Internal Revenue Bulletin 2008-3 (PDF rendition): IRS Revenue Procedures

Preserve advance releases and the authoritative Internal Revenue Bulletin rendition; directory timestamps are file-publication metadata, not legal effective dates. HTML bulletins begin June 2003; earlier available issues require full PDF parsing. Whole bulletin rendition: numbered items are identified below; other legal material and publisher context remain included. This is not a new standalone advance release.

Bulletin No. 200
8-3
January 22, 2008
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. 2008–4, page 272.
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 January 2008.
Rev. Rul. 2008–5, page 271.
Loss from wash sales of stock or securities.This ruling
provides that if an individual sells stock or securities for a loss
and causes his or her IRA or Roth IRA to purchase substantially
identical stock or securities within a specified period, the loss
on the sale of the stock or securities is disallowed under sec-
tion 1091 of the Code, and the individual’s basis in the IRA or
Roth IRA is not increased by virtue of section 1091(d).
Rev. Rul. 2008–6, page 271.
Indian Housing Block Grant (IHBG) Program.This rul-
ing advises taxpayers that certain rental assistance payments
made to a building owner on behalf or in respect of a tenant
under the Indian Housing Block Grant (IHBG) Program are not
grants made with respect to a building or its operation under
section 42(d)(5) of the Code.
Notice 2008–8, page 276.
This notice clarifies that the information reporting requirements
under section 6039 of the Code apply to certain stock trans-
fers occurring on or after January 1, 2007. Because new regu-
lations under section 6039 have not yet been issued, the IRS is
waiving the obligation to make an information return for 2007
stock transfers governed by section 6039. This notice ex-
plains, however, that corporations should continue to furnish to
employees the information, required by and in accordance with
existing section 1.6039–1, with respect to such stock trans-
fers.
Notice 2008–9, page 277.
Section 1502.This notice provides that final regulations un-
der section 1.1502–36 will not apply to a transfer to an unre-
lated person if the transfer is pursuant to an agreement that is
binding before the date the regulations are published and at all
times thereafter.
Notice 2008–10, page 277.
This notice announces the intention to issue regulations under
section 367(a) of the Code to clarify that certain outbound re-
organizations that effectively repatriate earnings of foreign cor-
porations to U.S. corporations will be subject to recognition of
gain under section 367(a)(1).
EMPLOYEE PLANS
Notice 2008–7, page 276.
Diversification; transition rules; extension.This notice
provides an extension of certaintransitional rules with respect
to the diversification requirements of publicly traded securities
for certain defined contribution plans. Notice 2006–107 mod-
ified.
(Continued on the next page)
Finding Lists begin on page ii.

Notice 2008–8, page 276.
This notice clarifies that the information reporting requirements
under section 6039 of the Code apply to certain stock trans-
fers occurring on or after January 1, 2007. Because new regu-
lations under section 6039 have not yet been issued, the IRS is
waiving the obligation to make an information return for 2007
stock transfers governed by section 6039. This notice ex-
plains, however, that corporations should continue to furnish to
employees the information, required by and in accordance with
existing section 1.6039–1, with respect to such stock trans-
fers.
Announcement 2008–2, page 307.
Minimum funding standards; alternative funding sched-
ule. This announcement describes how a commercial pas-
senger airline may make an election for an alternative funding
schedule under section 402(a)(2) of the Pension Protection Act
of 2006 as amended by section 6615 of the U.S. Troop Readi-
ness, Veterans’ Care, Katrina Recovery, and Iraq Accountability
Appropriations Act, 2007.
EXEMPT ORGANIZATIONS
Notice 2008–6, page 275.
This notice provides transitional relief for certain trusts that
have become private foundations through failure to meet the
responsiveness test for Type III supporting organizations as a
result of the Pension Protection Act of 2006. It also provides
timing and instructions for these trusts filing their first annual
return as a private foundation.
ADMINISTRATIVE
Notice 2008–11, page 279.
This notice clarifies Notice 2007–54, 2007–27 I.R.B. 12,
which provided guidance and transitional relief for the tax
return preparer penalty provisions under section 6694 of the
Code. Notice 2007–54 clarified.
Notice 2008–12, page 280.
This notice provides guidance to the public regarding imple-
mentation of the tax return preparer signature requirement
penalty provisions under section 6695(b) of the Code, as
amended by the Small Business and Work Opportunity Tax Act
of 2007.
Notice 2008–13, page 282.
This notice provides guidance regarding implementation of the
tax return preparer penalty provisions under section 6694 and
the related definitional provisions under section 7701(a)(36)
of the Code, as amended by the Small Business and Work
Opportunity Tax Act of 2007. The Service is also requesting
comments on the interim guidelines in this notice and on future
rules for the preparer penalty provisions.
Rev. Proc. 2008–10, page 290.
Insurance companies; loss reserves; discounting unpaid
losses. The loss payment patterns and discount factors are
set forth for the 2007 accident year. These factors will be used
for computing discounted unpaid losses under section 846 of
the Code.
Rev. Proc. 2008–11, page 301.
Insurance companies; discounting estimated salvage re-
coverable.The salvage discount factors are set forth for the
2007 accident year. These factors will be used for computing
discounted estimated salvagerecoverable under section 832
of the Code.
January 22, 20082008–3 I.R.B.

The IRS Mission
Provide Americ
a’s taxpayers top quality service by helping them
understand an
d 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 Secre-
tary (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.
2008–3 I.R.B.January 22, 2008

January 22, 20082008–3 I.R.B.
Place missing child here.

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 January 2008. See Rev. Rul. 2008-4, page 272.
26 CFR 1.42–16: Eligible basis reduced by federal
grants.
Indian Housing Block Grant (IHBG)
Program.This ruling advises taxpayers
that certain rental assistance payments
made to a building owner on behalf or in
respect of a tenant under the Indian Hous-
ing Block Grant (IHBG) Program are not
grants made with respect to a building or
its operation under section 42(d)(5) of the
Code.
Rev. Rul. 2008–6
Pursuant to § 1.42–16(b)(3) of the
Income Tax Regulations, the Internal
Revenue Service has determined that cer-
tain rental assistance payments made to a
building owner on behalf or in respect of
a tenant under theIndian Housing Block
Grant Program authorized by the Na-
tive American Housing Assistance and
Self-Determination Act of 1996(25 U.S.C.
4101et seq.) are not grants made with
respect to a building or its operation under
§ 42(d)(5) of the Internal Revenue Code.
These rental assistance payments are pro-
vided under 24 C.F.R. 1000.103(b).
DRAFTING INFORMATION
The principal author of this revenue rul-
ing is Christopher J. Wilson of the Office
of Assistant Chief Counsel (Passthroughs
and Special Industries). For further infor-
mation regarding this revenue ruling, con-
tact Mr. Wilson at (202) 622–3040 (not a
toll-free call).
Section 280G.—Golden
Parachute Payments
Federal short-term, mid-term, and long-term rates
are set forth for the month of January 2008. See Rev.
Rul. 2008-4, page 272.
Section 382.—Limitation
on Net Operating Loss
C
arryforwards and Certain
Built-In Losses Following
Ownership Change
The adjusted applicable federal long-term rate is
set forth for the month of January 2008. See Rev.
Rul. 2008-4, page 272.
Section 412.—Minimum
Funding Standards
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of January 2008. See Rev. Rul. 2008-4, page 272.
Section 467.—Certain
Payments 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 January 2008. See Rev. Rul. 2008-4, page 272.
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 January 2008. See Rev. Rul. 2008-4, page 272.
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 January 2008. See Rev.
Rul. 2008-4, page 272.
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 January 2008. See Rev. Rul. 2008-4, page 272.
Section 642.—Special
R
ules for Credits and
D
eductions
F
ederal short-term, mid-term, and long-term rates
a
re set forth for the month of January 2008. See Rev.
R
ul. 2008-4, page 272.
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 January 2008. See Rev. Rul. 2008-4, page 272.
Section 832.—Insurance
Company Taxable Income
26 CFR 1.832–4: Gross income.
The salvage discount factors are set forth for 2007.
These factors must be used to compute discounted
estimated salvage recoverable for purposes of section
832 of the Code. See Rev. Proc. 2008-11, page 301.
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 January 2008. See Rev. Rul. 2008-4, page 272.
26 CFR 1.846–1: Application of discount factors.
The salvage discount factors are set forth for 2007.
These factors must be used to compute discounted
estimated salvage recoverable for purposes of section
832 of the Code. See Rev. Proc. 2008-11, page 301.
Section 1091.—Loss From
Wash Sales of Stock or
Securities
26 CFR 1.1091–1: Losses from wash sales of stock
or securities.
Loss from wash sales of stock or se-
curities.This ruling provides that if an in-
dividual sells stock or securities for a loss
and causes his or her IRA or Roth IRA
to purchase substantially identical stock or
securities within a specified period, the
loss on the sale of the stock or securities is
disallowed under section 1091 of the Code,
and the individual’s basis in the IRA or
Roth IRA is not increased by virtue of sec-
tion 1091(d).
2008–3 I.R.B.271January 22, 2008

Rev. Rul. 2008–5
ISSUE
If an individual sells stock or securities
for a loss and causes his or her individ-
ual retirement account or Roth IRA to pur-
chase substantially identical stock or se-
curities within 30 days before or after the
sale, is the loss on the sale of the stock or
securities disallowed?
FACTS
A, an individual, owns 100 shares ofX
Company stock with a basis of $1,000. On
December 20, 2007,Asells the 100 shares
ofXCompany stock for $600 (the “Sale”).
On December 21, 2007,Acauses an
individual retirement account (within the
meaning of § 408) or a Roth IRA (within
the meaning of § 408A), established for
the exclusive benefit ofAorA’s benefi-
ciaries, to purchase 100 shares ofXCom-
pany stock for its then fair market value
(the “Purchase”).
Aexecutes the Sale and the Purchase
with different, unrelated market partici-
pants.
Ais not a dealer in stock or securities.
LAW AND ANALYSIS
Under § 408(a), the term “individual re-
tirement account” means a trust created or
organized in the United States for the ex-
clusive benefit of an individual or his ben-
eficiaries, but only if the written governing
instrument creating the trust meets certain
other requirements.
Under § 408(e)(1), generally, an indi-
vidual retirement account is exempt from
taxation.
Under §§ 408 and 72, any amount
distributed from an individual retirement
account is includible in the distributee’s
gross income for the year of the distri-
bution unless it is properly allocable to
the account owner’s basis in the account.
Under § 408A, a similar income inclusion
rule applies to nonqualified distributions
from a Roth IRA. An individual has basis
in an individual retirement account only
to the extent that the account includes
nondeductible contributions.
Section 1091(a) provides that in the
case of any loss claimed to have been sus-
tained from any sale or other disposition
of shares of stock or securities where it
appears that, within a period beginning 30
days before the date of such sale or dispo-
sition and ending 30 days after such date,
the taxpayer has acquired (by purchase
or by an exchange on which the entire
amount of gain or loss was recognized by
law), or has entered into a contract or op-
tion so to acquire, substantially identical
stock or securities, then no deduction shall
be allowed under § 165 unless the taxpayer
is a dealer in stock or securities and the
loss is sustained in a transaction made in
the ordinary course of such business.
Section 1091(d) provides rules for de-
termining the basis of stock or securities
the acquisition of which resulted in the
nondeductibility under § 1091 (or corre-
sponding provisions of prior law) of the
loss from the sale or other disposition of
substantially identical stock or securities.
InSecurity First National Bank of Los
Angeles, 28 BTA 289 (1933), the taxpayer
sold bonds (at a market price) to a corpo-
ration of which the taxpayer was the sole
shareholder. On the same day, in exchange
for land, the corporation transferred the
same bonds at the same price to a trust over
which the taxpayer had absolute dominion
and control. In finding that § 214(a)(5), the
predecessor to § 1091(a), applied to disal-
low the loss, the court reasoned as follows:
The [taxpayer] did not personally reac-
quire substantially identical property
and, strictly construed, the language
of section 214(a)(5), above referred to,
might not apply. However, the rule of
strict construction should not be un-
duly pressed to permit easy evasion of
a taxing statute.Carbon Steel Co. v.
Lewellyn, 251 U.S. 501. Unless the
respondent is right, a trust like this one
could be used deliberately to accom-
plish the very thing which Congress
intended to frustrate. ... Although title
to the bonds was acquired by the trust,
actual command over the property was
still in the [taxpayer]. ...The difference
between acquisition by him personally
and acquisition by the trust amounts
only to a refinement of title and may be
disregarded so far assection 214(a)(5)
is concerned.
Security First National Bank,28BTAat
314 – 315.
Applying this reasoning to the facts of
this ruling, even though an individual re-
tirement account is a tax-exempt trust,A
has nevertheless acquired, for purposes of
§ 1091(a), 100 shares ofXCompany stock
on December 21, 2007, by virtue of the
Purchase. See alsoShoenberg v. Commis-
sioner,77F.2d446(8
th
Cir. 1935).
HOLDING
The loss on the Sale of stock is disal-
lowed under § 1091.A’s basis in the indi-
vidual retirementaccount or Roth IRA is
not increased by virtue of § 1091(d). This
ruling does not address any issues other
than those specifically addressed herein.
In particular, this ruling does not address
(and no inference should be drawn with re-
spect to) any issue arising under § 4975.
DRAFTING INFORMATION
The principal author of this revenue rul-
ing is Roger E. Wade of the Office of As-
sociate Chief Counsel (Financial Institu-
tions & Products). For further informa-
tion regarding this revenue ruling, con-
tact Mr. Wade at (202) 622–3950 (not a
toll-free call).
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 January 2008.
Rev. Rul. 2008–4
This revenue ruling provides various
prescribed rates for federal income tax
purposes for January 2008 (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
January 22, 20082722008–3 I.R.B.

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 federal rate for determin-
ing the present value of an annuity, an
interest for life or for a term of years, or
a remainder or a reversionary interest for
purposes of section 7520. Finally, Table
6 contains the deemed rate of return for
transfers made during calendar year 2008
to pooled income funds described in sec-
tion 642(c)(5) that have been in existence
for less than 3 taxable years immediately
preceding the taxable year in which the
transfer was made.
REV. RUL. 2008–4 TABLE 1
Applicable Federal Rates (AFR) for January 2008
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term
AFR3.18%3.16%
3.15%
3.14%
110% AFR
3.51%
3.48%3.46%3.46%
120% AFR3.83%3.79%3.77%3.76%
130% AFR
4.15%
4.11%4.09%4.08%
Mid-term
AFR
3.58%3.55%3.53%3.52%
110% AFR
3.95%
3.91%3.89%3.88%
120% AFR4.31%4.26%4.24%4.22%
130% AFR4.67%4.62%
4.59%4.58%
150% AFR5.40%5.33%5.29%5.27%
175% AFR
6.31%6.21%6.16%6.13%
Long-term
AFR4.46%4.41%4.39%4.37%
110% AFR4.91%
4.85%
4.82%4.80%
120% AFR
5.36%5.29%5.26%5.23%
130% AFR
5.81%5.73%5.69%5.66%
REV. RUL. 2008–4 TABLE 2
Adjusted AFR for January 2008
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-t
erm adjusted
AFR
3.05%
3.03%3.02%3.01%
Mid-term adjusted AFR3.39%3.36%
3.35%
3.34%
Long-term adjusted
AFR
4.25%
4.21%4.19%4.17%
REV. RUL
. 2008–4 TABLE 3
Rates Under Section 382 for January 2008
Adjusted federal long-term rate for the current month
4.25%
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.)4.34%
2008–3 I.R.B.273January 22, 2008

REV. RUL. 2008–4 TABLE 4
Appropriate Percentages Under Section 42(b)(2) for January 2008
Appropriate percentage for the 70% present value low-income housing credit7.93%
Appropriate percentage for the 30% present value low-income housing credit3.40%
REV. RUL. 2008–4 TABLE 5
Rate Under Sec
tion 7520 for January 2008
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 interest4.4%
REV. RUL. 2008–4 TABLE 6
Deemed Rate for Transfers to New Pooled Income Funds During 2008
Deemed rate of return for transfers during 2008 to pooled income funds that have been in existence for
less than 3 taxable years4.8%
Section 1288.
—Treatment
of Original I
ssue Discount
on Tax-Exempt Obligations
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of January 2008. See Rev. Rul. 2008-4, page 272.
Section 7520.—Valuation
Tables
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of January 2008. See Rev. Rul. 2008-4, page 272.
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 January 2008. See Rev. Rul. 2008-4, page 272.
January 22, 20082742008–3 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous
Transitional Relief and Filing
Procedures for Certain
Charitable Trusts that Fail the
Responsiveness Test for Type
III Supporting Organizations
Notice 2008–6
PURPOSE
This notice provides transitional relief
and filing procedures for certain charitable
trusts that fail the responsiveness test for
Type III supporting organizations.
These procedures are intended for:
•charitable trusts that received a deter-
mination recognizing their tax-exempt
status under section 501(c)(3) and
that met the requirements of section
509(a)(3) until August 17, 2007, and
•non-exempt charitable trusts described
in section 4947(a)(1), that are treated
for certain purposes as organizations
describedinsection501(c)(3),and
that met the requirements of section
509(a)(3) until August 17, 2007. See
Rev. Proc. 72–50, 1972–2 C.B. 830.
BACKGROUND
Section 1.509(a)–4(i) of the Income
Tax Regulations sets forth the require-
ments for organizations to qualify as
section 509(a)(3) supporting organizations
that are “operated in connection with” one
or more publicly supported organizations
(hereafter, “Type III” supporting organiza-
tions). Type III supporting organizations
are required to meet a “responsiveness
test” to show that they are responsive to
the needs of the organizations they sup-
port. See section 1.509(a)–4(i)(1), (i)(2).
Prior to passage of the Pension Protec-
tion Act of 2006, Pub. L. No. 109–280,
120 Stat. 708 (2006) (PPA), there were
two alternative ways for Type III support-
ing organizations to meet the responsive-
ness test.
•The significant voice test.Section
1.509(a)–4(i)(2)(ii) generally provides
that an organization meets the respon-
siveness test if the officers, directors,
or trustees of the publicly supported
organization have a significant voice in
the investment policies and grant-mak-
ing of the supporting organization, and
in otherwise directing the use of its
income or assets.
•The charitable trust test.Section
1.509(a)–4(i)(2)(iii) provides that cer-
tain charitable trusts meet the respon-
siveness test requirement of section
1.509(a)–4(i)(2) if they are charitable
trusts under state law, each publicly
supported organization is a named
beneficiary under the trust’s govern-
ing instrument, and each beneficiary
organization has the power to enforce
the trust and compel an accounting
under state law.
Section 1241(c) of the PPA eliminated
the charitable trust test, effective August
17, 2007. Consequently, as of August 17,
2007, trusts previously classified as Type
III supporting organizations may be clas-
sified as private foundations as a result of
the PPA. A trust will continue to qualify
as a section 509(a)(3)supporting organiza-
tion if it meets the significant voice test for
Type III supporting organizations or if it is
able to establish that it meets the require-
ments of a Type I or Type II supporting or-
ganization under section 1.509(a)–4(g) or
(h).
DISCUSSION
Transitional Relief for Charitable Trusts
Because of the need for affected char-
itable trusts to adjust record-keeping
systems to reflect private foundation sta-
tus, and the administrative difficulties in
processing returns reflecting a mid-year
change of status, trusts that became private
foundations during 2007 by virtue of sec-
tion 1241(c) of the PPA may continue to
file Form 990,Return of Organization Ex-
empt From Income Tax, for taxable years
beginning before January 1, 2008. An
organization that is classified as a private
foundation by virtue of section 1241(c)
of the PPA will not be required to file an
information return on Form 990–PF or pay
excise taxes on investment income under
section 4940 until its first taxable year
beginning on or after January 1, 2008.
Filing Procedures for Charitable Trusts
that Became Private Foundations
Taxable years beginning before January
1, 2008:
•Charitable trusts that became pri-
vate foundations by virtue of section
1241(c) of the PPA should file Form
990 for taxable years beginning before
January 1, 2008.
•Normal due dates and submission rules
for filing Form 990 apply.
Taxable years beginning on or after
January 1, 2008
•Charitable trusts that became pri-
vate foundations by virtue of section
1241(c) of the PPA must file Form
990–PF,Return of Private Foundation,
for taxable years beginning on or after
January 1, 2008.
•For the first taxable year beginning on
or after January 1, 2008, filepaper
Form 990–PF. Write “Notice 2008–6
status change”atthetopofForm
990–PF.
•Normal due dates and submission rules
for filing Form 990–PF otherwise ap-
ply.
Filing Pr
ocedures for Charitable Trusts
that Did N
ot Become Private Foundations
A charitable trust that meets the signif-
icant voice test for Type III supporting or-
ganizations (section 1.509(a)–4(i)(2)(ii)),
or that can establish that it meets the
requirements of a Type I or Type II
supporting organization under section
1.509(a)–4(g) or (h), should continue to
file Form 990 under currently applicable
procedures for taxable years beginning
on or after January 1, 2008. Such a trust
should not file Form 990–PF.
DRAFTING INFORMATION
The principal author of this notice is
Robert Fontenrose of the Exempt Or-
ganizations, Tax Exempt and Govern-
ment Entities Division. For further in-
formation regarding this notice, contact
Mr. Ronald Shoemaker at (202) 283–9475
(not a toll-free call).
2008–3 I.R.B.275January 22, 2008

Extension of Transitional
Relief for Diversification
Requirements for Certain
Defined Contribution Plans
Notice 2008–7
I. PURPOSE
This notice extends the transitional
guidance and transitional relief provided
to certain defined contribution plans hold-
ing publicly traded employer securities
under Notice 2006–107, 2006–51 I.R.B.
1114, until the regulations being issued
under § 401(a)(35) of the Internal Revenue
Code become effective.
II. BACKGROUND
Section 401(a)(35), added by section
901 of the Pension Protection Act of 2006,
Public Law 109–280, 120 Stat. 780, pro-
vides diversification rights with respect to
publicly traded employer securities held
by a defined contribution plan. Section
401(a)(35) provides that, to remain quali-
fied under § 401(a), a defined contribution
plan (other than certain employee stock
ownership plans) must provide applicable
individuals with the right to divest em-
ployer securities in their accounts and rein-
vest those amounts in certain diversified
investments, and generally prohibits a plan
from imposing restrictions or conditions
with respect to the investment of employer
securities that are not imposed on the in-
vestment of other assets of the plan.
Notice 2006–107 provides transitional
guidance with respect to § 401(a)(35). For
example, Part III.D of Notice 2006–107
provides that a restriction or condition with
respect to employer securities generally in-
cludes: (1) a restriction on an applicable
individual’s rights to divest an investment
in employer securities that is not imposed
on an investment that is not in employer
securities; and (2) a benefit that is condi-
tioned on investment in employer securi-
ties. Notice 2006–107 also provides cer-
tain transitional relief with respect to the
requirements of Part III.D of the notice.
The relief set forth in paragraph 4 of Part
III.D of Notice 2006–107 is limited to the
period prior to January 1, 2008.
Notice 2006–107 also states that Trea-
sury and the Service expect to issue regu-
lations under § 401(a)(35) that will be con-
sistent with the guidance in the notice and
that will incorporate the transitional relief
in the notice.
III. EXTENSION OF TRANSITIONAL
RELIEF UNDER NOTICE 2006–107
The Treasury and the Service are
issuing proposed regulations under
§ 401(a)(35). It is expected that these
regulations, when finalized, will not be
effective before plan years beginning on
or after January 1, 2009. Except as oth-
erwise provided in the proposed or final
regulations, plans must continue to apply
Notice 2006–107 until the regulations go
into effect. For this purpose, the transi-
tional relief provided for the period prior
to January 1, 2008, in paragraph 4 of Part
III.D of Notice 2006–107 will continue to
apply after 2007 until the regulations go
into effect.
IV. EFFECT ON OTHER DOCUMENTS
Notice 2006–107 is modified.
DRAFTING INFORMATION
The principal author of this notice is
Robert M. Walsh of the Employee Plans,
Tax Exempt and Government Entities Di-
vision. For further information regard-
ing this notice, please call the Employee
Plans taxpayer assistance number between
8 a.m. and 4:30 p.m. Eastern time, Mon-
day through Friday at (877) 829–5500 (a
toll-free number) or email Mr. Walsh at
RetirementPlanQuestions@irs.gov.
Information Reporting
Requirements Under Internal
Revenue Code § 6039
Notice 2008–8
SECTION 1. PURPOSE
This notice provides interim guidance
with respect to the information returns re-
quired by § 6039 of the Internal Revenue
Code.
SECTION 2. BACKGROUND
Section 403 of the Tax Relief and
Health Care Act of 2006 (Act) amended
the information reporting requirements of
§ 6039. Prior to its amendment, § 6039
required corporations to furnish a written
statement to each employee, in a manner
prescribed by the Secretary in regulations,
regarding: (i) the corporation’s transfer of
stock pursuant to the employee’s exercise
of an incentive stock option described
in § 422(b); and (ii) transfers of stock
by the employee where the stock was
acquired pursuant to the exercise of an
option described § 423(c). Corporations
must furnish the statements required by
§ 6039 on or before January 31 of the year
following the year for which the statement
is required.
AsamendedbytheAct,§6039requires
corporations to make an information return
with the IRS, in addition to providing em-
ployees with an information statement, fol-
lowing a stock transfer. The time and man-
ner for making a return with the IRS, as
well as the information to be contained in
thereturnandfurnishedtoemployees,isto
be set forth in regulations. Section 6039, as
amended by the Act, applies to stock trans-
fers occurring on or after January 1, 2007.
Prior to the amendment made by the
Act, the Treasury Department and the IRS
issued regulation § 1.6039–1 effective on
August 3, 2004. Section 1.6039–1(a) enu-
merates the information that must be fur-
nished to employees with respect to stock
transfers relating to the employee’s exer-
cise of an incentive stock option. It pro-
vides that the statement the corporation
furnishes to the employee must include the
following information —
(1) The name, address, and employer
identification number of the corporation
transferring the stock;
(2) The name, address, and identifying
number of the person to whom the share or
shares of stock were transferred;
(3) The name and address of the cor-
poration the stock of which is the subject
of the option (if other than the corporation
transferring the stock);
(4) The date the option was granted;
(5) The date the shares were transferred
to the person exercising the option;
(6) The fair market value of the stock at
the time the option was exercised;
(7) The number of shares of stock trans-
ferred pursuant to the option;
(8) The type of option under which the
transferred shares were acquired; and
(9) The total cost of all the shares.
Section 1.6039–1(b) lists the informa-
tion that must be furnished to employees
January 22, 20082762008–3 I.R.B.

who transfer stock acquired pursuant to an
option granted under an employee stock
purchase plan. It provides that the state-
ment the corporation furnishes to the em-
ployee must include the following infor-
mation —
(1) The name and address of the corpo-
ration whose stock is being transferred;
(2) The name, address, and identifying
number of the transferor;
(3) The date such stock was transferred
to the transferor;
(4) The number of shares to which title
is being transferred; and
(5) The type of option under which the
transferred shares were acquired.
SECTION 3. ISSUANCE OF
REGULATIONS AND INTERIM
REPORTING
The Treasury Department and the IRS
intend to issue regulations that prescribe
rules relating to the information return
requirements contained in § 6039, as
amended by the Act. The Treasury De-
partment and the IRS expect that the forth-
coming regulations generally will retain
the existing rules contained in § 1.6039–1,
relating to the information statements to
be provided to employees, and generally
require that the same information be in-
cluded in the information returns made
with the IRS. The Treasury Department
and the IRS also expect that the new § 6039
regulations will be effective retroactively
to January 1, 2007.
Because regulations under § 6039 have
not yet been issued, the IRS is waiving
the obligation to make an information re-
turn for 2007 stock transfers governed by
§ 6039. However, corporations should
continue to furnish to employees the in-
formation required by, and in accordance
with, existing § 1.6039–1, with respect to
such stock transfers.
SECTION 4. DRAFTING
INFORMATION
The principal author of this notice is
Tom Scholz of the Office of Division
Counsel/Associate Chief Counsel (Tax
Exempt & Government Entities). For
further information regarding this notice,
contact Mr. Scholz at (202) 622–6030 (not
a toll-free call).
EffectiveDateRelieffor
Unified Rule for Loss on
Subsidiary Stock
Notice 2008–9
On January 23, 2007, the IRS and
Treasury Department issued a notice of
proposed rulemaking (REG–157711–02,
2007–8 I.R.B. 537 [72 FR 2964]) under
§1.1502–36. The proposed regulations set
forth rules applicable to transfers of loss
shares of subsidiary stock by members of
a consolidated group. The IRS and Trea-
sury Department have received, and are
considering, comments on the proposed
regulations.
While most comments will be ad-
dressed in the final regulations, there is
one concern that the IRS and Treasury
Department believe appropriate to ad-
dress immediately. The concern relates to
the proposed effective date, which would
make the regulations applicable to all
transfers on or after the date such regula-
tions are published as final regulations in
the Federal Register.
Practitioners have observed that the
proposed effective date presents a signif-
icant burden on taxpayers attempting to
negotiate transactions prior to the publi-
cation of the final regulations. The IRS
and Treasury Department recognize that
it is inappropriate to impose this level of
uncertainty on taxpayers negotiating these
transactions.
Accordingly, the IRS and Treasury De-
partment have concluded that the regula-
tions will generally apply to transfers on
or after the date they are published as final
regulations in the Federal Register, but will
not apply to a transfer to an unrelated per-
son if the transfer is pursuant to an agree-
ment that is binding before the date the reg-
ulations are so published and at all times
thereafter. The IRS and Treasury Depart-
ment expect that the rule will incorporate
the provisions of section 267(b) in deter-
mining whether persons are related for this
purpose.
The principal author of this notice is
Sean P. Duffley of the Office of Associate
Chief Counsel (Corporate). For further
information regarding this notice, contact
Sean P. Duffley at (202) 622–7770 (not a
toll-free call).
Regulations Under Section
367(a) Applicable to Certain
Outbound Reorganizations
and Section 351 Exchanges
Notice 2008–10
SECTION 1. OVERVIEW
The Internal Revenue Service (IRS)
and the Treasury Department (Treasury)
will issue regulations under section 367(a)
of the Internal Revenue Code (Code) to
clarify how the two exceptions to the rule
in §1.367(a)–3(d)(2)(vi) of the Income Tax
Regulations (coordination rule) provided
by §1.367(a)–3(d)(2)(vi)(B) apply to cer-
tain outbound reorganizations described
in section 368(a) and certain successive
transfers to which section 351 applies.
This notice is issued in response to certain
transactions designed to avoid U.S. in-
come tax. The regulations issued pursuant
to this notice will apply to transactions
occurring on or after December 28, 2007.
SECTION 2. TRANSACTIONS AT
ISSUE
The IRS and Treasury are aware that
certain taxpayers are engaging in transac-
tions intended to repatriate cash or other
property from foreign subsidiaries without
the recognition of gain or a dividend inclu-
sion. In one such transaction, for example,
USP, a domestic corporation, owns 100
percent of the stock of FA, a foreign cor-
poration, and USP’s basis in its FA stock
is $100x. USP also owns 100 percent of
the stock of UST, a domestic corporation,
and USP’s basis in its UST stock equals its
fair market value of $100x. UST’s prop-
erty consists of property with zero tax ba-
sis, such as self-created intangibles or fully
depreciated tangible property. UST sells
its property to FA in exchange for $100x
cash and, in connection with the transac-
tion, UST liquidates and FA transfers all
of the property acquired from UST to U.S.
Newco, a newly formed domestic corpo-
ration, in exchange for 100 percent of the
U.S. Newco stock (the Transaction). Other
variations of the Transaction may be avail-
able. For example, FA may purchase the
stock of UST from USP for $100x and,
in connection with the acquisition, UST
merges into a domestic limited liability
2008–3 I.R.B.277January 22, 2008

company (LLC) wholly owned by FA that
is disregarded as separate from FA for U.S.
tax purposes. FA then contributes all of
its LLC interests to U.S. Newco, a newly
formed domestic corporation, in exchange
for 100 percent of the U.S. Newco stock.
Taxpayers take the position that, pur-
suant to §1.367(a)–3(d)(2)(vi)(B)(1)(i),
UST’stransferofpropertytoFAisnot
subject to section 367(a) or (d) because the
basis adjustment requirement of section
367(a)(5) is satisfied if USP reduces by
$100x its basis in the FA stock that it held
prior to the Transaction.
SECTION 3. BACKGROUND
Section 367(a)(1) provides that if, in
connection with an exchange described
in section 332, 351, 354, 356, or 361, a
United States person transfers property
to a foreign corporation, such foreign
corporation shall not, for purposes of de-
termining the extent to which gain shall be
recognized on such transfer, be considered
to be a corporation. Section 367(a)(2) pro-
vides that, except to the extent provided
in regulations, section 367(a)(1) shall not
apply to the transfer of stock or securities
of a foreign corporation that is a party to
a reorganization. Section 367(a)(3) pro-
vides that, except to the extent provided
in regulations, section 367(a)(1) shall not
apply to the transfer of property used in an
active foreign trade or business. Section
367(a)(6) grants regulatory authority to
provide additional exceptions to the gen-
eral rule of section 367(a)(1).
Section 367(a)(5) provides that in the
case of an exchange described in section
361(a) or (b) (section 361 exchange), the
exceptions to section 367(a)(1) provided
under sections 367(a)(2) and (a)(3) shall
not apply. Therefore, the general rule un-
der section 367(a)(5) is that a transfer of
property by a domestic corporation (U.S.
transferor) to a foreign corporation in a
section 361 exchange is subject to sec-
tion 367(a)(1). Section 367(a)(5) also pro-
vides, however, that subject to basis ad-
justments and other conditions to be pro-
vided in regulations, the general rule will
not apply (and the transfer may therefore
be eligible for the exceptions under sec-
tions 367(a)(2) and (a)(3)) if the U.S. trans-
feror is controlled (within the meaning of
section 368(c)) by five or fewer domestic
corporations.
Regulations have not been issued under
section 367(a)(5). However, the legisla-
tive history of section 367(a)(5) explains
how the required basis adjustments would
have to be made:
It is expected that regulations will pro-
vide this relief only if the U.S. corpo-
rate shareholders in the transferor agree
to take a basis in the stock they receive
in a foreign corporation that is a party
to the reorganization equal to the lesser
of (a) the U.S. corporate shareholders’
basis in such stock received pursuant to
section 358, or (b) their proportionate
share of the basis in the property of the
transferor corporation transferred to the
foreign corporation.
S. Rep. No. 100–445, 100
th
Cong., 2d
Sess. at 62 (Aug. 3, 1988). Thus, the
gain realized, but not recognized, by the
U.S. transferor in connection with the sec-
tion 361 exchange must be preserved in the
stockreceivedby certain corporate share-
holders of the U.S. transferor in the reor-
ganization.
The rules regarding the treatment of
transfers of stock or securities to foreign
corporations are contained in §1.367(a)–3.
Certain outbound reorganizations fol-
lowed by transfers to controlled corpo-
rations and certain successive transfers
of property to which section 351 ap-
plies constitute “indirect stock transfers”
and are subject to §1.367(a)–3. See
§1.367(a)–3(d)(1). Such indirect stock
transfers are subject to gain recogni-
tion under section 367(a)(1), unless they
qualify for the exceptions contained in
§1.367(a)–3(b) (for transfers of foreign
stock) or –3(c) (for transfers of domestic
stock). See §1.367(a)–3(d)(1).
The general coordination rule of
§1.367(a)–3(d)(2)(vi)(A) provides, in
general, that if, pursuant to an indirect
stock transfer, a U.S. person transfers (or
is deemed to transfer) property to a for-
eign corporation in an exchange described
in sections 351 or 361, such transfer is
subject to sections 367(a) and (d), prior
to the application of the indirect stock
transfer rules of §1.367(a)–3(d). Section
1.367(a)–3(d)(2)(vi)(A). This general co-
ordination rule, however, is subject to two
exceptions (Exception One and Exception
Two).
Exception One is available for certain
section 361 transfersofpropertymade
pursuant to a reorganization to the extent
the foreign acquiring corporation transfers
the acquired property (re-transferred prop-
erty) to a domestic corporation controlled
within the meaning of section 368(c) (do-
mestic controlled corporation) as part of
the same transaction. However, Exception
One applies only if the domestic controlled
corporation’s basis in the re-transferred
property is no greater than the basis the
U.S.transferorhadinsuchpropertyand
either (i) the domestic acquired corpora-
tion is controlled (within the meaning of
section 368(c)) by five or fewer domes-
tic corporate shareholders, appropriate
basis adjustments as provided in section
367(a)(5) are made to the stock of the for-
eign acquiring corporation, and any other
conditions provided in regulations under
section 367(a)(5) are satisfied; or (ii) the
indirect transfer of stock of the domestic
acquired corporation satisfies the require-
ments of §1.367(a)–3(c)(1)(i), (ii), and
(iv), and (c)(6), and the domestic acquired
corporation attaches a statement to its tax
return for the taxable year of the transfer.
Section 1.367(a)–3(d)(2)(vi)(B)(1)(i)and
(ii).
Exception Two is available for trans-
fers described in §1.367(a)–3(d)(1)(vi)
where a U.S. person transfers property
to a foreign corporationinasection351
exchange, to the extent that such property
is transferred by such foreign corpora-
tion to a domestic corporation in another
section 351 exchange, but only if the
domestic transferee’s basis in the prop-
erty is no greater than the basis that the
U.S. transferor had in such property. See
§1.367(a)–3(d)(2)(vi)(B)(2).
SECTION 4. REGULATIONS TO BE
ISSUED UNDER SECTION 367(a)
The IRS and Treasury will issue regu-
lations under section 367(a) to clarify how
the two exceptions to the general coordina-
tion rule of §1.367(a)–3(d)(2)(vi)(A) are to
be applied.
The rule of Exception One contained
in §1.367(a)–3(d)(2)(vi)(B)(1)(i)willbe
modified to clarify that the basis ad-
justment required as provided in section
367(a)(5) must be made to the stock of
the foreign acquiringcorporation received
by domestic corporate shareholders of
the U.S. transferor in the reorganization
such that the appropriate amount of un-
recognized gain in the U.S. transferor’s
January 22, 20082782008–3 I.R.B.

property is reflected in such stock. Thus,
the basis adjustment requirement cannot
be satisfied by adjusting the basis in stock
of the foreign acquiring corporation held
by such shareholders prior to the reorga-
nization. The regulations will clarify that
to the extent the appropriate amount of
unrecognized gain in the U.S. transferor’s
property cannot be preserved in the stock
of the foreign acquiring corporation re-
ceived in the reorganization, then the U.S.
transferor’s transfer of property to the for-
eign acquiring corporation shall be subject
to sections 367(a) and (d).
Section 1.367(a)–3(d)(2)(vi)(B)(2)will
be modified to clarify that Exception Two
shall not apply to a section 351 transfer that
is also a section 361 exchange. Thus, a
section 351 transfer that is also a section
361 exchange may only qualify, if at all,
for Exception One.
SECTION 5. EFFECTIVE DATE
The regulations described in this notice
will apply to transactions occurring on or
after December 28, 2007. No inference
is intended as to the treatment of transac-
tions described herein under current law,
and the IRS may, where appropriate, chal-
lenge such transactions under applicable
provisions or judicial doctrines.
SECTION 6. COMMENTS
The IRS and Treasury are studying
other transactions and structures that have
the effect of repatriating earnings of for-
eign corporations without the recognition
of gain or a dividend inclusion. Comments
are requested in this regard. Comments
are also requested regarding more funda-
mental changes that can be made in this
area, including possible changes to the
coordination rule.
SECTION 7. DRAFTING
INFORMATION
The principal authors of this notice are
John Seibert and Daniel McCall of the
Office of Associate Chief Counsel (Inter-
national). However, other personnel from
the IRS and Treasury Department par-
ticipated in its development. For further
information regarding this notice, con-
tact Mr. Seibert or Mr. McCall at (202)
622–3860 (not a toll-free call).
Clarification of Notice
2007–54 Providing Guidance
and Transitional Relief
Under the Preparer
Penalty Provisions of the
Small Business and Work
Opportunity Tax Act of 2007
Notice 2008–11
This notice clarifies Notice 2007–54,
2007–27 I.R.B. 12, which provided guid-
ance and transitional relief for the tax re-
turn preparer penalty provisions under sec-
tion 6694 of the Internal Revenue Code, as
amended by the Small Business and Work
Opportunity Tax Act of 2007.
BACKGROUND
The Small Business and Work Oppor-
tunity Tax Act of 2007 (the Act), Pub. L.
No. 110–28, 121 Stat. 190, was enacted
on May 25, 2007. Section 8246 of the Act
amended several provisions of the Code to
extend the application of the income tax
return preparer penalties to all tax return
preparers, alter the standards of conduct
that must be met to avoid imposition of
the penalties for preparing a return which
reflects an understatement of liability, and
increase applicable penalties. The amend-
ments are effective for tax returns prepared
after the date of the enactment, May 25,
2007.
In order to provide sufficient time to ad-
dress issues pertaining to the implemen-
tation of the Act, the Treasury Depart-
ment and the IRS issued Notice 2007–54
on June 11, 2007, and which provided the
following transitional relief: For income
tax returns, amended returns, and refund
claims, the standards set forth under the
previous law and current regulations under
section 6694 will be applied in determin-
ing whether the IRS will impose a penalty
under section 6694(a), as amended by the
Act. Notice 2007–54 provided that gener-
ally, in applying transitional relief for in-
come tax returns, amended returns, or re-
fund claims, disclosure would be adequate
if made on a Form 8275,Disclosure State-
ment, or Form 8275–R,Regulation Dis-
closure Statement,attached to the return,
amended return, or refund claim, or pur-
suant to the annual revenue procedure au-
thorized in Treasury Regulation sections
1.6694–2(c)(3) and 1.6662–4(f)(2).
Notice 2007–54 further provided that
for all other returns, amended returns, and
claims for refund, including estate, gift,
and generation-skipping transfer tax re-
turns, employment tax returns, and excise
tax returns, the reasonable basis standard
set forth in the regulations issued under
section 6662, without regard to the dis-
closure requirements contained therein,
will be applied in determining whether the
IRS will impose a penalty under section
6694(a).
Notice 2007–54 provided that the
transitional relief applies to all returns,
amended returns, and refund claims due
on or before December 31, 2007 (deter-
mined with regard to any extension of time
for filing), and to 2007 employment and
excise tax returns due on or before January
31, 2008. Notice 2007–54 also provided
that no transitionalrelief was provided
under section 6694(b) as transitional relief
is not appropriate for tax return preparers
who exhibit willful or reckless conduct,
regardless of the type of return prepared.
TRANSITIONAL RELIEF
CLARIFICATIONS
Questions have arisen regarding the ex-
tent to which amended returns or claims
for refund qualify for transitional relief un-
der Notice 2007–54. There is no set due
date for such returns and claims other than
prior to the expiration of the period pro-
scribed by the applicable statute of limita-
tions. The transitional relief described in
Notice 2007–54 applies to timely amended
returns or claims for refund (other than
2007 employment and excise tax returns)
filed on or before December 31, 2007, and
to timely amended employment and excise
tax returns or claims for refund filed on or
before January 31, 2008.
Questions have arisen regarding the ex-
tent to which original tax returns due on
extension after December 31, 2007, but
filed on or before December 31, 2007,
qualify for transitional relief. The transi-
tional relief described in Notice 2007–54
applies to original returns (other than 2007
employment and excise tax returns) filed
on or before December 31, 2007, and to
original employment and excise tax re-
turns filed on or before January 31, 2008.
2008–3 I.R.B.279January 22, 2008

Questions have also arisen regarding
the extent to which advice rendered by
nonsigning preparers qualifies for transi-
tional relief under Notice 2007–54. The
transitional relief described in Notice
2007–54, as clarified by this notice, ap-
plies to nonsigning preparers for advice
provided on or before December 31, 2007.
In future guidance, the Treasury De-
partment and the IRS intend to provide
transitional rules to address amended re-
turns filed after the expiration of the tran-
sitional relief period described in Notice
2007–54 that relate to original returns filed
under previous law or during the transi-
tional relief period, as clarified by this no-
tice.
EFFECTIVE DATE
This notice is effective as of May 25,
2007.
EFFECT ON OTHER DOCUMENTS
Notice 2007–54, 2007–27 I.R.B. 12, is
clarified.
CONTACT INFORMATION
The principal authors of this notice are
Matthew S. Cooper and Michael E. Hara
of the Office of the Associate Chief Coun-
sel (Procedure and Administration). For
further information regarding this notice,
contact Mr. Cooper at (202) 622–4940 or
Mr. Hara at (202) 622–4910 (not toll-free
calls).
Preparer Signature
Requirements Under Section
6695(b), as Amended by the
Small Business and Work
Opportunity Tax Act of 2007
Notice 2008–12
This notice provides guidance to the
public regarding implementation of the
tax return preparer signature requirement
penalty provisions under section 6695(b)
of the Internal Revenue Code, as amended
by the Small Business and Work Opportu-
nity Tax Act of 2007.
BACKGROUND
The Small Business and Work Oppor-
tunity Tax Act of 2007 (the Act), Pub. L.
No. 110–28, 121 Stat. 190, was enacted
on May 25, 2007. Section 8246 of the Act
amended several provisions of the Code,
including section 6695(b), to extend the
application of the income tax return pre-
parer penalties to all tax return preparers.
As amended by the Act, section 6695(b)
imposesapenaltyonataxreturnpreparer
of any return or claim for refund who fails
tosignareturnwhenrequiredbyregula-
tions prescribed by the Secretary, unless it
is shown that the failure is due to reason-
able cause and not due to willful neglect.
The penalty under section 6695(b) is $50
for each failure to sign, with a maximum of
$25,000 per person imposed with respect
to each calendar year. The amendments
to section 6695(b) made by section 8246
of the Act are effective for tax returns and
claims for refund prepared after May 25,
2007.
INTERIM AND PLANNED GUIDANCE
The Treasury Department and the Inter-
nal Revenue Service intend to issue reg-
ulations that implement the signature re-
quirements under section 6695(b) for cer-
tain 2008 tax year returns and claims for
refund. In advance of these regulations,
guidance is being issued to (1) identify the
returns and claims for refund required to
besignedbyataxreturnpreparerinor-
der to avoid a section 6695(b) penalty un-
der current regulations, and (2) identify the
returns and claims for refund that will be
requiredtobesignedbyataxreturnpre-
parer in order to avoid a section 6695(b)
penalty under future regulations published
by the Treasury Department and IRS. This
interim guidance will apply until further
guidance is issued and tax return prepar-
ers may rely on the interim guidance in this
notice.
A.Signing Tax Return Preparer
For purposes of section 6695(b), an in-
dividual who is a tax return preparer with
respect to a return of tax or claim for refund
of tax listed below in paragraph (B)(1) of
this notice shall sign the return or claim for
refund after it is completed and before it
is presented to the taxpayer (or nontaxable
entity) for signature.If the tax return pre-
parer is unavailable for signature, another
tax return preparer shall review the entire
preparation of the return or claim for re-
fund, and then shall sign the return or claim
for refund.
If more than one tax return preparer
is involved in the preparation of the re-
turn or claim for refund, the individual tax
return preparer who has the primary re-
sponsibility as between or among the pre-
parers for the overall substantive accuracy
of the preparation of such return or claim
for refund shall be considered to be the
tax return preparer for purposes of section
6695(b).
B.Forms Requiring Signature of Tax
Return Preparer
(1) Consistent withexistingregula-
tions, in order to avoid the imposition of
a penalty under section 6695(b), a sign-
ing tax return preparer described above in
paragraph (A) of this notice must provide
a signature on any income tax returns or
claims for refund of income tax that are
filed after December 31, 2007, including
but not limited to the following:
•Form 990–T,Exempt Organization
Business Income Tax Return
•Form 990–PF,Return of Private Foun-
dation or Section 4947(a)(1) Nonex-
empt Charitable Trust Treated as a Pri-
vate Foundation
•Form 1040,U.S. Individual Income
Tax Return
•Form 1040A,U.S. Individual Income
Tax Return
•Form 1040–C,U.S. Departing Alien
Income Tax Return
•Form 1040EZ,Income Tax Return for
Single and Joint Filers With No Depen-
dents
•Form 1040NR,U.S. Nonresident Alien
Income Tax Return
•Form 1040NR–EZ,U.S. Income Tax
Return for Certain Nonresident Aliens
With No Dependents
•Form 1040–PR,Planilla para la
Declaración de la Contribución Fed-
eral sobre el Trabajo por Cuenta
Propia (Incluyendo el Crédito Tribu-
tario Adicional por Hijos para Resi-
dentes Bona fide de Puerto Rico)
•Form 1040–SS,U.S. Self-Employment
Tax Return (Including the Additional
January 22, 20082802008–3 I.R.B.

Child Tax Credit for Bona Fide Resi-
dents of Puerto Rico)
•Form 1040X,Amended U.S. Individual
Income Tax Return
•Form 1041,U.S. Income Tax Return for
Estates and Trusts
•Form 1041–N,U.S. Income Tax Return
for Electing Alaska Native Settlement
Trusts
•Form 1041–QFT,U.S. Income Tax Re-
turn for Qualified Funeral Trusts
•Form 1042,Annual Withholding Tax
Return for U.S. Source Income of For-
eign Persons
•Form 1065,U.S. Return of Partnership
Income
•Form 1065–B,U.S. Return of Income
for Electing Large Partnerships
•Form 1066,U.S. Real Estate Mortgage
Investment Conduit (REMIC) Income
Tax Return
•Form 1120,U.S. Corporation Income
Tax Return
•Form 1120–C,U.S. Income Tax Return
for Cooperative Associations
•Form 1120–F,U.S. Income Tax Return
of a Foreign Corporation
•Form 1120–FSC,U.S. Income Tax Re-
turn of a Foreign Sales Corporation
•Form 1120–H, U.S.Income Tax Return
for Homeowners Associations
•Form 1120IC–DISC,Interest Charge
Domestic International Sales Corpo-
ration Return
•Form 1120–L,U.S. Life Insurance
Company Income Tax Return
•Form 1120–ND,Return for Nuclear
Decommissioning Funds and Certain
Related Persons
•Form 1120–PC,U.S. Property and Ca-
sualty Insurance Company Income Tax
Return
•Form 1120–POL,U.S. Income Tax
Return for Certain Political Organiza-
tions
•Form 1120–REIT,U.S. Income Tax Re-
turn for Real Estate Investment Trusts
•Form 1120–RIC,U.S. Income Tax Re-
turn for Regulated Investment Compa-
nies
•Form 1120S,U.S. Income Tax Return
for an S Corporation
•Form 1120–SF,U.S. Income Tax Re-
turn for Settlement Funds (Under Sec-
tion 468B)
•Form 1120X,Amended U.S. Corpora-
tion Income Tax Return
•Form 2438,Undistributed Capital
Gains Tax Return
(2) In the absence of Treasury regula-
tions requiring signature, a signing tax re-
turn preparer described above in paragraph
(A) of this notice will not be subject to the
penalty under section 6695(b) with respect
to tax returns or refund claims for taxes
other than income taxes that are filed af-
ter December 31, 2007, but on or before
December 31, 2008, including the filing of
the following returns:
•Form CT–1,Employer’s Annual Rail-
road Retirement Tax Return
•Form CT–2,Employee Representa-
tive’s Quarterly Railroad Tax Return
•Form 11–C,Occupational Tax and
Registration Return for Wagering
•Form 706,United States Estate (and
Generation-Skipping Transfer) Tax
Return
•Form 706–A,United States Additional
Estate Tax Return
•Form 706–D,United States Additional
Estate Tax Return Under Code Section
2057
•Form 706–GS(D),Generation-Skip-
ping Transfer Tax Return For Distri-
butions
•Form 706–GS(T),Generation-Skip-
ping Transfer Tax Return For Termi-
nations
•Form 706–NA,United States Estate
(and Generation-Skipping Transfer)
Tax Return — Estate of nonresident
not a citizen of the United States
•Form 706–QDT,United States Estate
Tax Return for Qualified Domestic
Trusts
•Form 709,United States Gift (and
Generation-Skipping Transfer) Tax
Return
•Form 720,Quarterly Federal Excise
Tax Return
•Form 720X,Amended Quarterly Fed-
eral Excise Tax Return
•Form 730,Monthly Tax Return for Wa-
gers
•Form 843,Claim for Refund and Re-
quest for Abatement
•Form 940,Employer’s Annual Federal
Unemployment (FUTA) Tax Return
•Form 940–PR,Planilla para la
Declaración Federal ANUAL del Pa-
trono de la Contribución Federal para
el Desempleo (FUTA)
•Form 941,Employer’s QUARTERLY
Federal Tax Return
•Form 941–PR,Planillaparala
Declaración Federal TRIMESTRAL
del Patrono
•Form 941–SS,Employer’s QUAR-
TERLY Federal Tax Return
•Form 941–M,Employer’s MONTHLY
Federal Tax Return
•Form 943,Employer’s Annual Federal
Tax Return for Agricultural Employees
•Form 943(PR),Planilla Para la
Declaración ANUAL De La Contribu-
ción Del Patrono De Empleados Agrí-
colas
•Form 944,Employer’s ANNUAL Fed-
eral Tax Return
•Form 944–PR,Planillaparala
Declaración ANUAL de la Contribu-
ción Federaldel Patrono 944(SP),
Declaración Federal ANUAL de Im-
puestos del Patrono o Empleador
•Form 944–SS,Employer’s ANNUAL
Federal Tax Return
•Form 945,Annual Return of Withheld
Federal Income Tax
•Form 1040 (Schedule H),Household
Employment Taxes
•Form 1040–PR (Anexo H-PR),Con-
tribuciones sobre el Empleo de Em-
pleados Domesticos
•Form 2290,Heavy Highway Vehicle
Use Tax Return
•Form 2290(FR),Declaration d’Impot
sur L’utilisation des Vehicules Lourds
sur les Routes
•Form 2290(SP),Declaración del Im-
puesto sobre el Uso de Vehículos Pe-
sados en las Carreteras
•Form 4720,Return of Certain Excise
Taxes Under Chapters 41 and 42 of the
Internal Revenue Code
•Form 5330,Return of Excise Taxes Re-
lated to Employee Benefit Plans
•Form 8612,Return of Excise Tax on
Undistributed Income of Real Estate
Investment Trusts
•Form 8613,Return of Excise Tax on
Undistributed Income of Regulated In-
vestment Companies
•Form 8725,Excise Tax on Greenmail
•Form 8831,Excise Taxes on Excess In-
clusions of REMIC Residual Interests
•Form 8849,Claim for Refund of Excise
Taxes
•Form 8876,Excise Tax on Structured
Settlement Factoring Transactions
2008–3 I.R.B.281January 22, 2008

•Form 8924,Excise Tax on Certain
Transfers of Qualifying Geothermal or
Mineral Interests
The tax return preparer shall sign the re-
turn in the manner prescribed by the Com-
missioner in forms, instructions, or other
appropriate guidance.
The Treasury Department and IRS in-
tend to issue regulations on or before De-
cember 31, 2008, requiring signatures un-
der section 6695(b) for all the above listed
forms that are filed after December 31,
2008.
Information on the preparer signature
requirement for electronically filed returns
will be announced in IRS publications, in-
structions, and information posted elec-
tronically on theIRS.govwebsite.
EFFECTIVE DATE
This notice is effective as of January 1,
2008.
CONTACT INFORMATION
The principal authors of this notice are
Matthew S. Cooper and Michael E. Hara
of the Office of the Associate Chief Coun-
sel (Procedure and Administration). For
further information regarding this notice,
contact Mr. Cooper at (202) 622–4940 or
Mr. Hara at (202) 622–4910 (not toll-free
calls).
Guidance Under the Preparer
Penalty Provisions of the
Small Business and Work
Opportunity Tax Act of 2007
Notice 2008–13
This notice provides guidance regard-
ingimplementationofthetaxreturnpre-
parer penalty provisions under section
6694 and the related definitional provi-
sions under section 7701(a)(36) of the In-
ternal Revenue Code (Code), as amended
by the Small Business and Work Oppor-
tunity Tax Act of 2007 (the Act), Pub. L.
No. 110–28, 121 Stat. 190.
In 2008, the Treasury Department and
the IRS intend to revise the regulatory
scheme governing tax return preparer
penalties, which has remained substan-
tially unchanged since the late 1970’s.
Until then, this notice provides interim
guidance on the application of the tax
return preparer penalties as amended by
the Act. This notice also solicits public
comments regarding the revision of the
regulatory scheme governing tax return
preparer penalties in order to enable the
Treasury Department and the IRS to com-
plete their work on the overhaul of these
rules by the end of 2008.
BACKGROUND
Section8246oftheActamendedsev-
eral provisions of the Code to extend the
application of the income tax return pre-
parer penalties to all tax return preparers,
alter the standards of conduct that must
be met to avoid imposition of the sec-
tion 6694(a) penalty for preparing a return
which reflects an understatement of liabil-
ity, and increase applicable penalties under
section 6694(a) and (b). The amendments
made by the Act to section 6694 are effec-
tive for tax returns and claims for refund
prepared after May 25, 2007. The Trea-
sury Department and the IRS issued Notice
2007–54, 2007–27 I.R.B. 12, on June 11,
2007, which provided transitional relief
under section 6694(a). Concurrent with
the issuance of this notice, the Treasury
Department and the IRS are issuing addi-
tional guidance clarifying Notice 2007–54.
SeeNotice2008–11.
Prior to amendment by the Act, section
7701(a)(36) definedincome tax return pre-
pareras any person who prepared for com-
pensation an income tax return or claim for
refund, or a substantial portion of an in-
come tax return or claim for refund. As
amended by the Act, section 7701(a)(36)
now definestax return prepareras any per-
son that prepares for compensation a tax
return or claim for refund, or a substan-
tialportionofataxreturnorclaimforre-
fund, and is no longer limited to persons
who prepare income tax returns.
Section 301.7701–15 of the current
Procedure and Administration Regula-
tions defines the termincome tax return
preparerto include any person who pre-
pares for compensation all or a substantial
portion of a tax return or claim for refund
under Subtitle A of the Code. Operation
of the current regulations brings into the
preparer penalty regime a wide range of
activities performed by persons who do
not sign the tax return or claim for refund,
who may have no knowledge of how their
work is ultimately reported on the tax re-
turn or claim for refund, or who may have
no knowledge of the size or complexity of
the schedule, entry, or other portion of a
tax return or claim for refund relative to
the entire tax return. For example, cur-
rent regulations broadly define the term
substantial portionusing a facts and cir-
cumstances test that compares the relative
length, complexity, and tax liability of a
particular schedule, entry, or other portion
of a tax return or claim for refund to the
length, complexity, and tax liability of the
tax return or claim for refund as a whole.
Case law, includingGoulding v. United
States, 717 F. Supp. 545 (N.D. Ill. 1989),
aff’d, 957 F.2d 1420 (7th Cir. 1992), sup-
ports the current regulations which deem
the preparer of a Schedule K–1 for a part-
nership to be the preparer of a partner’s
income tax return on which the partner-
ship items were reported, if the Schedule
K–1 constitutes a substantial portion of
the partner’s tax return.
The Act also amended section 6694(a)
by raising the standards of conduct for
tax return preparers. Forundisclosed
positions, the Act replaced the realistic
possibility standard with a requirement
that there be a reasonable belief that the
tax treatment of the position would more
likely than not be sustained on its merits.
Fordisclosed positions, the Act replaced
the nonfrivolous standard with the require-
ment that there be a reasonable basis for
the tax treatment of the position.
The amendments made by the Act did
not modify the exception to liability un-
der section 6694 that is applicable when it
is shown, considering all the facts and cir-
cumstances, that the tax return preparer has
acted in good faith and there is reasonable
cause for the understatement.
As part of the regulatory rulemaking
process, the Treasury Department and the
IRS will determine the appropriate modi-
fications to the existing regulatory frame-
work, given the complexities and anoma-
lies created by the inter-relationship of the
amendments to section 6694 applicable to
tax return preparers and the various accu-
racy-related penalty provisions applicable
to taxpayers, as well as the inter-relation-
ship of the amendments to section 6694
and the regulations governing the practice
before the IRS in Circular 230 (31 CFR
part 10). In advance of publication of reg-
ulations in 2008, this notice provides in-
January 22, 20082822008–3 I.R.B.

terim guidance to tax return preparers re-
garding the definitions and standards of
conduct that must be met by a tax return
preparer to avoid a penalty under section
6694(a).Taxreturnpreparersmayrelyon
the interim guidance in this notice until fur-
ther guidance is issued. It is important to
note that the regulations expected to be fi-
nalized in 2008 may be substantially dif-
ferent from the rules described in this no-
tice, and in some cases more stringent.
Section 7805(a) provides the Treasury
Department and the IRS with authority
to issue regulations and other published
guidance interpreting the Code, including
sections 6694 and 7701(a)(36). Consis-
tent with the legislative history of section
6694, the Treasury Department and the
IRS promulgated regulations dating back
to 1977 that interpreted the statutory term
disclosedin section 6694(a)(3), as applied
tononsigning preparers, to include mak-
ing statements, either orally or in writing.
See Treas. Reg. § 1.6694–2(c)(3)(ii)(A)
and (B). Section 6694(a)(3) provides the
Treasury Department and the IRS with au-
thority to grant relieffrom penalty liability
if a tax return preparer has acted in good
faith and there is reasonable cause for any
understatement of tax that may result from
a position taken on a return. In addition, in
the past, reasonable cause relief (such as in
section 6694(a)) has been provided to im-
plement appropriate transitional rules for a
new or revised statutory provision.
This interim guidance discusses the fol-
lowing issues: (1) relevant categories of
tax returns or claims for refund for pur-
poses of section 6694; (2) the definition
oftax return preparerunder sections 6694
and 7701(a)(36); (3) standards of conduct
applicable to tax return preparers for dis-
closed and undisclosed positions taken on
tax returns; and (4) interim penalty com-
pliance obligations applicable to tax return
preparers. It is the IRS’s intent to adminis-
ter these provisions in a fair and equitable
manner that will promote compliance with
the requirements of the Code and effective
tax administration.
INTERIM GUIDANCE UNDER SECTION
6694
Except to the extent modified by the
interim guidance in this notice, and until
further guidance is issued, existing regu-
lations and guidance under sections 6694
and 7701(a)(36) willremain in effect.
A.Returns and Claims for Refund Subject
to the Section 6694 Penalty
Interim guidance discussed below de-
scribes categories of returns to which sec-
tion 6694 could apply and includes associ-
ated exhibits to thisnotice. The Treasury
Department and the IRS may choose to add
or remove documents from any of the cat-
egories or exhibits to this notice in future
guidance as they gain experience in imple-
menting the provisions of the Act and re-
ceive public comments.
1.Tax Returns Reporting Tax Liability
Until further guidance is issued, solely
for purposes of section 6694, areturnor
claim for refundincludes the tax returns
listed on Exhibit 1 or a claim for refund
with respect to any such return. A claim
for refund of tax includes a claim for credit
against any tax. A person who for com-
pensation prepares all or a substantial por-
tion of a tax return listed on Exhibit 1, or
a claim for refund with respect to any such
tax return, is a tax return preparer who is
subject to section 6694.
2.Information Returns and Other Doc-
uments
Under current regulations, a person
who for compensation prepares infor-
mation returns or other documents that
include information that is or may be re-
ported on a taxpayer’s tax return is subject
to section 6694 if the information reported
on the information return or other docu-
ment constitutes asubstantial portionof
the taxpayer’s tax return, notwithstand-
ing the fact that the information return
or other document may not be reporting
the liability of the taxpayer. The current
regulatory definitions ofsubstantial por-
tionandsubstantial preparationrequire a
facts and circumstances analysis of each
document prepared and a comparison of
the items included on that document with
the tax return that actually reports a tax
liability. Section 301.7701–15(b). Thus,
for example, under current regulations, the
preparer of a Form 1065,U.S. Return of
Partnership Income, may be deemed to be
the preparer of any of the partners’ indi-
vidual income tax return (e.g., Form 1040,
U.S. Individual Income Tax Return), if the
items on the partnership return constitute a
substantial portion of that partner’s income
tax return. Section 301.7701–15(b)(3).
(a)Information Returns Constituting a
Substantial Portion of a Taxpayer’s Tax
Return
Until further guidance is issued, solely
for purposes of section 6694, an infor-
mation return listed on Exhibit 2 that in-
cludes information that is or may be re-
ported on a taxpayer’s tax return or claim
for refund is a return to which section
6694 could apply if the information re-
ported constitutes asubstantial portionof
that taxpayer’s tax return or claim for re-
fund. A person who for compensation pre-
pares any of the forms listed on Exhibit 2,
which form does not report a tax liability
but affects an entry or entries on a tax re-
turn and constitutes a substantial portion of
the tax return or claim for refund that does
report a tax liability, is a tax return preparer
who is subject to section 6694.
(b)Other Documents Constituting a
Substantial Portion of a Taxpayer’s Tax
Return
Until further guidance is issued, solely
for purposes of section 6694, a document
that includes information that is or may be
reported on a taxpayer’s tax return or claim
for refund is treated as a return to which
section 6694 could apply if the informa-
tion reported constitutes asubstantial por-
tionof that taxpayer’s tax return or claim
for refund. For example, a person who for
compensation prepares documents, such as
depreciation schedules or cost, expense or
income allocation studies, that do not re-
port a tax liability but which will affect an
entry or entries on a tax return that does
report a tax liability, and that constitute a
substantial portion of such tax return, is a
tax return preparer who is subject to sec-
tion 6694.
(c)Other Documents Not Constituting
a Substantial Portion of a Taxpayer’s Tax
Return Unless Prepared Willfully to Un-
derstate Tax or in Reckless or Intentional
Disregard of the Rules or Regulations
Until further guidance is issued, solely
for purposes of section 6694, a document
listed on Exhibit 3 that includes infor-
mation that is or may be reported on a
taxpayer’s tax return or claim for refund
(and that constitutes a substantial portion
of such tax return or claim for refund) will
not subject the preparer to a penalty under
section 6694(a). A document listed on Ex-
hibit 3, however, may subject the preparer
2008–3 I.R.B.283January 22, 2008

to a willful or reckless conduct penalty
under section 6694(b) if the information
reported on the document constitutes a
substantial portion of the tax return or
claim for refund and is prepared willfully
in any manner to understate the liability of
taxonataxreturnorclaimforrefund,or
in reckless or intentional disregard of rules
or regulations. For example, preparation
of a Form W–2,Wage and Tax Statement,
reporting certain executive compensation
may constitute preparation of a substan-
tial portion of the Form 1040 return on
which the compensation is reported if it is
prepared willfully in a manner to under-
state the liability of tax. A person who for
compensation prepares all or a substan-
tial portion of any of the forms or other
documents listed on Exhibit 3 is not a tax
return preparer subject to section 6694(a)
unless the form or document was prepared
willfully in any manner to understate the
liability of tax on a tax return or claim for
refund or in reckless or intentional disre-
gard of rules or regulations.
B.Definition of Tax Return Preparer
Until further guidance is issued, solely
for purposes of section 6694, the term
tax return preparerin section 7701(a)(36)
is defined by using the definitions in
§§ 1.6694–1, 1.6694–3 and 301.7701–15,
with the following modifications:
1. Eliminating the wordincomeas
a modifier totax return preparer
throughout §§ 1.6694–1, 1.6694–3,
and 301.7701–15. This modification
conforms the current regulations to
amendments made by the Act.
2. Expanding the definition of returns
and claims for refund fromreturns of
tax under subtitle A,claims for refund
under subtitle A, or similar language,
to include returns of tax and claims
for refund under subtitles A through E
of the Code throughout §§ 1.6694–1,
1.6694–3, and 301.7701–15. This
modification conforms the current
regulations to amendments made by
the Act.
3. Interpreting the termsubstantial por-
tionin § 301.7701–15(b)(1) to mean a
schedule, entry, or other portion of a
taxreturnorclaimforrefundthat,if
adjusted or disallowed, could result in
a deficiency determination (or disal-
lowance of a claim for refund) that the
preparer knows or reasonably should
know is a significant portion of the tax
liability reported on the tax return (or,
in the case of a claim for refund, a sig-
nificant portion of the tax originally
reported or previously adjusted). This
clarifies that any determination as to
whether a person has prepared a sub-
stantial portion of a tax return and thus
is considered a tax return preparer will
depend on the relative size of the defi-
ciency attributable to the schedule, en-
try, or other portion.
For examples illustrating the provisions
of this section B, see section H below.
C.Date Return is Prepared
Until further guidance is issued, solely
for purposes of section 6694, a return or
claim for refund is deemed prepared on the
date reflected by the tax return preparer’s
signature. If a signing preparer fails to sign
the tax return, the tax return is deemed pre-
pared on the date the tax return is filed. In
the case of a nonsigning preparer, the rel-
evant date is the date the person provides
the advice, which date will be determined
based on all the facts and circumstances.
For purposes of this interim guidance, the
rules described in this section will apply
instead of § 1.6694–2(b)(5).
D.Reasonable Belief that the Tax
Treatment of the Position Would More
Likely Than Not Be Sustained on the
Merits
Until further guidance is issued, solely
for purposes of section 6694, a tax re-
turn preparer is considered to reasonably
believe that the tax treatment of an item
is more likely than not the proper tax
treatment (without taking into account
the possibility that the tax return will
not be audited, that an issue will not be
raised on audit, or that an issue will be
settled) if the tax return preparer analyzes
the pertinent facts and authorities in the
manner described in § 1.6662–4(d)(3)(ii)
and, in reliance upon that analysis, rea-
sonably concludes in good faith that there
is a greater than fifty percent likelihood
that the tax treatment of the item will be
upheld if challenged by the IRS. For pur-
poses of interim guidance, the standard
described in this section will apply instead
of § 1.6694–2(b).
For purposes of determining whether
the tax return preparer has a reasonable
belief that the position would more likely
than not to be sustained on the merits,
a tax return preparer may rely in good
faith without verification upon informa-
tion furnished by the taxpayer, as provided
in § 1.6694–1(e). In addition, a tax re-
turn preparer may relyingoodfaithand
without verification upon information fur-
nished by another advisor, tax return pre-
parer or other third party. Thus, a tax return
preparer is not required to independently
verify or review the items reported on tax
returns, schedules or other third party doc-
uments to determine if the items meet the
standard requiring a reasonable belief that
the position would more likely than not be
sustainedonthemerits.Thetaxreturnpre-
parer, however, may not ignore the impli-
cations of information furnished to the tax
return preparer or actually known to the
tax return preparer. The tax return preparer
also must make reasonable inquiries if the
information furnished by another tax re-
turn preparer or a third party appears to be
incorrect or incomplete.
For examples illustrating the provisions
of this section D, see section H below.
E.Reasonable Basis
Until further guidance is issued, solely
for purposes of section 6694, reasonable
basis will be interpreted in accordance
with § 1.6662–3(b)(3). For purposes of
this interim guidance, the standards de-
scribedinthissectionwillapplyinstead
of § 1.6694–2(c). Thereasonable basis
standard will also apply for purposes of
§ 1.6694–3(c)(2).
For purposes of determining whether
the tax return preparerhas a reasonable ba-
sis for a position, a tax return preparer may
rely in good faith without verification upon
information furnished by the taxpayer, as
provided in § 1.6694–1(e). In addition, a
tax return preparer may rely in good faith
and without verification upon information
furnished by another tax return preparer or
other third party. Thus, a tax return pre-
parer is not required to independently ver-
ify or review the items reported on tax re-
turns, schedules or other third party docu-
ments to determine if the items meet the
standard requiring a reasonable basis for
a position. The tax return preparer, how-
ever, may not ignore the implications of in-
January 22, 20082842008–3 I.R.B.

formation furnished to the tax return pre-
parer or actually known to the tax return
preparer. The tax return preparer also must
make reasonable inquiries if the informa-
tion furnished by another tax return pre-
parer or a third party appears to be incor-
rect or incomplete.
For examples illustrating the provisions
of this section E, see section H below.
F.Reasonable Cause and Good Faith
Until further guidance is issued, solely
for purposes of section 6694, the IRS will
continue to consider the factors described
in §§ 1.6694–2(d)(1) to -2(d)(4), but the
factor regarding reliance on advice found
in § 1.6694–2(d)(5) is replaced by the rules
described in this section F. For purposes
of this interim guidance, a tax return pre-
parer will be found to have acted in good
faith when the tax return preparer relied
on the advice of a third party who is not
in the same firm as the tax return preparer
and who the tax return preparer had reason
to believe was competent to render the ad-
vice. The advice may be written or oral,
but in either case the burden of establish-
ing that the advice was received is on the
tax return preparer. A tax return preparer is
notconsideredtohavereliedingoodfaith
if—
(i) The advice is unreasonable on its
face;
(ii) The tax return preparer knew or
should have known that the third party ad-
visor was not aware of all relevant facts; or
(iii) The tax return preparer knew or
should have known (given the nature of
the tax return preparer’s practice), at the
time the tax return or claim for refund was
prepared, that the advice was no longer
reliable due to developments in the law
sincethetimetheadvicewasgiven.
For examples illustrating the provisions
of this section F, see section H below.
G.Interim Penalty Compliance Rules
Until further guidance is issued, solely
for purposes of section 6694, asigning tax
return preparershall be deemed to meet
the requirements of section 6694 with re-
spect to a position for which there is a rea-
sonable basis but for which the tax return
preparer does not have a reasonable belief
that the position would more likely than
not be sustained on the merits, if the tax
return preparer meets any of the following
requirements:
1. The position is disclosed in accor-
dance with § 1.6662–4(f) (which
permits disclosure on a properly com-
pleted and filed Form 8275,Disclo-
sure Statement, or Form 8275–R,
Regulation Disclosure Statement,as
appropriate, or on the tax return in ac-
cordance with the annual revenue pro-
cedure described in§ 1.6662–4(f)(2));
2. If the position would not meet the
standard for the taxpayer to avoid a
penalty under section 6662(d)(2)(B)
without disclosure, the tax return
preparer provides the taxpayer with
the prepared tax return that includes
the disclosure in accordance with
§ 1.6662–4(f);
3. If the position would otherwise meet
the requirement for nondisclosure un-
der section 6662(d)(2)(B)(i), the tax
return preparer advises the taxpayer
of the difference between the penalty
standards applicable to the taxpayer
under section 6662 and the penalty
standards applicable to the tax return
preparer under section 6694, and con-
temporaneously documents in the tax
return preparer’s files that this advice
was provided; or
4. If section 6662(d)(2)(B) does not
apply because the position may be
described in section 6662(d)(2)(C),
the tax return preparer advises the
taxpayer of the penalty standards ap-
plicable to the taxpayer under section
6662(d)(2)(C) and the difference, if
any, between these standards and the
standards under section 6694, and
contemporaneously documents in the
tax return preparer’s files that this
advice was provided.
For purposes of this interim guidance,
the rules applicable to signing tax return
preparers described in this section will ap-
ply instead of § 1.6694–2(c)(3)(i).
Until further guidance is issued, solely
for purposes of section 6694, anonsign-
ing tax return preparershall be deemed
to meet the requirements of section 6694
with respect to a position for which there
is a reasonable basis but for which the non-
signing tax return preparer does not have
a reasonable belief that the position would
more likely than not be sustained on the
merits, if the advice to the taxpayer in-
cludes a statement informing the taxpayer
of any opportunity to avoid penalties un-
der section 6662 that could apply to the
position as a result of disclosure, if rel-
evant, and of the requirements for dis-
closure. If a nonsigning tax return pre-
parer provides advice to another tax return
preparer, a nonsigning tax return preparer
shall be deemed to meet the requirements
of section 6694 with respect to a position
for which there is a reasonable basis but for
which the nonsigning tax return preparer
does not have a reasonable belief that the
position would more likely than not be sus-
tained on the merits, if the advice to the tax
return preparer includes a statement that
disclosure under section 6694(a) may be
required. If the advice with respect to a po-
sition is in writing, the statement must be
in writing. If the advice with respect to a
position is oral, the statement also may be
oral. Contemporaneously prepared docu-
mentation in the nonsigning tax return pre-
parer’s files is sufficient to establish that
the statement was given to the taxpayer
or other tax return preparer. For purposes
of this interim guidance, the rules applica-
ble to nonsigning tax return preparers de-
scribed in this section will apply instead of
§ 1.6694–2(c)(3)(ii).
For examples illustrating the provisions
of this section G, see section H below.
H.Examples
Examples illustrating the provisions of
this notice and existing rules under current
regulations:
Example 1. Accountant A prepares a Form 8886,
Reportable Transaction Disclosure Statement,thatis
used to disclose reportable transactions. Accountant
A does not prepare the tax return or advise the tax-
payer regarding the tax return reporting position of
the transaction to which the Form 8886 relates. The
preparation of the Form 8886 is not directly relevant
to the determination of the existence, characteriza-
tion, or the amount of an entry on a tax return or claim
for refund. Rather, the Form 8886 is prepared by Ac-
countant A to disclose a reportable transaction. Ac-
countant A has not prepared a substantial portion of
the tax return and is not considered a tax return pre-
parer under section 6694.
Example 2. Accountant B prepares a partner-
ship’s Form 1065 (including Schedules K–1) allocat-
ing the partnership’s losses among its partners in pro-
portion to their original investment. Accountant B is
not an employee of either the partnership or the gen-
eral partner. Accountant B knows that the loss deduc-
tion calculated by Accountant B and claimed by one
of the partners on that partner’s tax return, if disal-
lowed, is the most significant portion of the liability
on that partner’s tax return. Accountant B has pre-
2008–3 I.R.B.285January 22, 2008

pared a substantial portion of that partner’s tax return
and is considered a tax return preparer under section
6694.
Example 3. Attorney C, an attorney in a law firm,
advises a large corporate taxpayer on specific issues
of law regarding the tax consequences of a proposed
corporate transaction. Based upon this advice, the
corporate taxpayer enters into the transaction. Once
the transaction is completed, the corporate taxpayer
does not receive any additional advice from Attorney
C or anyone in Attorney C’s firm with respect to the
proposed corporate transaction. Six months later, the
corporate taxpayer hires Preparer D, who is not asso-
ciated with the same firm as Attorney C, to prepare
its entire tax return. Attorney C has not prepared a
substantial portion of the corporation’s tax return and
is not considered a tax return preparer under section
6694.
Example 4. Attorney D, an attorney in a law
firm, advises a large corporate taxpayer concerning
the proper treatment and amount of a single entry on
the corporate taxpayer’s tax return. The tax liability
involved in this entry is an insignificant portion of the
tax liability for the corporate tax return as a whole.
Neither Attorney D nor any other attorney associated
with Attorney D’s firm signs the corporate taxpayer’s
taxreturnasataxreturnpreparer.AttorneyDhasnot
prepared a substantial portion of the corporation’s tax
return and is not considered a tax return preparer un-
der section 6694.
Example 5. Attorney E specializes in tax plan-
ning at a law firm and develops Strategy Y, a plan
with a significant purpose of tax avoidance. Attor-
ney E provides advice with respect to Strategy Y to
50 taxpayers. The 50 taxpayers implement Strategy
Y in a manner that significantly reduces the Federal
tax liability that would otherwise be reported on their
tax returns. After Strategy Y is entered into, Attor-
ney E advises each of the 50 taxpayers on the report-
ing of specific amounts that Attorney E knows will
be placed on the tax return of each of the 50 taxpay-
ers. Attorney E knows that the tax liability involved
in this entry, if disallowed, is a significant portion of
the tax liability for each of the tax returns. Neither
Attorney E nor any other person associated with At-
torney E’s firm signs the taxpayers’ tax returns as a
taxreturnpreparer. TheadvicerelatingtoStrategy
Y constitutes preparation of a substantial portion of
each of the 50 taxpayers’ tax returns. Thus, Attorney
E is a tax return preparer under section 6694.
Example 6. During an interview conducted by
Preparer F, the taxpayer provided a schedule prepared
by another advisor in Preparer F’s firm for use in
preparing the taxpayer’s tax return. The schedule did
not appear to be incorrect or incomplete. On the ba-
sis of this information, Preparer F completed the tax
return. It is later determined that there is an under-
statement of liability for tax that resulted from incor-
rect information on the schedule. Preparer F is not
required to audit, examine or review the schedule in
order to verify independently that the information on
the schedule met the standard requiring a reasonable
belief that the position would more likely than not be
sustained on the merits. Preparer F is not subject to a
penalty under section 6694.
Example 7. In preparing a tax return, Accountant
G relies on the advice of an actuary concerning the
limit on deductibility under section 404(a)(1)(A) of
a contribution by an employer to a qualified pension
trust. The actuary providing the advice was not as-
sociated with Accountant G’s firm. On the basis of
this advice, Accountant G completed the tax return.
It is later determined that there is an understatement
of liability for tax that resulted from incorrect advice
provided by the actuary. Accountant G had no reason
to believe that the advice was incorrect or incomplete,
and the advice appeared reasonable on its face. Ac-
countant G was also not aware of any reason why the
actuary did not know all of the relevant facts or that
the advice was no longer reliable due to developments
in the law since the time the advice was given. Ac-
countant G is not subject to a penalty under section
6694.
Example 8. During an interview conducted by
Preparer H, a taxpayer stated that he had made a
charitable contribution of real estate in the amount
of $50,000 during the tax year, when in fact he had
not made this charitable contribution. Preparer H did
not inquire about the existence of a qualified appraisal
or complete a Form 8283 in accordance with the re-
porting and substantiation requirements under section
170(f)(11). Preparer H reported deductions on the tax
return for the charitable contribution which resulted
in an understatement of liability for tax. Preparer H
is subject to a penalty under section 6694.
Example 9. Preparer I prepared the tax returns
of a taxpayer for each of the past three years. While
preparing this year’s tax return, Preparer I realizes
that the taxpayer did not provide a Form 1099 for
a bank account that producedsignificant taxable in-
come in each of the previous three years. When Pre-
parer I asked the taxpayer about any other existing
income and the lack of this Form 1099, the taxpayer
furnishes the Form 1099 to Preparer I for use in prepa-
ration of the tax return. Preparer I did not know that
the taxpayer owned an additional bank account this
past year that generated taxable income and the tax-
payer did not reveal this information to the tax return
preparer. Preparer I is not subject to a penalty under
section 6694.
Example 10. A corporate taxpayer hires Accoun-
tant J to prepare its tax return. Accountant J encoun-
ters an issue regarding various small asset expendi-
tures. Accountant J researches the issue and con-
cludes that there is a reasonable basis for a particu-
lar treatment of the issue. Accountant J cannot, how-
ever, reach a reasonable belief whether the position
would more likely than not be sustained on the mer-
its because it was impossible to make a precise quan-
tification regarding whether the position would more
likely than not be sustained on the merits. The po-
sition is not disclosed on the tax return. Accountant
J signs the tax return as the tax return preparer. The
IRS later disagrees with this position taken on the tax
return. Accountant J is not subject to a penalty under
section 6694.
Example 11. A corporate taxpayer hires Accoun-
tant K to prepare its income tax return. Accoun-
tant K does not reasonably believe that a particular
position taken on the tax return would more likely
than not be sustained on its merits although there
is substantial authority for the position. Accountant
K prepares and signs the tax return without disclos-
ing the position taken on the tax return, but advises
the corporate taxpayer of the difference between the
penalty standards applicable to the taxpayer under
section 6662 and to the tax return preparer under sec-
tion 6694, and contemporaneously documents in the
tax return preparer’s files that this advice was pro-
vided. The corporate taxpayer signs and files the tax
return without disclosing the position because the po-
sition meets the requirements for nondisclosure un-
der section 6662(d)(2)(B)(i). The IRS later disagrees
with the position taken on the tax return, resulting in
an understatement of liability reported on the tax re-
turn. Accountant K is not subject to a penalty under
section 6694.
Example 12. Attorney L advises a large corpo-
rate taxpayer in writing concerning the proper treat-
ment of complex entries on the corporate taxpayer’s
tax return. Attorney L has reason to know that the
tax liability involved in these entries, if disallowed,
is a significant portion of the tax liability for the tax
return. When providing the advice, Attorney L con-
cludes that one position with respect to these entries
does not meet the reasonable belief that the position
would more likely than not be sustained on the merits
standard and also does not have substantial authority,
although the position meets the reasonable basis stan-
dard. Attorney L, in good faith, advises the corporate
taxpayer in writing that the position lacks substantial
authority and the taxpayer will be subject to an accu-
racy-related penalty under section 6662 unless the po-
sition is disclosed in a disclosure statement included
in the return. Attorney L also documents the fact that
this advice was contemporaneously provided to the
corporate taxpayer in writing at the time the advice
was provided. The corporate taxpayer decides not to
include a disclosure statement in the return. Neither
Attorney L nor any other attorney associated with At-
torney L’s firm signs the corporate taxpayer’s return
as a tax return preparer, but the advice by Attorney L
constitutes preparation of a substantial portion of the
tax return. Thus, Attorney L is a tax return preparer
for purposes of section 6694. Attorney L, however,
will not be subject to a penalty under section 6694.
REQUESTS FOR COMMENTS
Interested parties are invited to submit
comments on this notice by March 24,
2008. Comments should be submitted to:
Internal Revenue Service, CC:PA:LPD:PR
(Notice 2008–13), Room 5203, P.O. Box
7604, Ben Franklin Station, Washing-
ton, DC 20224. Alternatively, comments
may be hand delivered Monday through
Friday between the hours of 8:00 a.m.
to 4:00 p.m. to: CC:PA:LPD:PR (No-
tice 2008–13), Courier’s Desk, Inter-
nal Revenue Service, 1111 Constitution
Avenue, N.W., Washington, DC. Com-
ments may also be submitted electron-
ically via the following e-mail address:
Notice.Comments@irscounsel.treas.gov.
Please includeNotice 2008–13in the
subject line of any electronic submissions.
Specifically, this notice requests com-
ments with respect to the definition of a
tax return preparer. The Treasury Depart-
ment and the IRS are considering various
modifications to the regulations defining
January 22, 20082862008–3 I.R.B.

tax return preparerforpurposesofsec-
tions 6694 and 7701(a)(36). These mod-
ifications may include limiting the defi-
nition or keeping a broader definition in
order to clarify the definition of nonsign-
ing tax return preparers in such a manner
that nonsigning tax return preparers can
more easily identify the circumstances un-
der which they would be subject to section
6694. This may involve the addition of ex-
amples or changes to the currentde min-
imissafe harbor in § 301.7701–15(b)(2).
This notice also requests comments
with respect to providing additional guid-
ance on defining both thereasonable
beliefandmore likely than notconcepts in-
cluded in section 6694, as amended by the
Act. Comments are requested whether the
Treasury Department and the IRS should
promulgate rules specifically tailored to
common situations when reaching amore
likely than notlevel of certainty on a po-
sition is not possible or practical as either
a legal or factual matter and, specifically,
whether disclosure should be necessary to
avoid penalties under section 6694(a) and
how disclosure should be made in those
situations.
EFFECTIVE DATE
This notice is effective as of: (1) Jan-
uary 1, 2008, for all tax returns, amended
tax returns, and claims for refund (other
than 2007 employment and excise tax re-
turns) filed on or after that date and with
respect to advice provided on or after that
date; and (2) February 1, 2008, for all 2007
employment and excise tax returns filed on
or after that date and with respect to advice
provided on or after that date.
CONTACT INFORMATION
The principal authors of this notice are
Matthew S. Cooper and Michael E. Hara
of the Office of the Associate Chief Coun-
sel (Procedure and Administration). For
further information regarding this notice,
contact Mr. Cooper at (202) 622–4940 or
Mr. Hara at (202) 622–4910 (not toll-free
calls).
2008–3 I.R.B.287January 22, 2008

EXHIBIT 1 — Tax Returns Reporting Tax Liability
Income Tax Returns — Subtitle A
Form 926,Return by a U.S. Transferor of Property to a Foreign Corporation;
Form 990–T,Exempt Organization Business Income Tax Return;
Form 1040, U.S. Individual Income Tax Return;
Form 1040A, U.S.Individual Income Tax Return;
Form 1040EZ,Income Tax Return for Single and Joint Filers With No Dependents;
Form 1040EZ–T,Request for Refund of Federal Telephone Excise Tax;
Form 1040X,Amended U.S. Individual Income Tax Return;
Form 1040–PR (Anexo H-PR),Contribuciones sobre el Empleo de Empleados Domesticos;
Form 1041, U.S.Income Tax Return for Estates and Trusts;
Form 1042,Annual Withholding Tax Return for U.S. Source Income of Foreign Persons;
Form 1066,U.S. Real Estate Mortgage Investment Conduit (REMIC) Income Tax Return;
Form 1120,U.S. Corporation Income Tax Return;
Form 1120–C,U.S. Income Tax Return forCooperative Associations;
Form 1120–IC DISC,Interest Charge Domestic International Sales Corporation Return;
Form 1120–F,U.S. Income Tax Return of a Foreign Corporation;
Form 1120S,U.S. Income Tax Return for an S Corporation;
Form 1120X,Amended U.S. Corporation Income Tax Return;
Form 8831,Excise Taxes on Excess Inclusions of REMIC Residual Interests;and
Form 8924,Excise Tax on Certain Transfers of Qualifying Geothermal or Mineral Interests(New Form, Exclusion
from Capital Gains).
Estate and Gift Tax Returns — Subtitle B
Form 706,United States Estate (and Generation-Skipping Transfer) Tax Return;
Form 706–A,United States Additional Estate Tax Return;
Form 706–D,United States Additional Estate Tax Return Under Code Section 2057;
Form 706–GS(D)Generation-Skipping Transfer Tax Return for Distributions;
Form 706–GS(T)Generation-Skipping Transfer Tax Return for Terminations;
Form 706–NA,United States Estate (and Generation-Skipping Transfer) Tax Return—Estate of nonresident not a
citizen of the United States;
Form 706–QDT,United States Estate Tax Return for Qualified Domestic Trusts;
Form 709,United States Gift (and Generation-Skipping Transfer) Tax Return;and
Form 843,Claim For Refund and Request for Abatement(also used to claim refunds for employment and certain excise
tax returns).
Employment Tax Returns — Subtitle C
Form CT–1,Employer’s Annual Railroad Retirement Tax Return;
Form CT–2,Employee Representative’s Quarterly Railroad Tax Return;
Form 940,
Employer’s Annual Federal Unemployment (FUTA) Tax Return;
Form 940–PR,Planilla para la Declaración Federal ANUAL del Patrono de la Contribución Federal para el Desempleo
(FUTA);
Form 941,Employer’s QUARTERLY Federal Tax Return;
January 22, 20082882008–3 I.R.B.

Form 941–PR,Planilla para la Declaración Federal TRIMESTRAL del Patrono;
Form 941–SS,Employer’s QUARTERLY Federal Tax Return;
Form 941–M,Employer’s MONTHLY Federal Tax Return;
Form 943,Employer’s Annual Federal Tax Return for Agricultural Employees;
Form 943–PR,Planilla para la Declaración ANUAL de la Contribución Federal del Patrono de Empleados Agrícolas;
Form 944,Employer’s ANNUAL Federal Tax Return;
Form 944–PR,Planilla para la Declaración ANUAL del Patrono;
Form 944(SP),Declaración Federal ANUAL de Impuestos del Patrono o Empleador;
Form 944–SS,Employer’s ANNUAL Federal Tax Return;
Form 945,Annual Return of Withheld Federal Income Tax;
Form 1040–SS,U.S. Self-Employment Tax Return (Including the Additional Child Tax Credit for Bona Fide Residents of
Puerto Rico).
Miscellaneous Excise Tax Returns — Subtitle D
Form 11–C,Occupational Tax and Registration Return for Wagering;
Form 720,Quarterly Federal Excise Tax Return;
Form 720X,Amended Quarterly Federal Excise Tax Return;
Form 730,Monthly Tax Return for Wagers;
Form 990–PF,Return of Private Foundation or Section 4947(a)(1)Nonexempt Charitable Trust Treated as a Private
Foundation(with respect to the excise tax based on investment income);
Form 2290,HeavyHighwayVehicleUseTaxReturn;
Form 2290(FR),Declaration d’Impot sur L’utilisation des Vehicules Lourds sur les Routes;
Form 2290(SP),Declaración del Impuesto sobre el Uso de Vehículos Pesados en las Carreteras;
Form 4720,Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code;
Form 5330,Return of Excise Taxes Related to Employee Benefit Plans;
Form 8612,Return of Excise Tax on Undistributed Income of Real Estate Investment Trusts;
Form 8613,Return of Excise Tax on Undistributed Income of Regulated Investment Companies;and
Form 8849,Claim for Refund of Excise Taxes.
Alcohol, Tobacco, and Certain Other Excise Taxes — Subtitle E
Form 8725, Excise Tax on Greenmail;and
Form 8876,Excise Tax on Structured Settlement Factoring Transactions.
Exhibit 2 — Information Returns That Report Information That is or May be Reported on Another Tax Return That
May Subject a Tax Return Preparer to the Section 6694(a) Penalty if the Information Reported Constitutes a Substantial
Portion of the Other Tax Return
Form 1042–S,Foreign Person’s U.S. Source Income Subject to Withholding;
Form 1065,U.S. Return of Partnership Income(including Schedules K–1);
Form 1120S,U.S. Income Tax Return for an S Corporation(including Schedules K–1);
Form 5500,Annual Return/Report of Employee Benefit Plan;
Form 8038,
Information Return for Tax-Exempt Private Activity Bond Issues;
Form 8038–G,InformationReturnforTax-Exempt Governmental Obligations;and
Form 8038–GC, Information Return for Small Tax-Exempt Governmental Bond Issues, Leases, and Installment Sales.
2008–3 I.R.B.289January 22, 2008

Exhibit 3 — Forms That Would Not Subject a Tax Return Preparer to the Section 6694(a) Penalty Unless Prepared
Willfully in any Manner to Understate the Liability of Tax on a Return or Claim for Refund or in Reckless or Intentional
Disregard of Rules or Regulations
Form 1099 series of returns;
Form W–2 series of returns;
Form W–8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding;
Form SS–8,Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.
Form 990,Return of Organization Exempt from Income Tax;
Form 990–EZ,Short Form Return of Organization Exempt From Income Tax;
Form 990–N,Electronic Notice (e-Postcard) for Tax-Exempt Organizations not Required To File Form 990 or 990–EZ;
Form 1040–ES,Estimated Tax for Individuals;
Form 1120–W,Estimated Tax for Corporations;
Form 2350,Application for Extension of Time to File U.S. Income Tax Return;
Form 2350 (SP),Solicitud de Prorroga para Presentar la Declarcion Del Impuesto Sobre el Ingreso Personal de los
Estados Unidos.
Form 4137,Social Security and Medicare Tax on Unreported Tip Income;
Form 4768,Application for Extension of Time to File a Return and/or Pay U.S.Estate (and Generation-Skipping Transfer)
Taxes;
Form 4868,Application for Automatic Extension of Time to File U.S. Individual Income Tax Return;
Form 4868 (SP),Solicited de Prorroga Automatic para Presenter la Declaracion del Impuesto Sobre el Ingreso Personal de
los Estados Unidas.
Form 5558,Application for Extension of Time to File Certain Employee Plan Returns;
Form 7004,Application for Automatic 6-Month Extension of Time To File Certain Business Income Tax, Information,
and Other Returns;
Form 8109,Federal Tax Deposit Coupon;
Form 8027,Employer’s Annual Information Return of Tip Income and Allocated Tips;
Form 8809,Application for Extension of Time to File Information Returns;
Form 8868,Application for Extension of Time To File an Exempt Organization Return;
Form 8892,Application for Automatic Extension of Time to FileForm 709 and/or Payment of Gift/Generation-Skipping
Transfer Tax;and
Form 8919,Uncollected Social Security and Medicare Tax on Wages.
26 CFR 601.201: Rulings and determination letters.
(Also Part 1, Section 846; 1.846–1.)
Rev. Proc. 2008–10
SECTION 1. PURPOSE
This revenue procedure prescribes the
loss payment patterns and discount factors
for the 2007 determination year. These
factors will be used to compute discounted
unpaid losses under § 846 of the Internal
Revenue Code.
SEC. 2. BACKGROUND
.01 Section 846 provides that dis-
counted unpaid losses must be separately
determined for each accident year of each
line of business by applying an interest
rate determined under § 846(c) and the
appropriate loss payment pattern to the
amount of unpaid losses as measured at
the end of the tax year.
Section 846(d) directs the Secretary to
use the most recent aggregate loss pay-
ment data of property and casualty insur-
ance companies to determine and publish a
loss payment pattern for each line of busi-
ness every five years. This payment pat-
tern is used to discount unpaid losses for
the accident year ending with a determina-
tion year and for each of the four succeed-
ing accident years.
Section 846(e) allows a taxpayer to
make an election in each determination
year to use its own historical payment
pattern instead of the Secretary’s tables.
This election does not apply to any inter-
national insurance or reinsurance line of
business.
Section 846(f)(4) defines the term “line
of business” as a category for the report-
ing of loss payment patterns on the an-
January 22, 20082902008–3 I.R.B.

nual statement for fire and casualty com-
panies approved by the National Associa-
tion of Insurance Commissioners (NAIC),
except that the multiple peril lines shall be
treated as a single line of business. Sec-
tion 846(f)(5) states that the term “multiple
peril lines” means the lines of business re-
lating to farmowners multiple peril, home-
owners multiple peril, commercial multi-
ple peril, ocean marine, aircraft (all perils)
and boiler and machinery.
.02 Pursuant to § 846(d), the Secretary
has determined a loss payment pattern for
each property and casualty line of busi-
ness for the 2007 determination year that,
pursuant to § 846(d)(1), must be applied
through the 2011 accident year.
.03 The loss payment patterns for the
2007 determination year are based on the
aggregate loss payment information re-
ported on the 2005 annual statements of
property and casualty insurance compa-
nies and compiled by A.M. Best and Co.
The tables are arranged in alphabetical
order. Following is anadditional explana-
tion of some of the tables and changes to
the tables.
(1)Lines of Business. The lines of busi-
ness for the 2007 determination year are
thesameasthelinesofbusinessforthe
2002 determination year.SeeRev. Proc.
2003–17, 2003–1 C.B. 427
(2)Format of the Tables. To simplify
the tables, the columns entitled Tax Year
provide the actual tax years, rather than
AY+0,AY+1,andsoon.
(3)Accident Years Not Separately Re-
ported on the NAIC Annual Statement.
Section V of Notice 88–100, 1988–2 C.B.
439, sets forth a composite method for
computing discounted unpaid losses for
accident years that are not separately re-
ported on the annual statement. The tables
separately provide discount factors for
taxpayers who elect to use the composite
method of section V of Notice 88–100.
SeeRev. Proc. 2002–74, 2002–2 C.B.
980.
(4)Smoothing Data.InRev.Proc.
2003–17, section 2.03(4), comments were
requested as to whether a methodology
shouldbeadoptedtosmooththerawpay-
ment data and thus produce a more stable
pattern of discount factors. This revenue
procedure does not adopt such a methodol-
ogy with respect to the 2007 determination
year.
SEC. 3. SCOPE
This revenue procedure applies to any
taxpayer that is required to discount unpaid
losses under § 846 for a line of business
using the discount factors published by the
Secretary.
SEC. 4. TABLES OF DISCOUNT
FACTORS
.01 The following tables present sepa-
rately for each line of business the discount
factors under § 846 for accident year 2007.
All the discount factors presented in this
section were determined using the appli-
cable interest rate under § 846(c) for 2007,
3.97 percent, and by assuming all loss pay-
ments occur in the middle of the calendar
year.
.02 If the groupings of individual
lines of business on the annual statement
change, taxpayers must discount unpaid
losses on the resulting line of business in
accordance with the discounting patterns
that would have applied to those unpaid
losses based on their classification on the
2007 annual statement.
.03 Tables
Accident and Health
(Other Than Disability Income or Credit Disability Insurance)
Taxpayers that do not use the composite method of Notice 88–100 should use 98.0722 percent to discount unpaid losses incurred
in this line of business in the 2007 accident year and that are outstanding at theend of the 2007 and later taxable years.
Taxpayers that use the composite method of Notice 88–100 should use 98.0722 percent to discount all unpaid losses in this line of
business that are outstanding at the end of the 2007 taxable year.
Auto Physical Damage
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
200789.409689.4096
10.5904
10.368797.9072
200899.6848
10.27520.3152
0.303296.1998
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount unpaid losses
incurred in this line of business in the 2007 accident year and that are outstanding at the end of the tax year shown.
2009 and later years
0.15760.15760.1546
98.0722
Taxpayer
s that use the composite method of Notice 88–100 should use 98.0722 percent to discount unpaid losses incurred in this
line of bu
siness in 2007 and prior years and that are outstanding at the end of the 2009 taxable year.
2008–3 I.R.B.291January 22, 2008

Commercial Auto/Truck Liability/Medical
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
200723.671823.671876.3282
70.318592.1265
2008
47.5425
23.8708
52.4575
48.770192.9709
200966.684719.1421
33.3153
31.187993.6143
2010
81.510514.825818.4895
17.308893.6143
2011
90.05488.54439.9452
9.283793.3488
201294.73114.6763
5.2689
4.884192.6963
201397.06022.32922.93982.703191.9480
201498.1174
1.0572
1.88261.7324
92.0225
2015
98.8692
0.7518
1.13081.034691.4939
201699.11600.24670.88400.824193.2174
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid losses
incurred in this line of business in the 2006 accident year and that are outstanding at the end of the tax year shown.
20170.24670.6373
0.6052
94.9641
20180.24670.39060.377796.6929
2019 and later years0.24670.14390.141198.0722
Taxpayers t
hat use the composite method of Notice 88–100 should use 95.5650 percent to discount unpaid losses incurred in this
line of busi
ness in 2007 and prior years and that are outstanding at the end of the 2017 taxable year.
Composite
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
200734.700434.7004
65.299659.3989
90.9638
2008
58.6076
23.907241.392437.379990.3063
200971.7608
13.1532
28.2392
25.4522
90.1307
201081.49879.7379
18.501316.5333
89.3631
201187.8488
6.350112.1512
10.714888.1789
201291.4226
3.57398.5774
7.496187.3938
2013
93.4057
1.9831
6.59435.771687.5245
201494.22800.8222
5.77205.1623
89.4370
201595.48751.25954.5125
4.083090.4817
2016
96.35600.8685
3.6440
3.3595
92.1928
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid losses
incurred in this line of business in the 2006 accident year and that are outstanding at the end of the tax year shown.
2017
0.86852.7754
2.607293.9399
2018
0.8685
1.9069
1.825195.7124
2019
0.8685
1.03831.0120
97.4599
2020 and later years
0.8685
0.1698
0.1665
98.0722
Taxpay
ers that use the composite method of Notice 88–100 should use 91.0440 percent to discount unpaid losses incurred in this
line of
business in 2007 and prior years and that are outstanding at the end of the 2017 taxable year.
January 22, 20082922008–3 I.R.B.

Fidelity/Surety
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
2007
25.232825.2328
74.767271.1687
95.1871
2008
61.102535.869838.8975
37.419396.1998
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount unpaid losses
incurred in this line of business in the 2007 accident year and that are outstanding at the end of the tax year shown.
2009 and later years19.448719.448719.073898.0722
Taxpayers that use the composite method of Notice 88–100 shoulduse 98.0722 percent to discount unpaid losses incurred in this
line of business in 2007 and prior years and that are outstanding at the end of the 2009 taxable year.
Financial Guaranty/Mortgage Guaranty
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
20077.78247.7824
92.2175
88.3402
95.7954
200862.1390
54.3565
37.861036.422296.1998
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount unpaid losses
incurred in this line of business in the 2007 accident year and that are outstanding at the end of the tax year shown.
2009 and later years
18.930518.930518.5656
98.0722
Taxpayers that use the composite method of Notice 88–100 shoulduse 98.0722 percent to discount unpaid losses incurred in this
line of business in 2007 and prior years and that are outstanding at the end of the 2009 taxable year.
International (Composite)
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
200734.700434.7004
65.299659.3989
90.9638
2008
58.6076
23.907241.392437.379990.3063
200971.7608
13.1532
28.2392
25.4522
90.1307
201081.49879.7379
18.501316.5333
89.3631
201187.8488
6.350112.1512
10.714888.1789
201291.4226
3.57398.5774
7.496187.3938
2013
93.4057
1.9831
6.59435.771687.5245
201494.22800.8222
5.77205.1623
89.4370
201595.48751.25954.5125
4.083090.4817
2016
96.35600.8685
3.6440
3.3595
92.1928
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid losses
incurred in this line of business in the 2007 accident year and that are outstanding at the end of the tax year shown.
2008–3 I.R.B.293January 22, 2008

International (Composite)
2017
0.86852.7754
2.607293.9399
2018
0.8685
1.9069
1.825195.7124
2019
0.8685
1.03831.0120
97.4599
2020 and later y
ears
0.8685
0.1698
0.1665
98.0722
Taxpayers that use the composite method of Notice 88–100 shoulduse 91.0440 percent to discount unpaid losses incurred in this
line of business in 2007 and prior years and that are outstanding at the end of the 2017 taxable year.
Medical Malpractice — Claims-Made
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
2007
4.94254.942595.057585.227889.6591
200819.936914.994480.063173.3222
91.5804
200944.348924.4120
55.651151.341192.2554
201064.8374
20.488535.1626
32.488292.3941
2011
80.253015.4156
19.7470
18.059391.4535
2012
85.79075.5377
14.209313.129792.4024
201391.2722
5.4815
8.72788.0618
92.3685
201493.3314
2.0593
6.66866.282194.2043
201596.1257
2.79423.87433.6823
95.0438
2016
97.65381.5281
2.34622.270496.7663
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount unpaid losses
incurred in this line of business in the 2007 accident year and that are outstanding at the end of the tax year shown.
2017 and later years
1.5281
0.81820.802498.0722
Taxpayers that use the composite method of Notice 88–100 shoulduse 97.4255 percent to discount unpaid losses incurred in this
line of business in 2007 and prior years and that are outstanding at the end of the 2017 taxable year.
Medical Malpractice — Occurrence
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
2007
1.58781.5878
98.4122
82.4895
83.8204
20084.47202.8842
95.5280
82.823486.7006
200917.773813.301882.2262
72.5482
88.2300
2010
35.8814
18.107664.1186
56.9648
88.8429
2011
52.9447
17.0633
47.0553
41.827688.8904
201268.4348
15.490131.5652
27.693687.7346
2013
79.5616
11.126820.4384
17.447585.3663
2014
85.81986.2582
14.1802
11.759082.9253
2015
90.12674.30699.87337.834279.3476
201690.37010.24349.62997.8971
82.0057
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid losses
incurred in this line of business in the 2007 accident year and that are outstanding at the end of the tax year shown.
January 22, 20082942008–3 I.R.B.

Medical Malpractice — Occurrence
20170.2434
9.3865
7.962484.8282
20180.24349.14318.030487.8294
20190.24348.89988.1010
91.0250
20200.2434
8.65648.1745
94.4327
2021 and later years0.24348.4130
8.2508
98.0722
Taxpayers that use the composite method of Notice 88–100 shoulduse 84.8282 percent to discount unpaid losses incurred in this
line of business in 2007 and prior years and that are outstanding at the end of the 2017 taxable year.
Miscellaneous Casualty
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
200772.906472.906427.0936
26.215496.7589
2008
93.5836
20.67716.41646.172696.1998
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount unpaid losses
incurred in this line of business in the 2007 accident year and that are outstanding at the end of the tax year shown.
2009 and later years3.20823.20823.146498.0722
Taxpayers that use the composite method of Notice 88–100 shoulduse 98.0722 percent to discount unpaid losses incurred in this
line of business in 2007 and prior years and that are outstanding at the end of the 2009 taxable year.
Multiple Peril Lines
(Homeowners/Farmowners, Commercial Multiple Peril, and Special Liability
(Ocean Marine, Aircraft (All Perils), Boiler and Machinery))
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
2007
52.588052.5880
47.412044.316893.4716
200880.0449
27.457019.955118.0795
90.6009
2009
86.16256.117513.837512.5595
90.7636
2010
90.74524.58279.25488.3853
90.6043
201193.9006
3.1555
6.0994
5.5007
90.1844
2012
95.7613
1.86074.23873.821890.1647
2013
96.8755
1.1141
3.12452.8375
90.8127
2014
97.6715
0.7960
2.32852.1385
91.8377
2015
98.0329
0.3615
1.9671
1.854894.2925
201698.68100.64811.31901.2676
96.1051
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid losses
incurred in this line of business in the 2007 accident year and that are outstanding at the end of the tax year shown.
20170.64810.6709
0.6571
97.9448
2018 and later years0.64810.02280.022498.0722
Taxpayers t
hat use the composite method of Notice 88–100 should use 97.9855 percent to discount unpaid losses incurred in this
line of busi
ness in 2007 and prior years and that are outstanding at the end of the 2017 taxable year.
2008–3 I.R.B.295January 22, 2008

Other (Including Credit)
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
2007
67.952867.9528
32.047230.844996.2484
200889.4609
21.508110.5391
10.138696.1998
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount unpaid losses
incurred in this line of business in the 2007 accident year and that are outstanding at the end of the tax year shown.
2009 and later years
5.26955.26955.1680
98.0722
Taxpayers that use the composite method of Notice 88–100 shoulduse 98.0722 percent to discount unpaid losses incurred in this
line of business in 2007 and prior years and that are outstanding at the end of the 2009 taxable year.
Other Liability
—Claims-Made
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
2007
5.87965.8796
94.1204
83.452088.6652
2008
18.8735
12.9938
81.126573.5158
90.6186
200941.6840
22.810558.316053.175591.1850
2010
62.5322
20.848337.467834.028490.8206
2011
73.520710.9885
26.479324.174991.2974
201282.00368.482917.9964
16.4850
91.6017
201388.62796.624411.372110.384991.3196
201490.71072.08289.2893
8.6735
93.3708
2015
94.84394.1332
5.1561
4.8034
93.1593
201696.26891.42493.7311
3.5411
94.9069
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid losses
incurred in this line of business in the 2007 accident year and that are outstanding at the end of the tax year shown.
20171.42492.30622.228796.6413
2018 and late
r years
1.42490.88120.864298.0722
Taxpayers th
at use the composite method of Notice 88–100 should use 96.1717 percent to discount unpaid losses incurred in this
line of busin
ess in 2007 and prior years and that are outstanding at the end of the 2017 taxable year.
January 22, 20082962008–3 I.R.B.

Other Liability — Occurrence
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
2007
13.659413.6594
86.3406
74.785286.6165
200824.8389
11.179575.161166.3549
88.2836
200941.779216.9403
58.220851.7160
88.8273
2010
58.4995
16.7203
41.5005
36.720188.4811
2011
69.5197
11.020330.480326.9411
88.3885
2012
77.7513
8.231622.248719.6172
88.1725
201384.22436.4730
15.775713.7958
87.4497
2014
83.2275
-0.9968
16.772515.359991.5778
201588.85245.6249
11.147610.234291.8064
2016
91.38522.5328
8.6148
8.057993.5358
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid losses
incurred in this line of business in the 2007 accident year and that are outstanding at the end of the tax year shown.
2017
2.5328
6.0820
5.795295.2850
2018
2.53283.5492
3.442796.9998
2019 and lat
er years
2.5328
1.01640.996898.0722
Taxpayers that use the composite method of Notice 88–100 shoulduse 92.8572 percent to discount unpaid losses incurred in this
line of business in 2007 and prior years and that are outstanding at the end of the 2017 taxable year.
Private Pas
senger Auto Liability/Medical
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
200742.610842.6108
57.389254.1196
94.3029
2008
71.5827
28.971928.417326.7268
94.0513
200984.694713.1120
15.3053
14.418294.2036
2010
92.3556
7.66107.64447.1790
93.9125
201196.23693.88123.7631
3.5065
93.1803
2012
97.9275
1.6907
2.0725
1.9218
92.7305
201398.77190.84441.22811.1371
92.5934
201499.26920.49730.7308
0.6752
92.3927
201599.5053
0.23610.49470.461393.2429
201699.64400.1387
0.3560
0.338294.9893
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid losses
incurred in this line of business in the 2007 accident year and that are outstanding at the end of the tax year shown.
20170.13870.21740.2102
96.7159
2018 and
later years
0.13870.07870.077298.0722
Taxpaye
rs that use the composite method of Notice 88–100 should use 97.0832 percent to discount unpaid losses incurred in this
line of b
usiness in 2007 and prior years and that are outstanding at the end of the 2017 taxable year.
2008–3 I.R.B.297January 22, 2008

Products Liability — Claims-Made
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
2007
1.02591.0259
98.974184.070384.9417
200811.792710.766788.2073
76.429586.6475
200929.3642
17.571670.635861.546787.1325
2010
55.165525.801244.8345
37.681784.0462
201183.4171
28.251616.5829
10.3708
62.5388
201264.8933
-18.523835.1067
29.6704
84.5149
201382.334617.4414
17.6654
13.0641
73.9533
201486.39864.064013.60149.4389
69.3965
2015
76.3310-10.067623.669020.079184.8330
201678.79102.460021.209018.367986.6043
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount unpaid losses
incurred in this line of business in the 2007 accident year and that are outstanding at the end of the tax year shown.
20172.460018.7490
16.5888
88.4781
20182.460016.289014.739090.4843
20192.460013.8290
12.8158
92.6732
20202.460011.369110.8163
95.1377
2021 and la
ter years
2.46008.90918.737398.0722
Taxpayers t
hat use the composite method of Notice 88–100 should use 88.4781 percent to discount unpaid losses incurred in this
line of bus
iness in 2007 and prior years and that are outstanding at the end of the 2017 taxable year.
Products Liability — Occurrence
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
2007
5.04665.046694.9534
80.447984.7236
2008
13.6935
8.6469
86.3065
74.824986.6967
2009
28.254114.560671.7459
62.948687.7383
201041.3083
13.054258.691752.1369
88.8318
2011
59.3693
18.061040.6307
35.7907
88.0878
201273.071713.702426.928323.239886.3026
201374.6612
1.589525.338822.5417
88.9612
201478.98334.322121.016719.0296
90.5449
2015
86.12317.139813.8769
12.5049
90.1129
201688.6931
2.5700
11.306910.3808
91.8095
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid losses
incurred in this line of business in the 2007 accident year and that are outstanding at the end of the tax year shown.
January 22, 20082982008–3 I.R.B.

Products Liability — Occurrence
2017
2.5700
8.73698.1724
93.5389
2018
2.5700
6.1669
5.876395.2882
2019
2.57003.5969
3.489197.0031
2020 and later y
ears
2.5700
1.02691.007198.0722
Taxpayers that use the composite method of Notice 88–100 shoulduse 92.1824 percent to discount unpaid losses incurred in this
line of business in 2007 and prior years and that are outstanding at the end of the 2017 taxable year.
Reinsurance — Nonproportional Assumed Liability
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
2007
12.945812.945887.054280.963593.0035
200860.179647.233839.8204
36.0155
90.4447
2009
80.8225
20.6429
19.1775
16.3966
85.4991
201084.9430
4.120515.0570
12.8460
85.3161
2011
85.66800.7250
14.332012.616788.0322
2012
80.0452-5.622919.954818.851094.4685
201386.7013
6.6561
13.298712.812496.3436
2014
97.253310.5520
2.7467
2.5617
93.2640
2015
97.67210.41882.32792.236396.0671
201698.8078
1.1357
1.19221.167197.8949
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount unpaid losses
incurred in this line of business in the 2007 accident year and that are outstanding at the end of the tax year shown.
2017 and later years
1.13570.05640.0553
98.0722
Taxpayers that use the composite method of Notice 88–100 shoulduse 92.7876 percent to discount unpaid losses incurred in this
line of business in 2007 and prior years and that are outstanding at the end of the 2017 taxable year.
Reinsurance — Nonproportional Assumed Liability
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
2007
32.591732.5917
67.4083
54.759281.2352
2008
33.3995
0.8078
66.600556.1095
84.2479
2009
35.49482.095364.505256.200687.1256
201044.0321
8.537355.9679
49.7267
88.8485
201164.829920.7979
35.1701
30.494186.7047
2012
66.43581.605933.5642
30.0673
89.5814
201377.809711.373822.1903
19.6635
88.6130
201482.44384.6341
17.556215.719089.5350
2015
84.1944
1.750715.805614.5579
92.1064
201687.92233.727912.077711.3347
93.8485
Taxpaye
rs that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid losses
incurre
d in this line of business in the 2007 accident year and that are outstanding at the end of the tax year shown.
2008–3 I.R.B.299January 22, 2008

Reinsurance — Nonproportional Assumed Liability
20173.72798.3498
7.983595.6137
20183.72794.62194.499397.3478
2019 and later years3.72790.89400.876898.0722
Taxpayers that use the composite method of Notice 88–100 shoulduse 92.6803 percent to discount unpaid losses incurred in this
line of business in 2007 and prior years and that are outstanding at the end of the 2017 taxable year.
Reinsurance — Nonproportional Assumed Financial Lines
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
20078.47838.4783
91.5217
82.811890.4832
2008
28.047519.569371.952566.145591.9295
2009
60.435132.387539.564935.747390.3510
201082.444822.0097
17.5552
14.724183.8733
201190.27207.82719.72807.3277
75.3251
2012
85.3168-4.9551
14.683112.671086.2966
201388.37773.060811.6223
10.0531
86.4983
201489.9934
1.6157
10.00668.804887.9894
2015
81.6664-8.326918.333617.644996.2439
201691.04919.3827
8.9509
8.778398.0722
Taxpayers th
at do not use the composite method of Notice 88–100 should use the following factor to discount unpaid losses
incurred in
this line of business in the 2007 accident year and that are outstanding at the end of the tax year shown.
2017 and lat
er years
---98.0722
Taxpayers th
at use the composite method of Notice 88–100 should use 92.7966 percent to discount unpaid losses incurred in this
line of busi
ness in 2007 and prior years and that are outstanding at the end of the 2017 taxable year.
Special Property
(Fire, Allied Lines, Inland Marine, Earthquake, Glass, Burglary and Theft)
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
2007
44.575644.575655.424453.6032
96.7140
200888.4263
41.850713.573713.0579
96.1998
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount unpaid losses
incurred in this line of business in the 2007 accident year and that are outstanding at the end of the tax year shown.
2009 and later years6.78696.7869
6.6560
98.0722
Taxpayers that use the composite method of Notice 88–100 shoulduse 98.0722 percent to discount unpaid losses incurred in this
line of business in 2007 and prior years and that are outstanding at the end of the 2009 taxable year.
January 22, 20083002008–3 I.R.B.

Workers’ Compensation
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
200719.041019.0410
80.9590
69.8486
86.2765
200840.244221.2032
59.755851.001585.3500
2009
57.149716.905542.850335.788583.5198
201067.860110.710432.139926.288381.7936
2011
75.5399
7.679724.4601
19.5013
79.7269
2012
80.11574.5758
19.8843
15.609878.5028
201382.18282.067217.817214.1216
79.2587
2014
84.4045
2.2217
15.5955
12.416979.6188
201585.51951.115014.4805
11.773081.3024
2016
86.2855
0.7661
13.714511.459383.5562
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid losses
incurred in this line of business in the 2007 accident year and that are outstanding at the end of the tax year shown.
20170.766112.948411.1331
85.9805
20180.766112.182310.794088.6033
20190.766111.416310.441491.4603
20200.7661
10.6502
10.0748
94.5968
2021 and later years0.76619.88429.693698.0722
Taxpayers that use the composite method of Notice 88–100 shoulduse 89.5536 percent to discount unpaid losses incurred in this
line of business in 2007 and prior years and that are outstanding at the end of the 2017 taxable year.
DRAFTING INFORMATION
The princi
pal author of this revenue
procedure
is Katherine A. Hossofsky of
the Offic
e of Associate Chief Counsel
(Financi
al Institutions & Products). For
further i
nformation regarding this revenue
procedur
e, contact Ms. Hossofsky at (202)
622–843
5 (not a toll-free call).
26 CFR 601
.201: Rulings and determination letters.
(Also Par
t I, Section 832, 846; 1.832–4, 1.846–1.)
Rev. Proc
. 2008–11
SECTION 1. PURPOSE
This revenue procedure prescribes the
salvage discount factors for 2007. These
factors must be used to compute dis-
counted estimated salvage recoverable
under § 832 of the Internal Revenue Code.
SEC. 2. BACKGROUND
Section
832(b)(5)(A) requires that all
estima
ted salvage recoverable (including
that which cannot be treated as an asset
for state accounting purposes) be taken
into account in computing the deduction
for losses incurred. Under § 832(b)(5)(A),
paid losses are reduced by salvage and
reinsurance recovered during the taxable
year. This amount is adjusted to reflect
changes in discounted unpaid losses on
nonlife insurance contracts and in unpaid
losses on life insurance contracts. An
adjustment is then made to reflect any
changes in discounted estimated salvage
recoverable and in reinsurance recover-
able.
Pursuant to § 832(b), the amount of es-
timated salvage is determined on a dis-
counted basis in accordance with proce-
dures established by the Secretary.
SEC. 3. SCOPE
This re
venue procedure applies to any
taxpay
er that is required to discount esti-
mated
salvage recoverable under § 832.
SEC. 4. APPLICATION
.01 The fol
lowing tables present sep-
arately fo
r each line of business the dis-
count fac
tors under § 832 for 2007. All
the disco
unt factors presented in this sec-
tion were
determined using the applicable
interest
rate under § 846(c) for 2007, which
is 3.97 p
ercent, and by assuming all esti-
mated sa
lvage is recovered in the middle
of the ca
lendar year
.02 Sect
ion V of Notice 88–100,
1988–2 C
.B. 439, sets forth a composite
method f
or computing discounted unpaid
losses f
or accident years that are not sep-
aratel
y reported on the annual statement.
Rev. Pr
oc. 2002–74, section 3.03, 2002–2
C.B. 98
0, provides that an insurance com-
pany th
at elects to use the composite
method
of Notice 88–100 must use the
same m
ethod to compute discounted esti-
mated
salvage recoverable. Accordingly,
the ta
bles separately provide discount fac-
tors f
or taxpayers who elect to use the
compo
site method of section V of Notice
88–10
0.
2008–3 I.R.B.301January 22, 2008

.02 These tables must be used by tax-
payers irrespective of whether they elected
to discount unpaid losses using their own
experience under § 846(e).
.03 Tables.
Accident and Health (Other Than
Disability Income or Credit Disability
Insurance)
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
98.0722 percent to discount salvage re-
coverable with respect to losses incurred
in this line of business in the 2007 acci-
dent year as of the end of the 2007 and
later taxable years.
Taxpayers that use the composite
method of Notice 88–100 should use
98.0722 percent to discount all salvage
recoverableinthislineofbusinessasof
the end of the 2007 taxable year.
Auto Physical Damage
Tax Year
Discount
Factors
(%)
200797.2919
200896.1998
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factor to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2007 accident
year.
2009 and later
years
98.0722
Taxpayers that use the composite
method of Notice 88–100 should use
98.0722 percent to discount salvage
recoverable as of the end of the 2009
taxable year with respect to losses in-
curred in this line of business in 2007
and prior years.
Commercial Auto/Truck
Liability/Medical
Tax Year
Discount
Factors
(%)
2007
92.5072
2008
92.4531
2009
92.7905
201093.1328
2011
93.8564
201293.6497
2013
92.1165
201493.0132
2015
96.3177
201698.0722
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factor to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2007 accident
year.
2017 and later
years
98.0722
Taxpayers that use the composite
method of Notice 88–100 should use
98.0722 percent to discount salvage
recoverable as of the end of the 2017
taxable year with respect to losses in-
curred in this line of business in 2007
and prior years.
Composite
Tax Year
Discount
Factors
(%)
2007
92.5224
2008
92.2753
200992.1017
201091.930
8
2011
91.3215
201290.4149
201391.2470
2014
92.56
73
201594.5527
Composite
201696.3399
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factor to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2007 accident
year.
2017 and later
years
98.0722
Taxpayers that use the composite
method of Notice 88–100 should use
95.5806 percent to discount salvage
recoverable as of the end of the 2017
taxable year with respect to losses in-
curred in this line of business in 2007
and prior years.
Fidelity/S
urety
Tax Year
Discount
Factors
(%)
200793.8272
200896.1998
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factor to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2007 accident
year.
2009 and later
years
98.0722
Taxpayers that use the composite
method of Notice 88–100 should use
98.0722 percent to discount salvage
recoverable as of the end of the 2009
taxable year with respect to losses in-
curred in this line of business in 2007
and prior years.
January 22, 20083022008–3 I.R.B.

Financial Guaranty/Mortgage
Guaranty
Tax Year
Discount
Factors
(%)
2007
94.8523
200896.1998
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factor to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2007 accident
year.
2009 and later
years
98.0722
Taxpayers that use the composite
method of Notice 88–100 should use
98.0722 percent to discount salvage
recoverable as of the end of the 2009
taxable year with respect to losses in-
curred in this line of business in 2007
and prior years.
Internation
al (Composite)
Tax Year
Discount
Factors
(%)
2007
92.5224
2008
92.2753
200992.1017
201091.9308
2011
91.3215
201290.4149
201391.2470
2014
92.5673
201594.5527
201696.3399
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factor to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2007 accident
year.
International (Composite)
2017 and later
years
98.0722
Taxpayers that use the composite
method of Notice 88–100 should use
95.5806 percent to discount salvage
recoverable as of the end of the 2017
taxable year with respect to losses in-
curred in this line of business in 2007
and prior years.
Medical Malpractice —
Claims-Made
Tax Year
Discount
Factors
(%)
200792.8129
200893.8690
200992.3083
201092.9226
201192.2409
201287.9349
201384.6380
201490.4891
201596.5200
201698.0722
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factor to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2007 accident
year.
2017 and later
years
98.0722
Taxpayers that use the composite
method of Notice 88–100 should use
98.0722 percent to discount salvage
recoverable as of the end of the 2017
taxable year with respect to losses in-
curred in this line of business in 2007
and prior years.
Medical Malpractice — Occurrence
Tax Year
Discount
Factors
(%)
2007
85.8039
2008
90.1315
200992.4448
2010
84.5882
2011
94.8975
2012
91.5995
2013
93.1599
2014
95.9622
2015
97.1608
201698.0722
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factor to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2007 accident
year.
2017 and later
years
98.0722
Taxpayers that use the composite
method of Notice 88–100 should use
98.0722 percent to discount salvage
recoverable as of the end of the 2017
taxable year with respect to losses in-
curred in this line of business in 2007
and prior years.
Miscellaneous Casualty
Tax Year
Discount
Factors
(%)
2007
96.6559
200896.1998
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factor to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2007 accident
year.
2008–3 I.R.B.303January 22, 2008

Miscellaneous Casualty
2009 and later
years
98.0722
Taxpayers that use the composite
method of Notice 88–100 should use
98.0722 percent to discount salvage
recoverable as of the end of the 2009
taxable year with respect to losses in-
curred in this line of business in 2007
and prior years.
Multiple Peril Lines (Homeown-
ers/Farmowners, Commercial
Multiple Peril, and Special Liability
(Ocean Marine, Aircraft (All Perils),
Boiler and Machinery))
Tax Year
Discount
Factors
(%)
200793.1480
2008
92.5520
200992.4746
2010
92.4125
201191.6181
201290.0772
201391.2078
2014
93.5843
201594.9567
201696.6862
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factor to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2007 accident
year.
2017 and later
years
98.0722
Taxpayers that use the composite
method of Notice 88–100 should use
98.0719 percent to discount salvage
recoverable as of the end of the 2017
taxable year with respect to losses in-
curred in this line of business in 2007
and prior years.
Other (Including Credit)
Tax Year
Discount
Factors
(%)
2007
95.7364
200896.1998
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factor to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2007 accident
year.
2009 and later
years
98.0722
Taxpayers that use the composite
method of Notice 88–100 should use
98.0722 percent to discount salvage
recoverable as of the end of the 2009
taxable year with respect to losses in-
curred in this line of business in 2007
and prior years.
Other Liabil
ity — Claims-Made
Tax Year
Discount
Factors
(%)
200788.6489
200889.7449
200987.8992
201091.0630
2011
92.5154
2012
94.3565
201393.3084
201491.9440
2015
97.4177
201698.0722
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factor to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2007 accident
year.
Other Liability — Claims-Made
2019 and later
years
98.0722
Taxpayers that use the composite
method of Notice 88–100 should use
96.8697 percent to discount salvage
recoverable as of the end of the 2017
taxable year with respect to losses in-
curred in this line of business in 2007
and prior years.
Other Liability — Occurrence
Tax Year
Discount
Factors
(%)
200787.3760
200888.3943
2009
90.6775
201091.4222
201190.8722
201290.9863
201390.4663
201493.1478
201595.8515
201697.6241
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factor to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2007 accident
year.
2017 and later
years
98.0722
Taxpayers that use the composite
method of Notice 88–100 should use
98.0722 percent to discount salvage
recoverable as of the end of the 2017
taxable year with respect to losses in-
curred in this line of business in 2007
and prior years.
January 22, 20083042008–3 I.R.B.

Private Passenger Auto
Liability/Medical
Tax Year
Discount
Factors
(%)
2007
94.6456
200894.6698
200994.4266
2010
93.5793
201193.0072
2012
92.2508
201393.1304
2014
94.6575
2015
94.7279
2016
96.4851
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factor to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2007 accident
year.
2017 and later
years
98.0722
Taxpayers that use the composite
method of Notice 88–100 should use
98.0708 percent to discount salvage
recoverable as of the end of the 2017
taxable year with respect to losses in-
curred in this line of business in 2007
and prior years.
Products Liability — Claims-Made
Tax Year
Discount
Factors
(%)
2007
89.1458
2008
52.2690
2009
54.6584
201090.890
3
2011
80.5163
2012
91.5977
201360.2981
201490.6932
201591.8054
201692.9
177
Products Liability — Claims-Made
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factors to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2007 accident
year.
201794.6739
201896.4396
2019 and later
years
98.0722
Taxpayers that use the composite
method of Notice 88–100 should use
94.6739 percent to discount salvage
recoverable as of the end of the 2017
taxable year with respect to losses in-
curred in this line of business in 2007
and prior years.
Products Liability — Occurrence
Tax Year
Discount
Factors
(%)
200787.8817
2008
89.9255
200991.7722
2010
92.5755
2011
93.0145
201290.6124
2013
91.2345
201494.1309
201594.3955
2016
96.215
6
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factor to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2007 accident
year.
Products Liability — Occurrence
2017 and later
years
98.0722
Taxpayers that use the composite
method of Notice 88–100 should use
94.6056 percent to discount salvage
recoverable as of the end of the 2017
taxable year with respect to losses in-
curred in this line of business in 2007
and prior years.
Reinsurance — Nonproportional
Assumed Property
Tax Year
Discount
Factors
(%)
200791.2766
200892.8906
2009
95.7836
2010
80.5177
2011
90.0569
201281.8877
2013
52.3517
2014
92.9805
2015
73.8412
2016
88.3425
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factors to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2007 accident
year.
201790.0606
201891.8464
2019
93.7215
2020
95.7382
2021 and later
years
98.0722
Taxpayers that use the composite
method of Notice 88–100 should use
90.0606 percent to discount salvage
recoverable as of the end of the 2017
taxable year with respect to losses in-
curred in this line of business in 2007
and prior years.
2008–3 I.R.B.305January 22, 2008

Reinsurance — Nonproportional
Assumed Liability
Tax Year
Discount
Factors
(%)
200787.0242
200890.2399
200991.6689
2010
88.8580
201190.8909
201291.7421
201391.6386
2014
93.3665
201595.2650
201696.9798
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factor to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2007 accident
year.
2017 and later
years
98.0722
Taxpayers that use the composite
method of Notice 88–100 should use
93.1607 percent to discount salvage
recoverable as of the end of the 2017
taxable year with respect to losses in-
curred in this line of business in 2007
and prior years.
Reinsurance — Nonproportional
Assumed Financial Lines
Tax Year
Discount
Factors
(%)
200787.4122
2008
86.1745
200990.1030
201078.9216
201190.4446
201280.6766
201390.6123
201491.01
21
201597.5684
Reinsurance — Nonproportional
Assumed Financial Lines
201698.0722
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factor to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2007 accident
year.
2017 and later
years
98.0722
Taxpayers that use the composite
method of Notice 88–100 should use
98.0722 percent to discount salvage
recoverable as of the end of the 2017
taxable year with respect to losses in-
curred in this line of business in 2007
and prior years.
Special Pro
perty (Fire, Allied Lines,
Inland Mari
ne, Earthquake, Glass,
Burglary an
dTheft)
Tax Year
Discount
Factors
(%)
200794.9917
200896.1998
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factor to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2007 accident
year.
2009 and later
years
98.0722
Taxpayers that use the composite
method of Notice 88–100 should use
98.0722 percent to discount salvage
recoverable as of the end of the 2009
taxable year with respect to losses in-
curred in this line of business in 2007
and prior years.
Workers’ Compensation
Tax Year
Discount
Factors
(%)
200788.6073
2008
90.6085
200991.3932
201091.3110
201189.8407
2012
88.4546
201389.0394
201488.7616
2015
90.9000
201692.6321
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factors to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2007 accident
year.
2017
94.4075
201896.2249
2019 and later
years
98.0722
Taxpayers that use the composite
method of Notice 88–100 should use
95.3569 percent to discount salvage
recoverable as of the end of the 2017
taxable year with respect to losses in-
curred in this line of business in 2007
and prior years.
DRAFTING INFORMATION
The principal author of this revenue
procedure is Katherine A. Hossofsky of
the Office of Associate Chief Counsel
(Financial Institutions & Products). For
further information regarding this revenue
procedure, contact Ms. Hossofsky at (202)
622–8435 (not a toll-free call).
January 22, 20083062008–3 I.R.B.

Part IV. Items o
fGeneralInterest
Election of Al
ternative Funding
Schedule
Announcement
2008–2
This announce
ment sets forth the pro-
cedures for el
ecting an alternative fund-
ing schedule
for certain employers, as de-
scribedinse
ction 402(a)(2) of the Pension
Protection A
ct of 2006 (PPA), Pub. L. No.
109–280, as a
mended by section 6615 of
the U.S. Troo
p Readiness, Veterans’ Care,
Katrina Rec
overy, and Iraq Accountabil-
ity Appropr
iations Act, 2007, Pub. L. No.
110–28.
Section 402
(a)ofPPApermitsaneli-
gible plan t
o elect one of two alternative
funding sch
edules to apply in lieu of the
generally
applicable minimum funding
requireme
nts. An eligible plan is a defined
benefit pl
an (other than a multiemployer
plan) that
is sponsored by an employer that
is a commercia
l passenger airline or whose
principal bus
iness is providing catering
services to a c
ommercial passenger airline.
The two altern
ative funding schedules are
set forth in se
ctions 402(a)(1) and (2) of
PPA.
An election th
at is made under section
402(a)(1) of
PPA applies beginning in
the first app
licable year, which must be
a plan year th
at begins in 2006 or 2007.
Announcemen
t 2006–70, 2006–40 I.R.B.
629, provid
es details for the election pro-
cedure for t
he section 402(a)(1) election.
If an eligib
le employer makes the elec-
tion under s
ection 402(a)(1), the rules of
section 40
2(e) of PPA apply to determine
the minimu
m funding requirements for
applicabl
e plan years that begin on or after
January 1,
2008.
An electio
n that is made under section
402(a)(2)
of PPA applies beginning for the
first pla
n year beginning in 2008. Any
such election
applies to the plan year for
which the elec
tion is made and subsequent
plan years unl
ess revoked with the con-
sent of the Ser
vice. If an employer makes
the election u
nder section 402(a)(2) of PPA
then, (1) the
shortfall amortization base is
amortized ov
er a period of 10 plan years
(rather than
7 years) and (2) for each of
those 10 year
s, the funding target is de-
termined us
ing an interest rate of 8.25%
(instead of
the segment rates calculated
on the basis
of the corporate bond yield
curve as mor
e fully described in Notice
2007–81, 2
007–44 I.R.B. 899). Under sec-
tion 402(d
)(1)(B) of PPA an election made
under sect
ion 402(a)(2) of PPA must be
made not la
ter than December 31, 2007.
The Append
ix of this announcement
sets forth
the information that must be
contained
in the election and the address
to which t
he election must be sent.
2008–3 I.R.B.307January 22, 2008

Appendix
Election of Alternative Funding Schedule under Section 402(a)(2) of the Pension
Protection Act of 2006
A. As an officer of the employer maintaining the plan, I hereby elect the alternative funding schedule under section 402(a)(2) of
PPA and provide the following information:
1. The employer is:
(a) a commercial passenger airline, or
(b) an entity whose principal business is providing catering services to a
commercial passenger airline.
2. The name and EIN of the employer:
3. The name and plan number of the plan:
4. Specify the first plan year for whichthe alternative funding schedule
provisions are to apply:
Signature of employerDate
The election mu
st be signed by an officer of the employer maintaining the plan. An authorized representative of the
employer, a pla
n administrator, or an enrolled actuary may notsign this election on behalf of the employer.
B. This election must be filed at the following address:
Internal Revenue Service
Commissione
r, Tax Exempt and Government Entities Division
Attention: SE:T:EP:RA:T
Alternative Funding Schedule Election
P.O. Box 27063
McPherson Station
Washington, D.C. 20038
January 22, 20083082008–3 I.R.B.

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 rulings
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.
2008–3 I.R.B.iJanuary 22, 2008

Numerical Finding List
1
Bulletins 2008–1 through 2008–3
Announcements:
2008-1, 2008-1 I.R.B.246
2008-2, 2008-3 I.R.B.307
2008-3, 2008-2 I.R.B.269
2008-4, 2008-2 I.R.B.269
Notices:
2008-1, 2008-2 I.R.B.251
2008-2, 2008-2 I.R.B.252
2008-3, 2008-2 I.R.B.253
2008-4, 2008-2 I.R.B.253
2008-5, 2008-2 I.R.B.256
2008-6, 2008-3 I.R.B.275
2008-7, 2008-3 I.R.B.276
2008-8, 2008-3 I.R.B.276
2008-9, 2008-3 I.R.B.277
2008-10, 2008-3 I.R.B.277
2008-11, 2008-3 I.R.B.279
2008-12, 2008-3 I.R.B.280
2008-13, 2008-3 I.R.B.282
Revenue Procedures:
2008-1, 2008-1 I.R.B.1
2008-2, 2008-1 I.R.B.90
2008-3, 2008-1 I.R.B.110
2008-4, 2008-1 I.R.B.121
2008-5, 2008-1 I.R.B.164
2008-6, 2008-1 I.R.B.192
2008-7, 2008-1 I.R.B.229
2008-8, 2008-1 I.R.B.233
2008-9, 2008-2 I.R.B.258
2008-10, 2008-3 I.R.B.290
2008-11, 2008-3 I.R.B.301
Revenue Rulings:
2008-1, 2008-2 I.R.B.248
2008-2, 2008-2 I.R.B.247
2008-3, 2008-2 I.R.B.249
2008-4, 2008-3 I.R.B.272
2008-5, 2008-3 I.R.B.271
2008-6, 2008-3 I.R.B.271
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2007–27 through 2007–52 is in Internal Revenue Bulletin
2007–52, dated December 26, 2007.
January 22, 2008ii2008–3 I.R.B.

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2008–1 through 2008–3
Notices:
2006-107
Modified by
Notice 2008-7, 2008-3 I.R.B.276
2007-54
Clarified by
Notice 2008-11, 2008-3 I.R.B.279
Proposed Regulations:
REG-113891-07
Hearing scheduled by
Ann. 2008-4, 2008-2 I.R.B.269
Revenue Procedures:
2007-1
Superseded by
Rev. Proc. 2008-1, 2008-1 I.R.B.1
2007-2
Superseded by
Rev. Proc. 2008-2, 2008-1 I.R.B.90
2007-3
Superseded by
Rev. Proc. 2008-3, 2008-1 I.R.B.110
2007-4
Superseded by
Rev. Proc. 2008-4, 2008-1 I.R.B.121
2007-5
Superseded by
Rev. Proc. 2008-5, 2008-1 I.R.B.164
2007-6
Superseded by
Rev. Proc. 2008-6, 2008-1 I.R.B.192
2007-7
Superseded by
Rev. Proc. 2008-7, 2008-1 I.R.B.229
2007-8
Superseded by
Rev. Proc. 2008-8, 2008-1 I.R.B.233
2007-39
Superseded by
Rev. Proc. 2008-3, 2008-1 I.R.B.110
2007-52
Superseded by
Rev. Proc. 2008-9, 2008-2 I.R.B.258
Revenue Rulings:
2007-4
Supplemented and superseded by
Rev. Rul. 2008-3, 2008-2 I.R.B.249
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2007–27 through 2007–52 is in Internal Revenue Bulletin 2007–52, dated December 26,
2007.
2008–3 I.R.B.iiiJanuary 22, 2008

January 22, 20082008–3 I.R.B.

INTERNAL REVENUE BULLETIN
The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue
Bulletin is sold on a yearly subscription basis by the Superintendent of Documents. Current subscribers are notified by the Superin-
tendent of Documents when their subscriptions must be renewed.
CUMULATIVE BULLETINS
The contents of this weekly Bulletin are consolidated semiannually into a permanent, indexed, Cumulative Bulletin. These are
sold on a single copy basis andare notincluded as part of the subscription to the Internal Revenue Bulletin. Subscribers to the weekly
Bulletin are notified when copies of the Cumulative Bulletin are available. Certain issues of Cumulative Bulletins are out of print
and are not available. Persons desiring available Cumulative Bulletins, which are listed on the reverse, may purchase them from the
Superintendent of Documents.
ACCESS THE INTERNAL REVENUE BULLETIN ON THE INTERNET
You may view the Internal Revenue Bulletin on the Internet at www.irs.gov. Under information for: select Businesses. Under
related topics, select More Topics. Then select Internal Revenue Bulletins.
INTERNAL REVENUE BULLETINS ON CD-ROM
Internal Revenue Bulletins are available annually as part ofPublication 1796 (Tax Products CD-ROM). The CD-ROM can be
purchased from National Technical Information Service (NTIS) on the Internet at www.irs.gov/cdorders (discount for online orders)
or by calling 1-877-233-6767. The first release is available in mid-December and the final release is available in late January.
HOW TO ORDER
Check the publications and/or subscription(s) desired on the reverse, complete the order blank, enclose the proper remittance,
detach entire page, and mail to the Superintendent of Documents, P.O. Box 371954, Pittsburgh PA, 15250–7954. Please allow two to
six weeks, plus mailing time, for delivery.
WE WELCOME COMMENTS ABOUT THE INTERNAL
REVENUE BULLETIN
If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it,
we would be pleased to hear from you. You can e-mail us your suggestions or comments through the IRS Internet Home Page
(www.irs.gov) or write to the IRS Bulletin Unit, SE:W:CAR:MP:T:T:SP, Washington, DC 20224
Internal Revenue Service
W
ashington,DC20224
Official Business
Penalty for Private Use, $300