting Information

The principal author of these regulations is Jamie Kim of the Office of Associate Chief Counsel (Income Tax & Accounting). However, other personnel from the IRS and Treasury Department participated in their development.

- - - -

Proposed Amendments to the Regulations

Accordingly, 26 CFR part 1 is proposed to be amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation for part 1 continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * * Par. 2. Section 1.1221–3 is added to read as follows:

§1.1221–3 Time and manner for electing capital asset treatment for certain self-created musical works .

[The text of proposed §1.1221–3 is the same as the text of §1.1221–3T(a) through (d)(1) published elsewhere in this issue of the Bulletin.]

Linda E. Stiff, Deputy Commissioner for Services and Enforcement.

2008–14 I.R.B. 730 April 7, 2008

proved plan that are too extensive or complex or otherwise determined by the Service to be incompatible with the purposes of the volume submitter program; and (3) where the adopter of a pre-approved plan is requesting a determination regarding partial termination, affiliated service group status or leased employees, or where the pre-approved plan is a multiple employer VS plan.

Except as otherwise provided in this announcement, an application for an individual determination letter on a pre-approved plan that is filed on Form 5300 will be reviewed on the basis of the Cumulative List in effect when the application is filed. For example, a determination letter application filed on Form 5300 on May 1, 2008, will be reviewed on the basis of the 2007 Cumulative List (Notice 2007–94, 2007–51 I.R.B. 1179).

Deadline for Employer Adoption of EGTRRA-approved Defined Contribution M&P and VS Plans

An adopting employer whose plan is eligible for the six-year remedial amendment cycle under section 17 of Rev. Proc. 2007–44 and that adopts an EGTRRA-approved M&P or VS defined contribution plan by April 30, 2010, will have adopted the plan within the employer’s six-year remedial amendment cycle. ¹ The end of the plan’s remedial amendment cycle with respect to EGTRRA and the changes in plan qualification requirements on the 2004 Cumulative List is April 30, 2010.

Individual Determination Letter Filing Procedures for Pre-approved Plans

The Service will accept applications for individual determination letters for EGTRRA-approved M&P and VS defined contribution plans starting May 1, 2008. The procedures for filing such applications are clarified and revised as follows:

letter that is filed on Form 5307 generally need not include the plan’s EGTRRA good faith amendments that were adopted prior to the adoption of the EGTRRA-restated plan or any interim plan amendments, regardless of when adopted, unless the plan is a VS

(Filed by the Office of the Federal Register on February 7, 2008, 8:45 a.m., and published in the issue of the Federal Register for February 8, 2008, 73 F.R. 7503)

Issuance of Opinion and Advisory Letters and Opening of the EGTRRA Determination Letter Program for Pre-Approved Defined Contribution Plans

Announcement 2008–23

The Service will soon issue opinion and advisory letters for pre-approved ( i.e ., master and prototype (M&P) and volume submitter (VS)) defined contribution plans that were timely filed with the Service to comply with the Economic Growth and Tax Relief Reconciliation Act of 2001, Pub. L. 107–16, (“EGTRRA”) and other changes in plan qualification requirements listed in Notice 2004–84, 2004–2 C.B. 1030 (“the 2004 Cumulative List”). The Service expects to issue the letters on March 31, 2008, or, in some cases, as soon as possible thereafter. Employers using these pre-approved plan documents to restate a plan for EGTRRA will be required to adopt the EGTRRA-approved plan document by April 30, 2010. The Service will accept applications for individual determination letters submitted by adopters of these pre-approved plans starting on May 1, 2008. This announcement describes certain changes to the determination letter application procedures for pre-approved plans that will simplify the application process for many applicants, and it informs plan sponsors that revised application forms for these plans will be available in the near future.

Background

Rev. Proc. 2007–44, 2007–28, I.R.B. 54, and Rev. Proc. 2005–16, 2005–1 C.B. 674, describe a staggered remedial amendment system for plans that are qualified under § 401(a) of the Internal Revenue Code, with five-year amendment/approval cycles for individually designed plans and six-year cycles for pre-approved plans. The submission period for the initial cycle for pre-approved defined contribution

plans was February 17, 2005, through January 31, 2006. Sponsors and practitioners were required to restate their pre-approved defined contribution plans for EGTRRA and the 2004 Cumulative List and apply for new opinion or advisory letters during this submission period.

Section 16.03 of Rev. Proc. 2007–44 provides that when the review of a cycle for pre-approved plans has neared completion, the Service will publish an announcement providing the date by which adopting employers must adopt the newly approved plans. This date is intended to give adopting employers a window of approximately two years in which to adopt the plans.

Procedures for filing determination letter applications are contained in Rev. Proc. 2008–6, 2008–1 I.R.B. 192. Section 6.05 of Rev. Proc. 2008–6 requires a determination letter application to include a copy of the plan’s signed and dated timely good faith EGTRRA amendments, interim and other plan amendments. These documents are in addition to the restated plan or, in the case of M&P and certain VS plans, the completed adoption agreement.

In general, an application for an individual determination letter on a pre-approved plan is to be filed on Form 5307, Application for Determination for Adopters of Master or Prototype or Volume Submitter Plans . These applications will be reviewed on the basis of the Cumulative List of Changes in Plan Qualification Requirements that was used to review the underlying pre-approved plan, that is, the 2004 Cumulative List in the case of an application filed for the cycle that includes the pre-approved plan submission period that ended on January 31, 2006.

In certain circumstances, however, an application for an individual determination letter on a pre-approved plan is to be filed on Form 5300, Application for Determina- tion for Employee Benefit Plan, rather than Form 5307. These circumstances include the following: (1) where the adopter of an M&P plan amends the basic plan document or adoption agreement, other than by choosing among options permitted under the plan or amending the plan in the manner described in sections 5.02 and 19.03 of Rev. Proc. 2005–16; (2) where the adopter of a VS plan makes changes to the pre-ap

1 Section 20 of Rev. Proc. 2007–44 provides that an opinion or advisory letter for a new pre-approved plan submitted for approval after the end of the submission period may not be relied on for the period prior to the date of submission.

April 7, 2008 731 2008–14 I.R.B.

plan that does not authorize the practitioner to amend the plan on behalf of the adopting employer. The Service may, however, request evidence of adoption of good faith and interim amendments during the course of its review of a particular plan. Applications filed on Form 5307 for VS plans that do not authorize the practitioner to amend the plan on behalf of the adopting employer must include the plan’s EGTRRA good faith amendments and any interim amendments that were adopted for qualification changes on the 2004 Cumulative List.

letter on a pre-approved plan that is required to file Form 5300 only because the plan is a multiple employer VS plan or because the employer is requesting a determination regarding partial termination, affiliated service group status or leased employees will be reviewed on the basis of the Cumulative List that was used to review the underlying pre-approved plan, that is, the 2004 Cumulative List, as if the application had been filed on Form 5307. The Service’s review of the application will not consider changes in the qualification requirements subsequent to the 2004 Cumulative List. Except in the case of VS plans that do not authorize the practitioner to amend the plan on behalf of the adopting employer, an application described in this paragraph need not include the plan’s EGTRRA good faith amendments that were adopted prior to the adoption of the EGTRRA-restated plan or any interim plan amendments, regardless of when adopted. The Service may, however, request evidence of adoption of good faith and interim amendments during the course of its review of a particular plan. An application for a VS plan that is described in this paragraph but which does not authorize the practitioner to amend on behalf of the adopting employer must include the plan’s EGTRRA good faith amendments and any interim amendments that were adopted for qualification changes on the 2004 Cumulative List.

ter on any other pre-approved plan that

is required to file Form 5300 will be reviewed on the basis of the Cumulative List in effect on the date the application is filed. The application must include a copy of the plan’s signed and dated timely good faith EGTRRA amendments, and interim and other plan amendments for all the changes in qualification requirements on the Cumulative List that is in effect when the application is filed. Applications described in this paragraph include (1) applications for determination letters on M&P plans that have been amended by the adopting employer in a manner other than to choose among options permitted under the plan or as described in sections 5.02 and 19.03 of Rev. Proc. 2005–16, and (2) applications for determination letters on VS plans that have been modified by the adopting employer in a manner that is too extensive or complex or otherwise determined by the Service to be incompatible with the purposes of the volume submitter program.

These changes will be published as modifications to Rev. Proc. 2008–6 when that revenue procedure is next revised. Until the modifications to the revenue procedures are published, plan sponsors may rely on this announcement regarding the changes.

Plan sponsors and their advisors are encouraged to review the frequently asked questions on the following web site: http://www.irs.gov/retirement/ article/0,,id=179990,00.html for additional information regarding the issuance of opinion, advisory and determination letters for pre-approved plans and the documents that must be submitted with a determination letter application.

Revision of Form 5307

Form 5307 is being revised to allow the form to be optically scanned and thereby improve the Service’s processing of determination letter applications filed with the form. It is expected that the revised form will be available soon. However, applications filed with the current form (revised 2001) will continue to be accepted through September 30, 2008.

Consolidated Returns; Intercompany Obligations

Announcement 2008–25

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Partial withdrawal of notice of proposed rulemaking.

SUMMARY: This document withdraws a portion of a notice of proposed rulemaking (REG–107592–00, 2007–44 I.R.B. 908) published in the Federal Register on September 28, 2007 (72 FR 55139). The withdrawn portion relates to the treatment of transactions involving the provision of insurance between members of a consolidated group.

FOR FURTHER INFORMATION CONTACT: Frances L. Kelly, (202) 622–7770 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

On September 28, 2007, the IRS and the Treasury Department published a notice of proposed rulemaking (REG–107592–00) in the Federal Register (72 FR 55139) which proposed to amend §1.1502–13(g) (regarding the treatment of transactions involving obligations between members of a consolidated group) and to add §1.1502–13(e)(2)(ii)(C) (regarding the treatment of certain transactions involving the provision of insurance between members of a consolidated group).

Under proposed §1.1502–13(e)(2) (ii)(C), certain intercompany insurance transactions would be taken into account on a single entity basis. Written comments were received with respect to proposed §1.1502–13(e)(2)(ii)(C). After consideration of these comments, the IRS and the Treasury Department have decided to withdraw proposed §1.1502–13(e)(2)(ii)(C). However, the IRS and the Treasury Department continue to study whether revisions to the rules for intercompany transactions are necessary to clearly reflect the taxable income of consolidated groups.

- - - -

2008–14 I.R.B. 732 April 7, 2008

New Horizons Educational Center, Inc.,

Philadelphia, PA North Carolina Community Solutions

Network, Durham, NC Paws From the Ghetto, Inc.,

New York, NY Phoenix Project, Inc., Nashville, TN Prostate Cancer Project, North Miami, FL Providence Childrens Home,

Victorville, CA Quest Depot, Inc., Goshen, AR Rhodius Booster Club, Plainfield, IN Scent-cerely Yours,

Desert Hot Springs, CA Seledorwon USA, Inc., Dorchester, MA Share Care Prayer Mission, Gonzales, LA Sherman Chamber Foundation, Inc.,

Sherman, TX Silver Threads & Golden Needles, Inc.,

Lawrenceville, GA Snell Development Group,

San Leandro, CA Society for the Prevention of Domestic

Violence, Inc., New York, NY Sonoma Mountain Institute, Petaluma, CA Sonshine Financial Ministries, Inc.,

Odenton, MD Spirit of a Child Foundation, Hayward, WI State Committee on the Life and History

of Black Georgians, Atlanta, GA Turnage Transitional Home for Clean

Living, Los Angeles, CA Tyler Court Interfaith Housing

Corporation, Lemon Grove, CA Victoria House Corporation,

San Diego, CA VIP Care Services, Pomona, CA Wheel Productions, Phoenix, AZ Your New Beginnings, Inc.,

Aberdeen, MS

If an organization listed above submits information that warrants the renewal of its classification as a public charity or as a private operating foundation, the Internal Revenue Service will issue a ruling or determination letter with the revised classification as to foundation status. Grantors and contributors may thereafter rely upon such ruling or determination letter as provided in section 1.509(a)–7 of the Income Tax Regulations. It is not the practice of the Service to announce such revised classification of foundation status in the Internal Revenue Bulletin.

Partial Withdrawal of a Notice of Proposed Rulemaking

Accordingly, under the authority of 26 U.S.C. 7805 and 26 U.S.C. 1502, §1.1502–13(e)(2)(ii)(C) of the notice of proposed rulemaking (REG–107592–00) that was published in the Federal Regis- ter on September 28, 2007 (72 FR 55139) is withdrawn.

Linda E. Stiff, Deputy Commissioner for Services and Enforcement .

(Filed by the Office of the Federal Register on February 20, 2008, 8:48 a.m., and published in the issue of the Federal Register for February 25, 2008, 73 F.R. 9972)

Foundations Status of Certain Organizations

Announcement 2008–28

The following organizations have failed to establish or have been unable to maintain their status as public charities or as operating foundations. Accordingly, grantors and contributors may not, after this date, rely on previous rulings or designations in the Cumulative List of Organizations (Publication 78), or on the presumption arising from the filing of notices under section 508(b) of the Code. This listing does not indicate that the organizations have lost their status as organizations described in section 501(c)(3), eligible to receive deductible contributions.

Former Public Charities. The following organizations (which have been treated as organizations that are not private foundations described in section 509(a) of the Code) are now classified as private foundations:

Absolute Positive Influences,

Fort Worth, TX Academy Community Development

Corporation, Greensboro, NC Adams Clubhouse, Prescott Valley, AZ Alternative Decisions Incorporation,

Wynocote, PA Bridges Ministry, Renton, WA Carolina Assistance Programs, Inc.,

Greer, SC

Christopher House, Inc., Fancy Farm, KY Coalition for Safe Community Needle

Disposal, Inc., Houston, TX Colonial Chapel Foundation at the

American Village, Montevallo, AL Dominion College, Cape Girardeau, MO Door of Hope Recovery House for

Women, Inc., Indianapolis, IN Dorothy Below Lesher Scholarship Trust,

Lansing, MI Eco Mentors Alliance, Mahtomedi, MN Eisner Research Associates, Inc.,

Encino, CA Florence Indian Education Parent

Committee, Florence, OR Friends of Western Missouri Medical

Foundation, Warrensburg, MS Global Community Development, Inc.,

Birmingham, AL Gratiot Residents East Area Together,

Detroit, MI Greater Zion Community Outreach

Center, Inc., Baltimore, MD Habitat for Education, Danville, CA Here Too Help, Los Angeles, CA Hosannas Horse Granger, Duluth, GA Housing Counselors of Texas, Inc.,

Dallas, TX Impact Housing Corporation, Mequon, WI Ivory & Billie Crittendon Foundation,

Tacoma, WA James 2 Association, Arlington, VA Knowledge Management Associates,

Columbia, MO Lambs Vision Christian Fellowship,

Garden Grove, CA Lindsay Educational Foundation,

Lindsay, OK Maandeeq Womans Organization, Inc.,

Oxford, GA Manna Ministry, Inc., Centreville, MD Metro Community Assistance, Inc.,

Dallas, GA Mississippi Housing Opportunity

Coalition, Inc., Collins, MS Morning Glory Temple Shelter of Hope,

Chicago, IL Museum of Black-African American

History and Learning Center, Lincoln, NE Museum of Life or Death Incorporation,

Irvington, NJ Myers Community Tutoring Service, Inc.,

Cordova, TN National Cave Museum, Park City, KY

April 7, 2008 733 2008–14 I.R.B.