HIGHLIGHTS OF THIS ISSUE

These synopses are intended only as aids to the reader in identifying the subject matter covered. They may not be relied upon as authoritative interpretations.

INCOME TAX

REG–129067–15, page 421. These proposed regulations provide a definition of “political subdivision” for purposes of sections 103 and 141 through 150 of the Code and rules stating when to apply that definition. The proposed definition generally provides that a political subdivision must be delegated sufficient sovereign powers, must serve a governmental purpose, and must be controlled by a State or local governmental unit. The proposed definition provides that an issuer must remain a political subdivision for its bonds to remain tax-exempt under section 103. The proposed regulations also streamline certain portions of the existing regulations without changing their meaning.

Rev. Rul. 2016–07, page 391. Federal rates; adjusted federal rates; adjusted federal longterm 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 March 2016.

Rev. Proc. 2016–16, page 394. General Rules and Specifications for Substitute Form 941, Schedule B (Form 941), Schedule D (Form 941), and Schedule R (Form 941) This procedure provides general rules and specifications from the IRS for paper and computer-generated substitutes for Form 941, Schedule B (Form 941), Schedule D (Form 941), and Schedule R (Form 941). This procedure will be reproduced as the next revision of Publication 4436. Rev. Proc. 2015–38 is superseded.

T.D. 9750, page 374. The final regulations provide guidance to brokers who (1) must report OID income on a tax-exempt debt instrument, (2) must take into account certain debt instrument elections when computing basis, or (3) must prepare a transfer statement for the transfer of a debt instrument or section 1256 option that is a covered security.

Finding Lists begin on page ii.