Bulletin No. 2004-19 May 10, 2004

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 EXEMPT ORGANIZATIONS

Rev. Rul. 2004–44, page 885. Notice 2004–35, page 889. Federal rates; adjusted federal rates; adjusted federal Net investment income of private foundation.Thisnotice long-termrateandthelong-termexemptrate. For pur- announces that the Treasury Department and the Service poses of sections 382, 642, 1274, 1288, and other sections intend to propose regulations modifying regulations section of the Code, tables set forth the rates for May 2004. 53.4940–1(d)(2) to provide that a private foundation’s net investment income for purposes of section 4940 of the Code T.D. 9120, page 881. does not include distributions from trusts and estates and that REG–129447–01, page 894. until further guidance is promulgated, income distributions Final, temporary, and proposed regulations under section 861 from trusts and estates will not retain their character in the of the Code provide an alternative method for valuing assets hands of a distributee private foundation for purposes of for purposes of apportioning interest expense under the tax determining the foundation’s net investment income under book value method contained in temporary regulations section section 4940(c). This notice also provides instructions on how 1.861–9T(g). For that limited purpose, the alternative method a private foundation should fill out its applicable returns and allows taxpayers to determine the adjusted basis of all tangi- how to claim refunds. ble property under the alternative depreciation system of sec- tion 168(g). The regulations also provide guidance on electing Notice 2004–36, page 889. the alternative method. The alternative method provides tax- Distributable amount of a private foundation. This no- payers with the option of determining the adjusted bases of tice states that the Treasury Department and the Service in- both foreign and domestic assets under one consistent depre- tend to propose regulations modifying regulations under sec- ciation regime for temporary regulations section 1.861–9T(g) tion 4942 of the Code in a manner consistent with the holding apportionment purposes and helps reduce the basis disparity of the Tax Court and the Ninth Circuit in Ann Jackson Family between foreign and domestic assets which can occur under Foundation. It also states that until further guidance is promul- the current regulations. A public hearing on the proposed reg- gated, private foundations should compute the distributable ulations is scheduled for July 19, 2004. amount under section 4942(d) without regard to regulations section 53.4942(a)–2(b)(2). Accordingly, income distributions T.D. 9122, page 886. received from section 4947(a)(2) trusts are not included in a Final regulations under section 1502 of the Code relate to the private foundation’s distributable amount for purposes of sec- determination of the basis of the stock of the common parent tion 4942. The notice also includes instructions for filling out of a consolidated group when such stock is acquired in a trans- the private foundation’s applicable information and excise tax action that qualifies as a group structure change. These regula- returns and how to claim a refund pursuant to this notice. tions amend current regulations section 1.1502–31 modifying the application of the net asset basis rule in group structure changes.

(Continued on the next page)

Finding Lists begin on page ii. Announcement 2004–34, page 895. A list is provided of organizations now classified as private foun- dations.

ADMINISTRATIVE

Rev. Proc. 2004–26, page 890. This procedure provides guidance for representatives of cer- tain military or civilian employees of the United States who die as a result of injuries incurred in a terrorist or military action. It provides guidance for having tax forgiven or for claiming re- funds of tax under section 692(c) of the Code, as amended by the Victims of Terrorism Tax Relief Act of 2001, Pub. L. No. 107–134. It also provides procedures by which the Sec- retary will determine whether a terrorist or military action has occurred. Rev. Proc. 85–35 obsoleted.

May 10, 2004 2004-19 I.R.B. The IRS Mission

Provide America’s taxpayers top quality service by helping applying the tax law with integrity and fairness to all. them understand and meet their tax responsibilities and by Introduction

The Internal Revenue Bulletin is the authoritative instrument of court decisions, rulings, and procedures must be considered, the Commissioner of Internal Revenue for announcing official and Service personnel and others concerned are cautioned rulings and procedures of the Internal Revenue Service and for against reaching the same conclusions in other cases unless publishing Treasury Decisions, Executive Orders, Tax Conven- the facts and circumstances are substantially the same. tions, legislation, court decisions, and other items of general interest. It is published weekly and may be obtained from the The Bulletin is divided into four parts as follows: Superintendent of Documents on a subscription basis. Bulletin contents are compiled semiannually into Cumulative Bulletins, which are sold on a single-copy basis. Part I.—1986 Code. This part includes rulings and decisions based on provisions of It is the policy of the Service to publish in the Bulletin all sub- the Internal Revenue Code of 1986. stantive rulings necessary to promote a uniform application of the tax laws, including all rulings that supersede, revoke, mod- Part II.—Treaties and Tax Legislation. ify, or amend any of those previously published in the Bulletin. This part is divided into two subparts as follows: Subpart A, All published rulings apply retroactively unless otherwise indi- Tax Conventions and Other Related Items, and Subpart B, Leg- cated. Procedures relating solely to matters of internal man- islation and Related Committee Reports. agement are not published; however, statements of internal practices and procedures that affect the rights and duties of taxpayers are published. Part III.—Administrative, Procedural, and Miscellaneous. To the extent practicable, pertinent cross references to these subjects are contained in the other Parts and Subparts. Also Revenue rulings represent the conclusions of the Service on the included in this part are Bank Secrecy Act Administrative Rul- application of the law to the pivotal facts stated in the revenue ings. Bank Secrecy Act Administrative Rulings are issued by ruling. In those based on positions taken in rulings to taxpayers the Department of the Treasury’s Office of the Assistant Sec- or technical advice to Service field offices, identifying details retary (Enforcement). and information of a confidential nature are deleted to prevent unwarranted invasions of privacy and to comply with statutory requirements. Part IV.—Items of General Interest. This part includes notices of proposed rulemakings, disbar- ment and suspension lists, and announcements. Rulings and procedures reported in the Bulletin do not have the force and effect of Treasury Department Regulations, but they may be used as precedents. Unpublished rulings will not be The last Bulletin for each month includes a cumulative index relied on, used, or cited as precedents by Service personnel in for the matters published during the preceding months. These the disposition of other cases. In applying published rulings and monthly indexes are cumulated on a semiannual basis, and are procedures, the effect of subsequent legislation, regulations, published in the last Bulletin of each semiannual period.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402.

2004-19 I.R.B. May 10, 2004 Part I. Rulings and Decisions Under the Internal Revenue Code of 1986 Section 42.—Low-Income Section 483.—Interest on method of valuing assets for purposes of Housing Credit Certain Deferred Payments apportioning expenses under the tax book value method of §1.861–9T. The alter- The adjusted applicable federal short-term, mid- The adjusted applicable federal short-term, mid- native tax book value method, which is term, and long-term rates are set forth for the month term, and long-term rates are set forth for the month elective, allows taxpayers to determine, of May 2004. See Rev. Rul. 2004-44, page 885. of May 2004. See Rev. Rul. 2004-44, page 885. for purposes of apportioning expenses, the tax book value of all tangible property Section 280G.—Golden Section 642.—Special that is subject to a depreciation deduction Parachute Payments Rules for Credits and under section 168 by using the straight Deductions line method, conventions, and recovery Federal short-term, mid-term, and long-term rates aresetforthforthemonthofMay2004.SeeRev. periods of the alternative depreciation Federal short-term, mid-term, and long-term rates system under section 168(g)(2). The alter- Rul. 2004-44, page 885. are set forth for the month of May 2004. See Rev. Rul. 2004-44, page 885. native method provided in the temporary regulations is intended to minimize basis Section 382.—Limitation disparities between foreign and domestic on Net Operating Loss Section 807.—Rules for assets of taxpayers that may arise when Carryforwards and Certain Certain Reserves taxpayers use adjusted tax basis to value Built-In Losses Following assets under the tax book value method Ownership Change The adjusted applicable federal short-term, mid- term, and long-term rates are set forth for the month of expense apportionment. The text of these temporary regulations also serves The adjusted applicable federal long-term rate is of May 2004. See Rev. Rul. 2004-44, page 885. set forth for the month of May 2004. See Rev. Rul. as the text of the proposed regulations 2004-44, page 885. (REG–129447–01) set forth in this issue Section 846.—Discounted of the Bulletin. Unpaid Losses Defined Section 412.—Minimum DATES: Effective Date: These regulations Funding Standards The adjusted applicable federal short-term, mid- term, and long-term rates are set forth for the month are effective on March 26, 2004. The adjusted applicable federal short-term, mid- of May 2004. See Rev. Rul. 2004-44, page 885. Applicability Date: For dates of ap- term, and long-term rates are set forth for the month plicability, see §§1.861–9(h)(5)(iii) and of May 2004. See Rev. Rul. 2004-44, page 885. Section 861.—Income 1.861–9T(i)(3). From Sources Within the FOR FURTHER INFORMATION Section 467.—Certain United States CONTACT: Margaret A. Hogan, (202) Payments for the Use of 622–3850 (not a toll-free number). Property or Services 26 CFR 1.861–9: Allocation and apportionment of interest expense. SUPPLEMENTARY INFORMATION: The adjusted applicable federal short-term, mid- term, and long-term rates are set forth for the month T.D. 9120 of May 2004. See Rev. Rul. 2004-44, page 885. Background DEPARTMENT OF This document contains amendments Section 468.—Special THE TREASURY to regulations under section 864(e) of the Rules for Mining and Solid Internal Revenue Service Internal Revenue Code (Code). Section Waste Reclamation and 26 CFR Part 1 864(e) was enacted by the Tax Reform Closing Costs Act of 1986 (Public Law 99–514, 100 Allocation and Apportionment Stat. 2121) to address concerns regarding The adjusted applicable federal short-term, mid- the allocation and apportionment of inter- term, and long-term rates are set forth for the month of Expenses; Alternative est expense. On September 14, 1988, the of May 2004. See Rev. Rul. 2004-44, page 885. Method for Determining Tax IRS published temporary regulations (T.D. Book Value of Assets 8228, 1988–2 C.B. 136 [53 FR 35467]) un- Section 482.—Allocation der §1.861 implementing section 864(e) of AGENCY: Internal Revenue Service of Income and Deductions the Code. The temporary regulations con- (IRS), Treasury. Among Taxpayers tained in this document amend §1.861–9T Federal short-term, mid-term, and long-term rates ACTION: Final and temporary regulation. and make conforming amendments to aresetforthforthemonthofMay2004.SeeRev. §§1.861–9 and 1.861–9T(g)(1)(ii). Rul. 2004-44, page 885. SUMMARY: This document contains tem- Section 864(e)(2) of the Code pro- porary regulations providing an alternative vides that allocations and apportionments

2004-19 I.R.B. 881 May 10, 2004 of interest expense shall be made on the United States generally will have a lower computed under ADS, the rules permitting basis of assets rather than gross income. adjusted tax basis (i.e., tax book value) a special allowance for property acquired For this purpose, the regulations per- than if the same asset were used predom- after September 10, 2001, and before Jan- mit a taxpayer to choose to compute the inantly outside of the United States. The uary 1, 2005, will not apply. See sec- value of its assets under either the tax relatively higher tax book value for as- tion 168(k)(2)(C)(ii). Application of sec- book value method or the fair market sets used predominantly outside the United tion 168(g)(2) as prescribed by these tem- value method. Sections 1.861–8T(c)(2) States results in an increased apportion- porary regulations applies solely for deter- and 1.861–9T(g)(1)(ii). Taxpayers using ment of interest expense to foreign source mining an asset’s tax book value for pur- the tax book value method may elect to income and a corresponding reduction in poses of apportioning expenses (includ- change to the fair market value method at the taxpayer’s foreign tax credit limitation. ing the calculation of the alternative min- any time. Rev. Proc. 2003–37, 2003–1 A disparity in the apportionment of imum tax foreign tax credit pursuant to C.B. 950 (May 27, 2003). Taxpayers expenses between domestic and foreign section 59(a)) under the asset method de- that elect to use the fair market value assets also may result when a U.S. corpo- scribed in §1.861–9T(g). Application of method must continue to use that method ration owns a 10-percent or greater interest section 168(g)(2) pursuant to these regu- unless expressly authorized by the Com- in a foreign subsidiary that holds tangi- lations does not otherwise affect the result missioner to change methods. Section ble property. Section 864(e)(4) provides under other provisions of the Code, includ- 1.861–8T(c)(2). Section 1.861–8T(c)(2) that for purposes of allocating and appor- ing the amount of any deduction claimed also permits taxpayers to apportion certain tioning expenses on the basis of assets, under sections 167, 168, 169, 263(a), 617, other expenses based on the comparative the tax basis of stock in a nonaffiliated or any other capital cost recovery provi- value of assets provided that such appor- 10-percent owned corporation will be ad- sion. tionment is made in accordance with the justed to reflect the earnings and profits The elective alternative to the existing rules of §1.861–9T(g). of the corporation that are attributable tax book valuation method provides tax- The use of adjusted tax basis for pur- to the stock held by the taxpayer. See payers with the option of determining the poses of apportioning expenses under the also §1.861–12T(c)(2). Accordingly, the adjusted bases of both foreign and domes- taxbookvaluemethodmayresultindis- adjusted tax basis of stock in a foreign tic assets under one consistent depreciation parities between the bases of domestic and corporation for purposes of apportion- method for purposes of apportioning ex- foreign assets of a taxpayer because of the ing expenses generally will reflect the penses under the asset method described differences in depreciation methods appli- foreign corporation’s earnings and prof- in §1.861–9T(g). A uniform depreciation cable to those assets. For example, the its, the computation of which reflects the methodology will help reduce the basis tax book value of tangible property used depreciation of tangible property. Under disparity between foreign and domestic as- in the United States generally reflects de- section 312(k), tangible property generally sets that can occur under the existing tax preciation of that property pursuant to the is depreciated under ADS for purposes of book value method. modified accelerated cost recovery system determining earnings and profits. Accord- The temporary regulations generally (MACRS) under section 168. MACRS ingly, a taxpayer that owns a 10-percent provide that, for a taxpayer that elects the generally permits a taxpayer to depreci- or greater interest in a foreign corporation alternative tax book value method, the tax ate tangible property (other than real prop- that holds tangible property may be sub- book value of tangible property that is de- erty) under the 200-percent declining bal- ject to a disparity similar to the one that preciated under section 168 is determined ance method, or the 150-percent declining arises where the taxpayer holds foreign as though such property were subject to balance method in the case of certain prop- assets directly. the alternative depreciation system under erty. Section 168(b). MACRS also per- section 168(g) for the entire period that mits taxpayers to depreciate property over Explanation of Provisions such property has been in service. Thus, if shorter recovery periods than a property’s a taxpayer elects the alternative tax book class life. The temporary regulations provide an value method effective for the 2005 tax- In contrast, tangible property used pre- alternative method of determining the tax able year, the tax book value of tangible dominantly outside the United States gen- book value of assets (the “alternative tax property placed in service in 2006 is deter- erally must be depreciated pursuant to the book value method”). The alternative tax mined each year using the rules of section alternative depreciation system (ADS) un- book value method allows a taxpayer to 168(g) that apply to property placed in der section 168(g). Section 168(g)(1)(A). elect to determine the tax book value of service in 2006. However, in the case of ADS requires a taxpayer to depreciate its tangible property that is subject to de- tangible property placed in service in a tangible property using the straight line preciation under section 168 as though all taxable year prior to the first taxable year method of depreciation. Additionally, such property had been depreciated using to which the election to use the alternative ADS generally requires taxpayers to use ADS under section 168(g)(2) during the method applies, the tax book value of such recovery periods equal to the property’s entire period in which it has been in ser- property is determined using the alterna- class life and therefore longer periods than vice. The temporary regulations further tive depreciation system rules that apply those used under MACRS. provide that tax book value will be deter- to property placed in service in the taxable As a result of accelerated depreciation minedwithoutregardtotheelectiontoex- year to which the election first applies. under MACRS as compared to slower de- pense certain depreciable assets under sec- Thus, if a taxpayer elects the alternative preciation under ADS, an asset used in the tion 179. Because tax book value will be tax book value method effective for the

May 10, 2004 882 2004-19 I.R.B. 2005 taxable year, the tax book value of In conjunction with the issuance of 12866. Therefore, a regulatory assessment tangible property placed in service in 2004 these regulations, the Treasury Depart- is not required. It has also been deter- and prior years is determined each year ment and the IRS intend to issue a revenue mined that section 553(b) of the Admin- using the rules of section 168(g) that apply procedure to provide temporary rules istrative Procedure Act (5 U.S.C. chapter to property placed in service in 2005. A granting taxpayers automatic consent to 5) does not apply to these regulations. For special rule also applies in determining change from the fair market value method the applicability of the Regulatory Flexi- tax book value in cases where a taxpayer to the alternative tax book value method. bility Act (5 U.S.C. chapter 6), refer to the makes an election to use the alternative tax It is anticipated that the revenue procedure Special Analyses section of the preamble book value method after recently (within willapplytochangesinmethodofappor- to the cross-reference notice of proposed three years) revoking a prior election to tionment made during a two-year period rulemaking published in this issue of the use that method. after March 26, 2004, with the automatic Bulletin. Pursuant to section 7805(f) of the The temporary regulations do not mod- consent applying to taxable years that be- Internal Revenue Code, these regulations ify the rules for determining when prop- gin on or after March 26, 2004, and for will be submitted to the Chief Counsel of erty is placed in service for purposes of which the taxpayer has not filed its in- Advocacy of the Small Business Adminis- section 168. If a taxpayer acquires prop- come tax return. Comments are requested tration for comment on its impact on small erty with a carryover or substituted basis, concerning such an automatic consent pro- businesses. the determination of the tax book value cedure, including the appropriateness of a of that property using the alternative tax two-year period of time for these purposes. Drafting Information book value method will reflect that carry- The Treasury Department and the IRS The principal author of these regula- over or substituted basis, determined us- are aware that application of the existing tions is Margaret A. Hogan, Office of ing the general rule for property placed in tax book value method may result in other Associate Chief Counsel (International). service during or after the year of elec- similar disparities between the valuation However, other personnel from the IRS tion and using the special rule for prop- of domestic and foreign assets. Accord- and Treasury Department participated in erty placed in service before the year of ingly, comments are requested regarding their development. election. The Treasury Department and the whether additional modifications to the tax IRS recognize that acquisitions, mergers, book value method may be appropriate to ***** and similar transactions involving taxpay- address potential disparities arising from ers that use different methods of interest other cost recovery provisions, such as the Amendments to the Regulations expense apportionment may raise partic- treatment of intangible drilling costs, that Accordingly, 26 CFR Part 1 is amended ular issues in applying these rules. The distinguish between assets based on place as follows: Treasury Department and the IRS request of use. comments regarding the use of the alterna- These temporary regulations are in- PART 1—INCOME TAXES tive tax book value method with respect to tended to improve the operation of the tangible property acquired pursuant to an rules relating to the allocation and appor- Paragraph 1. The authority citation for acquisition, merger, or similar transaction tionment of interest expense. The Treasury §1.861–9 is amended by adding entries in and placed in service in a taxable year prior Department and the IRS also are consid- numerical order to read in part as follows: to such transaction. ering additional guidance with respect Authority: 26 U.S.C. 7805. The temporary regulations set forth to interest expense allocation and appor- Sections 1.861–9 and 1.861–9T also is- rules for electing the alternative tax book tionment for purposes of §1.861–9T(h). sued under 26 U.S.C. 863(a), 26 U.S.C. value method. Generally, taxpayers may In particular, to prevent overvaluation of 864(e), 26 U.S.C. 865(i), and 26 U.S.C. elect to value their assets using the al- tangible assets under the fair market value 7701(f). * * * ternative tax book value method with method, the Treasury Department and the Par. 2. Section 1.861–9 is amended by: respect to any taxable year beginning on IRS intend to address situations in which 1. Revising paragraphs (a) through or after March 26, 2004. Once made, the a taxpayer that uses the fair market value (g)(1)(i). election applies to all members of an af- method of apportionment takes the posi- 2. Adding paragraphs (g)(1)(ii) through filiated group of corporations (as defined tion that the value of its tangible assets (h)(4), (h)(6), (i), and (j). in §§1.861–11(d) and 1.861–11T(d)). pursuant to §1.861–9T(h)(1)(ii) exceeds The revisions and additions read as fol- Taxpayers electing the alternative tax the aggregate value of its assets pursuant lows: book value method may change from that to §1.861–9T(h)(1)(i). Comments are method to the fair market value method at requested regarding modifications to the §1.861–9 Allocation and apportionment any time for any open year. However, tax- current regulations to address this situa- of interest expense. payers using the fair market value method tion. (a) through (g)(1)(i) [Reserved]. must obtain the consent of the Commis- For further guidance, see §1.861–9T(a) sioner to change methods, including a Special Analyses through (g)(1)(i). change to the alternative tax book value It has been determined that this Trea- (g)(1)(ii) [Reserved]. For further method. sury decision is not a significant regula- guidance, see the second sentence in tory action as defined in Executive Order §1.861–9T(g)(1)(ii).

2004-19 I.R.B. 883 May 10, 2004 (g)(1)(iii) through (h)(4) [Re- tax book value of such property shall be a taxpayer may elect to use the alterna- served]. For further guidance, see determined under the depreciation method, tive tax book value method with respect §1.861–9T(g)(1)(iii) through (h)(4). convention, and recovery period provided to any taxable year beginning on or af- (h)(5) * * * for under section 168(g) for the first tax- ter March 26, 2004. However, pursuant (h)(6) through (j) [Reserved]. For able year to which the election applies. to §1.861–8T(c)(2), a taxpayer that has further guidance, see §1.861–9T(h)(6) (iii) If a taxpayer revokes an election to elected the fair market value method must through (j). use the alternative tax book value method obtain the consent of the Commissioner Par. 3. Section 1.861–9T is amended (“the prior election”) and later makes an- prior to electing the alternative tax book by: other election to use the alternative tax value method. Any election made pur- 1. Revising the section heading. book value method (the “subsequent elec- suant to this paragraph (i)(2) shall apply 2. Adding a new sentence after the first tion”) that is effective for a taxable year to all members of an affiliated group of sentence in paragraph (g)(1)(ii) introduc- that begins within 3 years of the end of the corporations as defined in §§1.861–11(d) tory text. last taxable year to which the prior election and 1.861–11T(d). Any election made pur- 3. Adding paragraph (i). applied, the taxpayer shall determine the suant to this paragraph (i)(2) shall apply The revisions and addition read as fol- tax book value of its section 168 property to all subsequent taxable years of the tax- lows: as though the prior election has remained payer unless revoked by the taxpayer. Re- in effect. vocation of such an election, other than in §1.861–9T Allocation and apportionment (iv) The tax book value of section 168 conjunctionwithanelectiontousethefair of interest expense (temporary). property shall be determined without re- market value method, for a taxable year gard to the election to expense certain de- prior to the sixth taxable year for which the ***** preciable assets under section 179. election applies requires the consent of the (g)***(1)***(i)*** (v) Examples. The provisions of this Commissioner. (ii)***Forrulesconcerningtheappli- paragraph (i)(1) are illustrated in the fol- (ii) Example. The provisions of this cation of an alternative method of valuing lowing examples: paragraph (i)(2) are illustrated in the fol- assets for purposes of the tax book value Example 1. In 2000, a taxpayer purchases and lowing example: method, see paragraph (i) of this section. places in service section 168 property used solely in Example. Corporation X, a calendar year tax- the United States. In 2005, the taxpayer elects to use payer, elects on its original, timely filed tax return *** the alternative tax book value method, effective for for the taxable year ending December 31, 2007, to the current taxable year. For purposes of determin- use the alternative tax book value method for its 2007 ***** ing the tax book value of its section 168 property, the year. The alternative tax book value method applies (i) Alternative tax book value taxpayer’s depreciation deduction is determined by to X’s 2007 year and all subsequent taxable years. X method—(1) Alternative value for cer- applying the method, convention, and recovery pe- may not, without the consent of the Commissioner, tain tangible property. A taxpayer may riod rules of the alternative depreciation system un- revoke its election and determine tax book value us- der section 168(g)(2) as in effect in 2005 to the tax- elect to determine the tax book value of ing a method other than the alternative tax book value payer’s original cost basis in such property. In 2006, method with respect to any taxable year beginning be- its tangible property that is depreciated the taxpayer acquires and places in service in the fore January 1, 2012. However, X may automatically under section 168 (section 168 property) United States new section 168 property. The tax book elect to change from the alternative tax book value using the rules provided in this paragraph value of this section 168 property is determined under method to the fair market value method for any open (the alternative tax book value method). the rules of section 168(g)(2) applicable to property year. placed in service in 2006. (3) Effective date. (i) Paragraph (i) of The alternative tax book value method ap- Example 2. Assume the same facts as in Example plies solely for purposes of apportioning 1, except that the taxpayer revokes the alternative tax this section applies to taxable years begin- expenses (including the calculation of the book value method election effective for taxable year ning on or after March 26, 2004. alternative minimum tax foreign tax credit 2010. Additionally, in 2011, the taxpayer acquires (ii) The applicability of this paragraph pursuant to section 59(a)) under the asset new section 168 property and places it in service in (i) expires on or before March 26, 2007. the United States. If the taxpayer elects to use the method described in paragraph (g) of this alternative tax book value method effective for tax- ***** section. able year 2012, the taxpayer must determine the tax (i) The tax book value of section 168 book value of its section 168 property as though the Mark E. Matthews, property placed in service during or after prior election still applied. Thus, the tax book value Deputy Commissioner for the first taxable year to which the elec- of property placed in service prior to 2005 would be Services and Enforcement. determined by applying the method, convention, and tion to use the alternative tax book value recovery period rules of the alternative depreciation Approved March 16, 2004. method applies shall be determined as system under section 168(g)(2) applicable to prop- though such property were subject to the erty placed in service in 2005. The tax book value Gregory Jenner, alternative depreciation system under sec- of section 168 property placed in service during any Assistant Secretary of the Treasury. tion 168(g) for the entire period that such taxable year after 2004 would be determined by ap- plying the method, convention, and recovery period property has been in service. (Filed by the Office of the Federal Register on March 25, rules of the alternative depreciation system under sec- 2004, 8:45 a.m., and published in the issue of the Federal (ii) In the case of section 168 property tion 168(g)(2) applicable to property placed in service Register for March 26, 2004, 69 F.R. 15673) placed in service prior to the first taxable in such taxable year. year to which the election to use the alter- (2) Timing and scope of election.(i)Ex- native tax book value method applies, the cept as provided in this paragraph (i)(2),

May 10, 2004 884 2004-19 I.R.B. Section 1274.—Determi- Rev. Rul. 2004–44 of section 1288(b). Table 3 sets forth the nation of Issue Price in the adjusted federal long-term rate and the Case of Certain Debt Instru- This revenue ruling provides vari- long-term tax-exempt rate described in ments Issued for Property ous prescribed rates for federal income section 382(f). Table 4 contains the ap- tax purposes for May 2004 (the current propriate percentages for determining the (Also sections 42, 280G, 382, 412, 467, 468, 482, month). Table 1 contains the short-term, 483, 642, 807, 846, 1288, 7520, 7872.) low-income housing credit described in mid-term, and long-term applicable fed- section 42(b)(2) for buildings placed in Federal rates; adjusted federal rates; eral rates (AFR) for the current month service during the current month. Finally, adjusted federal long-term rate and the for purposes of section 1274(d) of the Table 5 contains the federal rate for de- long-term exempt rate. For purposes of Internal Revenue Code. Table 2 contains termining the present value of annuity, an sections 382, 642, 1274, 1288, and other the short-term, mid-term, and long-term interest for life or for a term of years, or sections of the Code, tables set forth the adjusted applicable federal rates (adjusted a remainder or a reversionary interest for rates for May 2004. AFR) for the current month for purposes purposes of section 7520.

REV. RUL. 2004–44 TABLE 1 Applicable Federal Rates (AFR) for May 2004 Period for Compounding Annual Semiannual Quarterly Monthly Short-Term AFR 1.50% 1.49% 1.49% 1.49% 110% AFR 1.65% 1.64% 1.64% 1.63% 120% AFR 1.80% 1.79% 1.79% 1.78% 130% AFR 1.95% 1.94% 1.94% 1.93%

Mid-Term AFR 3.16% 3.14% 3.13% 3.12% 110% AFR 3.48% 3.45% 3.44% 3.43% 120% AFR 3.81% 3.77% 3.75% 3.74% 130% AFR 4.12% 4.08% 4.06% 4.05% 150% AFR 4.77% 4.71% 4.68% 4.66% 175% AFR 5.58% 5.50% 5.46% 5.44%

Long-Term AFR 4.65% 4.60% 4.57% 4.56% 110% AFR 5.12% 5.06% 5.03% 5.01% 120% AFR 5.60% 5.52% 5.48% 5.46% 130% AFR 6.07% 5.98% 5.94% 5.91%

REV. RUL. 2004–44 TABLE 2 Rates Under Section 382 for May 2004

Period for Compounding Annual Semiannual Quarterly Monthly

Short-term adjusted 1.28% 1.28% 1.28% 1.28% AFR Mid-term adjusted AFR 2.52% 2.50% 2.49% 2.49% Long-term adjusted 4.19% 4.15% 4.13% 4.11% AFR

2004-19 I.R.B. 885 May 10, 2004 REV. RUL. 2004–44 TABLE 3 Rates Under Section 382 for May 2004 Adjusted federal long-term rate for the current month 4.19% 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.) 4.19%

REV. RUL. 2004–44 TABLE 4 Appropriate Percentages Under Section 42(b)(2) for May 2004

Appropriate percentage for the 70% present value low-income housing credit 7.91%

Appropriate percentage for the 30% present value low-income housing credit 3.39%

REV. RUL. 2004–44 TABLE 5 Rate Under Section 7520 for May 2004 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 3.8%

guidance regarding the determination of to reflect the former common parent’s net basis in the stock of the former common asset basis. Section 1288.—Treatment parent following a group structure change. Because of a concern that the applica- of Original Issue Discount These final regulations affect corporations tion of the net asset basis rule may produce on Tax-Exempt Obligations filing consolidated returns. inappropriate results on the disposition of stock acquired in a transaction in which, The adjusted applicable federal short-term, mid- DATES: These regulations are effective under generally applicable rules, the basis term, and long-term rates are set forth for the month April 26, 2004. of the acquired stock would otherwise be of May 2004. See Rev. Rul. 2004-44, page 885. determined by reference to the acquirer’s FOR FURTHER INFORMATION cost, the IRS and Treasury Department CONTACT: Ross Poulsen, (202) Section 1502.—Regulations issued regulations proposing to except 622–7770 (not a toll-free number). from the application of the net asset ba- 26 CFR 1.1502–31: Stock basis after a group struc- SUPPLEMENTARY INFORMATION: sis rule stock acquired in a transaction ture change. in which gain or loss was recognized Background in whole. Those regulations were in- T.D. 9122 cluded in a notice of proposed rulemaking This document contains amendments to (REG–130262–03, 2003–37 I.R.B. 553 DEPARTMENT OF the Income Tax Regulations (26 CFR part [68 FR 40579]) published in the Federal THE TREASURY 1) under section 1502 of the Internal Rev- Register [technical correction published Internal Revenue Service enue Code of 1986 (Code), specifically in 68 FR 52545]) on July 8, 2003. §1.1502–31, relating to the determination No public hearing was requested or held 26 CFR Part 1 of the basis of stock in the former common regarding the proposed regulations. One parent after a group structure change. Sec- written comment, however, was received. Guidance Under Section tion 1.1502–31 applies if one corporation That comment urged the expeditious pro- 1502; Stock Basis After a (P) succeeds another corporation (T) un- mulgation of the proposed regulations as Group Structure Change der the principles of §1.1502–75(d)(2) or final regulations. (3) as the common parent of a consolidated This Treasury decision adopts the pro- AGENCY: Internal Revenue Service group in a group structure change. Sec- posed regulations without substantive (IRS), Treasury. tion 1.1502–31 provides that if a corpora- changes as final regulations. The fi- tion acquires stock of the former common nal regulations apply to group structure ACTION: Final regulation. parent in a group structure change, the ba- changes that occur after April 26, 2004. sis of the members in the former common With respect to group structure changes SUMMARY: This document contains final parent’s stock immediately after the group that occur on or before April 26, 2004, and regulations under section 1502 providing structure change is generally redetermined in a consolidated return year beginning on

May 10, 2004 886 2004-19 I.R.B. or after January 1, 1995, these regulations the basis of the members in the former (g) Examples. For purposes of the ex- apply at the election of the group. common parent’s stock immediately af- amples in this section, unless otherwise ter the group structure change (including stated, all corporations have only one class Special Analyses any stock of the former common parent of stock outstanding, the tax year of all owned before the group structure change) persons is the calendar year, all persons It has been determined that these regu- that is, or would otherwise be, transferred use the accrual method of accounting, the lations are not a significant regulatory ac- basis property is redetermined in accor- facts set forth the only corporate activity, tion as defined in Executive Order 12866. dance with the results for an asset acqui- all transactions are between unrelated per- Therefore, a regulatory assessment is not sition described in paragraph (b)(1) of this sons, and tax liabilities are disregarded. required. It is hereby certified that these section. For example, if all of T’s stock The principles of this section are illustrated regulations do not have a significant im- is contributed to P in a group structure by the following examples: pact on a substantial number of small enti- change to which section 351 applies, P’s Example 1. Forward triangular merger.(i)Facts. ties. This certification is based on the fact basis in T’s stock is T’s net asset basis, P is the common parent of one group and T is the com- that these regulations primarily will affect mon parent of another. T has assets with an aggregate rather than the amount determined under affiliated groups of corporations, which basis of $60 and fair market value of $100 and no li- section 362. Similarly, if S merges into tend to be larger businesses. Moreover, abilities. T’s shareholders have an aggregate basis of T in a group structure change described in $50 in T’s stock. In Year 1, pursuant to a plan, P the number of taxpayers affected is mini- section 368(a)(2)(E) and P acquires all of forms S and T merges into S with the T sharehold- mal and the regulations will simplify basis the T stock, P’s basis in T’s stock is the ers receiving $100 of P stock in exchange for their T determinations. Therefore, a Regulatory stock. The transaction is a reorganization described basis that P would have in S’s stock un- Flexibility Analysis under the Regulatory in section 368(a)(2)(D). The transaction is also a re- der paragraph (b)(1) of this section if T had Flexibility Act (5 U.S.C. chapter 6) is not verse acquisition under §1.1502–75(d)(3) because the merged into S in a group structure change T shareholders, as a result of owning T’s stock, own required. Pursuant to section 7805(f) of described in section 368(a)(2)(D). more than 50% of the value of P’s stock immedi- the Code, the proposed regulations preced- ately after the transaction. Thus, the transaction is a ing these regulations were submitted to the ***** group structure change under §1.1502–33(f)(1), and Chief Counsel for Advocacy of the Small (d) * * * P’s earnings and profits are adjusted to reflect T’s Business Administration for comment on (2) * * * earnings and profits immediately before T ceases to (ii) Stock acquisitions.Iflessthanallof be the common parent of the T group. their impact. (ii) Analysis. Under paragraph (b)(1) of this sec- the former common parent’ stock is sub- tion, P’s basis in S’s stock is adjusted to reflect T’s Drafting Information ject to the redetermination described in net asset basis. Under paragraph (c) of this section, paragraph (b)(2) of this section, the per- T’s net asset basis is $60, the basis T would have in The principal author of this regulation centage of the former common parent’s the stock of a subsidiary under section 358 if T had is Ross Poulsen, Office of Associate Chief net asset basis taken into account in the transferred all of its assets and liabilities to the sub- sidiary in a transaction to which section 351 applies. Counsel (Corporate). However, other per- redetermination equals the percentage (by sonnel from the IRS and Treasury Depart- Thus, P has a $60 basis in S’s stock. fair market value) of the former common (iii) Pre-existing S.Thefactsarethesameasin ment participated in their development. parent’s stock subject to the redetermina- paragraph (i) of this Example 1, except that P has ***** tion. For example, if P owns less than all owned the stock of S for several years and P has a $50 of the former common parent’s stock im- basis in the S stock before the merger with T. Under paragraph (b)(1) of this section, P’s $50 basis in S’s Adoption of Amendments to the mediately after the group structure change Regulations stock is adjusted to reflect T’s net asset basis. Thus, and such stock would otherwise be trans- P’s basis in S’s stock is $110 ($50 plus $60). ferred basis property, only an allocable part (iv) Excess loss account included in former com- Accordingly, 26 CFR part 1 is amended of the basis determined under this section mon parent’s net asset basis. The facts are the same as follows: is reflected in the shares owned by P (and as in paragraph (i) of this Example 1, except that T has two assets, an operating asset with an $80 basis and PART 1—INCOME TAXES the amount allocable to shares owned by $90 fair market value, and stock of a subsidiary with nonmembers has no effect on the basis of a $20 excess loss account and $10 fair market value. Paragraph 1. The authority citation for their shares). Alternatively, if P acquired Under paragraph (c) of this section, T’s net asset ba- part 1 continues to read, in part, as follows: 10 percent of the former common parent’s sis is $60 ($80 minus $20). See sections 351 and 358, Authority: 26 U.S.C. 7805 * * * stock in a transaction in which the stock and §1.1502–19. Consequently, P has a $60 basis in S’s stock. Under section 362 and §1.1502–19, S has Par. 2. Section 1.1502–31 is amended basis was determined by P’s cost, and P an $80 basis in the operating asset and a $20 excess by revising paragraphs (b)(2), (d)(2)(ii), later acquires the remaining 90 percent of loss account in the stock of the subsidiary. (g), and (h) to read as follows: the former common parent’s stock in a sep- (v) Liabilities in excess of basis. The facts are the arate transaction that is described in para- same as in paragraph (i) of this Example 1, except §1.1502–31 Stock basis after a group graph (b)(2) of this section, P retains its that T’s assets have a fair market value of $170 (and structure change. $60 basis) and are subject to $70 of liabilities. Un- cost basis in its original stock and the ba- der paragraph (c) of this section, T’s net asset basis is sis of P’s newly acquired shares reflects ***** negative $10 ($60 minus $70). See sections 351 and only an allocable part of the former com- 358, and §§1.1502–19 and 1.1502–80(d). Thus, P has (b) * * * mon parent’s net asset basis. a $10 excess loss account in S’s stock. Under section (2) Stock acquisitions. If a corpora- 362, S has a $60 basis in its assets (which are subject tion acquires stock of the former com- ***** to $70 of liabilities). (Under paragraph (a)(2) of this mon parent in a group structure change, section, because the liabilities are taken into account

2004-19 I.R.B. 887 May 10, 2004 in determining net asset basis under paragraph (c) of P and S are adjusted to reflect T’s earnings and profits to group structure changes that occurred this section, the liabilities are not also taken into ac- immediately before T ceases to be the common par- on or before April 26, 2004, and in consol- count as consideration not provided by P under para- ent of the T group. idated return years beginning on or after graph (d)(1) of this section.) (ii) Analysis. Under paragraph (d)(4) of this sec- (vi) Consideration provided by S. The facts are the tion, although S is not the new common parent of the January 1, 1995. same as in paragraph (i) of this Example 1, except that T group, adjustments must be made to S’s basis in T’s (2) Prior law. For group structure P forms S with a $100 contribution at the beginning stock in accordance with the principles of this section. changes that occur on or before April 26, of Year 1, and during Year 6, pursuant to a plan, S Although S’s basis in T’s stock would ordinarily be 2004, and in consolidated return years be- purchases $100 of P stock and T merges into S with determined under section 362 by reference to the ba- ginning on or after January 1, 1995, with the T shareholders receiving P stock in exchange for sis of T’s shareholders in T’s stock immediately be- their T stock. Under paragraph (b)(1) of this section, fore the group structure change, under the principles respect to which the group does not elect P’s $100 basis in S’s stock is increased by $60 to of paragraph (b)(2) of this section, S’s basis in T’s to apply the provisions of this section, see reflect T’s net asset basis. Under paragraph (d)(1) stock is determined by reference to T’s net asset ba- §1.1502–31 as contained in the 26 CFR of this section, P’s basis in S’s stock is decreased by sis. Thus, S’s basis in T’s stock is $60. part 1 edition revised as of April 1, 2003. $100 (the fair market value of the P stock) because the (iii) Higher-tier adjustments. Under paragraph For group structure changes that occur in P stock purchased by S and used in the transaction is (d)(4) of this section, P’s basis in S’s stock is in- consideration not provided by P. creased by $60 (to be consistent with the adjustment consolidated return years beginning be- (vii) AppreciatedassetprovidedbyS. The facts to S’s basis in T’s stock). fore January 1, 1995, see §1.1502–31T are the same as in paragraph (i) of this Example 1, (iv) Cross ownership. The facts are the same as in as contained in the 26 CFR part 1 edition except that P has owned the stock of S for several paragraph (i) of this Example 2, except S purchased revised as of April 1, 1994. years, and the shareholders of T receive $60 of P stock 10% of T’s stock from an unrelated person for cash. and an asset of S with a $30 adjusted basis and $40 In an unrelated transaction, S acquires the remaining Mark E. Matthews, fair market value. S recognizes a $10 gain from the 90% of T’s stock in exchange for P stock. S’s basis in Deputy Commissioner for asset under section 1001. Under paragraph (b)(1) of the initial 10% of T’s stock is not redetermined under this section, P’s basis in S’s stock is increased by $60 this section. However, S’s basis in the additional 90% Services and Enforcement. to reflect T’s net asset basis. Under paragraph (d)(1) of T’s stock is redetermined under this section. S’s of this section, P’s basis in S’s stock is decreased by basis in that stock is adjusted to $54 (90% of T’s net Approved April 14, 2004. $40 (the fair market value of the asset provided by S). asset basis). In addition, P’s basis in S’s stock is increased under (v) Allocable share. The facts are the same as in Gregory F. Jenner, §1.1502–32(b) by S’s $10 gain. paragraph (i) of this Example 2, except that P owns Acting Assistant Secretary of the Treasury. (viii) Depreciated asset provided by S. The facts only 90% of S’s stock immediately after the group are the same as in paragraph (i) of this Example 1, structure change. S’s basis in T’s stock is the same (Filed by the Office of the Federal Register on April 23, 2004, except that P has owned the stock of S for several as in paragraph (ii) of this Example 2. Under para- 8:45 a.m., and published in the issue of the Federal Register for April 26, 2004, 69 F.R. 22399) years, and the shareholders of T receive $60 of P stock graph (d)(2) of this section, P’s basis in its S stock is and an asset of S with a $50 adjusted basis and $40 increased by $54 (90% of S’s $60 adjustment). fair market value. S recognizes a $10 loss from the Example 3. Taxable stock acquisition.(i)Facts. asset under section 1001. Under paragraph (b)(1) of P is the common parent of one group and T is the com- Section 7520.—Valuation this section, P’s basis in S’s stock is increased by $60 mon parent of another. T has assets with an aggregate Tables to reflect T’s net asset basis. Under paragraph (d)(1) basis of $60 and fair market value of $100 and no li- of this section, P’s basis in S’s stock is decreased by abilities. T’s shareholders have an aggregate basis of The adjusted applicable federal short-term, mid- $40 (the fair market value of the asset provided by S). $50 in T’s stock. Pursuant to a plan, P acquires all of term, and long-term rates are set forth for the month In addition, S’s $10 loss is taken into account under T’s stock in exchange for $70 of P’s stock and $30 of May 2004. See Rev. Rul. 2004-44, page 885. §1.1502–32(b) in determining P’s basis adjustments in a transaction that is a group structure change under under that section. §1.1502–33(f)(1). P’s acquired T stock is not trans- Example 2. Stock acquisition.(i)Facts. P is the ferred basis property. (Because of P’s use of cash, Section 7872.—Treatment common parent of one group and T is the common the acquisition is not a transaction described in sec- of Loans With Below-Market parent of another. T has assets with an aggregate basis tion 368(a)(1)(B).) Interest Rates of $60 and fair market value of $100 and no liabilities. (ii) Analysis. The rules of this section do not ap- T’s shareholders have an aggregate basis of $50 in T’s ply to determine P’s basis in T’s stock. Therefore, P’s The adjusted applicable federal short-term, mid- stock. Pursuant to a plan, P forms S and S acquires all basis in T’s stock is $100. term, and long-term rates are set forth for the month of T’s stock in exchange for P stock in a transaction (h) Effective dates —(1)General rule. of May 2004. See Rev. Rul. 2004-44, page 885. described in section 368(a)(1)(B). The transaction is This section applies to group structure also a reverse acquisition under §1.1502–75(d)(3). Thus, the transaction is a group structure change un- changes that occur after April 26, 2004. der §1.1502–33(f)(1), and the earnings and profits of However, a group may apply this section

May 10, 2004 888 2004-19 I.R.B. Part III. Administrative, Procedural, and Miscellaneous

Distributions to Private income made during the administration sought, the private foundation must file Foundations From Trusts of an estate for which a deduction is an amended Form 990–PF. The private or Estates: Net Investment claimed under section 642(c) does not foundation should mark the front page retain its character in the hands of the dis- of the amended return (or returns) “Filed Income tributee private foundation. However, a pursuant to Notice 2004–35.” Notice 2004–35 distribution of income from a non-grantor charitable lead trust described in section COMMENTS PURPOSE 4947(a)(2) for which the trust claims a section 642(c) deduction does retain its The Service welcomes comments and suggestions relating to the amendment This notice announces that the Internal character in the hands of the distributee of the regulations on distributions from Revenue Service intends to propose reg- private foundation, if the income is attrib- trusts and estates to private foundations. ulations modifying the regulations under utable to amounts placed in trust after May Written comments should be submitted section 4940 of the Internal Revenue Code 26, 1969. by August 9, 2004, to CC:PA:LPD:RU of 1986, as amended, with respect to dis- After studying the application (Notice 2004–35), Room 5203, Internal tributions received by private foundations of section 4940 and Treas. Reg. Revenue Service, POB 7604, Ben Franklin from trusts and estates. § 53.4940–1(d)(2) to distributions from various types of trusts and estates, the Station, Washington, D.C. 20044. Com- BACKGROUND Treasury Department and the Internal ments may be hand delivered between Revenue Service have concluded that the the hours of 8 a.m. and 5 p.m., Mon- Section 4940 imposes a tax on private disparate treatment of distributions under day through Friday to CC:PA:LPD:RU foundations based on the foundation’s net section 4940 is no longer appropriate. (Notice 2004–35), Courier’s Desk, Inter- investment income. Net investment in- nal Revenue Service, 1111 Constitution come is defined in section 4940(c)(1) as PROPOSED ACTION Ave., NW, Washington D.C. Alternatively, the amount by which the sum of the gross comments may be submitted electroni- investment income and the capital gain net The Treasury Department and the In- cally via e-mail to the following address: income exceeds certain deductions. Net ternal Revenue Service intend to pro- [email protected]. investment income is to be determined un- pose regulations modifying Treas. Reg. All comments will be available for public der the principles of subtitle A except to § 53.4940–1(d)(2) to provide that a pri- inspection. the extent inconsistent with the principles vate foundation’s net investment income of section 4940. for purposes of section 4940 does not in- DRAFTING INFORMATION Treas. Reg. § 53.4940–1(d)(2) states clude distributions from trusts and estates. that a distribution from a trust described in Until further guidance is promulgated, in- The principal author of this notice is section 4947(a)(1) or (2) or from an estate come distributions from trusts and estates Ronald B. Weinstock of the Office of Di- does not retain its character in the hands of will not retain their character in the hands vision Counsel/Associate Chief Counsel the distributee private foundation. Thus, of a distributee private foundation for pur- (Tax Exempt and Government Entities). these distributions are not included in net poses of determining the foundation’s net For further information regarding this investment income for purposes of section investment income under section 4940(c). notice, contact Mr. Weinstock at (202) 4940. Treas. Reg. § 53.4940–1(d)(2) 622–3094 or contact Oksana O. Xenos of also states that a distribution from a sec- CURRENT RETURN PROCESSING the Office of the Commissioner (Tax tion 4947(a)(2) trust that is attributable to Exempt and Government Entities) at For current tax returns, any private transfers in trust after May 26, 1969, re- 202–283–9469 (not a toll-free number). foundation to which this notice applies tains its character in the hands of the dis- should mark, “Filed pursuant to Notice tributee private foundation unless the in- 2004–35” on the front page of its Form come is taken into account as a result of Split-Interest Trust 990–PF, Return of Private Foundation or the application of section 671. The regu- Distributions to Private Section 4947(a)(1) Nonexempt Charitable lation is silent on the treatment of distribu- Trust Treated as a Private Foundation.Re- Foundations: Distributable tions from trusts other than trusts described turns should be completed in accordance Amount in section 4947. with this notice pending corresponding Because distributions of income re- changes to Form 990–PF and the accom- Notice 2004–36 ceived by a private foundation from some panying instructions. types of trusts, but not other types of PURPOSE trusts or estates, are included in the pri- REFUND PROCESSING vate foundation’s net investment income This notice provides guidance to pri- for purposes of section 4940, Treas. Reg. For years in which the statute of lim- vate foundations on the treatment of cer- § 53.4940–1(d)(2) leads to inconsistent itations has not expired and for which tain distributions received from split-inter- results. For example, a distribution of a refund of section 4940 taxes paid is est trusts described in section 4947(a)(2)

2004-19 I.R.B. 889 May 10, 2004 of the Internal Revenue Code of 1986, as CURRENT RETURN PROCESSING (Notice 2004–36), Room 5203, Internal amended, in light of the courts’ decisions Revenue Service, POB 7604, Ben Franklin in Ann Jackson Family Foundation v. Com- For current tax returns, any private Station, Washington, D.C. 20044. Com- missioner, 97 T.C. 534 (1991), aff’d,15 foundation to which this notice applies ments may be hand delivered between F.3d 917 (9th Cir. 1994). should mark “Filed pursuant to Notice the hours of 8 a.m. and 5 p.m., Mon- 2004–36” on the front page of its Form day through Friday to CC:PA:LPD:RU BACKGROUND 990–PF, Return of Private Foundation or (Notice 2004–36), Courier’s Desk, Inter- Section 4947(a)(1) Nonexempt Charitable nal Revenue Service, 1111 Constitution Section 4942(a) imposes a tax on the Trust Treated as a Private Foundation.If Ave., NW, Washington D.C. Alternatively, amount of undistributed income of a pri- a Form 4720, Return of Certain Excise comments may be submitted electroni- vate foundation for any taxable year that Taxes on Charities and Other Persons cally via e-mail to the following address: is not distributed by the first day of the Under Chapters 41 and 42 of the Internal [email protected]. second taxable year following such tax- Revenue Code, is filed, Schedule B (Initial All comments will be available for public able year. Section 4942(c) defines undis- Tax on Undistributed Income) should be inspection. tributed income as the amount by which computed disregarding distributions re- the distributable amount for the taxable ceived from section 4947(a)(2) trusts. Re- DRAFTING INFORMATION: year exceeds the qualifying distributions turns should be completed in accordance made out of the distributable amount. Sec- with this notice pending corresponding The principal author of this notice is tion 4942(d) defines distributable amount changes to Form 990–PF and Form 4720 Ronald B. Weinstock of the Office of Di- as the minimum investment return (plus and the accompanying instructions. vision Counsel/Associate Chief Counsel certain refunds of amounts previously Form 990–PF requires information with (Tax Exempt and Government Entities). taken into account as qualifying distri- respect to not only the current tax year, but For further information regarding this butions), reduced by the taxes imposed also prior tax years, particularly Parts XI notice, contact Mr. Weinstock at (202) on the private foundation under subti- and XIII. Private foundations may wish to 622–3094 or contact Oksana O. Xenos of tle A and section 4940. Treas. Reg. complete these Parts as if prior year returns the Office of the Commissioner (Tax § 53.4942(a)–2(b)(2), provides that the had been completed in accordance with Exempt and Government Entities) at distributable amount of a private foun- this Notice rather than the Form instruc- 202–283–9469 (not a toll-free number). dation shall be increased by the income tions. Private foundations may include a portion of distributions from trusts de- schedule to show how the information pro- scribed in section 4947(a)(2) with respect 26 CFR 601.105: Examination of returns and claims vided on such return varies from prior year for refund, credit, or abatement; determination of to amounts placed into trust after March returns as filed. It is not necessary for a pri- correct tax liability. 26, 1969. In Ann Jackson Family Founda- vate foundation to file amended returns for (Also, Part I, Sections 692, 7508A; 1.692–1, tion, the Tax Court held that Treas. Reg. prior years, but it will be expected to retain 1.7508A–1.) § 53.4942(a)–2(b)(2) was invalid to the the supporting information and computa- extent the regulation requires including tions for the changes that would have been Rev. Proc. 2004–26 in the private foundation’s distributable reflected had amended returns been filed. amount for the year the full amount of SECTION 1. PURPOSE the income portion of distributions from REFUND PROCESSING split-interest trusts. The court determined This revenue procedure provides guid- that the language of section 4942 did not For years in which the statute of lim- ance for representatives of certain military support this interpretative regulation. itations has not expired and for which a refund of section 4942 taxes paid is or civilian employees of the United States PROPOSED ACTION sought, the private foundation must file an who die as a result of injuries incurred amended Form 990–PF and an amended in a terrorist or military action. It pro- The Treasury Department and the In- Form 4720 for that year with a schedule vides guidance for having tax forgiven or ternal Revenue Service intend to propose showing the corrected amount of section for claiming refunds of tax under section regulations modifying the regulations un- 4942 liability pursuant to this Notice. The 692(c) of the Internal Revenue Code, as der section 4942 in a manner consistent private foundation should mark the front amended by the Victims of Terrorism Tax with the holdings of the Tax Court and page of the amended return (or returns) Relief Act of 2001, Pub. L. No. 107–134. the Ninth Circuit in Ann Jackson Family “Filed pursuant to Notice 2004–36.” It also provides procedures by which the Foundation. Until further guidance is pro- Secretary will determine whether a terror- mulgated, private foundations should com- COMMENTS ist or military action has occurred. pute the distributable amount under sec- tion 4942(d) without regard to Treas. Reg. The Service welcomes comments and SECTION 2. BACKGROUND § 53.4942(a)–2(b)(2). suggestions relating to the amendment of the regulations on distributions from .01 Prior to amendment by the Vic- split-interest trusts to private foundations. tims of Terrorism Tax Relief Act of 2001, Written comments should be submitted Pub. L. No. 107–134 (the Act), section by August 9, 2004, to CC:PA:LPD:RU 692(c)(1) provided that, in the case of any

May 10, 2004 890 2004-19 I.R.B. individual military or civilian employee of .05 Section 112(a) of the Act grants the the Secretary will ascertain, allowing a the United States who died as a result of Secretary authority under section 7508A to reasonable time under the circumstances wounds or injury incurred in a terrorist or disregard a period of time (up to one year) for response, from the Department of State military action outside the United States for determining: (a) the timeliness of acts and the Department of Justice whether while the individual was a military or civil- under section 7508(a)(1), (b) the amount of those Departments believe that a prepon- ian employee of the United States, any tax any addition to tax, and (c) the amount of derance of the evidence indicates that imposed by subtitle A of the Code (income any credit or refund, in the event of a ter- the event resulted from terrorist activity tax) did not apply with respect to the tax- rorist or military action, as defined in sec- directed against the United States or its able year in which fell the date of death and tion 692(c)(2). Section 112(c) of the Act allies. The Secretary will follow the same with respect to any prior taxable year in the amends the Employee Retirement Income procedures if an event that occurred within period beginning with the last taxable year Security Act, 29 U.S.C. § 1148 and 29 the United States has an international di- ending before the taxable year in which the U.S.C. § 1302(i) (ERISA), to authorize the mension, or if the perpetrators or cause of wounds or injury were incurred. Secretary of Labor to disregard a period of the event are unknown. An event within .02 Section 113(b) of the Act amended up to one year for determining the timeli- the United States has an “international section 692(c) to remove the requirement ness of actions required under ERISA, in dimension” if a preponderance of the ev- thattheemployeemusthaveincurred the event of a terrorist or military action, idence indicates that it involves: (a) an the wounds or injuries outside the United as defined by section 692(c)(2). attack by a foreign perpetrator, or by a do- States. This amendment applies to tax .06 Section 113 of the Act amends sec- mestic perpetrator with links to a foreign years ending on or after September 11, tion 104(a)(5) of the Code to include com- principal (e.g., a foreign terrorist group, 2001. Section 692(c)(1), as amended, pro- pensation received for injuries or sickness sponsor or financier); (b) an attack on a vides that, in the case of any individual as a result of a terrorist or military action, foreign national, family members in the military or civilian employee of the United as defined by section 692(c)(2). United States of a foreign national, or a States who dies as a result of wounds or United States entity held by foreign own- injury incurred in a terrorist or military SECTION 3. SCOPE ers; (c) an attack on a foreign diplomatic action while the individual was a military mission or on an international organiza- or civilian employee of the United States, .01 A determination under this revenue tion (including attacks on foreign diplo- any tax imposed by subtitle A of the Code procedure that an act qualifies as a terrorist mats and other internationally-protected (income tax) shall not apply with respect or military action within the meaning of persons in the United States); or (d) an to the taxable year in which falls the date section 692(c)(2) will apply with respect to attack on, or with its impact in, the United of death and with respect to any prior tax- the following provisions of the Code: States, launched from across the border able year in the period beginning with the (1) section 104(a)(5) — which excludes of the United States. See, generally,22 last taxable year ending before the taxable from gross income amounts received by an U.S.C. § 2656f(d); 18 U.S.C. § 2331(1). year in which the wounds or injury were individual as disability income attributable (2) Prior to publishing a determina- incurred. to injuries incurred as a direct result of a tion that an event that occurred within .03 Section 692(c)(2) defines “terroris- terrorist or military action; the United States that does not have an tic or military action” as any terrorist activ- (2) section 139(c) — which defines international dimension constituted a ter- ity which a preponderance of the evidence qualified disasters to include disasters rorist action within the meaning of section indicates was directed against the United which result from a terrorist or military 692(c)(2), the Secretary will ascertain, States or any of its allies and any military action; allowing a reasonable time under the cir- action involving the Armed Forces of the (3) section 692(c)(1) — which provides cumstances for response, from the Depart- United States and resulting from violence tax relief for certain military or civilian ment of Justice whether that Department or aggression against the United States or employees of the United States dying as a believes that a preponderance of the ev- any of its allies (or threat thereof). Terror- result of injuries incurred in a terrorist or idence indicates that the event resulted ist activity includes criminal offenses in- military action; and from terrorist activity directed against the tended to coerce, intimidate, or retaliate (4) section 7508A — which authorizes United States. against the government or civilian popula- the Secretary to postpone certain deadlines (3) Prior to publishing a determination tion. See, e.g., Homeland Security Act of by reason of Presidentially declared disas- that an event constituted a military action 2002, Pub. L. No. 107–296, sec. 2(15), ters or terrorist or military actions. within the meaning of section 692(c)(2), 116 Stat. 2135, 2141, 6 U.S.C. § 101(15). the Secretary will consult the Department .04 Section 111 of the Act added section SECTION 4. PROCEDURE of Defense with respect to whether the 139 to the Code. Section 139 provides that event was a military action involving the gross income shall not include any amount .01 Making a determination that a ter- Armed Forces of the United States result- received by an individual as a qualified rorist or military action has occurred under ing from violence or aggression against the disaster relief payment. A qualified disas- section 692(c)(2) — United States or its allies. ter includes a disaster which results from (1) Prior to publishing a determination (4) After determining that a terrorist or a terrorist or military action, as defined in that an event that occurred outside the military action has occurred, the Secretary section 692(c)(2). I.R.C. § 139(c)(1). United States constituted a terrorist action may exercise the authority under section within the meaning of section 692(c)(2), 7508A to disregard a period of up to one

2004-19 I.R.B. 891 May 10, 2004 year for determining: (a) the timeliness should be identified by writing “KITA” (or rorist or military action outside the United of acts under section 7508(a)(1); (b) the other designation as set forth in Publica- States. The certification must be made in amount of any addition to tax; and (c) the tion 3920 or other guidance the Service is- the form of a letter signed by the Director amount of any credit or refund. sues) in bold letters on the top of page 1 of General of the Foreign Service, Depart- (5) Taxpayers may rely on the published the return or claim for refund. ment of State, or his or her delegate. The guidance to establish that particular events (4) Returns and claims for refunds must certification must include the name and were terrorist or military actions for pur- be accompanied by the following docu- social security number of the individual, poses of sections 104(a)(5), 139(c), and ments: the date of injury, the date of death, and a 692(c). (a) Form 1310, Statement of Person statement that the individual died as the re- .02 Filing claims for credit or refund Claiming Refund Due a Deceased Tax- sult of a military or terrorist action outside under section 692(c) — payer, unless: (i) the surviving spouse is the United States and was an employee of (1) Representatives of employees who filing an original or amended joint return, the United States on the date of injury and qualify for the benefits of section 692(c), or (ii) the decedent’s personal represen- on the date of death. and for whom no Form 1040, U.S. In- tative is filing an original Form 1040, in (5) In a case in which a representative dividual Income Tax Return, has been which case the personal representative of a decedent who died as the result of filed, may claim those benefits, or claim must attach a copy of the court certificate terrorist or military action does not have a refund of withholding or estimated tax showing his or her appointment, and; enough tax information to file a timely payments, by filing a Form 1040. The (b)(i) For military and civilian employ- claim for refund, the representative may representatives should file those forms at ees of the Department of Defense — A cer- stop the running of the period of limita- the address provided in Publication 3920, tification made by the Department of De- tions for making such a claim by filing Tax Relief for Victims of Terrorist Attacks. fense on DD Form 1300 that includes the Form 1040X with the IRS at the address (Also see Publication 3920 for more de- name and social security number of the provided in Publication 3920, attaching tailed procedures for claiming a refund.) individual, the date of injury, the date of Form 1310, any other available documen- On joint returns reporting taxable income death, and a statement that the individual tation required by this revenue procedure, of the surviving spouse, taxpayers must died as the result of a military or terrorist and a statement that an amended claim will make an allocation of the tax liability be- action and was an employee of the United be filed as soon as the additional requisite tween spouses. See section 1.692–1(b) of States on the date of injury and on the date information is ascertained. the Income Tax Regulations. If the surviv- of death. (6) If an event occurs in the United ing spouse or other person filing the joint (ii) For United States government em- States that the representative of a dece- return cannot determine the proper alloca- ployees killed in the United States (who dent who was not an employee of the De- tion, he or she should attach a statement are not employees of the Department of partment of Defense at the time of injury of all income and deductions allocable to Defense) — and death believes was a terrorist or mili- each spouse and the IRS will make the (A) A death certificate stating the nature tary action, and the Secretary has not pub- proper allocation. The representative must of the injury causing death or, if the cause lished a determination that the event was attach the employee’s Form W-2, Wage of death is not apparent from the death cer- a terrorist or military action, the represen- and Tax Statement. tificate, a letter from the treating physician, tative may submit a request for a determi- (2) In the case of any employee for medical examiner, or hospital stating the nation with the return or claim for refund whom a Form 1040 already has been filed, cause of death, and of the decedent’s estate and any other doc- claims for refund should be made by filing (B) A certification from the federal em- umentation required by this revenue pro- Form 1040X, Amended U.S. Individual ployer that includes the name and social cedure. Taxpayers should submit the fol- Income Tax Return, with IRS at the ad- security number of the decedent, the date lowing information with their determina- dress provided in Publication 3920. (Also of injury, the date of death, a statement tion requests: see Publication 3920 for more detailed that the decedent was an employee of the procedures for claiming a refund.) In United States on the date of injury and (a) Date and location of incident, cases where the previously filed return the date of death and, if the death was as- was a joint return that reported taxable sociated with an event that the Secretary (b) Type of incident (terrorist or mili- income of the surviving spouse, the claim has identified as a military action or terror- tary), for refund must make an allocation of the ist activity in published guidance, a state- tax liability between spouses. See section ment identifying the action or activity as- (c) Number of taxpayers thought to be 1.692–1(b) of the Income Tax Regula- sociated with the death. This certificate affected, tions. If the surviving spouse or other maybeaformorletterfromtheemploy- person filing the claim for refund cannot ing agency’s personnel department to the (d) A description of the facts on which determine the proper allocation, he or she decedent’s representative. the representative bases the claim that a should attach a statement of all income and (iii) For United States government terrorist or military action has occurred, in- deductions allocable to each spouse, and employees killed overseas (who are not cluding the facts relating to any alleged in- the IRS will make the proper allocation. employees of the Department of Defense) ternational dimension of a terrorist action (3) All returns and claims for refund — A certification from the Department of as set forth in section 4.01(2) of this rev- filed pursuant to this revenue procedure State that the death was the result of ter- enue procedure, and

May 10, 2004 892 2004-19 I.R.B. (e) A completed Form 8821, Tax In- address is not required in this instance. procedure in the Internal Revenue Bul- formation Authorization, that will permit Taxpayers should check the box on the line letin, May 10, 2004. the IRS to disclose to the Department of of Form 8821 that indicates that the tax Justice (for terrorist attacks), the Depart- information authorization is for a specific SECTION 7. DRAFTING ment of State (for terrorist attacks with use and not recorded on the Centralized INFORMATION an alleged international dimension), or the Authorization File (CAF). Department of Defense (for military ac- The principal author of this revenue tions) return information relating to the re- SECTION 5. EFFECT ON OTHER procedure is Emly B. Berndt of the Asso- turn or claim for refund. Taxpayers should DOCUMENTS ciate Chief Counsel (Procedure and Ad- complete the form as instructed, listing the ministration), Administrative Provisions Department of Justice as the appointee if This revenue procedure obsoletes Rev. and Judicial Practice. For further infor- the request relates to an alleged terrorist at- Proc. 85–35, 1985–2 C.B. 433. mation regarding this revenue procedure, tack, the Department of State if the request contact Emly Berndt at (202) 622–4940 relates to an alleged terrorist attack with SECTION 6. EFFECTIVE DATE (not a toll-free call). an international dimension, or the Depart- ment of Defense if the request relates to an This revenue procedure is effective as alleged military action. The appointee’s of the date of publication of this revenue

2004-19 I.R.B. 893 May 10, 2004 Part IV. Items of General Interest

Notice of Proposed Room 5203, Internal Revenue Service, Advocacy of the Small Business Adminis- Rulemaking by POB 7604, Ben Franklin Station, Wash- tration for comment on its impact on small Cross-Reference to ington, DC 20044. Submissions may businesses. be hand-delivered between the hours of Temporary Regulations 8a.m.and4p.m.toCC:PA:LPD:PR Comments and Public Hearing and Notice of Public Hearing (REG–129447–01), Courier’s Desk, In- ternal Revenue Service, 1111 Constitution Before these proposed regulations are Allocation and Apportionment Avenue, NW, Washington, DC, or sent adopted as final regulations, consideration of Expenses; Alternative electronically, via the IRS internet site at will be given to any written (a signed origi- nal and eight (8) copies)orelectroniccom- Method for Determining Tax www.irs.gov/regs. The public hearing will be held in the IRS Auditorium, Internal ments that are submitted timely to the IRS. Book Value of Assets Revenue Building, 1111 Constitution Av- The IRS and the Treasury Department re- enue, NW, Washington, DC. quest comments on the clarity of the pro- REG–129447–01 posed rule and how it can be made easier FOR FURTHER INFORMATION to understand. All comments will be avail- AGENCY: Internal Revenue Service CONTACT: Concerning the proposed able for public inspection and copying. (IRS), Treasury. regulations, Margaret A. Hogan, (202) A public hearing has been scheduled for ACTION: Notice of proposed rulemaking 622–3850; concerning submissions of July 19, 2004, beginning at 10 a.m. in by cross-reference to temporary regula- comments, the hearing, and/or to be placed the IRS Auditorium of the Internal Rev- tions and notice of public hearing. on the building access list to attend the enue Building, 1111 Constitution Avenue, hearing, Robin Jones, (202) 622–7180 NW, Washington, DC. Due to building se- SUMMARY: In this issue of the Bul- (not a toll-free number). curity procedures, visitors must enter at the letin, the IRS is issuing temporary regula- Constitution Avenue entrance. In addition, SUPPLEMENTARY INFORMATION: tions (T.D. 9120) providing an alternative all visitors must present photo identifica- tion to enter the building. Because of ac- method of valuing assets for purposes of Background and Explanation of cess restrictions, visitors will not be ad- apportioning expenses under the tax book Provisions value method of §1.861–9T. The alter- mitted beyond the immediate entrance area native tax book value method, which is The temporary regulations in this is- more than 30 minutes before the hearing elective, allows taxpayers to determine, sue of the Bulletin amend 26 CFR Part starts. For more information about hav- for purposes of apportioning expenses, 1. The temporary regulations provide an ing your name placed on the building ac- the tax book value of all tangible property alternative method of valuing assets for cess list to attend the hearing, see the “FOR that is subject to a depreciation deduction purposes of apportioning expenses under FURTHER INFORMATION CONTACT” under section 168 by using the straight the tax book value method of §1.861–9T. section of this preamble. line method, conventions, and recovery The text of the temporary regulations also The rules of 26 CFR 601.601(a)(3) ap- periods of the alternative depreciation serves as the text of these regulations. The ply to the hearing. Persons who wish to system under section 168(g)(2). The alter- preamble of the temporary regulations ex- present oral comments at the hearing must native method provided in the temporary plains the temporary regulations and these submit electronic or written comments by regulations is intended to minimize basis proposed regulations. June 24, 2004, and an outline of the topics disparities between foreign and domestic to be discussed and the time to be devoted assets of taxpayers that may arise when Special Analyses to each topic (signed original and eight (8) taxpayers use adjusted tax basis to value copies) by June 28, 2004. A period of 10 It has been determined that this notice assets under the tax book value method of minutes will be allotted to each person for of proposed rulemaking is not a significant expense apportionment. The text of those making comments. An agenda showing regulatory action as defined in Executive temporary regulations also serves as the the scheduling of the speakers will be pre- Order 12866. Therefore, a regulatory as- text of these proposed regulations. This pared after the deadline for receiving out- sessment is not required. It has also been document also provides a notice of public lines has passed. Copies of the agenda will determined that section 553(b) of the Ad- hearing on these proposed regulations. be available free of charge at the hearing. ministrative Procedure Act (5 U.S.C. chap- DATES: Written or electronic comments ter 5) does not apply to these regulations, Drafting Information must be received by June 24, 2004. Out- and because the regulations do not im- lines of topics to be discussed at the public pose a collection of information on small The principal author of these proposed hearing scheduled for July 19, 2004, at 10 entities, the Regulatory Flexibility Act (5 regulations is Margaret A. Hogan, Office a.m. must be received by June 28, 2004. U.S.C. chapter 6) does not apply. Pursuant of Associate Chief Counsel (Interna- to section 7805(f) of the Internal Revenue tional). However, other personnel from ADDRESSES: Send submissions to: Code, this notice of proposed rulemaking the IRS and Treasury Department partici- CC:PA:LPD:PR (REG–129447–01), will be submitted to the Chief Counsel of pated in their development.

May 10, 2004 894 2004-19 I.R.B. ***** tain their status as public charities or as op- American Humanitarian Landmine erating foundations. Accordingly, grantors Disposal Foundation, Santa Monica, CA Proposed Amendments to the and contributors may not, after this date, American Museum of Beat Art, Regulations rely on previous rulings or designations Pasadena, CA in the Cumulative List of Organizations American Safety Training Foundation, Accordingly, 26 CFR Part 1 is proposed (Publication 78), or on the presumption Santa Clarita, CA to be amended as follows: arising from the filing of notices under sec- Anew Birth Christian Ministries, tion 508(b) of the Code. This listing does Los Angeles, CA PART 1—INCOME TAXES not indicate that the organizations have lost Anfall, Inc., Bell Gardens, CA Paragraph 1. The authority citation for their status as organizations described in Angels Plight, Inc., New York, NY §1.861–9 is amended by adding entries in section 501(c)(3), eligible to receive de- Antelope Valley Child Abuse Prevention numerical order to read in part as follows: ductible contributions. Council, Inc., Lancaster, CA Authority: 26 U.S.C. 7805. Former Public Charities. The follow- Antelope Valley Chinese Educational Sections 1.861–9 and 1.861–9T also is- ing organizations (which have been treated Center, Inc., Palmdale, CA sued under 26 U.S.C. 863(a), 26 U.S.C. as organizations that are not private foun- Antelope Valley Team Sheriff Racing, 864(e), 26 U.S.C. 865(i), and 26 U.S.C. dations described in section 509(a) of the Lancaster, CA 7701(f). * * * Code) are now classified as private foun- Antioch Baptist Church Community Par. 2. Section 1.861–9 is amended by dations: Development Corporation, Douglas, NE revising paragraph (g)(1)(ii) introductory Apartment A, Venice, CA 1st Chance Productions, Inc., Sylmar, CA APR Southern California Construction text, and adding paragraphs (h)(6), (i) and 7–H Foundation, Los Angeles, CA (j) to read as follows: Career Project, Los Angeles, CA 70 Plus, Valley Village, CA Arabic Christian Medical Association, 73rd Ave. Community Awareness §1.861–9 Allocation and apportionment Inc., Downey, CA Program, Oakland, CA of interest expense. Arikat Charitable Association, 77th Street Boosters, Inc., San Francisco, CA ***** Los Angeles, CA Arts Broadcasting L A, Santa Monica, CA (g)***(1)***(i)*** A One Kids, West Palm Beach, FL Asian Pacific Counseling & Consultant (ii)***[Thetextoftheproposedre- Accesscare, Morrisville, NC Group, Los Angeles, CA vision of §1.861–9(g)(1)(ii) is the same as Acts of Compassion, Inc., Deadwood, OR Asifa-Hollywood Animation Aid the second sentence of §1.861–9T(g)(1)(ii) Advocates for Technological Opportunity, Foundation, Burbank, CA published elsewhere in this issue of the Larkspur, CA Asociacion Esfuerzo Unido Por Piedra Bulletin.] * * * Afterschool Educational Enrichment Blanca Bonao, Inc., Bronx, NY Foundation, Beverly Hills, CA Aspiring Communities Institute, ***** Africa-USA, New York, NY St. Louis, MO (h)(6) [Reserved]. For further guidance AFWA IBOM State Association of Assemblies in Motion, Sherman Oaks, CA see, §1.861–9T(h)(6). Nigeria USA, Inc., Los Angeles, Association of Betterers Intervention (i) [The text of the proposed addition of Los Angeles, CA Programs, Encino, CA §1.861–9(i) is the same as §1.861–9T(i)(1) Ahepa Hellenic Heritage Foundation, Association of Korean Adoptees, through (i)(3)(i) published elsewhere in Pasadena, CA Los Angeles, CA this issue of the Bulletin.] Alameda Naval Air & Western Aerospace Atlas Foundation, Los Angeles, CA (j) [Reserved]. For further guidance, Museum, Oakland, CA Aua Fisheries Development Projects, Inc., see §1.861–9T(j). Alaska Tradeswomen Network, Pago Pago, AS Anchorage, AK Baby DJ Childrens Charities a Nonprofit Mark E. Matthews, Albany Rescue Mission Association, Corporation, Seattle, WA Deputy Commissioner for Albany, OR Services and Enforcement. Baker-Conway Foundation, Alethos Foundation, Calabasas, CA Shoreline, WA (Filed by the Office of the Federal Register on March 25, Alliance for Animal Hope of Louisiana, Bay Area Dragon Boat Foundation, 2004, 8:45 a.m., and published in the issue of the Federal Inc., New Orleans, LA Register for March 26, 2004, 69 F.R. 15753) Redwood City, CA Alpha and Omega Project, Inc., Bayanihan Senior Citizens Association, Inglewood, CA Inc., Los Angeles, CA Altemus, Inc., Beach Cities Hockey Foundation, Inc., Foundations Status of Certain Gravenhurst, Ontario Canada Rancho Santa Margari, CA Organizations America Theological Seminary, Beat Eddie Brown Center for the Arts, Los Angeles, CA Berkeley, CA Announcement 2004–34 American Anglican Council–Los Angeles, Because Its Right, Inc., Memphis, TN Los Angeles, CA Benchwear Athletic Consulting, The following organizations have failed American Center for Political Pasadena, CA to establish or have been unable to main- Communities of Meaning, Portland, OR

2004-19 I.R.B. 895 May 10, 2004 Benton County Water Conservancy Charities, Inc., Newark, DE Daniel Dru Native American Traditional Board, Patersen, WA Chico Dharma Study Group, Chico, CA Organization, Incorporated, Miami, OK Bicycle Friendly Berkeley Coalition, Inc., Children First, Oakland, CA Deafwax, Los Angeles, CA Berkeley, CA Childrens at Risk in Developing Denali Institute, Anchorage, AK Boys-to-Men Club, Los Angeles, CA Countries, Inc., St. Louis Park, MN Dennis Spaight Choreography Trust, Brain Injury Association of Alaska, Childrens Funeral Assistance, Portland, OR Anchorage, AK Los Angeles, CA Dolphin Odyssey Foundation, Kapaa, HI Brexton Renaissance, Inc., Laurel, MD Childrens Prime Time Sports Club, Inc., Don Lavy Dance Company, Bridge A NonProfit Corporation, Inglewood, CA Sherman Oaks, CA Seattle, WA Chinatown Community Housing Donny Cowgill Memorial Scholarship Bridgeport Buyers Association, Corporation, Honolulu, HI Fund, Highland Park, IL Bridgeport, TX Chinese Church Music Institute of Dream Industries, Los Angeles, CA Brighter Future, Carson, CA Northern California, San Francisco, CA Dreams Can Come True Foundation, Inc., Bristol Bay Elders Action Group, Chinese Lantern Cultural Foundation, Roseville, CA Naknek, AK Belmont, CA Earth Angels Foundation, New York, NY Bromont Housing Corporation, Chris Catering Institute, Los Angeles, CA Earth Studies, Inc., Palm Desert, CA Studio City, CA City Streets Foundation, Earthman Project, Inc., Davie, FL Building Community Links, Walnut Creek, CA East Fishkill Challenge San Francisco, CA Claire Lilienthal Learning Academy, Softball Association, Inc., Bulgarian Americans United, San Francisco, CA Hopewell Junction, NY Sacramento, CA Classic Aircraft Aviation Museum, Inc., Eastlake Child Development Center, Bunn Community Outreach, Bunn, NC Portland, OR Oakland, CA Business Boutique, Inc., Huntington, NY Clean & Sober, Portland, OR Easy English Times, Inc., Napa, CA Buying With Vision, San Francisco, CA Clean Belmont Project, Inc., Portland, OR Ecuadorian Association for Muscular Cadet Youth Foundation, Burbank, CA Clinicalcircle, Inc., Los Angeles, CA FilialFEOM,Houston,TX California Association of Batterers Coalition for Fire Rescue Technology, Education and Literacy Resource Intervention Programs, Encino, CA Inc., Anchorage, AK Connection, Inc., Sacramento, CA California Cowboy Benefit, Dublin, CA Coastal Public Benefit Corporation, El Ritmo Flamenco Dance Troop, California Cruisers, Tustin, CA El Granada, CA Columbus, OH Camoes Players, Honolulu, HI Community Alliances of Interdependent Emerald Chariot Foundation, Capistrano Cornerstone, Inc., Agriculture, Amherst, MA Marina Del Rey, CA Costa Mesa, CA Community Home Neighborhood Emerald Regiment Drill Team, Caring Heart Foster Family Agency, Inc., Maintenance & Development, Mountlake Terrace, WA Los Angeles, CA Spring Valley, CA Emeryville Performing Arts, Inc., Carter G. Woodson Alumni Association, Community Life, Springfield, OR Emeryville, CA Normangee, TX Community Outreach and Education English Opera Seattle, Seattle, WA Casa Nicaragua & Educational Project for Center, Walnut, CA Enrichment Plus North, Inc., Oakland, CA Central American, S. Gate, CA Compassionate Heart Ministries, Inc., Environmental Education Resources, Casa Rivas, San Fernando, CA Inglewood, CA Portola Valley, CA Cascadia Weekend, Wilsonville, OR Connecting, Incorporated, Envisage, Seattle, WA Catchum Young Foundation, Washington, DC Epiphany Theatre Co., Los Angeles, CA Los Angeles, CA Conservation Alliance of Palm Beach Excellent House Services, Inc., Celebrazione Italiana Festival County, Inc., West Palm Beach, FL West Palm Beach, FL Association, Oakdale, MN Construction Systems Scholarship Fund, Eyapaha Institute, Marina Del Rey, CA Center for Entrepreneurial Development Inc., Houston, TX Faith & Hope Ministries, Emerado, ND for the Pacific, Kailua, HI Consumer Credit Center, Los Angeles, CA Families of Hope, Stanwood, WA Center for New Americans, Portland, OR Cook Inlet Wrestling Club, Family Unity Network, Inc., Oakland, CA Center for Sustainable Urban Design at Anchorage, AK Fathers Project, Berkeley, CA Playa Vista, Playa Vista, CA Cory Jill Rovin Memorial Foundation, Federal Way High School Choral Booster Center for the Arts of the African Island Park, NY Club, Federal Way, WA Diaspora, Inc., Los Angeles, CA Council of KPC of Northern California, Fil-Am Center for Community Health and Chameleon Theatre Group, Inc., San Francisco, CA Development, Inc., San Pablo, CA Walden, NY Cowgirl Way Equestrian Drill Team, Financial Pacific C A P, Auburn, WA Champaign Rottweiller Rescue, Norco, CA First Star Scholarship Foundation, Champaign, IL Creative Technical Science Study S. Gate, CA Chance to Begin, Inc., Richmond, CA Foundation, San Francisco, CA Flint Cuts Glass Music, Ltd., Chapman Child and Family Foundation, Cultural Restoration Tourism Project, Oregon City, OR Santa Monica, CA Pacifica, CA

May 10, 2004 896 2004-19 I.R.B. Florida College Booster Club of Southern Great Basin Tree Foundation, Hemophilia Network, Incorporated, California, Inc., Winnetka, CA Klamath Falls, OR Los Angeles, CA Food for Thought Productions, Great Beginnings Childrens Fund, Inc., Heritage Begins Within, Beverly Hills, CA Toluca Lake, CA Kamuela, HI Heritage Cemetary Group, Inc., For a Better Future Foundation, Great Mission, Los Angeles, CA Tigard, OR Costa Mesa, CA Greater Community Outreach Service, Heritage Society of Ethnic Arts, Foundation for Advancement in Music Inc., Muskegon Heights, MI San Francisco, CA Education, Hollywood, CA Greater Harvest Family Life Center, Hillsboro Soccer Club, Hillsboro, OR Foundation for African Arts & Culture, Baltimore, MD Hineni Ministries a Non Profit Montana Oakdale, CA Greater Long Beach Youth Activities Corporation, Seattle, WA Foundation for Honduran Development, League, Los Angeles, CA HIV Complimentary Therapies of Sonoma Los Angeles, CA GTB SEWA Mission, Inc., Union City, CA County, Santa Rosa, CA Free Speech Movement Archives, Guardian Community Services, Inc., Hollywood Access Program for Natives, Palo Alto, CA Los Angeles, CA Inc., Tarzana, CA Fresh Start, Seattle, WA Guns Arent Fun, Portland, OR Hollywood Air Corps Charitable Friends of Fleet Park, Montesano, WA Halau Haloa the National Academy Foundation, Santa Monica, CA Friends of Marie Reed School and of Hawaiian Performing Arts, Hollywood Renainnance Film Festival, Recreation Center, Silver Spring, MD Pearl City, HI Hayward, CA Friends of Our Lady of Hope, Hampton Roads Mexican American Club, Hoop Dreams, Inc., Rodeo, CA San Francisco, CA Portsmouth, VA Hope & Lite Foundation, Inc., Friends of the Lockport Public Library, Handong International Foundation, Salt Lake City, UT Inc., Lockport, NY Los Angeles, CA Hope Life, Inc., Euless, TX Friends of VGH & UBC Hospital Hands-On Curriculum Concepts, Hope Through Opportunity, Inc., Foundation, Canada Gardena, CA Oakland, CA Frontier Ice Alliance, Inc., Palmer, AK Hankook Korean American Senior Hopedale Youth Basketball League, Inc., Full Circle Community Counseling Citizens Association, Los Angeles, CA Hopedale, MA and Support Services, Inc., Hans Einstein Community Medical Hopes Nest Limited, Los Angeles, CA San Francisco, CA Scholarship, Berkeley, CA Hospice Services in America Foundation, Full Gospel Business Women Fellowship Hanuri Korean Gay Community Network, Culver City, CA International, Inglewood, CA Los Angeles, CA Hospital Presbiteriano De Mainero, Inc., Fund of the Immaculate Heart, Harold Haughton Community Houston, TX Beverly Hills, CA Development Corporation, House of Change, Portland, OR Fundaninas Foundation, Inc., Miami, FL New Orleans, LA House of Concern, Los Angeles, CA G & L Connection, Lancaster, CA Harvest Outreach Hawaii, Haleiwa, HI H R A, Inc., Kailua-Kona, HI G. T. Brinson School in Lieu, Hawaii Academy of Audiology Hui O Hilo, Inc., Hilo, HI Federal Way, WA Foundation, Honolulu, HI Hungarian Christian Assembly, Galt Area Swim Program, Galt, CA Hawaii Museum of Flying, Honolulu, HI Stockton, CA Generations and Partnerships, Hawaii Rhythmic Gymnastic Association, IKF Booster Club, Grants Pass, OR E. Wenatchee, WA Haleiwa, HI Imagine Washington, Inc., Giant Steps of America, Novato, CA Hawaii State Junior Golf Association, Washington, DC Girdwood Volunteer Fire and Rescue, Inc., Honolulu, HI Immunocytochemistry Research Inc., Girdwood, AK Hawaii Wushu Center, Cotati, CA Institute-Seattle, Seattle, WA Global Business Educational Institute, Hawaiian Inter-Club Council of Southern Inglewood Educational Foundation, Inc., Warrensville, OH California Health & Ed Fund, Inglewood, CA Global Charity Organization, Inc., Los Angeles, CA Inland Empire AIDS Center, Inc., San Leandro, CA Hayward Police Officers Benevolent San Bernardino, CA Global Education & Cultural Foundation, Hayward, CA Inland Empire Talent Production, Opportunities, Inc., New Smyrna, FL Healthy Kids International, Seattle, WA Fontana, CA Go and Tell Ministries, Inc., Dallas, TX Heart Healers, Inc., a Non-for-Profit Instrumental Music Boosters, Inc., Gods Image, Norwalk, CA Corp., Woodland Hills, CA Alta Loma, CA Golden Carrot, Aguanga, CA Hecel Oyakapi, Inc., Studio City, CA Integrated Arts a Home for Creative Good Neighbors Old Fashioned HeirtotheThrone,Tacoma,WA Expression, Berkeley, CA Community Chest, Inc., Nashville, TN Help Heal Our Streets, Inc., International Christian Foundation, Inc., Goodnews River Lodge Educational San Fernando, CA Gresham, OR Fund, Inc., Eagle River, AK Help Us Help You, Sacramento, CA International Health Medical Group, Inc., Granite Regional Park Foundation, Helping Hands for the Sorrowful, Inc., Los Angeles, CA Sacramento, CA Palm Beach, FL

2004-19 I.R.B. 897 May 10, 2004 International Medical Advocacy Group Life Training a California Nonprofit National Association of Collegiate for Greater Health Care Information and Public Benefit Corporation, Women Athletic Administrators, Edu, Walpole, MA Calabasas, CA Wilmington, NC Internet Security Foundation International, Lifestyle & Education Institute, National Cervical Cancer Coalition, La Honda, CA Los Angeles, CA Van Nuys, CA Iron Sharpening Iron Training Center, Lighthouse of the Lord, Inc., Freeport, FL National Council on Business Strategy, Altadena, CA Lomita Womens Club, Lomita, CA Inc., Washington, DC J. D. Henderson Ministries, Inc., Lorenz-Smeenge Foundation, Inc., National High School Sports Foundation, Portland, OR Jacksonville, FL La Mirada, CA Jacobs Ladder, Inc., Oakland, CA Los Angeles Chapter of the National Black National Paralegal Defense League Corp. Jesus Video Project Northwest, Salem, OR MBA Association, Los Angeles, CA a Nevada Corporation, Los Angeles, CA Jewish Association for All, Los Angeles Fire Department Historical Nativity Club, Inc., Burbank, CA Los Angeles, CA Society, Los Angeles, CA Near-National Endowment for Animal Joans Second Chance Home, Los Angeles Korean Festival Committee, Rights, Los Angeles, CA North Hollywood, CA Los Angeles, CA Nedra Thurlow Horn Educational Tr., Joeys Feline Friends a Rescue Foundation, Macedonia Community Development Seattle, WA Kaneohe, HI Corporation, Trenton, NJ Nehemiah Project-Oakland, Oakland, CA Jonathans Christian Outreach, Inc., Manthano Project, Inc., Antelope, OR Nevada County Food & Toy Run, Chico, CA Mapintee, San Francisco, CA Nevada City, CA Joshuas House, Troutdale, OR Mariculture Research Institute, New Life in Christ Ministries, Jump Strait, Houston, TX Cleveland, TN Landover Hills, MD Junction City Soccer Club 01–01–98, Maryland Society for Obesity Prevention, New Mexico Sandplay Society, Junction City, OR Inc., Rockville, MD Albuquerque, NM JWW Counseling Service, Compton, CA Mayors Hunger and Homelessness Relief New World Mission Center, Ka Pa Hula O Leilehua, Mililani Oahu, HI Program, Oakland, CA Los Angeles, CA Kidn Around of Eastern Oregon, Inc., Medical International Rapid Response, Newton Educational Center, Redmond, OR Redmond, WA Los Angeles, CA Kids Are Important in North Dakota, Melita, Inc., Vallejo, CA Nexus Dance Company, Portland, OR Grand Forks, ND Merced Symphony Association, Nigerian Talking Drum Ensemble Kids Campaign, Van Nuys, CA Merced, CA Foundation, Inc., Los Angeles, CA Kids Korner Preschool, Inc., Arleta, CA Mere Tuiasosopo Betham Financial Aid Nika Gallery, Inc., San Francisco, CA Kids Learning Center of South Florida, and Scholarship Fund, Pago Pago, AS North Coast Symphony Orchestra, Inc., Miami, FL Mid-Valley Girls Fastpitch Softball Wheeler, OR Kidz Eyes Foundation, Los Angeles, CA League, Inc., Encino, CA North Florida Screaming Eagles, Inc., Kim Eung Hwa & Korean Dance Mid-Wilshire Human Services, MacClenny, FL Academy, Los Angeles, CA Los Angeles, CA North San Fernando Valley Community K L O 8240th Army Veterans Association Midway Village Resident Association, Foundation, Inc., Granada Hills, CA U S A, Los Angeles, CA Inc., Daly City, CA Northern California Earth Institute, Korean-American Alliance for the Minnesota Entrepreneurs, Inc., Oakland, CA Mentally Ill CA, Inc., Walnut, CA Minneapolis, MN Northwest Classical Theatre Company, Korean American Christian Broadcasting, Mission TLC, Inc., of Northeast Florida, Portland, OR Los Angeles, CA Ponte Verde Beach, FL Northwest Sculling Association, Korean American Coalition Hawaii Moores Meamorphosis, Inc., Seattle, WA Chapter, Honolulu, HI San Leandro, CA Northwest Tidal Waves, Marysville, WA Kyo-Youth Foundation, Everett, WA Mt. Everest Ministries, Oakland Young Peoples Theatre, LA Diversified Theater Group, Newport Beach, CA Oakland, CA Venice, CA Mukunghwa Korean School, Oakland, CA Oasis Transitional Housing Program, L A Evangelism College, Los Angeles, CA Music International Connection, Los Angeles, CA L A Jesus Love Mission Center, N. Hollywood, CA O C B Community Service, Inc., La Mirada, CA Music Mission, Monroe, WA Los Angeles, CA Lanakila Hockey Club, Ewa Beach, HI Muslim Community and Human October Sunday Festival, Inc., Laulima Kuhao, Lanai City, HI Development Corporation, Portland, OR St. Thomas, VI Lavender Alliance for Civic Action, My Friends House, Inc., Bend, OR Ohana Foundation, Cupertino, CA Sacramento, CA Na Koa Opio, Waianae, HI Olive Tree Literature Society, Tigard, OR League of Sacramento Theatres, Nac Foundation, Oakland, CA One Voice Foundation, Los Angeles, CA Sacramento, CA Naja, Inc., American Cyn, CA One Way Mission, Redwood City, CA Learning Tools for Kids, Inc., Naranjo Family Homes, Inc., One World One Vision, Inc., Portland, OR Inglewood, CA Jersey City, NJ

May 10, 2004 898 2004-19 I.R.B. Onesimus Jail Ministry, Bellflower, CA Pulaski County Wrestling Club, South Side OKC Boxing Club, Inc., Operation Ezekiel, Inc., Irvine, CA Roanoke, VA Oklahoma City, OK Oregon Premier Fastpitch Softball, Quest for Hearing, Lakewood, WA Southern California Chevra Kadisha, Inc., Portland, OR Rahus Institute, Pleasant Hill, CA N. Hollywood, CA Pacific Northwest Foundation, Canada Rainbow Atelier, Mercedes, TX Southern California Sanctuary for Pacifica Ocean Discovery Center, Regional Organization of Oaxaca, Children, Monrovia, CA Pacifica, CA Los Angeles, CA Special Events for the Disabled, Inc., Paramedics and EMTS Abroad, Inc., Revival Fire Ministries, Amarillo, TX Findlay, OH Silverton, OR Rinconada Ventures Foundation, St. Gregorys A and M Hovespian Parker County Childrens Advocacy San Francisco, CA Child Care Center, Incorporated, Center, Weatherford, TX Robin Hood Society a Humanitarian Pasadena, CA Partnership for Children, Everett, WA Foundation, Thousand Oaks, CA Still People Limited, Oregon City, OR Paul and Adell Lee Community Center, Rosalie Silva Poway Thunder Baseball, Stitches Technology Sewn Products Inc., Oak Park, MI Poway, CA Training Center, Inc., Los Angeles, CA PAVE,Cranberry,PA Rural Georgia Childrens League, Inc., Straight to God Ministries, Inc., Peaceful Streets, San Francisco, CA Buena Vista, GA Corvallis, OR Peggy Cole Ministries International, San Angeles Potbelly Pig Association, Student Voices, Inc., Beaverton, OR Paso Robles, CA Wilmington, DE Sustainable North Bay, Novato, CA People Achieving Recreation & San Diego Blues Society, Inc., Sustainable Policies Institute, Community Services, Malibu, CA San Diego, CA Los Angeles, CA Peoples Helping Hands, Beatyville, KY San Francisco Black Chamber Community Swedish American Music Foundation, Persian Cat Rescue of Northern California, Alliance, San Francisco, CA Minneapolis, MN Castro Valley, CA Save Orcas Bay, Orcas, WA T Rails Foundation, Seattle, WA Personal Financial Management Services, Save Our Brazilian Children, Tacoma Guild for Independent Film, Citrus Heights, CA Grosse Pointe, MI Tacoma, WA Peter John Mission, Los Angeles, CA Save Our Future, Shreveport, LA Te Mano O Te Ra, Walnut Creek, CA Phoenix and U Partners Homeownership, S E A Housing Corporation, Teach Another Generation, Incorporated, Van Nuys, CA Los Angeles, CA Oakland, CA Phoenix Resurrection Foundation, Seattle International Youth Soccer Club, Teams to the Nations, Hudson, OH Seward, AK Seattle, WA Techiah Foundation, San Francisco, CA Pine Creek Assisted Living, Inc., Second Mount Zion Community Technology Math & Science for Our Anchorage, AK Development Corporation, Detroit, MI Youth, Inc., Marietta, GA P L A C E Educational Corporation, Servicio Educacional Caribe, Inc., Tee-Bros, Torrance, CA McMinnville, OR New York, NY Teenage Pregnancy Prevention, Inc., Playwrights Group and LA Writers Seva International, Cerritos, CA Los Angeles, CA Workshop, Inc., Los Angeles, CA Sheriff Boosters Palmdale, Inc., Teens Advocating Non Violence T A N, Point Pleasant Foundation for Excellence Palmdale, CA Los Angeles, CA in Education, Inc., Pt. Pleasant, NJ Shield of Faith Christian Center, Term Limits Leadership Foundation, Polk District Renaissance, Pomona, CA West Redding, CT San Francisco, CA Shiloh Baptist Community Development Texas Publishers Education and Art Portland-Tallinn Friendship City Corporation, Port Norris, NJ Institute, Inc., Dallas, TX Association, Beaverton, OR Shortest Distance Foundation, Threatened Species Recovery Network, Potential Unlimited, Inc., Burbank, CA Corte Madera, CA Burtonsville, MD Sisu Foundation for the Arts, Inc., Tibet Aid Foundation, Everett, WA Preserve Our Water Environment and Honolulu, HI Tinaa Services Association, Juneau, AK Resources, Inc., Rome, GA Soar Business Institute, San Francisco, CA Tour of Unity, University Pl, WA Preserving Social Graces a Calif. Soaring Eagle Education Foundation, Transcend International, Inc., Waianae, HI Nonprofit Public Benefit Corp., Pasadena, CA Triple HHH, Portland, OR Los Angeles, CA Soaring Solo, Issaquah, WA TSC Strategic Ministries, Inc., Professional Women of Colors, Sociedad Benefica Hondurena, Bakersfield, CA Oakland, CA Los Angeles, CA Ujima, Inc., San Bernardino, CA Project Baby Love, Inc., Wenatchee, WA South Central Nursing Homes of Orlando, United Hmong Development, Inc., Project Restore, Inc., Gary, IN Inc., Orlando, FL Sacramento, CA Protecting Americas Children, Inc., South Central World Championship United Lebanese Christians, Palmdale, CA Lake Oswego, OR Entertainment & Association, United Parents for Runaway and PSU Educational Foundation, Inc., Los Angeles, CA Homeless Youth, Eugene, OR Nanuet, NY South Fulton Multi-Purpose Community UnitedWithPride,Inc., Center of Hope, Inc., Union City, GA San Francisco, CA

2004-19 I.R.B. 899 May 10, 2004 Universal Football Conference, Inc., WCFA Survivors, Inc., World Blessing Foundation, Inglewood, CA Baileys Harbor, WI Claremont, CA Up With Eagles, Altadena, CA We Create Miracles, Durham, NC WTL Communications, Merlin, OR Uplift Foundation, Pasadena, CA Wee Care Play & Learn Daycare, Inc., Wyland Institute for Civic Education, Urban Bankers and Financial Services Ogallala, NE Del Mar, CA Alliance, Inc., Foster City, CA West Hollywood Retirement Assistance Youth & Elderly Together Making a Urban Focus Music Foundation, Center, Los Angeles, CA Difference, Inc., Lakeland, FL Hollywood, CA West Los Angeles Jeopardy Program, Youth for Understanding, Urban Portland Interfaith Volunteer Los Angeles, CA San Francisco, CA Caregivers Program, Portland, OR Western Addition Drillettes and Youth in Arts Achievement Program, Inc., Utopa Pharmacutical Corp., Majorettes, Inc., San Francisco, CA Portland, OR Redwood City, CA Western Instituer for Research Youth-Musician Actor Singer and Valley Bulldogs, Woodland Hills, CA and Medical Education, Inc., Stage Performers Foundation, Inc., Veritas Christian Research Ministries, Bakersfield, CA New Bedford, MA Applegate, CA Wheatfields, Inc., Columbus, IN Victory Enterprises and Ministries, White City Youth Boxing Foundation, If an organization listed above submits Reseda, CA White City, OR information that warrants the renewal of Vietnamese Professional Womens Assoc., Whitestone Foundation, Bothell, WA its classification as a public charity or as Portland, OR Whittier Early Learning Center, a private operating foundation, the Inter- Villemin Dresser Music Foundation, Whittier, CA nalRevenueServicewillissuearulingor Malibu, CA Wholistic Health & Healing Association, determinationletterwiththerevisedclas- Visual Arts Hall of Fame, Shreveport, LA Roseville, CA sification as to foundation status. Grantors Voltaire Theatre, Chicago, IL Windward Friends for Adult Education, and contributors may thereafter rely upon W. J. Burns Childrens Preschool, Kailua, HI such ruling or determination letter as pro- Berkeley, CA Wings That Soar, Seattle, WA videdinsection1.509(a)–7oftheIncome Walnut Creek Library Foundation, WL-Central Asia Business Education Tax Regulations. It is not the practice of Walnut Creek, CA Partners, San Leandro, CA the Service to announce such revised clas- Wave Community Development W M F, Inc., Kamuela, HI sification of foundation status in the Inter- Corporation, Los Angeles, CA Women of the Cross, Pacoima, CA nal Revenue Bulletin.

May 10, 2004 900 2004-19 I.R.B. Definition of Terms Revenue rulings and revenue procedures and B, the prior ruling is modified because of a prior ruling, a combination of terms (hereinafter referred to as “rulings”) that it corrects a published position. (Compare is used. For example, modified and su- have an effect on previous rulings use the with amplified and clarified, above). perseded describes a situation where the following defined terms to describe the ef- Obsoleted describes a previously pub- substance of a previously published ruling fect: lished ruling that is not considered deter- is being changed in part and is continued Amplified describes a situation where minative with respect to future transac- without change in part and it is desired to no change is being made in a prior pub- tions. This term is most commonly used in restate the valid portion of the previously lished position, but the prior position is be- a ruling that lists previously published rul- published ruling in a new ruling that is self ingextendedtoapplytoavariationofthe ings that are obsoleted because of changes contained. In this case, the previously pub- fact situation set forth therein. Thus, if in laws or regulations. A ruling may also lished ruling is first modified and then, as an earlier ruling held that a principle ap- be obsoleted because the substance has modified, is superseded. plied to A, and the new ruling holds that the been included in regulations subsequently Supplemented is used in situations in same principle also applies to B, the earlier adopted. which a list, such as a list of the names of ruling is amplified. (Compare with modi- Revoked describes situations where the countries, is published in a ruling and that fied,below). position in the previously published ruling list is expanded by adding further names in Clarified is used in those instances is not correct and the correct position is subsequent rulings. After the original rul- where the language in a prior ruling is be- beingstatedinanewruling. ing has been supplemented several times, a ing made clear because the language has Superseded describes a situation where new ruling may be published that includes caused, or may cause, some confusion. the new ruling does nothing more than re- the list in the original ruling and the ad- It is not used where a position in a prior state the substance and situation of a previ- ditions, and supersedes all prior rulings in ruling is being changed. ously published ruling (or rulings). Thus, the series. Distinguished describes a situation the term is used to republish under the Suspended is used in rare situations where a ruling mentions a previously pub- 1986 Code and regulations the same po- to show that the previous published rul- lished ruling and points out an essential sition published under the 1939 Code and ings will not be applied pending some difference between them. regulations. The term is also used when future action such as the issuance of new Modified is used where the substance it is desired to republish in a single rul- or amended regulations, the outcome of of a previously published position is being ing a series of situations, names, etc., that cases in litigation, or the outcome of a changed. Thus, if a prior ruling held that a were previously published over a period of Service study. principle applied to A but not to B, and the time in separate rulings. If the new rul- new ruling holds that it applies to both A ing does more than restate the substance Abbreviations

The following abbreviations in current use ER—Employer. PRS—Partnership. and formerly used will appear in material ERISA—Employee Retirement Income Security Act. PTE—Prohibited Transaction Exemption. publishedintheBulletin. EX—Executor. Pub. L.—Public Law. F—Fiduciary. REIT—Real Estate Investment Trust. FC—Foreign Country. Rev. Proc.—Revenue Procedure. A—Individual. FICA—Federal Insurance Contributions Act. Rev. Rul.—Revenue Ruling. Acq.—Acquiescence. FISC reign International Sales Company. S diary. B—Individual. —Fo —Subsi FPH—Foreign Personal Holding Company. S.P.R.—Statement of Procedural Rules. BE—Beneficiary. F.R. —Federal Register. Stat.—Statutes at Large. BK—Bank. FUTA eral Unemployment Tax Act. T Corporation. B.T.A.—Board of Tax Appeals. —Fed —Target FX—Foreign corporation. T.C.—Tax Court. C—Individual. G.C.M.—Chief Counsel’s Memorandum. T.D. —Treasury Decision. C.B.—Cumulative Bulletin. GE e. TFE feree. CFR—Code of Federal Regulations. —Grante —Trans GP—General Partner. TFR—Transferor. CI—City. GR—Grantor. T.I.R.—Technical Information Release. COOP—Cooperative. IC nce Company. TP er. Ct.D.—Court Decision. —Insura —Taxpay I.R.B.—Internal Revenue Bulletin. TR—Trust. CY—County. LE—Lessee. TT—Trustee. D—Decedent. LP Partner. U.S.C. ted States Code. DC—Dummy Corporation. —Limited —Uni LR—Lessor. X—Corporation. DE—Donee. M Y Del. Order—Delegation Order. —Minor. —Corporation. Nonacq. nacquiescence. Z ion. DISC—Domestic International Sales Corporation. —No —Corporat O—Organization. DR—Donor. P—Parent Corporation. E—Estate. PHC l Holding Company. EE—Employee. —Persona PO—Possession of the U.S. E.O.—Executive Order. PR—Partner.

2004-19 I.R.B. i May 10, 2004 Numerical Finding List1 Notices— Continued: Revenue Procedures— Continued: 2004-6, 2004-3 I.R.B. 308 2004-2, 2004-1 I.R.B. 83 Bulletins 2004–1 through 2004–19 2004-7, 2004-3 I.R.B. 310 2004-3, 2004-1 I.R.B. 114 Announcements: 2004-8, 2004-4 I.R.B. 333 2004-4, 2004-1 I.R.B. 125 2004-9, 2004-4 I.R.B. 334 2004-5, 2004-1 I.R.B. 167 2004-1, 2004-1 I.R.B. 254 2004-10, 2004-6 I.R.B. 433 2004-6, 2004-1 I.R.B. 197 2004-2, 2004-3 I.R.B. 322 2004-11, 2004-6 I.R.B. 434 2004-7, 2004-1 I.R.B. 237 2004-3, 2004-2 I.R.B. 294 2004-12, 2004-10 I.R.B. 556 2004-8, 2004-1 I.R.B. 240 2004-4, 2004-4 I.R.B. 357 2004-13, 2004-12 I.R.B. 631 2004-9, 2004-2 I.R.B. 275 2004-5, 2004-4 I.R.B. 362 2004-14, 2004-9 I.R.B. 526 2004-10, 2004-2 I.R.B. 288 2004-6, 2004-3 I.R.B. 322 2004-15, 2004-9 I.R.B. 526 2004-11, 2004-3 I.R.B. 311 2004-7, 2004-4 I.R.B. 365 2004-16, 2004-9 I.R.B. 527 2004-12, 2004-9 I.R.B. 528 2004-8, 2004-6 I.R.B. 441 2004-17, 2004-11 I.R.B. 605 2004-13, 2004-4 I.R.B. 335 2004-9, 2004-6 I.R.B. 441 2004-18, 2004-11 I.R.B. 605 2004-14, 2004-7 I.R.B. 489 2004-10, 2004-7 I.R.B. 501 2004-19, 2004-11 I.R.B. 606 2004-15, 2004-7 I.R.B. 490 2004-11, 2004-10 I.R.B. 581 2004-20, 2004-11 I.R.B. 608 2004-16, 2004-10 I.R.B. 559 2004-12, 2004-9 I.R.B. 541 2004-21, 2004-11 I.R.B. 609 2004-17, 2004-10 I.R.B. 562 2004-13, 2004-9 I.R.B. 543 2004-22, 2004-12 I.R.B. 632 2004-18, 2004-9 I.R.B. 529 2004-14, 2004-10 I.R.B. 582 2004-23, 2004-15 I.R.B. 725 2004-19, 2004-10 I.R.B. 563 2004-15, 2004-11 I.R.B. 612 2004-24, 2004-13 I.R.B. 642 2004-20, 2004-13 I.R.B. 642 2004-16, 2004-13 I.R.B. 668 2004-25, 2004-15 I.R.B. 727 2004-21, 2004-14 I.R.B. 702 2004-17, 2004-12 I.R.B. 635 2004-26, 2004-16 I.R.B. 782 2004-22, 2004-15 I.R.B. 727 2004-18, 2004-12 I.R.B. 639 2004-27, 2004-16 I.R.B. 782 2004-23, 2004-16 I.R.B. 785 2004-19, 2004-13 I.R.B. 668 2004-28, 2004-16 I.R.B. 783 2004-24, 2004-16 I.R.B. 790 2004-20, 2004-13 I.R.B. 673 2004-29, 2004-17 I.R.B. 828 2004-25, 2004-16 I.R.B. 791 2004-21, 2004-13 I.R.B. 673 2004-30, 2004-17 I.R.B. 828 2004-26, 2004-19 I.R.B. 890 2004-22, 2004-14 I.R.B. 709 2004-31, 2004-17 I.R.B. 830 2004-27, 2004-17 I.R.B. 831 2004-23, 2004-13 I.R.B. 673 2004-32, 2004-18 I.R.B. 847 Revenue Rulings: 2004-24, 2004-14 I.R.B. 714 2004-33, 2004-18 I.R.B. 847 2004-25, 2004-15 I.R.B. 737 2004-34, 2004-18 I.R.B. 848 2004-1, 2004-4 I.R.B. 325 2004-26, 2004-15 I.R.B. 743 2004-35, 2004-19 I.R.B. 889 2004-2, 2004-2 I.R.B. 265 2004-27, 2004-14 I.R.B. 714 2004-36, 2004-19 I.R.B. 889 2004-3, 2004-7 I.R.B. 486 2004-28, 2004-16 I.R.B. 818 Proposed Regulations: 2004-4, 2004-6 I.R.B. 414 2004-29, 2004-15 I.R.B. 772 2004-5, 2004-3 I.R.B. 295 2004-30, 2004-17 I.R.B. 833 REG-106590-00, 2004-14 I.R.B. 704 2004-6, 2004-4 I.R.B. 328 2004-31, 2004-18 I.R.B. 854 REG-116664-01, 2004-3 I.R.B. 319 2004-7, 2004-4 I.R.B. 327 2004-32, 2004-18 I.R.B. 860 REG-129447-01, 2004-19 I.R.B. 894 2004-8, 2004-10 I.R.B. 544 2004-33, 2004-18 I.R.B. 862 REG-106681-02, 2004-18 I.R.B. 852 2004-9, 2004-6 I.R.B. 428 2004-34, 2004-19 I.R.B. 895 REG-122379-02, 2004-5 I.R.B. 392 2004-10, 2004-7 I.R.B. 484 2004-35, 2004-17 I.R.B. 839 REG-139845-02, 2004-5 I.R.B. 397 2004-11, 2004-7 I.R.B. 480 2004-37, 2004-17 I.R.B. 839 REG-165579-02, 2004-13 I.R.B. 651 2004-12, 2004-7 I.R.B. 478 2004-38, 2004-18 I.R.B. 878 REG-166012-02, 2004-13 I.R.B. 655 2004-13, 2004-7 I.R.B. 485 2004-39, 2004-17 I.R.B. 840 REG-115471-03, 2004-14 I.R.B. 706 2004-14, 2004-8 I.R.B. 511 2004-40, 2004-17 I.R.B. 840 REG-121475-03, 2004-16 I.R.B. 793 2004-15, 2004-8 I.R.B. 515 2004-41, 2004-18 I.R.B. 879 REG-126459-03, 2004-6 I.R.B. 437 2004-16, 2004-8 I.R.B. 503 2004-42, 2004-17 I.R.B. 840 REG-126967-03, 2004-10 I.R.B. 566 2004-17, 2004-8 I.R.B. 516 Court Decisions: REG-128309-03, 2004-16 I.R.B. 800 2004-18, 2004-8 I.R.B. 509 REG-149752-03, 2004-14 I.R.B. 707 2004-19, 2004-8 I.R.B. 510 2078, 2004-16 I.R.B. 773 REG-153172-03, 2004-15 I.R.B. 729 2004-20, 2004-10 I.R.B. 546 REG-156232-03, 2004-5 I.R.B. 399 2004-21, 2004-10 I.R.B. 544 Notices: REG-156421-03, 2004-10 I.R.B. 571 2004-22, 2004-10 I.R.B. 553 2004-1, 2004-2 I.R.B. 268 REG-167217-03, 2004-9 I.R.B. 540 2004-23, 2004-11 I.R.B. 585 2004-2, 2004-2 I.R.B. 269 REG-167265-03, 2004-15 I.R.B. 730 2004-24, 2004-10 I.R.B. 550 2004-25, 2004-11 I.R.B. 587 2004-3, 2004-5 I.R.B. 391 Revenue Procedures: 2004-4, 2004-2 I.R.B. 273 2004-26, 2004-11 I.R.B. 598 2004-5, 2004-7 I.R.B. 489 2004-1, 2004-1 I.R.B. 1 2004-27, 2004-12 I.R.B. 625

1 A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2003–27 through 2003–52 is in Internal Revenue Bulletin 2003–52, dated December 29, 2003.

May 10, 2004 ii 2004-19 I.R.B. Revenue Rulings— Continued: 2004-28, 2004-12 I.R.B. 624 2004-29, 2004-12 I.R.B. 627 2004-30, 2004-12 I.R.B. 622 2004-31, 2004-12 I.R.B. 617 2004-32, 2004-12 I.R.B. 621 2004-33, 2004-12 I.R.B. 628 2004-34, 2004-12 I.R.B. 619 2004-35, 2004-13 I.R.B. 640 2004-36, 2004-12 I.R.B. 620 2004-37, 2004-11 I.R.B. 583 2004-38, 2004-15 I.R.B. 717 2004-39, 2004-14 I.R.B. 700 2004-40, 2004-15 I.R.B. 716 2004-41, 2004-18 I.R.B. 845 2004-42, 2004-17 I.R.B. 824 2004-43, 2004-18 I.R.B. 842 2004-44, 2004-19 I.R.B. 885 Tax Conventions:

2004-3, 2004-7 I.R.B. 486 Treasury Decisions:

9099, 2004-2 I.R.B. 255 9100, 2004-3 I.R.B. 297 9101, 2004-5 I.R.B. 376 9102, 2004-5 I.R.B. 366 9103, 2004-3 I.R.B. 306 9104, 2004-6 I.R.B. 406 9105, 2004-6 I.R.B. 419 9106, 2004-5 I.R.B. 384 9107, 2004-7 I.R.B. 447 9108, 2004-6 I.R.B. 429 9109, 2004-8 I.R.B. 519 9110, 2004-8 I.R.B. 504 9111, 2004-8 I.R.B. 518 9112, 2004-9 I.R.B. 523 9113, 2004-9 I.R.B. 524 9114, 2004-11 I.R.B. 589 9115, 2004-14 I.R.B. 680 9116, 2004-14 I.R.B. 674 9117, 2004-15 I.R.B. 721 9118, 2004-15 I.R.B. 718 9119, 2004-17 I.R.B. 825 9120, 2004-19 I.R.B. 881 9122, 2004-19 I.R.B. 886

2004-19 I.R.B. iii May 10, 2004 Findings List of Current Actions on Revenue Procedures: Revenue Procedures— Continued: Previously Published Items1 2003-3 85-35 As amplified by Rev. Proc. 2003-14, and as Bulletins 2004–1 through 2004–19 Obsoleted by modified by Rev. Proc. 2003-48 superseded by Rev. Proc. 2004-26, 2004-19 I.R.B. 890 Announcements: Rev. Proc. 2004-3, 2004-1 I.R.B. 114 87-19 93-60 2003-4 Obsoleted in part by Obsoleted by Superseded by Rev. Proc. 2004-18, 2004-9 I.R.B. 529 Rev. Proc. 2004-23, 2004-16 I.R.B. 785 Rev. Proc. 2004-4, 2004-1 I.R.B. 125 93-15 2003-56 2003-5 Obsoleted in part by Modified by Superseded by Rev. Proc. 2004-18, 2004-9 I.R.B. 529 Ann. 2004-11, 2004-10 I.R.B. 581 Rev. Proc. 2004-5, 2004-1 I.R.B. 167 94-41 Notices: 2003-6 Superseded by Superseded by Rev. Proc. 2004-15, 2004-7 I.R.B. 490 98-5 Rev. Proc. 2004-6, 2004-1 I.R.B. 197 Withdrawn by 94-55 2003-7 Notice 2004-19, 2004-11 I.R.B. 606 Obsoleted in part by Superseded by Rev. Proc. 2004-18, 2004-9 I.R.B. 529 2000-4 Rev. Proc. 2004-7, 2004-1 I.R.B. 237 Obsoleted by 98-16 2003-8 T.D. 9115, 2004-14 I.R.B. 680 Suspended by Superseded by Notice 2004-12, 2004-10 I.R.B. 556 2003-76 Rev. Proc. 2004-8, 2004-1 I.R.B. 240 Modified by 2000-38 2003-23 Notice 2004-19, 2004-11 I.R.B. 606 Modified by Modified and superseded by Rev. Proc. 2004-11, 2004-3 I.R.B. 311 2004–2 Rev. Proc. 2004-14, 2004-7 I.R.B. 489 Modified by 2000-50 2003-26 Notice 2004–25, 2004–15 I.R.B. 727 Modified by Supplemented by Rev. Proc. 2004-11, 2004-3 I.R.B. 311 Proposed Regulations: Rev. Proc. 2004-17, 2004-10 I.R.B. 562 2001-10 2003-29 REG-110896-98 Modified by Obsoleted, except as provided in section 5.02, by Corrected by Ann. 2004-16, 2004-13 I.R.B. 668 Ann. 2004-14, 2004-10 I.R.B. 582 Rev. Proc. 2004-24, 2004-16 I.R.B. 790 2001-23 2003-64 REG-115037-00 Modified by Modified by Corrected by Ann. 2004-16, 2004-13 I.R.B. 668 Ann. 2004-7, 2004-4 I.R.B. 365 Rev. Proc. 2004-21, 2004-14 I.R.B. 702 2002-9 2004-1 REG-138499-02 Modified and amplified by Corrected by Partially withdrawn by Rev. Rul. 2004-18, 2004-8 I.R.B. 509 Ann. 2004-8, 2004-6 I.R.B. 441 REG-106590-00, 2004-14 I.R.B. 704 Rev. Proc. 2004-23, 2004-16 I.R.B. 785 REG-143321-02 Modified by 2004-4 Withdrawn by Rev. Proc. 2004-11, 2004-3 I.R.B. 311 Modified by Ann. 2004-16, 2004-13 I.R.B. 668 REG-156232-03, 2004-5 I.R.B. 399 Rev. Proc. 2004-15, 2004-7 I.R.B. 490 2002-28 REG-146893-02 2004-5 Modified by Corrected by Modified by Ann. 2004-16, 2004-13 I.R.B. 668 Ann. 2004-7, 2004-4 I.R.B. 365 Rev. Proc. 2004-15, 2004-7 I.R.B. 490 2002-71 REG-163974-02 2004-6 Superseded by Corrected by Modified by Rev. Proc. 2004-13, 2004-4 I.R.B. 335 Ann. 2004-13, 2004-9 I.R.B. 543 Rev. Proc. 2004-15, 2004-7 I.R.B. 490 2003-1 REG-166012-02 Revenue Rulings: Superseded by Corrected by Rev. Proc. 2004-1, 2004-1 I.R.B. 1 55-748 Ann. 2004-40, 2004-17 I.R.B. 840 Modified and superseded by 2003-2 Rev. Rul. 2004-20, 2004-10 I.R.B. 546 Superseded by Rev. Proc. 2004-2, 2004-1 I.R.B. 83

1 A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2003–27 through 2003–52 is in Internal Revenue Bulletin 2003–52, dated December 29, 2003.

May 10, 2004 iv 2004-19 I.R.B. Revenue Rulings— Continued: 92-19 Supplemented in part by Rev. Rul. 2004-14, 2004-8 I.R.B. 511

94-38 Clarified by Rev. Rul. 2004-18, 2004-8 I.R.B. 509

98-25 Clarified by Rev. Rul. 2004-18, 2004-8 I.R.B. 509

2004-38 Modified by Rev. Proc. 2004-22, 2004-15 I.R.B. 727 Treasury Decisions:

9088 Corrected by Ann. 2004-39, 2004-17 I.R.B. 840

2004-19 I.R.B. v*U.S. Government Printing Office: 2004—304–778/60134 May 10, 2004