For Tax Professionals  

IRS Regulations Issued in 1998

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HTML Version(23K) 12/23/1998
Abatement of Interest
The Taxpayer Bill of Rights 2 expanded the provisions for abatement of interest. The changes allow the Internal Revenue Service (IRS) to abate interest attributable to an unreasonable error or delay by an IRS employee in performing a managerial act as well as a ministerial act. The new law applies to interest accruing with respect to deficiencies or payments for taxable years beginning after July 30, 1996. The IRS has published final regulations (TD 8789) that define managerial act and ministerial act for the purpose of abating interest.
HTML Version(3K) 12/23/1998
Withdrawal of Proposed Regulations
This document withdraws proposed regulations amending the income tax regulations. This action is taken to remove from the IRS' inventory of regulations projects those proposed regulations that are in an inactive status and would remain in an inactive status for the foreseeable future.
HTML Version(9K) 12/23/1998
Increase In Cash-Out Limit Under Sections 411(a)(7), 411(a)(11), & 417(e)(1)
The tax laws generally permit a qualified retirement plan to distribute a participant's benefit without the participant's consent if the value of the benefit does not exceed a certain limit, known as the "cash-out limit." Also, if a participant receives a distribution of his or her entire benefit in the plan, and the value of the benefit is less than the cash-out limit, the plan generally may disregard the participant's service before the distribution in determining the participant's benefit under the plan. Until 1997, the cash-out limit was $3500. In 1997, Congress increased it to $5000.
HTML Version(16K) 12/23/1998
Intercompany Obligations
This regulation explains the tax treatment of a transaction in which indebtedness between corporations that are members of a consolidated group is transferred, paid, or canceled.
HTML Version(10K) 12/23/1998
Preparer Due Diligence Requirements for Determining Earned Income Credit Eligibility
In the Rules and Regulations section of this issue of the Federal Register, the IRS is issuing temporary regulations relating to the due diligence requirements in determining eligibility for the earned income credit for paid preparers of federal income tax returns or claims for refund.
HTML Version(20K) 12/23/1998
Certain Investment Income under the Qualifying Income Provisions of Section 7704 & the Application of the Passive Activity Loss Rules to Publicly Traded Partnerships
A publicly traded partnership is generally taxed as a corporation, unless at least 90 percent of its gross income is passive-type income ("qualifying income") such as interest and dividends. These final regulations provide guidance on how to compute the gross income of a publicly traded partnership and what constitutes qualifying income. A more detailed explanation of these provisions may be found in the final regulations.
HTML Version(21K) 12/23/1998
Increase In Cash-Out Limit Under Sections 411(a)(7), 411(a)(11), & 417(e)(1) for Qualified Retirement Plans
The tax laws generally permit a qualified retirement plan to distribute a participant's benefit without the participant's consent if the value of the benefit does not exceed a certain limit, known as the "cash-out limit." Also, if a participant receives a distribution of his or her entire benefit in the plan, and the value of the benefit is less than the cash-out limit, the plan generally may disregard the participant's service before the distribution in determining the participant's benefit under the plan. Until 1997, the cash-out limit was $3500. In 1997, Congress increased it to $5000.
HTML Version(21K) 12/23/1998
Notice, Consent & Election Requirements of Sections 411(a)(11) & 417 for Qualified Retirement Plans
The tax laws provide that a plan participant must consent to a distribution of his or her vested benefits from a retirement plan where those benefits exceed $5,000. A participant's consent is not valid unless he or she was first given notice of his or her rights under the plan. Similarly, the tax laws also provide that any spouse of a plan participant must consent to a distribution of such benefits if the distribution is not in the form of a qualified joint and survivor annuity. Also, the plan must provide a written explanation of the joint and survivor annuity before distributions may commence.
HTML Version(17K) 12/23/1998
Preparer Due Diligence Requirements for Determining Earned Income Credit Eligibility
Pursuant to changes made by the Taxpayer Relief Act of 1997, the IRS has published temporary regulations that set forth the due diligence requirements for income tax return preparers (preparers) who prepare returns or claims for refund involving the Earned Income Credit (EIC). To meet these requirements the preparer must: 1) complete the Eligibility Checklist (Form 8867); 2) complete the Computation Worksheet, (the "Earned Income Credit Worksheet" contained in the instructions to the Form 1040); 3) possess no knowledge that the information used to determine EIC eligibility and computation of the EIC is false; and 4)...
HTML Version(21K) 12/16/1998
Payment by Credit Card & Debit Card
These temporary regulations, which were published in the Federal Register on December 16, 1998, permit the IRS to accept payment of federal taxes by credit card or debit card, in the manner and in accordance with forms, instructions and procedures to be issued by the IRS.
HTML Version(21K) 12/16/1998
Acquisition of an S Corporation by a Member of a Consolidated Group
Acquisition of an S Corporation by a Member of a Consolidated Group When a consolidated group acquires an S corporation, the interaction of the consolidated return regulations and the subchapter S rules requires the filing of a separate return for the day of the acquisition. As a result, the day of the acquisition is treated as a separate tax year. This proposed regulation eliminates the requirement of filing a separate return for the day of the acquisition. Instead, the day of the acquisition will be included in the consolidated group's return.
HTML Version(11K) 12/16/1998
Election to Amortize Start-Up Expenditures for Active Trades or Businesses
The tax law provides that expenses incurred in starting up an active trade or business may be deducted ratably over a period of 60 months or more. The election must be made on or before the due date for filing the return for the taxable year when the trade or business begins (including extensions). The final regulations provide the procedures that must be followed to elect to deduct start-up expenditures. These regulations are effective for elections filed on or after the date they are published in the Federal Register.
HTML Version(11K) 12/16/1998
Relief from Disqualification for Plans Accepting Rollovers
The tax laws provide relief from disqualification to eligible retirement plans that inadvertently accept invalid rollover contributions if two conditions are satisfied. First, at the time that the rollover contribution was accepted, the receiving plan administrator must have reached a reasonable conclusion that the contribution was a valid rollover contribution. Second, if the receiving plan administrator later determines that the rollover contribution was an invalid rollover contribution, the amount of the invalid rollover contribution plus any earnings attributable to the contribution.
HTML Version(23K) 12/16/1998
Marital Deduction; Valuation of Interest Passing to Surviving Spouse
Marital Deduction; Valuation Of Interest Passing To Surviving Spouse: Under the proposed regulations, a reduction is made to the marital or charitable deduction for the dollar amount of any "estate transmission expenses" incurred during the administration of the decedent's estate and charged to the deductible property interest. In contrast, no reduction is made for "estate management expenses," unless such expenses are incurred with respect to other property and are charged to the deductible property interest.
HTML Version(34K) 12/10/1998
Qualified Long-Term Care Insurance Contracts
The final regulations, which will be published in the Federal Register on December 10, 1998, provide guidance concerning consumer protection with respect to qualified long-term care insurance contracts and events that will result in the loss of grandfathered status for long-term care insurance contracts issued before January 1, 1997.
HTML Version(43K) 12/10/1998
Guidance Regarding Charitable Remainder Trusts & Special Valuation Rules for Transfers of Interests in Trusts
A charitable remainder trust provides a specified periodic distribution to a beneficiary and holds an irrevocable remainder interest for charity. These final regulations provide rules on how to calculate the periodic payment and when the payment is to be made. A more detailed explanation of these provisions may be found in the final regulations.
HTML Version(66K) 12/7/1998
Credit for Increasing Research Activities
The law provides a tax credit for certain expenses incurred in conducting qualified research. The proposed regulations address the requirements necessary to qualify for the research tax credit and provide rules for electing and revoking the election of the alternative incremental credit. In general, the regulations are proposed to be effective for expenditures paid or incurred on or after the date final regulations are published in the Federal Register.
HTML Version(17K) 12/2/1998
Definition of Reasonable Basis
The regulations inform taxpayers that they will not be subject to certain penalties, for example negligence, if the position taken on their tax returns has a reasonable basis. The regulations also describe the standard for reasonable basis. Finally, the regulations indicate that even if the position taken on the return does not have a reasonable basis, a taxpayer may be able to avoid the penalty if the taxpayer qualifies for the reasonable cause and good faith exception. The full text of the regulations is set forth in the Federal Register dated December 2, 1998.
HTML Version(139K) 10/30/1998
Interim Rules For Group Health Plans & Health Insurance Issuers Under the Newborns' & Mothers' Health Protection Act AGENCIES: Internal Revenue Service, Department of the Treasury; Pension & Welfare Benefits Administration, Department of Labor; Health Care Financing Administration, Department of Health & Human Services.
These temporary regulations provide guidance on a law that applies to certain group health plans that offer benefits for hospital stays in connection with childbirth. Generally, a plan providing these benefits must pay for at least a 48-hour hospital stay following a vaginal delivery and for at least a 96-hour stay following a delivery by cesarean section. However, a plan can pay for a shorter stay if the doctor or other attending health care provider discharges the mother or newborn child earlier after consulting with the mother.
HTML Version(5K) 10/30/1998
HIPAA Newborns' & Mothers' Health Protection Act
These proposed regulations provide guidance on a law that applies to certain group health plans that offer benefits for hospital stays in connection with childbirth. Generally, a plan providing these benefits must pay for at least a 48-hour hospital stay following a vaginal delivery and for at least a 96-hour stay following a delivery by cesarean section. However, a plan can pay for a shorter stay if the doctor or other attending health care provider discharges the mother or newborn child earlier after consulting with the mother.
HTML Version(44K) 10/21/1998
Basis Reduction Due to Discharge of Indebtedness
Taxpayers are permitted to exclude income from discharge of indebtedness if the discharge occurs in a title 11 case or when the taxpayer is insolvent, or if the indebtedness is "qualified farm indebtedness" or "qualified real property business indebtedness." Taxpayers generally must reduce specified tax attributes, including adjusted bases of properties, to the extent income from discharge of indebtedness is excluded from gross income.
HTML Version(35K) 10/13/1998
Source of Income From Sales of Inventory Partly From Sources Within a Possession of the United States; Also, Source of Income Derived From Certain Purchases From a Corporation Electing Section 936
These final regulations provide rules for determining the source of income from certain sales of inventory, if such property is purchased, sold, or manufactured in a U.S. possession. The final regulations provide rules under section 863 for determining the source of income in two different types of transactions, one sales of inventory produced in the United States and sold in a possession of the United States (or vice versa), the other, sales of inventory purchased in a possession and sold in the United States.
HTML Version(7K) 10/13/1998
Continuity of Interest requirement for corporate reorganizations
This document amends final regulations providing guidance regarding satisfaction of the continuity of interest requirement for corporate reorganizations. The amendment to the final regulations affects corporations and their shareholders. This amendment to the final regulations is necessary to provide clarification regarding an example illustrating a relationship created in connection with a potential reorganization.
HTML Version(93K) 10/7/1998
Classification of Certain Transactions Involving Computer Programs
The final regulations provide rules under Treas. Reg. § 1.861-18 for classifying transactions in computer programs for purposes of the international provisions of the Code. The regulations first provide rules for characterizing a transaction as one or more of the following: (i) transfer of a copyright right, (ii) transfer of a copyrighted article, (iii) provision of services, or (iii) provision of know-how. The regulations distinguish between the transfer of a copyright right and the transfer of a copyrighted article based on principles of copyright law.
HTML Version(5K) 9/24/1998
Section 411(d)(6) Protected Benefits (Taxpayer Relief Act of 1997); Qualified Retirement Plan Benefits
In the Rules and Regulations section of this issue of the Federal Register, the IRS is issuing temporary regulations providing for changes to the rules regarding qualified retirement plan benefits that are protected from reduction by plan amendment, that have been made necessary by the Taxpayer Relief Act of 1997. The text of those temporary regulations also serves as the text of these proposed regulations.
HTML Version(102K) 9/24/1998
Roth IRAs
Roth IRAs are a new type of individual retirement account (IRA) that individuals can use beginning in 1998. This proposed regulation provides guidance, in a question and answer format, on Roth IRAs in general. In addition, this proposed regulation provides detailed guidance on: (1) establishing a Roth IRA; (2) the types of contributions that can be made to a Roth IRA and the limits that apply to the amount of such contributions; (3) converting a traditional IRA to a Roth IRA; (4) recharacterizing IRA contributions (both traditional and Roth contributions); (5) the tax treatment of Roth IRA...
HTML Version(14K) 9/24/1998
Exception From Supplemental Annuity Tax on Railroad Employers
This document contains proposed regulations that provide guidance to employers covered by the Railroad Retirement Tax Act. The Railroad Retirement Tax Act imposes a supplemental tax on those employers, at a rate determined by the Railroad Retirement Board, to fund the Railroad Retirement Board's supplemental annuity benefit. These proposed regulations provide rules for applying the exception from the supplemental tax with respect to employees covered by a supplemental pension plan established pursuant to a collective bargaining agreement and for applying a related excise tax with respect to...
HTML Version(35K) 9/24/1998
Notice of Certain Transfers to Foreign Partnerships & Foreign Corporations
This document contains proposed regulations under section 6038B of the Internal Revenue Code on information reporting requirements for certain transfers by United States persons to foreign partnerships. The proposed regulations would implement the amendments made by the Taxpayer Relief Act of 1997
HTML Version(11K) 9/24/1998
Source Rules for Foreign Sales Corporation Transfer Pricing
This document contains final regulations concerning foreign sales corporations ("FSCs") and their related suppliers. For taxable years beginning after December 31, 1997, the final regulations apply the FSC special source rule only to income of related suppliers from sales of export property giving rise to foreign trading gross receipts of a FSC. The final regulations also provide rules and examples which clarify how the special source rule is computed. The regulations are being finalized in this form in response to taxpayer comments.
HTML Version(7K) 9/24/1998
Revision of the Tax Refund Offset Program
This document contains proposed regulations relating to the administration of the Tax Refund Offset Program (TROP). This action is necessary because TROP, which is currently administered by the IRS, is being merged into the centralized administrative offset program known as the Treasury Offset Program (TOP), which is administered by the Financial Management Service (FMS). These regulations will affect State and Federal agencies that participate in TROP.
HTML Version(13K) 9/24/1998
Section 411(d)(6) Protected Benefits (Taxpayer Relief Act of 1997); Qualified Retirement Plan Benefits
This document contains final and temporary regulations providing for changes to the rules regarding qualified retirement plan benefits that are protected from reduction by plan amendment, that have been made necessary by the Taxpayer Relief Act of 1997 (TRA '97). The temporary regulations change the existing regulations to conform with the TRA '97 rules regarding in-kind distribution requirements for certain employee stock ownership plans, and specify the time period during which certain plan amendments for which relief has been granted by TRA '97 may be made without violating the prohibition against plan amendments that reduce accrued benefits. These temporary regulations affect sponsors of qualified retirement plans, employers that maintain qualified retirement plans, and qualified retirement plan participants. The final regulations amend the existing final regulations to cross-reference the temporary regulations.
HTML Version(94K) 8/25/1998
Qualified State Tuition Programs
IRC § 529 provides that qualified State tuition programs (QSTPs) generally do not pay tax. QSTPs are programs operated by a State under which persons may save for college expenses. College expenses are tuition, fees, books, supplies, equipment required for enrollment or attendance. They also include the cost of room and board for students who attend at least half-time. In general, the college must be accredited and offer a degree or another recognized credential. To be a QSTP, the program must satisfy the following requirements. All contributions must be made in cash. No one may direct the...
HTML Version(14K) 8/25/1998
Estate & Gift Tax Marital Deduction
The final regulations amend the estate tax marital deduction regulations to conform with recent court decisions, in particular, Estate of Clack v. Commissioner, 106 T.C. 131 (1996). The final regulation provides that a surviving spouse's interest in property is eligible for treatment as qualified terminable interest property (QTIP) if the income interest is contingent upon the executor's election and/or if that portion of the property for which no election is made will pass to or for the benefit of beneficiaries other than the surviving spouse. The regulation also provides retroactive relief for estates of...
HTML Version(12K) 8/25/1998
Rewards for Information Relating to Violations of Internal Revenue Laws
Section 7623 and the corresponding regulations provide for the payment of rewards for information that leads to the detection and punishment of civil or criminal violations of the tax laws. The final regulations clarify that informant rewards may be paid when the information provided leads to additional collections by the Service and also when the information provided leads to the denial of a claim for refund. The full text of the regulations is set forth in the Federal Register dated August 21, 1998.
HTML Version(51K) 8/12/1998
Reporting Requirements for Widely Held Fixed Investment Trusts
These regulations, published in the Federal Register for August 13, 1998, provide the reporting rules for the trustees of certain investment trusts and for the brokerage firms that hold interests in street name for investors in these trusts.
HTML Version(7K) 7/31/1998
Conversion to the Euro
The Treaty on European Union and Final Act of Feb. 7, 1992, sets forth a plan to replace the national currencies of participating members that meet certain economic criteria with a single European currency. These regulations provide rules relating to adjustments required for qualified business units operating in such currency and rules relating to the tax effect of holding certain financial instruments denominated in such currencies.
HTML Version(27K) 7/31/1998
Conversion to the Euro
The Treaty on European Union and Final Act of Feb. 7, 1992, sets forth a plan to replace the national currencies of participating members that meet certain economic criteria with a single European currency. These regulations provide rules relating to adjustments required for qualified business units operating in such currency and rules relating to the tax effect of holding certain financial instruments denominated in such currencies.
HTML Version(8K) 7/1/1998
Election Not to Apply Look-Back Method in De Minimis Cases
The tax law provides special rules that apply to certain long-term contracts. In 1997, the law was amended to provide simplified rules for these contracts in certain cases. The simplified rules apply only if the taxpayer elects. These regulations provide rules for making the election.
HTML Version(7K) 6/29/1998
EIC Eligibility Requirements
The IRS is issuing proposed and temporary regulations to provide guidance to taxpayers who have been denied the earned income credit (EIC) as a result of the deficiency procedures and wish to claim the credit in a subsequent year. The regulations apply to taxpayers claiming the EIC for taxable years beginning after December 31, 1997, where the taxpayer's EIC claim was denied for a taxable year beginning after December 31, 1996. The regulations require taxpayers to attach a new Form 8862, Information To Claim Earned Income Credit After Disallowance, to the first income tax return on which the...
HTML Version(12K) 6/29/1998
Kerosene Tax; Aviation Fuel Tax; Tax on Heavy Trucks & Trailers
In the Rules and Regulations section of this issue of the Federal Register, the IRS is issuing temporary regulations relating to the kerosene and aviation fuel excise taxes and the tax on the first retail sale of certain tractors, truck, trailer, and semitrailer chassis and bodies. The text of those temporary regulations also serves as the text of these proposed regulations. DATES: Written comments must be received by September 29, 1998. Requests to speak and outlines of oral comments to be discussed at the public hearing scheduled for Wednesday, November 4, 1998, must be received by September 29, 1998.
HTML Version(37K) 6/29/1998
Kerosene Tax; Aviation Fuel Tax; Tax on Heavy Trucks & Trailers
These temporary regulations provide rules for the administration of the excise tax on kerosene under the Taxpayer Relief Act of 1997. Effective July 1, 1998, kerosene is taxed at a rate of 24.4 cents per gallon in the same manner as tax is currently imposed on diesel fuel. Also, kerosene will be exempt from tax if it is dyed red with a dye of a type and concentration that is used to identify tax-exempt diesel fuel. The regulations describe additional exemptions for kerosene relating to aviation-grade kerosene and kerosene that will be used as a feedstock. The credit and refund provisions that currently apply...
HTML Version(19K) 6/29/1998
Magnetic Media Filing Requirements for Information Returns
The IRS is issuing final regulations that require certain employers with employees in Puerto Rico, the U.S. Virgin Islands, Guam, and American Samoa to file certain returns on magnetic media. These forms are Form 499R-2/W-2PR (Withholding Statement (Puerto Rico)), Form W-2VI (U.S. Virgin Islands Wage and Tax Statement), Form W-2GU (Guam Wage and Tax Statement), and Form W-2AS (American Samoa Wage and Tax Statement). This magnetic media filing requirement is effective for wage and tax statements required to be filed with the Social Security Administration after December 31, 1996.
HTML Version(12K) 6/29/1998
EIC Eligibility Requirements
The IRS is issuing regulations to provide guidance to taxpayers who have been denied the earned income credit (EIC) as a result of the deficiency procedures and wish to claim the credit in a subsequent year. The regulations apply to taxpayers claiming the EIC for taxable years beginning after December 31, 1997, where the taxpayer's EIC claim was denied for a taxable year beginning after December 31, 1996. The regulations require taxpayers to attach a new Form 8862, Information To Claim Earned Income Credit After Disallowance, to the first income tax return on which the taxpayer claims the EIC after the EIC has...
HTML Version(17K) 6/24/1998
Trading Safe Harbors.
These proposed regulations provide that foreign taxpayers who effect transactions in derivative financial instruments for their own accounts are not engaged in a trade or business in the United States so long as they are not dealers in any of stocks, securities, commodities or derivatives. This document also provides notice of a public hearing on these proposed regulations.
HTML Version(4K) 6/24/1998
Federal Employment Tax Deposits--De Minimis Rule
In the Rules and Regulations section of this issue of the Federal Register, the IRS is issuing temporary regulations relating to the deposits of Federal employment taxes. The text of those regulations also serves as the text of these proposed regulations.
HTML Version(5K) 6/24/1998
Foreign Liquidations & Reorganizations
In addition to issuing final regulations under section 367(a) and (and related reporting requirements under section 6038B) and section 367(b), this regulations package also contains a modification to 1991 proposed regulations under section 367(b). The 1991 proposed regulations were generally proposed to be effective for exchanges that occur on or after the date that is 30 days after final regulations are published. An exception in the regulations provided that the definition of the "all earnings and profits amount" is effective for exchanges that occur on or after August 26, 1991.
HTML Version(4K) 6/24/1998
Federal Employment Tax Deposits--De Minimis Rule
This document contains temporary and final regulations relating to the deposit of Federal employment taxes. The regulations change the de minimis deposit rule for quarterly and annual return periods. The regulations affect taxpayers required to make deposits of Federal employment taxes. The text of the temporary regulations also serves as the text of the proposed regulations set forth in the notice of proposed rulemaking on this subject in the Proposed Rules section of this issue of the Federal Register.
HTML Version(159K) 6/24/1998
Certain Transfers of Stock or Securities by U.S. Persons to Foreign Corporations & Related Reporting Requirements
These final regulations provide rules for determining the tax treatment of U.S. persons who transfer stock or securities to a foreign corporation in a tax-free exchange. The final regulations also contain rules for reporting these transactions. The final regulations are generally effective for transfers on or after July 20, 1998. Previously, the rules regarding transfers of stock of foreign corporations to other foreign corporations was contained in Notice 87-85 and temporary regulations under sections 367(a) and (b).
HTML Version(24K) 6/5/1998
Permitted Elimination of Preretirement Optional Forms of Benefit
These final regulations under section 411(d)(6) permit an employer to amend its qualified retirement plan to eliminate the right of plan participants to receive preretirement distributions at age 70 1/2, if certain conditions are satisfied. Prior to the enactment of the Small Business Job Protection Act ("SBJPA") in August of 1996, a qualified retirement plan, other than a governmental or church plan, was required to contain provisions mandating commencement of minimum distributions to each employee by April 1 following the calendar year in which the employee attained age 70 1/2 even if the ...
HTML Version(26K) 4/22/1998
Required Distributions from Qualified Plans & Individual Retirement Plans
This document contains amendments to the existing proposed regulations under section 401(a)(9) that make changes to the rules that apply if a trust is named as a beneficiary of an employee's benefit under a retirement plan. These proposed regulations will affect administrators of, participants in, and beneficiaries of qualified plans, institutions which sponsor and individuals who administer individual retirement plans, individuals who use individual retirement plans, simplified employee pensions and SIMPLE Savings Plans for retirement income and beneficiaries of individual retirement plans; and employees...
HTML Version(156K) 4/22/1998
Allocation & Sourcing of Income & Deductions Among Taxpayers Engaged in a Global Dealing Operation.
This document contains proposed rules for the allocation among controlled taxpayers and sourcing of income, deductions, gains and losses from a global dealing operation; rules applying these allocation and sourcing rules to foreign currency transactions and to foreign corporations engaged in a U.S. trade or business; and rules concerning the mark-to-market treatment resulting from hedging activities of a global dealing operation. These proposed rules affect foreign and domestic persons that are participants in such operations either directly or indirectly through subsidiaries or partnerships.
HTML Version(29K) 4/21/1998
Loans to Plan Participants
This document amends proposed Income Tax Regulations under section 72(p) of the Internal Revenue Code relating to loans made from a qualified employer plan to plan participants or beneficiaries. Section 72(p) was added by section 236 of the Tax Equity and Fiscal Responsibility Act of 1982, and amended by the Technical Corrections Act of 1982, the Deficit Reduction Act of 1984, the Tax Reform Act of 1986 and the Technical and Miscellaneous Revenue Act of 1988. These regulations provide guidance to the public with respect to section 72(p), and affect administrators of, participants in, and...
4/7/1998
Credit for Increasing Research Activities
This document contains proposed regulations that provide guidance under section 4980B of the Internal Revenue Code on certain changes made by the Health Insurance Portability and Accountability Act of 1996, the Omnibus Budget Reconciliation Act of 1989, and the Technical and Miscellaneous Revenue Act of 1988 relating to the continuation coverage requirements applicable to group health plans. The regulations will generally affect sponsors of and participants in group health plans, and they provide plan sponsors and plan administrators with guidance necessary to comply with the law.
HTML Version(52K) 4/6/1998
Valuation of Plan Distributions
In 1994, Congress enacted legislation setting forth requirements for calculating the minimum present value of a participant's distribution under a tax-qualified defined benefit plan. In this regard, temporary and proposed regulations issued in 1995
HTML Version(30K) 3/24/1998
Guidance Under Subpart F Relating to Partnerships & Branches.
These temporary regulations, and proposed regulations issued as part of this regulations package, provide guidance as announced in Notices 96-39, 1996-2 C.B. 209, and 98-11, 1998-6 I.R.B. 18.
HTML Version(51K) 3/24/1998
Guidance under Subpart F Relating to Partnerships & Branches.
These temporary regulations, and proposed regulations issued as part of this regulations package, provide guidance as announced in Notices 96-39, 1996-2 C.B. 209, and 98-11, 1998-6 I.R.B. 18. In these temporary and proposed regulations, the Treasury and Service set forth a framework for dealing with the issues posed by the use of entities which are regarded as fiscally-transparent for the purposes of U.S. tax law, with regard to the application of subpart F of the Code. One of the types of entities-hybrid branches-are those which, by definition, are not regarded as fiscally-transparentů
HTML Version(16K) 3/18/1998
Consolidated Returns--Limitations on the Use of Certain Credits; Overall Foreign Loss Accounts
Consolidated returns-Limitations on the use of certain credits; overall foreign loss accounts. The amendments provide guidance to consolidated groups that have a taxable year beginning on or after January 1, 1997, for which the income tax return is due on or before March 13, 1998. The text of the temporary regulations also serves as the text of the proposed regulations set forth in the notice of proposed rulemaking on this subject in the Proposed Rules section of this issue of the Federal Register.
HTML Version(33K) 3/9/1998
Change from Dollar Approximate Separate Transactions Method of Accounting to the Profit & Loss Method of Accounting/Change from the Profit & Loss Method to Dastm
Treasury regulations require businesses operating in a country with a hyperinflationary currency to use the dollar approximate separate transactions method of accounting (DASTM). These final regulations provide transition rules for a business that changes to DASTM because the local currency has become hyperinflationary and for businesses changing from DASTM when the currency is no longer hyperinflationary. The final regulations are effective April 6, 1998. However, in certain cases, a taxpayer may choose to apply this section to all open taxable years beginning after...
HTML Version(5K) 3/9/1998
Source & Grouping Rules for Foreign Sales Corporation Transfer Pricing
In the Rules and Regulations section of this issue of the Federal Register, the IRS is issuing temporary regulations that provide guidance to taxpayers who have made an election to be treated as a foreign sales corporation (FSC). The regulations provide rules clarifying the special sourcing rules under section 927(e)(1) and provide a deadline for the election to group transactions. This document also provides notice of a public hearing on these proposed regulations. The text of the temporary regulations also serves as the text of the proposed regulations.
HTML Version(17K) 3/9/1998
Source & Grouping Rules for Foreign Sales Corporation Transfer Pricing
This document contains temporary and proposed regulations concerning foreign sales corporations ("FSCs") and their related suppliers. The regulations relate to two separate issues. First, they clarify that the special foreign sourcing limit of the FSC's related supplier applies to any transaction, including but not limited to any sale, lease, license or service, giving rise to foreign trading gross receipts of the FSC. Second, for purposes of determining FSC benefits, they provide a deadline for the election to group transactions under the administrative pricing rules.
HTML Version(29K) 1/29/1998
Electronic Tip Reports
The IRS is issuing proposed regulations to provide guidance to employers who have tipped employees. The proposed regulations would set forth rules for employers permitting them to establish electronic systems for use by their tipped employees in reporting tips to the employer. The proposed regulations would also provide rules relating to substantiation requirements for tipped employees using the electronic system. The regulations will be effective when they are finalized.
HTML Version(11K) 1/28/1998
Modifications of Bad Debts & Dealer Assignments of Notional Principal Contracts
The Internal Revenue Service is issuing final regulations that provide rules for certain taxpayers relating to the allowance of a deduction for a partially worthless debt. The rules apply when a taxpayer agrees to change the terms of a debt instrument for which the taxpayer has already taken a deduction for partial worthlessness.
HTML Version(45K) 1/27/1998
Installment Obligations Received From Liquidating Corporations
These final regulations provide guidance under section 453(h) with respect to the use of the installment method to report the gain recognized by a shareholder who receives, in exchange for the shareholder's stock, certain installment obligations that are distributed upon the complete liquidation of a corporation. If the requirements of the regulations are satisfied, the shareholder is treated as having sold stock of the liquidating corporation in an installment sale directly to the issuer of the installment obligation that was distributed.
HTML Version(6K) 1/26/1998
Continuity of Interest
The Internal Revenue Code provides general nonrecognition treatment for reorganizations specifically described in section 368. In addition to meeting the statutory requirements, case law and regulations require that the transaction preserve a continuity of interest (COI). This notice of proposed rulemaking cross-references temporary regulations providing exceptions to the rule that target corporation shareholders generally will not violate the COI requirement by purchasing target corporation stock before a reorganization.
HTML Version(24K) 1/26/1998
Return of Partnership Income
This document withdraws the notice of proposed rulemaking relating to partnership returns. The proposed regulations were published in the Federal Register on January 23, 1986. These regulations revise the partnership filing requirement to reflect changes to the law made by the Taxpayer Relief Act of 1997
HTML Version(8K) 1/26/1998
Filing Requirements for Returns Claiming the Foreign Tax Credit
This final regulation contains rules regarding substantiation of claimed foreign tax credits. The regulation removes the requirement that specific documentation substantiating foreign tax credits be filed with the income tax return. The regulation provides that such documentation must be presented to the district director upon request. The regulation is effective for tax returns whose original due date falls on or after January 1, 1988. The full text of the regulation is set forth in the Federal Register dated January 27, 1998.
HTML Version(16K) 1/26/1998
Continuity of Interest
The Internal Revenue Code provides general nonrecognition treatment for reorganizations specifically described in section 368. In addition to meeting the statutory requirements, case law and regulations require that the transaction preserve a continuity of interest (COI). This Treasury decision provides exceptions to the rule that target corporation shareholders generally will not violate the COI requirement by purchasing target corporation stock before a reorganization.
HTML Version(66K) 1/26/1998
Continuity of Interest & Continuity of Business Enterprise
The Internal Revenue Code provides general nonrecognition treatment for reorganizations specifically described in section 368. In addition to meeting the statutory requirements, case law and regulations require that the transaction maintain a continuity of interest and a continuity of the acquired business enterprise. This Treasury decision provides that certain transfers by the acquiring corporation of target assets or stock will not disqualify an otherwise qualifying reorganization. In addition, it provides that target corporation shareholders generally will not violate...
HTML Version(15K) 1/21/1998
Nuclear Decommissioning Funds; Revised Schedules of Ruling Amounts
Section 468A of the Internal Revenue Code permits eligible, electing taxpayers to currently deduct a portion of the future decommissioning costs of their nuclear power plants by contributing these amounts to qualified nuclear decommissioning funds. This deduction is limited to the lesser of two values, one of which is a schedule of ruling amounts issued by the Service. Current regulations contain extensive requirements for requesting and receiving schedules of ruling amounts.
HTML Version(8K) 1/21/1998
Obligations of States & Political Subdivisions
This document withdraws portions of the notice of proposed rulemaking published in the Federal Register (59 FR 67658) on December 30, 1994. In the Rules and Regulations section of this issue of the Federal Register, the IRS is issuing temporary regulations that provide guidance to state and local governments that issue bonds for output facilities and to certain nongovernmental persons that are engaged in the local furnishing of electric energy or gas using facilities financed with state or local bonds. These proposed regulations reflect changes made by the Tax Reform Act of 1986 and the Small Business Job Protection Act of 1996.
HTML Version(77K) 1/21/1998
Obligations of States & Political Subdivisions
The temporary regulations contain special rules for the application of the private business tests of section 141 to state and local government bonds that finance output facilities. The temporary regulations clarify the standards for determining when a contract to purchase output results in private business use. The temporary regulations also provide guidance on the treatment of transactions resulting from restructuring of the electric power industry under the private business tests.
HTML Version(10K) 1/21/1998
Election Not to Apply Look-Back Method in De Minimis Cases
The tax law provides special rules that apply to certain long-term contracts. In 1997, the law was amended to provide simplified rules for these contracts in certain cases. The simplified rules apply only if the taxpayer elects. These regulations provide rules for making the election.
HTML Version(43K) 1/9/1998
Requirements Respecting the Adoption or Change of Accounting Method; Extensions of Time to Make Elections
This document contains final regulations providing the procedures for requesting an extension of time to make certain elections under the Internal Revenue Code. In addition, the regulations provide the standards that the Commissioner will use in determining whether to grant taxpayers extensions of time to make certain elections including changes in accounting method and accounting period. The regulations also set forth the time for filing a Form 3115, Application for Change in Accounting Method, with the Commissioner.
HTML Version(32K) 1/9/1998
Consolidated Returns--Limitations on the Use of Certain Losses & Credits; Overall Foreign Loss Accounts
This document contains temporary amendments to the consolidated return regulations. The temporary amendments govern the use of tax credits of a consolidated group and its members. They also concern the recharacterization of certain foreign source income because of a prior overall foreign loss. The text of the temporary regulations also serves as the text of the proposed regulations set forth in the notice of proposed rulemaking on this subject in the Proposed Rules section of this issue of the Federal Register.
HTML Version(40K) 1/9/1998
Debt Instruments with Original Issue Discount; Annuity Contracts
The regulations, which appear in the Federal Register dated January 8, 1998, provide rules for annuity contracts that are not issued by insurance companies. The regulations determine which non-insurance-company annuity contracts are taxed as debt instruments under the original issue discount provisions of the Internal Revenue Code. The regulations are generally effective for annuity contracts held on or after February 9, 1998.
HTML Version(15K) 1/9/1998
Qualified Zone Academy Bonds
Qualified zone academy bonds are issued by State and local governments for the benefit of eligible public schools in the States, the District of Columbia, and the possessions of the United States. The regulations provide rules for determining the credit rate of the bonds, the maximum maturity of the bonds, and the present value of private business contributions. The regulations also treat the allowance of the credit amount as if it were a payment of interest on the bonds.
HTML Version(7K) 1/9/1998
Consolidated Returns--Limitations on the Use of Certain Credits & Related Tax Attributes
These temporary regulations concern limitations on the use of tax credit carryovers and other tax attributes of consolidated groups. In general, a corporation can offset its tax liability by certain credits. For example, if a corporation makes certain business-related expenditures, the corporation can offset an amount equal to a portion of the expenditure against its tax liability (general business credits). Also, certain foreign taxes paid can be offset against U.S. tax liability (foreign tax credit).

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