Internal Revenue Bulletin 2000-28 (PDF rendition): IRS Announcements

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.

INCOME TAX
Ct. D. 2068, page 109.
Claims in bankruptcy court.The Supreme Court has af-
firmed that when the substantive law creating a tax obliga-
tion puts the burden of proof on a taxpayer, the burden of
proof on the tax claim in bankruptcy court remains with
the taxpayer.
Rev. Proc. 2000–30, page 113.
Gross income; information reporting; de minimispremi-
ums. For administrative convenience, the Service will not re-
quire a depositor who receives a “de minimispremium” to
treat the value of the premium as includible in gross income or
to reduce the basis in the account, and will not require a finan-
cial institution that provides a “de minimispremium” to treat it
as interest for purposes of information reporting under section
6049. Rev. Proc. 2000–30 is effective for “de minimispremi-
ums” provided after December 31, 1999.
EMPLOYMENT TAX
Page 112.
Railroad retirement; rate determination; quarterly.
The Railroad Retirement Board has determined that the
rate of tax imposed by section 3221 of the Code shall be
26 1/2 cents for the quarter beginning April 1, 2000.
ADMINISTRATIVE
Rev. Proc. 2000–29, page 113.
Election to treat certain debt substitutions as real-
ization events.This revenue procedure modifies Rev.
Proc. 99–18, 1999–11 I.R.B. 7, by removing the sunset
date of June 30, 2000. Rev. Proc. 99–18 modified.
Announcement 2000–57, page 115.
This document contains corrections to final regulations
(T.D. 8883, 2000–23 I.R.B. 1151) under section 1032 of
the Code relating to the treatment of a disposition of an is-
suing corporation’s stock by an acquiring entity in a tax-
able transaction.
Internal Revenue
bbuulllleettiinn
Bulletin No. 2000–28
July 10, 2000
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.
Department of the Treasury
Internal Revenue Service
Finding Lists begin on page ii.

July 10, 20002000–28 I.R.B.
The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing offi-
cial rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, 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 consolidated 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,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of in-
ternal management 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 pub-
lished rulings and procedures, the effect of subsequent leg-
islation, regulations, court decisions, rulings, and proce-
dures must be considered, and Service personnel and oth-
ers concerned are cautioned against reaching the same con-
clusions in other cases unless the facts and circumstances
are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions, and Subpart B, Legislation 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 Sub-
parts. Also included in this part are Bank Secrecy Act Admin-
istrative Rulings. Bank Secrecy Act Administrative Rulings
are issued by the Department of the Treasury’s Office of the
Assistant Secretary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.
The first 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 first Bulletin of the succeeding semi-
annual period, respectively.
The IRS Mission
Provide America’s taxpayers top quality service by help-
ing them understand and meet their tax responsibilities
and by applying the tax law with integrity and fairness to
all.
Introduction
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402.

Section 1001.—Determination
of Amount of and Recognition of
Gain or Loss
26 CFR 1.1001–3: Modification of debt
instruments.
Rev. Proc. 2000–29 modifies Rev. Proc. 99–18,
1999–11 I.R.B. 7, by removing the sunset date of
June 30, 2000. Rev. Proc. 99–18 provides taxpay-
ers with an election that allows them to treat a debt
substitution, in certain circumstances, as a realiza-
tion event even though it does not result in a signif-
icant modification under section 1.1001–3 of the
Income Tax Regulations. See Rev. Proc. 2000–29,
page 113.
Section 1273.—Determination
of Amount of Original Issue
Discount
26 CFR 1.1273–2: Determination of issue price and
issue date.
Will the Service require a depositor who receives
a “de minimispremium” to treat the value of the pre-
mium as includible in gross income or to reduce the
basis in the account, and will it require a financial
institution that provides a “de minimispremium” to
treat it as interest for purposes of information report-
ing under section 6049. See Rev. Proc. 2000–30,
page 113.
Section 1275.—Other
Definitions and Special Rules
26 CFR 1.1275–2: Special rules relating to debt
instruments.
Rev. Proc. 2000–29 modifies Rev. Proc. 99–18,
1999–11 I.R.B. 7, by removing the sunset date of
June 30, 2000. Rev. Proc. 99–18 provides taxpay-
ers with an election that allows them to treat a debt
substitution, in certain circumstances, as a realiza-
tion event even though it does not result in a signif-
icant modification under section 1.1001–3 of the
Income Tax Regulations. See Rev. Proc. 2000–29,
page 113.
Section 1398. — Rules Relating
to Individuals’ Title 11 Cases
Ct. D. 2068
SUPREME COURT OF THE
UNITED STATES
RALEIGH, chapter 7 trustee for
the ESTATE OF
STOECKER v. ILLINOIS
DEPARTMENT OF REVENUE
CERTIORARI TO THE UNITED
STATES COURT OF APPEALS FOR
THE SEVENTH CIRCUIT
No. 99—387. Argued April 17,
2000–Decided May 30, 2000
While debtor Stoecker was its president, a
now-defunct Illinois company purchased a
plane out of State and moved it to Illinois.
Respondent claims that this purchase was
subject to the State’s use tax. When such tax
is unpaid, respondent issues a Notice of Tax
Liability to the taxpayer and may issue a
Notice of Penalty Liability against any cor-
porate officer responsible for paying the tax
who willfully fails to file the return or make
the payment. By the time respondent dis-
covered that the tax was unpaid in this case,
the company was defunct and Stoecker was
in bankruptcy, with petitioner as his trustee.
Respondent filed, inter alia, a Notice of
Penalty Liability against Stoecker. The fact
that there was no affirmative proof that he
was responsible for or willfully evaded the
payment was not dispositive, for Illinois law
shifts the burden of proof, both on produc-
tion and persuasion, to the responsible offi-
cer once a Notice of Penalty Liability is is-
sued. The Seventh Circuit ruled for
respondent, holding that the burden of proof
remained with petitioner, just as it would
have been on Stoecker had the proceedings
taken place outside of bankruptcy, and find-
ing that petitioner had not satisfied the bur-
den of persuasion.
Held:When the substantive law creating a
tax obligation puts the burden of proof on a
taxpayer, the burden of proof on the tax
claim in bankruptcy court remains where
the substantive law put it (in this case, on
the trustee in bankruptcy). Pp. 4—10.
(a) Creditors’ entitlements in bankruptcy
arise from the underlying substantive law
creating the debtor’s obligation, subject to
any qualifying or contrary Bankruptcy
Code provisions. See Butnerv. United
States,440 U.S. 48, 55. The basic federal
rule in bankruptcy is that state law governs
the substance of claims. Id.,at 57. In this
case, Illinois tax law establishes the estate’s
obligation to respondent, placing the bur-
den of proof on the responsible officer. That
burden of proof is a substantive aspect of
such a claim, given its importance to the
outcome of cases. See, e.g., Director, Office
of Workers’ Compensation Programsv.
Greenwich Collieries,512 U.S. 267, 271.
Tax law is no candidate for exception from
the general rule, for the very fact that the
burden has often been shifted to the tax-
payer indicates how critical it is. Several
compelling rationales for this shift–the gov-
ernment’s vital interest in acquiring its rev-
enue, the taxpayer’s readier access to the
relevant information, and the importance of
encouraging voluntary compliance–are
powerful justifications not to be disre-
garded lightly. The Bankruptcy Code
makes no provision for altering the burden
of proof on a tax claim, and its silence indi-
cates that no change was intended.
Pp. 4—6.
(b) The trustee’s appeals to Code silence
are rejected. The state of pre-Code law
does not indicate that the Code is silent
because it was predicated on an alteration
of the substantive law of obligations once
a taxpayer enters bankruptcy. And al-
though Vanston Bondholders Protective
Comm.v. Green,329 U.S. 156, suggested
that “allowance” of claims is a federal
matter, that case concerned distribution of
assets, not the validity of claims in the
first instance, which, Vanstonspecifically
states, is to be determined by reference to
state law, id.,at 161. Nor is the trustee
helped by the reference, in City of New
Yorkv. Saper,336 U.S. 328, 332, to
“prov[ing]” government claims in the
same manner as other debts, for that refer-
ence was to the procedure by which proof
of claim was submitted, not to the validity
of the claim. Finally, the trustee’s argu-
ment that the Code-mandated priority en-
joyed by taxing authorities over other
creditors requires a compensating equal-
ity of treatment when it comes to demon-
strating validity of claims distorts a bank-
ruptcy court’s legitimate powers and begs
the question about the relevant principle
of equality. Pp. 6—10.
179 F.3d 546, affirmed.
SOUTER, J., delivered the opinion for a
unanimous Court.
2000–28 I.R.B.109July 10, 2000
Part I. Rulings and Decisions Under the Internal Revenue Code of 1986

SUPREME COURT OF THE
UNITED STATES
No. 99—387
THOMAS E. RALEIGH, chapter 7
trustee for the ESTATE OF
WILLIAM J. STOECKER, PETI-
TIONER v. ILLINOIS DEPART-
MENT OF REVENUE
ON WRIT OF CERTIORARI TO
THE UNITED STATES COURT OF
APPEALS FOR THE SEVENTH
CIRCUIT
[May 30, 2000]
JUSTICE SOUTER delivered the opinion
of the Court.
The question raised here is who bears the
burden of proof on a tax claim in bank-
ruptcy court when the substantive law
creating the tax obligation puts the burden
on the taxpayer (in this case, the trustee in
bankruptcy). We hold that bankruptcy
does not alter the burden imposed by the
substantive law.
I
The issue of state tax liability in question
had its genesis in the purchase of an air-
plane by Chandler Enterprises, Inc., a
now-defunct Illinois company. William J.
Stoecker, for whom petitioner Raleigh is
the trustee in bankruptcy, was president of
Chandler in 1988, when Chandler entered
into a lease-purchase agreement for the
plane, moved it to Illinois, and ultimately
took title under the agreement. See In re
Stoecker, 179 F.3d 546, 548 (CA7 1999).
According to respondent State Depart-
ment of Revenue, the transaction was
subject to the Illinois use tax, a sales-tax
substitute imposed on Illinois residents
such as Chandler who buy out of State. If
the seller does not remit the tax, the buyer
must, and, when buying a plane, must file
a return and pay the tax within 30 days
after the aircraft enters the State. Ill.
Comp. Stat., ch. 35, §105/10 (1999).
Chandler failed to do this.
When the State discovers a failure to file
and pay taxes, its Department of Revenue
(the respondent here) determines the
amount of tax due and issues a Notice of
Tax Liability to the taxpayer. §§105/12,
120/4. Unless the taxpayer protests within
the time provided, the assessment be-
comes final, though still subject to judi-
cial review in the Illinois circuit court.
§§120/4, 12.
Illinois law also provides that any corpo-
rate officer “who has the control, supervi-
sion or responsibility of filing returns and
making payment of the amount of any ...
tax ... who willfully fails to file the return
or make the payment ... shall be person-
ally liable for a penalty equal to the total
amount of tax unpaid by the [corpora-
tion].” §735/3—7. The department deter-
mines the amount, and its determination
is “prima facie evidence of a penalty
due,” ibid., though a Notice of Penalty Li-
ability issued under this provision is open
to challenge much like the antecedent No-
tice of Tax Liability.
By the time the department discovered the
unpaid tax in this case, Chandler was de-
funct and Stoecker was in bankruptcy.
The department issued both a Notice of
Tax Liability against Chandler and a No-
tice of Penalty Liability against Stoecker.
See 179 F.3d, at 549.
The record evidence about Chandler’s op-
erations is minimal. A person named
Pluhar acted as its financial officer. There
is no evidence directly addressing
Stoecker’s role in the filing of Chandler’s
tax returns or the payment of any taxes,
and so no affirmative proof that he was ei-
ther responsible for or willfully evaded
the payment of the use tax, see id., at 550.
This evidentiary dearth is not necessarily
dispositive, however, due to the provision
of Illinois law shifting the burden of
proof, both on production and persuasion,
to the responsible officer once a Notice of
Penalty Liability is issued, see Branson v.
Department of Revenue, 168 Ill. 2d 247,
256—261, 659 N. E. 2d 961, 966—968
(1995). The Court of Appeals for the Sev-
enth Circuit accordingly ruled for the De-
partment of Revenue. 179 F.3d, at 550.
The Court of Appeals thought the trustee
may have satisfied his burden of produc-
tion by identifying Pluhar as the financial
officer but, in any event, had not satisfied
his burden of persuasion. Because
Stoecker was the president and, as far as
the record showed, he and Pluhar were
the only officers, each would have been
involved in Chandler’s tax affairs. Ibid.
While it is true that failure to pay must be
willful (at least grossly negligent) to jus-
tify the penalty under Illinois law, see
Branson, supra, at 254—255, 659 N. E.
2d, at 965, and true that Chandler had an
opinion letter from a reputable lawyer that
no tax was due because of certain details
of the lease-purchase agreement, there
was no evidence that Stoecker ever saw
the letter or relied on it, and nothing else
bearing on the issue of willfulness. See
179 F.3d, at 550—551.
Obviously, the burden of proof was critical
to the resolution of the case, which the De-
partment of Revenue won because the
Court of Appeals held that the burden re-
mained on the trustee, just as it would have
been on the taxpayer had the proceedings
taken place outside of bankruptcy. The
Courts of Appeals are divided on this point:
the Seventh Circuit joined the Third and
Fourth Circuits in leaving the burden on the
taxpayer. See Resyn Corp. v. United States,
851 F.2d 660, 663 (CA3 1988); In re Land-
bank Equity Corp., 973 F.2d 265, 270—
271 (CA4 1992). The Courts of Appeals for
the Fifth, Eighth, Ninth, and Tenth Circuits
have come out the other way. See In re
Placid Oil Co., 988 F.2d 554, 557 (CA5
1993); In re Brown, 82 F.3d 801, 804—805
(CA8 1996); In re Macfarlane, 83 F.3d
1041, 1044—1045 (CA9 1996), cert. de-
nied, 520 U.S. 1115 (1997); In re Fullmer,
962 F.2d 1463, 1466 (CA10 1992). We
granted certiorari to resolve the issue, 528
U.S. 1068 (2000), and now affirm.
II
Creditors’ entitlements in bankruptcy
arise in the first instance from the under-
lying substantive law creating the
debtor’s obligation, subject to any quali-
fying or contrary provisions of the Bank-
ruptcy Code. See Butnerv. United States,
440 U.S. 48, 55 (1979); Vanston Bond-
holders Protective Comm.v. Green,329
U.S. 156, 161—162 (1946). The “basic
federal rule” in bankruptcy is that state
law governs the substance of claims, But-
ner, supra, at 57, Congress having “gener-
ally left the determination of property
rights in the assets of a bankrupt’s estate
to state law,” 440 U.S., at 54 (footnote
omitted). “Unless some federal interest
requires a different result, there is no rea-
son why [the state] interests should be an-
July 10, 20001102000–28 I.R.B.

alyzed differently simply because an in-
terested party is involved in a bankruptcy
proceeding.” Id., at 55. In this case, the
bankruptcy estate’s obligation to the Illi-
nois Department of Revenue is estab-
lished by that State’s tax code, which puts
the burden of proof on the responsible of-
ficer of the taxpayer, see Branson, supra,
at 260—262, 659 N. E. 2d, at 968.
The scope of the obligation is the issue
here. Do the State’s right and the tax-
payer’s obligation include the burden of
proof? Our cases point to an affirmative
answer. Given its importance to the out-
come of cases, we have long held the bur-
den of proof to be a “substantive” aspect of
a claim. See, e.g., Director, Office of Work-
ers’ Compensation Programsv. Greenwich
Collieries,512 U.S. 267, 271 (1994); Dick
v. New York Life Ins. Co.,359 U.S. 437,
446 (1959); Garrettv. Moore-McCormack
Co.,317 U.S. 239, 249 (1942). That is, the
burden of proof is an essential element of
the claim itself; one who asserts a claim is
entitled to the burden of proof that nor-
mally comes with it.
Tax law is no candidate for exception
from this general rule, for the very fact
that the burden of proof has often been
placed on the taxpayer indicates how crit-
ical the burden rule is, and reflects several
compelling rationales: the vital interest of
the government in acquiring its lifeblood,
revenue, see Arkansasv. Farm Credit
Servs. of Central Ark.,520 U.S. 821, 826
(1997); the taxpayer’s readier access to
the relevant information, see United
States v. Rexach, 482 F.2d 10, 16 (CA1),
cert. denied, 414 U.S. 1039 (1973); and
the importance of encouraging voluntary
compliance by giving taxpayers incen-
tives to self-report and to keep adequate
records in case of dispute, see United
Statesv. Bisceglia,420 U.S. 141, 145
(1975). These are powerful justifications
not to be disregarded lightly.
1
Congress of course may do what it likes
with entitlements in bankruptcy, but there
is no sign that Congress meant to alter the
burdens of production and persuasion on
tax claims. The Code in several places, to
be sure, establishes particular burdens of
proof. See, e.g.,11 U.S.C. § 362(g) (relief
from automatic stay), §363(o) (adequate
protection for creditors), §364(d)(2)
(same), §547(g) (avoidability of preferen-
tial transfer), §1129(d) (confirmation of
plan for purpose of avoiding taxes). But
the Code makes no provision for altering
the burden on a tax claim, and its silence
says that no change was intended.
2
III
The trustee looks for an advantage in the
very silence of the Code, however, first
by arguing that actual, historical practice
favored trustees under the Bankruptcy Act
of 1898 and various pre-Code revisions
up to the current Code’s enactment in
1978. He says that courts operating in the
days of the Bankruptcy Act, which was
silent on the burden to prove the validity
of claims, almost uniformly placed the
burden on those seeking a share of the
bankruptcy estate. Because the Code gen-
erally incorporates pre-Code practice in
the absence of explicit revision, the argu-
ment goes, and because the Code is silent
here, we should follow the pre-Code prac-
tice even when this would reverse the bur-
den imposed outside bankruptcy. This tra-
dition makes sense, petitioner urges,
because in bankruptcy tax authorities are
no longer opposed to the original tax-
payer, and the choice is no longer merely
whether the tax claim is paid but whether
other innocent creditors must share the
bankruptcy estate with the taxing govern-
ment.
We, however, find history less availing to
the trustee than he says. While some pre-
Code cases put the burden of proof on
taxing authorities,
3
others put it on the
trustee,
4
and still others cannot be fath-
omed.
5
This state of things is the end of
the argument, for without the weight of
solid authority on the trustee’s side, we
cannot treat the Code as predicated on an
alteration of the substantive law of obliga-
tions once a taxpayer enters bankruptcy.
Cf. United Sav. Assn. of Tex.v. Timbers of
Inwood Forest Associates, Ltd.,484 U.S.
365, 381—382 (1988) (“The at best di-
vided [pre-Code] authority ... removes all
cause for wonder that the alleged depar-
ture from it should not have been com-
mented on in the legislative history”).
The trustee makes a different appeal to
Code silence in pointing to language in
Vanston Bondholders Protective Comm.v.
Green,329 U.S. 156 (1946), suggesting
that “allowance” of claims is a federal
matter. But “allowance” referred to the
ordering of valid claims when that case
was decided, see id., at 162—163, and
Vanston, in fact, concerned distribution of
assets, not the validity of claims in the
first instance, see In re Highland Super-
stores, Inc., 154 F.3d 573, 578 (CA6
1998); Fahs v. Martin, 224 F.2d 387,
394—395 (CA5 1955). The burden of
2000–28 I.R.B.111July 10, 2000
1
It is true that a trustee may have less access to the
facts than a taxpayer with personal knowledge, but
the trustee takes custody of the taxpayer’s records,
see 11 U.S.C. § 521(4), and may have greater access
to the taxpayer than a creditor. Even if the trustee’s
advantage is somewhat less than the original taxpay-
er’s, the difference hardly overcomes the compelling
justifications for shifting the burden of proof. The
government, of course, is in no better position than it
ever was, and remains without access to sources of
proof when the taxpayer has not kept sufficient doc-
umentation.
2. The legislative history indicates that the burden of
proof on the issue of establishing claims was left to
the Rules of Bankruptcy Procedure. See S. Rep. No.
95—989, p. 62 (1978); H. R. Rep. No. 95—595, p.
352 (1977). The Bankruptcy Rules are silent on the
burden of proof for claims; while Federal Rule of
Bankruptcy Procedure 3001(f) provides that a proof
of claim (the name for the proper form for filing a
claim against a debtor) is “prima facie evidence of the
validity and amount of the claim,” this rule does not
address the burden of proof when a trustee disputes a
claim. The Rules thus provide no additional guidance.
3. See, e.g., United Statesv. Sampsell, 224 F.2d 721,
722—723 (CA9 1955); In re Avien, Inc., 390 F.
Supp. 1335, 1341—1342 (EDNY 1975), aff’d, 532
F.2d 273 (CA2 1976); In re Gorgeous Blouse Co.,
106 F. Supp. 465 (SDNY 1952); see also In re
Highway Constr. Co., 105 F.2d 863, 866 (CA6 1939)
(apparently accepting lower court’s placement of
burden of proof on tax authority).
4. See, e.g., In re Uneco, Inc., 532 F.2d 1204, 1207
(CA8 1976); Paschal v. Blieden, 127 F.2d 398,
401—402 (CA8 1942); In re Lang Body Co., 92 F.2d
338, 341 (CA6 1937), cert. deniedsub nom. Hipp v.
Boyle, 303 U.S. 637 (1938); United States v. Knox-
Powell-Stockton Co., 83 F.2d 423, 425 (CA9), cert.
denied, 299 U.S. 573 (1936). Some of these cases,
such as Paschaland Lang Body Co., appear to con-
fuse the burden of production (which ceases to be
relevant upon presentation of a trustee’s case) with
the burden of persuasion, under tax statutes that shift
the entire burden of proof to the taxpayer. Whatever
we make of their reasoning, these cases do not fol-
low the rule whose pedigree petitioner wishes to
establish.
5. See, e.g., Fiori v. Rothensies, 99 F.2d 922 (CA3
1938) (per curiam)(discussing prima facie value of
tax authority’s claim, but failing to discuss burden of
proof); Dickinson v. Riley, 86 F.2d 385 (CA8 1936)
(resolving claim without reference to burden of
proof); In re Clayton Magazines, Inc., 77 F.2d 852
(CA2 1935) (same).

July 10, 20001122000–28 I.R.B.
proof rule in question here bears only on
validity, and as to that the Vanstonopin-
ion specifically states that “[w]hat claims
of creditors are valid and subsisting oblig-
ations ... is to be determined by reference
to state law.” 329 U.S., at 161 (footnote
omitted). Nor is the trustee helped by City
of New Yorkv. Saper,336 U.S. 328, 332
(1949), which mentions “prov[ing]” gov-
ernment claims in the same manner as
other debts; the reference was to the pro-
cedure by which proof of claim was sub-
mitted and not to the validity of the claim.
While it is true that federal law has gener-
ally evolved to impose the same proce-
dural requirements for claim submission
on tax authorities as on other creditors,
ibid., nothing in that evolution has
touched the underlying laws on the ele-
ments sufficient to prove a valid state
claim.
Finally, the trustee argues that the Code-
mandated priority enjoyed by taxing au-
thorities over other creditors, see 11
U.S.C. §§ 507(a), 503(b)(1)(B), requires a
compensating equality of treatment when
it comes to demonstrating validity of
claims. But we think his argument distorts
the legitimate powers of a bankruptcy
court and begs the question about the rele-
vant principle of equality.
Bankruptcy courts do indeed have some
equitable powers to adjust rights between
creditors. See, e.g.,§510(c) (equitable
subordination). That is, within the limits
of the Code, courts may reorder distribu-
tions from the bankruptcy estate, in whole
or in part, for the sake of treating legiti-
mate claimants to the estate equitably. But
the scope of a bankruptcy court’s equi-
table power must be understood in the
light of the principle of bankruptcy law
discussed already, that the validity of a
claim is generally a function of underly-
ing substantive law. Bankruptcy courts
are not authorized in the name of equity to
make wholesale substitution of underly-
ing law controlling the validity of credi-
tors’ entitlements, but are limited to what
the Bankruptcy Code itself provides. See
United Statesv. Reorganized CF&I Fab-
ricators of Utah, Inc.,518 U.S. 213,
228—229 (1996); United Statesv.
Noland,517 U.S. 535, 543 (1996).
Moreover, even on the assumption that a
bankruptcy court were to have a free
hand, the case for a rule placing the bur-
den of proof uniformly on all bankruptcy
creditors is not self-evidently justified by
the trustee’s invocation of equality. Cer-
tainly the trustee has not shown that equal
treatment of all bankruptcy creditors in
proving debts is more compelling than
equal treatment of comparable creditors
in and out of bankruptcy. The latter sort of
equality can be provided by a bankruptcy
court as a matter of course, whereas the
trustee’s notion of equality could not be
uniformly observed consistently with
other bankruptcy principles. Consider the
case when tax litigation is pending at the
time the taxpayer files for bankruptcy.
The tax litigation will be subject to an au-
tomatic stay, but the stay can be lifted by
the bankruptcy court for cause, see 11
U.S.C. § 362(d)(1), which could well in-
clude, among other things, a lack of good
faith in attempting to avoid tax proceed-
ings, or in attempting to favor private
creditors who might escape the disadvan-
tage of a priority tax claim under the
trustee’s proposed rule. See generally 3
Collier on Bankruptcy ¶362.07[6][a], pp.
362—101 to 362—102 (rev. 15th ed.
2000) (noting that bad faith commence-
ment of case justifies lifting stay); Inter-
nal Revenue Service v. Bacha, 166 B. R.
611, 612 (Bkrtcy. Ct. Md. 1993) (lifting
automatic stay when bankruptcy filing
was attempt to avoid tax proceedings). If
the bankruptcy court exercises its discre-
tion to lift the stay, the burden of proof
will be on the taxpayer in the pre-existing
tax litigation, and a tax liability determi-
nation will be final. See 11 U.S.C.
§ 505(a)(2)(A). We see no reason that
Congress would have intended the burden
of proof (and consequent vindication of
this trustee’s vision of equality) to depend
on whether tax authorities have initiated
proceedings against a debtor before a
bankruptcy filing. Thus, the uncertainty
and increased complexity that would be
generated by the trustee’s position is an-
other reason to stick with the simpler rule,
that in the absence of modification ex-
pressed in the Bankruptcy Code the bur-
den of proof on a tax claim in bankruptcy
remains where the substantive tax law
puts it.
The judgment of the Court of Appeals is
affirmed.
It is so ordered.
Section 3221.—Rate of Tax
Determination of Quarterly Rate
of Excise Tax for Railroad
Retirement Supplemental
Annuity Program
In accordance with directions in section
3221(c) of the Railroad Retirement Tax
Act (26 U.S.C. 3221(c)), the Railroad Re-
tirement Board has determined that the
excise tax imposed by such section 3221
(c) on every employer, with respect to
having individuals in his employ, for each
work-hour for which compensation is
paid by such employer for services ren-
dered to him during the quarter beginning
April 1, 2000, shall be at the rate of 26 1/2
cents.
In accordance with directions in section
15(a) of the Railroad Retirement Act of
1974, the Railroad Retirement Board has
determined that for the quarter beginning
April 1, 2000, 37.2 percent of the taxes
collected under sections 3211(b) and
3221(c) of the Railroad Retirement Tax
Act shall be credited to the Railroad Re-
tirement Account and 62.8 percent of the
taxes collected under such sections
3211(b) and 3221(c) plus 100 percent of
the taxes collected under section 3221(d)
of the Railroad Retirement Tax Act shall
be credited to the Railroad Retirement
Supplemental Account.
Dated March 1, 2000.
By authority of the Board.
Beatrice Ezerski,
Secretary to the Board.
(Filed by the Office of the Federal Register on
March 16, 2000, 8:45 a.m., and published in the
issue of the Federal Register for March 17, 2000, 65
F.R. 14636)
Section 6049.—Returns
Regarding Payments of Interest
26 CFR 1.6049–4: Return of information as to
interest paid and original issue discount includible
in gross income after December 31, 1982.
Will the Service require a depositor who receives
a “de minimispremium” to treat the value of the pre-
mium as includible in gross income or to reduce the
basis in the account, and will it require a financial
institution that provides a “de minimispremium” to
treat it as interest for purposes of information report-
ing under section 6049. See Rev. Proc. 2000–30,
page 113.

2000–28 I.R.B.113July 10, 2000
26 CFR 601.601: Rules and regulations.
(Also Part I, §§ 1001; 1.1001–3, 1.1275–2.)
Rev. Proc. 2000-29
SECTION 1. PURPOSE
In response to comments, this revenue
procedure removes the sunset date in Rev.
Proc. 99-18, 1999–11 I.R.B. 7.
SECTION 2. BACKGROUND
.01 Rev. Proc. 99-18 provides an elec-
tion that facilitates the substitution of
newly issued debt instruments for out-
standing debt instruments. Under the
election, taxpayers can treat a substitution
of debt instruments, in certain circum-
stances, as a realization event for federal
income tax purposes even though it does
not result in a significant modification
under § 1.1001–3 of the Income Tax Reg-
ulations (and, therefore, is not other-
wise an exchange for purposes of
§ 1.1001–1(a)). Under section 4 of Rev.
Proc. 99-18, taxpayers do not recognize
any realized gain or loss on the date of the
substitution. Instead, the gain or loss gen-
erally is taken into account as income or
deductions over the term of the new debt
instruments. Rev. Proc. 99-18 is effective
for substitutions that occur between
March 1, 1999, and June 30, 2000.
.02 The Internal Revenue Service re-
quested comments on Rev. Proc. 99-18,
including comments on whether the rev-
enue procedure should be made perma-
nent. In response to the request for com-
ments, taxpayers asked that Rev. Proc.
99-18 be made permanent. In addition,
taxpayers asked for several other changes,
including the coordination of Rev. Proc.
99-18 with the regulations dealing with
qualified reopenings of debt instruments.
See§ 1.1275-2T(d) of the temporary In-
come Tax Regulations and § 1.1275-2(k)
of the proposed Income Tax Regulations
published in the Federal Register on No-
vember 5, 1999 (64 Fed. Reg. 60395).
.03 This revenue procedure modifies
only the effective period of Rev. Proc. 99-
18. The Treasury Department and the In-
ternal Revenue Service plan to reconsider
the other provisions of Rev. Proc. 99-18
when the regulations dealing with quali-
fied reopenings are finalized.
SECTION 3. APPLICATION
Section 5 of Rev. Proc. 99-18 is modi-
fied to read as follows: This revenue pro-
cedure applies to substitutions that occur
on or after March 1, 1999.
SECTION 4. EFFECT ON OTHER
DOCUMENTS
Rev. Proc. 99–18, 1999–11 I.R.B. 7, is
modified.
SECTION 5. EFFECTIVE DATE
This revenue procedure is effective
June 22, 2000.
CONTACT PERSON
For further information regarding this
revenue procedure, contact William E.
Blanchard of the Office of Assistant Chief
Counsel (Financial Institutions and Prod-
ucts) on (202) 622–3950 (not a toll-free
call).
26 CFR 1.61-7: Interest.
(Also Part I, §§ 1273, 6049; 1.1273-2, 1.6049-4.)
Rev. Proc. 2000-30
SECTION 1. PURPOSE
This revenue procedure provides guid-
ance to depositors who receive “de min-
imispremiums” (as defined below) from
financial institutions. It also provides
guidance to financial institutions on their
information reporting obligations for
those premiums.
SECTION 2. BACKGROUND
.01 Banks and other financial institu-
tions sometimes provide premiums as in-
ducements to depositors to open new ac-
counts or add to existing accounts.
Questions have arisen as to a depositor’s
tax treatment of non-cash premiums and
the financial institution’s information re-
porting obligations for the premiums.
.02 Interest (including original issue
discount) generally is includible in a re-
cipient’s gross income under § 61(a)(4)
of the Internal Revenue Code and § 1.61-
7 of the Income Tax Regulations. The
term “interest” means amounts paid for
the use or forbearance of money, which
includes amounts, whether or not desig-
nated as interest, paid on savings ac-
counts and other deposit arrangements.
Under § 1.1273-2, a payment from a fi-
nancial institution to a depositor upon the
origination of an account reduces the
issue price of the account and, in effect,
the depositor’s basis in the account. The
reduction generally creates original issue
discount on the account. In addition,
payments made on an account over its
term are first treated as a payment of ac-
crued but unpaid interest and then as a
payment of principal. See §§ 1.446-2(e)
and 1.1275-2(a).
.03 Under § 6049 and § 1.6049-4, a
person who pays interest aggregating $10
or more to another person during a calen-
dar year generally must file a return set-
ting forth certain required information.
SECTION 3. DEFINITION
For purposes of this revenue procedure,
a “de minimispremium” is a non-cash in-
ducement, provided by a financial institu-
tion (as defined in § 265(b)(5)) to a de-
positor to open or add to an account, that
does not have a value in excess of $10 for
a deposit of less than $5,000 or $20 for a
deposit of $5,000 or more. The cost to the
financial institution of the premium is
used in determining whether the dollar
limitations are met.
SECTION 4. APPLICATION
.01 Depositor. For administrative
convenience, the Internal Revenue Ser-
vice will not require a depositor who re-
ceives a “de minimispremium” to treat
the value of the premium as includible in
gross income. In addition, the Service
will not require the depositor to reduce
the basis in the account by the “de min-
imispremium.”
.02 Financial Institution. For adminis-
trative convenience, the Service will not
require a financial institution that pro-
vides a “de minimispremium” to treat it
as interest for purposes of information re-
porting under § 6049.
SECTION 5. EFFECTIVE DATE
This revenue procedure is effective for
“de minimispremiums” provided after
December 31,1999.
Part III. Administrative, Procedural, and Miscellaneous

DRAFTING INFORMATION
The principal author of this revenue
procedure is G. Channing Horton of the
Office of Assistant Chief Counsel (In-
come Tax and Accounting). For further
information regarding this revenue proce-
dure contact Mr. Horton on (202) 622-
4920 (not a toll free call).
July 10, 20001142000–28 I.R.B.

Guidance Under Section 1032
Relating to the Treatment of a
Disposition by an Acquiring
Entity of the Stock of a
Corporation in a Taxable
Transaction; Correction
Announcement 2000–57
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Correction to final regulations.
SUMMARY: This document contains a
correction to Treasury Decision 8883
(2000–23 I.R.B. 1151), which was pub-
lished in the Federal Registeron Tues-
day, May 16, 2000 (65 FR 31073), which
provides guidance under section 1032 of
the Internal Revenue Code, relating to the
treatment of a disposition by an acquiring
entity of the stock of a corporation in a
taxable transaction.
EFFECTIVE DATE: This correction is
effective on May 16, 2000.
FOR FURTHER INFORMATION CON-
TACT: Filiz Serbes at (202) 622-7550
(not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
The final regulations that are subject to
correction are under section 1032 of the
Internal Revenue Code.
Need for Correction
As published, Treasury Decision 8883
contains an error which may prove to be
misleading and is in need of clarification.
Correction of Publication
Accordingly, the publication of the
final regulations (TD 8883), which was
the subject of FR Doc. 00-11900, is cor-
rected as follows:
§1.1032-3 [Corrected]
On page 31076, column 3, §1.1032-
3(c)(1), is corrected to read as follows:
§1.1032-3 Disposition of stock or stock
options in certain transactions not quali-
fying under any other nonrecognition pro-
vision.
* * * * *
(c) * * *
(1) The acquiring entity acquires stock
of the issuing corporation directly or indi-
rectly from the issuing corporation in a
transaction in which, but for this section,
the basis of the stock of the issuing corpo-
ration in the hands of the acquiring entity
would be determined, in whole or in part,
with respect to the issuing corporation’s
basis in the issuing corporation’s stock
under section 362(a) or 723 (provided
that, in the case of an indirect acquisition
by the acquiring entity, the transfers of is-
suing corporation stock through interme-
diate entities occur immediately after one
another);
* * * * *
Cynthia E. Grigsby,
Chief, Regulations Unit,
Assistant Chief Counsel (Corporate).
(Filed by the Office of the Federal Register on June
14, 2000, 8:45 a.m., and published in the issue of the
Federal Register for June 15, 2000, 65 F.R. 37481)
2000–28 I.R.B.115July 10, 2000
Part IV. Items of General Interest

July 10, 2000i2000–28 I.R.B.
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
effect:
Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus,
if an earlier ruling held that a principle
applied to A, and the new ruling holds
that the same principle also applies to B,
the earlier ruling is amplified. (Compare
with modified, below).
Clarified is used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously
published ruling and points out an essen-
tial difference between them.
Modified is 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 ap-
plies to both A and B, the prior ruling is
modified because it corrects a published
position. (Compare with amplified and
clarified, above).
Obsoleted describes 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
rulings that are obsoleted because of
changes in law or regulations. A ruling
may also be obsoleted because the sub-
stance has been included in regulations
subsequently adopted.
Revoked describes situations where the
position in the previously published rul-
ing is not correct and the correct position
is being stated in the new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a pe-
riod of time in separate rulings. If the
new ruling does more than restate the
substance of a prior ruling, a combination
of terms is used. For example, modified
and superseded describes a situation
where the substance of a previously pub-
lished 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 published ruling is first
modified and then, as modified, is super-
seded.
Supplemented is 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 ruling has been supplemented
several times, a new ruling may be pub-
lished that includes the list in the original
ruling and the additions, and supersedes
all prior rulings in the series.
Suspended is 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 following abbreviations in current use and for-
merly used will appear in material published in the
Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C.—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
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—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contribution Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign Corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statements of Procedral Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.
Definition of Terms

2000–28 I.R.B.iiJuly 10, 2000
Numerical Finding List
1
Bulletin 2000–27
Notices:
2000–33, 2000–27 I.R.B. 97
Proposed Regulations:
REG–105316–98, 2000–27 I.R.B. 98
Revenue Procedures:
2000–28, 2000–27 I.R.B. 60
Revenue Rulings:
2000–32, 2000–27 I.R.B. 1
Treasury Decisions:
8886, 2000–27 I.R.B. 3
8888, 2000–27 I.R.B. 3
1
A cumulative list of all revenue rulings, revenue
procedures, Treasury decisions, etc., published in
Internal Revenue Bulletins 2000–1 through 2000–26
is in Internal Revenue Bulletin 2000–27, dated July
3, 2000.

July 10, 2000iii2000–28 I.R.B.
Finding List of Current Actions on
Previously Published Items
1
Bulletin 2000–27
Revenue Procedures:
99–34
Superseded by
Rev. Proc. 2000–28, 2000–27 I.R.B. 60
1
A cumulative list of current actions on previously
published items in Internal Revenue Bulletins
2000–1 through 2000–26 is in Internal Revenue
Bulletin 2000–27, dated July 3, 2000.

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2000–28 I.R.B.July 10, 2000

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July 10, 20002000–28 I.R.B.

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