SECTION 6. Drafting Information

The principal author of this notice is Alfred C. Bishop of the Office of Associate Chief Counsel (Corporate). For further information regarding this notice, please contact Mr. Bishop at (202) 622–7930 (not a toll-free call).

of the partnership will consist of auction rate preferred stock described in § 2.1 of this notice that meets the conditions of § 3.2 and § 3.3 of this notice and temporary investments of proceeds received from dispositions of such stock pending redemption of partnership interests. The partnership must issue two classes of equity interests: (1) interests that are entitled to a preferred variable return on capital payable out of partnership income (“variable-rate interests”); and (2) residual inverse interests that are entitled to all remaining income of the partnership. The variable-rate interests must be supported by liquidity facilities that have terms and limitations that are comparable to liquidity facilities described in § 2.2 of this notice and that meet the conditions of § 3.2, § 3.4, § 3.5, and § 3.7 of this notice ( i.e., certain time limitations for liquidity facilities, limitations requiring liquidity providers to be unrelated parties to the partnership, permissible trigger events for liquidity facilities, and the absence of contractual rights of the liquidity provider to require the partnership or a related party to the partnership to redeem or repurchase the variable-rate interests in the partnership). The partnership must offer to sell the auction rate preferred stock that it holds at each periodic auction or remarketing duly held under the terms of the stock to set the dividend rates on such stock at a price

equal to the par amount of the applicable liquidation preference on such stock, plus accrued but unpaid dividends. The partnership must apply proceeds received from sales, redemptions, or other dispositions of auction rate preferred stock that it holds promptly to redeem partnership interests and the partnership must not reinvest such disposition proceeds, except only for temporary reinvestments of such disposition proceeds for a reasonable period pending redemption of partnership interests. A partnership that meets the requirements of this § 3.8 and that otherwise constitutes a partnership for Federal income tax purposes is treated as eligible to make a monthly closing election under Rev. Proc. 2003–84, 2003–2 C.B. 1159, as in effect on June 13, 2008 (“Rev. Proc. 2003–84”). In applying the 95 percent qualified income test under § 4.02 of Rev. Proc. 2003–84, any dividends paid by an Eligible Issuer under this notice shall be treated as qualified income for this purpose.