Internal Revenue Bulletin 2007-52 (PDF rendition): IRS Notices

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
7-52
December 26, 200
7
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
INCOME TAX
Rev. Rul. 2007–68, page 1236.
Interest rates; underpayments and overpayments.The
rates of interest determined under section 6621 of the Code
for the calendar quarter beginning January 1, 2008, will be 7
percent for overpayments (6 percent in the case of a corpo-
ration), 7 percent for underpayments, and 9 percent for large
corporate underpayments. The rate of interest paid on the por-
tion of a corporate overpayment exceeding $10,000 will be 4.5
percent.
T.D. 9365
, page 1218.
Final reg
ulations under section 45G of the Code provide rules
for claim
ing the railroad track maintenance credit for qualified
railroad
track maintenance expenditures paid or incurred by a
Class II r
ailroad or Class III railroad and other eligible taxpayers
during t
he taxable year.
Rev. Proc. 2007–72, page 1257.
This procedure describes the conditions under which changes
to certain subprime mortgage loans will not cause the Internal
Revenue Service to challenge the tax status of certain securiti-
zation vehicles holding the loans.
EMPLOY
EE PLANS
Notice
2007–99, page 1243.
Distri
butions from governmental plans and health and
accide
nt insurance; section 845 of PPA ’06.As a result of
sectio
n 845 of the Pension Protection Act of 2006 and section
9(i)(1
)(B) and (C) of S. 1974 and H.R. 3361, the pending Pen-
sion Pr
otection Technical Corrections Acts of 2007, Q&A–23
of Notice 2007–7, 2007–5 I.R.B. 395, pertaining to distribu-
tions from certain health and accident plans is altered. Notice
2007–7 modified.
Notice 2007–100, page 1243.
This notice provides transition relief and guidance on the cor-
rection of certain failures of a nonqualified deferred compen-
sation plan to comply with section 409A(a) of the Code in op-
eration (an operational failure), including: (1) methods for cor-
recting certain operational failures during a service provider’s
taxable year in which the failure occurs to avoid income in-
clusion under section 409A(a); (2) transition relief limiting the
amount includible in income under section 409A(a) for certain
operational failures occurring in a service provider’s taxable
year beginning before January 1, 2010, that involve only lim-
ited amounts; (3) an outline of, and request for comments on,
a potential corrections program that would permit service re-
cipients and service providers to limit the amounts required to
be included in income under section 409A(a) due to certain op-
erational failures.
Notice 2007–101, page 1253.
Weighted average interest rate update; corporate bond
indices; 30-year Treasury securities; segment rates.
This notice contains updates for the corporate bond weighted
average interest rate for planyears beginning in December
2007; the 24-month average segment rates; the funding tran-
sitional segment rates applicable for December 2007; and the
minimum present value transitional rates for November 2007.
(Continued on the next page)
Finding Lists begin on page ii.
Index for July through December begins on page vi.

EXEMPT ORGANIZATIONS
T.D. 9366, page 1232.
REG–104942–07, page 1264.
Temporary and proposed regulations under section 6033 of the
Code describe the time and manner in which certain tax-exempt
organizations not currently required to file an annual information
return under section 6033(a)(1) are required to submit an an-
nual electronic notice including certain information required by
section 6033(i)(1)(A) through (F).
EMPLOYMENT TAX
T.D. 9367, page 1229.
Final regulations under section 3121 of the Code define the
term “salary reduction agreement” for purposes of section
3121(a)(5)(D). The regulations provide guidance to employers
(public educational institutions and section 501(c)(3) organiza-
tions) purchasing annuity contracts described in section 403(b)
on behalf of their employees.
ADMINISTRA
TIVE
T.D. 9366, p
age 1232.
REG–104942
–07, page 1264.
Temporary a
nd proposed regulations under section 6033 of the
Code descri
be the time and manner in which certain tax-exempt
organizat
ions not currently required to file an annual information
return und
er section 6033(a)(1) are required to submit an an-
nual elect
ronic notice including certain information required by
section 60
33(i)(1)(A) through (F).
REG–155669–04, page 1262.
Proposed regulations under section 6045 of the Code provide
guidance relating to information on the sale or exchange of
standing timber for lump-sum payment. The regulations would
amend section 1.6045–4(b)(2) by providing that the term “own-
ership interest” includes any contractual interest in a sale or
exchange of standing timber for a lump-sum payment that is
fixed and contingent. The regulations would also amend sec-
tion 1.6045–4(c) to provide that the terms “crops” and “natural
resources” do not include standing timber.
December 26, 20072007–52 I.R.B.

The IRS Mission
Provide America’s taxpayers top quality service by helping
them understand and meet their tax responsibilities and by
applying the tax law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are compiled semiannually into Cumulative Bulletins,
which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement are not published; however, statements of internal
practices and procedures that affect the rights and duties of
taxpayers are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers
or technical advice to Service field offices, identifying details
and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B, Leg-
islation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Sec-
retary (Enforcement).
Part IV
.—Items of General Interest.
This par
t includes notices of proposed rulemakings, disbar-
ment an
d suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The c
ontents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S.Government Printing Office, Washington, DC 20402.
2007–52 I.R.B.December 26, 2007

December 26, 20072007–52 I.R.B.

Part I. Rulings and Decisions Under the Internal Revenue Code
of 1986
Section 199.—Income
Attributable to Domestic
Production Activities
26 CFR 1.45G–1: Railroad track maintenance credit.
T.D. 9365
DEPARTMENT OF
THE TREASURY
Internal Revenue Service
26 CFR Parts 1 and 602
Railroad Track Maintenance
Credit
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final Regulations.
SUMMARY: This document contains final
regulations that provide rules for claiming
the railroad track maintenance credit under
section 45G of the Internal Revenue Code
for qualified railroad track maintenance
expenditures paid or incurred by a Class
II railroad or Class III railroad and other
eligible taxpayers during the taxable year.
These final regulations reflect changes to
the law made by the American Jobs Cre-
ation Act of 2004, the Gulf Opportunity
Zone Act of 2005, and the Tax Relief and
Health Care Act of 2006.
DATES:Effective Date:These regulations
are effective on November 13, 2007.
Applicability Date:For dates of appli-
cability, see §1.45G–1(g).
FOR FURTHER INFORMATION
CONTACT: David Selig, (202) 622–3040
(not a toll-free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information con-
tained in these final regulations has been
reviewed and approved by the Office of
Management and Budget in accordance
with the Paperwork Reduction Act (44
U.S.C. 3507(d)) under control number
1545–2031.
The collection of information in these
final regulations is in §1.45G–1(d). This
information is required to enable the IRS
to verify the assignments of railroad track
miles made under section 45G(b).
An agency may not conduct or sponsor,
and a person is not required to respond to, a
collection of information unless it displays
a valid control number.
Books or records relating to this col-
lection of information must be retained as
long as their contents might become ma-
terial in the administration of any internal
revenue law. Generally, tax returns and tax
return information are confidential, as re-
quired by 26 U.S.C. 6103.
Background
This document contains amendments
to 26 CFR part 1 to provide regulations
under section 45G of the Internal Revenue
Code (Code). Section 45G was added to
the Code by section 245(a) of the Amer-
ican Jobs Creation Act of 2004, Public
Law 108–357 (118 Stat. 1418) (AJCA),
and was modified by section 403(f) of
the Gulf Opportunity Zone Act of 2005,
Public Law 109–135 (119 Stat. 2577),
andsection423(a)oftheTaxReliefand
Health Care Act of 2006, Public Law
109–432 (120 Stat. 2922) (TRHCA). On
September 8, 2006, the IRS and Trea-
sury Department published in theFederal
Registertemporary and proposed regula-
tions (REG–142270–05, 2006–43 I.R.B.
791) under section 45G (71 FR 53009,
71 FR 53053). The IRS and Treasury
Department issued a correction notice for
the temporary regulations in T.D. 9286,
2006–43 I.R.B. 750, on December 8, 2006
(71 FR 71039). No requests were received
to testify on the proposed regulations
and, accordingly, nopublic hearing was
held. Written and electronic comments
responding to the proposed regulations
were received. After consideration of all
the comments, the proposed regulations
are adopted as amended by this Treasury
decision and the corresponding temporary
regulations are removed.
General Overview
Section 38 allows a credit for the tax-
able year for, among other things, the cur-
rent year business credit. The current year
business credit is the sum of the credits
listed in section 38(b). Section 245(c)(1)
of the AJCA amended section 38(b) to add
to the list of credits the railroad track main-
tenance credit (RTMC) determined under
section 45G(a).
Section 45G(a) provides that, for pur-
poses of section 38, the RTMC for the tax-
able year is an amount equal to 50 per-
cent of the qualified railroad track mainte-
nance expenditures (QRTME) paid or in-
curred by an eligible taxpayer during the
taxable year.
Section 45G(b) imposes limitations on
the amount of the RTMC for any taxable
year. The credit allowed under section
45G(a) may not exceed $3,500 multiplied
by the sum of (1) the number of miles of
railroad track owned by, or leased to, the
eligible taxpayer as of the close of the tax-
able year, and (2) the number of miles of
railroad track assigned to the eligible tax-
payerbyaClassIIrailroadorClassIIIrail-
road that owns or leases the track as of the
close of the taxable year.
Section 45G(c) defines an eligible tax-
payer to mean any Class II railroad or
Class III railroad, and any person who
transports property using the rail facilities
of such a railroad, or who furnishes rail-
road-related property or services to such a
railroad, but only with respect to miles of
railroad track assigned to such person by a
Class II railroad or Class III railroad.
Section 45G(d), as amended by sec-
tion 423(a) of the TRHCA, defines the
term QRTME to mean gross expenditures
(whether or not chargeable to capital ac-
count) for maintaining railroad track (in-
cluding roadbed, bridges, and related track
structures) owned or leased as of January
1, 2005, by a Class II or Class III railroad
(determined without regard to any consid-
eration for such expenditures given by the
2007–52 I.R.B.1218December 26, 2007

Class II or Class III railroad which made
the assignment of such track).
Section 45G(e) defines the terms Class
II railroad and Class III railroad to have the
respective meanings given those terms by
the Surface Transportation Board (STB).
Under section 45G(f), section 45G ap-
plies to QRTME paid or incurred during
taxable years beginning after December
31, 2004, and before January 1, 2008.
The amendments to section 45G(d) made
by section 423(a) of the TRHCA apply
retroactively to taxable years beginning
after December 31, 2004.
Summary of Comments
Eligible Taxpayers
A commentator suggested that the final
regulations clarify that a Class II or Class
III railroad may not be recharacterized as
an ineligible taxpayer because the rail-
road is a member of a controlled group
of corporations under section 45G(e)(2)
that includes a ClassI railroad. Section
45G(c)(1) defines the term eligible tax-
payer to include any Class II or Class
III railroad. Section 45G(e)(1) provides
that the terms Class II railroad and Class
III railroad have the respective meanings
given such terms by the STB. The con-
trolled group rules do not affect the class
designations made by the STB. The tem-
porary regulations did not prescribe that
the class designations made by the STB be
superseded by the controlled group rules.
Nevertheless, in response to the comment,
the final regulations in §1.45G–1(b)(1)
state explicitly that the definitions of Class
II and Class III railroads are determined
without regard to the controlled group
rules under section 45G(e)(2).
Effect on Reimbursements
Commentators stated that the reim-
bursement rule in §1.45G–1T(c)(3)(ii) of
the temporary regulations prevents eligi-
ble taxpayers from being made whole for
their expenditures on railroad track infra-
structure, because the credit is only for 50
percent of eligible expenditures. Under
§1.45G–1T(c)(3)(ii), QRTME is treated
as not paid or incurred during the taxable
year to the extent that a taxpayer is enti-
tled to reimbursement of any expenditures
that would otherwisequalify as QRTME.
Section 1.45G–1T(c)(3)(ii) further pro-
vides that reimbursements may consist of
amounts paid either directly or indirectly
to the taxpayer. Examples of indirect
reimbursements in the temporary regula-
tions include discounted freight shipping
rates, price markups of railroad-related
property, debt forgiveness, and similar
arrangements. Thus, §1.45G–1T(c)(3)(ii)
limits the QRTME paid or incurred to the
actual out-of-pocket expenditures paid or
incurred by an eligible taxpayer.
On December 20, 2006, Congress en-
acted the TRHCA, which changed the
definition of QRTME. Although statu-
tory changes other than technical correc-
tions are usually made prospectively, this
change to the statute was made retroactive
to the original date of enactment of section
45G. The new definition provides that
QRTME is not reduced by the discount
amount in the case of discounted freight
shipping rates, the increment in a markup
of the price for track materials, or by debt
forgiveness or cash payments made by
the Class II or Class III railroad to the as-
signee as consideration for railroad track
maintenance expenditures. Consideration
received directly or indirectly from per-
sons other than the Class II or Class III
railroad, however, does reduce the amount
of QRTME. See Joint Committee on Tax-
ation Staff,General Explanation of Tax
Legislation Enacted in the 109th Con-
gress, 109th Cong., 2d Sess. 769 (January
17, 2007).
Consistent with the change to the
statute, the final regulations retroactively
limit the application of the reimbursement
rule in §1.45G–1(c)(3)(ii) to consideration
received directly or indirectly from per-
sons other than the Class II or Class III
railroad. A taxpayer that relied on the re-
imbursement rule in §1.45G–1T(c)(3)(ii)
and reduced its QRTME reported on
Form 8900, “Qualified Railroad Track
Maintenance Credit,” that was filed
with the taxpayer’s Federal income tax
return, may amend its return to apply
§1.45G–1(c)(3)(ii) to the taxable year pro-
vided the taxpayer applies all of §1.45G–1
to the taxable year.
Basis Adjustment
Commentators suggested that the ba-
sis reduction required by section 45G(e)(3)
should only be taken by the Class II or
Class III railroad owning the railroad track
even if an assignee claims the RTMC. Sec-
tion 45G(e)(3) requires that if a credit is
allowed with respect to any railroad track,
the basis of such track shall be reduced by
the amount of the credit so allowed. Sec-
tion 1.45G–1T(e) of the temporary regula-
tions provides rules for adjusting basis for
the amount of the RTMC claimed by an
eligible taxpayer. The temporary regula-
tions provide that for purposes of the basis
adjustment under section 45G(e)(3), rail-
road track is the asset, if any, to which the
QRTME must be capitalized, whether the
asset is tangible or intangible. Therefore,
the only basis that is reduced under section
45G(e)(3) is basis created by capitalizing
the QRTME.
Congress commonly includes a basis
adjustment rule when it enacts business tax
credits as an investment incentive. See, for
example, sections 43(d), 44(e), 45D(h),
45F(f), 45H(d), 45L(e), and 280C. The
purpose of a basis adjustment is to pre-
vent the taxpayer who claims the credit
from obtaining a double tax benefit by
also including the expenditures on which
the credit was claimed in the basis of the
asset created by the expenditures. Section
45G(e)(3) is clear and requires that the
basis be reduced on the track with respect
to which the credit is allowed. There-
fore, to further the intent of Congress by
preventing the double tax benefit, the ba-
sis adjustment rule must require that the
increase in basis of property that results
from the QRTME (without regard to the
basis adjustment rule) be reduced by the
amount of the credit allowed with respect
to such QRTME. Allowing the reduction
in basis by a taxpayer other than the tax-
payer claiming the credit on property other
than the property whose basis is increased
by the QRTME (without regard to the
basis adjustment rule) is contrary to the
statute. Therefore, the final regulations do
not adopt the commentators’ suggestion.
Commentators also suggested that the
definition of railroad track under section
45G(e)(3) should be limited to rails, ties,
ballast, and other track materials. As stated
previously, section 45G(e)(3) requires that
basis be reduced on the track with respect
to which the credit is allowed. The credit is
allowed with respect to QRTME expended
on railroad track. The definition of rail-
road track for purposes of the basis ad-
justment must be the same as the defini-
tion used for determining QRTME. Lim-
December 26, 200712192007–52 I.R.B.

iting the definition of railroad track un-
der the basis adjustment rule to rails, ties,
ballast, and other track materials is in-
consistent with the intent of the definition
of railroad track on which expenditures
may qualify as QRTME. The definition of
railroad track for which expenditures may
qualify as QRTME was intended by Con-
gress to be expansive and includes bridges
and other related track structures.
Commentators further suggested that
the definition of railroad track under
section 45G(e)(3) should not include in-
tangibles. All or some of the QRTME
paid or incurred by an eligible taxpayer
during the taxable year may be required
to be capitalized under section 263(a) as a
tangible asset or as an intangible asset for
improvements to another taxpayer’s real
property depending upon whether the el-
igible taxpayer owns (leases) the railroad
track and improvements or not. (See, for
example, §1.263(a)–4(d)(8), which gen-
erally requires capitalization of amounts
paid or incurred by a taxpayer to produce
or improve real property owned by an-
other.) Regardless of whether an asset
created by QRTME is tangible railroad
track owned by the taxpayer, leasehold
improvement to railroad track, or intan-
gible railroad track for improvements to
another taxpayer’s real property, capital-
ization of the QRTME creates the basis in
railroad track that must be reduced under
section 45G(e)(3) if the RTMC is claimed
on such expenditures. The rules requiring
capitalization of amounts paid or incurred
by a taxpayer to produce or improve real
property owned by another under section
263(a) were prescribed prior to the en-
actment of section 45G. The provision
in these final regulations that specifically
references intangible assets is a reminder
that, for purposes of section 45G(e)(3),
it is possible that the basis that must be
reduced is the basis of an intangible asset.
Coordination with Section 61
The temporary regulations, as cor-
rected, do not contain a specific provision
relating to the application of section 61,
because such a provision would need to
be placed in regulations under section 61.
Section 1.45G–1T was never intended to
provide rules for determining gross in-
come under section 61. Section 61 and its
regulations apply tocertain transactions
involving section 45G regardless of these
regulations or the temporary regulations,
and additional regulations under section
61 are not necessary. As stated in the
preamble to the temporary regulations,
there is no provision in section 45G that
prevents the application of section 61 to
certain transactions under section 45G.
Taxpayers are reminded, therefore, that
certain transactions under section 45G
may generate gross income.
Other Changes
The final regulations contain other var-
ious changes that clarify the application of
section 45G.
Effective Dates
Section 245(a) of the AJCA provides
that section 45G applies to taxable years
beginning after December 31, 2004 and
beginning before January 1, 2008. Sec-
tion 423(b) of the TRHCA provides that
the amendments made by section 423(a)
to section 45G(d) take effect as if included
in section 245(a) of the AJCA. The final
regulations provide that §1.45G–1 is effec-
tive for taxable years ending on or after
September 7, 2006 (the effective date of
§1.45G–1T). Section 1.45G–1(g)(2) pro-
vides that a taxpayer may apply §1.45G–1
to taxable years beginning after December
31, 2004, and ending before September 7,
2006, provided that the taxpayer applies all
provisions in §1.45G–1 to the taxable year.
Special Analyses
It has been determined that this Trea-
sury decision is not a significant regula-
tory action as defined in Executive Order
12866. Therefore, a regulatory assessment
is not required. It has been determined that
section553(b)oftheAdministrativePro-
cedure Act (5 U.S.C. chapter 5) does not
apply to these regulations, and because the
regulations do not impose a collection of
information on small entities, the Regula-
tory Flexibility Act (5 U.S.C. chapter 6)
does not apply. Therefore, a Regulatory
Flexibility Analysis under the Regulatory
Flexibility Act (5 U.S.C. chapter 6) is not
required. Pursuant to section 7805(f) of
the Internal Revenue Code, the notice of
proposed rulemaking was submitted to the
Chief Counsel for Advocacy of the Small
Business Administration for comment on
its impact on small business.
Drafting Information
The principal author of these regula-
tions is David Selig, Office of the As-
sociate Chief Counsel (Passthroughs and
Special Industries). However, other per-
sonnel from the IRS and Treasury Depart-
ment participated in their development.
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR parts 1 and 602
are amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.45G–0 is added to
read as follows:
§1.45G–0 Table of contents for the
railroad track maintenance credit rules.
This section lists the table of contents
for §1.45G–1.
§1.45G–1 Railroad track maintenance
credit.
(a) In general.
(b) Definitions.
(1) Class II railroad and Class III rail-
road.
(2) Eligible railroad track.
(3) Eligible taxpayer.
(4) Qualifying railroad structure.
(5) Qualified railroad track mainte-
nance expenditures.
(6) Rail facilities.
(7) Railroad-related property.
(8) Railroad-related services.
(9) Railroad track.
(10) Form 8900.
(11) Examples.
(c) Determination of amount of railroad
track maintenance credit for the taxable
year.
(1) General amount.
(2) Limitation on the credit.
(i) Eligible taxpayer is a Class II rail-
road or Class III railroad.
(ii) Eligible taxpayer is not a Class II
railroad or Class III railroad.
2007–52 I.R.B.1220December 26, 2007

(iii) No carryover of amount that ex-
ceeds limitation.
(3) Determination of amount of
QRTME paid or incurred.
(i) In general.
(ii) Effect of reimbursements received
from persons other than a Class II or Class
III railroad.
(4) Examples.
(d) Assignment of track miles.
(1) In general.
(2) Assignment eligibility.
(3) Effective date of assignment.
(4) Assignment information statement.
(i) In general.
(ii) Assignor.
(iii) Assignee.
(iv) Special rule for returns filed prior
to November 9, 2007.
(5) Special rules.
(i) Effect of subsequent dispositions of
eligible railroad track during the assign-
ment year.
(ii) Effect of multiple assignments of el-
igible railroad track miles during the same
taxable year.
(6) Examples.
(e) Adjustments to basis.
(1) In general.
(2) Basis adjustment made to railroad
track.
(3) Examples.
(f) Controlled groups.
(1) In general.
(2) Definitions.
(i) Trade or business.
(ii) Group and controlled group.
(iii) Group credit.
(iv) Consolidated group.
(v) Credit year.
(3) Computation of the group credit.
(4) Allocation of the group credit.
(i) In general.
(ii) Stand-alone entity credit.
(5) Special rules for consolidated
groups.
(i) In general.
(ii) Special rule for allocation of group
credit among consolidated group mem-
bers.
(6) Tax accounting periods used.
(i) In general.
(ii) Special rule when timing of
QRTME is manipulated.
(7) Membership during taxable year in
more than one group.
(8) Intra-group transactions.
(i) In general.
(ii) Payment for QRTME.
(g) Effective/applicability date.
(1) In general.
(2) Taxable years ending before
September 7, 2006.
(3) Special rules for returns filed prior
to November 9, 2007.
§1.45G–0T [Removed]
Par. 3. Section 1.45G–0T is removed.
Par. 4. Section 1.45G–1 is added to
read as follows:
§1.45G–1 Railroad track maintenance
credit.
(a)In general. For purposes of section
38, the railroad track maintenance credit
(RTMC) for qualified railroad track main-
tenance expenditures (QRTME) paid or
incurred by an eligible taxpayer during
the taxable year is determined under this
section. A taxpayer claiming the RTMC
must do so by filing Form 8900, “Quali-
fied Railroad Track Maintenance Credit,”
with its timely filed (including extensions)
Federal income tax return for the taxable
year the RTMC is claimed. Paragraph
(b) of this section provides definitions
of terms. Paragraph (c) of this section
provides rules for computing the RTMC,
including rules regarding limitations on
the amount of the credit. Paragraph (d) of
this section provides rules for assigning
miles of railroad track. Paragraph (e) of
this section contains rules for adjusting
basis for the amount of the RTMC claimed
by an eligible taxpayer. Paragraph (f) of
this section contains rules for computing
the amount of the RTMC in the case of a
controlled group, and for the allocation of
the group credit among members of the
controlled group.
(b)Definitions. For purposes of section
45G and this section, the following defini-
tions apply:
(1)Class II railroad and Class III
railroadhave the respective meanings
giventothesetermsbytheSurfaceTrans-
portation Board (STB) without regard to
the controlled group rules under section
45G(e)(2).
(2)Eligible railroad trackis railroad
track (as defined in paragraph (b)(9) of this
section) located within the United States
that is owned or leased by a Class II rail-
road or Class III railroad at the close of
its taxable year. Forpurposes of section
45G and this section, a Class II railroad or
Class III railroad owns railroad track if the
railroad track is subject to the allowance
for depreciation under section 167 by the
Class II railroad or Class III railroad.
(3)Eligible taxpayeris—
(i) A Class II railroad or Class III rail-
road during the taxable year;
(ii) Any person that transports property
using the rail facilities (as defined in para-
graph (b)(6) of this section) of a Class II
railroad or Class III railroad during the tax-
able year, but only is an eligible taxpayer
with respect to the miles of eligible rail-
road track assigned to the person for that
taxable year by that Class II railroad or
Class III railroad under paragraph (d) of
this section; or
(iii) Any person that furnishes railroad-
related property (as defined in paragraph
(b)(7) of this section)or railroad-related
services (as defined in paragraph (b)(8) of
this section), to a Class II railroad or Class
III railroad during the taxable year, but
only is an eligible taxpayer with respect to
the miles of eligible railroad track assigned
to the person for that taxable year by that
Class II railroad or Class III railroad under
paragraph (d) of this section.
(4)Qualifying railroad structureis
property located within the United States
that is described in the following STB
property accounts in 49 CFR Part 1201,
Subpart A:
(i) Property Account 3, Grading.
(ii) Property Account 4, Other right-of-
way expenditures.
(iii) Property Account 5, Tunnels and
subways.
(iv) Property Account 6, Bridges, tres-
tles, and culverts.
(v) Property Account 7, Elevated struc-
tures.
(vi) Property Account 8, Ties.
(vii) Property Account 9, Rails and
other track material.
(viii) Property Account 11, Ballast.
(ix) Property Account 13, Fences,
snowsheds, and signs.
(x) Property Account 27, Signals and
interlockers.
(xi) Property Account 39, Public im-
provements; construction.
(5)Qualified railroad track mainte-
nance expenditures (QRTME)are expen-
ditures for maintaining, repairing, and
improving qualifying railroad structure
December 26, 200712212007–52 I.R.B.

(as defined in paragraph (b)(4) of this sec-
tion) that is owned or leased as of January
1, 2005, by a Class II railroad or Class III
railroad. These expenditures may or may
not be chargeable to a capital account.
(6)Rail facilitiesof a Class II railroad or
Class III railroad are railroad yards, tracks,
bridges, tunnels, wharves, docks, stations,
and other related assets that are used in the
transport of freight by a railroad and that
are owned or leased by the Class II railroad
or Class III railroad.
(7)Railroad-related propertyis prop-
erty that is provided directly to, and is
unique to, a railroad and that, in the hands
of a Class II railroad or Class III railroad,
is described in—
(i) The following STB property ac-
counts in 49 CFR Part 1201, Subpart A:
(A) Property Account 3, Grading;
(B) Property Account 5, Tunnels and
subways;
(C) Property Account 22, Storage ware-
houses; and
(ii) Asset classes 40.1 through 40.54
in the guidance issued by the Internal
Revenue Service under section 168(i)(1)
(for further guidance, for example, see
Rev. Proc. 87–56, 1987–2 C.B. 674,
and §601.601(d)(2)(ii)(b) of this chapter),
except that any office building, any pas-
senger train car, and any miscellaneous
structure if such structure is not provided
directly to, and is not unique to, a railroad
are excluded from the definition of rail-
road-related property.
(8)Railroad-related servicesare ser-
vices that are provided directly to, and
are unique to, a railroad and that relate
to railroad shipping, loading and unload-
ing of railroad freight, or repairs of rail
facilities (as definedin paragraph (b)(6)
of this section) or railroad-related prop-
erty (as defined in paragraph (b)(7) of this
section). Examples of railroad-related ser-
vices are the transport of freight by rail;
the loading and unloading of freight trans-
ported by rail; railroad bridge services;
railroad track construction; providing rail-
road track material orequipment; locomo-
tive leasing or rental; maintenance of rail-
road’s right-of-way (including vegetation
control); piggyback trailer ramping; rail
deramping services; and freight train cars
repair services. Examples of services that
are not railroad-related services are gen-
eral business services, such as, account-
ing and bookkeeping, marketing, legal ser-
vices; janitorial services; office building
rental; banking services (including financ-
ing of railroad-related property); and pur-
chasing of, or services performed on, prop-
erty not described in paragraph (b)(7) of
this section.
(9) Except as provided in paragraph
(e)(2) of this section,railroad trackis
property described in STB property ac-
counts 8 (ties), 9 (rails and other track
material),and11(ballast)in49CFRpart
1201, Subpart A.Double trackis treated as
multiple lines of railroad track, rather than
as a single line of railroad track. Thus, one
mile of single track is one mile, but one
mile of double track is two miles.
(10)Form 8900.IfForm8900isre-
vised or renumbered, any reference in this
section to that form shall be treated as a ref-
erence to the revised or renumbered form.
(11)Examples. The application of this
paragraph (b) is illustrated by the follow-
ing examples. In all examples, the taxpay-
ers use a calendar taxable year, and are not
members of a controlled group.
Example 1. A is a manufacturer that in 2006,
transports its products by rail using the railroad tracks
owned by B, a Class II railroad that owns 500 miles of
railroad track within the United States on December
31, 2006. B properly assigns for purposes of section
45G 100 miles of eligible railroad track to A in 2006.
A is an eligible taxpayer for 2006 with respect to the
100 miles of eligible railroad track.
Example 2. C is a bank that loans money to sev-
eral Class III railroads. In 2006, C loans money to
D, a Class III railroad, who in turn uses the loan pro-
ceeds to purchase track material. Because providing
loans is not a service that is unique to a railroad, C is
not providing railroad-related services and, thus, C is
not an eligible taxpayer, even if D assigns miles of el-
igible railroad track to C for purposes of section 45G.
Example 3. E leases locomotives directly to Class
I, Class II, and Class III railroads. In 2006, E leases
locomotives to F, a Class II railroad that owns 200
miles of railroad track within the United States on
December 31, 2006. F properly assigns for purposes
of section 45G 200 miles of eligible railroad track to
E. Because locomotives are property that is unique
to a railroad, and E leases these locomotives directly
to F in 2006, E is an eligible taxpayer for 2006 with
respect to the 200 miles of eligible railroad track as-
signed to E by F.
Example 4. The facts are the same as inExam-
ple 3, except that E leases passenger trains, not loco-
motives, to F. Because passenger trains are not rail-
road-related property for purposes of section 45G, E
is not an eligible taxpayer even if F assigns miles of
eligible railroad track to E for purposes of section
45G.
(c)Determination of amount of railroad
track maintenance credit for the taxable
year—(1)General amount. Except as pro-
vided in paragraph (c)(2) of this section,
for purposes of section 38, the RTMC
determined under section 45G(a) for the
taxable year is equal to 50 percent of the
QRTME paid or incurred (as determined
under paragraph (c)(3) of this section) by
an eligible taxpayer during the taxable
year.
(2)Limitation on the credit—(i)Eligi-
ble taxpayer is a Class II railroad or Class
III railroad. If an eligible taxpayer is a
ClassIIrailroadorClassIIIrailroad,the
RTMC determined under paragraph (c)(1)
of this section for the Class II railroad or
Class III railroad for any taxable year must
not exceed $3,500 multiplied by the sum
of—
(A) The number of miles of eligible rail-
road track owned or leased by the Class
II railroad or Class III railroad, reduced
by the number of miles of eligible railroad
track assigned under paragraph (d) of this
section by the Class II railroad or Class
III railroad to another eligible taxpayer for
that taxable year; and
(B) The number of miles of eligible
railroad track owned or leased by another
Class II railroad or Class III railroad that
are assigned under paragraph (d) of this
section to the Class II railroad or Class III
railroad for the taxable year.
(ii)Eligible taxpayer is not a Class II
railroad or Class III railroad.Ifaneligible
taxpayer is not a Class II railroad or Class
III railroad, the RTMC determined under
paragraph (c)(1) of this section for the el-
igible taxpayer for any taxable year must
not exceed $3,500 multiplied by the num-
ber of miles of eligible railroad track as-
signed under paragraph (d) of this section
by a Class II railroad or Class III railroad to
the eligible taxpayer for the taxable year.
(iii)No carryover of amount that ex-
ceeds limitation. Amounts that exceed the
limitation under paragraph (c)(2)(i) of this
section or paragraph (c)(2)(ii) of this sec-
tion, may never be carried over to another
taxable year.
(3)Determination of amount of
QRTME paid or incurred—(i)In general.
The termpaid or incurredmeans, in the
case of a taxpayer using an accrual method
of accounting, a liability incurred (within
the meaning of §1.446–1(c)(1)(ii)). A lia-
bility may not be taken into account under
section 45G and this section prior to the
taxable year during which the liability is
incurred. Any amount that an eligible tax-
payer (assignee) pays a Class II railroad or
2007–52 I.R.B.1222December 26, 2007

Class III railroad (assignor) in exchange
for an assignment of one or more miles of
eligible railroad track under paragraph (d)
of this section, is treated, for purposes of
this section, as QRTME paid or incurred
by the assignee, and not by the assignor,
at the time and to the extent the assignor
pays or incurs QRTME.
(ii)Effect of reimbursements received
from persons other than a Class II or
Class III railroad. The amount of QRTME
treated as paid or incurred during the tax-
able year by an eligible taxpayer under
paragraphs (b)(3)(ii) and (iii) of this sec-
tion shall be reduced by any amount to
which the eligible taxpayer is entitled to
be reimbursed, directly or indirectly, from
persons other than a Class II or Class III
railroad.
(4)Examples. The application of this
paragraph (c) is illustrated by the follow-
ing examples. In all examples, the taxpay-
ers use an accrual method of accounting
and a calendar taxable year, and are not
members of a controlled group.
Example 1.Computation of RTMC; section 45G
credit limitation is not exceeded. (i)GisaClassII
railroad that owns or has leased to it 1,000 miles of
railroad track within the United States on December
31, 2006. H is a manufacturer that in 2006, trans-
ports its products by rail using the rail facilities of G.
In 2006, for purposes of section 45G, G assigns 100
miles of eligible railroad track to H and does not make
any other assignments of railroad track miles. H did
not receive any other assignments of railroad track
miles in 2006. During 2006, G incurred QRTME in
the amount of $2.5 million and H incurred QRTME
in the amount of $200,000.
(ii) For 2006, G determines the tentative amount
of RTMC under paragraph (c)(1) of this section to be
$1,250,000 (50% multiplied by $2,500,000 QRTME
incurred by G during 2006). G further determines
G’s credit limitation under paragraph (c)(2)(i) of this
section for 2006 to be $3,150,000 ($3,500 multiplied
by 900 miles of eligible railroad track (1,000 miles
owned by, or leased to, G on December 31, 2006, less
100 miles assigned by G to H in 2006)). Because G’s
tentative amount of RTMC does not exceed G’s credit
limitation amount for 2006, G may claim a RTMC for
2006 in the amount of $1,250,000.
(iii) For 2006, H determines the tentative amount
of RTMC under paragraph (c)(1) of this section to
be $100,000 (50% multiplied by $200,000 QRTME
incurred by H during 2006). H further determines
H’s credit limitation under paragraph (c)(2)(ii) of this
section for 2006 to be $350,000 ($3,500 multiplied
by 100 miles of eligible railroad track assigned by
G to H in 2006). Because H’s tentative amount of
RTMC does not exceed H’s credit limitation amount
for 2006, H may claim a RTMC in the amount of
$100,000.
Example 2.Computation of RTMC; section 45G
credit limitation is exceeded. (i) The facts are the
same as inExample 1, except that G assigned for pur-
poses of section 45G only 50 miles of railroad track
to H in 2006 and, during 2006, H incurred QRTME
in the amount of $400,000.
(ii) For 2006, G determines the tentative amount
of RTMC under paragraph (c)(1) of this section to be
$1,250,000 (50% multiplied by $2,500,000 QRTME
incurred by G during 2006). G further determines
G’s credit limitation under paragraph (c)(2)(i) of this
section for 2006 to be $3,325,000 ($3,500 multiplied
by 950 miles of eligible railroad track (1,000 miles
owned by, or leased to, G on December 31, 2006, less
50 miles assigned by G to H in 2006)). Because G’s
tentative amount of RTMC does not exceed G’s credit
limitation amount for 2006, G may claim a RTMC in
the amount of $1,250,000
(iii) For 2006, H determines the tentative amount
of RTMC under paragraph (c)(1) of this section to be
$200,000 (50% multiplied by $400,000 QRTME in-
curred by H during 2006). H further determines H’s
credit limitation under paragraph (c)(2)(ii) of this sec-
tion for 2006 to be $175,000 ($3,500 multiplied by 50
miles of eligible railroad track assigned by G to H in
2006). Because H’s tentative amount of RTMC ex-
ceeds H’s credit limitation amount for 2006, H may
claim a RTMC in the amount of $175,000 (the credit
limitation amount). Under paragraph (c)(2)(iii) of
this section, there is no carryover of the $25,000 (the
tentative amount of $200,000 less the credit limita-
tion amount of $175,000) that exceeds the limitation.
Example 3.Railroad track miles assigned for
payment. (i)JisaClassIIrailroadthatownsorhas
leased to it 1,000 miles of railroad track within the
United States on December 31, 2006. K is a corpora-
tion that sells ties, ballast, and other track material to
Class I, Class II, and Class III railroads. During 2006,
K sold these items to J and J incurred QRTME in the
amount of $1 million. Also, on December 6, 2006,
J assigned for purposes of section 45G 150 miles of
eligible railroad track to K and K paid J $800,000 for
that assignment. K did not pay or incur any other
QRTME during 2006.
(ii) For 2006, in accordance with paragraph
(c)(3)(ii) of this section, J is treated as having
incurred QRTME in the amount of $200,000 ($1 mil-
lion QRTME actually incurred by J less the $800,000
paid by K to J for the assignment of the railroad track
miles in 2006). For 2006, J determines the tentative
amount of RTMC under paragraph (c)(1) of this
section to be $100,000 (50% multiplied by $200,000
QRTME treated as incurred by J during 2006). J
further determines J’s credit limitation amount under
paragraph (c)(2)(i) of this section for 2006 to be
$2,975,000 ($3,500 multiplied by 850 miles of eligi-
ble railroad track (1,000 miles owned by, or leased
to, J on December 31, 2006, less 150 miles assigned
by J to K in 2006)). BecauseJ’s tentative amount of
RTMC does not exceed J’s credit limitation amount
for 2006, J may claim a RTMC in the amount of
$100,000.
(iii) For 2006, K is an eligible taxpayer because,
during 2006, K provided railroad-related property
to J and received an assignment of eligible railroad
track miles from J. Underparagraph (c)(3)(ii) of
this section, K is treated as having incurred QRTME
in the amount of $800,000 (the amount paid by K
to J for the assignment of the railroad track miles
in 2006). For 2006, K determines the tentative
amount of RTMC under paragraph (c)(1) of this
section to be $400,000 (50% multiplied by $800,000
QRTME treated as incurred by K during 2006). K
further determines K’s credit limitation amount un-
der paragraph (c)(2)(ii) of this section for 2006 to be
$525,000 ($3,500 multiplied by 150 miles of eligible
railroad track assigned by J in 2006). Because K’s
tentative amount of RTMC does not exceed K’s
credit limitation amount for 2006, K may claim a
RTMC in the amount of $400,000.
(iv) The results in thisExample 3would be the
same if K sold the ties, ballast, and other track ma-
terial with a fair market value of $1 million to J for
$200,000 in exchange for the assignment by J of 150
miles of eligible railroad track to K.
Example 4.Reimbursement of QRTME.(i)Lisa
Class III railroad that owns or has leased to it 500
miles of railroad track within the United States on
December 31, 2006. M is a manufacturer that in 2006
transports its products by rail using the rail facilities
of L. During 2006, L did not incur any QRTME. Also,
in 2006, L assigned for purposes of section 45G 200
miles of eligible railroad track to M and agreed to
reduce L’s freight shipping rates to M by $250,000 in
exchange for M upgrading these railroad track miles.
Consequently, during 2006, M incurred QRTME of
$500,000 to upgrade these 200 miles of railroad track
and L reduced L’s freight shipping rates for M by
$250,000.
(ii) For 2006, M is an eligible taxpayer because,
during 2006, M transported property using the rail fa-
cilities of L and received an assignment of eligible
railroad track miles from L. The amount of QRTME
paid or incurred by M during 2006 is $500,000 and
is not reduced by the reimbursement of $250,000 by
L to M because, under paragraph (c)(3)(ii) of this
section, QRTME is not reduced by reimbursements
from Class II or Class III railroads. For 2006, M de-
termines the tentative amount of RTMC under para-
graph (c)(1) of this section to be $250,000 (50% mul-
tiplied by $500,000 QRTME incurred by M during
2006). M further determines M’s credit limitation
amount under paragraph (c)(2)(ii) of this section for
2006 to be $700,000 ($3,500 multiplied by 200 miles
of eligible railroad track assigned by L to M in 2006).
Because M’s tentative amount of RTMC does not ex-
ceed M’s credit limitation amount for 2006, M may
claim a RTMC in the amount of $250,000.
(d)Assignmentoftrackmiles—(1)In
general. An assignment of any mile of el-
igible railroad trackunder this paragraph
(d) is a designation by a Class II railroad
or Class III railroad that is made solely for
purposes of section 45G and this section
of a specific number of miles of eligible
railroad track as being assigned to another
eligible taxpayer for a taxable year. A des-
ignation must be in writing and must in-
clude the name and taxpayer identification
number of the assignee, and the informa-
tion required under the rules of paragraph
(d)(4)(iii)(B) of this section. A designation
requires no transfer of legal title or other
indiciaof ownership of the eligible rail-
road track, and need not specify the loca-
tion of any assigned mile of eligible rail-
road track. Further, an assigned mile of el-
December 26, 200712232007–52 I.R.B.

igible railroad track need not correspond to
any specific mile of eligible railroad track
with respect to which the eligible taxpayer
actually pays or incurs the QRTME.
(2)Assignment eligibility.OnlyaClass
II railroad or Class III railroad may assign
a mile of eligible railroad track. If a Class
II railroad or Class III railroad assigns a
mile of eligible railroad track to an eligible
taxpayer, the assignee is not permitted to
reassign any mile of eligible railroad track
to another eligible taxpayer. The maxi-
mum number of miles of eligible railroad
track that may be assigned by a Class II
railroad or Class III railroad for any tax-
able year is its total miles of eligible rail-
road track less the miles of eligible railroad
track that the Class II railroad or Class III
railroad retains for itself in determining its
RTMC for the taxable year.
(3)Effective date of assignment.Ifa
Class II railroad or Class III railroad as-
signs a mile of eligible railroad track, the
assignment is treated as being made by the
ClassIIrailroadorClassIIIrailroadatthe
close of its taxable year in which the as-
signment was made. With respect to the
assignee, the assignment of a mile of el-
igible railroad track is taken into account
for the taxable year of the assignee that in-
cludes the date the assignment is treated as
being made by the assignor Class II rail-
road or Class III railroad under this para-
graph (d)(3).
(4)Assignment information state-
ment—(i)In general. A taxpayer must
file Form 8900, “Qualified Railroad Track
Maintenance Credit,” with its timely filed
(including extensions) Federal income tax
return for the taxable year for which the
taxpayer assigns any mile of eligible rail-
road track, even if the taxpayer is not itself
claiming the RTMC for that taxable year.
(ii)Assignor. Except as provided in
paragraph (d)(4)(iv) of this section, a Class
II railroad or Class III railroad (assignor)
that assigns one or more miles of eligible
railroad track during a taxable year to one
or more eligible taxpayers must attach to
the assignor’s Form 8900 for that taxable
year an information statement providing—
(A) The name and taxpayer identifica-
tion number of each assignee;
(B) The total number of miles of the
assignor’s eligible railroad track;
(C) The number of miles of eligible rail-
road track assigned by the assignor to each
assignee for the taxable year; and
(D)Thetotalnumberofmilesofeligi-
ble railroad track assigned by the assignor
to all assignees for the taxable year.
(iii)Assignee. Except as provided in
paragraph (d)(4)(iv) of this section, an eli-
gible taxpayer (assignee) that has received
an assignment of miles of eligible railroad
track during its taxable year from a Class
II railroad or Class III railroad, and that
claims the RTMC for that taxable year,
must attach to the assignee’s Form 8900
for that taxable year a statement—
(A) Providing the total number of miles
of eligible railroad track assigned to the
assignee for the assignee’s taxable year;
and
(B) Attesting that the assignee has
in writing, and has retained as part of
the assignee’s records for purposes of
§1.6001–1(a), the following information
from each assignor:
(1) The name and taxpayer identifica-
tion number of each assignor.
(2) The date of each assignment made
by each assignor (as determined under
paragraph (d)(3) of this section) to the
assignee;
(3) The number of miles of eligible rail-
road track assigned by each assignor to the
assignee for the assignee’s taxable year.
(iv)Special rules for returns filed prior
to November 9, 2007. If an eligible tax-
payer’s Federal income tax return for a
taxable year beginning after December
31, 2004, and ending before November
9, 2007, was filed before December 13,
2007, and the eligible taxpayer is not filing
an amended Federal income tax return for
that taxable year pursuant to paragraph
(g)(2) of this section before the eligible
taxpayer’s next filed original Federal in-
come tax return, and the eligible taxpayer
wants to apply paragraph (g)(2) of this
section but did not include with that return
the information specified in paragraph
(d)(4)(ii) or (iii) of this section, as appli-
cable, the eligible taxpayer must attach
a statement containing the information
specified in paragraph (d)(4)(ii) or (iii) of
this section, as applicable, to either—
(A) The eligible taxpayer’s next filed
original Federal income tax return; or
(B) The eligible taxpayer’s amended
Federal income tax return that is filed pur-
suant to paragraph (g)(2) of this section,
provided that amended Federal income tax
return is filed by the eligible taxpayer be-
fore its next filed original Federal income
tax return.
(5)Special rules—(i)Effect of sub-
sequent dispositions of eligible railroad
track during the assignment year.Ifa
ClassIIrailroadorClassIIIrailroadas-
signs one or more miles of eligible railroad
track that it owned or leased as of the ac-
tual date of the assignment, but does not
own or lease any eligible railroad track at
the close of the taxable year in which the
assignment is made by the Class II railroad
or Class III railroad, the assignment is not
valid for that taxable year for purposes of
section 45G and this section.
(ii)Effect of multiple assignments of el-
igible railroad track miles during the same
taxable year.IfaClassIIrailroadorClass
III railroad assigns more miles of eligible
railroad track than it owned or leased as of
the close of the taxable year in which the
assignment is made by the Class II rail-
road or Class III railroad, the assignment
is valid for purposes of section 45G and
this section only with respect to the name
of the assignee and the number of miles
listed by the assignor Class II railroad or
Class III railroad on the statement required
under paragraph (d)(4)(ii) of this section
and only to the extent of the maximum
miles of eligible railroad track that may be
assigned by the assignor Class II railroad
or Class III railroad as determined under
paragraph (d)(2) of this section. If the to-
tal number of miles on this statement ex-
ceeds the maximum miles of eligible rail-
road track that may be assigned by the as-
signorClassIIrailroadorClassIIIrailroad
(as determined under paragraph (d)(2) of
this section), the total number of miles on
the statement shall be reduced by the ex-
cess amount of miles. This reduction is al-
located among each assignee listed on the
statement in proportion to the total number
of miles listed on the statement for that as-
signee.
(6)Examples. The application of this
paragraph (d) is illustrated by the follow-
ing examples. In none of the examples
are the taxpayers members of a controlled
group:
Example 1.Assignor and assignee have the same
taxable year. (i) N, a calendar year taxpayer, is a
Class II railroad that owns 500 miles of railroad track
within the United States on December 31, 2006. O,
a calendar year taxpayer, is not a railroad, but is a
taxpayer that provides railroad-related property to N
during 2006. On November 7, 2006, N assigns for
purposes of section 45G 300 miles of eligible railroad
2007–52 I.R.B.1224December 26, 2007

track to O. O receives no other assignment of eligi-
ble railroad track in 2006. O pays or incurs QRTME
in the amount of $100,000 in November 2006, and
$50,000 in February 2007. N and O each file Form
8900 with their timely filed Federal income tax re-
turns for 2006 and attach the statement required by
paragraph (d)(4)(ii) and (iii), respectively, of this sec-
tion reporting the assignment of the 300 miles of eli-
gible railroad track to O.
(ii) The assignment of the 300 miles of eligible
railroad track made by N to O on November 7, 2006,
is treated as made on December 31, 2006 (at the close
of the N’s taxable year). Consequently, the assign-
ment is taken into account by O for O’s taxable year
ending on December 31, 2006. For 2006, O is an eli-
gible taxpayer because, during 2006, O provides rail-
road-related property to N and receives an assignment
of 300 eligible railroad track miles from N. For 2006,
O determines the tentative amount of RTMC under
paragraph (c)(1) of this section to be $50,000 (50%
multiplied by $100,000 QRTME paid or incurred by
O during 2006). O further determines the credit lim-
itation amount under paragraph (c)(2)(i) of this sec-
tion for 2006 to be $1,050,000 ($3,500 multiplied by
300 miles of eligible railroad track assigned by N to
O on December 31, 2006). Because O’s tentative
amount of RTMC does not exceed O’s credit limita-
tion amount for 2006, O may claim a RMTC for 2006
in the amount of $50,000.
Example 2.Assignor and assignee have different
taxable years. (i) The facts are the same as inExam-
ple 1, except that O’s taxable year ends on March 31.
(ii) The assignment of the 300 miles of eligible
railroad track made by N to O on November 7, 2006,
is treated as made on December 31, 2006. As a re-
sult, the assignment is taken into account by O for
O’s taxable year ending on March 31, 2007. Thus,
for the taxable year ending on March 31, 2007, O de-
termines the tentative amount of RMTC under para-
graph (c)(1) of this section to be $75,000 (50% mul-
tiplied by $150,000 QRTME incurred by O during its
taxable year ending March 31, 2007). Because O’s
tentative amount of RTMC does not exceed O’s credit
limitation amount for the taxable year ending March
31, 2007, O may claim a RMTC for the taxable year
ending March 31, 2007, in the amount of $75,000.
Example 3.Assignment location differs from
QRTME location. (i) P, a calendar-year taxpayer,
is a Class III railroad that owns or has leased to it
200 miles of railroad track within the United States
on December 31, 2006. P owns 50 miles of this
railroad track and leases 150 miles of this railroad
track from Q, a Class I railroad. On February 8,
2006, P assigns for purposes of section 45G 50 miles
of eligible railroad track to R. R is not a railroad, but
is a taxpayer that ships products using the 50 miles
of eligible railroad track owned by P, and R paid
$100,000 in 2006 to P to enable P to upgrade these
50 miles of eligible railroad track. In March 2006, P
also assigns for purposes of section 45G 150 miles
of eligible railroad track to S. S is not a railroad, but
is a taxpayer that provides railroad-related property
to P, and S paid $400,000 to P to enable P to upgrade
P’s 200 miles of eligible railroad track. For 2006, P
pays or incurs QRTME in the amount of $500,000 to
upgrade the 150 miles of eligible railroad track that
it leases from Q and pays or incurs no QRTME on
the 50 miles of eligible railroad track that it owns.
For 2006, P receives no other assignment of eligible
railroad track miles and did not retain any eligible
railroad track miles for itself. Also, R and S do not
pay or incur any other amounts that would qualify
as QRTME during 2006. P, R, and S each file Form
8900 with their timely filed Federal income tax re-
turns for 2006 and attach the statement required by
paragraph (d)(4)(ii) or (iii) of this section, whichever
applies, reporting the assignment of eligible railroad
track by P to R or S in 2006.
(ii) For 2006, in accordance with paragraph
(c)(3)(ii) of this section, P is treated as having in-
curred QRTME in the amount of $0 ($500,000
QRTME actually incurred by P less the $100,000
paid by R to P for the assignment of the 50 miles of
eligible railroad track and the $400,000 paid by S
to P for the assignment of the 150 miles of eligible
railroad track). Further, P assigned all of its eligible
railroad track miles to R and S for 2006. Accord-
ingly, for 2006, P may not claim any RTMC.
(iii) For 2006, R is an eligible taxpayer because,
during 2006, R ships property using the rail facili-
ties of P and receives an assignment of 50 eligible
railroad track miles from P. In accordance with para-
graph (c)(3)(ii) of this section, R is treated as hav-
ing incurred QRTME in the amount of $100,000 (the
amount paid by R to P for the assignment of the eligi-
ble railroad track miles in 2006) even though no work
was performed on the 50 miles of eligible railroad
track that was assigned by P to R. For 2006, R de-
termines the tentative amount of RTMC under para-
graph (c)(1) of this section to be $50,000 (50% mul-
tiplied by $100,000 QRTME treated as incurred by R
during 2006). R further determines the credit limita-
tion amount under paragraph (c)(2)(ii) of this section
to be $175,000 ($3,500 multiplied by 50 miles of el-
igible railroad track assigned by P to R in 2006). Be-
cause R’s tentative amount of RTMC does not exceed
R’s credit limitation amount for 2006, R may claim a
RTMC for 2006 in the amount of $50,000.
(iv) For 2006, S is an eligible taxpayer because,
during 2006, S provides railroad-related property to
P and receives an assignment of 150 eligible railroad
track miles from P. In accordance with paragraph
(c)(3)(ii) of this section, S is treated as having in-
curred QRTME in the amount of $400,000 (amount
paid by S to P for the assignment of the eligible rail-
road track miles in 2006). For 2006, S determines the
tentative amount of RTMC under paragraph (c)(1)
of this section to be $200,000 (50% multiplied by
$400,000 QRTME treated as incurred by S during
2006). S further determines the credit limitation
amount under paragraph (c)(2)(ii) of this section
to be $525,000 ($3,500 multiplied by 150 miles of
eligible railroad track assigned by P to S in 2006).
Because S’s tentative amount of RTMC does not
exceed S’s credit limitation amount for 2006, S may
claim a RTMC for 2006 in the amount of $200,000.
Example 4.Multiple assignments of track miles.
(i) T, a calendar-year taxpayer, is a Class III railroad
that owns or has leased to it 200 miles of railroad track
within the United States on December 31, 2006. T
owns 75 miles of this railroad track and leases 125
miles of this railroad track from U, a Class I railroad.
V and W are not railroads, but are both taxpayers that
provide railroad-related services to T during 2006.
On January 15, 2006, T assigns for purposes of sec-
tion 45G 200 miles of eligible railroad track to V. V
agrees to incur, in 2006, $1.4 million of QRTME to
upgrade a portion of/segment of these 200 miles of
eligible railroad track. Due to unexpected financial
difficulties, V only incurs $250,000 of QRTME dur-
ing 2006 and on May 15, 2006, T learns that V is un-
able to incur the remainder of the QRTME. On June
15, 2006, T assigns for purposes of section 45G the
200 miles of railroad track to W. In 2006, W incurs
$1,100,000 of QRTME to upgrade a portion of/seg-
ment of the railroad track. For 2006, T receives no
other assignment of eligible railroad track miles and
did not retain any eligible railroad track miles for it-
self. V and W do not receive any other assignments
of miles of eligible railroad track miles from a Class
II railroad or Class III railroad during 2006. T and W
each file Form 8900 with their timely filed Federal in-
come tax returns for 2006, and attach the statement re-
quired by paragraph (d)(4)(ii) and (iii), respectively,
of this section, reporting the assignment of 200 miles
of eligible railroad track to W.
(ii) Because T did not retain any miles of eligible
railroad track for itself for 2006, the maximum miles
of eligible railroad track that may be assigned by T
for 2006 is 200 miles pursuant to paragraph (d)(2) of
this section. On the statement required by paragraph
(d)(4)(ii) of this section, T assigned a total of 200
miles of eligible railroad track to W. Consequently,
because T did not list V as an assignee on T’s state-
ment required by paragraph (d)(4)(ii) of this section,
V did not receive an assignment of eligible railroad
track miles from T during 2006 and V is not an eli-
gible taxpayer for 2006. Thus, for 2006, V may not
claim any RTMC even though V incurred QRTME in
the amount of $250,000.
(iii) For 2006, W is an eligible taxpayer because,
during 2006, W provides railroad-related services to
T and receives an assignment of 200 eligible rail-
road track miles from T. W determines the tentative
amount of RTMC under paragraph (c)(1) of this sec-
tion to be $550,000 (50% multiplied by $1,100,000
QRTME incurred by W during 2006). W further
determines the credit limitation amount under para-
graph (c)(2)(ii) of this section to be $700,000 ($3,500
multiplied by the 200 miles of eligible railroad track
assigned by T to W in 2006). Because W’s tentative
amount of RTMC does not exceed W’s credit limita-
tion amount for 2006, W may claim a RTMC for 2006
in the amount of $550,000.
Example 5.Multiple assignments of track miles.
(i) Same facts as inExample 4, except T, to its Form
8900 for 2006, attaches the statement required by
paragraph (d)(4)(ii) of this section assigning 200
miles of eligible railroad track to W and 200 miles of
eligible railroad track to V.
(ii) Because T did not retain any miles of eligible
railroad track for itself for 2006, the maximum miles
of eligible railroad track that may be assigned by T
for 2006 is 200 miles pursuant to paragraph (d)(2) of
this section. However, on the statement required by
paragraph (d)(4)(ii) of this section, T assigned a total
of 400 miles of eligible railroad track (200 miles to
W and 200 miles to V). Consequently, the 400 miles
of eligible railroad track on this statement must be re-
duced to the 200 maximum miles of eligible railroad
track available for assignment for 2006. Because the
statement reports 200 miles of eligible railroad track
assigned to each W and V, the reduction of 200 miles
(400 total miles of eligible railroad track on the state-
ment less 200 maximum miles of eligible railroad
track available for assignment) is allocatedpro-rata
between W and V and, therefore, 100 miles each to
December 26, 200712252007–52 I.R.B.

W and V. Thus, pursuant to paragraph (d)(5)(ii) of this
section, the number of miles of eligible railroad track
assigned by T to W and V for 2006 is 100 miles each.
(iii) For 2006, V is an eligible taxpayer because,
during 2006, V provides railroad-related services to
T and receives an assignment of 100 eligible rail-
road track miles from T. V determines the tentative
amount of RTMC under paragraph (c)(1) of this sec-
tion to be $125,000 (50% multiplied by $250,000
QRTME incurred by V during 2006). V further deter-
mines the credit limitation amount under paragraph
(c)(2)(ii) of this section to be $350,000 ($3,500 mul-
tiplied by the 100 miles of eligible railroad track as-
signed by T to V in 2006). Because V’s tentative
amount of RTMC does not exceed W’s credit limita-
tion amount for 2006, V may claim a RTMC for 2006
in the amount of $125,000.
(iv) For 2006, W is an eligible taxpayer because,
during 2006, W provides railroad-related services to
T and receives an assignment of 100 eligible rail-
road track miles from T. W determines the tentative
amount of RTMC under paragraph (c)(1) of this sec-
tion to be $550,000 (50% multiplied by $1,100,000
QRTME incurred by W during 2006). W further
determines the credit limitation amount under para-
graph (c)(2)(ii) of this section to be $350,000 ($3,500
multiplied by the 100 miles of eligible railroad track
assigned by T to W in 2006). Because W’s tenta-
tive amount of RTMC exceeds W’s credit limitation
amount for 2006, W may claim a RTMC for 2006 in
the amount of $350,000 (the credit limitation). There
is no carryover of the amount of $200,000 (the ten-
tative amount of $550,000 less the credit limitation
amount of $350,000).
(e)Adjustments to basis—(1)In gen-
eral. All or some of the QRTME paid or
incurred by an eligible taxpayer during the
taxable year may be required to be capi-
talized under section 263(a) as a tangible
asset or as an intangible asset. See, for ex-
ample, §1.263(a)–4(d)(8), which requires
capitalization of amounts paid or incurred
by a taxpayer to produce or improve real
property owned by another (except to the
extent the taxpayer is selling services at
fair market value to produce or improve
the real property) if the real property can
reasonably be expected to produce signif-
icant economic benefits for the taxpayer.
The basis of the tangible asset or intangi-
ble asset includes the capitalized amount
of the QRTME.
(2)Basis adjustment made to railroad
track. An eligible taxpayer must reduce
the adjusted basis of any railroad track
with respect to which the eligible taxpayer
claims the RTMC. For purposes of section
45G(e)(3) and this paragraph (e)(2), the
adjusted basis of any railroad track with re-
spect to which the eligible taxpayer claims
the RTMC is limited to the amount of
QRTME, if any, that is required to be cap-
italized into the qualifying railroad struc-
ture or an intangible asset. The adjusted
basis of the railroad track is reduced by the
amount of the RTMC allowable (as deter-
mined under paragraph (c) of this section)
by the eligible taxpayer for the taxable
year, but not below zero. This reduction is
taken into account at the time the QRTME
is paid or incurred by an eligible taxpayer
and before the depreciation deduction with
respect to such railroad track is determined
for the taxable year for which the RTMC is
allowable. If all or some of the QRTME
paid or incurred by an eligible taxpayer
during the taxable year is capitalized un-
dersection263(a)tomorethanoneasset,
whether tangible or intangible (for exam-
ple, railroad track and bridges), the reduc-
tion to the basis of these assets under this
paragraph (e)(2) is allocated among each
of the assets subject to the reduction in pro-
portion to the unadjusted basis of each as-
setatthetimetheQRTMEispaidorin-
curred during that taxable year.
(3)Examples. The application of this
paragraph (e) is illustrated by the follow-
ing examples. In each example, all taxpay-
ers use a calendar taxable year, and no tax-
payers are members of a controlled group.
Example 1. (i) X is a Class II railroad that owns
500 miles of railroad track within the United States
on December 31, 2006. During 2006, X incurs $1
million of QRTME for maintaining this railroad
track. X uses the track maintenance allowance
method for track structure expenditures (for further
guidance, see Rev. Proc. 2002–65, 2002–2 C.B. 700,
and §601.601(d)(2)(ii)(b) of this chapter). Assume
all of the $1 million QRTME is track structure ex-
penditures and none of it was expended for new track
structure.
(ii) For 2006, X determines the tentative amount
of RTMC under paragraph (c)(1) of this section to be
$500,000 (50% multiplied by $1 million QRTME in-
curred by X during 2006). X further determines the
credit limitation amount under paragraph (c)(2)(i) of
this section for 2006 to be $1,750,000 ($3,500 mul-
tiplied by 500 miles of eligible railroad track). Be-
cause X’s tentative amount of RTMC does not exceed
X’s credit limitation amount for 2006, X may claim a
RTMC for 2006 in the amount of $500,000.
(iii) Of the $1 million QRTME incurred by X dur-
ing 2006, X determines under the track maintenance
allowance method that $750,000 is the track main-
tenance allowance under section 162 and $250,000
is the capitalized amount for the track structure. In
accordance with paragraph (e)(2) of this section,
X reduces the capitalized amount of $250,000 by
the RTMC of $500,000 claimed by X for 2006, but
not below zero. Thus, the capitalized amount of
$250,000 is reduced to zero. X also deducts un-
der section 162 a track maintenance allowance of
$750,000 on its 2006 Federal income tax return.
Example 2. (i) Y is a Class II railroad that owns
or has leased to it 500 miles of eligible railroad track
within the United States on December 31, 2006. Z is
not a railroad, but is a taxpayer that, in 2006, trans-
ports its products using the rail facilities of Y. In 2006,
Y assigns for purposes of section 45G 300 miles of el-
igible railroad track to Z. Z does not receive any other
assignments of eligible railroad track miles in 2006.
During 2006, Z incurs QRTME in the amount of $1
million, and Y does not incur any QRTME. Y and Z
each file Form 8900 with their timely filed Federal in-
come tax returns for 2006 and attach the statement re-
quired by paragraph (d)(4)(ii) and (iii), respectively,
of this section reporting the assignment of the 300
miles of eligible railroad track to Z.
(ii) For 2006, Z determines the tentative amount
of RTMC under paragraph (c)(1) of this section to be
$500,000 (50% multiplied by $1 million QRTME in-
curred by Z during 2006). Zfurther determines the
credit limitation amount under paragraph (c)(2)(ii)
of this section for 2006 to be $1,050,000 ($3,500
multiplied by 300 miles of eligible railroad track as-
signed by Y to Z in 2006). Because Z’s tentative
amount of RTMC does not exceed Z’s credit limita-
tion amount for 2006, Z may claim a RTMC for 2006
in the amount of $500,000.
(iii) For 2006, Z also must determine the portion
of the $1 million QRTME that Z incurs that is re-
quired to be capitalized under section 263(a), and the
portion that is a section 162 expense. Because Z is not
a Class II railroad or Class III railroad, Z cannot use
the track maintenance allowance method. Assume
that all of the QRTME constitutes an intangible asset
under §1.263(a)–4(d)(8) and, therefore, is required to
be capitalized by Z under section 263(a) as an intan-
gible asset. In accordance with paragraph (e)(2) of
this section, Z reduces the capitalized amount of $1
million by the RTMC of $500,000 claimed by Z for
2006. Thus, the capitalized amount of $1 million for
the intangible asset is reduced to $500,000. Further,
pursuant to §1.167(a)–3(b)(1)(iv), Z may treat this in-
tangible asset with an adjusted basis of $500,000 as
having a useful life of 25 years for purposes of the
depreciation allowance under section 167(a).
(f)Controlled groups—(1)In general.
Pursuant to section 45G(e)(2), if an eligi-
ble taxpayer is a member of a controlled
group of corporations, rules similar to the
rules in §1.41–6T apply for determining
the amount of the RTMC under section
45G(a) and this section. To determine the
amount of RTMC (if any) allowable to
a trade or business that at the end of its
taxable year is a member of a controlled
group, a taxpayer must—
(i) Compute the group credit in the man-
ner described in paragraph (f)(3) of this
section; and
(ii) Allocate the group credit among the
members of the group in the manner de-
scribed in paragraph (f)(4) of this section.
(2)Definitions. For purposes of section
45G(e)(2) and paragraph (f) of this sec-
tion—
(i) Atrade or businessisasolepropri-
etorship, a partnership, a trust, an estate,
or a corporation that is carrying on a trade
2007–52 I.R.B.1226December 26, 2007

or business (within the meaning of section
162). Any corporation that is a member
of a commonly controlled group shall be
deemed to be carrying on a trade or busi-
ness if any other member of that group is
carrying on any trade or business;
(ii)Groupandcontrolled groupmeans
a controlled group of corporations, as de-
fined in section 41(f)(5), or a group of
trades or businesses under common con-
trol. For rules for determining whether
trades or businesses are under common
control, see §1.52–1 (b) through (g);
(iii)Group creditmeans the RTMC (if
any) allowable to a controlled group;
(iv)Consolidated grouphas the mean-
ing set forth in §1.1502–1(h); and
(v)Credit yearmeans the taxable year
for which the member is computing the
RTMC.
(3)Computation of the group credit.
All members of a controlled group are
treated as a single taxpayer for purposes
of computing the RTMC. The group credit
is computed by applying all of the sec-
tion 45G computational rules (including
the rules set forth in this section) on an ag-
gregate basis.
(4)Allocation of the group credit—(i)
In general. (A) To the extent the group
credit (if any) computed under paragraph
(f)(3) of this section does not exceed the
sum of the stand-alone entity credits of
all of the members of a controlled group,
computed under paragraph (f)(4)(ii) of this
section, such group credit shall be allo-
cated among the members of the controlled
group in proportion to the stand-alone en-
tity credits of the members of the con-
trolled group, computed under paragraph
(f)(4)(ii) of this section:
group credit that does not exceed sum of all the members’
stand-alone entity credits
member’s stand-alone entity credit
×
Sum of all the members’ stand-alone entity credits.
(B) To the extent that the group credit (if
any) computed under paragraph (f)(3) of
this section exceeds the sum of the stand-
alone entity credits of all of the members
of the controlled group, computed under
paragraph (f)(4)(ii) of this section, such ex-
cess shall be allocated among the members
of a controlled group in proportion to the
QRTMEs of the members of the controlled
group:
(group credit less the sum ofall the members’ stand-alone
entity credits)
QRTMEs of members that are eligible taxpayers
×
sum of QRTMEs of all members that are eligible taxpayers.
(ii)Stand-alone entity credit.Theterm
stand-alone entity creditmeans the RTMC
(if any) that would be allowable to a mem-
ber of a controlled group if the credit were
computed as if section 45G(e)(2) did not
apply, except that the member must apply
the rules provided in paragraphs (f)(5) (re-
lating to consolidated groups) and (f)(8)
(relating to intra-group transactions) of
this section.
(5)Special rules for consolidated
groups—(i)In general. For purposes of
applying paragraph (f)(4) of this section,
a consolidated group whose members are
members of a controlled group is treated
as a single member of the controlled group
and a single stand-alone entity credit is
computed for the consolidated group.
(ii)Special rule for allocation of group
credit among consolidated group mem-
bers. The portion of the group credit that
is allocated to a consolidated group is allo-
cated to the members of the consolidated
group in accordance with the principles
of paragraph (f)(4) of this section. How-
ever, for this purpose, the stand-alone
entity credit of a member of a consoli-
dated group is computed without regard to
section 45G(e)(2).
(6)Tax accounting periods used—(i)In
general. The credit allowable to a member
of a controlled group is that member’s
share of the group credit computed as of
the end of that member’s taxable year. In
computing the group credit for a group
whose members have different taxable
years, a member generally should treat the
taxable year of another member that ends
with or within the credit year of the com-
puting member as the credit year of that
other member. For example, Q, R, and
S are members of a controlled group of
corporations. Both Q and R are calendar
year taxpayers. S files a return using a
fiscal year ending June 30. For purposes
of computing the group credit at the end
of Q’s and R’s taxable year on December
31, S’s fiscal year ending June 30, which
ends within Q’s and R’s taxable year, is
treated as S’s credit year.
(ii)Special rule when timing of QRTME
is manipulated. If the timing of QRTME
by members using different tax accounting
periods is manipulated to generate a credit
in excess of the amount that would be al-
lowable if all members of the group used
the same tax accounting period, then the
appropriate Internal Revenue Service offi-
cial in the operating division that has ex-
amination jurisdiction of the return may re-
quire each member of the group to calcu-
late the credit in the current taxable year
and all future years as if all members of the
group had the same taxable year and base
period as the computing member.
(7)Membership during taxable year in
more than one group. A trade or business
may be a member of only one group for
a taxable year. If, without application of
this paragraph (f)(7), a business would be
a member of more than one group at the
end of its taxable year, the business shall be
December 26, 200712272007–52 I.R.B.

treated as a member of the group in which
it was included for its preceding taxable
year. If the business was not included for
its preceding taxable year in any group in
which it could be included as of the end
of its taxable year, the business shall des-
ignate in its timely filed (including exten-
sions) federal income tax return for the tax-
able year the group in which it is being in-
cluded. If the business does not so desig-
nate, then the appropriate Internal Revenue
Service official in the operating division
that has examination jurisdiction of the re-
turn will determine the group in which the
business is to be included. If the Federal
income tax return for a taxable year begin-
ning after December 31, 2004, and ending
before November 9, 2007, was filed be-
fore December 13, 2007, and the business
wants to apply paragraph (g)(2) of this sec-
tion but did not designate its group mem-
bership in that return, the business must
designate its group membership for that
year either—
(i) In its next filed original Federal in-
come tax return; or
(ii) In its amended Federal income
tax return that is filed pursuant to para-
graph (g)(2) of this section, provided that
amended Federal income tax return is filed
by the business before its next filed origi-
nal Federal income tax return.
(8)Intra-group transactions—(i)In
general. Because all members of a group
under common control are treated as a sin-
gle taxpayer for purposes of determining
the RTMC, transfers between members of
the group are generally disregarded.
(ii)Payment for QRTME.Amountspaid
or incurred by the owner (or lessor) of
eligible railroad track to another member
of the group for QRTME shall be taken
into account as QRTME by the owner (or
lessor) of the eligible railroad track for pur-
poses of section 45G only to the extent of
the lesser of—
(A) The amount paid or incurred to the
other member; or
(B) The amount that would have been
considered paid or incurred by the other
member for the QRTME, if the QRTME
was not reimbursed by the owner (or
lessor) of the eligible railroad track.
(g)Effective/applicability date—(1)In
general. Except as provided in paragraphs
(g)(2) and (g)(3) of this section, this sec-
tion applies to taxable years ending on or
after September 7, 2006.
(2)Taxable years ending before
September 7, 2006. A taxpayer may
apply this section to taxable years begin-
ning after December 31, 2004, and ending
before September 7, 2006, provided that
the taxpayer applies all provisions in this
section to the taxable year.
(3)Special rules for returns filed prior
to November 9, 2007. If a taxpayer’s
Federal income tax return for a taxable
year beginning after December 31, 2004,
and ending before November 9, 2007, was
filed before December 13, 2007, and the
taxpayer is not filing an amended Federal
income tax return for that taxable year pur-
suant to paragraph (g)(2) of this section
before the taxpayer’s next filed original
Federal income tax return, see paragraphs
(d)(4)(iv) and (f)(7) of this section for the
statements that must be attached to the tax-
payer’s next filed original Federal income
tax return.
§1.45G–1T [Removed]
Par. 5. Section 1.45G–1T is removed.
PART 602—OMB CONTROL
NUMBERS UNDER THE PAPERWORK
REDUCTION ACT
Par. 6. The authority citation for part
602 continues to read as follows:
Authority: 26 U.S.C. 7805.
Par. 7. In §602.101, paragraph (b)
is amended by removing the entry for
“1.45G–1T” from the table.
Par. 8. In §602.101, paragraph (b) is
amended by adding the following entry in
numerical order to the table to read as fol-
lows:
§602.101 OMB control numbers.
*****
(b) * * *
CFR part or section where
identified and described
Current OMB
control no.
*****
1.45G–1........................................................... 1545–2031
*****
Linda E. Stiff,
Deputy Commissioner for
Services and Enforcement.
Approved November 2, 2007.
Eric Solomon,
Assistant Secretary of the
Treasury (Tax Policy).
(Filed by the Office of the Federal Register on November 9,
2007, 8:45 a.m., and published in the issue of the Federal
Register for November 13, 2007, 72 F.R. 63813)
Section 1001.—Deter-
mination of Amount and
RecognitionofGainorLoss
26 CFR 1.1001–3: Modifications of debt instruments.
This revenue procedure describes the conditions
under which changes to certain subprime mortgage
loans will not cause the Internal Revenue Service to
challenge the tax status of certain securitization vehi-
cles holding the loans. See Rev. Proc. 2007-72, page
1257.
2007–52 I.R.B.1228December 26, 2007

Section 3121.—Definitions
26 CFR 31.3121(a)(5)–2: Payments under or to an
annuity contract described in section 403(b).
T.D. 9367
DEPARTMENT OF
THE TREASURY
Internal Revenue Service
26 CFR Part 31
Payments Made by Reason of
a Salary Reduction Agreement
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulation.
SUMMARY: This document promulgates
a final regulation that defines the term
salary reduction agreementfor purposes
of section 3121(a)(5)(D) of the Internal
Revenue Code (Code). The final reg-
ulation provides guidance to employers
(public educational institutions and sec-
tion 501(c)(3) organizations) purchasing
annuity contracts described in section
403(b) on behalf of their employees.
DATES:Effective Date:This regulation is
effective November 15, 2007.
Applicability Date:This regulation
applies to contributions to section 403(b)
plans made on or after November 15,
2007.
FOR FURTHER INFORMATION
CONTACT: Neil D. Shepherd, (202)
622–6040 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This final regulation amends the Em-
ployment Tax Regulations (26 CFR part
31) by providing guidance relating to sec-
tion 3121(a)(5)(D). The Federal Insurance
Contributions Act (FICA) imposes taxes
on employees and employers equal to a
percentage of the wages received with
respect to employment. Section 3121(a)
defines wages for FICA tax purposes as all
remuneration for employment unless oth-
erwise excepted. Section 3121(a)(5)(D),
added by the Social Security Amendments
of 1983 (Public Law 98–21 (97 Stat. 65)),
generally excepts from wages payments
made by an employer for the purchase of
an annuity contract described in section
403(b). However section 3121(a)(5)(D)
expressly excludes from the exception
payments made by reason of a salary re-
duction agreement (whether evidenced by
a written instrument or otherwise). Thus,
payments made under a salary reduction
agreement to purchase a section 403(b)
annuity contract are included in wages
for FICA purposes. A temporary and
proposed regulation (T.D. 9159, 2004–2
C.B. 895) defining the term “salary reduc-
tion agreement” for purposes of section
3121(a)(5)(D) was published in theFed-
eral Register(69 FR 67054) on November
16, 2004.
For income tax purposes, contributions
made by an employer to a section 403(b)
contract, including contributions made
pursuant to a cash or deferred election or
other salary reductionagreement, are gen-
erally excluded from income. §403(b); see
also section 1450(a) of the Small Business
Job Protection Act of 1996 (Public Law
104–188 (110 Stat. 1755)). Conversely,
for FICA tax purposes, contributions made
by an employer to a section 403(b) con-
tract pursuant to a cash or deferred election
or other salary reduction agreement are in-
cluded in wages. §3121(a)(5)(D); see also
S. Rep. No. 98–23, at 40–41, 98
th
Cong.,
1
st
Sess. (1983).
Summary of Comments and
Explanation of Provisions
This regulation finalizes the temporary
and proposed regulation without change.
The final regulation provides that the term
“salary reduction agreement” includes (1)
a plan or arrangement whereby a payment
will be made if the employee elects to
reduce his or her compensation pursuant
to a cash or deferred election as defined
at §1.401(k)–1(a)(3) of the Income Tax
Regulations, (2) a plan or arrangement
whereby a payment will be made if the
employee elects to reduce his or her com-
pensation pursuant to a one-time irrevo-
cable election made at or before the time
of initial eligibility to participate in such
plan or arrangement (or pursuant to a
similar arrangement involving a one-time
irrevocable election), and (3) a plan or
arrangement whereby a payment will be
made if the employee agrees as a condition
of employment (whether such condition
is set by statute, contract, or otherwise)
to make a contribution that reduces the
employee’s compensation.
Comments were submitted with respect
to the definition of the term “salary re-
duction agreement” for purposes of section
3121(a)(5)(D) and with respect to the ap-
plicability date of the temporary and pro-
posed regulation.
Salary Reduction Agreement
Commentators asserted that Congress
intended the term “salary reduction agree-
ment” in section 3121(a)(5)(D) to apply
only to voluntary reductions in salary and
not to salary reductions required as a con-
dition of employment. In support of this
view, commentators cited the legislative
history underlying section 3121(a)(5)(D),
particularly the following language from
the Senate Report:
The bill also provides that any amounts
paid by an employer to a tax-sheltered
annuity by reason of a salary reduction
agreement between the employer and
the employee would be includible in the
employee’s social security wage base.
The committee intended that the provi-
sion would merely codify the holding of
Revenue Ruling 65–208, 1965–2 Cum.
Bull. 383, without any implication with
respect to the issue of whether a partic-
ular amount paid by an employer to a
tax-sheltered annuity is, in fact, made
by reason of a “salary reduction agree-
ment.”
S. Rep. No. 98–23, at 40–41, 98
th
Cong.,
1
st
Sess. (1983).
Commentators maintained that Rev-
enue Ruling 65–208 distinguishes be-
tween voluntary and mandatory salary
reduction contributions and that the leg-
islative history reflects Congress’ intent
to treat only voluntary salary reduction
contributions as having been made by
reason of a salary reduction agreement.
While the Senate Report indicates a Con-
gressional intent to “codify the holding
of Revenue Ruling 65–208,” the revenue
ruling does not address any distinction be-
tween voluntary and mandatory reductions
in salary. The critical distinction drawn
in Revenue Ruling 65–208 is between
situations “where an organization uses its
own funds for the purchase of an annuity
contract” (a supplemental contribution)
December 26, 200712292007–52 I.R.B.

and situations “wherethe employee takes
avoluntaryreductioninsalarytoprovide
the necessary funds” (a salary reduction
contribution). At the time Revenue Ruling
65–208 was issued the statutory standard
under section 3121(a)(2) for determining
whether to include contributions to sec-
tion 403(b) annuity contracts in wages for
FICA purposes was whether the contri-
butions had been paid by the employer or
by the employee. Thus, in determining
whether the employer or the employee
has paid the contribution, the revenue rul-
ing distinguishes between supplemental
contributions funded by the employer and
salary reduction contributions funded by
the employee. Whether a salary reduction
contribution was voluntary or mandatory
is irrelevant in establishing that the em-
ployee funded the contribution through a
reduction in salary.
Several courts have discussed Rev-
enue Ruling 65–208 and confirmed that it
addresses the distinction between salary
supplements and salary reductions. See
Temple University v. United States,769
F.2d 126, 130 (3d Cir. 1985), discussing
the distinction drawn by Revenue Ruling
65–208 between supplemental contribu-
tions and salary reduction contributions,
andCanisius College v. United States,799
F.2d 18, 20–21 (2d Cir. 1986), distinguish-
ing between “salary supplement plans”
and “salary reduction plans.” See also
University of Chicago v. United States,
No. 06 C 3452, 2007 U.S. Dist. LEXIS
61632, at *8 (N.D. Ill. Aug. 21, 2007)
concluding that “the distinction that was
being drawn in [Revenue Ruling 65–208]
was between annuity purchase funds that
come from employee contributions and
those that come from employer contribu-
tions.” The Treasury Department and the
Internal Revenue Service (IRS) continue
to believe that it is consistent with the leg-
islative history of section 3121(a)(5)(D)
and with the codification of Revenue Rul-
ing 65–208 to treat both voluntary salary
reductions and salary reductions to which
theemployeeagreesasaconditionofem-
ployment as payments made pursuant to a
salary reduction agreement.
Commentators suggested that the term
“salary reduction agreement” for purposes
of section 3121(a)(5)(D) should mean
an elective deferral within the meaning
of section 402(g)(3)(C), which defines
the termelective deferralfor purposes
of the section 402(g)(3) limit on the ex-
clusion of elective deferrals from gross
income. In their view, because salary re-
duction contributions made pursuant to
a one-time irrevocable election or as a
condition of employment are not elective
deferrals under section 402(g)(3)(C) and
its accompanying regulations, such contri-
butions are not made pursuant to a salary
reduction agreement and, consequently,
are excluded from wages under section
3121(a)(5)(D).
Section 402(g)(3)(C) provides that the
term “elective deferral” includes “any
employer contribution to purchase an an-
nuity contract under section 403(b) under
a salary reduction agreement (within the
meaning of section 3121(a)(5)(D)).” How-
ever, when enacting section 402(g)(3),
Congress made the following statement
about the relationship among mandatory
salary reduction contributions, elective de-
ferrals, and salary reduction agreements:
“if an employee is required to contribute
a fixed percentage of compensation to a
tax-sheltered annuity as a condition of
employment, the contributions are not
treated as elective deferrals.” H.R. Rep.
No. 99–841 at II–405 (1986). Similarly, in
1988 Congress added the flush language
of 402(g)(3) providing that a one-time
irrevocable election will not be treated
as an elective deferral. Congress added
the flush language to clarify that the term
“elective deferral” excludes contributions
“made pursuant to a one-time election to
participate in the tax-sheltered annuity
even though such contribution would be
considered made under a salary reduction
agreement under section 3121(a)(5)(D).”
S. Rep. No. 100–445, at 151, 100
th
Cong.,
2d Sess. (1988). Congress explained the
clarification to section 402(g)(3) as fol-
lows:
The bill conforms the statutory lan-
guage to the legislative history by pro-
viding that contributions to a tax-shel-
tered annuity are not considered elec-
tive deferrals if the contributions are
made pursuant to a one-time irrevo-
cable election made by the employee
at the time of initial eligibility to par-
ticipate in the annuity or are made
pursuant to a similar arrangement spec-
ified in regulations. The bill does not
change the definition of salary reduc-
tion agreement for purpose of section
3121(a)(5)(D).
Sen. Rep. 100–445, 100th Cong., 2d Sess.
(1988) 151.
Thus, as reflected in both the statutory lan-
guage of section 402(g) and in its legisla-
tive history, Congress intended the defini-
tion of salary reduction agreement for pur-
poses of section 3121(a)(5)(D) to be dis-
tinct from the definition of elective defer-
ral for purposes of section 402(g)(3)(C).
Furthermore, Congress intended that
the termwageswould have different
meanings for income tax withholding and
FICA tax purposes. The broader scope
of the term for FICA tax purposes is con-
sistent with the general policy underlying
the FICA. See S. Rep. No. 98–23, at
39, 98th Cong., 1st Sess. (1983) relat-
ing to the Social Security Amendments
of 1983 (Public Law 98–21 (97 Stat.
65)). Moreover, the legislative history to
section 3121(a)(5)(D) cited in this pream-
ble describes Congress’s intent to codify
the holding in Revenue Ruling 65–208
(see §601.601(d)(2)(ii)(b)), which pro-
vides that certain amounts included in
income and amounts included in wages
with respect to contributions used to pur-
chase a 403(b) annuity contract are not
the same. Based on the statutory lan-
guage and the legislative history of section
3121(a)(5)(D) and related provisions, in-
cluding section 3121(v)(1)(B) as discussed
in this preamble, the Treasury Department
and the IRS continue to believe that the
term “salary reduction agreement” in
section 3121(a)(5)(D) includes salary re-
duction contributions made pursuant to
a one-time irrevocable election or as a
condition of employment.
The term “salary reduction agreement”
is used not only in section 3121(a)(5)(D)
but also in another subsection of section
3121, specifically section 3121(v)(1)(B),
which provides that wages include “any
amount treated as an employer contri-
bution under section 414(h)(2) where
thepickupreferredtoinsuchsection
is pursuant to a salary reduction agree-
ment (whether evidenced by a written
instrument or otherwise).” Commen-
tators contended that the term “salary
reduction agreement” should be inter-
preted differently for purposes of sections
3121(a)(5)(D) and 3121(v)(1)(B) because
section 3121(v)(1)(B) applies only to
salary reduction contributions made under
a section 414(h) pick-up plan established
by a State or local government employer.
2007–52 I.R.B.1230December 26, 2007

By definition, the salary reductions that
fund these employer contributions are
mandatory whereas contributions to sec-
tion 403(b) annuity plans may be manda-
tory or voluntary. While it is correct that
salary reductions in connection with sec-
tion 414(h) pick-up plans are mandatory,
we see no evidence in the statute or leg-
islative history that Congress intended to
interpret the same language differently or
to treat similarly situated employees dif-
ferently for FICA purposes. Both section
3121(a)(5)(D) and section 3121(v)(1)(B)
include salary reduction contributions in
wages for FICA tax purposes. Neither the
statute nor the legislative history gives a
basis for concluding that mandatory salary
reductions made in connection with a
section 414(h) pick-up plan should be in-
cluded in wages for FICA purposes while
mandatory salary reductions made in con-
nection with a section 403(b) annuity plan
should be excluded from wages. Thus,
the Treasury Department and the IRS con-
tinue to believe that it is appropriate to
give a consistent interpretation to identical
language in two subsections of the same
statutory section enacted only one year
apart.
Similarly, as discussed in the pream-
ble to the temporary and proposed regula-
tion, the Tenth Circuit’s decision inPublic
Employees’ Retirement Board v. Shalala,
153F.3d1160(10
th
Cir. 1998) supports
the view that a mandatory salary reduc-
tion contribution nonetheless requires the
employee’s agreement. InPublic Employ-
ees’ Retirement Boardthe Court of Ap-
peals held that the term “salary reduction
agreement” includesmandatory salary re-
duction contributions made as a condition
of employment. As the Court said, “[A]n
employee’s decision to go to work or con-
tinuetowork...constitutesconductman-
ifesting assent to a salary reduction.” 153
F.3d at 1166. The employment relation-
ship itself is a voluntary relationship, and
the employee manifests his or her agree-
ment with the terms and conditions of the
employment relationship by accepting em-
ployment. SeeUniversity of Chicago v.
United States, No. 06 C 3452, 2007 U.S.
Dist. LEXIS 61632, at *7 (N.D. Ill. Aug.
21, 2007) citingPublic Employees’ Re-
tirement Boardfor the proposition that “a
salary reduction agreed to as a condition
of employment constitutes a salary reduc-
tion agreement because ’the employee has
“agreed” to the salary reduction by con-
tinuing employment.’” The temporary and
proposed regulations, and now the final
regulations, read the term “agreement” for
purposes of section3121(a)(5)(D) as the
Tenth Circuit read it for purposes of sec-
tion 3121(v)(1)(B), as both an agreement
to accept employment subject to a manda-
tory salary reduction and an agreement to
a specified salary reduction.
Accordingly, the final regulation adopts
the definition of salary reduction agree-
ment as proposed.
Applicability Date
Commentators asked the IRS to con-
firm that the definition of salary reduction
agreement provided in the temporary and
proposed regulation would apply prospec-
tively only and, therefore, would not
affect contributionsto a section 403(b)
plan made prior to November 16, 2004,
the date the temporary and proposed reg-
ulation went into effect. As explicitly set
forth in §31.3121(a)(5)–2T the temporary
and proposed regulation was applicable
to contributions to section 403(b) annu-
ity plans made on or after November 16,
2004. Therefore, the Internal Revenue
Service will not apply the temporary and
proposed regulation to contributions made
to any section 403(b) plan prior to Novem-
ber 16, 2004, for purposes of determining
whether such contributions were subject
to FICA tax. The final regulation will
apply only to contributions made to any
section 403(b) plan on or after November
15, 2007.
Special Analyses
It has been determined that this Trea-
sury decision is not a significant regula-
tory action as defined in Executive Order
12866. Therefore, a regulatory assessment
is not required. It has also been determined
that section 553(b) and (d) of the Adminis-
trative Procedure Act(5 U.S.C. chapter 5)
do not apply to this regulation, and because
the regulation does not impose a collection
of information on small entities, the Regu-
latory Flexibility Act (5 U.S.C. chapter 6)
does not apply.
Drafting Information
The principal author of this regulation
is Neil D. Shepherd, Office of Division
Counsel/Associate Chief Counsel (Tax Ex-
empt and Government Entities). However,
other personnel from the IRS and Trea-
sury Department participated in its devel-
opment.
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 31 is
amended as follows:
PART 31—EMPLOYMENT TAXES
Paragraph 1. The authority citation for
part 31 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 31.3121(a)(5)–2 is
added to read as follows:
§31.3121(a)(5)–2 Payments under or to
an annuity contract described in section
403(b).
(a)Salary reduction agreement defined.
For purposes of section 3121(a)(5)(D), the
termsalary reduction agreementmeans a
plan or arrangement (whether evidenced
by a written instrument or otherwise)
whereby payment will be made by an em-
ployer, on behalf of an employee or his
or her beneficiary, under or to an annuity
contract described in section 403(b)—
(1) If the employee elects to reduce
his or her compensation pursuant to a
cash or deferred election as defined at
§1.401(k)–1(a)(3) of this chapter;
(2) If the employee elects to reduce his
or her compensation pursuant to a one-
time irrevocable election made at or be-
fore the time of initial eligibility to partic-
ipateinsuchplanorarrangement(orpur-
suant to a similar arrangement involving a
one-time irrevocable election); or
(3) If the employee agrees as a condi-
tion of employment (whether such condi-
tion is set by statute, contract, or other-
wise) to make a contribution that reduces
his or her compensation.
(b)Effective/applicability date.This
section is applicable on November 15,
2007.
§31.3121(a)(5)–2T [Removed]
Par. 3. Section 31.3121(a)(5)–2T is
removed.
December 26, 200712312007–52 I.R.B.

Linda E. Stiff,
Deputy Commissioner for
Services and Enforcement.
Approved November 13, 2007.
Eric Solomon,
Assistant Secretary of
theTreasury(TaxPolicy).
(Filed by the Office of the Federal Register on November 14,
2007, 1:17 p.m., and published in the issue of the Federal
Register for November 19, 2007, 72 F.R. 64939)
Section 6033.—Return by
Exempt Organizations
26 CFR 1.6033–6T: Notification requirement for en-
tities not required to file an annual information return
under section 6033(a)(1) (taxable years beginning af-
ter December 31, 2006)
T.D. 9366
DEPARTMENT OF
THE TREASURY
Internal Revenue Service
26 CFR Part 1
Notification Requirement
for Tax-Exempt Entities Not
Currently Required to File
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Temporary regulations.
SUMMARY: This doc
ument contains
temporary regula
tions describing the time
and manner in whi
ch certain tax-exempt
organizations n
ot currently required to
file an annual in
formation return under
section 6033(a)
(1) are required to sub-
mit an annual el
ectronic notice including
certain inform
ationrequiredbysection
6033(i)(1)(A)
through (F). The text of
the temporary r
egulations also serves
as the text of th
e proposed regulations
(REG–104942–
07) set forth in the notice
of proposed ru
lemaking on this subject in
this issue of t
he Bulletin.
DATES:Effective Date:These regulations
are effective on November 15, 2007.
Applicability Date:These regulations
are applicable to taxable years beginning
after December 31, 2006.
FOR FURTHER INFORMATION
CONTACT: Monice Rosenbaum at (202)
622–6070 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains amendments
to the Income Tax Regulations (26 CFR
part 1) under section 6033(i)(1) relating
to the notification requirement for entities
not currently required to file an annual in-
formation return under section 6033(a)(1).
Section 6033(i)(1) was added by section
1223(a) of the Pension Protection Act
of 2006, Public Law 109–208 (120 Stat.
1090 (2006)) (PPA 2006), effective for an-
nual periods beginning after 2006. Section
6033(i)(1) requires the Treasury Secretary
to promulgate regulations that describe the
time and manner in which certain tax-ex-
empt organizations not currently required
to file an annual information return are
to submit an annual electronic notice in-
cluding information set forth in section
6033(i)(1)(A) through (F). Section 1223
of the PPA 2006 also contains new rules
for termination, loss of exempt status, and
reinstatement. These new rules do not
require regulations for implementation
and are therefore not addressed in this
temporary regulation but are discussed in
this preamble. Substantive and adminis-
trative rules related to termination, loss of
exempt status, and reinstatement will be
considered in separate guidance and other
publications.
Prior to the PPA 2006, either by oper-
ation of law or through discretionary ex-
ceptions, certain organizations were not re-
quired to file an information return (for
example, Form 990,“Return of Organi-
zation Exempt From Income Tax”). Sec-
tion 6033(a)(3)(A)(ii) provided a manda-
tory exception from filing by certain orga-
nizations (other than private foundations)
described in section 6033(a)(3)(C), whose
annual gross receipts were normally not
more than $5,000. Section 6033(a)(3)(B)
provided a discretionary exception under
which the Secretary relieved certain other
organizations from filing. Exercising this
discretionary authority, the IRS published
Announcement 82–88, 1982–25 I.R.B. 23
(June 21, 1982), which provided an excep-
tion for organizations whose annual gross
receipts were not normally in excess of
$25,000 from filing Form 990 for tax years
ending on or after December 31, 1982. The
new electronic notice provision of section
6033(i)(1) applies to organizations whose
gross receipts are low enough that they
are not required to file information returns
under sections (a)(3)(A)(ii) or (a)(3)(B).
The substance of this electronic notice is
discussed below in this preamble. See
§601.601(d)(2)(ii)(b).
Section 6033(i)(2) provides that orga-
nizations required to submit annual elec-
tronic notification are also required to pro-
vide notice of termination upon the termi-
nation of the existence of the organization.
The time and manner of the notice of ter-
mination is not specified in the statute.
Section 6033(j), added by section
1223(b) of the PPA 2006, provides that
if an organization required to file an an-
nual information return under section
6033(a)(1) or submit an electronic notice
under section 6033(i) fails to provide the
required return or notice for three consec-
utive years, the organization’s tax-exempt
status is revoked. The revocation is ef-
fective from the date the Secretary deter-
mines was the last day the organization
could have timely filed the third required
information return or submitted the no-
tice. Any organization whose tax-exempt
status is revoked under section 6033(j)(1)
must apply in order to obtain reinstate-
ment of that status regardless of whether
such organization was originally required
to make an application for tax-exempt sta-
tus. If, upon application for reinstatement
of tax-exempt status, an organization can
show to the satisfaction of the Secretary
evidence of reasonable cause for the fail-
ure to file the information return or submit
the notice, the organization’s tax-exempt
status may, in the discretion of the Secre-
tary, be reinstated retroactive to the date
of revocation.
Section 7428(b), regarding limitations
on declaratory judgments relating to status
and classification of certain tax-exempt
organizations, was amended by section
1223(c) of the PPA 2006 and provides
that no action may be brought under sec-
tion 7428 with respect to any revocation
of tax-exempt status described in section
6033(j)(1), for failure to provide the re-
quired return under section 6033(a)(1)
or notice under section 6033(i) for three
consecutive years.
2007–52 I.R.B.1232December 26, 2007

Section 6652(c)(1)(E), added by sec-
tion 1233(d) of the PPA 2006, provides
that there is no monetary penalty for failure
to submit any notice required under section
6033(i).
Explanation of Provisions
Annual Electronic Notice Requirements
and Other General Requirements Related
to Maintaining Tax-Exempt Status
Section 6033(i)(1) provides that the an-
nual notification, in electronic form, shall
set forth: (A) the legal name of the organ-
ization, (B) any name under which the or-
ganization operates or does business, (C)
the organization’s mailing address and In-
ternet Web site address (if any), (D) the or-
ganization’s taxpayer identification num-
ber, (E) the name and address of a prin-
cipal officer, and (F) evidence of the con-
tinuing basis for the organization’s exemp-
tion from the filing requirements under
section 6033(a)(1).The temporary regu-
lations also provide that additional infor-
mation necessary to process the notifica-
tion may be required. For example, an or-
ganization will be required to state the tax
period for which it is submitting the elec-
tronic notification.
Themailingaddressrequiredbysection
6033(i)(1)(C) and submitted in the annual
electronic notification shall be the organ-
ization’s last known address as provided
by §301.6212–2(a) of the Regulations on
Procedure and Administration. This last
known address may be updated as pro-
vided under §301.6212–2 or by clear and
concise notification as described in Rev.
Proc. 2001–18, 2001–1 C.B. 708. The
IRS will use this last known address as
the organization’s address of record and
will direct all mailings to this address. See
§601.601(d)(2)(ii)(b).
By submitting the annual electronic
notification described in this paragraph,
an organization acknowledges that it is
not required to file a return under section
6033(a) because its gross receipts are not
normally in excess of $25,000. In order to
make this determination, the organization
must keep records that enable it to calcu-
late its gross receipts. All organizations
are required to maintain records under
section 6001. These records will provide
evidence of the continuing basis for the
organization’s exemption from the filing
requirements under section 6033(a)(1).
The temporary regulations restate that
an organization, even though relieved from
filing a return under section 6033(a), is still
required under §1.6033–2(i) and (j) to in-
form the IRS in writing of any changes in
the organization’s character, operation, or
purpose; provide additional information;
and file other returns of information and
unrelated business tax returns. Organiza-
tions are also reminded that if the organi-
zation is required to file an unrelated busi-
ness tax return, Form 990–T,“Exempt Or-
ganization Business Income Tax Return,”
the filing of the Form 990–T does not re-
lieve the organization from the require-
ment of submitting the annual electronic
notification under section 6033(i).
The statute requires that the annual noti-
fication be submitted electronically. There
is no provision in the temporary regula-
tions for any paper notification. How-
ever, if an organization that is required
to submit an annual electronic notification
files a complete Form 990 or Form 990EZ,
“Short Form Return of Organization Ex-
empt From Income Tax,”the annual notifi-
cation requirement of section 6033(i) shall
be deemed satisfied. The annual notifica-
tion requirement is not satisfied if the Form
990 or Form 990–EZ contains only those
items of information that would have been
required by submitting the notification in
electronic form.
The notification shall be submitted on
or before the 15th day of the fifth calen-
dar month following the close of the period
for which the notification is required to
be submitted. Thus, an organization with
an accounting period ending December 31,
2007, is required to submit the annual no-
tification by May 15, 2008.
Annual Electronic Notification Is Not a
Return
The electronic notification is not a re-
turn because it does not contain sufficient
data to calculate tax liability or determine
tax-exempt status. Moreover, the elec-
tronic notification does not purport to be
a return. The electronic notification sim-
ply identifies an organization and indicates
the basis for it not having to file an in-
formation return under section 6033(a)(1).
Because the electronic notification is not
a tax or information return, submission of
the notification does not trigger the period
of limitations for assessment under sec-
tion 6501(g)(2). However, the filing of a
complete Form 990 or Form 990–EZ, as
noted in this preamble, will start the pe-
riod of limitations for assessment under
section 6501(g)(2). Furthermore, there is
no monetary penalty for failure to file un-
der section 6033(i). To further distinguish
the electronic notification from a tax or
information return, the temporary regula-
tions provide that the electronic notifica-
tion is submitted to the IRS, rather than
filed or furnished, the terms used in con-
nection with tax and information returns.
The notifications required by section
6033(i) are subject to public disclosure and
inspection. See section 6104 (generally
applicable to Form 990 information re-
turns). Further, this provision does not af-
fect any other obligations an organization
may have to file other required information
and or tax returns, or penalties for failure
to file such returns.
Form 990–N, Electronic Notice
(e-Postcard) for Tax-Exempt
Organizations Not Required to File
Form 990 or 990–EZ
Form 990–N,“Electronic Notice
(e-Postcard) for Tax-Exempt Organiza-
tions Not Required To File Form 990 or
990–EZ,”has been developed to satisfy
the requirements of section 6033(i)(1).
The IRS plans to deliver a simple, Internet
based process for submitting the e-Post-
card, Form 990–N. It is anticipated that
organizations that do not have access to a
computer can use their local public library
to file the e-Postcard. Because the sys-
tem will be Internet based, organizations
should not need to purchase software to
file the e-Postcard. The temporary regu-
lations provide thatthe annual electronic
notification shall be submitted in accor-
dance with instructions and publications,
including those provided at the IRS Web
site for exempt organizations.
Organizations Required to File Returns or
Submit Electronic Notice
In general, every organization exempt
from taxation under section 501(a) that is
not required to file a return described in
§1.6033–2(a)(2), other than an organiza-
tion described in section 401(a) (qualified
pension, profit-sharing, and stock bonus
December 26, 200712332007–52 I.R.B.

plans) or section 501(d) (religious and
apostolic organizations), is required to
submit an annual electronic notice under
section 6033(i). However, a organization
that is required to file or files an annual in-
formation return under section 6033(a)(1)
should not submit an annual electronic
notification under section 6033(i). This
includes any organization included in a
group return as provided in §1.6033–2
for that year; all private foundations re-
quired to file Form 990–PF,“Return of
Private Foundation or Section 4947(a)(1)
Nonexempt Charitable Trust Treated as
a Private Foundation”;section 509(a)(3)
supporting organizations required to file
Form 990 or Form 990–EZ; a section
501(c)(21) black lung trust required to file
Form 990–BL,“Information and Initial
Excise Tax Return for Black Lung Benefit
Trusts and Certain Related Persons”;and
any organization that is required to file or
files an annual information return under
section 6033(a)(1) on any other form pre-
scribed by the IRS for that purpose.
Neither annual information returns
under section 6033(a)(1) nor annual elec-
tronic notices under section 6033(i) are
required to be filed or submitted by an
organization exempt from taxation under
section 501(a) that is a church, an inter-
church organization of local units of a
church, a convention or association of
churches, or an integrated auxiliary of
a church (as defined in §1.6033–2(h));
an exclusively religious activity of any
religious order; a mission society spon-
sored by or affiliated with one or more
churches or church denominations, more
than half of the activities of which society
are conducted in, or directed at persons in,
foreign countries; an educational organiza-
tion (below college level) that is described
in section 170(b)(1)(A)(ii), that has a
program of a general academic nature,
and that is affiliated (within the mean-
ing of §1.6033–2(h)(2)) with a church
or operated by a religious order; a State
institution, the income of which is ex-
cluded from gross income under section
115(a); an organization described in sec-
tion 501(c)(1); or an organization that is
a governmental unit or an affiliate of a
governmental unit exempt from Federal
income tax under section 501(a) as de-
scribed in Rev. Proc. 95–48, 1995–2 C.B.
418. See §601.601(d)(2)(ii)(b).
If an organization exempt from taxation
under section 501(a) is not exempted in ei-
ther of the two preceding paragraphs, the
organization must submit an annual elec-
tronic notice. Thus, a black lung trust that
normally has gross receipts of $25,000 or
less is not required to file Form 990–BL
butisrequiredtosubmitanelectronicno-
tification. A section 509(a)(3) support-
ing organization of a religious organization
that normally has gross receipts of $5,000
or less is not required to file Form 990 or
Form 990–EZ but is required to submit an
electronic notification.
Special Analyses
It has been determined that this Trea-
sury decision is not a significant regula-
tory action as defined in Executive Order
12866. Therefore, a regulatory assessment
is not required. It also has been deter-
mined that section 553(b) of the Admin-
istrative Procedure Act (5 U.S.C. chapter
5) does not apply to these regulations. For
the applicability of the Regulatory Flexi-
bility Act, please refer to the cross-refer-
ence notice of proposed rulemaking pub-
lished elsewhere in this issue of the Bul-
letin. Pursuant to section 7805(f) of the
Internal Revenue Code, these regulations
have been submitted to the Chief Counsel
for Advocacy of the Small Business Ad-
ministration for comment on their impact
on small business.
Drafting Information
The principal author of these regula-
tions is Monice Rosenbaum, of the Of-
fice of Division Counsel/Associate Chief
Counsel (Tax Exempt and Government
Entities). However, other personnel from
the IRS and the Treasury Department par-
ticipated in their development.
*****
Amendments to the Regulations.
Accordingly, 26 CFR part 1 is amended
as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 is amended by adding an entry in
numerical order to read as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.6033–6 also issued under 26
U.S.C. 6033(i)(1). * * *
Par. 2 Section 1.6033–6T is added to
read as follows:
§1.6033–6T Notification requirement
for entities not required to file an
annual information return under section
6033(a)(1) (taxable years beginning after
December 31, 2006)—
(a)In general. Except as otherwise pro-
vided in this paragraph, every organiza-
tion exempt from taxation under section
501(a) that is not required to file a return
described in §1.6033–2(a)(2), other than
an organization described in section 401(a)
or 501(d), shall submit annually, in elec-
tronic form, a notification setting forth the
items described in paragraph (b) of this
section and such other information as may
be prescribed in the instructions and publi-
cations issued with respect to the notifica-
tion.
(b)Organizations not required to sub-
mit annual notification. (1) An organ-
ization exempt from taxation under sec-
tion 501(a) that is required to file or files
an annual information return under sec-
tion 6033(a)(1) shall not submit an annual
notification under section 6033(i). This
includes the following types of organiza-
tions:
(i) Any organization included in a group
return for that year under §1.6033–2(d).
(ii) All private foundations required
to file under §1.6033–2(a)(2)(i) Form
990–PF,“Return of Private Foundation or
Section 4947(a)(1) Nonexempt Charitable
Trust Treated as a Private Foundation.”
(iii) Section 509(a)(3) supporting
organizations required to file under
§1.6033–2(a)(2)(i) Form 990,“Return of
Organization Exempt From Income Tax,”
or Form 990–EZ,“Short Form Return of
Organization Exempt From Income Tax.”
(iv) A section 501(c)(21) black
lung trust required to file under
§1.6033–2(a)(2)(i) Form 990–BL.
(v) Any organization that is required to
file or files an annual information return
under section 6033(a)(1) on any other form
prescribed by the Internal Revenue Service
for that purpose.
(2) An organization exempt from tax-
ation under section 501(a) that is not
2007–52 I.R.B.1234December 26, 2007

required to file a return under section
6033(a)(1) is also not required to sub-
mit an annual notification under section
6033(i). This includes the following types
of organizations:
(i) A church, an interchurch organiza-
tion of local units of a church, a conven-
tion or association of churches, or an inte-
grated auxiliary of a church (as defined in
§1.6033–2(h)).
(ii) An exclusively religious activity of
any religious order.
(iii) A mission society sponsored by or
affiliated with one or more churches or
church denominations, more than one-half
of the activities of which society are con-
ducted in, or directed at persons in, foreign
countries.
(iv) An educational organization (be-
low college level) described in section
170(b)(1)(A)(ii), that has a program
of a general academic nature, and that
is affiliated (within the meaning of
§1.6033–2(h)(2)) with a church or op-
erated by a religious order.
(v) A State institution, the income of
which is excluded from gross income un-
der section 115(a);
(vi) An organization described in sec-
tion 501(c)(1); or
(vii) An organization that is a govern-
mental unit or an affiliate of a governmen-
tal unit exempt from Federal income tax
under section 501(a).
(3) If an organization exempt from tax-
ation under section 501(a) is not described
in paragraph (b)(1) or (2) of this section,
the organization must submit an annual no-
tification. Thus, a black lung trust that
normally has gross receipts of $25,000 or
less is not required to file Form 990–BL
but is required to submit electronic notifi-
cation. A section 509(a)(3) supporting or-
ganization of a religious organization that
normally has gross receipts of $5,000 or
less is not required to file Form 990 or
Form 990–EZ but is required to submit
electronic notification.
(c)Additional notification require-
ments—(1)In general. Any organization
described in paragraph (a)(1) of this sec-
tion shall submit an annual notification
described in section 6033(i)(1). The an-
nual notification shall—
(i) Be in electronic form; and
(ii) Set forth—
(A) The legal name of the organization;
(B) Any name under which the organi-
zation operates or does business;
(C) The organization’s mailing address
and Internet Web site address (if any);
(D) The organization’s taxpayer identi-
fication number;
(E) The name and address of a principal
officer;
(F) Evidence of the continuing basis for
the organization’s exemption from the fil-
ing requirements under section 6033(a)(1);
and
(G) Additional information necessary
to process the notification.
(2) The mailing address required by
section 6033(i)(1)(C) and submitted in the
annual notification shall be the organiza-
tion’s last known address as provided by
§301.6212–2(a) of this chapter. This last
known address may be updated as pro-
vided under §301.6212–2 of this chapter,
or by clear and concise notification. The
Internal Revenue Service will use this last
known address as the organization’s ad-
dress of record and will direct all mailings
to this address.
(3) By submitting the annual notifi-
cation described in this paragraph (c)(1),
an organization acknowledges that it is
not required to file a return under section
6033(a) because its annual gross receipts
are not normally in excess of $25,000.
In order to make this determination, the
organization must keep records that en-
able it to calculate its gross receipts. All
organizations are required to maintain
records under section 6001. These records
will provide evidence of the continuing
basis for the organization’s exemption
from the filing requirements under section
6033(a)(1).
(4) If an organization that is required
to submit an annual electronic notifica-
tion files a complete Form 990 or Form
990–EZ the annual notification require-
ment shall be deemed satisfied. The an-
nual notification requirement is not satis-
fied if the Form 990 or Form 990–EZ con-
tains only those items of information that
would have been required by submitting
the notification in electronic form. Also,
the filing of a complete Form 990 or Form
990–EZ, rather than the submission of an
annual electronic notification, is the fil-
ing of a return that starts the period of
limitations for assessment under section
6501(g)(2).
(d)No effect on other filing require-
ments. An organization that is relieved
from filing an information return under
section 6033(a) is still subject to the re-
quirements of §1.6033–2(i) and (j), con-
cerning notice regarding changes in char-
acter, operations, or purpose; providing
additional information; duty to file other
returns of information; and duty to file un-
related business tax returns. If an organi-
zation is required to file an unrelated busi-
ness tax return, Form 990–T,“Exempt Or-
ganization Business Income Tax Return,”
the filing of that return does not relieve the
organization from the requirement of sub-
mitting notification under section 6033(i).
(e)Accounting period for submitting
electronic notification. An annual notifi-
cation required by this section shall be on
the basis of the established annual account-
ing period of the organization. If the or-
ganization has no established accounting
period, annual notification shall be on the
basis of the calendar year.
(f)Time and place for submitting elec-
tronic notification. The annual notification
required by this section shall be submitted
on or before the 15th day of the fifth cal-
endar month following the close of the pe-
riod for which the notification is required
to be submitted. Thus, an organization
with an accounting period ending Decem-
ber 31, 2007, is required to submit annual
notification by May 15, 2008. The noti-
fication shall be submitted in accordance
with instructions and publications, includ-
ing those provided at the Internal Revenue
Service Web site for exempt organizations.
(g)Effective/applicability date.These
regulations are applicable to annual peri-
ods beginning after 2006.
(h)Expiration date. These regulations
expire February 12, 2010.
LindaE.Stiff,
Deputy Commissioner for
Services and Enforcement.
Approved November 6, 2007.
Eric Solomon,
Assistant Secretary of the
Treasury (Tax Policy).
(Filed by the Office of the Federal Register on November 14,
2007, 8:45 a.m., and published in the issue of the Federal
Register for November 15, 2007, 72 F.R. 64147)
December 26, 200712352007–52 I.R.B.

Section 6621.—Determina-
tion of Rate of Interest
26 CFR 301.6621–1: Interest rate.
Interest rates; underpayments and
overpayments.The rates of interest deter-
mined under section 6621 of the Code for
the calendar quarter beginning January 1,
2008, will be 7 percent for overpayments
(6 percent in the case of a corporation), 7
percent for underpayments, and 9 percent
for large corporate underpayments. The
rate of interest paid on the portion of a
corporate overpayment exceeding $10,000
will be 4.5 percent.
Rev. Rul. 2007–68
Section 6621 of the Internal Revenue
Code establishes the rates for interest
on tax overpayments and tax underpay-
ments. Under section 6621(a)(1), the
overpayment rate is the sum of the federal
short-term rate plus 3 percentage points
(2 percentage points in the case of a cor-
poration), except the rate for the portion
of a corporate overpayment of tax exceed-
ing $10,000 for a taxable period is the
sum of the federal short-term rate plus
0.5 of a percentage point. Under section
6621(a)(2), the underpayment rate is the
sum of the federal short-term rate plus 3
percentage points.
Section 6621(c) provides that for pur-
poses of interest payable under section
6601 on any large corporate underpay-
ment, the underpayment rate under section
6621(a)(2) is determined by substituting
“5 percentage points" for “3 percentage
points.” See section6621(c) and section
301.6621–3 of the Regulations on Proce-
dure and Administration for the definition
of a large corporate underpayment and
for the rules for determining the appli-
cable date. Section 6621(c) and section
301.6621–3 are generally effective for
periods after December 31, 1990.
Section 6621(b)(1) provides that the
Secretary will determine the federal
short-term rate for the first month in each
calendar quarter.
Section 6621(b)(2)(A) provides that the
federal short-term rate determined under
section 6621(b)(1) for any month applies
during the first calendar quarter beginning
after such month.
Section 6621(b)(3) provides that the
federal short-term rate for any month is
the federal short-term rate determined
during such month by the Secretary in
accordance with section 1274(d), rounded
to the nearest full percent (or, if a multiple
of 1/2 of 1 percent, the rate is increased to
the next highest full percent).
Notice 88–59, 1988–1 C.B. 546, an-
nounced that, in determining the quarterly
interest rates to be used for overpayments
and underpayments of tax under section
6621, the Internal Revenue Service will
use the federal short-term rate based on
daily compounding because that rate is
most consistent with section 6621 which,
pursuant to section 6622, is subject to daily
compounding.
Rounded to the nearest full percent, the
federal short-term rate based on daily com-
pounding determined during the month of
October 2007 is 4 percent. Accordingly, an
overpayment rate of 7 percent (6 percent
in the case of a corporation) and an under-
payment rate of 7 percent are established
for the calendar quarter beginning January
1, 2008. The overpayment rate for the por-
tion of a corporate overpayment exceeding
$10,000 for the calendar quarter beginning
January 1, 2008, is 4.5 percent. The un-
derpayment rate for large corporate under-
payments for the calendar quarter begin-
ning January 1, 2008, is 9 percent. These
rates apply to amounts bearing interest dur-
ing that calendar quarter.
Interest factors for daily compound in-
terest for annual rates of 4.5 percent, 6 per-
cent, 7 percent, and 9 percent are published
in Tables 14, 17, 19, and 23 of Rev. Proc.
95–17, 1995–1 C.B. 556, 568, 571, 573,
and 577.
Annual interest rates to be compounded
daily pursuant to section 6622 that apply
for prior periods are set forth in the tables
accompanying this revenue ruling.
DRAFTING INFORMATION
The principal author of this revenue
ruling is Wendy Kribell of the Office of
Associate Chief Counsel (Procedure &
Administration). For further informa-
tion regarding this revenue ruling, contact
Ms. Kribell at (202) 622–4570 (not a
toll-free call).
2007–52 I.R.B.1236December 26, 2007

TABLE OF INTEREST RATES
PERIODS BEFORE JUL. 1, 1975 — PERIODS ENDING DEC. 31, 1986
OVERPAYMENTS AND UNDERPAYMENTS
PERIODRATE
In 1995–1 C.B.
DAILY RATE TABLE
Before Jul. 1, 19756%Table 2, pg. 557
Jul. 1, 1975—Jan. 31, 19769%Table 4, pg. 559
Feb. 1, 1976—Jan. 31, 19787%Table 3, pg. 558
Feb. 1, 1978—Jan. 31, 19806%Table 2, pg. 557
Feb. 1, 1980—Jan. 31, 198212%Table 5, pg. 560
Feb. 1, 1982—Dec. 31, 198220%Table 6, pg. 560
Jan. 1, 1983—Jun. 30, 198316%Table 37, pg. 591
Jul. 1, 1983—Dec. 31, 198311%Table 27, pg. 581
Jan. 1, 1984—Jun. 30, 198411%Table 75, pg. 629
Jul. 1, 1984—Dec. 31, 198411%Table 75, pg. 629
Jan. 1, 1985—Jun. 30, 198513%Table 31, pg. 585
Jul. 1, 1985—Dec. 31, 198511%Table 27, pg. 581
Jan. 1, 1986—Jun. 30, 198610%Table 25, pg. 579
Jul. 1, 1986—Dec. 31, 19869%Table 23, pg. 577
TABLE OF INTEREST RATES
FROM JAN. 1, 1987 — Dec. 31, 1998
OVERPAYMENTSUNDERPAYMENTS
1995–1 C.B.1995–1 C.B.
RATE TABLEPGRATE TABLEPG
Jan. 1
, 1987—Mar. 31, 1987
8%215759%23577
Apr. 1, 1987—Jun. 30, 19878%215759%23577
Jul. 1, 1987—Sep. 30, 19878%215759%23577
Oct. 1
, 1987—Dec. 31, 1987
9%2357710%25579
Jan. 1, 1988—Mar. 31, 198810%7362711%75629
Apr. 1, 1988—Jun. 30, 19889%7162510%73627
Jul.
1, 1988—Sep. 30, 1988
9%7162510%73627
Oct. 1, 1988—Dec. 31, 198810%7362711%75629
Jan. 1, 1989—Mar. 31, 198910%2557911%27581
Apr
. 1, 1989—Jun. 30, 1989
11%2758112%29583
Jul. 1, 1989—Sep. 30, 198911%2758112%29583
Oct. 1, 1989—Dec. 31, 198910%2557911%27581
Ja
n. 1, 1990—Mar. 31, 1990
10%2557
9
11%2758
1
Apr. 1, 1990—Jun. 30, 199010%2557911%27581
Jul. 1, 1990—Sep. 30, 199010%2557911%27581
O
ct. 1, 1990—Dec. 31, 1990
1
0
%2
5
5
79
1
1
%2
7
5
81
Jan. 1, 1991—Mar. 31, 199110%2557911%27581
Apr. 1, 1991—Jun. 30, 19919%2357710%25579
J
ul. 1, 1991—Sep. 30, 1991
9%2
3
5
77
1
0
%2
5
5
79
Oct. 1, 1991—Dec. 31, 19919%2357710%25579
Jan. 1, 1992—Mar. 31, 19928%696239%71625
Apr. 1, 1992—Jun. 30, 19927%676218%69623
Jul. 1, 1992—Sep. 30, 19927%676218%69623
Oct. 1, 1992—Dec. 31, 19926%656197%67621
Jan. 1, 1993—Mar. 31, 19936%175717%19573
Apr. 1, 1993—Jun. 30, 19936%175717%19573
Jul. 1, 1993—Sep. 30, 19936%175717%19573
Oct. 1, 1993—Dec. 31, 19936%175717%19573
Jan. 1, 1994—Mar. 31, 19946%175717%19573
Apr. 1, 1994—Jun. 30, 19946%175717%19573
Jul. 1, 1994—Sep. 30, 19947%195738%21575
December 26, 200712372007–52 I.R.B.

TABLE OF INTEREST RATES
FROM JAN. 1, 1987 — Dec. 31, 1998 – Continued
OVERPAYMENTSUNDERPAYMENTS
1995–1 C.B.1995–1 C.B.
RATE TABLEPGRATE TABLEPG
Oct. 1, 1994—Dec. 31, 19948%215759%23577
Jan. 1, 1995—
Mar. 31, 1995
8%215759%23577
Apr. 1, 1995—Jun. 30, 19959%2357710%25579
Jul. 1, 1995—Sep. 30, 19958%215759%23577
Oct. 1, 1995
—Dec. 31, 1995
8%215759%23577
Jan. 1, 1996—Mar. 31, 19968%696239%71625
Apr. 1, 1996—Jun. 30, 19967%676218%69623
Jul. 1, 199
6—Sep. 30, 1996
8%696239%71625
Oct. 1, 1996—Dec. 31, 19968%696239%71625
Jan. 1, 1997—Mar. 31, 19978%215759%23577
Apr. 1, 19
97—Jun. 30, 1997
8%215759%23577
Jul. 1, 1997—Sep. 30, 19978%215759%23577
Oct. 1, 1997—Dec. 31, 19978%215759%23577
Jan. 1, 1
998—Mar. 31, 1998
8%215759%23577
Apr. 1, 1998—Jun. 30, 19987%195738%21575
Jul. 1, 1998—Sep. 30, 19987%195738%21575
Oct. 1,
1998—Dec. 31, 1998
7%195738%21575
TABLE O
F INTEREST RATES
FROM JANUARY 1, 1999 — PRESENT
NONCORPORATE OVERPAYMENTS AND UNDERPAYMENTS
1995–
1C.B.
RATETABLEPG
Jan.
1, 1999—Mar. 31, 1999
7%19573
Apr. 1, 1999—Jun. 30, 19998%21575
Jul. 1, 1999—Sep. 30, 19998%21575
Oct.
1, 1999—Dec. 31, 1999
8%21575
Jan. 1, 2000—Mar. 31, 20008%69623
Apr. 1, 2000—Jun. 30, 20009%71625
Jul
. 1, 2000—Sep. 30, 2000
9%71625
Oct. 1, 2000—Dec. 31, 20009%71625
Jan. 1, 2001—Mar. 31, 20019%23577
Ap
r. 1, 2001—Jun. 30, 2001
8%2157
5
Jul. 1, 2001—Sep. 30, 20017%19573
Oct. 1, 2001—Dec. 31, 20017%19573
J
an. 1, 2002—Mar. 31, 2002
6
%
1
7
5
71
Apr. 1, 2002—Jun. 30, 20026%17571
Jul. 1, 2002—Sep. 30, 20026%17571
Oct. 1, 2002—Dec. 31, 20026%17571
Jan. 1, 2003—Mar. 31, 20035%15569
Apr. 1, 2003—Jun. 30, 20035%15569
Jul. 1, 2003—Sep. 30, 20035%15569
Oct. 1, 2003—Dec. 31, 20034%13567
Jan. 1, 2004—Mar. 31, 20044%61615
Apr. 1, 2004—Jun. 30, 20045%63617
Jul. 1, 2004—Sep. 30, 20044%61615
Oct. 1, 2004—Dec. 31, 20045%63617
Jan. 1, 2005—Mar. 31, 20055%15569
Apr. 1, 2005—Jun. 30, 20056%17571
Jul. 1, 2005—Sep. 30, 20056%17571
Oct. 1, 2005—Dec. 31, 20057%19573
Jan. 1, 2006—Mar. 31, 20067%19573
2007–52 I.R.B.1238December 26, 2007

TABLE OF INTEREST RATES
FROM JANUARY 1, 1999 — PRESENT – Continued
NONCORPORATE OVERPAYMENTS AND UNDERPAYMENTS
1995–1 C.B.
RATETABLEPG
Apr. 1, 2006—Jun. 30, 20067%19573
Jul. 1, 2006—Sep. 30, 20068%21575
Oct. 1, 2006—Dec. 31, 20068%21575
Jan. 1, 2007—Mar. 31, 20078%21575
Apr. 1, 2007- Jun. 30, 20078%21575
Jul. 1, 2007—Sep. 30, 20078%21575
Oct. 1, 2007—Dec. 31, 20078%21575
Jan. 1, 2008—Mar. 31, 20087%67621
TABLE OF INTEREST RATES
FROM JANUARY 1, 1999 — PRESENT
CORPORATE OVERPAYMENTS AND UNDERPAYMENTS
OVERPAYMENTSUNDERPAYMENTS
1995–1 C.B.1995–1 C.B.
RATE TABLEPGRATE TABLEPG
Jan. 1, 1999—Mar. 31, 19996%175717%19573
Apr. 1,
1999—Jun. 30, 1999
7%195738%21575
Jul. 1, 1999—Sep. 30, 19997%195738%21575
Oct. 1, 1999—Dec. 31, 19997%195738%21575
Jan. 1
, 2000—Mar. 31, 2000
7%676218%69623
Apr. 1, 2000—Jun. 30, 20008%696239%71625
Jul. 1, 2000—Sep. 30, 20008%696239%71625
Oct. 1
, 2000—Dec. 31, 2000
8%696239%71625
Jan. 1, 2001—Mar. 31, 20018%215759%23577
Apr. 1, 2001—Jun. 30, 20017%195738%21575
Jul.
1, 2001—Sep. 30, 2001
6%175717%19573
Oct. 1, 2001—Dec. 31, 20016%175717%19573
Jan. 1, 2002—Mar. 31, 20025%155696%17571
Apr
. 1, 2002—Jun. 30, 2002
5%155696%17571
Jul. 1, 2002—Sep. 30, 20025%155696%17571
Oct. 1, 2002—Dec. 31, 20025%155696%17571
Ja
n. 1, 2003—Mar. 31, 2003
4%1356
7
5%1556
9
Apr. 1, 2003—Jun. 30, 20034%135675%15569
Jul. 1, 2003—Sep. 30, 20034%135675%15569
O
ct. 1, 2003—Dec. 31, 2003
3
%
1
1
5
65
4
%
1
3
5
67
Jan. 1, 2004—Mar. 31, 20043%596134%61615
Apr. 1, 2004—Jun. 30, 20044%616155%63617
J
ul. 1, 2004—Sep. 30, 2004
3
%
5
9
6
13
4
%
6
1
6
15
Oct. 1, 2004—Dec. 31, 20044%616155%63617
Jan. 1, 2005—Mar. 31, 20054%135675%15569
Apr. 1, 2005—Jun. 30, 20055%155696%17571
Jul. 1, 2005—Sep. 30, 20055%155696%17571
Oct. 1, 2005—Dec. 31, 20056%175717%19573
Jan. 1, 2006—Mar. 31, 20066%175717%19573
Apr. 1, 2006—Jun. 30, 20066%175717%19573
Jul. 1, 2006—Sep. 30, 20067%195738%21575
Oct. 1, 2006—Dec. 31, 20067%195738%21575
Jan. 1, 2007—Mar. 31, 20077%195738%21575
Apr. 1, 2007- Jun. 30, 20077%195738%21575
Jul. 1, 2007—Sep. 30, 20077%195738%21575
Oct. 1, 2007—Dec. 31, 20077%195738%21575
December 26, 200712392007–52 I.R.B.

TABLE OF INTEREST RATES
FROM JANUARY 1, 1999 — PRESENT – Continued
CORPORATE OVERPAYMENTS AND UNDERPAYMENTS
OVERPAYMENTSUNDERPAYMENTS
1995–1 C.B.1995–1 C.B.
RATE TABLEPGRATE TABLEPG
Jan. 1, 2008—Mar. 31, 20086%656197%67621
TABLE OF INTEREST RATES FOR
LARGE CORPORATE UNDERPAYMENTS
FROM JANUARY 1, 1991 — PRESENT
1995–1 C.B
.
RATETABLEPG
Jan. 1, 199
1—Mar. 31, 1991
13%31585
Apr. 1, 1991—Jun. 30, 199112%29583
Jul. 1, 1991—Sep. 30, 199112%29583
Oct. 1, 19
91—Dec. 31, 1991
12%29583
Jan. 1, 1992—Mar. 31, 199211%75629
Apr. 1, 1992—Jun. 30, 199210%73627
Jul. 1, 1
992—Sep. 30, 1992
10%73627
Oct. 1, 1992—Dec. 31, 19929%71625
Jan. 1, 1993—Mar. 31, 19939%23577
Apr. 1,
1993—Jun. 30, 1993
9%23577
Jul. 1, 1993—Sep. 30, 19939%23577
Oct. 1, 1993—Dec. 31, 19939%23577
Jan. 1
, 1994—Mar. 31, 1994
9%23577
Apr. 1, 1994—Jun. 30, 19949%23577
Jul. 1, 1994—Sep. 30, 199410%25579
Oct.
1, 1994—Dec. 31, 1994
11%27581
Jan. 1, 1995—Mar. 31, 199511%27581
Apr. 1, 1995—Jun. 30, 199512%29583
Jul.
1, 1995—Sep. 30, 1995
11%27581
Oct. 1, 1995—Dec. 31, 199511%27581
Jan. 1, 1996—Mar. 31, 199611%75629
Apr
. 1, 1996—Jun. 30, 1996
10%73627
Jul. 1, 1996—Sep. 30, 199611%75629
Oct. 1, 1996—Dec. 31, 199611%75629
Ja
n. 1, 1997—Mar. 31, 1997
11%2758
1
Apr. 1, 1997—Jun. 30, 199711%27581
Jul. 1, 1997—Sep. 30, 199711%27581
O
ct. 1, 1997—Dec. 31, 1997
1
1
%2
7
5
81
Jan. 1, 1998—Mar. 31, 199811%27581
Apr. 1, 1998—Jun. 30, 199810%25579
Jul. 1, 1998—Sep. 30, 199810%25579
Oct. 1, 1998—Dec. 31, 199810%25579
Jan. 1, 1999—Mar. 31, 19999%23577
Apr. 1, 1999—Jun. 30, 199910%25579
Jul. 1, 1999—Sep. 30, 199910%25579
Oct. 1, 1999—Dec. 31, 199910%25579
Jan. 1, 2000—Mar. 31, 200010%73627
Apr. 1, 2000—Jun. 30, 200011%75629
Jul. 1, 2000—Sep. 30, 200011%75629
Oct. 1, 2000—Dec. 31, 200011%75629
Jan. 1, 2001—Mar. 31, 200111%27581
Apr. 1, 2001—Jun. 30, 200110%25579
Jul. 1, 2001—Sep. 30, 20019%23577
Oct. 1, 2001—Dec. 31, 20019%23577
2007–52 I.R.B.1240December 26, 2007

TABLE OF INTEREST RATES FOR
LARGE CORPORATE UNDERPAYMENTS
FROM JANUARY 1, 1991 — PRESENT – Continued
1995–1 C.B.
RATETABLEPG
Jan. 1, 2002—Mar. 31, 20028%21575
Apr. 1, 2002—Jun. 30, 20028%21575
Jul. 1, 2002—Sep. 30, 20028%21575
Oct. 1, 2002—Dec. 30, 20028%21575
Jan. 1, 2003—Mar. 31, 20037%19573
Apr. 1, 2003—Jun. 30, 20037%19573
Jul. 1, 2003—Sep. 30, 20037%19573
Oct. 1, 2003—Dec. 31, 20036%17571
Jan. 1, 2004—Mar. 31, 20046%65619
Apr. 1, 2004—Jun. 30, 20047%67621
Jul. 1, 2004—Sep. 30, 20046%65619
Oct. 1, 2004—Dec. 31, 20047%67621
Jan. 1, 2005—Mar. 31, 20057%19573
Apr. 1, 2005—Jun. 30, 20058%21575
Jul. 1, 2005—Sep. 30, 20058%21575
Oct. 1, 2005—Dec. 31, 20059%23577
Jan. 1, 2006—Mar. 31, 20069%23577
Apr. 1, 2006—Jun. 30, 20069%23577
Jul. 1, 2006—Sep. 30, 200610%25579
Oct. 1, 2006—Dec. 31, 200610%25579
Jan. 1, 2007—Mar. 31, 200710%25579
Apr. 1, 2007- Jun. 30, 200710%25579
Jul. 1, 2007—Sep. 30, 200710%25579
Oct. 1, 2007—Dec. 31, 200710%25579
Jan. 1, 2008—Mar. 31, 20089%71625
TABLE OF INTEREST RATES FOR CORPORATE
OVERPAYMENTS EXCEEDING $10,000
FROM JANUARY 1, 1995 — PRESENT
1995–1 C.B.
RATETABLEPG
Jan. 1, 1995—Mar. 31, 19956.5%18572
Apr. 1, 1995—Jun. 30, 19957.5%20574
Jul. 1, 1995—Sep. 30, 19956.5%18572
Oct. 1, 1995—Dec. 31, 19956.5%18572
Jan. 1, 1996—Mar. 31, 19966.5%66620
Apr. 1, 1996—Jun. 30, 19965.5%64618
Jul. 1, 1996—Sep. 30, 19966.5%66620
Oct. 1, 1996—Dec. 31, 19966.5%66620
Jan. 1, 1997—Mar. 31, 19976.5%18572
Apr. 1, 1997—Jun. 30, 19976.5%18572
Jul. 1, 1997—Sep. 30, 19976.5%18572
Oct. 1, 1997—Dec. 31, 19976.5%18572
Jan. 1, 1998—Mar. 31, 19986.5%18572
Apr. 1, 1998—Jun. 30, 19985.5%16570
Jul. 1, 1998—Sep. 30, 19985.5%16570
Oct. 1, 1998—Dec. 31, 19985.5%16570
Jan. 1, 1999—Mar. 31, 19994.5%14568
Apr. 1, 1999—Jun. 30, 19995.5%16570
Jul. 1, 1999—Sep. 30, 19995.5%16570
Oct. 1, 1999—Dec. 31, 19995.5%16570
Jan. 1, 2000—Mar. 31, 20005.5%64618
December 26, 200712412007–52 I.R.B.

TABLE OF INTEREST RATES FOR CORPORATE
OVERPAYMENTS E
XCEEDING $10,000
FROM JANUARY 1, 1995 — PRESENT – Continued
1995–1 C.B.
RATETABLEPG
Apr. 1, 2000—Jun. 30, 20006.5%66620
Jul. 1, 2000—Sep. 30, 20006.5%66620
Oct. 1, 2000—Dec. 31, 20006.5%66620
Jan. 1, 2001—Mar. 31, 20016.5%18572
Apr. 1, 2001—Jun. 30, 20015.5%16570
Jul. 1, 2001—Sep. 30, 20014.5%14568
Oct. 1, 2001—Dec. 31, 20014.5%14568
Jan. 1, 2002—Mar. 31, 20023.5%12566
Apr. 1, 2002—Jun. 30, 20023.5%12566
Jul. 1, 2002—Sep. 30, 20023.5%12566
Oct. 1, 2002—Dec. 31, 20023.5%12566
Jan. 1, 2003—Mar. 31, 20032.5%10564
Apr. 1, 2003—Jun. 30, 20032.5%10564
Jul. 1, 2003—Sep. 30, 20032.5%10564
Oct. 1, 2003—Dec. 31, 20031.5%8562
Jan. 1, 2004—Mar. 31, 20041.5%56610
Apr. 1, 2004—Jun. 30, 20042.5%58612
Jul. 1, 2004—Sep. 30, 20041.5%56610
Oct. 1, 2004—Dec. 31, 20042.5%58612
Jan. 1, 2005—Mar. 31, 20052.5%10564
Apr. 1, 2005—Jun. 30, 20053.5%12566
Jul. 1, 2005—Sep. 30, 20053.5%12566
Oct. 1, 2005—Dec. 31, 20054.5%14568
Jan. 1, 2006—Mar. 31, 20064.5%14568
Apr. 1, 2006—Jun. 30, 20064.5%14568
Jul. 1, 2006—Sep. 30, 20065.5%16570
Oct. 1, 2006—Dec. 31, 20065.5%16570
Jan. 1, 2007—Mar. 31, 20075.5%16570
Apr. 1, 2007- Jun. 30, 20075.5%16570
Jul. 1, 2007—Sep. 30, 20075.5%16570
Oct. 1, 2007—Dec. 31, 20075.5%16570
Jan. 1, 2008—Mar. 31, 20084.5%62616
Section 7701.—Definitions
26 CFR 301.7701–4: Trusts.
This revenue procedure describes the conditions
under which changes to certain subprime mortgage
loans will not cause the Internal Revenue Service to
challenge the tax status of certain securitization vehi-
cles holding the loans. See Rev. Proc. 2007-72, page
1257.
2007–52 I.R.B.1242December 26, 2007

Part III. Administrative, Procedural, and Miscellaneous
Modification of Q&A–23 of
Notice 2007–7
Notice 2007–99
I. Purpose
This notice modifies Q&A–23 of No-
tice 2007–7, 2007–5 I.R.B. 395. Notice
2007–7, Q&A–23, states that the exclu-
sion provided under § 402(l) of the Internal
Revenue Code with respect to the payment
of certain health insurance premiums by
certain pension plans does not apply to pre-
miums paid to an accident or health plan
that is self-insured.
II. Background
Section 402(l) of the Internal Revenue
Code, which was added by section 845(a)
of Pension Protection Act of 2006, P.L.
109–280 (“PPA ’06”), provides for an ex-
clusion from gross income up to $3,000
annually for certain distributions paid from
an eligible governmental plan that are used
to pay qualified health insurance premi-
ums of an eligible retired public safety
officer or his or her spouse or dependents.
The term “qualified health insurance pre-
miums” is defined in § 402(l)(4)(D) as
“premiums for coverage for the eligible
retired public safety officer, his spouse,
and dependents, by an accident or health
insuranceplan or qualified long-term
care insurance contract (as defined in
§ 7702B(b)).” (Emphasis added.) Section
402(l)(5)(A) further limits the exclusion
to premiums that are paid “directly to
the provider of the accident or healthin-
suranceplan or qualified long-term care
insurance contract.” (Emphasis added.)
Section 402(l) applies to distributions in
taxable years beginning after December
31, 2006.
Notice 2007–7, Q&A–23, provides that
premiums paid to self-insured accident or
health plans are not eligible for the § 402(l)
exclusion from gross income because, in
order to receive favorable tax treatment
under § 402(l), the accident or health plan
receiving the premium payments must be
an accident or health insurance plan. Thus,
the plan must be providing insurance is-
sued by an insurance company regulated
by a State (including a managed care or-
ganization that is treated as issuing insur-
ance).
In general, §§ 104(a)(3) and 105(b)
and (c) exclude from gross income cer-
tain amounts received through accident
or health insurance.Under § 105(e)(1),
amounts received under an accident or
health plan for employees are treated as
received through accident or health in-
surance for purposes of §§ 104 and 105.
Section 1.105–5(a) of the Income Tax
Regulations provides that an accident
or health plan may be either insured or
self-insured.
On August 2, 2007, S. 1974, the Pen-
sion Protection Technical Corrections
Act of 2007, was introduced in the Sen-
ate and, on August 3, 2007, H.R. 3361,
the Pension Protection Technical Correc-
tions Act of 2007, was introduced in the
House of Representatives. Both bills have
identical provisions — § 9(i)(1)(B) and
(C) of S. 1974 and H.R. 3361 — which
would revise section 845(a) of PPA ’06
by deleting the word “insurance” from
the term “accident or health insurance
plan,” which occurs in both the definition
of qualified health insurance premiums in
§ 402(l)(4)(D) of the Code and the direct
payment requirement in § 402(l)(5)(A).
Because of these pending technical correc-
tions and special considerations involving
eligible retired public safety officers, No-
tice 2007–7, Q&A–23, is being modified.
III. Modification of Notice 2007–7,
Q&A–23
Notice 2007–7, Q&A–23, is modified
as follows:
Q–23. Can the accident or health plan
receiving the payments of qualified health
insurance premiums be a self-insured
plan?
A–23. Yes. An accident or health plan,
which is defined under § 105(e), includes a
self-insured plan. See § 1.105–5(a) of the
Income Tax Regulations.
IV. EFFECT ON OTHER
DOCUMENTS
Notice 2007–7 is modified.
DRAFTING INFORMATION
The principal author of this notice
is Angelique Carrington of Employee
Plans, Tax Exempt and Government
Entities Division. For further informa-
tion regarding this notice, please call
the Employee Plans customer assis-
tance service Monday through Friday
between 8:30 a.m. and 4:30 p.m. East-
ern time at (877) 829–5500 (a toll-free
number) or e-mail Ms. Carrington at
RetirementPlanQuestions@irs.gov.
Transition Relief and Guidance
on Corrections of Certain
Failures of a Nonqualified
Deferred Compensation Plan
to Comply with § 409A(a) in
Operation
Notice 2007–100
I. PURPOSE
This notice provides transition relief
and guidance on the correction of certain
failures of a nonqualified deferred com-
pensation plan to comply with § 409A(a)
in operation (an operational failure). This
transition relief and additional guidance
includes:
•Methods for correcting certain opera-
tional failures during the taxable year
of the service provider in which the
failure occurs to avoid income inclu-
sion under § 409A(a).
•Transition relief limiting the amount
includible in income under § 409A(a)
for certain operational failures oc-
curring in a service provider’s taxable
year beginning before January 1, 2010,
that involve only limited amounts.
•An outline of, and request for com-
ments on, a potential corrections pro-
gram that would permit service recipi-
ents and service providers to limit the
amounts required to be included in in-
come under § 409A(a) due to certain
operational failures.
December 26, 200712432007–52 I.R.B.

II. CORRECTIONS OF CERTAIN
OPERATIONAL FAILURES IN THE
SAME TAXABLE YEAR AS THE
FAILURE OCCURS
A.General Requirements
If an unintentional operational failure
to comply with § 409A(a) occurs, but the
operational failure is corrected in accor-
dance with this § II, no amount is required
to be included in income under § 409A(a)
as a result of the failure. The relief pro-
vided by this § II applies only to uninten-
tional operational failures, which means an
unintentional failure to comply with plan
provisions that satisfy the requirements of
§ 409A(a) and the guidance thereunder, or
an unintentional failure to follow the re-
quirements of § 409A(a) in practice, due to
one or more inadvertent errors in the oper-
ation of the plan. This § II does not provide
relief for plan terms and provisions that fail
to meet the requirements of § 409A and
the applicable guidance or for operational
failures for which a correction is not de-
scribedinthis§II.
1
Relief is not available
under this § II with respect to any inten-
tional failure to comply with the terms of a
plan or the requirements of § 409A in the
operation of a plan. In addition, relief is
not available under this § II with respect to
any exercise of a stock right that otherwise
would result in a failure to comply with
§ 409A. Relief otherwise available under
this § II is conditioned upon the timely fil-
ing and providing of the information re-
quired by § IV of this notice.
The relief provided under this § II is not
available unless, in addition to correcting
the operational failure in accordance with
this § II, the service recipient takes com-
mercially reasonable steps to avoid a re-
currence of the operational failure. If the
same or a substantially similar operational
failure has occurred previously, the relief
is not available for any taxable year of the
service provider beginning after Decem-
ber 31, 2008, unless the service recipient
demonstrates that the service recipient had
established practices and procedures rea-
sonably designed to ensure that such an op-
erational failure would not recur, had taken
commercially reasonable steps to avoid a
recurrence of the operational failure, and
the operational failure occurred despite the
diligent efforts of the service recipient.
Relief is not available under this § II
with respect to any intentional failure to
comply with the terms of a plan or the re-
quirements of § 409A in the operation of
a plan. The relief provided in this sec-
tion also is not available with respect to
an operational failure that is egregious,
or where the failure is directly or indi-
rectly related to participation in an abu-
sive tax avoidance transaction (meaning
for this purpose any listed transaction un-
der § 1.6011–4(b)(2)).
In each instance, the taxpayer claiming
the relief has the burden of demonstrating
that the taxpayer was eligible for the relief
and that the requirements of this section
have been met. Any application of the
relief provided in this section is subject to
examination by the IRS.
B.Failure to Defer Amount or Incorrect
Payment Corrected in the Same Taxable
Year
This § II.B applies to amounts of non-
qualified deferred compensation that, un-
der the terms of the plan and any appli-
cable deferral election, and § 409A and
the applicable guidance, should not have
been paid or made available to a service
provider in a taxable year of the service
provider, but were paid or made available
in that year due to an unintentional opera-
tional failure with respect to the plan, other
than a payment that fails to meet the re-
quirements of § 409A(a)(2)(B)(i) and the
applicable guidance thereunder (require-
ment to delay for six months payments
to a specified employee upon separation
from service). For rules relating to correc-
tion of certain payments made in violation
of § 409A(a)(2)(B)(i) and the applicable
guidance under that section, see § II.C of
this notice.
An amount to which this § II.B applies
is treated as having been timely deferred
in accordance with the terms of the plan
and any applicable deferral election (or as
having continued to be deferred under the
termsoftheplan)iftheserviceprovider
repays to the service recipient the amount
that was erroneously paid or made avail-
able to the service provider on or before
the last day of the service provider’s tax-
able year in which such amount was erro-
neously paid or made available, and im-
mediately after such repayment the service
provider has a legally binding right under
the plan to be paid the amount that would
have been due if such amount had not been
erroneously paid or made available to the
service provider during such taxable year,
at the same time and in the same form of
payment that the amount would have been
payable if such amount had not been erro-
neously paid or made available to the ser-
vice provider during such taxable year.
In addition, if the total of all amounts
to which this § II.B applies that are erro-
neously paid or made available under a
plan (as defined for purposes of § 409A)
in a service provider’s taxable year ex-
ceeds the limit on elective deferrals that
would apply to a qualified plan under
§ 402(g)(1)(B) for the year in which the
erroneous payment was made and the
service provider is an insider (as defined
in this § II.B) with respect to the service
recipient, to qualify for the relief provided
in this section, the service provider must
also pay interest to the service recipient
at the time the service provider repays the
amount to the service recipient equal to
the amount of the erroneous payment (E)
multiplied by the short-term applicable
Federal rate (AFR) under § 1274(d)(1) (r)
multiplied by a fraction, the numerator
of which is the number of days from the
erroneous payment date to the repayment
date (n
1
) and the denominator of which is
the number of days in such taxable year
(n
2
), or (Exrxn
1
/n
2
). For purposes of
the preceding sentence,ris the short-term
AFR, based on annual compounding, for
the month in which the erroneous pay-
ment was paid or made available to the
service provider. For purposes of counting
days under this § II.B, the first day of the
period is disregarded and the last day is
taken into account. Where a repayment
is made through a reduction of the ser-
vice provider’s other compensation, the
repayment date occurs on each date the
compensation otherwise would have been
paid to the service provider, and if the
amount withheld on a repayment date is
less than the entire erroneous payment, the
interest calculation in the preceding sen-
1
Reliance on the transition relief provided in Notice 2007–86, 2007–46 I.R.B.990, the preamble to the final regulations under § 409A, 72 Fed. Reg. 19234, Notice 2006–79, 2006–43 I.R.B.
763, the preamble to the proposed regulations under § 409A, 70 Fed. Reg. 57930, or Notice 2005–1, 2005–1 C.B. 274, for the years to which such transitionrelief applies, does not preclude
a taxpayer from qualifying for the relief provided in this notice with respect to unintentional operational errors occurring in taxable years beginning before January 1, 2009.
2007–52 I.R.B.1244December 26, 2007

tence is applied by substituting the unpaid
balance immediately before the repayment
for the amount of the erroneous payment.
For purposes of this notice, a service
provider is an insider with respect to a ser-
vice recipient if theservice provider is a
director or officer of the service recipient
or is directly or indirectly the beneficial
owner of more than 10 percent of any class
of any equity security of the service re-
cipient, determined in accordance with the
rules of the Securities and Exchange Com-
mission under § 16 of the Securities Ex-
change Act of 1934, as amended, 15 USC
78p, without regard to whether the service
recipient has any class of equity securities
registered under § 12 of such Act, 15 USC
78l. See 17 CFR § 240.16a–1(a) (benefi-
cial owner) and (f) (officer). In the case of
a service recipient that is not a corporation,
such rules are applied by analogy.
The service provider may satisfy the re-
quirement to repay the service recipient
the amount erroneously paid to the ser-
vice provider and interest (if applicable)
by paying the service recipient the equiv-
alent amount on or before the last day of
such taxable year. Alternatively, in lieu of
such repayment, the service recipient may
reduce the service provider’s compensa-
tion that otherwise would have been paid
during such taxable year by an equivalent
amount on or before the last day of such
taxable year. In either case, an amount
will not be treated as paid by the service
provider if, in connection with such pay-
ment, the service recipient pays the service
provider, or otherwise provides a benefit
(including an obligation to pay an amount
or provide a benefit in the future), intended
as a substitute for all or part of the amount
the service provider is required to repay the
service recipient.
The amount erroneously paid to the ser-
vice provider that is repaid by the service
provider to the service recipient is not re-
quired to be included in income by the ser-
vice provider, or reported as income to the
service provider on a Form W–2 or Form
1099 by the service recipient. To the ex-
tent employment taxes have been withheld
and paid with respect to such payment, ap-
propriate adjustments should be made un-
der the applicable rules under § 6413. To
the extent that, in lieu of repayment, the
service recipient reduces other compen-
sation that would have been paid to the
service provider, the other compensation
that would have been paid to the service
provider, but instead is used to repay the er-
roneous payment or to pay any required in-
terest on the erroneous payment, is includi-
ble in income (and wages if the service
provider is an employee); however, any
employment taxes withheld and paid with
respect to the original erroneous payment
maybeappliedtosatisfytherequirement
to withhold and pay employment taxes on
such compensation, in which case no ad-
justment to the employment taxes previ-
ouslywithheldandpaidshouldbemade.
For purposes of this § II.B, the ser-
vice provider’s account balance or other
amount of deferred compensation under
the plan may be adjusted for earnings (or
losses) retroactive to the date the amount
should have been credited to the service
provider’s account or otherwise deferred
(or if the amount should have otherwise
remained deferred compensation after the
end of the service provider’s taxable year,
retroactive to the date the amount was paid
or made available), provided that such ad-
justment must be made on or before the last
day of such taxable year (or if it is imprac-
ticable to make the adjustment by the end
of such taxable year, the service provider
(in the case of earnings) and the service re-
cipient (in the case of losses) must have a
legally binding right to have such adjust-
ment made on or before the last day of such
taxable year).
The relief provided in this § II.B is not
available with respect to any erroneous
payment occurring during any taxable
year of the service provider in which
the service recipient experienced a sub-
stantial financial downturn or otherwise
experienced financial or other issues that
indicated a significant risk that the ser-
vice recipient would not be able to pay
the amount deferred when the payment
became due.
In each of the following examples, it is
assumed that Employer does not make any
payment to Employee, or otherwise pro-
vide a benefit (including an obligation to
pay an amount or provide a benefit in the
future) to or on behalf of Employee, that is
intended as a substitute for all or part of the
amount that Employee pays to Employer
(or the reduction in compensation other-
wise payable to Employee), that Employee
is an individual whose taxable year is the
calendar year, that Employer did not ex-
perience a substantialfinancial downturn
or otherwise experience financial or other
issues that indicated a significant risk that
the service recipient would not be able to
pay the amount deferred when the payment
became due, and that Employee and Em-
ployer each satisfy the other applicable re-
quirements of this § II.
Example 1: Employee, who is not an insider with
respect to Employer, makes a timely election to de-
fer 50% of a bonus payable in 2007 pursuant to an
account balance plan maintained by Employer. The
bonus is $100,000. Due to an unintentional opera-
tional failure with respect to the plan, Employer de-
fers only 10% of the bonus, or $10,000, and pays
Employee the other $90,000 in 2007 (including the
$40,000 that should have been deferred). The defer-
ral is treated as made inaccordance with the terms
of the plan and the deferral election if, on or before
December 31, 2007, the additional $40,000 is cred-
ited to Employee’s account balance and Employee
pays Employer $40,000. The $40,000 erroneously
paid to Employee is not required to be included in in-
come by Employee or reported by Employer on Form
W–2. Alternatively, in lieu of the $40,000 repayment
by Employee to Employer, compensation otherwise
payable to Employee in 2007 (such as salary pay-
ments) may be reduced by $40,000, provided that the
$40,000 reduction in Employee’s compensation used
to repay the amount (but not the $40,000 erroneous
payment) is included in income by Employee and re-
ported as wages by Employer on the 2007 Form W–2.
Employer may also adjust Employee’s account to re-
flect the earnings (or losses) that would have been al-
located to Employee’s account had the amount been
timely deferred and credited to Employee’s account
balance, if such adjustment for earnings (or losses)
is made on or before December 31, 2007. Alter-
natively, if it is impracticable to make the adjust-
ment on or before December 31, 2007, such adjust-
ment may be made later retroactively to December
31, 2007, provided that Employee and Employer each
has a legally binding right on December 31, 2007
with respect to such adjustment. For example, if the
original incorrect deferral would have been credited
with 10% in deemed investment earnings, the defer-
ral plus earnings would be $11,000. This amount
must be increased by the $40,000 repaid by Employee
and may also be increased by an additional $4,000
($40,000 multiplied by 10%), to result in the $55,000
account balance that would have been reflected had
the amount been properly deferred. If the original in-
correct deferral would have been charged with 10%
in deemed investment losses, the deferral less losses
would be $9,000. This account balance must be in-
creased by the $40,000, but may also be reduced by
$4,000, for a net increase of $36,000, to result in the
$45,000 account balance that would have been re-
flected had the amount been properly deferred.
Example 2: Pursuant to a nonqualified deferred
compensation plan sponsored by Employer, Em-
ployee, who is an insider with respect to Employer, is
scheduled to receive a $10,000 installment payment
in 2007 that is not subject to the 6-month delay for
payments to specified employees upon separation
from service under § 409A(a)(2)(B)(i). Due to an
unintentional operational failure with respect to the
plan, Employer pays Employee $11,000. The in-
stallment payment is treated as made in accordance
December 26, 200712452007–52 I.R.B.

with the terms of the plan and the deferral election if
on or before December 31, 2007, the excess $1,000
payment is credited to Employee’s account balance,
and Employee pays Employer $1,000. The $1,000
isnotrequiredtobeincludedinincomebyEm-
ployee or reported by Employer as wages on Form
W–2. Alternatively, in lieu of the $1,000 payment by
Employee to Employer, Employee’s compensation
otherwise payable in 2007 (such as salary payments)
may be reduced by $1,000, provided that the $1,000
reduction in Employee’s compensation used to repay
the amount (but not the $1,000 erroneous payment)
is included in income by Employee and reported by
Employer as wages on the 2007 Form W–2. Because
the excess $1,000 payment does not exceed the ap-
plicable limit on elective deferrals that would apply
to a qualified plan under § 402(g)(1)(B), Employee
is not required to pay any interest to qualify for
the relief. Employer may also adjust Employee’s
account to reflect the earnings (or losses) that would
have been allocated to Employee’s account had the
amount been timely deferred and credited to Em-
ployee’s account balance,if such adjustment for
earnings (or losses) is made on or before December
31, 2007. Alternatively, if it is impracticable to make
the adjustment on or before December 31, 2007,
such adjustment may be made later retroactively to
December 31, 2007, provided that on December 31,
2007, Employee and Employer each has a legally
binding right with respect to such adjustment.
Example 3: Employee, who is an insider with re-
spect to Employer, makes a timely election to defer
80% of a $100,000 bonus payable on July 1, 2009,
pursuant to an account balance plan maintained by
Employer. Due to an unintentional operational fail-
ure with respect to the plan, Employer defers only
10% of the bonus, or $10,000, and pays Employee the
other $90,000 (including $70,000 that should have
been deferred) on July 1, 2009. Assume for purposes
of this example that the short-term AFR, based on an-
nual compounding, for July 2009 is 4.0 percent. Em-
ployer notifies Employee of the error and Employee
pays Employer $70,705.75 on October 1, 2009, con-
sisting of the $70,000 erroneous payment plus interest
equal to $705.75 ($70,000 x .04 x 92/365) (because
the erroneous payment exceeds the limit on elective
deferrals that would apply to a qualified plan under
§ 402(g)(1)(B) for 2009 and Employee is an insider).
The deferral is treated as made in accordance with
the terms of the plan under this § II.B. The $70,000
is not required to be included in income by Employee
or reported as wages by Employer on Form W–2. Al-
ternatively, in lieu of the $70,705.75 payment by Em-
ployee to Employer, compensation otherwise payable
to Employee in 2009 (such as salary payments) may
be reduced by $70,000 plus applicable interest, in
which case the reduction in Employee’s compensa-
tion used to repay the amount plus interest (but not
the erroneous $70,000 payment) must be reported by
Employer as wages on the 2009 Form W–2 issued
to Employee and included in Employee’s income for
2009. Employer may also adjust Employee’s account
to reflect the earnings that would have been allocated
to Employee’s account had the amount been timely
deferred and credited to Employee’s account balance,
if such adjustment for earnings is made on or before
December 31, 2009. Alternatively, if it is impracti-
cable to make the adjustment on or before December
31, 2009, such adjustment may be made retroactively
to December 31, 2009, provided that Employee and
Employer each have a legally binding right on De-
cember 31, 2009 with respect to such adjustment.
C.Incorrect Payment in Violation of
§ 409A(a)(2)(B)(i) Corrected in the Same
Taxable Year
This section applies to amounts of non-
qualified deferred compensation that, un-
der the terms of the plan and any applicable
deferral election, and § 409A(a)(2)(B)(i)
(requirement to delay for six months
payments to a specified employee upon
separation from service) and the applica-
ble guidance, should not have been paid
or made available to a service provider for
at least six months following the service
provider’s separation from service, but
that were paid or made available to the
service provider before the expiration of
such six-month period due to an uninten-
tional operational failure with respect to
the plan. For the ability to correct certain
other payments in violation of § 409A and
the applicable guidance, see § II.B of this
notice.
With respect to an amount to which this
§ II.C applies, the service provider will
not be treated as having failed to comply
with § 409A(a)(2)(B)(i) and the terms of
the plan and any applicable deferral elec-
tion as a result of the amount being paid or
made available at the earlier date if, on or
before the last day of the service provider’s
taxable year in which the amount was paid
or made available, the service provider re-
pays to the service recipient the amount
that was erroneously paid or made avail-
able to the service provider, immediately
after such repayment the service provider
has a legally binding right to receive such
amount from the service recipient on the
date that is the same number of days af-
ter the later of (i) the date the amount
would otherwise have been payable un-
der the terms of the plan and the appli-
cable deferral election or (ii) the date of
the repayment as the number of days from
the date the service recipient made the er-
roneous payment to the service provider
through the date the service provider re-
paid the erroneous payment to the service
recipient, and the repaid amount is not paid
or made available to the service provider
before such date. For purposes of count-
ing days under this § II.C, the first day
of the period is disregarded and the last
day is taken into account (for example, if
on June 1, 2008, a service recipient mis-
takenly paid a service provider an amount
that the service provider repaid on June
30, 2008, there would be 29 days from the
date of payment through the date of repay-
ment).
If the requirements of this § II.C are
met, the original payment from the ser-
vice recipient to the service provider that
has been repaid to the service recipient is
not required to be reported as income on
Form W–2 or Form 1099, as applicable.
To the extent employment taxes have been
withheld and paid with respect to such
payment, appropriate adjustments should
be made under the applicable rules under
§ 6413. However, the subsequent payment
of the amount by the service recipient to
the service provider is required to be re-
ported appropriately as income on Form
W–2 or Form 1099, as applicable, and sub-
ject to the applicable employment taxes. If
the payment is deductible by the service re-
cipient, the taxable year in which such de-
duction is allowable will be determined in
accordance with § 404(a)(5) and the ser-
vice recipient’s method of accounting.
The relief provided in this section
is not available with respect to any er-
roneous payment occurring during any
taxable year of the service provider in
which the service recipient experienced a
substantial financial downturn or other-
wise experienced financial or other issues
that indicated a significant risk that the
service recipient would not be able to pay
the amount deferred when the payment
became due.
In each of the following examples, it is
assumed that: Specified Employee is an
individual whose taxable year is the cal-
endar year; at all relevant times Specified
Employee is a specified employee of Em-
ployer for purposes of § 409A(a)(2)(B)(i);
at all relevant times Employer is not ex-
periencing any substantial financial down-
turn or any other financial or other issue
that indicates a significant risk that Em-
ployer would not be able to pay the rele-
vant deferred amounts when due; and Em-
ployee and Employer each satisfy the other
applicable requirements of this § II.
Example 1: Under a nonqualified deferred com-
pensation plan sponsored by Employer, Specified
Employee has a legally binding right to a payment of
deferred compensation on the first day of the seventh
month following Specified Employee’s separation
from service. Specified Employee separates from
service on November 15, 2007 so that the payment
2007–52 I.R.B.1246December 26, 2007

is due on June 1, 2008. Due to an unintentional op-
erational failure with respect to the plan, Employer
pays Specified Employee the amount of deferred
compensation on May 1, 2008. Employer discovers
the error on July 1, 2008, and Specified Employee
repays the amount to Employer on July 1, 2008 (61
days after the erroneous payment). Provided that im-
mediately after such repayment Specified Employee
has a legally binding right to receive the amount
from Employer on August 31, 2008 (61 days after
the July 1, 2008 repayment date) and Employer does
not repay the amount to Specified Employee before
that date, Specified Employee will not be treated
ashavingfailedtocomplywith§409A(a)(2)(B)(i)
and the terms of the plan and the applicable deferral
election solely as a result of the early payment.
Example 2: Under a nonqualified deferred com-
pensation plan sponsored by Employer, Specified
Employee has a legally binding right to a payment
of deferred compensation payable on the first day
of the seventh month following separation from
service. Specified Employee separates from ser-
vice on May 1, 2008 so that the payment is due on
December 1, 2008. Due to an unintentional oper-
ational failure with respect to the plan, Employer
pays Specified Employee the amount of deferred
compensation on May 1, 2008. Employer discovers
the error and Specified Employee repays the amount
to Employer on July 1, 2008 (61 days after the er-
roneous payment). Provided that immediately after
such repayment Specified Employee has a legally
binding right to receive the amount from Employer
on January 31, 2009 (61 days after December 1,
2008) and Employer does not repay the amount to
Specified Employee before that date, Specified Em-
ployee will not be treated as having failed to comply
with § 409A(a)(2)(B)(i) and the terms of the plan
and the applicable deferral election solely as a result
of the early payment. The erroneous payment is not
includible in Specified Employee’s income, and is
not required to be reported on the 2008 Form W–2.
Such amount is includible in Specified Employee’s
income in the year in which the amount is repaid
by Employer to Specified Employee pursuant to the
plan, and is required to be reported on that year’s
Form W–2 and subject to applicable employment
taxes.
D.Excess Deferred Amount Corrected in
theSameTaxableYear
If under the terms of a plan and an ap-
plicable deferral election, and § 409A and
the applicable guidance, an amount that
should not have been deferred compensa-
tion under the plan is credited to the service
provider’s account or otherwise treated as
deferred compensation under the plan as a
result of an unintentional operational fail-
ure with respect to the plan, and such ex-
cess amount otherwise would have been
paid to the service provider during the ser-
vice provider’s taxable year in which the
excess amount was incorrectly credited to
the service provider’s account or other-
wise treated as deferred compensation un-
der the plan, the excess amount is not
treated as an amount deferred under the
plan if the excess amount is paid to the
service provider on or before the last day
of the service provider’s taxable year in
which the excess amount was incorrectly
treated as deferred compensation. The
amount to which the service provider has
a legally binding right under the plan at
the end of the year must be adjusted to re-
flect the payment (for example, through a
reduction in the account balance). In ad-
dition, if the service provider is an insider
with respect to the service recipient (as de-
fined in § II.B of this notice), the remaining
account balance (or other deferred com-
pensation under the plan) must be adjusted
for positive earnings retroactive to the date
the excess amount was incorrectly credited
to the service provider’s account or oth-
erwise incorrectly treated as deferred un-
der the plan, provided that such adjustment
must be made on or before the last day
of the service provider’s taxable year in
which such amount was incorrectly treated
as deferred compensation under the plan
(or if it is impracticable to make the ad-
justment by the end of such year, the ser-
vice recipient must have a legally bind-
ing right on the last day of such taxable
year to make such adjustment retroactively
to such date). In other cases, such ad-
justment may be (but is not required to
be) made. Where the amount was subject
to losses, the remaining account balance
(or other deferred compensation under the
plan) is not required to be adjusted, but
may be adjusted for such losses retroac-
tive to the date the excess amount was in-
correctly credited to the service provider’s
account or otherwise incorrectly treated as
deferred under the plan, provided that such
adjustment must be made on or before the
last day of the service provider’s taxable
year in which such amount was incorrectly
treated as deferred compensation under the
plan (or if it is impracticable to make the
adjustment by the end of such taxable year,
the service provider must have a legally
binding right on the last day of such tax-
able year to require that such an adjustment
be made retroactively to the date of the
failure). The service recipient may (but is
not required to) pay reasonable interest to
(or otherwise reasonably compensate) the
service provider to reflect the time value
of money with respect to the late pay-
ment, provided that such interest or other
compensation is paid or made available by
the end of the service provider’s taxable
year in which such amount was incorrectly
treated as deferred compensation under the
plan.
This relief is not applicable to a service
recipient’s failure to timely pay in the
proper taxable year of a service provider
amounts that were deferred in one or
more previous taxable years of the service
provider. However, see § 1.409A–3(d) for
certain circumstances under which such
payments may be treated as made in ac-
cordance with a designated payment date.
Example: Employee, who is an insider with re-
spect to Employer and whose taxable year is the cal-
endar year, makes a timely election pursuant to an
account balance plan to defer 10% of a bonus oth-
erwise payable in 2007. The bonus is $100,000. Due
to an unintentional operational failure with respect
to the plan, Employer defers 50% of the bonus, or
$50,000, and pays Employee $50,000 (instead of de-
ferring $10,000 and paying Employee $90,000). The
excess $40,000 will not be treated as deferred under
the plan if on or before December 31, 2007, Employer
pays Employee $40,000 of the account balance under
the plan, and Employee and Employer each satisfy
the other applicable requirements of this § II. The re-
maining account balance must be adjusted for earn-
ings and may be adjusted for losses that were alloca-
ble to such amount under the plan. For example, if
the account was credited with 10% in deemed invest-
ment earnings, the account balance must be reduced
by both the $40,000 paid to Employee and the $4,000
in earnings, or $44,000, to result in the $11,000 ac-
count balance that would have been reflected had the
deferred compensation under the plan been properly
deferred. The adjustment must be made by Decem-
ber 31, 2007, except that the adjustment can be made
later, retroactively as of that date, if it is impractica-
ble to make the adjustment by December 31, 2007
and the service recipient has a legally binding right
on that date to make such a retroactive adjustment.
If the account was charged with 10% in deemed in-
vestment losses, the account balance must be reduced
by the $40,000, but may be increased not later than
December 31, 2007, by the $4,000 in losses on the
improperly deferred amount, for a net reduction of
$36,000, to result in the $9,000 account balance that
would have been reflected had the deferred compen-
sation under the plan been properly deferred. Alter-
natively, if it is impracticable to make the adjustment
on or before December 31, 2007, such $4,000 adjust-
ment may be made later retroactively to December
31, 2007, provided that the service provider has a
legally binding right on December 31, 2007, to have
such adjustment made. Employer may (but is not re-
quired to) pay Employee reasonable interest on the
$40,000 erroneous deferral provided such payment is
made by December 31, 2007.
E.Correction of Exercise Price of
Otherwise Excluded Stock Rights
This § II.E applies if under the terms
of a stock right, the stock right would
December 26, 200712472007–52 I.R.B.

not be nonqualified deferred compensation
under § 1.409A–1(b)(5)(i)(A) (excluded
stock options) or § 1.409A–1(b)(5)(i)(B)
(excluded stock appreciation rights), ex-
cept that the exercise price of the stock
right is less than the fair market value of
the underlying stock on the date of grant.
This section applies only if the failure of
the exercise price to equal or exceed the
fair market value of the underlying stock
results from an unintentional administra-
tive error in determining the exercise price.
If this section applies to a stock right, the
stock right is treated from the date of grant
as not providing for nonqualified deferred
compensation for purposes of § 409A. This
section applies if before the stock right is
exercised and not later than the last day of
a service provider’s taxable year in which
the service recipient granted the service
provider the stock right, the exercise price
is reset to an amount equal to or exceed-
ing the fair market value of the underlying
stock on the date of grant, and at all times
before such increase in the exercise price
the stock right otherwise would not have
provided for nonqualified deferred com-
pensation for purposes of § 409A. For ex-
ample, assume that on January 1, 2008, an
employer grants an employee a stock op-
tion to purchase 100 shares of stock, and
the stock option would otherwise be ex-
cluded from coverage under § 409A except
that due to an unintentional administrative
error the exercise price is set at an amount
below the fair market value of the stock
on January 1, 2008. Assume further that
on July 1, 2008, the employee partially ex-
ercises the stock option and purchases 40
shares, but retains a stock option to pur-
chase 60 shares. Provided that on or be-
fore December 31, 2008, the exercise price
of the remaining stock option to purchase
60 shares is reset to a price at or above the
fair market value of the underlying stock
on January 1, 2008, the stock option to pur-
chase 60 shares may qualify for the relief
provided in this section. Because the exer-
cise price was not reset before July 1, 2008,
the portion of the stock option that was ex-
ercised to purchase 40 shares is not eligible
for the relief provided in this section.
III. TRANSITION RELIEF
FOR CERTAIN OPERATIONAL
FAILURES INVOLVING LIMITED
AMOUNTS OCCURRING DURING
TAXABLE YEARS BEGINNING
BEFORE 2010
A.General Requirements
If an unintentional operational failure
to comply with § 409A(a) occurs during a
service provider’s taxable year beginning
before January 1, 2010, but the operational
failure qualifies for the relief provided in
this § III and is corrected in accordance
with this § III, the amount required to be
included in income under § 409A(a) as a
result of the failure, and the resulting ad-
ditional taxes under § 409A, are limited in
accordance with the provisions of this sec-
tion. In each instance, the taxpayer claim-
ing the relief (the service provider, the ser-
vice recipient, or both) has the burden of
demonstrating that such taxpayer was el-
igible for the relief and that the require-
ments of this section have been met. Any
application of the relief provided in this
section is subject to examination by the
IRS.
The relief provided by this section ap-
plies only to unintentional operational fail-
ures, which means an unintentional fail-
uretocomplywithplanprovisionsthat
satisfy the requirements of § 409A(a) and
the guidance thereunder, or an uninten-
tional failure to follow the requirements of
§ 409A in practice, due to one or more
inadvertent errors in the operation of the
plan. This notice does not apply to plan
terms that fail to meet the requirements of
§ 409A and applicable guidance or to op-
erational failures for which a correction is
not provided in this § III.
The relief provided under this § III is
not available unless, in addition to correct-
ing the operational failure in accordance
with this § III, the service recipient takes
commercially reasonable steps to avoid a
recurrence of the operational failure. For
any taxable year of the service provider be-
ginning after December 31, 2008, if the
same or a substantially similar operational
failure has occurred previously, the ser-
vice recipient must demonstrate that the
service recipient had established practices
and procedures reasonably designed to en-
sure that such an operational failure would
not recur, had taken commercially reason-
able steps to avoid a recurrence of the op-
erational failure and that the operational
failure occurred despite the diligent efforts
of the service recipient. Relief otherwise
available under this § III is conditioned
upon the timely filing and providing of the
informationrequiredby§IVofthisnotice.
The relief provided by this section is
not available with respect to any failure
unless all of the requirements of this sec-
tion (other than the requirements of § IV
of this notice) have been satisfied not later
than the end of the second taxable year
of the service provider following the tax-
able year of the service provider in which
such failure occurred. In addition, the re-
lief provided in this section is not available
if a federal income tax return of the ser-
vice provider for the taxable year of the
service provider in which the failure oc-
curred is under examination with respect
to the plan. For this purpose, an individual
service provider is treated as under exam-
ination with respect to the plan if the indi-
vidual is under examination with respect to
the individual’s federal income tax return
(for example, Form 1040) for the taxable
year.
Relief is not available under this § III
with respect to any intentional failure to
comply with the terms of a plan or the re-
quirements of § 409A in the operation of
a plan. The relief provided in this sec-
tion also is not available with respect to
an operational failure that is egregious,
or where the failure is directly or indi-
rectly related to participation in an abu-
sive tax avoidance transaction (meaning
for this purpose any listed transaction un-
der § 1.6011–4(b)(2)). The relief provided
in this section also is not available with re-
spect to a failure to comply with § 409A
resulting from an exercise of a stock right.
B.Failure to Defer Limited Amount not
Corrected in the Same Taxable Year and
Certain Erroneous Payments
This § III.B applies if during a service
provider’s taxable year beginning before
January 1, 2010, an unintentional opera-
tional failure occurs that meets the follow-
ing requirements:
(1) An amount should have been treated
as deferred compensation under the terms
of the plan and any applicable deferral
election, and § 409A and the applicable
guidance, but the amount was not credited
2007–52 I.R.B.1248December 26, 2007

to the service provider’s account or other-
wise treated as deferred compensation dur-
ing the service provider’s taxable year, or
did not remain deferred compensation af-
ter the end of such year;
(2) Because the amount was not cred-
ited to the service provider’s account or
otherwise treated as deferred compensa-
tion under the plan during such year, or
did not remain deferred compensation un-
der the plan after the end of such year,
the amount was paid or made available
to the service provider during the service
provider’s taxable year;
(3) Section II.B of this notice does not
apply because relief is not available under
§ II.B of this notice with respect to the
failure, the failure is not corrected under
§ II.B of this notice, or otherwise; and
(4) The amount paid or made available
to the service provider does not exceed the
limit on elective deferrals that would apply
to a qualified plan under § 402(g)(1)(B) for
the year of the operational failure.
In such a case, if the plan is otherwise
compliant with the requirements of § 409A
and the applicable guidance, the amount
includible in income under § 409A(a)
as a result of such payment is limited to
the amount that should have been treated
as deferred compensation under the plan
(or should have continued to be deferred
compensation under the plan) but was
instead paid or made available to the ser-
vice provider, and does not include any
other amounts deferred under the plan.
In addition, with respect to such amount
includible in income under § 409A(a), the
service provider is required to pay the ad-
ditional tax under § 409A(a)(1)(B)(i)(II)
(the additional 20% tax), but is not re-
quired to pay the additional tax under
§ 409A(a)(1)(B)(i)(I) (the premium inter-
est tax).
For purposes of this section, a pay-
ment of an amount (including a payment
of an amount that is one of a series of
installment payments or life annuity pay-
ments) that under the terms of the plan
and § 409A(a)(2)(B)(i) and the applica-
ble guidance is required to be delayed
for at least six months following a sep-
aration from service, but is paid before
the completion of that six months, may
be treated as the payment of an amount
that should have continued to be deferred
compensation. In addition, for purposes
of this section, the plan includes any ar-
rangements treated as a single plan under
§ 1.409A–1(c), so that this section will
apply only if any and all erroneous pay-
ments under the plan, in the aggregate, of
amounts that otherwise should have been
treated as deferred compensation with re-
spect to the service provider during the
taxable year (or should have continued
to be deferred compensation during the
taxable year), do not exceed the limit on
elective deferrals that would apply to a
qualified plan under § 402(g)(1)(B) for
such year. The relief provided in this
§ III.B is not available if the operational
failure occurred during a taxable year of
the service provider in which the service
recipient experienceda substantial finan-
cial downturn or otherwise experienced
financial or other issues that indicated a
significant risk that the service recipient
would not be able to pay the amount de-
ferred when the payment became due.
It is assumed for purposes of the follow-
ing examples that: Employee is an individ-
ual whose taxable year is the calendar year;
Employee’s tax return is not under exam-
ination for any relevant period; during all
relevant periods Employer did not experi-
ence any financial downturn or financial
or other issues indicating a significant risk
that Employer would not be able to pay
relevant deferred amounts when due; and
Employee and Employer each satisfy the
other applicable requirements of this § III.
Example 1: Employee makes a timely election to
defer 10% of a bonus payable in 2007 pursuant to an
account balance plan. The bonus is $10,000. Due
to an unintentional operational failure with respect
to the plan, Employer defers only 8% of the bonus,
or $800, and pays Employee $9,200 (instead of de-
ferring $1,000 and paying Employee $9,000). The
amount is not corrected by December 31, 2007, when
Employee’s account balance is $100,000. As a pay-
ment to Employee, Employer must treat the amount
as a wage payment for employment tax and reporting
purposes, as appropriate, including reporting as in-
come and wages on the 2007 Form W–2. Employer
is permitted to report as income under § 409A on the
2007 Form W–2 (or 2007 Form W–2c), Box 12, us-
ing Code Z, only $200, and Employee is permitted to
include in income under § 409A for 2007 only $200.
Furthermore, Employee is permitted to pay the addi-
tional 20% tax only with respect to the $200 (or $40
in additional income tax), and is not required to pay
the premium interest tax.
Example 2: Employee is a specified employee
entitled under a nonqualified deferred compensation
plan to a life annuity commencing upon the first
day of the seventh month following the specified
employee’s separation from service. The annuity
payments are $2,000 per month. Employee separates
from service on April 18, 2007, and is scheduled to
receive an initial annuity payment on November 1,
2007. Due to an inadvertent miscalculation of the
specified employee’s separation from service date,
Employee receives a $2,000 payment on October 1,
2007, before the end of the 6-month period following
Employee’s separation from service. Employer and
Employee do not discover the error until 2008, so that
the relief provided in § II.C of this notice is not avail-
able. As a payment to Employee, Employer must
treat the amount as a wage payment for employment
tax and reporting purposes, as appropriate, including
reporting as income on the 2007 Form W–2. Em-
ployer is permitted to report as income under § 409A
on the 2007 Form W–2 (or 2007 Form W–2c), Box
12, using Code Z, only $2,000, and Employee is
permitted to include in income under § 409A in 2007
only $2,000. Furthermore, Employee is permitted to
pay the additional 20% tax only with respect to the
$2,000 (or $400 in additional income tax), and is not
required to pay the premium interest tax.
C.Limited Excess Deferred Amount not
Corrected in the Same Taxable Year
This§III.Cappliesifonorbeforethe
last day of a service provider’s taxable year
beginning before January 1, 2010, the fol-
lowing requirements are met:
(1) Under the terms of the plan and any
applicable deferral election, and § 409A
and the applicable guidance, an amount
of deferred compensation under the plan
should have been paid or made available
to the service provider during the service
provider’s taxable year, or an amount is
treated as deferred compensation under the
plan that should have been paid or made
available to the service provider during the
service provider’s taxable year, but such
amount is not paid or made available due
to an unintentional operational failure with
respect to the plan;
(2) Section II.D of this notice does not
apply because relief is not available under
§ II.D of this notice with respect to the
failure, the failure is not corrected under
§ II.D of this notice, or otherwise;
(3) The amount that should have been
paid or made available to the service
provider during that service provider’s
taxable year does not exceed the limit on
elective deferrals that would apply to a
qualified plan under § 402(g)(1)(B) for
such year;
(4)Bythelateroftheendoftheservice
provider’s taxable year in which the fail-
ure is discovered or the fifteenth day of the
third month following the date upon which
the failure is discovered, the service recip-
ient pays the service provider the amount
that should have been paid or made avail-
able to the service provider, provided that
December 26, 200712492007–52 I.R.B.

any earnings allocable to such amounts
through the date of the payment are ei-
ther forfeited or added to the payment to
the service provider, and any losses allo-
cable to such amounts through the date of
the payment are either permanently disre-
garded or subtracted from the payment to
the service provider, and the service recip-
ient reports such payment on a Form W–2
or Form 1099, as applicable, in accordance
with the requirements of this section; and
(5) The service provider includes such
amount in income and pays the additional
taxes under § 409A(a) as described in this
section on a timely filed federal income tax
return (including an income tax return filed
in accordance with a timely request for ex-
tension, but not including an amended in-
come tax return).
In such a case, if the plan otherwise
complies with the requirements of § 409A
and the applicable guidance, the amount
includible in income under § 409A(a) as a
result of such failure is limited to the ex-
cess amount paid to the service provider,
and does not include any other deferred
compensation under the plan, and the
amount is includible in income only when
paid to the service provider in accordance
with this section. In addition, with respect
to this amount includible in income under
§ 409A(a), the service provider is required
to pay the additional 20% tax, but is not
required to pay the premium interest tax.
If the service recipient properly reports
the payment as includible in income under
§ 409A on a Form W–2, if applicable, for
the year in which the payment was made,
including reporting such amount on Form
W–2, Box 12 using Code Z, the service
recipient will not be subject to penalties
or liability for the failure to properly with-
hold under § 3402.
For purposes of this section, the plan
includes any arrangements treated as a
single plan under § 1.409A–1(c), so that
this section will apply only if any and
all erroneous deferrals under the plan, in
the aggregate, of amounts that otherwise
should have been paid during the ser-
vice provider’s taxable year to the service
provider do not exceed the applicable limit
on elective deferrals that would apply to a
qualified plan under § 402(g)(1)(B).
Example: Employee, who has a calendar year tax-
able year, makes a timely election to defer 8% of a
bonus payable in 2007 into an account balance plan.
The bonus is $10,000. Due to an unintentional op-
erational failure with respect to the plan, Employer
defers 10% of the bonus, or $1,000, and pays Em-
ployee $9,000 (instead of deferring $800 and paying
Employee $9,200). The plan otherwise complies with
§ 409A and the applicable guidance. Employer dis-
covers the error on February 1, 2008, so that the ex-
cess deferred amount of $200 is not corrected by De-
cember 31, 2007. On March 1, 2008, at which time
Employee’s account balance includes $15 in earnings
on the excess $200 credited to the account, Employer
pays Employee $215. Employer reports the $215 as
income under § 409A on the 2008 Form W–2, Box
1 and Box 12, using Code Z and satisfies the other
applicable requirements of this § III, including the
requirements of § IV of this notice. Provided that
Employee reports such income and pays the applica-
ble taxes, including the additional § 409A taxes, on a
timely filed 2008 Form 1040 (including a 2008 Form
1040 filed under extension, but not an amended 2008
Form 1040), and satisfies the applicable requirements
of § IV of this notice, Employee is not required to in-
clude any additional amounts deferred under the plan
in income under § 409A(a) or to include any amount
in income under § 409A for years before 2008, and
with respect to the $215 includible in income under
§ 409A is required to pay only the additional 20%
tax (or $42.50 in additional income tax), and not the
premium interest tax. Employer may also have paid
Employee only the $200 excess deferred amount if
the $15 in earnings on such amount were forfeited.
IV. INFORMATION AND
REPORTING REQUIREMENTS
A.Information Required with Respect
to Correction of an Operational Failure
in the Same Taxable Year as the Failure
Occurs
A service recipient described in § II
of this notice must attach to its timely-
filed (including extensions) original fed-
eral income tax return for its taxable year
in which the failure occurred a statement
entitled “§ 409A Relief under § II of No-
tice 2007–100” setting out the informa-
tion required by § IV.A.1 of this notice,
and must provide to each service provider
affected by such failure a statement enti-
tled “§ 409A Relief under § II of Notice
2007–100” setting out the information re-
quired by § IV.A.2 of this notice by no later
than the date (with extensions) on which
it is required to provide an information re-
turn (Form W–2 or 1099) to such service
provider for the calendar year in which
such failure occurred (or if no information
return is required for such service provider,
not later than the January 31 following the
calendar year in which such failure oc-
curred). Notwithstanding the foregoing, to
qualify for the relief described in § II.E of
this notice (Correction of Exercise Price
of Otherwise Excluded Stock Rights), the
service recipient is not required to provide
a statement to such service provider with
respect to such failure. In addition, each
taxpayer relying on the relief provided in
§ II of this notice must provide notice to the
examining agent upon the commencement
of an examination of such taxpayer’s fed-
eral tax return that the taxpayer was relying
upon the relief provided under this notice
for years covered by the examination (ex-
cept in the case of a service provider for
whom a correction has been made under
§ II.E of this notice).
1.Attachment to Service Recipient Tax
Return for Failures Described in § II
The service recipient must attach a
statement to its federal income tax return
stating that it is relying upon § II of this
notice with respect to a correction of a
failure to comply with § 409A and setting
out the following information with respect
to each such failure:
a. The name and taxpayer identifi-
cation number of each service provider
affected by the failure and whether such
service provider is an insider with respect
to the service recipient. Where the same or
a substantially similar operational failure
has occurred with respect to multiple ser-
vice providers, the information required
in § IV.A.1.b through e of this notice
may be supplied only once with respect
to such operational failure, provided that
the identification of each service provider
affected by the operational failure in this
§ IV.A.1.a references such information
and the amount involved in the opera-
tional failure with respect to such service
provider.
b. Identification of the nonqualified de-
ferred compensation plan with respect to
which such failure occurred.
c. A brief description of the failure and
the circumstances under which it occurred,
including the amount involved and date on
which the failure occurred.
d. A brief description of the steps taken
to correct the failure and the date on which
such correction was completed.
e. A statement that the operational fail-
ure is eligible for the correction under the
terms of this notice, and that the service re-
cipient has taken all actions required, and
otherwise met all requirements, for such
correction.
2007–52 I.R.B.1250December 26, 2007

2.Information to be Provided to Service
Provider for Failures Described in § II
The service recipient must provide
the following information to each service
provider affected by correction of a failure
to comply with § 409A who is entitled to
relief under § II of this notice (other than
§ II.E of this notice (Correction of Exer-
cise Price of Otherwise Excluded Stock
Rights)) with respect to such failure:
a. A statement that the service provider
is entitled to the relief provided in § II
of this notice with respect to a failure to
comply with § 409A.
b. The information described in
§ IV.A.1.b through e of this notice.
B.Information Required with Respect to
Transition Relief for Certain Operational
Failures Involving Limited Amounts
A service recipient described in § III.B
or III.C of this notice must attach to its
timely-filed (including extensions) origi-
nal federal income tax return for its tax-
able year in which it discovers the failure
a statement entitled Ҥ 409A Relief under
§ III of Notice 2007–100” setting out the
information required by § IV.B.1 of this
notice and, not later than the date (with
extensions) on which it is required to pro-
vide an information return (Form W–2 or
1099) for the calendar year in which it dis-
covers such failure to a service provider
who is affected by such failure (or if no in-
formation return is required for such ser-
vice provider, not later than the January
31 following the calendar year in which
it discovers such failure), must provide to
each such service provider a statement en-
titled “§ 409A Relief under § III of No-
tice 2007–100” setting out the informa-
tion required by § IV.B.2 of this notice.
A service provider who is relying on the
relief provided in § III.B or III.C of this
notice with respect to a failure to com-
ply with § 409A must attach to the ser-
vice provider’s timely-filed (including ex-
tensions) original federal income tax re-
turn for the year in which such failure
was discovered the information required
by § IV.B.3 of this notice. In addition, each
taxpayer relying on the relief provided in
§ III of this notice must provide notice to
the examining agent upon the commence-
ment of an examination of such taxpayer’s
federal tax return that the taxpayer was re-
lying upon the relief provided under this
notice for years covered by the examina-
tion.
1.Attachment to Service Recipient Tax
Return for Failures Described in § III.B
or III.C.
The service recipient must attach a
statement to its return setting out the fol-
lowing information with respect to each
failure described in § III.B. or III.C of this
notice:
a. The name and taxpayer identifi-
cation number of each service provider
affected by the failure. Where the same or
a substantially similar operational failure
has occurred with respect to multiple ser-
vice providers, the information required
in § IV.B.1.b through e of this notice
may be supplied only once with respect
to such operational failure, provided that
the identification of each service provider
affected by the operational failure in this
§ IV.B.1.a referencessuch information
and the amount involved in the opera-
tional failure with respect to such service
provider.
b. Identification of the nonqualified de-
ferred compensation plan with respect to
which such failure occurred.
c. A brief description of the failure and
the circumstances under which it occurred,
including the amount involved and date on
which the failure occurred.
d. A brief description of the steps taken
by the service recipient to avoid a recur-
rence of the failure, including the date on
which such steps were implemented.
e. A statement that the operational fail-
ure is eligible for the correction under the
terms of this notice, and that the service re-
cipient has taken all actions required, and
otherwise met all requirements, for such
correction.
2.Information to be Provided to Service
Provider for Failures Described in § III.B
or III.C.
The service recipient must provide
the following information to each service
provider affected by a failure to comply
with § 409A who is entitled to relief under
§ III.B or III.C of this notice with respect
to such failure:
a. A statement that the service provider
is entitled to the relief provided in § III.B
or III.C of this notice (as applicable)
with respect to a failure to comply with
§ 409A and that the service provider must
attach a copy of the statement to the ser-
vice provider’s income tax return for the
taxable year in which the failure was dis-
covered.
b. The information described in
§ IV.B.1.b through e of this notice.
3.Attachment to Service Provider Tax
Return for Failures Described in § III.B
or III.C.
The service provider must attach to
the service provider’s income tax return a
copy of the statement the service provider
received from the service recipient with
respect to each such failure.
V. POTENTIAL PROGRAM TO
CORRECT CERTAIN FAILURES
TO COMPLY WITH § 409A(a) IN
OPERATION
The Treasury Department and the IRS
are considering establishing a corrections
program under which taxpayers could
correct certain failures to comply with
§ 409A(a) in the operation of a nonqual-
ified deferred compensation plan (opera-
tional failures), including correction after
the end of the service provider’s taxable
year in which an operational failure oc-
curs. The Treasury Department and the
IRS request comments on all aspects of
this potential program. For information
regarding the submission of comments,
see § VI of this notice.
The program under consideration
would cover failures that are not eligible
for the transition relief provided in § III of
this notice because the amount involved is
too large. The program may also provide
that the relief in § III for failures involving
small amounts would be available per-
manently. In addition, it is expected that
the program under consideration would,
in general, permit a service provider with
respect to whom an operational failure
occurred that is addressed by the program
but not eligible for the relief provided in
§ III of this notice, to include an amount in
income, and pay the additional taxes under
§ 409A with respect to, only the amount
involved in the operational failure, and not
other amounts deferred under the plan. For
example, if a service provider erroneously
December 26, 200712512007–52 I.R.B.

deferred an additional $50,000 to a plan
under which the service provider had pre-
viously deferred $1,000,000 (for a total
of $1,050,000), and the $50,000 deferral
and the error were corrected pursuant to
the program, the service provider would
not be required to include in income under
§ 409A, and pay the additional § 409A
taxes with respect to, the $1,000,000 de-
ferred under the plan that was not involved
in the operational failure.
The Treasury Department and the IRS
anticipate that the IRS would not issue
a ruling, enter into a closing agreement
or otherwise issue any formal approval
evidencing that participating taxpayers
had met the requirements of, and qual-
ified for the relief available under, the
program. Rather, if the IRS examined
the relevant tax returns, the service re-
cipient and service provider would have
the burden of demonstrating that the ap-
plicable requirements had been met. The
corrections program would be restricted
to service providers that at the time of the
correction are not under examination for
the year or years in which the operational
failure occurred, and would be limited
to operational failures that are corrected
promptly after discovery and in any case
within two years after the occurrence.
As part of the corrections program, the
service recipient and the service provider
would be required to satisfy information
and reporting requirements substantially
similartothosesetforthin§IV.Bofthis
notice and the service recipient and service
provider would also be required to provide
notice to the examining agent upon the
commencement of an examination that the
taxpayer was relying upon the relief pro-
vided under the program for years covered
by the examination.
The Treasury Department and the IRS
anticipate that the program would include
the following limitations and require-
ments:
•Relief would only be available with re-
spect to an operational failure that has
occurred notwithstanding the service
recipient’s reasonable efforts to com-
ply with the terms of the plan. Thus re-
lief would only be available if the ser-
vice recipient had established practices
and procedures reasonably designed to
ensure compliance with § 409A.
•Relief would only be available with re-
spect to an operational failure if the ser-
vice recipient also took commercially
reasonable steps to avoid a recurrence
ofthesametypeofoperationalfailure.
•Relief would also not be available
to correct an operational failure that
is egregious, intentional, or where
the failure is directly or indirectly re-
lated to participation in an abusive
tax avoidance transaction (meaning
for this purpose any listed transaction
under §1.6011–4(b)(2)).
•If the operational failure involved an
accelerated payment that did not oth-
erwise satisfy the plan’s terms and the
requirements of § 409A(a), the correc-
tion of the failure would require that
the service provider return to the ser-
vice recipient the amount improperly
paid by the service provider to the ser-
vice recipient. The service provider
would not be entitled to any loss or de-
duction for either the year of the repay-
ment or the year to which the correc-
tion applied. However, if the plan does
not otherwise violate the provisions of
§ 409A and the applicable guidance,
the service provider would be required
thereafter to include in gross income
only additional amounts subsequently
paid from such plan (as if the amount
taken into gross income in the year of
the failure resulted in investment in the
contract with respect to the amount that
was actually included in gross income
for the year of the erroneous payment).
•Relief would not be available for an
accelerated payment that did not oth-
erwise satisfy the terms of the plan
and the requirements of § 409A(a) if
the service recipient made the payment
proximate to a financial downturn of
the service recipient or the service re-
cipient experiencing any financial or
other issue that indicated a significant
risk that the service recipient would
notbeabletopaytheamountdeferred
when the payment became due under
the plan.
•If the operational failure involved an
amount that was improperly deferred
(for example, the deferral of salary
in excess of the applicable deferral
election under the terms of the plan),
or an amount of deferred compensa-
tion that was not paid to the service
provider on the date applicable under
the terms of the plan, the correction
of the operational failure would re-
quire that the service recipient pay the
amount to the service provider. The
service provider would be required to
include the amount in gross income
in the service provider’s taxable year
in which the failure occurred and not
at the time the service recipient made
the corrective payment, with the ser-
vice provider being required to report
the amount on an original or amended
return for such year and pay the appro-
priate tax thereon.
•Investment earnings (potentially in-
cluding losses) in accordance with the
terms of the plan for the period of time
after the operational failure through
the date of correction would be re-
quired to be taken into account.
•In addition to the requirement of in-
come inclusion described above, the
service provider would be required to
pay income taxes, including the addi-
tional § 409A taxes (and any appli-
cable interest on the underpayment of
such § 409A taxes), as applicable. The
service recipient would be required to
file with the IRS and provide to the
service provider a Form W–2c or cor-
rected Form 1099, as applicable. If the
service recipient and service provider
met the requirements for the correction
program, the service recipient would
not be liable for any failure to withhold
income taxes on the amount required to
be included in income under § 409A as
a result of the operational failure, to the
extent the amounts required to be in-
cluded in income had not been paid or
made available to the service provider.
•Some or all of the relief may be avail-
able only to service providers that are
not insiders with respect to the service
recipient.
VI. SUBMISSION OF COMMENTS
The Treasury Department and the IRS
are currently considering formulating gen-
eral guidance on the correction of oper-
ational failures under a nonqualified de-
ferred compensation plan resulting in a
2007–52 I.R.B.1252December 26, 2007

failure to meet the requirements of § 409A.
Some of the guidance being considered has
been set forth in this notice. The Trea-
sury Department and the IRS request com-
ments on all aspects of a potential correc-
tions program, including but not limited
to the topics addressed in this notice and
specifically request comments on the fol-
lowing:
•With respect to the program under con-
sideration described in § V of this no-
tice, potential methods of tracking the
“investment in the contract” created
when an amount is included in income
under § 409A but not yet paid to the
service provider.
•With respect to the program under con-
sideration described in § V of this no-
tice, potential methods of addressing
the service recipient’s deduction for
payments made, and the affect of re-
payments by the service provider to the
service recipient on such deductions.
Comments must be submitted by March
3, 2008. All materials submitted will be
available for public inspection and copy-
ing. Comments may be submitted to In-
ternal Revenue Service, CC:PA:LPD:RU
(Notice 2007–100), Room 5203, PO Box
7604, Ben Franklin Station, Washing-
ton, DC 20044. Submissions may also
be hand-delivered Monday through Fri-
day between the hours of 8 a.m. and
4 p.m. to the Courier’s Desk at 1111
Constitution Avenue, NW, Washington,
DC 20224, Attn: CC:PA:LPD:RU (Notice
2007–100), Room 5203. Submissions
may also be sent electronically via the
internet to the following email address:
Notice.comments@irscounsel.treas.gov.
Include the notice number (Notice
2007–100) in the subject line.
VII. EFFECT ON OTHER
DOCUMENTS
For service recipients and service
providers who are entitled to relief under
this notice, Notice 2006–100, 2006–51
I.R.B. 1109 (relating to reporting and
wage withholding for 2006) and Notice
2007–89, 2007–46 I.R.B. 998 (relating to
reporting and wage withholding for 2007)
are modified to conform to the provisions
of this notice with respect to (i) the amount
that is required to be included in income by
a service provider under section 409A(a),
and (ii) the amount that is required to be
reported by the service recipient as an
amount includible in income under section
409A(a) on Form W–2, Box 1 and Box
12, using Code V, or Form 1099–MISC,
Box 7 and Box 15b, as applicable.
VIII. PAPERWORK REDUCTION
ACT
The collection of information contained
in this notice has been reviewed and ap-
proved by the Office of Management and
Budget in accordance with the Paperwork
Reduction Act (44 USC. 3507) under con-
trol number 1545–2086.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
control number.
The collection of information in this no-
tice is in section IV. This information is
required to determine whether the taxpay-
ers claiming the relief are eligible for the
relief and that the applicable requirements
forreliefaremet. The likely respondents
are corporations and individuals.
The estimated annual reporting and/or
recordkeeping burden is 5,000 hours.
The estimated annual burden per re-
spondent/recordkeeper is .5 hours.
The estimated number of respondents is
10,000.
The estimated annual frequency of re-
sponse is on occasion.
Books or records relating to a collection
of information must be retained as long
as their contents may become material in
the administration of any internal revenue
law. Generally, tax return and tax return
information are confidential, as required
by § 6103.
IX. DRAFTING INFORMATION
The principal authors of this notice
are Stephen Tackney and Bill Schmidt
of the Office of Division Counsel/As-
sociate Chief Counsel (Tax Exempt and
Government Entities), although other
Treasury and IRS officials participated in
its development. For further information
on the provisions of this notice, contact
Stephen Tackney or Bill Schmidt at (202)
927–9639 (not a toll-free number).
Update for Weighted Average
Interest Rates, Yield Curves,
and Segment Rates
Notice 2007–101
This notice provides guidance as to the
corporate bond weighted average interest
rate and the permissible range of interest
rates specified under §412(b)(5)(B)(ii)(II)
of the Internal Revenue Code. It also
provides guidance on the corporate bond
monthly yield curve (and the correspond-
ing spot segment rates), the 24-month av-
erage segment rates, and the funding tran-
sitional segment rates under § 430(h)(2).
In addition, this notice provides guidance
as to the interest rate on 30-year Treasury
securities under § 417(e)(3)(A)(ii)(II) as
in effect for plan years beginning before
2008, and the minimum present value seg-
ment rates under § 417(e)(3)(D) as in effect
for plan years beginning after 2007.
CORPORATE BOND WEIGHTED
AVERAGE INTEREST RATE
Sections412(b)(5)(B)(ii)and
412(l)(7)(C)(i), as amended by the Pen-
sion Funding Equity Act of 2004 and by
the Pension Protection Act of 2006 (PPA),
provide that the interest rates used to cal-
culate current liability and to determine
the required contribution under § 412(l)
for plan years beginning in 2004 through
2007 must be within a permissible range
based on the weighted average of the rates
of interest on amounts invested conser-
vatively in long term investment grade
corporate bonds during the 4-year period
ending on the last day before the beginning
of the plan year.
Notice 2004–34, 2004–1 C.B. 848, pro-
vides guidelines for determining the cor-
porate bond weighted average interest rate
and the resulting permissible range of in-
terest rates used to calculate current liabil-
ity. That notice establishes that the corpo-
rate bond weighted average is based on the
monthly composite corporate bond rate de-
rived from designated corporate bond in-
dices. The methodology for determining
the monthly composite corporate bond rate
as set forth in Notice 2004–34 continues to
apply in determining that rate. See Notice
2006–75, 2006–36 I.R.B. 366.
The composite corporate bond rate for
November 2007 is 6.14 percent. Pursuant
December 26, 200712532007–52 I.R.B.

to Notice 2004–34, the Service has de-
termined this rate as the average of the
monthly yields for the included corporate
bond indices for that month.
The following corporate bond weighted
average interest rate was determined for
plan years beginning in the month shown
below.
For Plan Years
Beginning inPermissible Range
MonthYear
Corporate
Bond Weighted
Average90%to100%
December20075.905.315.90
YIELD CURVE AND SEGMENT
RATES
Generally for plan years beginning
after 2007 (except for delayed effective
dates for certain plans under sections 104,
105, and 106 of PPA), § 430 of the Code
specifies the minimum funding require-
ments that apply to single employer plans
pursuant to § 412. Section 430(h)(2) spec-
ifies the interest rates that must be used
to determine a plan’s target normal cost
and funding target. Under this provision,
present value is generally determined us-
ing three 24-month average interest rates
(“segment rates”), each of which applies
to cash flows during specified periods.
However, an election may be made under
§ 430(h)(2)(D)(ii) to use the monthly yield
curve in place of the segment rates. For
plan years beginning in 2008 and 2009, a
transitional rule under § 430(h)(2)(G) pro-
vides that the segment rates are blended
with the corporate bond weighted average
as specified above. An election may be
made under § 430(h)(2)(G)(iv) to use the
segment rates without applying the transi-
tional rule.
Notice 2007–81, 2007–44 I.R.B. 899,
provides guidelines for determining the
monthly corporate bond yield curve, the
24-month average corporate bond segment
rates, and the funding transitional segment
rates used to compute the target normal
cost and the funding target. Pursuant to
Notice 2007–81, the monthly corporate
bond yield curve derived from November
2007 data is in Table I at the end of this
notice. The spot first, second, and third
segment rates for the month of Novem-
ber 2007 are, respectively, 4.92, 6.02
and 6.47. The three 24-month average
corporate bond segment rates applicable
for December 2007 under the election of
§ 430(h)(2)(G)(iv) are as follows:
First
Segment
Second
Segment
Third
Segment
5.315.906.41
The transitional segment rates under
§ 430(h)(2)(G) applicable for December
2007, taking into account the corporate bond weighted average of 5.90 stated
above, are as follows:
For Plan Years
Beginning in
First
Segment
Second
Segment
Third
Segment
20085.705.906.07
30-YEAR TREASURY SECURITIES
INTEREST RATE
Section 417(e)(3)(A)(ii)(II) (prior to
amendment by PPA) defines the appli-
cable interest rate, which must be used
for purposes of determining the minimum
present value of a participant’s benefit
under § 417(e)(1) and (2), as the annual
rate of interest on 30-year Treasury se-
curities for the month before the date
of distribution or such other time as the
Secretary may by regulations prescribe.
Section 1.417(e)–1(d)(3) of the Income
Tax Regulations provides that the applica-
ble interest rate for a month is the annual
rate of interest on 30-year Treasury secu-
rities as specified by the Commissioner
for that month in revenue rulings, notices
or other guidance published in the Internal
Revenue Bulletin.
The rate of interest on 30-year Treasury
securities for November 2007 is 4.52 per-
cent. The Service has determined this rate
as the monthly average of the daily deter-
mination of yield on the 30-year Treasury
bond maturing in May 2037.
MINIMUM PRESENT VALUE
SEGMENT RATES
Generally for plan years beginning after
December 31, 2007, theapplicable inter-
est rates under § 417(e)(3)(D) of the Code
are segment rates computed without regard
to a 24-month average. For plan years
beginning in 2008 through 2011, the ap-
plicable interest rate is the monthly spot
segment rate blended with the applicable
rate under § 417(e)(3)(A)(ii)(II) as in ef-
fect for plan years beginning in 2007. No-
tice 2007–81 provides guidelines for de-
termining the minimum present value seg-
ment rates. Pursuant to that notice, the
2007–52 I.R.B.1254December 26, 2007

minimum present value transitional seg-
ment rates determined for November 2007,
taking into account the November 2007 30-year Treasury rate of 4.52 stated above,
are as follows:
For Plan Years
Beginning in
First
Segment
Second
Segment
Third
Segment
20084.604.824.91
DRAFTING INFORMATION
The principal author of this notice is
Tony Montanaro of the Employee Plans,
Tax Exempt and Government Entities Di-
vision. Mr. Montanaro may be e-mailed at
RetirementPlanQuestions@irs.gov.
December 26, 200712552007–52 I.R.B.

Table I
Monthly Yield Curve for October 2007
Maturity YieldMaturity YieldMaturity YieldMaturity YieldMaturity Yield
0.55.0420.56.3240.56.4960.56.5580.56.58
1.04.8621.06.3341.06.4961.06.5581.06.58
1.54.7321.56.3341.56.5061.56.5581.56.58
2.04.6822.06.3442.06.5062.06.5582.06.58
2.54.7022.56.3542.56.5062.56.5582.56.58
3.04.7923.06.3643.06.5063.06.5583.06.58
3.54.9023.56.3643.56.5063.56.5683.56.58
4.05.0324.06.3744.06.5164.06.5684.06.58
4.55.1524.56.3844.56.5164.56.5684.56.58
5.05.2725.06.3845.06.5165.06.5685.06.58
5.55.3825.56.3945.56.5165.56.5685.56.58
6.05.4726.06.3946.06.5166.06.5686.06.59
6.55.5626.56.4046.56.5166.56.5686.56.59
7.05.6327.06.4047.06.5267.06.5687.06.59
7.55.7027.56.4147.56.5267.56.5687.56.59
8.05.7628.06.4148.06.5268.06.5688.06.59
8.55.8128.56.4248.56.5268.56.5688.56.59
9.05.8629.06.4249.06.5269.06.5689.06.59
9.55.9029.56.4249.56.5269.56.5789.56.59
10.05.9430.06.4350.06.5270.06.5790.06.59
10.55.9730.56.4350.56.5370.56.5790.56.59
11.06.0131.06.4451.06.5371.06.5791.06.59
11.56.0431.56.4451.56.5371.56.5791.56.59
12.06.0632.06.4452.06.5372.06.5792.06.59
12.56.0932.56.4552.56.5372.56.5792.56.59
13.06.1133.06.4553.06.5373.06.5793.06.59
13.56.1333.56.4553.56.5373.56.5793.56.59
14.06.1534.06.4654.06.5474.06.5794.06.59
14.56.1734.56.4654.56.5474.56.5794.56.59
15.06.1935.06.4655.06.5475.06.5795.06.59
15.56.2035.56.4755.56.5475.56.5795.56.59
16.06.2236.06.4756.06.5476.06.5796.06.59
16.56.2336.56.4756.56.5476.56.5796.56.59
17.06.2537.06.4757.06.5477.06.5897.06.59
17.56.2637.56.4857.56.5477.56.5897.56.59
18.06.2738.06.4858.06.5478.06.5898.06.60
18.56.2838.56.4858.56.5578.56.5898.56.60
19.06.2939.06.4859.06.5579.06.5899.06.60
19.56.3039.56.4959.56.5579.56.5899.56.60
20.06.3140.06.4960.06.5580.06.58100.06.60
2007–52 I.R.B.1256December 26, 2007

26 CFR 601.105: Examination of returns and claims
for refund, credit or abatement; determination of
correct tax liability.
(Also Part I, §§ 860D, 860G, 1001; 1.860G–2,
1.1001–3, 301.7701–2, 301.7701–3, 301.7701–4.)
Rev. Proc. 2007–72
SECTION 1. PURPOSE
This revenue procedure describes the
conditions under which changes to certain
subprime mortgage loans will not cause
the Internal Revenue Service to challenge
the tax status of certain securitization ve-
hicles holding the loans.
The purpose of this revenue procedure
is to provide certainty in the current eco-
nomic environment with respect to certain
potential tax issues that may be impli-
cated by fast track loan modifications,
as described below. No inference should
be drawn about whether similar conse-
quences would obtain if a transaction falls
outside the limited scope of this revenue
procedure. Furthermore, there should be
no inference that this revenue procedure
is necessary to prevent transactions within
its scope from impacting the tax status of
securitization vehicles.
SECTION 2. BACKGROUND-THE
ASF “FRAMEWORK”
.01 On December 6, 2007, the Amer-
ican Securitization Forum (“ASF”) re-
leased a document entitled, “Statement of
Principles, Recommendations and Guide-
lines for a Streamlined Foreclosure and
Loss Avoidance Framework for Securi-
tized Subprime Adjustable Rate Mortgage
Loans” (the “Framework”). An Execu-
tive Summary of the Framework (entitled
“Streamlined Foreclosure and Loss Avoid-
ance Framework for Securitized Subprime
Adjustable Rate Mortgage Loans”) was
released simultaneously and is attached as
an Appendix to this revenue procedure.
.02 The Framework has been broadly
supported as an appropriate step in ad-
dressing certain risks in the current eco-
nomic environment.
.03 The Framework applies to first-lien
subprime residential adjustable rate mort-
gage (ARM) loans that—
(1) Have an initial fixed rate period of
36 months or less (including “2/28s” and
“3/27s”);
(2) Were originated between January 1,
2005, and July 31, 2007;
(3) Are included in securitized pools;
and
(4) Have an initial interest rate reset be-
tween January 1, 2008, and July 31, 2010.
This revenue procedure refers to these
instrumentsas“Loans.”
.04 The Framework provides a “fast
track” procedure for modifying Loans and
details the criteria for determining which
Loans are eligible for the procedure. Mod-
ifications pursuant to the procedure are re-
ferred to as “fast track modifications.”
.05 In a fast track modification, a bor-
rower is offered a Loan modification under
which the interest rate on the affected Loan
will be kept at the existing rate, generally
for five years following the date on which
the rate would have reset in the absence of
the modification.
SECTION 3.
BACKGROUND—REMICS
.01 Real Estate Mortgage Investment
Conduits (REMICs) are widely used secu-
ritization vehicles for mortgages. REMICs
are governed by sections 860A through
860G of the Internal Revenue Code.
.02 For an organization to qualify as a
REMIC, all of the interests in the organi-
zation must consist of one or more classes
of regular interests and a single class of
residual interests,seesection 860D(a),
and those interests must be issued on
the startup day, within the meaning of
§ 1.860G–2(k) of the Income Tax Regula-
tions.
.03 A regular interest is one that is des-
ignated as a regular interest and whose
termsarefixedonthestartupday.Section
860G(a)(1). In addition, a regular interest
must (1) unconditionally entitle the holder
to receive a specifiedprincipal amount (or
other similar amount), and (2) provide that
interest payments, if any, at or before ma-
turity are based on a fixed rate (or to the
extent provided in regulations, at a variable
rate).
.04 An interest issued after the startup
day does not qualify as a REMIC regular
interest.
.05 An entity qualifies as a REMIC only
if, among other things, as of the close of the
third month beginning after the startup day
and at all times thereafter, substantially all
of its assets constitute qualified mortgages
and permitted investments.Seesection
860D(a)(4). An entity that initially qual-
ifies as a REMIC may cease to qualify, if
a sufficiently large portion of its qualified
mortgages are significantly modified and
the modified obligations are not qualified
mortgages.See§ 1.860G–2(b)(1). For this
purpose, a qualified mortgage is generally
treated as having beensignificantly modi-
fied if the change in terms would be treated
as an exchange of obligations under sec-
tion 1001 and the regulations thereunder.
See§ 1.860G–2(b)(2).
.06 Certain changes in the terms of
an obligation, however, are not signifi-
cant modifications for this purpose, re-
gardless of whether they are significant
modifications under section 1001 and
§ 1.1001–3.See§ 1.860G–2(b)(3). In
particular, changes in the terms of an
obligation “occasioned by default or a
reasonably foreseeable default” are not
significant modifications for this purpose.
See§ 1.860G–2(b)(3)(i).
.07Section860F(a)(1)imposesataxon
REMICs equal to 100 percent of the net
income derived from “prohibited transac-
tions.” The disposition of a qualified mort-
gage is a prohibited transaction unless the
disposition is pursuant to (i) the substitu-
tion of a qualified replacement mortgage
for a qualified mortgage; (ii) a disposition
incident to the foreclosure, default, or im-
minent default of the mortgage; (iii) the
bankruptcy or insolvency of the REMIC;
or (iv) a qualified liquidation. Section
860F(a)(2)(A).
SECTION 4.
BACKGROUND—TRUSTS
.01 Section 301.7701–2(a) of the Pro-
cedure and Administration Regulations
defines a “business entity” as any entity
recognized for federal tax purposes (in-
cluding an entity with a single owner that
may be disregarded as an entity separate
from its owner under § 301.7701–3) that
is not properly classified as a trust under
§ 301.7701–4 or otherwise subject to spe-
cial treatment under the Code.
.02 Section 301.7701–4(a) provides
that an arrangement is treated as a trust if
the purpose of the arrangement is to vest
in trustees responsibility for the protection
and conservation of property for benefi-
ciaries who cannot share in the discharge
of this responsibility and, therefore, are
December 26, 200712572007–52 I.R.B.

not associates in a joint enterprise for the
conduct of business for profit.
.03 Section 301.7701–4(c) provides
that an “investment” trust is not classified
as a trust if there is a power under the trust
agreement to vary the investment of the
certificate holders.
SECTION 5. SCOPE
.01 This revenue procedure applies to
the following transactions occurring on or
before July 31, 2010—
(1) A fast track modification of a Loan
pursuant to the Framework; and
(2) A second-lien holder’s action of
subordinating its lien to any new lien that
may arise under a Loan as the result of a
fast track modification.
.02 If the Framework is materially mod-
ified after December 6, 2007, this revenue
procedure does not necessarily apply to
fast track modifications under the revised
Framework or to second-lien subordina-
tions to accommodate those modifications.
SECTION 6. APPLICATION
In the case of one or more transactions
to which this revenue procedure applies—
.01 The Internal Revenue Service will
not challenge a securitization vehicle’s
qualification as a REMIC on the grounds
that the transactions are not among the
exceptions listed in § 1.860G–2(b)(3);
.02 The Internal Revenue Service
will not contend that the transactions
are prohibited transactions under section
860F(a)(2) on the grounds that the transac-
tions are not among the exceptions listed
in section 860F(a)(2)(A)(i)–(iv);
.03 The Internal Revenue Service will
not challenge a securitization vehicle’s
classification as a trust on the grounds that
the transactions manifest a power to vary
the investment of the certificate holders;
and
.04 The Internal Revenue Service will
not challenge a securitization vehicle’s
qualification as a REMIC on the grounds
that the transactions resulted in a deemed
reissuance of the REMIC regular interests.
SECTION 7. EFFECTIVE DATE
This revenue procedure is effective be-
ginning December 6, 2007.
SECTION 8. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Diana Imholtz of the Office
of Associate Chief Counsel (Financial
Institutions and Products). For further
information, contactMs. Imholtz at (202)
622–3930 (not a toll-free call).
Appendix to Revenue Procedure 2007–72
American Securitization Forum
Streamlined Foreclosure and Loss Avoidance Framework for
Securitized Subprime Adjustable Rate Mortgage Loans
Executiv
e Summary
December 6, 2007
Scope:
This str
eamlined framework applies to all first lien subprime residential adjustable rate mortgage (ARM) loans that
have an i
nitial fixed rate period of 36 months or less (including“2/28s” and “3/27s”), referred to below as “subprime
ARM loan
s” that:
•were originated between January 1, 2005 and July 31, 2007;
•are included in securitized pools; and
•have an initial interest rate reset between January 1, 2008 and July 31, 2010.
This streamlined framework would be applied to subprime ARM loans in advance of an initial reset date. Typically,
servicer/borrower communication should begin 120 days prior to the initial reset date.
2007–52 I.R.B.1258December 26, 2007

Overarching Principles:
•The servicer wi
ll not take any action that is prohibited by the pooling and servicing agreement (“PSA”) or other
applicable se
curitization governing document,or that would violate applicablelaws, regulations, or accounting
standards. AS
F’s Statement of Principles, Recommendations andGuidelines for a Streamlined Foreclosure and
Loss Avoidanc
e Framework for Securitized Subprime AdjustableRate Mortgage Loans, published concurrently
with this docu
ment, analyzes how the framework described in the Executive Summary is consistent with typical
PSA provision
s. The ASF urges readers of this Executive Summary to review the full Statement.
•The ASF belie
ves that this framework is consistent with the authority granted to a servicer to modify subprime
mortgage loa
ns in typical PSAs. The ASF expects that the procedures in this framework will constitute standard
and customar
y servicing procedures for subprime loans.
•The servicer
will expeditiously implement the ASF Investor Reporting Guidelines for the Modification of Sub-
prime ARM Loa
nsrecommendedbytheASF,whichissimultaneously released with this framework.
•LTV and CLTV w
ill be determined based on information at origination. If an origination LTV is below 97%, a
servicer ma
y obtain an updated home value by obtaining an AVM, BPO or other means.
•All service
rs of second liens to subprime borrowers should cooperate fully with this framework by providing infor-
mation need
ed by first lien servicers and by agreeing to subordinate the second lien to any new first lien resulting
from a refin
ance (with no cash out) under this framework.
•All existin
g contractual obligations and remedies related tofraudulent mortgage origination activity should be
strictly en
forced.
•The streaml
ined framework outlined in this framework represents the consensus view of the membership of the
ASF, acting
through its Board of Directors, asto the parameters used to determine the segmentation of subprime
ARM loans,
including the numeric values included in those parameters. It is understood by the ASF’s members
that the nu
meric values included in the parameters are not based on historic data, but rather simply represent a
consensus
view as to appropriate numeric values for use within this framework for the purpose of supporting a
streamlin
ed approach to loan modifications that complies with typical securitization governing documents. The
ASF, acti
ng through its Board of Directors, may in the future change these numeric values or further refine these
paramete
rs as experience is gained and market conditions evolve.
Borrower Segmentation:
Under this framework, subprime ARM loans are divided into 3 segments.
Segment
1includes current (as defined below) loans where the borrower is likely to be able to refinance into any
availab
le mortgage product, including FHA, FHA Secure or readily available mortgage industry products.
•Generally, the servicer will determine whether loans may be eligible for refinancing into readily available mort-
gage industry products based on ascertainable data not requiring direct communication with the borrower, such as
LTV, loan amount, FICO and payment history. Servicers will generally not determine current income or DTI to
determine initial eligibility for refinancing.
•If the borrower also has a second lien on the property, this framework contemplates that the borrower is able to
refinance the first lien only, on a no cash out basis. In order for the loan to fall into this segment, the second lien
does not have to be refinanced; however, any second lien holder will need to agree to subordinate their interest to
the refinanced first lien.
Segment 2includes current loans where the borrower is unlikely to be able to refinance into any readily available
mortgage industry product.
•Current: For purposes of this framework “current” means the loan must be not more than 30 days delinquent,
and must not have been more than 1 x 60 days delinquent in the last 12 months, both under the OTS method.
Corresponding tests would apply under the MBA method if the servicer uses that standard.
December 26, 200712592007–52 I.R.B.

•LTV test: All current loans with an LTV (based on the first lien only) greater than 97% are deemed not to be eligible
for refinance into any available product, and thus are within Segment 2. (97% is the maximum LTV allowed under
FHA Secure.)
•Not FHA Secure eligible: All current loans that otherwise do not satisfy FHA Secure requirements, including
delinquency history, DTI at origination and loan amountstandards for this program, are within Segment 2 unless
the servicer can determine whether they may meet eligibilitycriteria for another product, by reviewing eligibility
criteria without performing an underwriting analysis.
Segment 3includes loans where the borrower is not current as defined above, demonstrating difficulty meeting the
introductory rate.
Segment 1 — Refinance:
•It is expected that borrowers in this category should refinance their loans, if they are unable or unwilling to meet
their reset payment. However, a servicer may evaluate each borrower in this category on a case by case basis
or apply any framework consistent with the applicable servicing standard in the transaction documents for a loan
modification or other loss mitigation outcome.
•The servicer will facilitate a refinance in a manner that avoids the imposition of prepayment penalties wherever
feasible. This may be accomplished by timing the refinance to occur after the upcoming reset date.
•Servicers should take all reasonable steps permitted under the PSA and other governing documents to encourage
or facilitate refinancing for borrowers in Segment 1, or to borrowers in Segment 2 who become eligible for a
refinance, including, where permitted, providing borrowers with information about FHA, FHA Secure and other
readily available mortgage industry products, even if that servicer is not able to provide those products through
any affiliated originator.
Segment 2 — Loan Modification:
•The servicer will determine the following for each Segment 2 borrower: current owner occupancy status (based
on information known to the servicer, including billing and property address), current FICO score and the FICO
score at origination of the loan.
•FICO test:
•If the current FICO score is less than 660 and is less than a score 10% higher than the FICO score at origination,
theborrowerisconsideredtohavemetthe“FICOtest.”If the borrower meets the FICO test, the servicer will
generally not determine the borrower’s current income.
•If either a) the current FICO score is 660 or higher, or b) the current FICO is at least 10% higher than the
FICO score at origination, the borrower is considered to not meet the “FICO test.” If the borrower does not
meet the FICO test, the servicer will use an alternate analysis to determine if the borrower is eligible for a loan
modification.
•Segment 2 loans will only be eligible for a fast track loan modification if:
•The borrower currently occupies the property as his or her primary residence;
•The borrower meets the FICO test; and
•The servicer determines that, at the upcoming reset, the payment amount would go up by more than 10%.
•Borrowers in this segment and eligible for a fast track loan modification as described above may be offered a loan
modification under which the interest rate will be kept at the existing rate,generally for 5 years following the
upcoming reset.
2007–52 I.R.B.1260December 26, 2007

•As to Segment 2 loans eligible for a fast track loan modification, the servicer may make the following presump-
tions:
•The borrower is able to pay under the loan modification based on his or her current payment history prior to
the reset date.
•The borrower is willing to pay under the loan modification, as evidenced by a) an agreement to the modification
after being contacted or b) in the event that the affirmative agreement of the borrower cannot be obtained, the
borrower’s payment of two payments under the loan as modified after receiving notice of the modified terms.
•The borrower is unable to pay (and default is reasonablyforeseeable) after the upcoming reset under the orig-
inal loan terms, based on the size of the payment increase that would otherwise apply.
•The modification maximizes the netpresent value of recoveries to the securitization trust and is in the best
interests of investors in the aggregate, because refinancing opportunities are likely not available and the bor-
rower is able and willing to pay under the modified terms.
•For borrowers that do not meet the FICO test, the servicer will use an alternate analysis to determine if the borrower
is eligible for a loan modification, as well as the terms of the modification (which may vary). This may include a)
conducting an individual review of current income and debtobligations, debt-to-income analysis, and considering
a tailored modification for a borrower, or b) applying any other framework consistent with the applicable servicing
standard in the transaction documents to determine if a borrower is eligible for a loan modification.
•For borrowers that are eligible for a fast track modification, the fast track option is non-exclusive and does not
preclude a servicer from using an alternate analysis to determine if a borrower is eligible for a loan modification,
as well as the terms of the modification.
Segment 3 — Loss Mitigation:
•For loans in this category, the servicerwill determine the appropriate loss mitigation approach in a manner consis-
tent with the applicable servicing standard in the transaction documents, but without employing the fast tracking
procedures described under Segment 2. The approach chosen should maximize the net present value of the recov-
eries to the securitization trust. The available approaches may include loan modification (including rate reduction
and/or principal forgiveness), forbearance,short sale, short payoff, or foreclosure.
•These borrowers will require a more intensive analysis, including where appropriate current debt and income anal-
ysis, to determine the appropriate loss mitigation approach.
December 26, 200712612007–52 I.R.B.

Part IV. Items of General Interest
Notice of Proposed
Rulemaking
Information Reporting for
Lump-Sum Timber Sales
REG–155669–04
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemaking.
SUMMARY: This document contains pro-
posed regulations that provide guidance
regarding the information reporting re-
quirements contained in section 6045(e)
of the Internal Revenue Code (Code) on
sales or exchanges of standing timber
for lump-sum (outright) payments. The
proposed regulations amend §1.6045–4
of the Income Tax Regulations to require
real estate reporting persons, as defined in
section 6045(e)(2) of the Code, to report
lump-sum payments received by sellers
(landowners) for sales or exchanges of
standing timber. This action is being taken
to make the reporting requirements for
lump-sum sales of standing timber con-
sistent with the reporting requirements
applicable to pay-as-cut timber sales. The
proposed regulations do not change the
information reporting requirements that
currently apply to sales or exchanges of
standing timber for pay-as-cut (contin-
gent) payments under section 6050N of
the Code.
DATES: Written or electronic comments
and requests for a public hearing must be
received by February 27, 2008.
ADDRESSES: Send submissions to:
CC:PA:LPD:PR (REG–155669–04), room
5203, Internal Revenue Service, PO Box
7604, Ben Franklin Station, Washing-
ton DC 20044. Submissions may be
hand-delivered Monday through Friday
between the hours of 8 a.m. and 4 p.m.
to CC:PA:LPD:PR (REG–155669–04),
Courier’s Desk, Internal Revenue Service,
1111 Constitution Avenue, NW, Washing-
ton, DC, or via the Federal eRulemaking
Portal athttp://www.regulations.gov(IRS
REG–155669–04).
FOR FURTHER INFORMATION
CONTACT: Concerning the proposed reg-
ulation, Julie Hanlon-Bolton of the Office
of Chief Counsel (Procedure and Adminis-
tration), at (202) 622–7028; for questions
concerning submissions of comments,
contact Kelly Banks at (202) 622–7180.
SUPPLEMENTARY INFORMATION:
Background
This document contains a proposed
amendment to the Income Tax Regulations
under section 6045(e). The amendment
imposes information reporting require-
ments on sales or exchanges of standing
timber for lump-sum payments, com-
monly referred to as lump-sum or outright
timber sales. A lump-sum contract pro-
vides for a pre-set, fixed, and non-contin-
gent payment in exchange for the right to
cut and remove designated trees. In these
transactions, sellers of standing timber re-
ceive fixed payments that are not based on
the amount of the timber actually cut. The
sellers do not retain any economic interest
in the timber and bear no risk of loss upon
execution of the sales contract.
Sales or exchanges of standing tim-
ber for contingent payments, commonly
referred to as pay-as-cut timber sales,
allow purchasers to cut designated trees
in exchange for a payment that is based
on a specified rate for each unit of tim-
ber actually cut and measured. In these
transactions, sellers of standing timber
receive payments that are contingent on
the amount of timber actually cut. The
sellers retain an economic interest in the
timber and continue tobear economic risk
associated with the sales contract until the
timber is actually cut and removed.
Because the sellers of standing tim-
ber who enter into pay-as-cut transac-
tions retain an economic interest until
the timber is actually cut and removed,
the payments are characterized as timber
royalties reportable under section 6050N
on Form 1099–S,“Proceeds From Real
Estate Transactions.”See Announcement
90–129, 1990–48 I.R.B. 10.
However, currently, no information re-
porting obligation applies to a sale or ex-
change of standing timber for a lump-sum
payment. The information reporting re-
quirements of section 6050N do not ap-
ply to a sale or exchange of timber for a
lump-sum payment because the seller re-
tains no economic interest and bears no
economic risk of loss in the timber upon
execution of the sales contract.
Recognizing the disparate treatment in
the reporting of timber sale and exchange
transactions, the Treasury Department has
reconsidered the information reporting re-
quirements under section 6045(e) as they
apply to lump-sum sales or exchanges of
standing timber and has decided to amend
the regulations to require information re-
porting for these transactions.
Currently, section 6045(e) requires a
“real estate reporting person,” as defined
in section 6045(e)(2), to make an infor-
mation return and furnish a statement to
the transferor with respect to a real estate
transaction that consists in whole or in part
of the sale or exchange of “reportable real
estate.” Section 1.6045–4(b)(2) defines
“reportable real estate” as, among other
things, any present or future ownership
interest in land. Section 1.6045–4(c)(2)(i)
provides that no return of information is
required with respect to a sale or exchange
of an interest in timber, provided that the
sale or exchange of such property is not re-
lated to the sale or exchange of reportable
real estate.
The preamble to §1.6045–4 pro-
vides background information concern-
ing the exception for timber sales in
§1.6045–4(c)(2)(i), stating in pertinent
part as follows:
The proposed regulations provided an
exception from the reporting require-
ments for transactions involving natu-
ral resources, including standing tim-
ber. Section 6050N of the Code re-
quires reporting for certain royalty pay-
ments, including timber royalties, but
not for other transactions involving tim-
ber. The IRS believes that the disparity
in the reporting requirements for differ-
ent forms of timber transactions may be
inappropriate. However, this issue was
not addressed in the public comments
and was not considered at the public
hearing. Accordingly, the final regula-
tions contain the exception for natural
resource transactions, including stand-
ing timber. The IRS will open a new
2007–52 I.R.B.1262December 26, 2007

regulations project to consider the ex-
pansion of the reporting requirements to
include sales and exchanges of stand-
ingtimber. Anyrequirementsforthe
reporting of standing timber will apply
only to transactions occurring after the
issuance of such requirements. See 55
FR 51282, T.D. 8323.
The IRS has found that some taxpayers
are underreporting income from lump-sum
or outright sales of timber, resulting in a
loss of tax revenue. Additionally, the Trea-
sury Department and the IRS do not think
that the disparate treatment of lump-sum
and pay-as-cut timber transactions for in-
formation reporting purposes is in the in-
terests of sound tax administration. Based
on considerations of tax policy and sound
tax administration, the Treasury Depart-
ment has decided to amend the regulations
under section 6045(e) to require informa-
tion reporting for sales or exchanges of
standing timber for lump-sum payments.
This amendment provides that sales
or exchanges of standing timber for
lump-sum payments are “reportable real
estate” transactions under §1.6045–4(b)(2)
and, thus, shall be reported as provided in
section 6045(e) and the regulations.
Paperwork Reduction Act
The collection of information contained
in this notice of proposed rulemaking has
been submitted to the Office of Manage-
ment and Budget for review in accordance
with the Paperwork Reduction Act of 1995
(44 U.S.C. 3507(d)). Comments on the
collection of information should be sent
to the Office of Management and Budget,
Attn: Desk Officer for the Department of
Treasury, Office of Information and Reg-
ulatory Affairs, Washington, DC 20503,
with copies to the Internal Revenue Ser-
vice, Attn: IRS Reports Clearance Offi-
cer, SE:W:CAR:MP:T:T:SP, Washington,
DC 20224. Comments on the collection of
information should be received by Febru-
ary 27, 2008. The Treasury Department is
interested in comments on the following:
Whether the proposed collection of in-
formation is necessary for the proper per-
formance of the function of the IRS, in-
cluding whether the information will have
practical utility;
The accuracy of the estimated burden
associated with the proposed collection of
information (see below);
How the quality, utility, and clarity of
the information to be collected may be en-
hanced;
How the burden of complying with the
proposed collections of information may
be minimized, including through the appli-
cation of automated collection techniques
or other forms of information technology;
and
Estimates of capital or start-up costs
and costs of operation, maintenance, and
purchase of service to provide information.
The collection of information affected
by this proposed regulation is described in
§1.6045–4. The collection of information
is mandatory. The likely respondents are
for-profit corporations and small business
entities.
Estimated total annual reporting bur-
den: 10,000 hours.
Estimated average annual burden hours
per respondent: .5 hours.
Estimated number of respondents:
20,000.
Estimated frequency of responses: an-
nually.
An agency may not conduct or sponsor,
and a person is not required to respond to, a
collection of information unless it displays
a valid control number assigned by the Of-
fice of Management and Budget.
Books or records relating to a collection
of information must be retained as long
as their contents may become material in
the administration of any Internal Revenue
Law. Generally, tax returns and tax return
information are confidential, as required
by 26 U.S.C. 6103.
Proposed Effective Date
These amendments shall apply to sales
or exchanges of standing timber for lump-
sum payments completed on or after the
date of publication of a Treasury decision
adopting these rules as final regulations in
the Federal Register.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a significant
regulatory action as defined in Executive
Order 12866. Therefore, a regulatory as-
sessment is not required. It has also been
determined that section 553(b) of the Ad-
ministrative Procedure Act (5 U.S.C. chap-
ter 5) does not apply to these regulations.
It is hereby certified that collection of in-
formation in this regulation will not have a
significant economic impact on a substan-
tial number of small entities. This certi-
fication is based on the fact that the col-
lection of information burden imposed by
these regulations flows directly from sec-
tion 6045(e) of the Code. Moreover, re-
quiring information reporting as described
in the preamble with regard to sales or ex-
changes of standing timber for lump-sum
payments imposes minimal burden in time
or expense. Therefore,a Regulatory Flexi-
bility Analysis under the Regulatory Flex-
ibility Act (5 U.S.C. Chapter 6) is not re-
quired. The IRS invites comments on the
accuracy of this certification. Pursuant to
section 7805(f) of the Code, this notice of
proposed rulemaking has been submitted
to the Chief Counsel for Advocacy of the
Small Business Administration for com-
ment on its impact on small business.
Comments and Request for Public
Hearing
Before these proposed regulations are
adopted as final regulations, consideration
will be given to any written (a signed origi-
nal and eight (8) copies)orelectroniccom-
ments that are submitted timely to the IRS.
The IRS and the Treasury Department re-
quest comments on the clarity of the pro-
posed rules and how they can be made eas-
ier to understand. All comments will be
available for public inspection and copy-
ing.
A public hearing may be scheduled if
requested by any person who timely sub-
mits comments. If a public hearing is
scheduled, notice of the date, time and
place for the hearing will be published in
theFederal Register.
Drafting Information
The principal author of these regula-
tions is Julie A. Hanlon-Bolton of the Of-
fice of Associate Chief Counsel (Proce-
dure and Administration). However, other
personnel from the IRS and the Treasury
Department participated in their develop-
ment.
*****
December 26, 200712632007–52 I.R.B.

Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 1 is proposed
to be amended as follows:
Part 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.6045–4 is amended
by:
1. Redesignating paragraphs (b)(2)(i),
(b)(2)(ii), (b)(2)(iii), and (b)(2)(iv) as
paragraphs (b)(2)(i)(A), (b)(2)(i)(B),
(B)(2)(i)(C), and (b)(2)(i)(D), respec-
tively.
2. Adding paragraph (b)(2)(i)(E).
3. Redesignating paragraph (b)(2) in-
troductory text as (b)(2)(i) introductory
text.
4. Designating the undesignated text as
paragraph (b)(2)(ii).
5. Adding a new last sentence at the end
of newly designated paragraph (b)(2)(ii).
6. Revising paragraph (c)(2)(i) and
paragraph (s).
The revisions and additions read as fol-
lows:
§1.6045–4 Information reporting on real
estate transactions with dates of closing
on or after January 1, 1991.
*****
(b) * * *
(2)* * * (i) * * *
(E) Any non-contingent interest in
standing timber.
(ii)***Further,thetermownership
interestincludes any contractual interest in
a sale or exchange of standing timber for
a lump-sum payment that is fixed and not
contingent.
*****
(c) * * *
(2) * * *
(i) An interest in surface or subsurfa
ce
natural resources (for example, wat
er,
ores, and other natural deposits) or
crops,
whether or not such natural resource
sor
crops are severed from the land. For p
ur-
poses of this section, the terms “nat
ural
resources” and “crops” do not inclu
de
standing timber.
*****
(s)Effective/applicability date.This
section applies for real estate transactions
with dates of closing (as determined under
paragraph (h)(2)(ii) of this section) that
occur on or after January 1, 1991. The
amendments to paragraphs (b)(2)(i)(e),
(b)(2)(ii) and (c)(2)(i) of this section shall
apply to sales or exchanges of standing
timber for lump-sum payments completed
after the date specified in the final regula-
tions.
Linda E. Stiff,
Deputy Commissioner for
Services and Enforcement.
(Filed by the Office of the Federal Register on November 28,
2007, 8:45 a.m., and published in the issue of the Federal
Register for November 29, 2007, 72 F.R. 67589)
Notice of Proposed
Rulemaking by
Cross-Reference to
Temporary Regulations
Notification Requirement
for Tax-Exempt Entities Not
Currently Required to File
REG–104942–07
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemaking
by cross-reference to temporary regula-
tions and notice of public hearing.
SUMMARY: In this issue of the Bul-
letin, the IRS is issuing temporary reg-
ulations (T.D. 9366) describing the time
and manner in which certain tax-exempt
organizations not currently required to
file an annual information return under
section 6033(a)(1) are required to sub-
mit an annual electronic notice including
certain information required by section
6033(i)(1)(A) through (F). The text of
those regulations also serves as the text of
these proposed regulations.
DATES: Written or electronic comments
and requests for a public hearing must be
received by February 13, 2008.
ADDRESSES: Send submissions to:
CC:PA:LPD:PR(REG–104942–07),
room 5203, Internal Revenue Ser-
vice, PO Box 7604, Ben Franklin Sta-
tion, Washington, DC 20044. Submis-
sions may be hand-delivered Monday
through Friday between the hours of
8 a.m. and 4 p.m. to CC:PA: LPD:PR
(REG–104942–07), Courier’s Desk, In-
ternal Revenue Service, 1111 Constitution
Avenue,NW,Washington,DC.,orsent
electronically, via the Federal eRule-
making Portal atwww.regulations.gov
(IRS-REG–104942–07).
FOR FURTHER INFORMATION
CONTACT: Concerning the proposed
regulations, Monice Rosenbaum at (202)
622–6070 (not a toll-free number); con-
cerning submission of comments and re-
quests for a public hearing, Richard Hurst,
Richard.A.Hurst@irscounsel.treas.gov.
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information contained
in these proposed regulations has been re-
viewed by the Office of Management and
Budget in accordance with the Paper-
work Reduction Act of 1995 (44 U.S.C.
3507(d)). An agency may not conduct
or sponsor, and a person is not required
to respond to, a collection of information
unless it displays a valid control number
assigned by the Office of Management
and Budget.
The information that is required to be
collected for purposes of §1.6033–6(c)
is required to be submitted on Form
990–N,“Electronic Notice (e-Postcard)
for Tax-Exempt Organizations not Re-
quired To File Form 990 or 990–EZ,”
under control number 1545–2085. The es-
timated number of recordkeepers that will
submit electronic notification is approxi-
mately 520,000. The estimated paperwork
burden for taxpayers submitting Form
990–N is 15 minutes per taxpayer.
Books and records relating to the col-
lection of information must be retained as
long as their contents may become mate-
rial in the administration of any internal
revenue law.
Background and Explanation of
Provision
Temporary regulations in this issue of
the Bulletin amend the Income Tax Reg-
ulations (26 CFR part 1) relating to sec-
2007–52 I.R.B.1264December 26, 2007

tion 6033(i)(1). The temporary regulations
describe the time and manner in which
certain tax-exempt organizations not cur-
rently required to file are required to pro-
vide an annual electronic notice including
certain information set forth in the sec-
tion 6033(i)(1)(A) through (F). The text of
those regulations also serves as the text of
these proposed regulations. The preamble
to the temporary regulations explains the
amendments.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a significant
regulatory action as defined in Executive
Order 12866. Therefore, a regulatory as-
sessment is not required. It has also been
determined that section 553(b) of the Ad-
ministrative Procedure Act (5 U.S.C. chap-
ter 5) does not apply to these regulations.
It is hereby certified that the collection of
information in §1.6033–6T will not have a
significant economic impact on a substan-
tial number of small entities. Accordingly,
a regulatory flexibility analysis under the
Regulatory Flexibility Act (5 U.S.C. 601)
(RFA) is not required.
The effect of these proposed regulations
on small entities flows directly from the
statute these regulations implement. Sec-
tion 6033(i)(1) requires that certain entities
submit annual notification, in electronic
form, setting forth: the legal name of the
organization; any name under which such
organization operates or does business; the
organization’s mailing address and Inter-
net Web site address (if any); the organiza-
tion’s taxpayer identification number; the
name and address of a principal officer;
and evidence of the continuing basis for
the organization’s exemption from the fil-
ing requirements under section 6033(a)(1).
Pursuant to section 7805(f) of the Code,
this regulation as been submitted to the
Chief Counsel for Advocacy of the Small
Business Administration for comment on
its impact on small business.
Comments and Requests for a Public
Hearing
Before the proposed regulations are
adopted as final regulations, consideration
will be given to any written comments (a
signed original and eight (8) copies) or
electronic comments that are submitted
timely to the IRS. The IRS and Treasury
Department specifically request comments
on the clarity of the proposed rule and how
it may be made easier to understand. Com-
ments are requested on all aspects of the
proposed regulations. All comments will
be available for public inspection and
copying. A public hearing will be sched-
uled if requested in writing by any person
that timely submits written comments. If a
public hearing is scheduled, notice of the
date, time, and place for the public hearing
will be published in theFederal Register.
Drafting Information
The principal author of these regula-
tions is Monice Rosenbaum of the Office
of the Associate Chief Counsel (Tax Ex-
empt and Government Entities). However,
other personnel from the IRS and Treasury
Department participated in their develop-
ment.
*****
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 1 is proposed
to be amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 is amended by adding an entry in
numerical order to read as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.6033–6 also issued under 26
U.S.C. 6033(i)(1). * * *
Par.2.Section1.6033–6isproposedto
be added to read as follows:
§1.6033–6 Notification requirement
for entities not required to file an
annual information return under section
6033(a)(1) (taxable years beginning after
December 31, 2006).
[The text of proposed §1.6033–6 is the
same as the text of §1.6033–6T published
elsewhere in this issue of the Bulletin].
Linda E. Stiff,
Deputy Commissioner for
Services and Enforcement.
(Filed by the Office of the Federal Register on November 14,
2007, 8:45 a.m., and published in the issue of the Federal
Register for November 15, 2007, 72 F.R. 64174)
December 26, 200712652007–52 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 rul-
ings will not be applied pending some
future action such as the issuance of new
or amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
DC—Dummy Corporation.
DE—Donee.
Del. Order
—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
2007–52 I.R.B.iDecember 26, 2007

Numerical Finding List
1
Bulletins 2007–27 through 2007–52
Announcements:
2007-61, 2007-28 I.R.B.84
2007-62, 2007-29 I.R.B.115
2007-63, 2007-30 I.R.B.236
2007-64, 2007-29 I.R.B.125
2007-65, 2007-30 I.R.B.236
2007-66, 2007-31 I.R.B.296
2007-67, 2007-32 I.R.B.345
2007-68, 2007-32 I.R.B.348
2007-69, 2007-33 I.R.B.371
2007-70, 2007-33 I.R.B.371
2007-71, 2007-33 I.R.B.372
2007-72, 2007-33 I.R.B.373
2007-73, 2007-34 I.R.B.435
2007-74, 2007-35 I.R.B.483
2007-75, 2007-36 I.R.B.540
2007-76, 2007-36 I.R.B.560
2007-77, 2007-38 I.R.B.662
2007-78, 2007-38 I.R.B.663
2007-79, 2007-40 I.R.B.749
2007-80, 2007-38 I.R.B.667
2007-81, 2007-38 I.R.B.667
2007-82, 2007-40 I.R.B.749
2007-83, 2007-40 I.R.B.752
2007-84, 2007-41 I.R.B.797
2007-85, 2007-39 I.R.B.719
2007-86, 2007-39 I.R.B.719
2007-87, 2007-40 I.R.B.753
2007-88, 2007-42 I.R.B.801
2007-89, 2007-41 I.R.B.798
2007-90, 2007-42 I.R.B.856
2007-91, 2007-42 I.R.B.857
2007-92, 2007-42 I.R.B.857
2007-93, 2007-42 I.R.B.858
2007-94, 2007-42 I.R.B.858
2007-95, 2007-43 I.R.B.894
2007-96, 2007-42 I.R.B.859
2007-97, 2007-43 I.R.B.895
2007-98, 2007-43 I.R.B.896
2007-99, 2007-43 I.R.B.896
2007-100, 2007-44 I.R.B.922
2007-101, 2007-43 I.R.B.898
2007-102, 2007-44 I.R.B.922
2007-103, 2007-44 I.R.B.923
2007-104, 2007-44 I.R.B.924
2007-105, 2007-45 I.R.B.984
2007-106, 2007-46 I.R.B.1021
2007-107, 2007-46 I.R.B.989
2007-108, 2007-47 I.R.B.1044
2007-109, 2007-47 I.R.B.1045
2007-110, 2007-48 I.R.B.1082
2007-111, 2007-49 I.R.B.
1153
2007-112, 2007-50 I.R.B.1175
Announcements— Continued:
2007-113, 2007-51 I.R.B.1215
2007-114, 2007-50 I.R.B.1176
2007-115, 2007-51 I.R.B.1216
2007-116, 2007-51 I.R.B.1216
2007-117, 2007-51 I.R.B.1217
Court Decisions:
2083, 2007-46 I.R.B.986
2084, 2007-47 I.R.B.1032
Notices:
2007-54, 2007-27 I.R.B.12
2007-55, 2007-27 I.R.B.13
2007-56, 2007-27 I.R.B.15
2007-57, 2007-29 I.R.B.87
2007-58, 2007-29 I.R.B.88
2007-59, 2007-30 I.R.B.135
2007-60, 2007-35 I.R.B.466
2007-61, 2007-30 I.R.B.140
2007-62, 2007-32 I.R.B.331
2007-63, 2007-33 I.R.B.353
2007-64, 2007-34 I.R.B.385
2007-65, 2007-34 I.R.B.386
2007-66, 2007-34 I.R.B.387
2007-67, 2007-35 I.R.B.467
2007-68, 2007-35 I.R.B.468
2007-69, 2007-35 I.R.B.468
2007-70, 2007-40 I.R.B.735
2007-71, 2007-35 I.R.B.472
2007-72, 2007-36 I.R.B.544
2007-73, 2007-36 I.R.B.545
2007-74, 2007-37 I.R.B.585
2007-75, 2007-39 I.R.B.679
2007-76, 2007-40 I.R.B.735
2007-77, 2007-40 I.R.B.735
2007-78, 2007-41 I.R.B.780
2007-79, 2007-42 I.R.B.809
2007-80, 2007-43 I.R.B.867
2007-81, 2007-44 I.R.B.899
2007-82, 2007-44 I.R.B.904
2007-83, 2007-45 I.R.B.960
2007-84, 2007-45 I.R.B.963
2007-85, 2007-45 I.R.B.965
2007-86, 2007-46 I.R.B.990
2007-87, 2007-45 I.R.B.966
2007-88, 2007-46 I.R.B.993
2007-89, 2007-46 I.R.B.998
2007-90, 2007-46 I.R.B.1003
2007-91, 2007-48 I.R.B.1069
2007-92, 2007-47 I.R.B.1036
2007-93, 2007-48 I.R.B.1072
2007-94, 2007-51 I.R.B.1179
2007-95, 2007-49 I.R.B.1091
2007-96, 2007-49 I.R.B.1091
2007-97, 2007-49 I.R.B.1092
Notices— Continued:
2007-98, 2007-50 I.R.B.1160
2007-99, 2007-52 I.R.B.1243
2007-100, 2007-52 I.R.B.1243
2007-101, 2007-52 I.R.B.1253
Proposed Regulations:
REG-209020-86, 2007-48 I.R.B.1075
REG-107592-00, 2007-44 I.R.B.908
REG-121475-03, 2007-35 I.R.B.474
REG-128274-03, 2007-33 I.R.B.356
REG-151884-03, 2007-51 I.R.B.1200
REG-114084-04, 2007-33 I.R.B.359
REG-149036-04, 2007-33 I.R.B.365
REG-149036-04, 2007-34 I.R.B.411
REG-155669-04, 2007-52 I.R.B.1262
REG-101001-05, 2007-36 I.R.B.548
REG-119097-05, 2007-28 I.R.B.74
REG-128843-05, 2007-37 I.R.B.587
REG-142695-05, 2007-39 I.R.B.681
REG-143326-05, 2007-43 I.R.B.873
REG-143397-05, 2007-41 I.R.B.790
REG-147171-05, 2007-32 I.R.B.334
REG-148951-05, 2007-36 I.R.B.550
REG-163195-05, 2007-33 I.R.B.366
REG-118886-06, 2007-37 I.R.B.591
REG-128224-06, 2007-36 I.R.B.551
REG-138707-06, 2007-32 I.R.B.342
REG-139268-06, 2007-34 I.R.B.415
REG-140206-06, 2007-46 I.R.B.1006
REG-142039-06, 2007-34 I.R.B.415
REG-144540-06, 2007-31 I.R.B.296
REG-148393-06, 2007-39 I.R.B.714
REG-103842-07, 2007-28 I.R.B.79
REG-104942-07, 2007-52 I.R.B.1264
REG-106143-07, 2007-43 I.R.B.881
REG-113891-07, 2007-42 I.R.B.821
REG-114125-07, 2007-46 I.R.B.1012
REG-115910-07, 2007-51 I.R.B.1214
REG-116215-07, 2007-38 I.R.B.659
REG-118719-07, 2007-37 I.R.B.593
REG-127770-07, 2007-50 I.R.B.1171
REG-129916-07, 2007-43 I.R.B.891
REG-133300-07, 2007-49 I.R.B.1140
REG-134923-07, 2007-47 I.R.B.1037
REG-138637-07, 2007-45 I.R.B.977
Revenue Procedures:
2007-42, 2007-27 I.R.B.15
2007-43, 2007-27 I.R.B.26
2007-44, 2007-28 I.R.B.54
2007-45, 2007-29 I.R.B.89
2007-46, 2007-29 I.R.B.102
2007-47, 2007-29 I.R.B.108
2007-48, 2007-29 I.R.B.110
2007-49, 2007-30 I.R.B.141
1
A cumulative list of all revenue rulings, revenueprocedures, Treasury decisions, etc., publishedin Internal Revenue Bulletins 2007–1 through 2007–26 is in Internal Revenue Bulletin
2007–26, dated June 25, 2007.
December 26, 2007ii2007–52 I.R.B.

Revenue Procedures— Continued:
2007-50, 2007-31 I.R.B.244
2007-51, 2007-30 I.R.B.143
2007-52, 2007-30 I.R.B.222
2007-53, 2007-30 I.R.B.233
2007-54, 2007-31 I.R.B.293
2007-55, 2007-33 I.R.B.354
2007-56, 2007-34 I.R.B.388
2007-57, 2007-36 I.R.B.547
2007-58, 2007-37 I.R.B.585
2007-59, 2007-40 I.R.B.745
2007-60, 2007-39 I.R.B.679
2007-61, 2007-40 I.R.B.747
2007-62, 2007-41 I.R.B.786
2007-63, 2007-42 I.R.B.809
2007-64, 2007-42 I.R.B.818
2007-65, 2007-45 I.R.B.967
2007-66, 2007-45 I.R.B.970
2007-67, 2007-48 I.R.B.1072
2007-68, 2007-49 I.R.B.1093
2007-69, 2007-49 I.R.B.1137
2007-70, 2007-50 I.R.B.1162
2007-71, 2007-51 I.R.B.1184
2007-72, 2007-52 I.R.B.1257
Revenue Rulings:
2007-42, 2007-28 I.R.B.44
2007-43, 2007-28 I.R.B.45
2007-44, 2007-28 I.R.B.47
2007-45, 2007-28 I.R.B.49
2007-46, 2007-30 I.R.B.126
2007-47, 2007-30 I.R.B.127
2007-48, 2007-30 I.R.B.129
2007-49, 2007-31 I.R.B.237
2007-50, 2007-32 I.R.B.311
2007-51, 2007-37 I.R.B.573
2007-52, 2007-37 I.R.B.575
2007-53, 2007-37 I.R.B.577
2007-54, 2007-38 I.R.B.604
2007-55, 2007-38 I.R.B.604
2007-56, 2007-39 I.R.B.668
2007-57, 2007-36 I.R.B.531
2007-58, 2007-37 I.R.B.562
2007-59, 2007-37 I.R.B.582
2007-60, 2007-38 I.R.B.606
2007-61, 2007-42 I.R.B.799
2007-62, 2007-41 I.R.B.767
2007-63, 2007-41 I.R.B.778
2007-64, 2007-45 I.R.B.953
2007-65, 2007-45 I.R.B.949
2007-66, 2007-45 I.R.B.956
2007-67, 2007-48 I.R.B.1047
2007-68, 2007-52 I.R.B.1236
2007-69, 2007-49 I.R.B.1083
2007-70, 2007-50 I.R.B.1158
2007-71, 2007-50 I.R.B.1155
2007-72, 2007-50 I.R.B.1154
Social Security Contribution and Benefit
Base; Domestic Employee Coverage
Threshold:
2007-92, 2007-47 I.R.B.1036
Tax Conventions:
2007-75, 2007-36 I.R.B.540
2007-88, 2007-42 I.R.B.801
2007-107, 2007-46 I.R.B.989
Treasury Decisions:
9326, 2007-31 I.R.B.242
9327, 2007-28 I.R.B.50
9328, 2007-27 I.R.B.1
9329, 2007-32 I.R.B.312
9330, 2007-31 I.R.B.239
9331, 2007-32 I.R.B.298
9332, 2007-32 I.R.B.300
9333, 2007-33 I.R.B.350
9334, 2007-34 I.R.B.382
9335, 2007-34 I.R.B.380
9336, 2007-35 I.R.B.461
9337, 2007-35 I.R.B.455
9338, 2007-35 I.R.B.463
9339, 2007-35 I.R.B.437
9340, 2007-36 I.R.B.487
9341, 2007-35 I.R.B.449
9342, 2007-35 I.R.B.451
9343, 2007-36 I.R.B.533
9344, 2007-36 I.R.B.535
9345, 2007-36 I.R.B.523
9346, 2007-37 I.R.B.570
9347, 2007-38 I.R.B.624
9348, 2007-37 I.R.B.563
9349, 2007-39 I.R.B.668
9350, 2007-38 I.R.B.607
9351, 2007-38 I.R.B.616
9352, 2007-38 I.R.B.621
9353, 2007-40 I.R.B.721
9354, 2007-41 I.R.B.759
9355, 2007-37 I.R.B.577
9356, 2007-39 I.R.B.675
9357, 2007-41 I.R.B.773
9358, 2007-41 I.R.B.769
9359, 2007-45 I.R.B.931
9360, 2007-43 I.R.B.860
9361, 2007-47 I.R.B.1026
9362, 2007-48 I.R.B.1050
9363, 2007-49 I.R.B.1084
9364, 2007-51 I.R.B.1177
9365, 2007-52 I.R.B.1218
9366, 2007-52 I.R.B.1232
9367, 2007-52 I.R.B.1229
2007–52 I.R.B.iiiDecember 26, 2007

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2007–27 through 2007–52
Announcements:
84-26
Obsoleted by
T.D. 9336, 2007-35 I.R.B.461
84-37
Obsoleted by
T.D. 9336, 2007-35 I.R.B.461
Notices:
89-110
Modified by
REG-142695-05, 2007-39 I.R.B.681
96-13
Superseded by
Notice 2007-96, 2007-49 I.R.B.1091
99-6
Obsoleted as of January 1, 2009 by
T.D. 9356, 2007-39 I.R.B.675
2002-45
Modified by
REG-142695-05, 2007-39 I.R.B.681
2003-81
Modified and supplemented by
Notice 2007-71, 2007-35 I.R.B.472
2005-1
Modified by
Notice 2007-89, 2007-46 I.R.B.998
2006-1
Modified by
Notice 2007-70, 2007-40 I.R.B.735
2006-43
Modified by
T.D. 9332, 2007-32 I.R.B.300
2006-56
Clarified by
Notice 2007-74, 2007-37 I.R.B.585
2006-79
Section 3 modified and superseded by
Notice 2007-86, 2007-46 I.R.B.990
2006-89
Modified by
Notice 2007-67, 2007-35 I.R.B.467
2007-3
Modified by
Notice 2007-69, 2007-35 I.R.B.468
2007-7
Modified by
Notice 2007-99, 2007-52 I.R.B.1243
Notices— Continued:
2007-26
Modified by
Notice 2007-56, 2007-27 I.R.B.15
2007-78
Modified by
Notice 2007-86, 2007-46 I.R.B.990
Proposed Regulations:
EE-16-79
Withdrawn by
REG-142695-05, 2007-39 I.R.B.681
EE-130-86
Withdrawn by
REG-142695-05, 2007-39 I.R.B.681
REG-243025-96
Withdrawn by
REG-142695-05, 2007-39 I.R.B.681
REG-105964-98
Withdrawn by
REG-107592-00, 2007-44 I.R.B.908
REG-117162-99
Withdrawn by
REG-142695-05, 2007-39 I.R.B.681
REG-157711-02
Corrected by
Ann. 2007-74, 2007-35 I.R.B.483
REG-119097-05
Hearing location change by
Ann. 2007-81, 2007-38 I.R.B.667
REG-142695-05
Hearing location change by
Ann. 2007-91, 2007-42 I.R.B.857
REG-148951-05
Corrected by
Ann. 2007-94, 2007-42 I.R.B.858
REG-109367-06
Hearing scheduled by
Ann. 2007-66, 2007-31 I.R.B.296
REG-128224-06
Hearing location change by
Ann. 2007-92, 2007-42 I.R.B.857
Corrected by
Ann. 2007-95, 2007-43 I.R.B.894
REG-138707-06
Corrected by
Ann. 2007-79, 2007-40 I.R.B.749
Cancellation of hearing by
Ann. 2007-101, 2007-43 I.R.B.898
REG-140206-06
Corrected by
Ann. 2007-116, 2007-51 I.R.B.1216
Proposed Regulations— Continued:
REG-143601-06
Corrected by
Ann. 2007-71, 2007-33 I.R.B.372
REG-143797-06
Cancellation of hearing by
Ann. 2007-85, 2007-39 I.R.B.719
REG-148393-06
Corrected by
Ann. 2007-98, 2007-43 I.R.B.896
REG-103842-07
Corrected by
Ann. 2007-77, 2007-38 I.R.B.662
REG-116215-07
Corrected by
Ann. 2007-97, 2007-43 I.R.B.895
Revenue Procedures:
90-12
Modified by
Rev. Proc. 2007-66, 2007-45 I.R.B.970
90-27
Superseded by
Rev. Proc. 2007-52, 2007-30 I.R.B.222
95-28
Superseded by
Rev. Proc. 2007-54, 2007-31 I.R.B.293
97-14
Modified and superseded by
Rev. Proc. 2007-47, 2007-29 I.R.B.108
97-27
Modified by
Rev. Proc. 2007-67, 2007-48 I.R.B.1072
98-48
Modified by
T.D. 9353, 2007-40 I.R.B.721
2002-9
Modified and amplified by
Rev. Proc. 2007-48, 2007-29 I.R.B.110
Rev. Proc. 2007-53, 2007-30 I.R.B.233
2002-41
Modified by
Rev. Proc. 2007-66, 2007-45 I.R.B.970
2003-43
Supplemented by
Rev. Proc. 2007-62, 2007-41 I.R.B.786
2004-42
Superseded by
Notice 2007-59, 2007-30 I.R.B.135
2004-48
Supplemented by
Rev. Proc. 2007-62, 2007-41 I.R.B.786
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2007–1 through 2007–26 is in Internal Revenue Bulletin 2007–26, dated June 25, 2007.
December 26, 2007iv2007–52 I.R.B.

Revenue Procedures— Continued:
2005-16
Modified by
Rev. Proc. 2007-44, 2007-28 I.R.B.54
2005-27
Superseded by
Rev. Proc. 2007-56, 2007-34 I.R.B.388
2005-66
Clarified, modified, and superseded by
Rev. Proc. 2007-44, 2007-28 I.R.B.54
2006-25
Superseded by
Rev. Proc. 2007-42, 2007-27 I.R.B.15
2006-27
Modified by
Rev. Proc. 2007-49, 2007-30 I.R.B.141
2006-33
Superseded by
Rev. Proc. 2007-51, 2007-30 I.R.B.143
2006-41
Superseded by
Rev. Proc. 2007-63, 2007-42 I.R.B.809
2006-45
Modified and clarified by
Rev. Proc. 2007-64, 2007-42 I.R.B.818
2006-49
Superseded by
Rev. Proc. 2007-70, 2007-50 I.R.B.1162
2006-53
Modified by
Rev. Proc. 2007-60, 2007-39 I.R.B.679
2006-55
Superseded by
Rev. Proc. 2007-43, 2007-27 I.R.B.26
2007-4
Modified by
Notice 2007-69, 2007-35 I.R.B.468
2007-15
Superseded by
Rev. Proc. 2007-50, 2007-31 I.R.B.244
2007-24
Superseded by
Rev. Proc. 2007-68, 2007-49 I.R.B.1093
Revenue Rulings:
54-378
Clarified by
Rev. Rul. 2007-51, 2007-37 I.R.B.573
65-18
Revoked by
Rev. Rul. 2007-69, 2007-49 I.R.B.1083
Revenue Rulings— Continued:
67-93
Obsoleted by
T.D. 9347, 2007-38 I.R.B.624
69-141
Modified by
REG-142695-05, 2007-39 I.R.B.681
72-605
Amplified by
Rev. Rul. 2007-69, 2007-49 I.R.B.1083
74-299
Amplified by
Rev. Rul. 2007-48, 2007-30 I.R.B.129
75-425
Obsoleted by
Rev. Rul. 2007-60, 2007-38 I.R.B.606
76-278
Obsoleted by
T.D. 9354, 2007-41 I.R.B.759
76-288
Obsoleted by
T.D. 9354, 2007-41 I.R.B.759
76-450
Obsoleted by
T.D. 9347, 2007-38 I.R.B.624
78-257
Obsoleted by
T.D. 9347, 2007-38 I.R.B.624
78-369
Revoked by
Rev. Rul. 2007-53, 2007-37 I.R.B.577
89-96
Amplified by
Rev. Rul. 2007-47, 2007-30 I.R.B.127
92-17
Modified by
Rev. Rul. 2007-42, 2007-28 I.R.B.44
94-62
Supplemented by
Rev. Rul. 2007-58, 2007-37 I.R.B.562
2001-48
Modified by
T.D. 9332, 2007-32 I.R.B.300
2001-62
Modified by
Rev. Rul. 2007-67, 2007-48 I.R.B.1047
2002-41
Modified by
REG-142695-05, 2007-39 I.R.B.681
2003-102
Modified by
REG-142695-05, 2007-39 I.R.B.681
Revenue Rulings— Continued:
2005-24
Modified by
REG-142695-05, 2007-39 I.R.B.681
2006-36
Modified by
REG-142695-05, 2007-39 I.R.B.681
2006-57
Modified by
Notice 2007-76, 2007-40 I.R.B.735
2007-54
Suspended by
Rev. Rul. 2007-61, 2007-42 I.R.B.799
2007-59
Amplified by
Notice 2007-74, 2007-37 I.R.B.585
Treasury Decisions:
8073
Removed by
T.D. 9349, 2007-39 I.R.B.668
9321
Corrected by
Ann. 2007-68, 2007-32 I.R.B.348
Ann. 2007-78, 2007-38 I.R.B.663
9330
Corrected by
Ann. 2007-80, 2007-38 I.R.B.667
9332
Corrected by
Ann. 2007-83, 2007-40 I.R.B.752
Ann. 2007-84, 2007-41 I.R.B.797
9334
Corrected by
Ann. 2007-93, 2007-42 I.R.B.858
9340
Corrected by
Ann. 2007-102, 2007-44 I.R.B.922
9353
Corrected by
Ann. 2007-103, 2007-44 I.R.B.923
2007–52 I.R.B.vDecember 26, 2007

INDEX
Internal Revenue Bulletins 2007–27 through
2007–52
The abbreviation and number in parenthesis following the index entry
refer to the specific item; numbers in roman and italic type following
the parenthesis refers to the Internal Revenue Bulletin in which the item
may be found and the page number on which it appears.
Key to Abbreviations:
AnnAnnouncement
CDCourt Decision
DODelegation Order
EOExecutive Order
PLPublic Law
PTEProhibited Transaction Exemption
RPRevenue Procedure
RRRevenue Ruling
SPRStatement of Procedural Rules
TCTax Convention
TDTreasury Decision
TDOTreasury Department Order
EMPLOYEE PLANS
Abusive trust arrangements, sections 419 and 419A (Notice 83)
45,960
Automatic contribution arrangements (REG–133300–07) 49,
1140
Benefit restrictions for underfunded pension plans
(REG–113891–07) 42,821
Bona fide severance pay plan under section 457(e)(11) and sub-
stantial risk of forfeiture under section 457(f) (Notice 62) 32,
331
Cafeteria plans under section 125, guidance (REG–142695–05)
39,681; change in hearing location (Ann 91) 42,857
Corrections of certain failures ofa nonqualified deferred com-
pensation plan to comply with section 409A(a) (Notice 100)
52,1243
Determination letters, staggered remedial amendments (RP 44)
28,54
Disclosure requirements with respect to prohibited tax shelter
transactions (TD 9335) 34,380
Employee Plans Compliance Resolution System (EPCRS), cor-
rection program (RP 49) 30,141
Form 5500, Schedule P, elimination (Ann 63) 30,236
Full funding limitations, weighted average interest rates, seg-
ment rates for:
July 2007 (Notice 61) 30,140
August 2007 (Notice 68) 35,468
September 2007 (Notice 75) 39,679
October 2007 (Notice 82) 44,904
November 2007 (Notice 91) 48,1069
December 2007 (Notice 101) 52,1253
Indian tribal government, Pension Protection Act of 2006 (Notice
67) 35,467
EMPLOYEE PLANS—Cont.
Individual retirement accounts(IRAs), deemed IRAs in govern-
mental plans/qualified nonbank trustee rules (TD 9331) 32,
298
Insurance:
Section 402(l) of the Code (Notice 99) 52,1243
Interest rate yields for August 2007, targeted segments
(Notice 81) 44,899
Mortality tables for:
Determining present value, correction to REG–143601–06
(Ann 71) 33,372
Single sum distributions (RR 67) 48,1047
Nonexempt employees’ trusts,income and employment tax con-
sequences (RR 48) 30,129
Nonqualified deferred compensation plans:
Application of section 409A, correction to TD 9321 (Ann 68)
32,348; additional correction to TD 9321 (Ann 78) 38,663
Extension of transition relief (Notice 86) 46,990
Transition relief and additional guidance on the application of
section 409A (Notice 78) 41,780
Proposed Regulations:
26 CFR 1.72–15, amended; 1.105–4, –6, removed; 1.106–1,
amended; 1.401–1, amended; 1.402(a)–1, amended;
1.402(c)–2, amended; 1.403(a)–1, amended; 1.403(b)–6,
amended; medical and accident insurance benefits under
qualified plans (REG–148393–06) 39,714; correction
(Ann 98) 43,896
26 CFR 1.125–0, –1, –2, –5, –6, –7, added; employee bene-
fits – cafeteria plans (REG–142695–05) 39,681;changein
hearing location (Ann 91) 42,857
26 CFR 1.401(k)–0 thru –3, –6, amended; 1.401(m)–0 thru
–3, amended; 1.402(c)–2, amended; 1.411(a)–4, amended;
1.414(w)–1, added; 54.4979–1, amended; automatic con-
tribution agreements (REG–133300–07) 49,1140
26 CFR 1.430(f)–1, added; 1.436–1, added; benefit restric-
tions for underfunded pension plans (REG–113891–07) 42,
821
26 CFR 1.430(h)(3)–2, amended; mortality tables for de-
termining present value, correction to REG–143601–06
(Ann 71) 33,372
26 CFR 1.6033–5, added; 53.4965–1 thru –9, added;
53.6071–1,amended;54.6011–1,amended;
301.6011(g)–1, added; 301.6033–5, added; excise
taxes on prohibited tax shelter transactions and related dis-
closure requirements, disclosure requirements with respect
to prohibited tax shelter transactions, requirement of return
and time for filing (REG–142039–06; REG–139268–06)
34,415
Qualification:
Remedial amendment period (Notice 94) 51,1179
Section 403(b) model amendments (RP 71) 51,1184
Qualified retirement plans:
Covered compensation tables for 2008, permitted disparity
(RR 71) 50,1155
Limitations on benefits and contributions, cost-of-living ad-
justments, 2008 (Notice 87) 45,966
Pension plans, normal retirement age (Notice 69) 35,468
December 26, 2007vi2007–52 I.R.B.

EMPLOYEE PLANS—Cont.
Pre-approved defined benefit plans, GUST amendments
(Ann 61) 28,84
Section 401(a), pre-approved plans, defined contribution
plans, temporary stop in accepting applications beginning
December 18, 2007 (Ann 90) 42,856
Regulations:
26 CFR 1.402(b)–1, amended; 1.402(g)(3)–1, added;
1.402A–1, revised; 1.403(b)–0, added; 1.403(b)–1, –2,
–3, revised; 1.403(b)–4 thru –11, added; 1.403(d)–1,
removed; 1.414(c)–5 redesignated as 1.414(c)–6; new
1.414(c)–5, added; 602.101, amended; revised regulations
concerning section 403(b) tax-sheltered annuity contracts
(TD 9340) 36,487
26 CFR 1.408–2(e)(8), revised; 1.408–2T, removed; deemed
IRAs in governmental plans/qualified nonbank trustee rules
(TD 9331) 32,298
26 CFR 1.409A–1, –2, –3, –6, amended; application of sec-
tion 409A to nonqualified deferred compensation plans;
correctiontoTD9321(Ann78)38,663
26 CFR 1.6033–5T, added; 301.6033–5T, added; disclosure
requirements with respect to prohibited tax shelter transac-
tions (TD 9335) 34,380
26 CFR 53.6011–1, amended; 53.6071–1, amended;
53.6071–1T, added; 54.6011–1, –1T, amended; require-
ment of return and time for filing (TD 9334) 34,382
Reporting and withholding requirements under section 409A for
calendar year 2007 (Notice 89) 46,998
Requirement of return and time for filing with respect to section
4965 taxes (TD 9334) 34,382; (REG–142039–06) 34,415;
(REG–139268–06) 34,415
Tax-sheltered annuities, section 403(b) contracts (TD 9340) 36,
487
Terminations and partial terminations, turnover of employees,
presumption (RR 43) 28,45
Use of qualified plan amounts to pay health insurance premiums
(REG–148393–06) 39,714; correction (Ann 98) 43,896
Welfare benefit funds:
Employer’s deduction (RR 65) 45,949
Post-retirement benefits (Notice 84) 45,963
EMPLOYMENT TAX
American Jobs Creation Act (AJCA), modifications to the sec-
tion 6011 regulations (TD 9350) 38,607
Disregarded entities, employment and excise taxes (TD 9356)
39,675
Liens, changes to office to which notices of nonjudicial sale
and requests for return of wrongfully levied property must
be sent (TD 9344) 36,535; correction (Ann 93) 42,858;
(REG–148951–05) 36,550; correction (Ann 94) 42,858
Nonexempt employees’ trusts,income and employment tax con-
sequences (RR 48) 30,129
Payments made by reasons of a salary reduction agreement
(TD 9367) 52,1229
EMPLOYMENT TAX—Cont.
Penalties, transitional relief for the return preparer penalty pro-
visions under section 6694 (Notice 54) 27,12
Proposed Regulations:
26 CFR 301.6343–2, amended; 301.7425–3, amended;
changes to office to which notices of nonjudicial sale and
requests for return of wrongfully levied property must be
sent (REG–148951–05) 36,550;correction(Ann94)42,
858
Publications:
1141, General Rules and Specifications for Substitute Forms
W-2 and W-3, revised (RP 43) 27,26
4436, General Rules and Specifications for Substitute Form
941 and Schedule B (Form 941), revised (RP 42) 27,15
Qualified transportation fringes, smart cards, debit or credit
cards, or other electronic media, Rev. Rul. 2006–57’s effec-
tive date delayed from January 1, 2008 to January 1, 2009
(Notice 76) 40,735
Regulations:
26 CFR 1.34–1, revised; 1.34–2 thru –6, removed; 1.1361–4,
–6, amended; 301.7701–2, amended; disregarded entities,
employment and excise taxes (TD 9356) 39,675
26 CFR 1.6011–4, revised; 1.6011–4T, removed; 20.6011–4,
revised; 25.6011–4, revised; 31.6011–4, revised;
53.6011–4, revised; 54.6011–4, revised; 56.6011–4,
revised; AJCA modifications to the section 6011 regula-
tions (TD 9350) 38,607
26 CFR 31.3121(a)(5)–2, added; 31.3121(a)(5)–2T, removed;
payment made by reason of a salary reduction agreement
(TD 9367) 52,1229
26 CFR 31.3402(f)(2)–1,(f)(5)–1,amended;
31.3402(f)(2)–1T, (f)(5)–1T, removed; withholding
exemptions (TD 9337) 35,455
26 CFR 301.6343–2, amended; 301.6343–2T, added;
301.7425–3, amended; 301.7425–3T, added; changes
to office to which notices of nonjudicial sale and requests
forreturnofwrongfullyleviedpropertymustbesent
(TD 9344) 36,535; correction (Ann 93) 42,858
Social security contribution andbenefit base, domestic employee
coverage threshold, 2008 (Notice 92) 47,1036
Substitute forms:
W-2 and W-3, general rules and specifications (RP 43) 27,26
941 and Schedule B (Form 941), general rules and specifica-
tions (RP 42) 27,15
Withholding exemptions (TD 9337) 35,455
ESTATE TAX
American Jobs Creation Act (AJCA), modifications to the sec-
tion 6011 regulations (TD 9350) 38,607
Charitable lead annuity trust (CLAT):
Inter vivos, sample forms (RP 45) 29,89
Testamentary, sample form (RP 46) 29,102
Cost-of-living adjustments for inflation for 2008 (RP 66) 45,970
Generation-skipping transfer (GST) tax:
Qualified severance of a trust (TD 9348) 37,563
2007–52 I.R.B.viiDecember 26, 2007

ESTATE TAX—Cont.
Severance of a trust for GST tax purposes II
(REG–128843–05) 37,587
Grantor retained interest trusts,application of sections 2036 and
2039 (REG–119097–05) 28,74; hearing location change (Ann
81) 38,667
Interest rates for 2007, farm real property, special use value (RR
45) 28,49
Liens, changes to office to which notices of nonjudicial sale
and requests for return of wrongfully levied property must
be sent (TD 9344) 36,535; correction (Ann 93) 42,858;
(REG–148951–05) 36,550; correction (Ann 94) 42,858
Penalties, transitional relief for the return preparer penalty pro-
visions under section 6694 (Notice 54) 27,12
Proposed Regulations:
26 CFR 20.2036–1, amended; 20.2039–1, amended; grantor
retained interest trusts-application of sections 2036 and
2039 (REG–119097–05) 28,74; hearing location change
(Ann 81) 38,667
26 CFR 26.2600–1, amended; 26.2642–6, amended;
26.2654–1, amended; severance of a trust for gen-
eration-skipping transfer (GST) tax purposes II
(REG–128843–05) 37,587
26 CFR 301.6343–2, amended; 301.7425–3, amended;
changes to office to which notices of nonjudicial sale and
requests for return of wrongfully levied property must be
sent (REG–148951–05) 36,550; correction (Ann 94) 42,
858
Regulations:
26 CFR 1.1001–1, amended; 26.2600–1, amended;
26.2642–6, added; 26.2654–1, amended; 602.101,
amended; qualified severance of a trust for genera-
tion-skipping transfer (GST) tax purposes (TD 9348) 37,
563
26 CFR 1.6011–4, revised; 1.6011–4T, removed; 20.6011–4,
revised; 25.6011–4, revised; 31.6011–4, revised;
53.6011–4, revised; 54.6011–4, revised; 56.6011–4,
revised; AJCA modifications to the section 6011 regula-
tions (TD 9350) 38,607
26 CFR 301.6343–2, amended; 301.6343–2T, added;
301.7425–3, amended; 301.7425–3T, added; changes
to office to which notices of nonjudicial sale and requests
for return of wrongfully levied property must be sent
(TD 9344) 36,535; correction (Ann 93) 42,858
Security for section 6166 elections (Notice 90) 46,1003
EXCISE TAX
Alternative fuel and alternative fuel mixtures claims, definition
of liquid hydrocarbon (Notice 97) 49,1092
American Jobs Creation Act (AJCA), modifications to the sec-
tion 6011 regulations (TD 9350) 38,607
Cost-of-living adjustments for inflation for 2008 (RP 66) 45,970
Disclosure requirements with respect to prohibited tax shelter
transactions (TD 9335) 34,380
EXCISE TAX—Cont.
Disregarded entities, employment and excise taxes (TD 9356)
39,675
Liens, changes to office to which notices of nonjudicial sale
and requests for return of wrongfully levied property must
be sent (TD 9344) 36,535; correction (Ann 93) 42,858;
(REG–148951–05) 36,550;correction(Ann94)42,858
Penalties, transitional relief for the return preparer penalty pro-
visions under section 6694 (Notice 54) 27,12
Proposed Regulations:
26 CFR 1.6033–5, added; 53.4965–1 thru –9, added;
53.6071–1,amended;54.6011–1,amended;
301.6011(g)–1, added; 301.6033–5, added; excise
taxes on prohibited tax shelter transactions and related dis-
closure requirements, disclosure requirements with respect
to prohibited tax shelter transactions, requirement of return
and time for filing (REG–142039–06; REG–139268–06)
34,415
26 CFR 301.6343–2, amended; 301.7425–3, amended;
changes to office to which notices of nonjudicial sale and
requests for return of wrongfully levied property must be
sent (REG–148951–05) 36,550;correction(Ann94)42,
858
Regulations:
26 CFR 1.34–1, revised; 1.34–2 thru –6, removed; 1.1361–4,
–6, amended; 301.7701–2, amended; disregarded entities,
employment and excise taxes (TD 9356) 39,675
26 CFR 1.6011–4, revised; 1.6011–4T, removed; 20.6011–4,
revised; 25.6011–4, revised; 31.6011–4, revised;
53.6011–4, revised; 54.6011–4, revised; 56.6011–4,
revised; AJCA modifications to the section 6011 regula-
tions (TD 9350) 38,607
26 CFR 1.6033–5T, added; 301.6033–5T, added; disclosure
requirements with respect to prohibited tax shelter transac-
tions (TD 9335) 34,380
26 CFR 48.4081–1, –3, –5, amended; 48.4081–1T, –3T, re-
moved; 602.101, amended; entry of taxable fuel (TD 9346)
37,570
26 CFR 53.6011–1, amended; 53.6071–1, amended;
53.6071–1T, added; 54.6011–1, –1T, amended; require-
ment of return and time for filing (TD 9334) 34,382
26 CFR 301.6343–2, amended; 301.6343–2T, added;
301.7425–3, amended; 301.7425–3T, added; changes
to office to which notices of nonjudicial sale and requests
forreturnofwrongfullyleviedpropertymustbesent
(TD 9344) 36,535; correction (Ann 93) 42,858
Requirement of return and time for filing with respect to section
4965 taxes (TD 9334) 34,382; (REG–142039–06) 34,415;
(REG–139268–06) 34,415
Taxable fuel, entry into the United States (TD 9346) 37,570
EXEMPT ORGANIZATIONS
American Jobs Creation Act (AJCA), modifications to the sec-
tion 6011 regulations (TD 9350) 38,607
December 26, 2007viii2007–52 I.R.B.

EXEMPT ORGANIZATIONS—Cont.
Disclosure requirements with respect to prohibited tax shelter
transactions (TD 9335) 34,380
Form 1098-C, Contributions of Motor Vehicles, Boats, and Air-
planes, filing location change (Notice 70) 40,735
Information and materials made available for public inspection
(REG–116215–07) 38,659; correction (Ann 97) 43,895
Letter rulings and determination letters, exemption applica-
tion determination letter rulings under sections 501 and 521
(RP 52) 30,222
List of organizations classifiedas private foundations (Ann 67)
32,345; (Ann 82) 40,749;(Ann99)43,896; (Ann 108) 47,
1044; (Ann 117) 51,1217
Notification requirement for tax-exempt entities not currently re-
quired to file (TD 9366) 52,1232; (REG-104942–07) 52,1264
Payment requirements of Type III supporting organizations that
are not functionally integrated (Ann 87) 40,753
Proposed Regulations:
26 CFR 1.6033–5, added; 53.4965–1 thru –9, added;
53.6071–1,amended;54.6011–1,amended;
301.6011(g)–1, added; 301.6033–5, added; excise
taxes on prohibited tax shelter transactions and related dis-
closure requirements, disclosure requirements with respect
to prohibited tax shelter transactions, requirement of return
and time for filing (REG–142039–06; REG–139268–06)
34,415
26 CFR 1.6033–6, added; notification requirement
for tax-exempt entities not currently required to file
(REG–104942–07) 52,1264
26 CFR 301.6104(a)–1, amended; 301.6110–1, amended;
public inspection of material relating to tax-exempt orga-
nizations (REG–116215–07) 38,659; correction (Ann 97)
43,895
Regulations:
26 CFR 1.402(b)–1, amended; 1.402(g)(3)–1, added;
1.402A–1, revised; 1.403(b)–0, added; 1.403(b)–1, –2,
–3, revised; 1.403(b)–4 thru –11, added; 1.403(d)–1,
removed; 1.414(c)–5 redesignated as 1.414(c)–6; new
1.414(c)–5, added; 602.101, amended; revised regulations
concerning section 403(b) tax-sheltered annuity contracts
(TD 9340) 36,487
26 CFR 1.6011–4, revised; 1.6011–4T, removed; 20.6011–4,
revised; 25.6011–4, revised; 31.6011–4, revised;
53.6011–4, revised; 54.6011–4, revised; 56.6011–4,
revised; AJCA modifications to the section 6011 regula-
tions (TD 9350) 38,607
26 CFR 1.6011–5, added; 1.6011–5T, removed; 1.6033–4,
added; 1.6033–4T, removed; 1.6037–2, added; 1.6037–2T,
removed; 301.6011–5, added; 301.6011–5T, removed;
301.6033–4, added; 301.6033–4T, removed; 301.6037–2,
added; 301.6037–2T, removed; returns required on mag-
netic media (TD 9363) 49,1084
26 CFR 1.6033–5T, added; 301.6033–5T, added; disclosure
requirements with respect to prohibited tax shelter transac-
tions (TD 9335) 34,380
EXEMPT ORGANIZATIONS—Cont.
26 CFR 1.6033–6T, added; notification requirement for tax-
exempt entities not currently required to file (TD 9366) 52,
1232
26 CFR 53.6011–1, amended; 53.6071–1, amended;
53.6071–1T, added; 54.6011–1, –1T, amended; require-
ment of return and time for filing (TD 9334) 34,382
Requirement of return and time for filing with respect to section
4965 taxes (TD 9334) 34,382; (REG–142039–06) 34,415;
(REG–139268–06) 34,415
Returns required on magnetic media (TD 9363) 49,1084
Revocations (Ann 64) 29,125;(Ann65)30,236; (Ann 69)
33,371;(Ann73)34,435; (Ann 76) 36,560;(Ann86)39,
719;(Ann89)41,798;(Ann96)42,859; (Ann 105) 45,984;
(Ann 111) 49,1153; (Ann 115) 51,1216
Suspension of tax-exempt statusof organizations identified with
terrorism (Ann 70) 33,371;(Ann113)51,1215
Tax-sheltered annuities, section 403(b) contracts (TD 9340) 36,
487
GIFT TAX
American Jobs Creation Act (AJCA), modifications to the sec-
tion 6011 regulations (TD 9350) 38,607
Charitable lead annuity trust (CLAT), inter vivos, sample forms
(RP 45) 29,89
Cost-of-living adjustments for inflation for 2008 (RP 66) 45,970
Liens, changes to office to which notices of nonjudicial sale
and requests for return of wrongfully levied property must
be sent (TD 9344) 36,535; correction (Ann 93) 42,858;
(REG–148951–05) 36,550;correction(Ann94)42,858
Penalties, transitional relief for the return preparer penalty pro-
visions under section 6694 (Notice 54) 27,12
Proposed Regulations:
26 CFR 301.6343–2, amended; 301.7425–3, amended;
changes to office to which notices of nonjudicial sale and
requests for return of wrongfully levied property must be
sent (REG–148951–05) 36,550;correction(Ann94)42,
858
Regulations:
26 CFR 1.6011–4, revised; 1.6011–4T, removed; 20.6011–4,
revised; 25.6011–4, revised; 31.6011–4, revised;
53.6011–4, revised; 54.6011–4, revised; 56.6011–4,
revised; AJCA modifications to the section 6011 regula-
tions (TD 9350) 38,607
26 CFR 301.6343–2, amended; 301.6343–2T, added;
301.7425–3, amended; 301.7425–3T, added; changes
to office to which notices of nonjudicial sale and requests
forreturnofwrongfullyleviedpropertymustbesent
(TD 9344) 36,535; correction (Ann 93) 42,858
INCOME TAX
Accounting methods:
Accounting period change (RP 64) 42,818
2007–52 I.R.B.ixDecember 26, 2007

INCOME TAX—Cont.
Automatic consent to change, Advance Trade Discount
Method (RP 53) 30,233
Process for change (Notice 88) 46,993
Reorganizations and liquidations (REG–151884–03) 51,
1200
Requests to revise the year of change for Form 3115, Appli-
cation for Change in Accounting Method, pending (RP 67)
48,1072
Safe harbor method of accounting for rotable spare parts
(RP 48) 29,110
Accounts and notes receivable,section 1221(a)(4) capital asset
exclusion, hearing (Ann 66) 31,296
Agent for a consolidated group with foreign common parent
(TD 9343) 36,533
Alternative signature methods for Electronic Return Originators
(EROs) (Notice 79) 42,809
American Jobs Creation Act (AJCA):
Modifications to the section 6011 regulations (TD 9350) 38,
607
Modifications to the section 6111 regulations (TD 9351) 38,
616
Modifications to the section 6112 regulations (TD 9352) 38,
621
Base period T-Bill rate, 2007 (RR 64) 45,953
Bonds, arbitrage guidance for tax-exempt bonds
(REG–106143–07) 43,881
Cafeteria plans under section 125:
Guidance (REG–142695–05) 39,681;changeinhearinglo-
cation (Ann 91) 42,857
Removal of temporary regulations TD 8073 (TD 9349) 39,
668
Charitable contribution of real property, deduction (Notice 72)
36,544
Charitable lead annuity trust (CLAT):
Inter vivos, sample forms (RP 45) 29,89
Testamentary, sample form (RP 46) 29,102
Commodity Credit Corporation (CCC) loans, tax treatment and
information reporting of repayments (Notice 63) 33,353
Compensation for labor or personal services, artists and athletes
(REG–114125–07) 46,1012
Consolidated returns:
Intercompany obligations, REG–105964–98 withdrawn
(REG–107592–00) 44,908;correction(Ann109)47,1045
Unified rule for loss on subsidiary stock, correction to
REG–157711–02 (Ann 74) 35,483
Corporations:
Corporate reorganizations:
Active trade or business requirement for spin offs, distri-
butions under section 355 (Notice 60) 35,466
Spin offs, distributions under section 355 (RR 42) 28,44
Estimated tax payments by corporations (TD 9347) 38,624
Exclusions from gross income of foreign corporations
(TD 9332) 32,300;correction(Ann83)40,752; additional
corrections (Ann 84) 41,797; (REG–138707–06) 32,342;
correction (Ann 79) 40,749; hearing cancellation (Ann
101) 43,898
INCOME TAX—Cont.
Information returns required with respect to certain foreign
corporations and certain foreign-owned domestic corpora-
tions (TD 9338) 35,463
Real estate investment trust (REIT) distributions subject to
section 897(h)(1) (Notice 55) 27,13
Relief for late S corporation election, additional simplified
method (RP 62) 41,786
S corporations, electing small business trusts
(REG–143326–05) 43,873
Section 382 treatment of prepaid income under built-in gain
provisions of section 382(h) (TD 9330) 31,239; correction
(Ann 80) 38,667; (REG–144540–06) 31,296
Cost-of-living adjustments for inflation for 2008 (RP 66) 45,970
Credits:
Alternative motor vehicle credit phase-out (Notice 98) 50,
1160
Child and dependent care credit expenses (TD 9354) 41,759
Clean renewable energy bonds, volume cap, change of ad-
dress (Notice 56) 27,15
Enhanced oil recovery credit, 2007 inflation adjustment (No-
tice 64) 34,385
Foreign tax credit:
Effective dates for regulations (Notice 95) 49,1091
Redeterminations (TD 9362) 48,1050; (REG–209020–86)
48,1075
Regulated investment companies (RICs) (TD 9357) 41,
773
Low-income housing credit:
Carryovers to qualified states, 2007 National Pool (RP 55)
33,354
Guidance on:
Application of the qualified contract provisions of sec-
tion 42 (REG–114084–04) 33,359
Temporary relief of certain section 42 requirements as
a result of major disasters declared by the President
(RP 54) 31,293
Satisfactory bond, “bond factor” amounts for the period:
January through September 2007 (RR 46) 30,126
January through December 2007 (RR 62) 41,767
Time extension for restoration of certain low-income hous-
ing credit projects located within the Gulf Opportunity
Zone damaged by Hurricane Katrina (Notice 66) 34,387
Utility allowances under section 42 (REG–128274–03) 33,
356
Low sulfur diesel fuel production credit, certification (RP 69)
49,1137
Overpayments, tax liabilities:
Outstanding amounts, bankruptcy (RR 52) 37,575
Unassessed amounts, notice of deficiency (RR 51) 37,573
Railroad track maintenance credit (TD 9365) 52,1218
Disciplinary actionsinvolving attorneys,certified public accoun-
tants, enrolled agents, and enrolled actuaries (Ann 72) 33,373;
(Ann 104) 44,924
December 26, 2007x2007–52 I.R.B.

INCOME TAX—Cont.
Disclosure:
Of returns and return information in connection with written
contracts or agreements for the acquisition of property or
services for tax administration purposes (TD 9327) 28,50
Requirement, material advisor, Form 8918 (Notice 85) 45,
965
Electronic filing:
Alternative signature methods for Electronic Return Origina-
tors (EROs) (Notice 79) 42,809
And burden reduction, guidance (TD 9329) 32,312
Entertainment use of business aircraft (REG–147171–05) 32,
334
Estates or trusts, section 67 limitations (REG–128224–06) 36,
551; change in hearing location (Ann 92) 42,857; correction
(Ann 95) 43,894
Expenses:
Housing cost amount eligible for exclusion or deduction
(Notice 77) 40,735
Medical expenses (RR 72) 50,1154
Optional standard mileage rates, 2008 (RP 70) 50,1162
Financial services income under section 904(d), request for com-
ments (Notice 58) 29,88
Forms:
1096, 1098, 1099, 5498, W-2G, and 1042-S, substitute form
specifications (RP 50) 31,244
1098, 1099, 5498 and W-2G, requirements for filing electron-
ically or magnetically, 2007 revision (RP 51) 30,143
1098-C, Contributions of Motor Vehicles, Boats, and Air-
planes, filing location change (Notice 70) 40,735
1118, Foreign Tax Credit – Corporations, comments requested
on proposed revisions (Ann 62) 29,115
8918, disclosure requirement, material advisor (Notice 85) 45,
965
Proposed Form 8926, Disqualified Corporate Interest Ex-
pense Disallowed Under Section 163(j) and Related
Information (Ann 114) 50,1176
Gambling winnings, reporting requirements (RP 57) 36,547
Health Savings Accounts (HSAs), employer comparable contri-
butions to HSAs under section 4980G, cancellation of hearing
on REG–143797–06 (Ann 85) 39,719
Hurricane Katrina filers, time for filing postponed to April 15,
2007, extension of time (Notice 74) 37,585
Inflation adjusted amounts under section 179 of the Code, cor-
rection (RP 60) 39,679
Information reporting:
For lump-sum timber sales (REG–155669–04) 52,1262
On employer-owned life insurance contracts (TD 9364) 51,
1177; (REG–115910–07) 51,1214
Institute on Current Issues in International Taxation (Ann 100)
44,922
Insurance companies:
Diversification requirements under section 817
(REG–118719–07) 37,593
Inevitable future costs as insurance risk (RR 47) 30,127
INCOME TAX—Cont.
Life insurance, reserves for variable life insurance contracts
and required interest under section 807(d)(2) (RR 54) 38,
604
Minimum effectively connectedincome, foreign insurance
company, guidance regarding computation of amount
(RP 58) 37,585
Proration of increase in policy values of life insurance con-
tracts under the subchapter Lproration rules (RP 61) 40,
747
Suspension of Rev. Rul. 2007–54 (RR 61) 42,799
Treatment of certain nondiversified contracts, qualified pen-
sion or retirement contracts (RR 58) 37,562
Interest:
Accruals, federal income taxes (CD 2084) 47,1032
Disallowed under section 163(j), proposed Form 8926
(Ann 114) 50,1176
Investment:
Federal short-term, mid-term, and long-term rates for:
July 2007 (RR 44) 28,47
August 2007 (RR 50) 32,311
September 2007 (RR 57) 36,531
October 2007 (RR 63) 41,778
November 2007 (RR 66) 45,956
December 2007 (RR 70) 50,1158
Rates:
Underpayments and overpayments, quarter beginning:
October 1, 2007 (RR 56) 39,668
January 1, 2008 (RR 68) 52,1236
Suspension of interest:
General rules and exceptions (REG–149036–04) 34,411
Listed transactions (TD 9333) 33,350; (REG–149036–04)
33,365
Involuntary conversions, livestock sold on account of drought,
extension of replacement period, list of affected counties (No-
tice 80) 43,867
Levy, third party property, wrongful levy action (CD 2083) 46,
986
Liens, changes to office to which notices of nonjudicial sale
and requests for return of wrongfully levied property must
be sent (TD 9344) 36,535; correction (Ann 93) 42,858;
(REG–148951–05) 36,550;correction(Ann94)42,858
Life-nonlife tacking rule, taxable years of members of consoli-
dated groups (TD 9342) 35,451
Listed transaction, loss importation transaction (Notice 57) 29,
87
Losses, deductions for abandoned stock or securities
(REG–101001–05) 36,548
Marginal production rates, 2007 (Notice 65) 34,386
Modifications of subprime mortgage loans held by certain secu-
ritization vehicles (RP 72) 52,1257
Nonexempt employees’ trusts,income and employment tax con-
sequences (RR 48) 30,129
Nonqualified deferred compensation plans:
Extension of transition relief (Notice 86) 46,990
Transition relief and additional guidance on the application of
section 409A (Notice 78) 41,780
2007–52 I.R.B.xiDecember 26, 2007

INCOME TAX—Cont.
Nuclear decommissioning funds, non-qualified, allocation under
sections 338 and 1060 (TD 9358) 41,769
Partnerships:
Aggregation of reverse 704(c) gain (RP 59) 40,745
Application of sections 704(c)(1)(B) and 737 to distributions
of property after two partnerships engage in an assets-over
merger (REG–143397–05) 41,790
Request for applications for participation in the 2008 IRS In-
dividual e-file Partnership Program (Ann 106) 46,1021
Safe harbor for partnerships allocating wind energy produc-
tion credits (RP 65) 45,967; correction (Ann 112) 50,1175
Section1045applicationtopartnerships (TD 9353) 40,721;
correction (Ann 103) 44,923
Subpart F income (TD 9326) 31,242
Passive foreign investment companies (PFICs), purging elec-
tions (TD 9360) 43,860
Patented transactions (REG–129916–07) 43,891
Payment card transactions, procedure for payment card organi-
zation to obtain Qualified Payment Card Agent (QPCA) deter-
mination (Notice 59) 30,135
Penalties, transitional relief for the return preparer penalty pro-
visions under section 6694 (Notice 54) 27,12
Per diem allowances (RP 63) 42,809
Practice before the Internal Revenue Service (Circular 230):
General standards (TD 9359) 45,931
Standards with respect to tax returns (REG–138637–07) 45,
977
Presidential Election Campaign Fund, Presidential Primary
Matching Payment Account, timing of payments (Notice 96)
49,1091
Presidentially declared disaster:
Or combat zone, postponement of certain acts (RP 56) 34,388
Time for filing return (RR 59) 37,582
Private foundations, organizations now classified as (Ann 67) 32,
345;(Ann82)40,749;(Ann99)43,896; (Ann 108) 47,1044;
(Ann 117) 51,1217
Proposed Regulations:
26 CFR 1.42–10, –12, amended; section 42 utility allowance
regulations update (REG–128274–03) 33,356
26 CFR 1.42–18, added; section 42 qualified contract provi-
sions (REG–114084–04) 33,359
26 CFR 1.61–21, amended; 1.274–9, –10, added; de-
ductions for entertainment use of business aircraft
(REG–147171–05) 32,334
26 CFR 1.67–4, added; section 67 limitations on estates or
trusts (REG–128224–06) 36,551; change in hearing loca-
tion (Ann 92) 42,857; correction (Ann 95) 43,894
26 CFR 1.125–0, –1, –2, –5, –6, –7, added; employee bene-
fits – cafeteria plans (REG–142695–05) 39,681;changein
hearing location (Ann 91) 42,857
26 CFR 1.148–0, –3, –4, –5, amended; 1.148–8, –11,
revised; arbitrage guidance for tax-exempt bonds
(REG–106143–07) 43,881
26 CFR 1.165–5, amended; losses for abandoned stock or
securities (REG–101001–05) 36,548
INCOME TAX—Cont.
26 CFR 1.199–3, –7, –8, amended; qualified films under sec-
tion 199 (REG–103842–07) 28,79; correction (Ann 77) 38,
662
26 CFR 1.381(a)–1, revised; 1.381(c)(4)–1, revised;
1.381(c)(5)–1, revised; 1.446–1, amended; update and
revision of sections 1.381(c)(4)–1 and 1.381(c)(5)–1
(REG–151884–03) 51,1200
26 CFR 1.382–7, added; built-in gains and losses under sec-
tion 382(h) (REG–144540–06) 31,296
26 CFR 1.704–3, –4, amended; 1.737–1(c)(1), amended;
1.737–2, –5, amended; partner’s distributive share
(REG–143397–05) 41,790
26 CFR 1.817–5, amended; diversification requirements for
variable annuity, endowment, and life insurance contracts
(REG–118719–07) 37,593
26 CFR 1.860A–0, –1, amended; 1.860G–2, amended; modi-
fications of commercial mortgage loans held by a real estate
mortgage investment conduit (REMIC) (REG–127770–07)
50,1171
26 CFR 1.861–4, amended; compensation for labor or per-
sonal services, artists and athletes (REG–114125–07) 46,
1012
26 CFR 1.883–0 thru –5, amended; exclusions from gross
income of foreign corporations (REG–138707–06) 32,
342;correction(Ann79)40,749; hearing cancellation
(Ann 101) 43,898
26 CFR 1.905–3, –4, added; 301.6689–1, added; foreign
tax credit: notification of foreign tax redetermination
(REG–209020–86) 48,1075
26 CFR 1.1361–0, –1, –4, –6, amended; 1.1362–0, –4,
amended; 1.1366–0, –2, –5, amended; S corporation
guidance under AJCA of 2004 and GOZA of 2005
(REG–143326–05) 43,873
26 CFR 1.1397E–1, amended; qualified zone academy
bonds, obligations of states and political subdivisions
(REG–121475–03) 35,474
26 CFR 1.1441–3, amended; withholding procedures under
section 1441 for certain distributions to which section 302
applies (REG–140206–06) 46,1006; correction (Ann 116)
51,1216
26 CFR 1.1502–13, amended; consolidated returns, in-
tercompany obligations, REG–105964–98 withdrawn
(REG–107592–00) 44,908;correction(Ann109)47,1045
26 CFR 1.1502–13, –32, –35, –36, revised; unified rule for
loss on subsidiary stock, correction to REG–157711–02
(Ann 74) 35,483
26 CFR 1.6011–4, amended; 301.6111–3, amended; patented
transactions (REG–129916–07) 43,891
26 CFR 1.6039I–1, added; information reporting on em-
ployer-owned life insurance contracts (REG–115910–07)
51,1214
26 CFR 1.6045–1, amended; information reporting for lump-
sum timber sales (REG–155669–04) 52,1262
26 CFR 1.6411–2, –3, revised; clarification to section 6411
regulations (REG–118886–06) 37,591
December 26, 2007xii2007–52 I.R.B.

INCOME TAX—Cont.
26 CFR 31.3406(g)–1(f), amended; 301.6724–1, amended;
information reporting and backup withholding for payment
card transactions (REG–163195–05) 33,366
26 CFR 301.6343–2, amended; 301.7425–3, amended;
changes to office to which notices of nonjudicial sale and
requests for return of wrongfully levied property must be
sent (REG–148951–05) 36,550; correction (Ann 94) 42,
858
26 CFR 301.6404–0, amended; 301.6404–4, added; applica-
tion of section 6404(g) of the Code suspension provisions
(REG–149036–04) 33,365; (REG–149036–04) 34,411
31 CFR 10.34, amended; regulations governing prac-
tice before the Internal Revenue Service (Circular 230)
(REG–138637–07) 45,977
31 CFR 300.0, amended; 300.7, .8, added; user fees relating to
enrollment to perform actuarial services (REG–134923–07)
47,1037
Publications:
1141, General Rules and Specifications for Substitute Forms
W-2 and W-3, revised (RP 43) 27,26
1167, General Rules and Specifications for Substitute Forms
and Schedules (RP 68) 49,1093
1179, General Rules and Specifications for Substitute Forms
1096, 1098, 1099, 5498, W-2G, and 1042-S, update (RP
50) 31,244
1187, Specifications for Filing Form 1042-S, Foreign Per-
son’s U.S. Source Income Subject to Withholding, Elec-
tronically or Magnetically (Revised 12-2006) (Ann 110) 48,
1082
1220, Specifications for Filing Forms 1098, 1099, 5498 and
W-2G Electronically or Magnetically, 2007 revision (RP
51) 30,143
4436, General Rules and Specifications for Substitute Form
941 and Schedule B (Form 941), revised (RP 42) 27,15
Qualified films under section 199 (REG–103842–07) 28,79;cor-
rection (Ann 77) 38,662
Qualified Payment Card Agent (QPCA), payment card transac-
tions (REG–163195–05) 33,366
Qualified transportation fringes, smart cards, debit or credit
cards, or other electronic media, Rev. Rul. 2006–57’s effec-
tive date delayed from January 1, 2008 to January 1, 2009
(Notice 76) 40,735
Qualified zone academy bonds, obligations of states and political
subdivisions (TD 9339) 35,437; (REG–121475–03) 35,474
Regulated investment companies (RICs), foreign tax credit
(TD 9357) 41,773
Regulations:
26 CFR 1.21–1 redesignated as 1.15–1; 1.21–1 thru –4, added;
1.44A–1 thru –4, removed; 1.214–1, removed; 1.214A–1
thru –5, removed; 602.101, amended; expenses for house-
hold and dependent care services necessary for gainful em-
ployment (TD 9354) 41,759
26 CFR 1.45G–0, –1, added; 1.45G–0T, –1T, removed;
602.101, amended; railroad track maintenance credit
(TD 9365) 52,1218
INCOME TAX—Cont.
26 CFR 1.56–0, amended; 1.56–1(e)(4), revised; 1.6154–1
thru –5, removed; 1.6425–2(a), revised; 1.6425–3,
amended; 1.6655–0, –4, –5, –6, added; 1.6655–1, –2,
–3, revised; 1.6655–7, removed; 1.6655–5 redesignated as
1.6655–7; new 1.6655–7, revised; 301.6154–1, removed;
301.6655–1, revised; 602.101, amended; corporate esti-
mated tax (TD 9347) 38,624
26 CFR 1.125–2T, removed; employee benefits – cafeteria
plans (TD 9349) 39,668
26 CFR 1.302–2, –4, amended; 1.302–2T, –4T, removed;
1.331–1, amended; 1.331–1T, removed; 1.332–6, added;
1.322–6T, removed; 1.338–0, –10, amended; 1.338–10T,
removed; 1.351–3, added; 1.351–3T, removed; 1.355–0,
amended; 1.355–5, added; 1.355–5T, removed; 1.368–3,
added; 1.368–3T, removed; 1.381(b)–1, amended;
1.381(b)–1T, removed; 1.382–1, –8, amended; 1.382–8T,
–11T, removed; 1.382–11, added; 1.1081–11, added;
1.1081–11T, removed; 1.1221–2, amended; 1.1221–2T,
removed; 1.1502–13, –31, –32, –33, –90, –95, amended;
1.1502–13T, –31T, –32T, –33T, –95T, removed; 1.1563–3,
amended; 1.1563–3T, removed; 1.6012–2, amended;
1.6012–2T, removed; guidancenecessary to facilitate busi-
ness electronic filing and burden reduction (TD 9329) 32,
312
26 CFR 1.338–0, –6, amended; 1.338–6T, removed;
1.1060–1, amended; 1.1060–1T, removed; treatment
of certain nuclear decommissioning funds for purposes
of allocating purchase pricein certain deemed and actual
asset acquisitions (TD 9358) 41,769
26 CFR 1.367(b)–2, amended; 1.367(b)–4(d), revised;
1.1248–1, –2, –3, –7, revised; 1.1248–8, added; section
1248 attribution principles (TD 9345) 36,523
26 CFR 1.368–1, –2, amended; corporate reorganizations,
transfers of assets or stock following a reorganization
(TD 9361) 47,1026
26 CFR 1.382–7T, added; built-in gains and losses under sec-
tion 382(h) (TD 9330) 31,239; correction (Ann 80) 38,667
26 CFR 1.402(b)–1, amended; 1.402(g)(3)–1, added;
1.402A–1, revised; 1.403(b)–0, added; 1.403(b)–1, –2,
–3, revised; 1.403(b)–4 thru –11, added; 1.403(d)–1,
removed; 1.414(c)–5 redesignated as 1.414(c)–6; new
1.414(c)–5, added; 602.101, amended; revised regulations
concerning section 403(b) tax-sheltered annuity contracts
(TD 9340) 36,487; correction (Ann 102) 44,922
26 CFR 1.475–0, amended; 1.475(a)–4, added; 1.475(e)–1,
redesignated as 1.475(g)–1; 1.475(g)–1, amended;
602.101, amended; safe harbor for valuation under section
475 (TD 9328) 27,1
26 CFR 1.853–1 thru –3, amended; 1.853–4, revised;
602.101, amended; elimination of country-by-country
reporting to shareholders of foreign taxes paid by regulated
investment companies (TD 9357) 41,773
26 CFR 1.883–0, thru –5, amended; 1.883–0T thru –5T,
added; 602.101, amended; exclusions from gross income
of foreign corporations (TD 9332) 32,300; correction
(Ann 83) 40,752; additional corrections (Ann 84) 41,797
2007–52 I.R.B.xiiiDecember 26, 2007

INCOME TAX—Cont.
26 CFR 1.905–3T, –5T, amended; 1.905–4T, revised;
301.6689–1T, amended; foreign tax credit, notification of
foreign tax redetermination (TD 9362) 48,1050
26 CFR 1.954–2, amended; 1.954–2T, removed; guidance un-
der subpart F relating to partnerships (TD 9326) 31,242
26 CFR 1.1045–1, added; 602.101, amended; section 1045
application to partnerships (TD 9353) 40,721; correction
(Ann 103) 44,923
26 CFR 1.1291–9, amended; 1.1291–9T, removed; 1.1297–0,
revised; 1.1297–0T, –3T, removed; 1.1297–3, added;
1.1298–0, revised; 1.1298–0T, –3T, removed; 1.1298–3,
amended; 602.101, amended; guidance on passive foreign
investment company (PFIC) purging elections (TD 9360)
43,860
26 CFR 1.1397E–1, amended; 1.1397E–1T, added; 602.101,
amended; qualified zoneacademy bonds, obligations of
states and political subdivisions (TD 9339) 35,437
26 CFR 1.1502–19, –80, amended; 1.1502–19T, –80T, re-
moved; treatment of excess loss accounts (TD 9341) 35,
449
26 CFR 1.1502–47, –76, amended; 1.1502–47T, –76T, re-
moved; amendment of tacking rule requirements of life-
nonlife consolidated regulations (TD 9342) 35,451
26 CFR 1.1502–77, amended; 1.1502–77T, removed; agent
for a consolidated group with foreign common parent
(TD 9343) 36,533
26 CFR 1.6011–4, revised; 1.6011–4T, removed; 20.6011–4,
revised; 25.6011–4, revised; 31.6011–4, revised;
53.6011–4, revised; 54.6011–4, revised; 56.6011–4,
revised; AJCA modifications to the section 6011 regula-
tions (TD 9350) 38,607
26 CFR 1.6011–5, added; 1.6011–5T, removed; 1.6033–4,
added; 1.6033–4T, removed; 1.6037–2, added; 1.6037–2T,
added; 301.6011–5, added; 301.6011–5T, removed;
301.6033–4, added; 301.6033–4T, removed; 301.6037–2,
added; 301.6037–2T, removed; returns required on mag-
netic media (TD 9363) 49,1084
26 CFR 1.6012–2, amended; return required by subchapter T
cooperatives under section 6012 (TD 9336) 35,461
26 CFR 1.6038–2, amended; 1.6038–2T, revised; 1.6038A–2,
amended; information returnsrequired with respect to cer-
tain foreign corporations and certain foreign-owned domes-
tic corporations (TD 9338) 35,463
26 CFR 1.6039I–1T, added; information reporting on em-
ployer-owned life insurance contracts (TD 9364) 51,1177
26 CFR 1.6411–2, –3, amended; 1.6411–2T, –3T, added; clar-
ification of section 6411 regulations (TD 9355) 37,577
26 CFR 301.6103(n)–1, revised; disclosure of returns and re-
turn information in connection with written contracts or
agreements for the acquisitionof property or services for
tax administration purposes (TD 9327) 28,50
26 CFR 301.6111–3, added; 301.6111–3T, removed; AJCA
modifications to the section 6111 regulations (TD 9351) 38,
616
26 CFR 301.6112–1, revised; AJCA modifications to the sec-
tion 6112 regulations (TD 9352) 38,621
INCOME TAX—Cont.
26 CFR 301.6343–2, amended; 301.6343–2T, added;
301.7425–3, amended; 301.7425–3T, added; changes
to office to which notices of nonjudicial sale and requests
forreturnofwrongfullyleviedpropertymustbesent
(TD 9344) 36,535; correction (Ann 93) 42,858
26 CFR 301.6404–0T, –4T, added; application of section
6404(g) of the Code suspension provisions (TD 9333) 33,
350
31 CFR 10.1 thru 10.7, 10.22, 10.25, 10.27, 10.29, 10.30,
10.34, 10.35, 10.50 thru 10.53, 10.60 thru 10.63, 10.65,
10.68, 10.70, 10.72, 10.73, 10.76, 10.77, 10.78, 10.82,
10.90, 10.91, amended; 10.73, removed; 10.71 and 10.72
redesignated as 10.72 and 10.73; new 10.71, added; reg-
ulations governing practice before the Internal Revenue
Service (TD 9359) 45,931
REMIC commercial loan modification (REG–127770–07) 50,
1171
Reporting and withholding requirements under section 409A for
calendar year 2007 (Notice 89) 46,998
Research agreements, private business use (RP 47) 29,108
Returns required on magnetic media (TD 9363) 49,1084
Revenue rulings, RR 75–425 obsolete (RR 60) 38,606
Revocations, exempt organizations (Ann 64) 29,125; (Ann 65)
30,236;(Ann69)33,371; (Ann 73) 34,435;(Ann76)36,
560;(Ann86)39,719; (Ann 89) 41,798; (Ann 96) 42,859;
(Ann 105) 45,984; (Ann 111) 49,1153; (Ann 115) 51,1216
Safe harbor: for valuation under section 475 for dealers in secu-
rities and commodities (TD 9328) 27,1
Standard Industry Fare Level (SIFL) formula (RR 55) 38,604
Stocks:
Attribution of earnings and profits to stock of controlled for-
eign corporations (TD 9345) 36,523
Corporate reorganizations, transfers of assets or stock follow-
ing a reorganization (TD 9361) 47,1026
Post-grant restrictions added to previously vested stock
(RR 49) 31,237
Subchapter T cooperatives, return required under section 6012
(TD 9336) 35,461
Substitute forms:
W-2 and W-3, general rules and specifications (RP 43) 27,26
941 and Schedule B (Form 941), general rules and specifica-
tions (RP 42) 27,15
1096, 1098, 1099, 5498, W-2G, and 1042-S, rules and speci-
fications (RP 50) 31,244
And schedules, general rules and specifications (RP 68) 49,
1093
Suspension of:
Certain penalties and interest under section 6404(g)(1)
(Notice 93) 48,1072
Tax-exempt status of organizations identified with terrorism
(Ann 70) 33,371
Tax avoidance transaction involving foreign currency options
(Notice 71) 35,472
Tax conventions:
U.S.-Angola, reciprocal exemption agreement (Ann 88) 42,
801
December 26, 2007xiv2007–52 I.R.B.

INCOME TAX—Cont.
U.S.-Netherlands, qualification of certain pension and other
employee benefit arrangements (Ann 75) 36,540
U.S.-U.K. agreement defining the term “first notification”
under treaty Article 26(1) (Mutual Agreement Procedure)
(Ann 107) 46,989
Tax-sheltered annuities, section 403(b) contracts (TD 9340) 36,
487; correction (Ann 102) 44,922
Tentative allowance of refund (RR 53) 37,577
Tentative carryback adjustment under section 6411, clarification
relating to the computation and allowance (TD 9355) 37,577;
(REG–118886–06) 37,591
Transaction of interest:
Contribution of successor member interest (Notice 72) 36,
544
Identification of toggling grantor trust (Notice 73) 36,545
Treatment of excess loss accounts (TD 9341) 35,449
User fees for enrolled actuaries (REG–134923–07) 47,1037
Veterans’ benefits, compensated work therapy program (RR 69)
49,1083
Withholding and reporting obligations under section 1441 re-
garding tender offers (REG–140206–06) 46,1006; correction
(Ann 116) 51,1216
SELF-EMPLOYMENT TAX
Liens, changes to office to which notices of nonjudicial sale
and requests for return of wrongfully levied property must
be sent (TD 9344) 36,535; correction (Ann 93) 42,858;
(REG–148951–05) 36,550; correction (Ann 94) 42,858
Proposed Regulations:
26 CFR 301.6343–2, amended; 301.7425–3, amended;
changes to office to which notices of nonjudicial sale and
requests for return of wrongfully levied property must be
sent (REG–148951–05) 36,550; correction (Ann 94) 42,
858
Regulations:
26 CFR 301.6343–2, amended; 301.6343–2T, added;
301.7425–3, amended; 301.7425–3T, added; changes
to office to which notices of nonjudicial sale and requests
for return of wrongfully levied property must be sent
(TD 9344) 36,535; correction (Ann 93) 42,858
2007–52 I.R.B.xvDecember 26, 2007

December 26, 20072007–52 I.R.B.

2007–52 I.R.B.December 26, 2007

December 26, 20072007–52 I.R.B.

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