Internal Revenue Bulletin 2007-50 (PDF rendition): IRS Announcements

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Bulletin No. 200
7-50
December 10, 200
7
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
Rev. Rul. 2007–70, page 1158.
Federal rates; adjusted federal rates; adjusted federal
long-termrateandthelong-termexemptrate.For pur-
poses of sections 382, 642, 1274, 1288, and other sections
of the Code, tables set forth the rates for December 2007.
Rev. Rul. 2
007–72, page 1154.
Diagnosti
c medical procedures.This ruling holds that
amounts pa
id by individuals for certain diagnostic and similar
procedure
sanddevicesaremedicalcareexpensesdeductible
under sec
tion 213 of the Code.
REG–127770–07, page 1171.
Proposed regulations under section 860G of the Code expand
the list of permitted loan modifications to include certain mod-
ifications of commercial mortgages. Changes to the regula-
tions are necessary to better accommodate evolving commer-
cial mortgage industry practices. These changes will affect
lenders, borrowers, servicers, and sponsors of securitizations
of mortgages in REMICs.
Notice 2007–98, page 1160.
This notice announces the phase-out of the qualified hybrid mo-
tor vehicle credit and the new advanced lean burn technology
motor vehicle credit for passenger automobiles and light trucks
manufactured by American Honda Motor Company, Inc., that
are purchased for use or lease in the United States beginning
on January 1, 2008.
Rev. Pr
oc. 2007–70, page 1162.
Option
al standard mileage rates.This procedure an-
nounce
s 50.5 cents as the optional rate for deducting or
accoun
ting for expenses for business use of an automobile,
14 cents as the optional rate for use of an automobile as a
charitable contribution, and 19 cents as the optional rate for
use of an automobile as a medical or moving expense for
2008. The procedure also provides rules for substantiating
the deductible expenses of using an automobile for busi-
ness, moving, medical, or charitable purposes. Rev. Proc.
2006–49 superseded.
Announcement 2007–112, page 1175.
This announcement revises Revenue Procedure 2007–65,
2007–45 I.R.B. 967, by adding the following language to Sec-
tion 3: “The requirements set forth in this revenue procedure
that must be satisfied in order to qualify for the Safe Harbor,
however, are not intended to provide substantive rules and
are not to be used as audit guidelines,” and replacing “will not
challenge” with “will respect” in Section 6.
Announcement 2007–114, page 1176.
This document announces that proposed Form 8926,Disqual-
ified Corporate Interest Expense Disallowed Under Section
163(j) and Related Information, is being posted to the IRS
website.
EMPLOYEE PLANS
Rev. Rul. 2007–71, page 1155.
2008 covered compensation tables; permitted disparity.
The covered compensation tables under section 401 of the
Code for the year 2008 are provided for use in determining
contributions to defined benefit plans and permitted disparity.
(Continued on the next page)
Fi
nding Lists begin on page ii.

ADMINISTRATIVE
Announcement 2007–112, page 1175.
This announcement revises Revenue Procedure 2007–65,
2007–45 I.R.B. 967, by adding the following language to Sec-
tion 3: “The requirements set forth in this revenue procedure
that must be satisfied in order to qualify for the Safe Harbor,
however, are not intended to provide substantive rules and
are not to be used as audit guidelines,” and replacing “will not
challenge” with “will respect” in Section 6.
December 10, 20072007–50 I.R.B.

The IRS Mission
Provide America’s taxpayers top quality service by helping
them understand and meet their tax responsibilities and by
applying the tax law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are compiled semiannually into Cumulative Bulletins,
which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement are not published; however, statements of internal
practices and procedures that affect the rights and duties of
taxpayers are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers
or technical advice to Service field offices, identifying details
and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
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
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B, Leg-
islation and Related Committee Reports.
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
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Sec-
retary (Enforcement).
Part IV
.—Items of General Interest.
This par
t includes notices of proposed rulemakings, disbar-
ment an
d suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The c
ontents 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.
2007–50 I.R.B.December 10, 2007

December 10, 20072007–50 I.R.B.

Part I. Rulings and Decisions Under the Internal Revenue Code
of 1986
Section 42.—Low-Income
Housing Credit
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of December 2007. See Rev. Rul. 2007-70, page
1158.
Section 213.—Medical,
Dental, etc., Expenses
26 CFR 1.213–1: Medical, dental, etc., expenses.
Diagnostic medical procedures.This
ruling holds that amounts paid by individ-
uals for certain diagnostic and similar pro-
cedures and devices are medical care ex-
penses deductible under section 213 of the
Code.
Rev. Rul. 2007–72
ISSUE
Are amounts paid by individuals for
diagnostic and certain similar procedures
and devices, not compensated by insur-
ance or otherwise, medical care expenses
deductible under § 213(a) of the Internal
Revenue Code?
FACTS
In the situations described below, the
costs paid by the taxpayers are not com-
pensated by insurance or otherwise, and
the taxpayers are not experiencing any
symptoms of illness.
Situation 1
TaxpayerAundergoes an annual phys-
ical examination, which is performed by a
physician.Apays for the physician’s ser-
vices and laboratory tests.
Situation 2
TaxpayerBpays for a full-body elec-
tronic scan, a relatively high-cost proce-
dure, performed by a technician at a clinic.
The scan examines the condition ofB’s
internal organs and may identify disease
or other abnormalities.Bhas not con-
sulted a physician before undergoing the
procedure, which canbe obtained without
a physician’s direction, or determined if
less expensive alternatives are available.
Situation 3
TaxpayerCbuys a test kit and uses it to
determine whether she is pregnant.
LAW
Section 213(a) allows a deduction for
expenses paid during the taxable year, not
compensated for by insurance or other-
wise, for medical care of the taxpayer,
spouse, or dependent, to the extent that the
expenses exceed 7.5 percent of adjusted
gross income. Medical care includes
amounts paid for the diagnosis, cure,
mitigation, treatment, or prevention of
disease, or for the purpose of affecting any
structure or function of the body. Section
213(d)(1)(A).
Medical care includes X-rays and lab-
oratory and other diagnostic services.
Amounts paid for obstetrical services are
deemed to be for the purpose of affecting
a structure or function of the body and
therefore are paid for medical care. Sec-
tion 1.213–1(e)(1)(ii) of the Income Tax
Regulations.
“Diagnosis” is the determination of a
medical condition, such as a disease, by
physical examination or study of symp-
toms.Black’s Law Dictionary(8
th
ed.,
2004). A diagnosis may encompass a de-
termination that disease is absent. The de-
termination of a medical condition may in-
clude testing for changes in the functions
of the body, such as those resulting from
pregnancy, that are unrelated to disease.
In determining whether an expense is
for either medical or personal reasons, the
recommendation of a physician is impor-
tant.Havey v. Commissioner, 12 T.C. 409,
412 (1949). However, this determination
is unnecessary in the case of expenses for
items that are wholly medical in nature and
serve no other function in everyday life.
Stringham v. Commissioner, 12 T.C. 580,
584 (court reviewed),aff’d183 F.2d 579
(6
th
Cir. 1950).
The amount of the deduction under
§ 213 is not limited by a ceiling and,
although additional costs for personal con-
venience are not allowable, § 213 does not
limit the deduction to amounts paid for
the least expensive form of medical care
available.Ferris v. Commissioner,582
F.2d 1112, 1116 (7
th
Cir. 1978).
ANALYSIS
InSituation 1,the amountApays for the
annual physical examination is for diagno-
sis and qualifies as an expense for medical
care even thoughAis not experiencing any
symptoms of illness.
InSituation 2, the amountBpays for the
full-body scan is for diagnosis and quali-
fies as an expense for medical care even
thoughBis not experiencing symptoms
of illness and has not obtained a physi-
cian’s recommendation before undergoing
the procedure. The procedure serves no
non-medical function and the expense is
not disallowed because of the high cost or
possible existence of less expensive alter-
natives.
InSituation 3, the amountCpays for
the pregnancy test qualifies as an expense
for medical care even though its purpose is
to test the healthy functioning of the body
rather than to detect disease.
Therefore, the amounts paid by Taxpay-
ersA,B,andCfor the physical examina-
tion, the full-body scan, and the pregnancy
test kit are deductible under § 213(a), sub-
ject to the 7.5 percent floor.
HOLDING
Amounts paid by individuals for diag-
nostic and certain similar procedures and
devices, not compensated by insurance or
otherwise, are medical care expenses de-
ductible under § 213(a), subject to the lim-
itations of that section.
DRAFTING INFORMATION
For further information regarding this
revenue ruling, contact Dan Cassano at
(202) 622–7900 (not a toll-free call).
2007–50 I.R.B.1154December 10, 2007

Section 280G.—Golden
Parachute Payments
Federal short-term, mid-term, and long-term rates
are set forth for the month of December 2007. See
Rev. Rul. 2007-70, page 1158.
Section 382.—Limitation
on Net Operating Loss
Carryforwards and Certain
Built-In Losses Following
Ownership Change
The adjusted applicable federal long-term rate is
set forth for the month of December 2007. See Rev.
Rul. 2007-70, page 1158.
Section 401.—Qualified
Pension, Profit-Sharing,
and Stock Bonus Plans
26 CFR 1.401(l)–1: Permitted disparity in employer-
provided contributions or benefits.
2008 cover
ed compensation tables;
permitted
disparity.The covered com-
pensatio
n tables under section 401 of the
Code for t
he year 2008 are provided for
use in det
ermining contributions to defined
benefit p
lans and permitted disparity.
Rev. Rul. 2007–71
This revenue ruling provides ta-
bles of covered compensation under
§ 401(l)(5)(E) of the Internal Revenue
Code (the “Code”) and the Income Tax
Regulations, thereunder, for the 2008 plan
year.
Section 401(l)(5)(E)(i) defines covered
compensation with respect to an employee,
as the average of the contribution and ben-
efit bases in effect under section 230 of the
Social Security Act (the “Act”) for each
year in the 35-year period ending with the
year in which the employee attains social
security retirement age.
Section 401(l)(5)(E)(ii) of the Code
states that the determination for any year
preceding the year in which the employee
attains social security retirement age shall
be made by assuming that there is no in-
crease in covered compensation after the
determination year and before the em-
ployee attains social security retirement
age.
Section 1.401(l)–1(c)(34) defines the
taxable wage base as the contribution and
benefit base under section 230 of the Act.
Section 1.401(l)–1(c)(7)(i) defines cov-
ered compensation for an employee as the
average (without indexing) of the taxable
wage bases in effect for each calendar year
during the 35-year period ending with the
last day of the calendar year in which the
employee attains (or will attain) social se-
curity retirement age. A 35-year period is
used for all individuals regardless of the
year of birth of the individual. In deter-
mining an employee’s covered compensa-
tion for a plan year, the taxable wage base
for all calendar years beginning after the
first day of the plan year is assumed to be
thesameasthetaxablewagebaseinef-
fect as of the beginning of the plan year.
An employee’s covered compensation for
a plan year beginning after the 35-year pe-
riod applicable under § 1.401(l)–1(c)(7)(i)
is the employee’s covered compensation
for a plan year during which the 35-year
period ends. An employee’s covered com-
pensation for a plan year beginning be-
fore the 35-year period applicable under
§ 1.401(l)–1(c)(7)(i) is the taxable wage
base in effect as of the beginning of the
plan year.
Section 1.401(l)–1(c)(7)(ii) provides
that, for purposes of determining the
amount of an employee’s covered com-
pensation under § 1.401(l)–1(c)(7)(i), a
planmayusetables,providedbytheCom-
missioner, that are developed by rounding
the actual amounts of covered compensa-
tion for different years of birth.
For purposes of determining covered
compensation for the 2008 year the taxable
wage base is $102,000.
The following tables provide covered
compensation for 2008:
ATTACHMENT I
2008 COVERED COMPENSATION TABLE
CALENDAR
YEAR OF
BIRTH
CALENDAR YEAR OF
SOCIAL SECURITY
RETIREMENT AGE
2008 COVERED
COMPENSATION
TABLE II
19071972
$4,488
190819734,704
190919745,004
191019755,316
191119765,664
191219776,060
191319786,480
191419797,044
191519807,692
191619818,460
191719829,300
19
18
19
83
10,2
36
1919198411,232
1920198512,276
1921198613,368
December 10, 200711552007–50 I.R.B.

ATTACHMENT I
2008 COVERED COMPENSATION TABLE
CALENDAR
YEAR OF
BIRTH
CALENDAR YEAR OF
SOCIAL SECURITY
RETIREMENT AGE
2008 COVERED
COMPENSATION
TABLE II
1922198714,520
1923198815,708
1924198916,968
1925199018,312
1926199119,728
1927199221,192
1928199322,716
1929199424,312
1930199525,920
1931199627,576
1932199729,304
1933199831,128
1934199933,060
1935200035,100
1936200137,212
1937200239,444
1938200443,992
1939200546,344
1940200648,816
1941200751,348
1942200853,952
1943200956,484
1944201058,992
1945201161,476
1946201263,912
19
47
20
13
66,3
24
1948201468,580
1949201570,764
1950201672,828
1951201774,820
1952201876,704
1953201978,540
1954202080,328
1955202283,700
1956202385,332
1957202486,880
1958202588,320
1959202689,712
1960202791,044
1961202892,304
1962202993,492
1963203094,656
1964203195,784
1965203296,828
1966203397,788
1967203498,628
1968203599,360
1969203699,984
19702037100,464
19712038100,896
2007–50 I.R.B.1156December 10, 2007

ATTACHMENT I
2008 COVERED COMPENSATION TABLE
CALENDAR
YEAR OF
BIRTH
CALENDAR YEAR OF
SOCIAL SECURITY
RETIREMENT AGE
2008 COVERED
COMPENSATION
TABLE II
19722039101,304
19732040101,640
19742041101,868
1975 and Later2042102,000
2008 Rounded
Covered
Compensation Table
Year of BirthCovered
Compensation
193739,000
1938 - 193945,000
194048,000
194151,000
194254,000
194357,000
1944 - 194560,000
194663,000
194766,000
194869,000
1949 - 195072,000
195175,000
1952 - 195378,000
195481,000
1955 - 195684,000
1957 - 195887,000
1959 - 196090,000
1961 - 196293,000
1963 - 196596,000
196
6 - 1970
99,00
0
1971 and Later102,000
DRAFTING INFORMATION
The principal author of this revenue
ruling is Wayne Bradley of the Employee
Plans, Tax Exempt and Government Enti-
ties Division. For further information re-
garding this revenue ruling, please contact
the Employee Plans taxpayer assistance
telephone service at 1–877–829–5500,
between the hours of 8:30 a.m. and
4:30 p.m.Eastern time, Monday
through Friday (a toll-free number).
Mr. Bradley may be reached via e-mail at
RetirementPlanQuestions@irs.gov.
Section 412.—Minimum
Funding Standards
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of December 2007. See Rev. Rul. 2007-70, page
1158.
Se
ction 467.—Certain
P
ayments for the Use of
Property or Services
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of December 2007. See Rev. Rul. 2007-70, page
1158.
Section 468.—Special
Rules for Mining and Solid
Waste Reclamation and
Closing Costs
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of December 2007. See Rev. Rul. 2007-70, page
1158.
Section 482.—Allocation
of Income and Deductions
Among Taxpayers
Federal short-term, mid-term, and long-term rates
are set forth for the month of December 2007. See
Rev. Rul. 2007-70, page 1158.
December 10, 200711572007–50 I.R.B.

Section 483.—Interest on
Certain Deferred Payments
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of December 2007. See Rev. Rul. 2007-70, page
1158.
Section 642.—Special
Rules for Credits and
Deductions
Federal short-term, mid-term, and long-term rates
are set forth for the month of December 2007. See
Rev. Rul. 2007-70, page 1158.
Section 807.—Rules for
Certain Reserves
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of December 2007. See Rev. Rul. 2007-70, page
1158.
Section 846.—Discounted
Unpaid Losses Defined
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of December 2007. See Rev. Rul. 2007-70, page
1158.
Section 1274.—Determi-
nation of Issue Price in the
Case of Certain Debt Instru-
ments Issued for Property
(Also Sections 42, 280G, 382, 412, 467, 468, 482,
483, 642, 807, 846, 1288, 7520, 7872.)
Federal rates; adjusted federal rates;
adjusted federal long-term rate and the
long-term exempt rate.For purposes of
sections 382, 642, 1274, 1288, and other
sections of the Code, tables set forth the
rates for December 2007.
Rev. Rul. 2007–70
This revenue ruling provides various
prescribed rates for federal income tax
purposes for December 2007 (the current
month). Table 1 contains the short-term,
mid-term, and long-term applicable fed-
eral rates (AFR) for the current month
for purposes of section 1274(d) of the
Internal Revenue Code. Table 2 contains
the short-term, mid-term, and long-term
adjusted applicable federal rates (adjusted
AFR) for the current month for purposes
of section 1288(b). Table 3 sets forth the
adjusted federal long-term rate and the
long-term tax-exempt rate described in
section 382(f). Table 4 contains the ap-
propriate percentages for determining the
low-income housing credit described in
section 42(b)(2) for buildings placed in
service during the current month. Table 5
contains the federalrate for determining
the present value of an annuity, an interest
for life or for a term of years, or a remain-
der or a reversionary interest for purposes
of section 7520. Finally, Table 6 contains
the 2008 interest rate for sections 846 and
807.
REV. RUL. 2007–70 TABLE 1
Applicabl
e Federal Rates (AFR) for December 2007
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-te
rm
AFR3.88%3.84%3.82%3.81%
110% AFR4.26%4.22%4.20%4.18%
120% AFR4.66%4.61%4.58%4.57%
130% AFR5.05%4.99%4.96%4.94%
Mid-term
AFR4.13%4.09%4.07%4.06%
110% AFR4.55%4.50%4.47%4.46%
120% AFR4.97%4.91%4.88%4.86%
130% A
FR
5.39%5.32%5.29%5.26%
150% AFR6.23%6.14%6.09%6.06%
175% AFR7.29%7.16%7.10%7.06%
Long-term
AFR4.72
%
4.67
%
4.64
%
4.63
%
110% AFR5.21%5.14%5.11%5.09%
120% AFR5.68%5.60%5.56%5.54%
130
%AFR
6.1
6%
6.0
7%
6.0
2%
5.9
9%
2007–50 I.R.B.1158December 10, 2007

REV. RUL. 2007–
70 TABLE 2
Adjusted AFR for December 2007
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term adjusted
AFR
3.40%3.37%3.36%3.35%
Mid-term adjusted AFR3.67%3.64%3.62%3.61%
Long-term ad
justed
AFR
4.34%4.29%4.27%4.25%
REV. RUL. 2007–70 TABLE 3
Rates Under Section 382 for December 2007
Adjusted federal long-term rate for the current month4.34%
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.)4.49%
REV. RUL. 2007–70 TABLE 4
Appropriate Percentages Under Section 42(b)(2) for December 2007
Appropriate percentage for the 70% present value low-income housing credit8.03%
Appropriate percentage for the 30% present value low-income housing credit3.44%
REV. RU
L. 2007–70 TABLE 5
Rate Under Section 7520 for December 2007
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 interest5.0%
REV. RUL. 2007–70 TABLE 6
Applicable rate of interest for 2008 for purposes of section 846 and 8074.06%
Sect
ion 1288.—Treatment
of O
riginal Issue Discount
on Tax-Exempt Obligations
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of December 2007. See Rev. Rul. 2007-70, page
1158.
Section 7520.—Valuation
Tables
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of December 2007. See Rev. Rul. 2007-70, page
1158.
Section 7872.—Treatment
of Loans With Below-Market
Interest Rates
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of December 2007. See Rev. Rul. 2007-70, page
1158.
December 10, 200711592007–50 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous
Phase-outofCreditfor
New Qualified Hybrid Motor
Vehicles and New Advanced
Lean Burn Technology Motor
Vehicles
Notice 2007–98
SECTION 1. PURPOSE
This notice announces the credit
phase-out schedule for new advanced
lean burn technology motor vehicles and
new qualified hybrid passenger automo-
biles and light trucks manufactured by
American Honda Motor Company, Inc.
SECTION 2. BACKGROUND
Section 30B(a)(2) of the Internal Rev-
enue Code provides for a credit determined
under § 30B(c) for certain new advanced
lean burn technology motor vehicles. Sec-
tion 30B(a)(3) provides for a credit de-
termined under § 30B(d) for certain new
qualified hybrid motor vehicles. Both the
new advanced lean burn technology motor
vehicle credit and the new qualified hybrid
motor vehicle credit begin to phase out for
a manufacturer’s passenger automobiles
and light trucks in the second calendar
quarter after the calendar quarter in which
at least 60,000 of the manufacturer’s pas-
senger automobiles and light trucks that
qualify for either credit have been sold for
use or lease in the United States (deter-
mined on a cumulative basis for sales after
December 31, 2005). Taxpayers purchas-
ing the manufacturer’s vehicles during the
first two calendar quarters of the phase-out
period may claim only 50 percent of the
otherwise allowable credit. Taxpayers pur-
chasing the manufacturer’s vehicles dur-
ing the third and fourth quarters of the
phase-out period may claim only 25 per-
cent of the otherwise allowable credit. No
credit is available for vehicles purchased
after the last day of the fourth quarter of
the phase-out period.
Notice 2006–9, 2006–6 C.B. 413, pro-
vides procedures for a vehicle manufac-
turer (or, in the case of a foreign vehi-
cle manufacturer, its domestic distributor)
to certify to the Internal Revenue Service
(Service) both (1) that a particular make,
model, and model year of vehicle qualifies
for either the advanced lean burn technol-
ogy motor vehicle credit or the new quali-
fied hybrid motor vehicle credit and (2) the
amount of the credit allowable with respect
to that vehicle.
Section 5.05 of Notice 2006–9 requires
a manufacturer (or, inthe case of a foreign
vehicle manufacturer,its domestic distrib-
utor) that has received from the Service an
acknowledgement of its certification for a
particular make, model, and model year of
vehicle to submit to the Service a report
of the number of qualified vehicles sold
by the manufacturer (or, in the case of a
foreign vehicle manufacturer, its domestic
distributor) to retail dealers during the cal-
endar quarter. A qualified vehicle is de-
fined for this purpose as any passenger au-
tomobile or light truck that is a new ad-
vanced lean burn technology motor vehi-
cle or a new qualified hybrid motor vehi-
cle.
In accordance with section 5.05 of
Notice 2006–9, American Honda Motor
Company, Inc. has submitted quarterly
reports that indicate that its cumulative
sales of qualified vehicles to retail dealers
reached the 60,000-vehicle limit during
the calendar quarter ending September 30,
2007. Accordingly, the credit for all new
advanced lean burn technology motor ve-
hicles or new qualified hybrid passenger
automobiles or light trucks manufactured
by American Honda Motor Company, Inc.
will begin to phase out on January 1, 2008.
SECTION 3. SCOPE OF NOTICE
This notice applies to any make, model,
or model year of new advanced lean burn
technology motor vehicle or new qualified
hybrid passenger automobile or light truck
that is—
(1) manufactured by American Honda
Motor Company, Inc.; and
(2) purchased for use or lease in the
United States on or after January 1, 2008.
SECTION 4. CREDIT AMOUNT
.01In general.If a new advanced lean
burn technology motor vehicle or new
qualified hybrid passenger automobile or
light truck manufactured by American
Honda Motor Company, Inc. is purchased
for use or lease after December 31, 2007,
the allowable credit is as follows:
(1) For vehicles purchased for use or
lease on or after January 1, 2008, and on or
before June 30, 2008, the credit is 50 per-
cent of the otherwise allowable amount de-
termined under § 30B(c) or (d) (whichever
is applicable);
(2) For vehicles purchased for use or
lease on or after July 1, 2008, and on
or before December 31, 2008, the credit
is 25 percent of the otherwise allowable
amount determined under § 30B(c) or (d)
(whichever is applicable); and
(3) For vehicles purchased for use or
lease on or after January 1, 2009, no credit
is allowable.
.02 Certified Vehicles.The following
tables set forth the credit available on or
after January 1, 2008, for hybrid motor ve-
hicles for which American Honda Motor
Company, Inc. received an acknowledge-
ment of its certification from the Service
on or before November 19, 2007:
2007–50 I.R.B.1160December 10, 2007

Table 1
January 1, 2008 — June 30, 2008
Model YearModelCredit Amount
2005Accord Hybrid AT
$325
2005Accord Hybrid Navi AT
$325
2005Civic Hybrid MT
$850
2005Civic Hybrid CVT
$850
2005Insight CVT
$725
2006Accord Hybrid AT with updated
calibration
$650
2006Accord Hybrid Navi AT with updated
calibration
$650
2006Accord Hybrid AT without updated
calibration
$325
2006Accord Hybrid Navi AT without updated
calibration
$325
2006Civic Hybrid CVT
$1050
2006Insight CVT
$725
2007Accord Hybrid AT
$650
2007Accord Hybrid Navi AT
$650
2007Civic Hybrid CVT
$1050
2008Civic Hybrid CVT
$1050
Table 2
July 1, 2008 — December 31, 2008
Model YearModelCredit Amount
2005Accord Hybrid AT
$162.50
2005Accord Hybrid Navi AT
$162.50
2005Civic Hybrid MT
$425
2005Civic Hybrid CVT
$425
2005Insight CVT
$362.50
2006Accord Hybrid AT with updated
calibration
$325
2006Accord Hybrid Navi AT with updated
calibration
$325
2006Accord Hybrid AT without updated
calibration
$162.50
2006Accord Hybrid Navi AT without updated
calibration
$162.50
December 10, 200711612007–50 I.R.B.

Model YearModelCredit Amount
2006Civic Hybrid CVT
$525
2006Insight CVT
$362.50
2007Accord Hybrid AT
$325
2007Accord Hybrid Navi AT
$325
2007Civic Hybrid CVT
$525
2008Civic Hybrid CVT
$525
Table 3
On or After January 1, 2009
Model YearModelCredit Amount
2005Accord Hybrid AT
$0.00
2005Accord Hybrid Navi AT
$0.00
2005Civic Hybrid MT
$0.00
2005Civic Hybrid CVT
$0.00
2005Insight CVT
$0.00
2006Accord Hybrid AT with updated
calibration
$0.00
2006Accord Hybrid Navi AT with updated
calibration
$0.00
2006Accord Hybrid AT without updated
calibration
$0.00
2006Accord Hybrid Navi AT without updated
calibration
$0.00
2006Civic Hybrid CVT
$0.00
2006Insight CVT
$0.00
2007Accord Hybrid AT
$0.00
2007Accord Hybrid Navi AT
$0.00
2007Civic Hybrid CVT
$0.00
2008Civic Hybrid CVT
$0.00
The principal author of this notice is
Nicole R. Cimino of the Office of Asso-
ciate Chief Counsel (Passthroughs & Spe-
cial Industries). For further information
regarding this notice, contact Ms. Cimino
at (202) 622–3110 (not a toll-free call).
26 CFR 601.105: Examination of returns and claims
for refund, credit, or abatement; determination of
correct tax liability.
(Also Part I, §§ 62, 162, 170, 213, 217, 274, 1016;
1.62–2, 1.162–17, 1.170A–1, 1.213–1, 1.217–2,
1.274–5, 1.1016–3.)
Rev. Proc. 2007–70
S
ECTION 1. PURPOSE
This revenue procedure updates Rev.
Proc. 2006–49, 2006–47 I.R.B. 936, and
provides optional standard mileage rates
for employees, self-employed individuals,
or other taxpayers to use in computing
the deductible costs of operating an auto-
mobile for business, charitable, medical,
or moving expense purposes. This rev-
enue procedure also provides rules under
which the amount of ordinary and nec-
essary expenses of local travel or trans-
portation away from home that are paid
or incurred by an employee are deemed
substantiated under § 1.274–5 of the In-
come Tax Regulations if a payor (the em-
ployer, its agent, or a third party) pro-
vides a mileage allowance under a reim-
bursement or other expense allowance ar-
2007–50 I.R.B.1162December 10, 2007

rangement to pay for the expenses. Use
of a method of substantiation described
in this revenue procedure is not manda-
tory and a taxpayer may use actual allow-
able expenses if the taxpayer maintains
adequate records or other sufficient evi-
dence for proper substantiation. The Inter-
nal Revenue Service prospectively adjusts
the business and medical and moving stan-
dard mileage rates annually (to the extent
warranted).
SECTION 2. SUMMARY OF
STANDARD MILEAGE RATES
.01Standard mileage rates
(1) Business (section 5 below)50.5 cents per mile
(2) Charitable contribution (section 7 below)14 cents per mile
(3) Medical and moving (section 7 below)19 cents per mile
.02Determination of standard mileage
rates. The business and medical and mov-
ing standard mileage rates reflected in this
revenue procedure are based on an annual
study of the fixed and variable costs of op-
erating an automobile conducted on behalf
of the Service by an independent contrac-
tor. The charitable contribution standard
mileage rate is provided in § 170(i) of the
Internal Revenue Code.
SECT
ION 3. BACKGROUND AND
CHA
NGES
.01 Section 162(a) allows a deduction
for all the ordinary and necessary expenses
paid or incurred during the taxable year
in carrying on any trade or business. Un-
der that provision, an employee or self-em-
ployed individual may deduct the cost of
operating an automobile to the extent that
it is used in a trade or business. However,
under § 262, no portion of the cost of op-
erating an automobile that is attributable to
personal use is deductible.
.02 Section 274(d) provides, in part,
that no deduction is allowed under § 162
with respect to any listed property (as de-
finedin§280F(d)(4)toincludepassen-
ger automobiles and any other property
used as a means of transportation) unless
the taxpayer complies with certain sub-
stantiation requirements. Section 274(d)
further provides that regulations may pre-
scribe that some or all of the substantiation
requirements do not apply to an expense
that does not exceed an amount prescribed
by the regulations.
.03 Section 1.274–5(j), in part, grants
the Commissioner of Internal Revenue
the authority to establish a method under
which a taxpayer may use mileage rates
to substantiate, for purposes of § 274(d),
the amount of the ordinary and necessary
expenses of using a vehicle for local trans-
portation and transportation to, from, and
at the destination while traveling away
from home.
.04 Section 1.274–5(g), in part, grants
the Commissioner the authority to pre-
scribe rules relating to mileage allowances
for ordinary and necessary expenses of
using a vehicle for local transportation
and transportation to, from, and at the
destination while traveling away from
home. Pursuant to this grant of authority,
the Commissioner may prescribe rules
under which the allowances, if in accor-
dance with reasonable business practice,
will be regarded as (1) equivalent to sub-
stantiation, by adequate records or other
sufficient evidence, of the amount of the
travel and transportation expenses for pur-
poses of § 1.274–5(c), and (2) satisfying
the requirements of an adequate account-
ing to the employer of the amount of the
expenses for purposes of § 1.274–5(f).
.05 Section 62(a)(2)(A) allows an em-
ployee, in determining adjusted gross in-
come, a deduction for the expenses al-
lowedbyPartVI(§161andfollowing),
subchapter B, chapter 1 of the Code, paid
or incurred by the employee in connection
with the performance of services as an em-
ployee under a reimbursement or other ex-
pense allowance arrangement with a payor.
.06 Section 62(c) provides that an ar-
rangement will not be treated as a reim-
bursement or other expense allowance ar-
rangement for purposes of § 62(a)(2)(A) if
it—
(1) does not require the employee to
substantiate the expenses covered by the
arrangement to the payor, or
(2) provides the employee with the right
to retain any amount in excess of the sub-
stantiated expenses covered under the ar-
rangement.
Section 62(c) further provides that
the substantiation requirements described
therein do not apply to any expense to the
extent that, under the grant of regulatory
authority in § 274(d), the Commissioner
has provided that substantiation is not re-
quired for the expense.
.07 Under § 1.62–2(c), a reimburse-
ment or other expense allowance arrange-
ment satisfies the requirements of § 62(c)
if it meets the requirements of business
connection, substantiation, and returning
amounts in excess of expenses as specified
in the regulations. If an arrangement meets
these requirements, all amounts paid under
the arrangement are treated as paid under
an accountable plan and are excluded
from income and wages. If an arrange-
ment does not meet these requirements,
all amounts paid under the arrangement
are treated as paid under a nonaccountable
plan and are included in the employee’s
gross income, must be reported as wages
or compensation on the employee’s Form
W–2, and are subject to the withholding
and payment of employment taxes. Sec-
tion 1.62–2(e)(2) specifically provides
that substantiation of certain business ex-
penses in accordance with rules prescribed
under the authority of § 1.274–5(g) will
be treated as substantiation of the amount
of the expenses for purposes of § 1.62–2.
Under § 1.62–2(f)(2), the Commissioner
may prescribe rules under which an ar-
rangement providing mileage allowances
is treated as satisfying the requirement of
returning amounts in excess of expenses,
even though the arrangement does not
require the employee to return the por-
tion of the allowance that relates to miles
of travel substantiated and that exceeds
the amount of the employee’s expenses
deemed substantiated pursuant to rules
prescribed under § 274(d), provided the
allowance is reasonably calculated not
to exceed the amount of the employee’s
expenses or anticipated expenses and the
December 10, 200711632007–50 I.R.B.

employee is required to return any portion
of the allowance that relates to miles of
travel not substantiated.
.08 Section 1.62–2(h)(2)(i)(B) provides
that if a payor pays a mileage allowance
under an arrangement that meets the re-
quirements of § 1.62–2(c)(1), the portion,
if any, of the allowance that relates to miles
of travel substantiated in accordance with
§ 1.62–2(e), that exceeds the amount of
the employee’s expenses deemed substan-
tiated for the travel pursuant to rules pre-
scribed under § 274(d) and § 1.274–5(g),
and that the employee is not required
to return, is subject to withholding and
payment of employment taxes.See
§§ 31.3121(a)–3, 31.3231(e)–1(a)(5),
31.3306(b)–2, and 31.3401(a)–4 of the
Employment Tax Regulations. Because
the employee is not required to return this
excess portion, the reasonable period of
time provisions of § 1.62–2(g) (relating to
the return of excess amounts) do not apply
to this excess portion.
.09 Under § 1.62–2(h)(2)(i)(B)(4), the
Commissioner may provide special rules
regarding the timing of withholding and
payment of employment taxes on mileage
allowances.
.10 Sections 9.09 and 10.03 of this
revenue procedure refer to Rev. Rul.
2006–56, 2006–46 I.R.B. 874, which
describes circumstances when a payor’s
reimbursement or other expense allowance
arrangement evidences a pattern of abuse
of the rules of § 62(c) and the regulations
thereunder.
SECTION 4. DEFINITIONS
.01Standard mileage rate.Theterm
“standard mileage rate” means the applica-
ble amount provided by the Service for op-
tional use by employees or self-employed
individuals in computing the deductible
costs of operating automobiles (including
vans, pickups, or panel trucks) they own or
lease for business purposes, or by taxpay-
ers in computing the deductible costs of
operating automobiles for charitable, med-
ical, or moving expense purposes.
.02Transportation expenses.Theterm
“transportation expenses” means the ex-
penses of operating an automobile for local
travel or transportation away from home.
.03Mileage allowance.Theterm
“mileage allowance” means a payment
under a reimbursement or other expense
allowance arrangement that is:
(1) paid with respect to the ordinary and
necessary business expenses incurred, or
that the payor reasonably anticipates will
be incurred, by an employee for transporta-
tion expenses in connection with the per-
formance of services as an employee of the
employer,
(2) reasonably calculated not to exceed
the amount of the expenses or the antici-
pated expenses, and
(3) paid at the applicable standard
mileage rate, a flat rate or stated schedule,
or in accordance with any other Ser-
vice-specified rate or schedule.
.04Flat rate or stated schedule.A
mileage allowance is paid at a flat rate or
stated schedule if it is provided on a uni-
form and objective basis with respect to the
expenses described in section 4.03 of this
revenue procedure. The allowance may
be paid periodically at a fixed rate, at a
cents-per-mile rate, at a variable rate based
on a stated schedule, at a rate that com-
bines any of these rates, or on any other
basis that is consistently applied and in ac-
cordance with reasonable business prac-
tice. Thus, for example, a periodic pay-
ment at a fixed rate to cover the fixed
costs (including depreciation (or lease pay-
ments), insurance, registration and license
fees, and personal property taxes) of driv-
ing an automobile in connection with the
performance of services as an employee of
the employer, coupled with a periodic pay-
ment at a cents-per-mile rate to cover the
variable costs (including gasoline and all
taxes thereon, oil, tires, and routine main-
tenance and repairs) of using an automo-
bile for those purposes, is an allowance
paid at a flat rate or stated schedule. Like-
wise, a periodic payment at a variable rate
based on a stated schedule for different lo-
cales to cover the costs of driving an auto-
mobile in connection with the performance
of services as an employee is an allowance
paid at a flat rate or stated schedule.
SECTION 5. BUSINESS STANDARD
MILEAGE RATE
.01In general. The standard mileage
rate for transportation expenses is 50.5
cents per mile for all miles of use for busi-
ness purposes.
.02Use of the business standard
mileage rate. A taxpayer may use the
business standard mileage rate with re-
spect to an automobile that is either owned
or leased by the taxpayer. A taxpayer
generally may deduct an amount equal
to either the business standard mileage
rate times the number of business miles
traveled or the actual costs (both fixed and
variable) paid or incurred by the taxpayer
that are allocable to traveling those busi-
ness miles.
.03Business standard mileage rate in
lieu of fixed and variable costs. A deduc-
tion using the business standard mileage
rate is computed on a yearly basis and is
in lieu of all fixed and variable costs of the
automobile allocable to business purposes
(except as provided in section 9.06 of this
revenue procedure). Items such as depre-
ciation (or lease payments), maintenance
and repairs, tires, gasoline (including all
taxes thereon), oil, insurance, and license
and registration feesare included in fixed
and variable costs for this purpose.
.04Parking fees, tolls, interest, and
taxes. Parking fees and tolls attributable
to use of the automobile for business pur-
poses may be deducted as separate items.
Likewise, interest relating to the purchase
of the automobile as well as state and local
personal property taxes may be deducted
as separate items, but only to the extent al-
lowable under § 163 or § 164, respectively.
Section 163(h)(2)(A) expressly provides
that interest is nondeductible personal
interest if it is paid or accrued on indebt-
edness properly allocable to the trade or
business of performing services as an em-
ployee. Section 164 expressly provides
that state and local taxes that are paid or
accrued by a taxpayer in connection with
an acquisition or disposition of property
are treated as part of the cost of the ac-
quired property or as a reduction in the
amount realized on the disposition of the
property. If the automobile is operated less
than 100 percent for business purposes,
an allocation is required to determine the
business and nonbusiness portion of the
taxes and interest deduction allowable.
.05Depreciation. For owned automo-
biles placed in service for business pur-
poses, and for which the business stan-
dard mileage rate has been used for any
year, depreciation is considered to have
been allowed at the rate of 16 cents per
mile for 2003 and 2004, 17 cents per mile
for 2005 and 2006, 19 cents per mile for
2007, and 21 cents per mile for 2008 for
2007–50 I.R.B.1164December 10, 2007

those years in which the business standard
mileage rate was used. If actual costs were
used for one or more of those years, these
rates do not apply to any year in which ac-
tual costs were used. The depreciation de-
scribed above reduces the basis of the au-
tomobile (but not below zero) in determin-
ing adjusted basis as required by § 1016.
.06Limitations.
(1) The business standard mileage rate
may not be used to compute the deductible
expenses of (a) automobiles used for hire,
such as taxicabs, or (b) five or more auto-
mobiles owned or leased by a taxpayer and
used simultaneously (such as in fleet oper-
ations).
(2) The business standard mileage rate
may not be used to compute the deductible
business expenses of an automobile leased
by a taxpayer unless the taxpayer uses ei-
ther the business standard mileage rate or
a fixed and variable rate allowance (FAVR
allowance) (as provided in section 8 of
this revenue procedure) to compute the de-
ductible business expenses of the automo-
bile for the entire lease period (including
renewals). For a lease commencing on
or before December 31, 1997, the “en-
tire lease period” means the portion of the
lease period (including renewals) remain-
ing after that date.
(3) The business standard mileage rate
may not be used to compute the deductible
expenses of an automobile for which the
taxpayer has (a) claimed depreciation us-
ing a method other than straight-line for its
estimated useful life, (b) claimed a § 179
deduction, (c) claimed the special depre-
ciation allowance under § 168(k), or (d)
used the Accelerated Cost Recovery Sys-
tem (ACRS) under former § 168 or the
Modified Accelerated Cost Recovery Sys-
tem (MACRS) under current § 168. By us-
ing the business standard mileage rate, the
taxpayer has elected to exclude the auto-
mobile (if owned) from MACRS pursuant
to § 168(f)(1). If, after using the busi-
ness standard mileage rate, the taxpayer
uses actual costs, the taxpayer must use
straight-line depreciation for the automo-
bile’s remaining estimated useful life (sub-
ject to the applicable depreciation deduc-
tion limitations under § 280F).
(4) The business standard mileage rate
and this revenue procedure may not be
used to compute the amount of the de-
ductible automobile expenses of an em-
ployee of the United States Postal Service
incurred in performing services involving
the collection and delivery of mail on a ru-
ral route if the employee receives qualified
reimbursements (as defined in § 162(o))
for the expenses.See§ 162(o) for the
rules that apply to these qualified reim-
bursements.
SECTION 6. RESERVED
SECTION 7. CHARITABLE AND
MEDICAL AND MOVING STANDARD
MILEAGE RATES
.01Charitable. Section 170(i) provides
a standard mileage rate of 14 cents per mile
for purposes of computing the charitable
contribution deduction for use of an auto-
mobile in connection with rendering gratu-
itous services to a charitable organization
under § 170.
.02Medical and moving. The standard
mileage rate is 19 cents per mile for use of
an automobile (1) to obtain medical care
described in § 213, or (2) as part of a move
for which the expenses are deductible un-
der § 217.
.03Charitable or medical and moving
standard mileage rates in lieu of variable
expenses. A deduction computed using the
applicable standard mileage rate for chari-
table, medical, or moving expense miles is
in lieu of all variable expenses (including
gasoline and oil) of the automobile alloca-
ble to those purposes. Costs for items such
as depreciation (or lease payments), insur-
ance, and license and registration fees are
not deductible, and are not included in the
charitable or medical and moving standard
mileage rates.
.04Parking fees, tolls, interest, and
taxes. Parking fees and tolls attributable
to the use of the automobile for charitable,
medical, or moving expense purposes may
be deducted as separate items. Interest
relating to the purchase of the automobile
and state and local personal property taxes
are not deductible as charitable, medical,
or moving expenses, but they may be
deducted as separate items to the extent
allowable under § 163 or § 164, respec-
tively.
SECTION8.FIXEDANDVARIABLE
RATE ALLOWANCE
.01In general.
(1) The ordinary and necessary ex-
penses paid or incurred by an employee
in driving an automobile owned or leased
by the employee in connection with the
performance of services as an employee
of the employer are deemed substantiated
(in an amount determined under section 9
of this revenue procedure) when a payor
reimburses those expenses with a mileage
allowance using a flat rate or stated sched-
ule that combines periodic fixed and
variable rate payments that meet all the
requirements of section 8 of this revenue
procedure (a FAVR allowance).
(2) The amount of a FAVR allowance
must be based on data that (a) is derived
from the base locality, (b) reflects retail
prices paid by consumers, and (c) is rea-
sonable and statistically defensible in ap-
proximating the actual expenses employ-
ees receiving the allowance would incur as
owners of the standard automobile.
.02Computation of FAVR allowance.
(1)FAVR allowance.AFAVRal-
lowance includes periodic fixed payments
and periodic variable payments. A payor
may maintain more than one FAVR al-
lowance. A FAVR allowance that uses the
same payor, standard automobile (or an au-
tomobileofthesamemakeandmodelthat
is comparably equipped), retention period,
and business use percentage is considered
one FAVR allowance,even though other
features of the allowance may vary. A
FAVR allowance also includes any op-
tional high mileage payments; however,
optional high mileage payments are in-
cluded in the employee’s gross income,
are reported as wages or other compen-
sation on the employee’s Form W–2, and
are subject to withholding and payment
of employment taxes when paid.Seesec-
tion 9.05 of this revenue procedure. An
optional high mileage payment covers
the additional depreciation for a standard
automobile attributable to business miles
driven and substantiated by the employee
for a calendar year in excess of the annual
business mileage for that year. If an em-
ployee is covered by the FAVR allowance
for less than the entire calendar year, the
annual business mileage may be prorated
on a monthly basis for purposes of the
preceding sentence.
(2)Periodic fixed payment. A periodic
fixed payment covers the projected fixed
costs (including depreciation (or lease pay-
ments), insurance, registration and license
December 10, 200711652007–50 I.R.B.

fees, and personal property taxes) of driv-
ing the standard automobile in connection
with the performance of services as an em-
ployee of the employer in a base locality,
and must be paid at least quarterly. A pe-
riodic fixed payment may be computed by
(a) dividing the total projected fixed costs
of the standard automobile for all years
of the retention period, determined at the
beginning of the retention period, by the
number of periodic fixed payments in the
retention period, and (b) multiplying the
resulting amount by the business use per-
centage.
(3)Periodic variable payment.Aperi-
odic variable payment covers the projected
variable costs (including gasoline and all
taxes thereon, oil, tires, and routine main-
tenance and repairs) of driving a standard
automobile in connection with the perfor-
mance of services as an employee of the
employer in a base locality, and must be
paid at least quarterly. The rate of a pe-
riodic variable payment for a computation
period may be computed by dividing the
total projected variable costs for the stan-
dard automobile for the computation pe-
riod, determined at the beginning of the
computation period, by the computation
period mileage. A computation period can
be any period of a year or less. Compu-
tation period mileage is the total mileage
(business and personal) a payor reason-
ably projects a standard automobile will
be driven during a computation period and
equals the retention mileage divided by the
number of computation periods in the re-
tention period. For each business mile sub-
stantiated by the employee for the com-
putation period, the periodic variable pay-
ment must be paid at a rate that does not ex-
ceed the rate for that computation period.
(4)Base locality. A base locality is
the particular geographic locality or re-
gion of the United States in which the
costs of driving an automobile in connec-
tion with the performance of services as
an employee of the employer are generally
paid or incurred by the employee. Thus,
for purposes of determining the amount
of fixed costs, the base locality is gen-
erally the geographic locality or region
in which the employee resides. For pur-
poses of determining the amount of vari-
able costs, the base locality is generally the
geographic locality or region in which the
employee drives the automobile in connec-
tion with the performance of services as an
employee of the employer.
(5)Standard automobile. A standard
automobile is the automobile selected by
the payor on which a specific FAVR al-
lowance is based.
(6)Standard automobile cost.Thestan-
dard automobile cost for a calendar year
may not exceed 95 percent of the sum of
(a) the retail dealer invoice cost of the stan-
dard automobile in the base locality, and
(b) state and local sales or use taxes appli-
cable on the purchase of the automobile.
Further, the standard automobile cost may
not exceed $27,500.
(7)Annual mileage. Annual mileage is
the total mileage (business and personal)
a payor reasonably projects a standard au-
tomobile will be driven during a calendar
year. Annual mileage equals the annual
business mileage divided by the business
use percentage.
(8)Annual business mileage. Annual
business mileage is the mileage a payor
reasonably projects a standard automobile
will be driven by an employee in connec-
tion with the performance of services as an
employee of the employer during the cal-
endar year, but may not be less than 6,250
miles for a calendar year. Annual business
mileage equals the annual mileage multi-
plied by the business use percentage.
(9)Business use percentage. A busi-
ness use percentage is determined by
dividing the annual business mileage by
the annual mileage. The business use
percentage may not exceed 75 percent.
In lieu of demonstrating the reasonable-
ness of the business use percentage based
on records of total mileage and business
mileage driven by theemployees annually,
a payor may use a business use percentage
that is less than or equal to the following
percentages for a FAVR allowance that
is paid for the following annual business
mileage:
Annual business mileageBusiness use percentage
6,250 or more but less than 10,00045 percent
10,000 or more but less than 15,00055 percent
15,000 or more but less than 20,00065 percent
20,000 or more75 percent
(10)Retention period. A retention pe-
riod is the period in calendar years selected
by the payor during which the payor ex-
pectsanemployeetodriveastandardauto-
mobile in connection with the performance
of services as an employee of the employer
before the automobile is replaced. The
period may not be less than two calendar
years.
(11)Retention mileage. Retention
mileage is the annual mileage multiplied
by the number of calendar years in the
retention period.
(12)Residual value. The residual value
of a standard automobile is the projected
amount for which it could be sold at the
end of the retention period after being
driven the retention mileage. The Ser-
vice will accept the following safe harbor
residual values for a standard automobile
computed as a percentage of the standard
automobile cost:
2007–50 I.R.B.1166December 10, 2007

Retention periodResidual value
2-year70 percent
3-year60 percent
4-year50 percent
.03FAVR allowance in lieu of fixed and
variable costs.
(1) A reimbursement computed using
a FAVR allowance is in lieu of the em-
ployee’s deduction of all the fixed and
variable costs paid or incurred by an em-
ployee in driving the automobile in con-
nection with the performance of services
as an employee of the employer, except
as provided in section 9.06 of this rev-
enue procedure. Items such as deprecia-
tion (or lease payments), maintenance and
repairs, tires, gasoline (including all taxes
thereon), oil, insurance, license and reg-
istration fees, and personal property taxes
are included in fixed and variable costs for
this purpose.
(2) Parking fees and tolls attributable to
an employee driving the standard automo-
bile in connection with the performance of
services as an employee of the employer
are not included in fixed and variable costs
and may be deducted as separate items.
Similarly, interest relating to the purchase
of the standard automobile may be de-
ducted as a separate item, but only to the
extent that the interest is an allowable de-
duction under § 163.
.04Depreciation.
(1) A FAVR allowance may not be paid
with respect to an automobile for which the
employee has (a) claimed depreciation us-
ing a method other than straight-line for its
estimated useful life, (b) claimed a § 179
deduction, (c) claimed the special depreci-
ation allowance under§ 168(k), or (d) used
ACRS under former § 168 or MACRS un-
der current § 168. If an employee uses
actual costs for an owned automobile that
has been covered by a FAVR allowance,
theemployeemustusestraight-linedepre-
ciation for the automobile’s remaining es-
timated useful life (subject to the applica-
ble depreciation deduction limitations un-
der § 280F).
(2) Except as provided in section
8.04(3) of this revenueprocedure, the total
amount of the depreciation component for
the retention period taken into account in
computing the periodic fixed payments
for that retention period may not exceed
the excess of the standard automobile cost
over the residual value of the standard
automobile. In addition, the total amount
of the depreciation component may not
exceed the sum of the annual § 280F lim-
itations on depreciation (in effect at the
beginning of the retention period) that ap-
ply to the standard automobile during the
retention period.
(3) If the depreciation component of pe-
riodic fixed payments exceeds the limi-
tations in section 8.04(2) of this revenue
procedure, that section will be treated as
satisfied in any year during which the to-
tal annual amount of the periodic fixed
payments and the periodic variable pay-
ments made to an employee driving 80 per-
cent of the annual business mileage of the
standard automobile does not exceed the
amount obtained by multiplying 80 per-
cent of the annual business mileage of the
standard automobile by the business stan-
dard mileage rate for that year (under sec-
tion 5.01 of the applicable revenue proce-
dure).
(4) The depreciation included in each
periodic fixed payment portion of a FAVR
allowance paid with respect to an automo-
bile reduces the basis of the automobile
(but not below zero) in determining ad-
justedbasisasrequiredby§1016.See
section 8.07(2) of this revenue procedure
for the requirement that the employer re-
port the depreciation component of a peri-
odic fixed payment to the employee.
.05FAVR allowance limitations.
(1) A FAVR allowance may be paid
only to an employee who substantiates to
the payor for a calendar year at least 5,000
miles driven in connection with the perfor-
mance of services as an employee of the
employer or, if greater, 80 percent of the
annual business mileage of that FAVR al-
lowance. If the employee is covered by
the FAVR allowance for less than the en-
tire calendar year, these limits may be pro-
ratedonamonthlybasis.
(2) A FAVR allowance may not be
paid to a control employee (as defined
in § 1.61–21(f)(5) and (6), excluding
the $100,000 limitation in paragraph
(f)(5)(iii)).
(3)AnemployermaynotpayaFAVR
allowance if at any time during a calendar
year a majority of the employees covered
by the FAVR allowance are management
employees.
(4)AnemployermaynotpayaFAVR
allowance to any employee unless at all
times during a calendar year at least five
employees in total are covered by FAVR
allowances provided by the employer.
(5) A FAVR allowance may be paid
only with respect to an automobile (a)
owned or leased by the employee receiv-
ing the payment, (b) the cost of which, as
a new vehicle (whether or not purchased
new by the employee), was at least 90 per-
cent of the standard automobile cost taken
into account for purposes of determining
the FAVR allowance for the first calendar
year the employee receives the allowance
with respect to that automobile, and (c) the
model year of which does not differ from
the current calendar year by more than the
number of years in the retention period.
(6) A FAVR allowance may not be paid
with respect to an automobile leased by
an employee for which the employee has
used actual expenses to compute the de-
ductible business expenses of the automo-
bile for any year duringtheentireleasepe-
riod. For a lease commencing on or before
December 31, 1997, the “entire lease pe-
riod” means the portion of the lease period
(including renewals) remaining after that
date.
(7) The insurance cost component of
a FAVR allowance must be based on the
rates charged in the base locality for in-
surance coverage on the standard automo-
bile during the current calendar year with-
out taking into account rate-increasing fac-
tors such as poor driving records or young
drivers.
(8) A FAVR allowance may be paid
only to an employee whose insurance cov-
erage limits on the automobile with respect
to which the FAVR allowance is paid are at
December 10, 200711672007–50 I.R.B.

least equal to the insurance coverage lim-
its used to compute the periodic fixed pay-
ment under that FAVR allowance.
.06Employee reporting.Within30
days after an employee’s automobile is
initially covered by a FAVR allowance,
or is again covered by a FAVR allowance
if coverage has lapsed, the employee by
written declaration must provide the payor
with the following information: (1) the
make, model, and year of the employee’s
automobile, (2) written proof of the insur-
ance coverage limits on the automobile,
(3) the odometer reading of the automo-
bile, (4) if owned, the purchase price of
the automobile or, if leased, the price at
which the automobile is ordinarily sold by
retailers (the gross capitalized cost of the
automobile), and (5) if owned, whether
the employee has claimed depreciation
with respect to the automobile using any
of the depreciation methods prohibited by
section 8.04(1) of this revenue procedure
or, if leased, whether the employee has
computed deductible business expenses
with respect to the automobile using actual
expenses. The information described in
(1), (2), and (3) of the preceding sentence
also must be supplied by the employee
to the payor within 30 days after the be-
ginning of each calendar year that the
employee’s automobile is covered by a
FAVR allowance.
.07Payor recordkeeping and reporting.
(1)Thepayororitsagentmustmain-
tain written records setting forth (a) the sta-
tistical data and projections on which the
FAVR allowance payments are based, and
(b) the information provided by the em-
ployees pursuant to section 8.06 of this
revenue procedure.
(2) Within 30 days of the end of each
calendar year, the employer must pro-
vide each employee covered by a FAVR
allowance during that year with a state-
ment that, for automobile owners, lists
the amount of depreciation included in
each periodic fixed payment portion of the
FAVR allowance paid during that calen-
dar year and explains that by receiving a
FAVR allowance the employee has elected
to exclude the automobile from the Mod-
ified Accelerated Cost Recovery System
pursuant to § 168(f)(1). For automobile
lessees, the statement must explain that
by receiving the FAVR allowance the em-
ployee may not compute the deductible
business expenses of the automobile using
actual expenses for the entire lease period
(including renewals). For a lease com-
mencing on or before December 31, 1997,
the “entire lease period” means the portion
of the lease period (including renewals)
remaining after that date.
.08Failure to meet section 8 require-
ments. If an employee receives a mileage
allowance that fails to meet one or more
of the requirements of section 8 of this
revenue procedure, the employee may not
be treated as covered by any FAVR al-
lowance of the payor during the period of
the failure. Nevertheless, the expenses to
which that mileage allowance relates may
be deemed substantiated using the method
described in sections 5, 9.01(1), and 9.02
of this revenue procedure to the extent the
requirements of those sections are met.
SECTION 9. APPLICATION
.01 If a payor pays a mileage allowance
in lieu of reimbursing actual transportation
expenses incurred or to be incurred by an
employee, the amount of the expenses that
is deemed substantiated to the payor is ei-
ther:
(1) for any mileage allowance other
than a FAVR allowance, the lesser of the
amount paid under the mileage allowance
or the applicable standard mileage rate
in section 5.01 of this revenue procedure
multiplied by the number of business miles
substantiated by the employee; or
(2) for a FAVR allowance, the amount
paid under the FAVR allowance less the
sum of (a) any periodic variable rate pay-
ment that relates to miles in excess of the
business miles substantiated by the em-
ployee and that the employee fails to re-
turn to the payor although required to do
so, (b) any portion of a periodic fixed pay-
ment that relates to a period during which
the employee is treated as not covered by
the FAVR allowance and that the employee
fails to return to the payor although re-
quired to do so, and (c) any optional high
mileage payments.
.02 If the amount of transportation ex-
penses is deemed substantiated under the
rulesprovidedinsection9.01ofthisrev-
enue procedure, and the employee actually
substantiates to the payor the elements of
time, place (or use), and business purpose
of the transportation expenses in accor-
dance with paragraphs (b)(2) (travel away
from home) and (b)(6) (listed property,
which includes passenger automobiles and
any other property used as a means of
transportation) of § 1.274–5T, and para-
graph (c) of § 1.274–5, the employee is
deemed to satisfy the adequate account-
ing requirements of § 1.274–5(f) as well
as the requirement to substantiate by ade-
quate records or other sufficient evidence
for purposes of § 1.274–5(c).See also
§ 1.62–2(e)(1) for the rule that, in order to
satisfy the substantiation requirement of an
accountable plan, an arrangement must re-
quire business expenses to be substantiated
to the payor within a reasonable period of
time.
.03 An arrangement providing mileage
allowances will be treated as satisfying the
requirement of § 1.62–2(f)(2) with respect
to returning amounts in excess of expenses
as follows:
(1) For a mileage allowance (other
than a FAVR allowance) paid only at a
cents-per-mile rate, the requirement to
return excess amounts is treated as satis-
fied if the employee is required to return
within a reasonable period of time (as de-
fined in § 1.62–2(g)) any portion of the
allowance that relates to miles of travel
not substantiated by the employee, even
though the arrangement does not require
the employee to return the portion of the
allowance that relates to the miles of travel
substantiated and that exceeds the amount
of the employee’s expenses deemed sub-
stantiated. For example, assume a payor
provides an employee an advance mileage
allowance of $109.00 based on an antici-
pated 200 business miles at 54.5 cents per
mile (at a time when the business standard
mileage rate is 50.5 cents per mile), and
the employee substantiates 120 business
miles. The requirement to return excess
amounts is treated as satisfied if the em-
ployee is required to return the portion
of the allowance that relates to the 80
unsubstantiated business miles ($43.60)
even though the employee is not required
to return the portion of the allowance
($4.80) that exceeds the amount of the em-
ployee’s expenses deemed substantiated
under section 9.01 of this revenue pro-
cedure ($60.60) for the 120 substantiated
business miles. However, the $4.80 excess
portion of the allowance is treated as paid
under a nonaccountable plan as discussed
in section 9.05.
(2) For a mileage allowance (other than
a FAVR allowance) paid other than only
2007–50 I.R.B.1168December 10, 2007

at a cents-per-mile rate, the requirement
to return excess amounts is treated as sat-
isfied if the employee is required to re-
turn within a reasonable period of time
(as defined in § 1.62–2(g)) any portion
of the allowance that exceeds the prod-
uct of the standard mileage rate and the
number of miles of travel substantiated by
the employee. For example, assume a
payor provides an employee an advance
mileage allowance of $400 per month plus
20 cents per mile based on an anticipated
2000 miles for a total of $800 (at a time
when the business standard mileage rate
is 50.5 cents per mile), and the employee
substantiates 1000 business miles. The
requirement to return excess amounts is
treated as satisfied if the employee is re-
quired to return $295, the portion of the
allowance that exceeds the product of the
standard mileage rate and the miles sub-
stantiated ($505).
(3) For a FAVR allowance, the require-
ment to return excess amounts is treated
as satisfied if the employee is required to
return within a reasonable period of time
(as defined in § 1.62–2(g)), (a) the portion
(if any) of the periodic variable payment
received that relates to miles in excess of
the business miles substantiated by the em-
ployee, and (b) the portion (if any) of a pe-
riodic fixed payment that relates to a pe-
riod during which the employee was not
covered by the FAVR allowance.
.04 An employee is not required to
include in gross income the portion of a
mileage allowance received from a payor
that is less than or equal to the amount
deemed substantiated under section 9.01
of this revenue procedure, provided the
employee substantiates in accordance
with section 9.02.See§ 1.274–5T(f)(2)(i).
Assuming that the remaining require-
ments for an accountable plan provided
in § 1.62–2 are satisfied, that portion of
the allowance is treated as paid under an
accountable plan, is not reported as wages
or other compensation on the employee’s
Form W–2, and is exempt from withhold-
ing and payment of employment taxes.
See§ 1.62–2(c)(2) and (c)(4).
.05 An employee is required to include
in gross income the portion of a mileage
allowance received from a payor that ex-
ceeds the amount deemed substantiated
under section 9.01 of this revenue proce-
dure, provided the employee substantiates
in accordance with section 9.02 of this rev-
enue procedure.See§ 1.274–5T(f)(2)(ii).
In addition, the excess portion of the al-
lowance is treated as paid under a nonac-
countable plan, is reported as wages or
other compensation on the employee’s
Form W–2, and is subject to withholding
and payment of employment taxes.See
§ 1.62–2(c)(3)(ii), (c)(5), and (h)(2)(i)(B).
.06 If an employee’s substantiated ex-
penses are less than the employee’s actual
expenses, the following rules apply:
(1) Except as otherwise provided in
section 9.06(2) of this revenue procedure
with respect to leased automobiles, if the
amount of the expenses deemed substan-
tiated under the rules provided in section
9.01 of this revenue procedure is less than
the amount of the employee’s business
transportation expenses, the employee
may claim an itemized deduction for the
amount by which the business transporta-
tion expenses exceed the amount that is
deemed substantiated, provided the em-
ployee substantiates all the business trans-
portation expenses (not just the excess
over the business standard mileage rate),
includes on Form 2106,Employee Busi-
ness Expenses, the deemed substantiated
portion of the mileage allowance received
from the payor, and includes in gross in-
come the portion (if any) of the mileage
allowance received from the payor that
exceeds the amount deemed substantiated.
See§ 1.274–5T(f)(2)(iii). However, for
purposes of claiming this itemized deduc-
tion, substantiation of the amount of the
expenses is not required if the employee
is claiming a deduction that is equal to or
less than the applicable standard mileage
rate multiplied by the number of business
miles substantiated by the employee minus
the amount deemed substantiated under
section 9.01 of this revenue procedure.
The itemized deduction is subject to the
2-percent floor on miscellaneous itemized
deductions provided in § 67.
(2) An employee whose business trans-
portation expenses with respect to a leased
automobile are deemed substantiated un-
der section 9.01(1) of this revenue proce-
dure (relating to an allowance other than a
FAVR allowance) may not claim a deduc-
tion based on actual expenses under sec-
tion 9.06(1) unless the employee does so
consistently beginning with the first busi-
ness use of the automobile after December
31, 1997. An employee whose business
transportation expenses with respect to a
leased automobile are deemed substanti-
ated under section 9.01(2) of this revenue
procedure (relating to a FAVR allowance)
may not claim a deduction based on actual
expenses.
.07Anemployeemaydeductan
amount computed pursuant to section
5.01 of this revenue procedure only as an
itemized deduction. This itemized deduc-
tion is subject to the 2-percent floor on
miscellaneous itemized deductions pro-
vided in § 67.
.08 A self-employed individual may
deduct an amount computed pursuant to
section 5.01 of this revenue procedure in
determining adjusted gross income under
§62(a)(1).
.09 If a payor’s reimbursement or
other expense allowance arrangement ev-
idences a pattern of abuse of the rules of
§ 62(c) and the regulations thereunder,
all payments under the arrangement will
be treated as made under a nonaccount-
able plan.See§ 1.62–2(k) and Rev. Rul.
2006–56. Thus, the payments are included
in the employee’s gross income, are re-
ported as wages or other compensation on
the employee’s Form W–2, and are subject
to withholding and payment of employ-
ment taxes.See§ 1.62–2(c)(3), (c)(5), and
(h)(2), and section 10.03 of this revenue
procedure.
SECTION 10. WITHHOLDING AND
PAYMENT OF EMPLOYMENT TAXES
.01 The portion of a mileage allowance
(other than a FAVR allowance), if any,
that relates to the miles of business travel
substantiated and that exceeds the amount
deemed substantiated for those miles un-
der section 9.01(1) of this revenue pro-
cedure is treated as paid under a nonac-
countable plan and is subject to withhold-
ing and payment of employment taxes.See
§ 1.62–2(h)(2)(i)(B).
(1) In the case of a mileage allowance
paid as a reimbursement, the excess de-
scribedinsection10.01ofthisrevenue
procedure is subject to withholding and
payment of employment taxes in the pay-
roll period in which the payor reimburses
the expenses for the business miles sub-
stantiated.See§ 1.62–2(h)(2)(i)(B)(2).
(2) In the case of a mileage allowance
paid as an advance, the excess described in
section 10.01 of this revenue procedure is
subject to withholding and payment of em-
December 10, 200711692007–50 I.R.B.

ployment taxes no later than the first pay-
roll period following the payroll period in
which the business miles with respect to
which the advance was paid are substanti-
ated.See§ 1.62–2(h)(2)(i)(B)(3). If some
or all of the business miles with respect
to which the advance was paid are not
substantiated within a reasonable period
of time and the employee does not return
the portion of the allowance that relates to
those miles within a reasonable period of
time, the portion of the allowance that re-
lates to those miles is subject to withhold-
ing and payment of employment taxes no
later than the first payroll period follow-
ing the end of the reasonable period.See
§ 1.62–2(h)(2)(i)(A).
(3) In the case of a mileage allowance
that is not computed on the basis of a
fixedamountpermileoftravel(forex-
ample, a mileage allowance that combines
periodic fixed and variable rate payments,
but that does not satisfy the requirements
of section 8 of this revenue procedure),
the payor must compute periodically (no
less frequently than quarterly) the amount,
if any, that exceeds the amount deemed
substantiated under section 9.01(1) of this
revenue procedure by comparing the total
mileage allowance paid for the period to
the standard mileage rate in section 5.01
of this revenue procedure multiplied by the
number of business miles substantiated by
the employee for the period. Any excess
is subject to withholding and payment of
employment taxes no later than the first
payroll period following the payroll pe-
riod in which the excess is computed.See
§ 1.62–2(h)(2)(i)(B)(4).
(4) For example, assume an employer
pays its employees a mileage allowance
under an arrangement that otherwise meets
the requirements of an accountable plan
at a rate of 54.5 cents per mile (when
the business standard mileage rate is 50.5
cents per mile). The employer does not
require the return of the portion of the al-
lowance that exceeds the business standard
mileage rate for the business miles sub-
stantiated (4.0 cents). In June, the em-
ployer advances an employee $272.50 for
500 miles to be traveled during the month.
In July, the employee substantiates to the
employer 400 business miles traveled in
June and returns $54.50 to the employer
for the 100 business miles not traveled.
The amount deemed substantiated for the
400 miles traveled is $202.00 and the em-
ployee is not required to return $16.00. No
later than the first payroll period following
the payroll period in which the 400 busi-
ness miles traveled are substantiated, the
employer must withhold and pay employ-
ment taxes on $16.00.
.02 The portion of a FAVR allowance,
if any, that exceeds the amount deemed
substantiated for those miles under section
9.01(2) of this revenue procedure is sub-
ject to withholding and payment of em-
ployment taxes.See§ 1.62–2(h)(2)(i)(B).
(1) Any periodic variable rate payment
that relates to miles in excess of the busi-
ness miles substantiated by the employee
and that the employee fails to return within
a reasonable period, or any portion of a pe-
riodic fixed payment that relates to a pe-
riod during which the employee is treated
as not covered by the FAVR allowance and
that the employee fails to return within a
reasonable period, is subject to withhold-
ing and payment of employment taxes no
later than the first payroll period follow-
ing the end of the reasonable period.See
§ 1.62–2(h)(2)(i)(A).
(2) Any optional high mileage payment
is subject to withholding and payment of
employment taxes when paid.
.03 If a mileage allowance arrangement
has no mechanism or process to determine
when an allowance exceeds the amount
that may be deemed substantiated and the
arrangement routinely pays allowances in
excess of the amount that may be deemed
substantiated without requiring actual
substantiation of all the expenses or re-
payment of the excess amount, the failure
of the arrangement to treat the excess al-
lowances as wages for employment tax
purposes causes all payments made under
the arrangement to be treated as made un-
der a nonaccountable plan.SeeRev. Rul.
2006–56.
SECTION 11. EFFECTIVE DATE
This revenue procedure is effective
for (1) deductible transportation expenses
paid or incurred on or after January 1,
2008, and (2) mileage allowances or re-
imbursements paid to an employee or
to a charitable volunteer (a) on or after
January 1, 2008, and (b) with respect to
transportation expenses paid or incurred
by the employee or charitable volunteer
on or after January 1, 2008.
SECTION 12. EFFECT ON OTHER
DOCUMENTS
Rev. Proc. 2006–49 is superseded.
DRAFTING INFORMATION
The principal author of this revenue
procedure is Bernard P. Harvey of the Of-
fice of Associate Chief Counsel (Income
Tax and Accounting). For further infor-
mation regarding this revenue procedure,
contact Mr. Harvey at (202) 622–4930
(not a toll-free call).
2007–50 I.R.B.1170December 10, 2007

Part IV. Items of General Interest
Notice of Proposed
Rulemaking
Modifications of Commercial
Mortgage Loans Held by
a Real Estate Mortgage
Investment Conduit (REMIC)
REG–127770–07
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemaking.
SUMMARY: This document contains pro-
posed regulations that would expand the
list of permitted loan modifications to in-
clude certain modifications of commercial
mortgages. Changes to the regulations are
necessary to better accommodate evolving
commercial mortgage industry practices.
These changes will affect lenders, borrow-
ers, servicers, and sponsors of securitiza-
tions of mortgages in REMICs.
DATES: Written or electronic comments
and requests for a public hearing must be
received by February 7, 2008.
ADDRESSES: Send submissions to:
CC:PA:LPD:PR(REG–127770–07),
room 5203, Internal Revenue Ser-
vice, PO Box 7604, Ben Franklin Sta-
tion, Washington, DC 20044. Submis-
sions may be hand-delivered Monday
through Friday between the hours of
8a.m. and4p.m.toCC:PA:LPD:PR
(REG–127770–07), Courier’s Desk, In-
ternal Revenue Service, 1111 Constitution
Avenue, N.W., Washington, DC, or sent
electronically via the Federal eRulemak-
ing Portal atwww.regulations.gov(IRS
REG–127770–07).
FOR FURTHER INFORMATION
CONTACT: Concerning the pro-
posed regulations, Diana Imholtz or
Susan Thompson Baker, (202) 622–3930;
concerning submissions of comments
and requests for a public hearing,
Kelly D. Banks, (202) 622–7180 (not
toll-free numbers).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information contained
in this notice of proposed rulemaking has
been submitted to the Office of Manage-
ment and Budget for review in accordance
with the Paperwork Reduction Act of 1995
(44 U.S.C. 3507(d)). Comments on the
collection of information should be sent to
theOffice of Management and Budget,
Attn: Desk Officer for the Department
of the Treasury, Office of Information
and Regulatory Affairs, Washington, DC
20503, with copies to theInternal Rev-
enue Service, Attn: IRS Reports Clear-
ance Officer, SE:W:CAR:MP:T:T:SP,
Washington, DC 20224. Comments on
the collection of information should be
received by January 8, 2008.
Comments are specifically requested
concerning:
Whether the proposed collection of in-
formation is necessary for the proper per-
formance of the functions of the Internal
Revenue Service, including whether the
information will have practical utility;
The accuracy of the estimated burden
associated with the proposed collection of
information;
How the quality, utility, and clarity of
the information to be collected may be en-
hanced;
How the burden of complying with the
proposed collections of information may
be minimized, including through the appli-
cation of automated collection techniques
or other forms of information technology;
and
Estimates of capital or start-up costs
and costs of operation, maintenance, and
purchase of service to provide information.
The collection of information
in this proposed regulation is in
§1.860G–2(b)(7). This information is
required in order to show that modifi-
cations to mortgages permitted by the
proposed regulation will not cause the
modified mortgage to cease to be a quali-
fied mortgage. The collection of informa-
tion is voluntary to obtain a benefit. The
likely respondents are businesses or other
for-profit institutions.
Estimated total annual reporting bur-
den: 3000 hours.
Estimated average annual burden hours
per respondent: 8.
Estimated annual frequency of re-
sponses: 1.
An agency may not conduct or sponsor,
and a person is not required to respond to, a
collection of information unless it displays
a valid control number assigned by the Of-
fice of Management and Budget.
Books or records relating to a collection
of information must be retained as long
as their contents may become material in
the administration of any internal revenue
law. Generally, tax returns and tax return
information are confidential, as required
by 26 U.S.C. 6103.
Background
This document contains proposed
amendments to 26 CFR part 1 under sec-
tion 860G of the Internal Revenue Code
(Code). The REMIC provisions under
sections 860A through 860G provide for a
pass-through vehicle that issues multiple
classes of interests in pools of residen-
tial and commercial mortgage loans. All
income from the mortgage loans in the
REMIC is taxed to the holders of the reg-
ular and residual interests in the REMIC.
Among the requirements for qualification
are that the mortgage loans held by the
REMIC must consist of “qualified mort-
gages” that are principally secured by an
interest in real property. All loans must be
acquired on the startup day of the REMIC
or within three months thereafter, except
that the REMIC may exchange a defective
loan for a “qualified replacement mort-
gage” for up to two years.
Section 1.860G–2(b)(1) of the In-
come tax regulations (the regulations)
provides that, subject to certain excep-
tions described in §1.860G–2(b)(3), if
an obligation is significantly modified,
then the modified obligation is treated as
one that was newly issued in exchange
for the unmodified obligation that it re-
placed. If such a significant modification
occurs after the obligation has been con-
tributed to the REMIC and the modified
obligation is not a qualified replacement
December 10, 200711712007–50 I.R.B.

mortgage, the modified obligation will not
be a qualified mortgage and the deemed
disposition of the unmodified obligation
will be a prohibited transaction under sec-
tion 860F(a)(2). Section 1.860G–2(b)(2)
defines a “significant modification” as any
change in the terms of an obligation that
would be treated as an exchange of obli-
gations under section 1001 and the related
regulations. The treatment of specific loan
modifications as deemed exchanges is ad-
dressed in §1.1001–3. Section 1.1001–3
defines a loan modification and provides
that a modification that is significant will
be treated as a deemed exchange of the
original loan for a new loan.
Section 1.860G–2(b)(3) of the regula-
tionssetsforthfourtypesofloanmodifi-
cations that are expressly permitted with-
out regard to the section 1001 modification
rules. The four permitted modifications
are: (i) changes in the terms of the obli-
gation occasioned by default or a reason-
ably foreseeable default; (ii) assumption of
the obligation; (iii) waiver of a due-on-sale
clause or a due on encumbrance clause;
and (iv) conversion of an interest rate by a
mortgagor pursuant to the terms of a con-
vertible mortgage.
The present REMIC regulations were
adopted in 1992 at a time when the mort-
gage-backed securities market involved
primarily residential mortgage loans.
Since that time, the securitization of com-
mercial mortgage loans has become more
common. The four types of modifications
that are expressly permitted without re-
gard to the section 1001 modification rules
cover the most common changes affecting
residential mortgage loans, but may not
cover the range of likely changes in com-
mercial mortgage loans.
In Notice 2007–17, 2007–12 I.R.B.
748, the IRS and Treasury Department
solicited input on whether the present
REMIC regulations should be amended to
permit additional types of modifications
incurred in connection with the com-
mercial mortgage loans. In response to
Notice 2007–17, the IRS and Treasury
Department received three comments. See
§601.601(d)(2)(ii)(b).
The first comment set forth a proposal
to add six new types of permissible modi-
fications: (1) a modification that releases,
adds, substitutes or otherwise alters any
portion of the collateral for, a guarantee
of, or other form of credit enhancement
for the obligation, whether recourse or
nonrecourse (other than an alteration that
causes the obligation not to be principally
secured by an interest in real property); (2)
a change in the obligation from recourse
(or substantially all recourse) to nonre-
course (or substantially all nonrecourse),
or vice versa; (3) a change in the date on
which the obligation may be prepaid or
defeased in whole or in part, or addition
of a defeasance provision; (4) substitution
of a new obligor or addition or deletion of
a co-obligor on the obligation; (5) imposi-
tion or waiver of a prepayment penalty or
other fee; and (6) a change of the principal
payment schedule of a loan following a
voluntary or involuntary prepayment of
principal. The secondcomment set forth a
proposal to add two new types of permis-
sible modifications relating to changes in
collateral and defeasance that are substan-
tially similar to proposals (1) and (3) of
the first comment. In addition, the second
comment set forth a proposal to revise the
existing exception for assumptions of the
obligation to include any substitution of
a guarantor for a guarantee on, or other
form of credit enhancement for, an obliga-
tion. The first and second comments also
set forth examples of the most common
changes to commercial loans requested by
commercial borrowers to assist the IRS
and Treasury Department in understand-
ing the particular business need served by
each proposed modification.
Finally, the third comment requested
that the IRS and Treasury Department con-
sider a prior proposal advocating a new
standard to measure materiality for modi-
fications to loans held by a REMIC. Rather
than adding specific types of loan modi-
fications to the list of permitted modifi-
cations, the prior proposal recommended
that the REMIC regulations be revised to
provide that any change in the terms of
a qualified mortgage will not cause it to
cease to be a qualified mortgage so long as
the change does not increase the principal
amount or extend the maturity of the mort-
gage.
IRS and Treasury Department person-
nel, including personnel from Large &
Mid-Size Business (LMSB) and LMSB
Division Counsel, reviewed all comments
and met with certain of the submitting
parties to explore the proposals and the
analysis supporting those proposals. After
consideration of all comments received,
the IRS and Treasury Department believe
that it is appropriate at this time to propose
amendments to the REMIC regulations to
permit certain additional types of modifi-
cations to commercial mortgages.
Explanation of Provisions
1.General
The proposed regulations are intended
to address the concerns raised by the com-
mercial real estate industry that the exist-
ing REMIC regulations do not adequately
accommodate legitimate business prac-
tices existing in the commercial mortgage
securitization market. Submitting parties
have indicated that the real property that
secures a commercial mortgage loan is
typically an active, income-generating,
business property of the commercial loan
borrower. Thus, in contrast to residential
mortgage loans, there is a greater need to
make ongoing changes to the terms of a
commercial mortgage loan. For example,
a borrower may request a release of a par-
cel of land from the lien of the mortgage to
either sell or develop the land. Although
the mortgage continues to be principally
secured by an interest in real property fol-
lowing the release, such a change under
the existing REMIC regulations might
cause the mortgage to cease to be a quali-
fied mortgage.
The legislative history indicates that
REMICs “should be flexible enough
to accommodate most legitimate busi-
ness concerns while preserving the de-
sired certainty of income tax treatment.”
S. Rep. No. 99–313, 99
th
Cong., 2d
Sess., at 792. The legislative history also
indicates that a REMIC, to preserve its
tax status, must consist of a substantially
fixed pool of real estate mortgages and
related assets and have “no powers to vary
the composition of its mortgage assets.”
S. Rep. No. 99–313, 99
th
Cong., 2d Sess.,
at 791–792. Accordingly, the proposed
regulations are intended to strike a balance
between accommodating the legitimate
business concerns of the commercial real
estate industry with the requirement that a
REMIC remain a substantially fixed pool
of mortgages and not be engaged in an
active lending business.
In weighing the business needs of the
industry against Congressional intent that
a REMIC consist of a fixed pool of quali-
2007–50 I.R.B.1172December 10, 2007

fied mortgages that are principally secured
by real property and whose income can be
accurately calculated as of the startup day,
the IRS and Treasury Department applied
four core concepts to each of the proposed
modifications. First, to minimize changes
to REMIC cash flows after the startup day,
the IRS and Treasury Department analyzed
whether a particular modification would
be likely to produce any significant gain or
loss to the REMIC. Second, the IRS and
Treasury Department considered whether
a mortgage loan, if permitted to be mod-
ified as requested by submitting parties,
would remain principally secured by real
property after the modification. Third, the
IRS and Treasury Department examined
the ability of the IRS to review and ad-
minister compliance with the requirements
of a particular modification. Finally, the
IRS and Treasury Department considered
the business needs indicated by the indus-
try for a borrower requesting a particular
modification to the terms of the loan and
whether that business need was adequately
addressed by the current regulations.
2.Proposed Modifications
In applying the four core concepts, the
IRS and Treasury Department determined
that proposals relating to changes in collat-
eral, guarantees and credit enhancement of
an obligation and changes to the recourse
nature of an obligation should be added to
the list of permitted exceptions under sec-
tion 860G to the section 1001 modifica-
tion rules. These changes would be per-
mitted so long as the obligation contin-
uestobeprincipallysecuredbyaninter-
est in real property. The proposed regula-
tions also would clarify that a release of a
lien on real property collateral securing a
mortgage does not disqualify a mortgage
so long as the mortgage continues to be
principally secured by an interest in real
property after giving effect to any releases,
substitutions, additions or other alterations
to the collateral.
Section 1.860G–2(a)(1)ofthecurrent
regulations provides that an obligation is
principally secured by an interest in real
property if the fair market value of the real
property that secures the obligation equals
at least 80 percent of the adjusted issue
price of the obligation. The current regula-
tions require the 80-percent test to be sat-
isfied either at the time the obligation was
originated or at the time the sponsor con-
tributes the obligation to the REMIC. To
ensure that a modified mortgage loan con-
tinues to be principally secured by an in-
terest in real property, the proposed regu-
lations require the 80-percent test to be sat-
isfied at the time the mortgage loan is mod-
ified as determined by an appraisal per-
formed by an independent appraiser.
To support their proposals, commen-
tators provided examples of loan modifi-
cation requests that arise with some fre-
quency in commercial mortgage loan se-
curitizations. The majority of those exam-
ples involved requests to change the secu-
rity or credit enhancement of an obligation.
Accordingly, the IRS and Treasury Depart-
ment expect that, by permitting changes to
collateral and changes to the recourse na-
ture of an obligation without regard to the
section 1001 modification rules, the pro-
posed regulations will resolve many of the
industry’s business concerns arising from
borrower requests to modify commercial
mortgage loans.
3.Other Modifications
In balancing the competing interests
noted in the preceding discussion, how-
ever, the IRS and Treasury Department de-
termined that the remainder of the changes
requested by commentators to accommo-
date business needs of the industry could
not be adopted in the proposed regulations.
First, commentators set forth a proposal to
permit changes to the date on which a com-
mercial mortgage loan may be defeased
and to permit the addition of a defeasance
provision where the original terms of the
mortgage loan do not otherwise provide.
By defeasing a commercial mortgage loan,
the borrower replaces the underlying real
property collateral securing the mortgage
with government securities whose pay-
ments match the mortgage’s payments.
Section 1.860G–2(a)(8) of the current reg-
ulations permits defeasance of a mortgage
loan, under certain conditions, including
the condition that the defeasance not occur
within 2 years of the startup date of the
REMIC. These conditions are intended to
ensure that the defeasance transaction is
undertaken as part of a customary com-
mercialtransactionandnotaspartofan
arrangement to collateralize a REMIC
with obligations that are not real estate
mortgages.
Commentators indicated that while de-
feasance is currently the preferred means
by which a borrower can obtain an early
release from liability on a commercial
mortgage, the original terms of commer-
cial loan documents do not always satisfy
the current defeasance exception. Sub-
mitting parties maintain that expanding
the borrower’s ability to defease does not
violate the policy against replacing real
property securing a commercial mortgage
with other collateral so long as the de-
feasance does not occur within two years
of the startup date. The IRS and Trea-
sury Department believe, however, that
the current defeasance exception already
adequately accommodates the legitimate
business need of providing borrowers with
the ability to defease a mortgage loan if
certain conditions are met. Expanding
the defeasance exception is not warranted
given Congress’ intent that REMICs con-
sist of a substantially fixed pool of real
estate mortgages and related assets.
Second, commentators set forth a pro-
posal to expand the existing exception for
assumptions of the obligation such that any
changes to the obligor on a commercial
mortgage loan, including the addition or
deletion of a co-obligor, would be permit-
ted. In general, a change to the obligor on
a nonrecourse debt instrument is not a sig-
nificant modification for purposes of the
section 1001 modification rules. The sub-
mitting parties indicated that the vast ma-
jority of commercial mortgage loans are
nonrecourse. As a result, permitting a bor-
rower to make changes to the obligor on a
commercial mortgage would not generally
cause the mortgage to cease to be a qual-
ified mortgage. For this reason, the IRS
and Treasury Department do not believe
that expanding the existing exception for
assumptions of the obligation is necessary
to address a business need of the industry
that was not already addressed by the cur-
rent regulations.
Third, the commentators set forth a
proposal to allow for the imposition or
waiver of a prepayment penalty. The
imposition or waiver of a prepayment
penalty generally results in a change in
yield on an obligation and can further
result in a significant modification under
§1.1001–3(e)(2) of the regulations if the
annual yield of the modified obligation
varies from the unmodified obligation by
more than the greater of 25 basis points
December 10, 200711732007–50 I.R.B.

or 5 percent of the yield of the unmodi-
fied instrument. Commentators indicated
that although there is an administrative
burden imposed on the servicer because
the yield change computations are com-
plicated and are performed frequently due
to borrower requests, the change in yield
resulting from an imposition or waiver of
a prepayment penalty does not generally
cause a significant modification and does
not cause the mortgage to cease to be a
qualified mortgage.Accordingly, the IRS
and Treasury Department do not believe
that adoption of this proposal is necessary
to address a business need of the industry
that was not already addressed by the cur-
rent regulations.
Fourth, commentators set forth a pro-
posal to permit changes in the principal
payment schedule following a partial pre-
payment of a mortgage. Commentators in-
dicated that loan documents do not always
provide for a reamortization or other ad-
justment of a principal payment schedule
after a partial principal payment on a loan.
In general, a material deferral of scheduled
principal payments is a significant modi-
fication under the section 1001 modifica-
tion rules. Section 1.1001–3(e)(3)(ii) of
the regulations, however, provides a safe
harbor period that begins on the original
due date of the first deferred payment and
extends for a period equal to the lesser of 5
years or 50 percent of the original term of
the obligation. In addition, apro ratapre-
payment of all of the remaining payments
on an obligation does not result in a modi-
fication of the portion of the obligation that
remains outstanding.
In light of the safe harbor and the rule
forpro rataprepayments, it is not clear to
the IRS and Treasury Department whether
permitting changes to the timing of princi-
pal payments is necessary. In addition, it is
not clear whether a change in the principal
payment schedule of a commercial mort-
gage loan could result in a change in yield
more than the greater of 25 basis points or
5 percent of the yield of the unmodified
loan.
Finally, one commentator advocated a
new standard to measure materiality for
modifications to loans held by a REMIC
that departs from the standards set forth
under section 1001. The IRS and Trea-
sury Department continue to believe that
thesection1001standardshouldgenerally
govern modifications of mortgage loans
held by a REMIC. The IRS and Treasury
Department further believe that adding to
the list of exceptions expressly permitted
without regard to the section 1001 modifi-
cations strikes the appropriate balance be-
tween accommodating the business needs
of the industry with the requirement that a
REMIC remain a substantially fixed pool
of mortgages.
4.Interaction with Section 1001
The additional types of modifications
permitted by the proposed regulations
will exempt the modified obligation from
deemed exchange treatment for purposes
of §1.860G–2(b)(1) of the regulations
only. For example, a commercial mort-
gage loan that is modified from nonre-
course to recourse and continues to be
principally secured by an interest in real
property will continue to be a qualified
mortgage and will not be subject to the
prohibited transaction tax under section
860F(a)(2). Such a modification, how-
ever, is significant under §1.1001–3 and
will be treated as a deemed exchange of
the original mortgage loan for a new mort-
gage loan for purposes of section 1001.
Accordingly, any resulting gain or loss
under section 1001 must be included in
the computation of the REMIC’s taxable
income.
Effective Date
These regulations are proposed to ap-
ply to modifications made to the terms of
an obligation on or after publication of this
document in the Federal Register as a Trea-
sury decision.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a significant
regulatory action as defined in Executive
Order 12866. Therefore, a regulatory as-
sessment is not required. It has also been
determined that section 553(b) of the Ad-
ministrative Procedure Act (5 U.S.C. chap-
ter 5) does not apply to this regulation.
It is hereby certified that the collec-
tion of information requirement in this reg-
ulation will not have a significant eco-
nomic impact on a substantial number of
small business entities. This certification
is based on the fact that the REMICs af-
fected by this regulation will not be clas-
sified as small business entities. Accord-
ing to the Small Business Administration
definition of a “small business,” 13 C.F.R.
121.201, a REMIC is classified under Sec-
tor 52 (Finance and Insurance), Subsector
525 (Funds, Trusts and Other Financial Ve-
hicles) under the category “Other Finan-
cial Vehicle”, NAICS code 525990, and is
only considered a small business entity if it
accumulates less than 6.5 million dollars in
annual receipts. REMICs affected by this
regulation generally hold pools of com-
mercial mortgage loans with an average
loan size of 18.1 million dollars, and have
greater than 6.5 million dollars in annual
receipts. Therefore, a Regulatory Flexibil-
ity Analysis under the Regulatory Flexibil-
ity Act (5 U.S.C. chapter 6) is not required.
Pursuant to section 7805(f) of the Inter-
nal Revenue Code, this regulation has been
submitted to the Chief Counsel for Advo-
cacy of the Small Business Administration
for comment on its impact on small busi-
ness.
Comments and Requests for Public
Hearing
Before these proposed regulations are
adopted as final regulations, considera-
tion will be given to any written (a signed
original and eight (8) copies) or electronic
comments that are submitted timely to
the IRS. The IRS and Treasury Depart-
ment request comments on the clarity of
the proposed rules and how they can be
made easier to understand. All comments
will be available for public inspection and
copying. A public hearing will be sched-
uled if requested in writing by any person
that timely submits written comments. If a
public hearing is scheduled, notice of the
date, time, and place for the public hearing
will be published in theFederal Register.
Drafting Information
The principal author of these proposed
regulations is Diana Imholtz of the Of-
fice of Associate Chief Counsel (Finan-
cial Institutions and Products). Other per-
sonnel from the IRS and Treasury Depart-
ment participated, however, in their devel-
opment.
*****
2007–50 I.R.B.1174December 10, 2007

Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 1 is proposed
to be amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 is amended by adding entries in nu-
merical order to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.860A–0 also issued under 26
U.S.C. 860G(e).
Section 1.860A–1 also issued under 26
U.S.C. 860G(e).
Section 1.860G–2 also issued under 26
U.S.C. 860G(e). * * *
Par. 2. Section 1.860A–0 is amended
by adding an entry for §1.860G–2(b)(7) to
read as follows:
§1.860A–0 Outline of REMIC provisions.
*****
§1.860G–2 Other rules.
*****
(b) * * *
(7) Principally secured test; appraisal
requirement.
*****
Par. 3. Section 1.860A–1 is amended
by adding paragraph (b)(6) to read as fol-
lows:
§1.860A–1 Effective dates and transition
rules.
*****
(b) * * *
(6)Exceptions for certain modi-
fied obligations. Paragraphs (b)(3)(v),
(b)(3)(vi) and (b)(7) of §1.860G–2 apply
to modifications made to the terms of an
obligation on or after the date of publi-
cation of this document in the Federal
register as a Treasury decision.* * * * *
Par. 4. Section 1.860G–2 is amended
by:
1.Revising paragraphs (a)(8),
(b)(3)(iii) and (b)(3)(iv).
2.Adding paragraphs (b)(3)(v),
(b)(3)(vi) and (b)(7).
The additions and revisions read as fol-
lows:
§1.860G–2 Other rules.
(a) * * *
(8)Release of interest in real prop-
erty securing a qualified mortgage; de-
feasance. If a REMIC releases its lien
on real property that secures a qualified
mortgage, that mortgage ceases to be a
qualified mortgage on the date the lien is
released unless —
(i) The REMIC releases its lien pur-
suant to a modification described in para-
graph (b)(3)(v) of this section addressing
changes to the collateral for, guarantees on,
or other form of credit enhancement on a
mortgage; or
(ii) The mortgage is defeased in the fol-
lowing manner —
(A) The mortgagor pledges substitute
collateral that consists solely of govern-
ment securities (as defined in section
2(a)(16) of the Investment Company Act
of 1940 as amended (15 U.S.C. 80a–1));
(B) The mortgage documents allow
such a substitution;
(C) The lien is released to facilitate the
disposition of the property or any other
customary commercial transaction, and
not as part of an arrangement to collater-
alize a REMIC offering with obligations
that are not real estate mortgages; and
(D) The release is not within 2 years of
the startup day.
*****
(b) * * *
(3) * * *
(iii) Waiver of a due-on-sale clause or a
due on encumbrance clause;
(iv) Conversion of an interest rate by a
mortgagor pursuant to the terms of a con-
vertible mortgage;
(v) A modification that releases, substi-
tutes, adds or otherwise alters a substan-
tial amount of the collateral for, a guaran-
tee on, or other form of credit enhancement
for a recourse or nonrecourse obligation,
so long as the obligation continues to be
principally secured by an interest in real
property following such release, substitu-
tion, addition or other alteration; and
(vi) A change in the nature of the obli-
gation from recourse (or substantially all
recourse) to nonrecourse (or substantially
all nonrecourse), so long as the obligation
continues to be principally secured by an
interest in real property following such a
change.
*****
(7)Principally secured test; appraisal
requirement. For purposes of paragraph
(b)(3)(v) and (vi) of this section, in deter-
mining whether an obligation continues to
be principally secured by an interest in real
property, the fair market value of the in-
terest in real property securing the obliga-
tion, determined as of the date of the mod-
ification, must be equal to at least 80 per-
cent of the adjusted issue price of the mod-
ified obligation, determined as of the date
of the modification. For purposes of this
test, the fair market value of the interest in
real property securing the obligation must
be determined by an appraisal performed
by an independent appraiser.
*****
LindaE.Stiff,
Deputy Commissioner for
Services and Enforcement.
(Filed by the Office of the Federal Register on November 8,
2007, 8:45 a.m., and published in the issue of the Federal
Register for November 9, 2007, 72 F.R. 63523)
Wind Energy Partnerships
Announcement 2007–112
This announcement revises Revenue
Procedure 2007–65, 2007–45 I.R.B. 967,
by adding the following language to Sec-
tion 3: “The requirements set forth in this
revenue procedure that must be satisfied
in order to qualify for the Safe Harbor,
however, are not intended to provide sub-
stantive rules and are not to be used as
audit guidelines,” and replacing “will not
challenge” with “will respect” in Section
6.
The principal authors of this announce-
ment are Vishal R. Amin and Richard T.
Probst of the Office of Associate Chief
Counsel (Passthroughs and Special In-
dustries). For furtherinformation regard-
ing this announcement, contact Vishal
R. Amin or Richard T. Probst at (202)
622–3060 (not a toll-free call).
December 10, 200711752007–50 I.R.B.

Disqualified Corporate Interest
Expense Disallowed Under
Section 163(j) and Related
Information
Announcement 2007–114
This announcement alerts the public to
the fact that a new proposed form, Form
8926,Disqualified Corporate Interest Ex-
pense Disallowed Under Section 163(j)
and Related Information, is being posted
on the IRS website. The proposed form
requires corporate taxpayers that either
paid or accrued any disqualified interest
for the taxable year or carried forward
disallowed disqualified interest from prior
taxable years under section 163(j) of the
Internal Revenue Code to provide certain
information relating to the determinations
and computations under section 163(j).
Section 163(j) imposes a limitation on
deductions for interest paid or accrued by
corporations to related persons where the
interest is exempt or partially exempt from
taxation. Section 163(j) also applies to a
corporation that pays or accrues interest to
an unrelated party if the interest is not sub-
ject to a gross basis tax and the guarantor is
a related person who is either a foreign per-
son or a tax-exempt organization as well as
to a taxable REIT subsidiary of a REIT that
pays or accrues interest to the REIT.
Section 424 of the American Jobs Cre-
ation Act of 2004, Public Law 108–357,
118 Stat. 1418 (October 22, 2004), man-
dated that the Secretary of the Treasury or
a delegate conduct a study of the effective-
ness of provisions of the Internal Revenue
Code of 1986 applicable to earnings strip-
ping.
The Treasury Department has con-
ducted a study of earnings stripping as di-
rected by Congress and has issued a report
regarding its findings and recommenda-
tions on this issue. The study recommends
that the relevant tax forms be modified to
require more information about earnings
stripping. Therefore, proposed Form 8926
has been created to obtain information re-
lating to the application of section 163(j).
Proposed Form 8926 solicits informa-
tion relating to the determination and com-
putation of a corporate taxpayer’s section
163(j) limitation, including the determi-
nation of the taxpayer’s debt-to-equity
ratio, net interest expense, adjusted tax-
able income, excess interest expense,
total disqualified interest for the tax
year and the amount of interest deduc-
tion disallowed under section 163(j),
as well as certain information with re-
spect to the related persons receiving
disqualified interest. The proposed form
will be posted on the IRS website at
www.irs.gov/taxpros/topic/index.htmlun-
der Draft Tax Forms.
The principal author of this announce-
ment is Sheila Ramaswamy of the Office
of Associate Chief Counsel (Interna-
tional). However, other personnel from
the Treasury Department and the IRS par-
ticipated in its development. For further
information regarding this announce-
ment, contact Sheila Ramaswamy at (202)
622–3870 (not a toll-free call).
2007–50 I.R.B.1176December 10, 2007

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the ef-
fect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is be-
ingextendedtoapplytoavariationofthe
fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that the
same principle also applies to B, the earlier
ruling is amplified. (Compare withmodi-
fied,below).
Clarifiedis used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion.
It is not used where a position in a prior
ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
withamplifiedandclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
beingstatedinanewruling.
Supersededdescribes a situation where
the new ruling does nothing more than re-
state the substance and situation of a previ-
ously published ruling (or rulings). Thus,
the term is used to republish under the
1986 Code and regulations the same po-
sition published under the 1939 Code and
regulations. The term is also used when
it is desired to republish in a single rul-
ing a series of situations, names, etc., that
were previously published over a period of
time in separate rulings. If the new rul-
ing does more than restate the substance
of a prior ruling, a combination of terms
is used. For example,modifiedandsu-
persededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is self
contained. In this case, the previously pub-
lished ruling is first modified and then, as
modified, is superseded.
Supplementedis used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names in
subsequent rulings. After the original rul-
ing has been supplemented several times, a
new ruling may be published that includes
the list in the original ruling and the ad-
ditions, and supersedes all prior rulings in
the series.
Suspendedis used in rare situations
to show that the previous published rul-
ings will not be applied pending some
future action such as the issuance of new
or amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
DC—Dummy Corporation.
DE—Donee.
Del. Order
—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
December 10, 2007i2007–50 I.R.B.

Numerical Finding List
1
Bulletins 2007–27 through 2007–50
Announcements:
2007-61, 2007-28 I.R.B.84
2007-62, 2007-29 I.R.B.115
2007-63, 2007-30 I.R.B.236
2007-64, 2007-29 I.R.B.125
2007-65, 2007-30 I.R.B.236
2007-66, 2007-31 I.R.B.296
2007-67, 2007-32 I.R.B.345
2007-68, 2007-32 I.R.B.348
2007-69, 2007-33 I.R.B.371
2007-70, 2007-33 I.R.B.371
2007-71, 2007-33 I.R.B.372
2007-72, 2007-33 I.R.B.373
2007-73, 2007-34 I.R.B.435
2007-74, 2007-35 I.R.B.483
2007-75, 2007-36 I.R.B.540
2007-76, 2007-36 I.R.B.560
2007-77, 2007-38 I.R.B.662
2007-78, 2007-38 I.R.B.663
2007-79, 2007-40 I.R.B.749
2007-80, 2007-38 I.R.B.667
2007-81, 2007-38 I.R.B.667
2007-82, 2007-40 I.R.B.749
2007-83, 2007-40 I.R.B.752
2007-84, 2007-41 I.R.B.797
2007-85, 2007-39 I.R.B.719
2007-86, 2007-39 I.R.B.719
2007-87, 2007-40 I.R.B.753
2007-88, 2007-42 I.R.B.801
2007-89, 2007-41 I.R.B.798
2007-90, 2007-42 I.R.B.856
2007-91, 2007-42 I.R.B.857
2007-92, 2007-42 I.R.B.857
2007-93, 2007-42 I.R.B.858
2007-94, 2007-42 I.R.B.858
2007-95, 2007-43 I.R.B.894
2007-96, 2007-42 I.R.B.859
2007-97, 2007-43 I.R.B.895
2007-98, 2007-43 I.R.B.896
2007-99, 2007-43 I.R.B.896
2007-100, 2007-44 I.R.B.922
2007-101, 2007-43 I.R.B.898
2007-102, 2007-44 I.R.B.922
2007-103, 2007-44 I.R.B.923
2007-104, 2007-44 I.R.B.924
2007-105, 2007-45 I.R.B.984
2007-106, 2007-46 I.R.B.1021
2007-107, 2007-46 I.R.B.989
2007-108, 2007-47 I.R.B.1044
2007-109, 2007-47 I.R.B.1045
2007-110, 2007-48 I.R.B.1082
2007-111, 2007-49 I.R.B.
1153
2007-112, 2007-50 I.R.B.1175
Announcements— Continued:
2007-114, 2007-50 I.R.B.1176
Court Decisions:
2083, 2007-46 I.R.B.986
2084, 2007-47 I.R.B.1032
Notices:
2007-54, 2007-27 I.R.B.12
2007-55, 2007-27 I.R.B.13
2007-56, 2007-27 I.R.B.15
2007-57, 2007-29 I.R.B.87
2007-58, 2007-29 I.R.B.88
2007-59, 2007-30 I.R.B.135
2007-60, 2007-35 I.R.B.466
2007-61, 2007-30 I.R.B.140
2007-62, 2007-32 I.R.B.331
2007-63, 2007-33 I.R.B.353
2007-64, 2007-34 I.R.B.385
2007-65, 2007-34 I.R.B.386
2007-66, 2007-34 I.R.B.387
2007-67, 2007-35 I.R.B.467
2007-68, 2007-35 I.R.B.468
2007-69, 2007-35 I.R.B.468
2007-70, 2007-40 I.R.B.735
2007-71, 2007-35 I.R.B.472
2007-72, 2007-36 I.R.B.544
2007-73, 2007-36 I.R.B.545
2007-74, 2007-37 I.R.B.585
2007-75, 2007-39 I.R.B.679
2007-76, 2007-40 I.R.B.735
2007-77, 2007-40 I.R.B.735
2007-78, 2007-41 I.R.B.780
2007-79, 2007-42 I.R.B.809
2007-80, 2007-43 I.R.B.867
2007-81, 2007-44 I.R.B.899
2007-82, 2007-44 I.R.B.904
2007-83, 2007-45 I.R.B.960
2007-84, 2007-45 I.R.B.963
2007-85, 2007-45 I.R.B.965
2007-86, 2007-46 I.R.B.990
2007-87, 2007-45 I.R.B.966
2007-88, 2007-46 I.R.B.993
2007-89, 2007-46 I.R.B.998
2007-90, 2007-46 I.R.B.1003
2007-91, 2007-48 I.R.B.1069
2007-92, 2007-47 I.R.B.1036
2007-93, 2007-48 I.R.B.1072
2007-95, 2007-49 I.R.B.1091
2007-96, 2007-49 I.R.B.1091
2007-97, 2007-49 I.R.B.1092
2007-98, 2007-50 I.R.B.1160
Proposed Regulations:
REG-209020-86, 2007-48 I.R.B.1075
REG-107592-00, 2007-44 I.R.B.908
Proposed Regulations— Continued:
REG-121475-03, 2007-35 I.R.B.474
REG-128274-03, 2007-33 I.R.B.356
REG-114084-04, 2007-33 I.R.B.359
REG-149036-04, 2007-33 I.R.B.365
REG-149036-04, 2007-34 I.R.B.411
REG-101001-05, 2007-36 I.R.B.548
REG-119097-05, 2007-28 I.R.B.74
REG-128843-05, 2007-37 I.R.B.587
REG-142695-05, 2007-39 I.R.B.681
REG-143326-05, 2007-43 I.R.B.873
REG-143397-05, 2007-41 I.R.B.790
REG-147171-05, 2007-32 I.R.B.334
REG-148951-05, 2007-36 I.R.B.550
REG-163195-05, 2007-33 I.R.B.366
REG-118886-06, 2007-37 I.R.B.591
REG-128224-06, 2007-36 I.R.B.551
REG-138707-06, 2007-32 I.R.B.342
REG-139268-06, 2007-34 I.R.B.415
REG-140206-06, 2007-46 I.R.B.1006
REG-142039-06, 2007-34 I.R.B.415
REG-144540-06, 2007-31 I.R.B.296
REG-148393-06, 2007-39 I.R.B.714
REG-103842-07, 2007-28 I.R.B.79
REG-106143-07, 2007-43 I.R.B.881
REG-113891-07, 2007-42 I.R.B.821
REG-114125-07, 2007-46 I.R.B.1012
REG-116215-07, 2007-38 I.R.B.659
REG-118719-07, 2007-37 I.R.B.593
REG-127770-07, 2007-50 I.R.B.1171
REG-129916-07, 2007-43 I.R.B.891
REG-133300-07, 2007-49 I.R.B.1140
REG-134923-07, 2007-47 I.R.B.1037
REG-138637-07, 2007-45 I.R.B.977
Revenue Procedures:
2007-42, 2007-27 I.R.B.15
2007-43, 2007-27 I.R.B.26
2007-44, 2007-28 I.R.B.54
2007-45, 2007-29 I.R.B.89
2007-46, 2007-29 I.R.B.102
2007-47, 2007-29 I.R.B.108
2007-48, 2007-29 I.R.B.110
2007-49, 2007-30 I.R.B.141
2007-50, 2007-31 I.R.B.244
2007-51, 2007-30 I.R.B.143
2007-52, 2007-30 I.R.B.222
2007-53, 2007-30 I.R.B.233
2007-54, 2007-31 I.R.B.293
2007-55, 2007-33 I.R.B.354
2007-56, 2007-34 I.R.B.388
2007-57, 2007-36 I.R.B.547
2007-58, 2007-37 I.R.B.585
2007-59, 2007-40 I.R.B.745
2007-60, 2007-39 I.R.B.679
2007-61, 2007-40 I.R.B.747
1
A cumulative list of all revenue rulings, revenueprocedures, Treasury decisions, etc., publishedin Internal Revenue Bulletins 2007–1 through 2007–26 is in Internal Revenue Bulletin
2007–26, dated June 25, 2007.
2007–50 I.R.B.iiDecember 10, 2007

Revenue Procedures— Continued:
2007-62, 2007-41 I.R.B.786
2007-63, 2007-42 I.R.B.809
2007-64, 2007-42 I.R.B.818
2007-65, 2007-45 I.R.B.967
2007-66, 2007-45 I.R.B.970
2007-67, 2007-48 I.R.B.1072
2007-68, 2007-49 I.R.B.1093
2007-69, 2007-49 I.R.B.1137
2007-70, 2007-50 I.R.B.1162
Revenue Rulings:
2007-42, 2007-28 I.R.B.44
2007-43, 2007-28 I.R.B.45
2007-44, 2007-28 I.R.B.47
2007-45, 2007-28 I.R.B.49
2007-46, 2007-30 I.R.B.126
2007-47, 2007-30 I.R.B.127
2007-48, 2007-30 I.R.B.129
2007-49, 2007-31 I.R.B.237
2007-50, 2007-32 I.R.B.311
2007-51, 2007-37 I.R.B.573
2007-52, 2007-37 I.R.B.575
2007-53, 2007-37 I.R.B.577
2007-54, 2007-38 I.R.B.604
2007-55, 2007-38 I.R.B.604
2007-56, 2007-39 I.R.B.668
2007-57, 2007-36 I.R.B.531
2007-58, 2007-37 I.R.B.562
2007-59, 2007-37 I.R.B.582
2007-60, 2007-38 I.R.B.606
2007-61, 2007-42 I.R.B.799
2007-62, 2007-41 I.R.B.767
2007-63, 2007-41 I.R.B.778
2007-64, 2007-45 I.R.B.953
2007-65, 2007-45 I.R.B.949
2007-66, 2007-45 I.R.B.956
2007-67, 2007-48 I.R.B.1047
2007-69, 2007-49 I.R.B.1083
2007-70, 2007-50 I.R.B.1158
2007-71, 2007-50 I.R.B.1155
2007-72, 2007-50 I.R.B.1154
Social Security Contribution and Benefit
Base; Domestic Employee Coverage
Threshold:
2007-92, 2007-47 I.R.B.1036
Tax Conventions:
2007-75, 2007-36 I.R.B.540
2007-88, 2007-42 I.R.B.801
2007-107, 2007-46 I.R.B.989
Treasury Decisions:
9326, 2007-31 I.R.B.242
9327, 2007-28 I.R.B.50
9328, 2007-27 I.R.B.1
9329, 2007-32 I.R.B.312
9330, 2007-31 I.R.B.239
Treasury Decisions— Continued:
9331, 2007-32 I.R.B.298
9332, 2007-32 I.R.B.300
9333, 2007-33 I.R.B.350
9334, 2007-34 I.R.B.382
9335, 2007-34 I.R.B.380
9336, 2007-35 I.R.B.461
9337, 2007-35 I.R.B.455
9338, 2007-35 I.R.B.463
9339, 2007-35 I.R.B.437
9340, 2007-36 I.R.B.487
9341, 2007-35 I.R.B.449
9342, 2007-35 I.R.B.451
9343, 2007-36 I.R.B.533
9344, 2007-36 I.R.B.535
9345, 2007-36 I.R.B.523
9346, 2007-37 I.R.B.570
9347, 2007-38 I.R.B.624
9348, 2007-37 I.R.B.563
9349, 2007-39 I.R.B.668
9350, 2007-38 I.R.B.607
9351, 2007-38 I.R.B.616
9352, 2007-38 I.R.B.621
9353, 2007-40 I.R.B.721
9354, 2007-41 I.R.B.759
9355, 2007-37 I.R.B.577
9356, 2007-39 I.R.B.675
9357, 2007-41 I.R.B.773
9358, 2007-41 I.R.B.769
9359, 2007-45 I.R.B.931
9360, 2007-43 I.R.B.860
9361, 2007-47 I.R.B.1026
9362, 2007-48 I.R.B.1050
9363, 2007-49 I.R.B.1084
December 10, 2007iii2007–50 I.R.B.

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2007–27 through 2007–50
Announcements:
84-26
Obsoleted by
T.D. 9336, 2007-35 I.R.B.461
84-37
Obsoleted by
T.D. 9336, 2007-35 I.R.B.461
Notices:
89-110
Modified by
REG-142695-05, 2007-39 I.R.B.681
96-13
Superseded by
Notice 2007-96, 2007-49 I.R.B.1091
99-6
Obsoleted as of January 1, 2009 by
T.D. 9356, 2007-39 I.R.B.675
2002-45
Modified by
REG-142695-05, 2007-39 I.R.B.681
2003-81
Modified and supplemented by
Notice 2007-71, 2007-35 I.R.B.472
2005-1
Modified by
Notice 2007-89, 2007-46 I.R.B.998
2006-1
Modified by
Notice 2007-70, 2007-40 I.R.B.735
2006-43
Modified by
T.D. 9332, 2007-32 I.R.B.300
2006-56
Clarified by
Notice 2007-74, 2007-37 I.R.B.585
2006-79
Section 3 modified and superseded by
Notice 2007-86, 2007-46 I.R.B.990
2006-89
Modified by
Notice 2007-67, 2007-35 I.R.B.467
2007-3
Modified by
Notice 2007-69, 2007-35 I.R.B.468
2007-26
Modified by
Notice 2007-56, 2007-27 I.R.B.15
Notices— Continued:
2007-78
Modified by
Notice 2007-86, 2007-46 I.R.B.990
Proposed Regulations:
EE-16-79
Withdrawn by
REG-142695-05, 2007-39 I.R.B.681
EE-130-86
Withdrawn by
REG-142695-05, 2007-39 I.R.B.681
REG-243025-96
Withdrawn by
REG-142695-05, 2007-39 I.R.B.681
REG-105964-98
Withdrawn by
REG-107592-00, 2007-44 I.R.B.908
REG-117162-99
Withdrawn by
REG-142695-05, 2007-39 I.R.B.681
REG-157711-02
Corrected by
Ann. 2007-74, 2007-35 I.R.B.483
REG-119097-05
Hearing location change by
Ann. 2007-81, 2007-38 I.R.B.667
REG-142695-05
Hearing location change by
Ann. 2007-91, 2007-42 I.R.B.857
REG-148951-05
Corrected by
Ann. 2007-94, 2007-42 I.R.B.858
REG-109367-06
Hearing scheduled by
Ann. 2007-66, 2007-31 I.R.B.296
REG-128224-06
Hearing location change by
Ann. 2007-92, 2007-42 I.R.B.857
Corrected by
Ann. 2007-95, 2007-43 I.R.B.894
REG-138707-06
Corrected by
Ann. 2007-79, 2007-40 I.R.B.749
Cancellation of hearing by
Ann. 2007-101, 2007-43 I.R.B.898
REG-143601-06
Corrected by
Ann. 2007-71, 2007-33 I.R.B.372
REG-143797-06
Cancellation of hearing by
Ann. 2007-85, 2007-39 I.R.B.719
Proposed Regulations— Continued:
REG-148393-06
Corrected by
Ann. 2007-98, 2007-43 I.R.B.896
REG-103842-07
Corrected by
Ann. 2007-77, 2007-38 I.R.B.662
REG-116215-07
Corrected by
Ann. 2007-97, 2007-43 I.R.B.895
Revenue Procedures:
90-12
Modified by
Rev. Proc. 2007-66, 2007-45 I.R.B.970
90-27
Superseded by
Rev. Proc. 2007-52, 2007-30 I.R.B.222
95-28
Superseded by
Rev. Proc. 2007-54, 2007-31 I.R.B.293
97-14
Modified and superseded by
Rev. Proc. 2007-47, 2007-29 I.R.B.108
97-27
Modified by
Rev. Proc. 2007-67, 2007-48 I.R.B.1072
98-48
Modified by
T.D. 9353, 2007-40 I.R.B.721
2002-9
Modified and amplified by
Rev. Proc. 2007-48, 2007-29 I.R.B.110
Rev. Proc. 2007-53, 2007-30 I.R.B.233
2002-41
Modified by
Rev. Proc. 2007-66, 2007-45 I.R.B.970
2003-43
Supplemented by
Rev. Proc. 2007-62, 2007-41 I.R.B.786
2004-42
Superseded by
Notice 2007-59, 2007-30 I.R.B.135
2004-48
Supplemented by
Rev. Proc. 2007-62, 2007-41 I.R.B.786
2005-16
Modified by
Rev. Proc. 2007-44, 2007-28 I.R.B.54
2005-27
Superseded by
Rev. Proc. 2007-56, 2007-34 I.R.B.388
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2007–1 through 2007–26 is in Internal Revenue Bulletin 2007–26, dated June 25, 2007.
2007–50 I.R.B.ivDecember 10, 2007

Revenue Procedures— Continued:
2005-66
Clarified, modified, and superseded by
Rev. Proc. 2007-44, 2007-28 I.R.B.54
2006-25
Superseded by
Rev. Proc. 2007-42, 2007-27 I.R.B.15
2006-27
Modified by
Rev. Proc. 2007-49, 2007-30 I.R.B.141
2006-33
Superseded by
Rev. Proc. 2007-51, 2007-30 I.R.B.143
2006-41
Superseded by
Rev. Proc. 2007-63, 2007-42 I.R.B.809
2006-45
Modified and clarified by
Rev. Proc. 2007-64, 2007-42 I.R.B.818
2006-49
Superseded by
Rev. Proc. 2007-70, 2007-50 I.R.B.1162
2006-53
Modified by
Rev. Proc. 2007-60, 2007-39 I.R.B.679
2006-55
Superseded by
Rev. Proc. 2007-43, 2007-27 I.R.B.26
2007-4
Modified by
Notice 2007-69, 2007-35 I.R.B.468
2007-15
Superseded by
Rev. Proc. 2007-50, 2007-31 I.R.B.244
2007-24
Superseded by
Rev. Proc. 2007-68, 2007-49 I.R.B.1093
Revenue Rulings:
54-378
Clarified by
Rev. Rul. 2007-51, 2007-37 I.R.B.573
65-18
Revoked by
Rev. Rul. 2007-69, 2007-49 I.R.B.1083
67-93
Obsoleted by
T.D. 9347, 2007-38 I.R.B.624
69-141
Modified by
REG-142695-05, 2007-39 I.R.B.681
Revenue Rulings— Continued:
72-605
Amplified by
Rev. Rul. 2007-69, 2007-49 I.R.B.1083
74-299
Amplified by
Rev. Rul. 2007-48, 2007-30 I.R.B.129
75-425
Obsoleted by
Rev. Rul. 2007-60, 2007-38 I.R.B.606
76-278
Obsoleted by
T.D. 9354, 2007-41 I.R.B.759
76-288
Obsoleted by
T.D. 9354, 2007-41 I.R.B.759
76-450
Obsoleted by
T.D. 9347, 2007-38 I.R.B.624
78-257
Obsoleted by
T.D. 9347, 2007-38 I.R.B.624
78-369
Revoked by
Rev. Rul. 2007-53, 2007-37 I.R.B.577
89-96
Amplified by
Rev. Rul. 2007-47, 2007-30 I.R.B.127
92-17
Modified by
Rev. Rul. 2007-42, 2007-28 I.R.B.44
94-62
Supplemented by
Rev. Rul. 2007-58, 2007-37 I.R.B.562
2001-48
Modified by
T.D. 9332, 2007-32 I.R.B.300
2001-62
Modified by
Rev. Rul. 2007-67, 2007-48 I.R.B.1047
2002-41
Modified by
REG-142695-05, 2007-39 I.R.B.681
2003-102
Modified by
REG-142695-05, 2007-39 I.R.B.681
2005-24
Modified by
REG-142695-05, 2007-39 I.R.B.681
2006-36
Modified by
REG-142695-05, 2007-39 I.R.B.681
Revenue Rulings— Continued:
2006-57
Modified by
Notice 2007-76, 2007-40 I.R.B.735
2007-54
Suspended by
Rev. Rul. 2007-61, 2007-42 I.R.B.799
2007-59
Amplified by
Notice 2007-74, 2007-37 I.R.B.585
Treasury Decisions:
8073
Removed by
T.D. 9349, 2007-39 I.R.B.668
9321
Corrected by
Ann. 2007-68, 2007-32 I.R.B.348
Ann. 2007-78, 2007-38 I.R.B.663
9330
Corrected by
Ann. 2007-80, 2007-38 I.R.B.667
9332
Corrected by
Ann. 2007-83, 2007-40 I.R.B.752
Ann. 2007-84, 2007-41 I.R.B.797
9334
Corrected by
Ann. 2007-93, 2007-42 I.R.B.858
9340
Corrected by
Ann. 2007-102, 2007-44 I.R.B.922
9353
Corrected by
Ann. 2007-103, 2007-44 I.R.B.923
December 10, 2007v2007–50 I.R.B.

2007–50 I.R.B.December 10, 2007

December 10, 20072007–50 I.R.B.

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