Internal Revenue Bulletin 2008-8 (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
8-8
February 25, 200
8
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
T.D. 9371, page 447.
REG–141399–07, page 470.
Final, temporary, and proposed regulations under section 904
of the Code provide rules concerning the treatment of over-
all foreign and domestic losses, as well as separate limitation
losses, under sections 904(f) and (g). A public hearing is sched-
uled for April 10, 2008.
Notice 2008–22, page 465.
Low-income housing tax credit; private activity bonds.
Resident populations of the 50 states, the District of Columbia,
Puerto Rico, and the insular areas are provided for purposes
of determining the 2008 calendar year (1) state housing credit
ceiling under section 42(h) of the Code, (2) private activity bond
volume cap under section 146, and (3) private activity bond
volume limit under section 142(k).
EMPLOYEE PLANS
Notice 2008–24, page 466.
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 plan years beginning in February
2008; the 24-month average segment rates; the funding
transitional segment rates applicable for February 2008; and
the minimum present value transitional rates for January 2008.
EXEMPT ORGANIZATIONS
Announcement 2008–13, page 480.
A list is provided of organizations now classified as private foun-
dations.
Announcement 2008–14, page 481.
The IRS has revoked its determination that Judah Youth Min-
istries of Red Bank, NJ; Little League Baseball of West War-
wick, RI; Youth Sports Systems, Inc., of Albuquerque, NM;
Miss Crestline Scholarship Pageant Committee of Crestline,
OH; Millcreek Development Corp. of Philadelphia, PA; Jeff
& Ann Mowrey Charitable Supporting Organization of Colum-
bia, MD; Pacoima Athletic Club of Arleta, CA; Families on The
Move of New Brunswick, NJ; Credit Foundation of America
of Irvine, CA; Family Pride, Inc., of Cataula, GA; Bear Soldier
Industries of Bismarck, ND; Equal Opportunity Housing DBA
Home Star Magic of Denver, CO; One Particular Harbour Foun-
dation of Wyoming, MI; Soulfire Films of Brooklyn, NY; Gottlieb
Family Foundation of Lawrence, NY; Coltrin Family Foundation
of Sandy, UT; Crock 39 Foundation of Irving, TX; Community
Outreach Development Foundation of Gulfport, MS; Lakhdar
Barouche Foundation, Inc., of New York, NY; Don Luscombe
Aviation History Foundation of Phoenix, AZ; Americas Youth Ap-
prenticeship Enterprises, Inc., of Oklahoma City, OK; The Edu-
cational Charitable Supporting Organization of Millersville, MD;
Family to Family Americans for Prostate Cancer Awareness and
Support of Carson City, NV; The Douglas and Valerie Wood
Charitable Supporting Organization of Latrobe, PA, qualify as
organizations described in sections 501(c)(3) and 170(c)(2) of
the Code.
(Continued on the next page)
Announcements of Disbarments and Suspensions begin on page 473.
Fi
nding Lists begin on page ii.
Index for January through February begins on page iv.

ADMINISTRATIVE
T.D. 9372, page 462.
The Code authorizes the Service to disclose tax return infor-
mation to the Department of Commerce for the purpose of
structuring censuses and conducting related statistical activi-
ties authorized by law. Final regulations under section 6103
of the Code add two items of return information disclosed to
the Department of Commerce solely for the purpose of pro-
ducing statutorily mandated Small Area Income and Poverty
Estimates. The regulations also remove four items of return in-
formation the Department of Commerce indicated it no longer
requires.
T.D. 9373, page 463.
REG–147832–07, page 472.
Temporary and proposed regulations under section 6103 of
the Code add one item of return information disclosed to the
Department of Commerce necessary for the Bureau of the Cen-
sus’ annual Survey of Industrial Research and Development.
February 25, 20082008–8 I.R.B.

The IRS Mission
Provide Americ
a’s taxpayers top quality service by helping them
understand an
d meet their tax responsibilities and by applying
the tax law with
integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are compiled semiannually into Cumulative Bulletins,
which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement are not published; however, statements of internal
practices and procedures that affect the rights and duties of
taxpayers are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers
or technical advice to Service field offices, identifying details
and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B, Leg-
islation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Secre-
tary (Enforcement).
Part IV
.—Items of General Interest.
This par
t includes notices of proposed rulemakings, disbar-
ment an
d suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The c
ontents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S.Government Printing Office, Washington, DC 20402.
2008–8 I.R.B.February 25, 2008

February 25, 20082008–8 I.R.B.

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 904.—
Limitation
on Credit
26 CFR 1.904((
f)–2T: Recapture of overall foreign
loss (tempora
ry).
T.D. 9371
Department of
the Treasury
Internal Rev
enue Service
26 CFR Part I
Treatment o
f Overall Foreign
and Domesti
cLosses
AGENCY: Int
ernal Revenue Service
(IRS), Trea
sury.
ACTION: Fin
al and temporary regula-
tions.
SUMMARY: T
his document contains fi-
nal and tem
porary regulations under sec-
tion 904(g
) of the Internal Revenue Code
(Code) rel
ating to the recapture of overall
domestic l
osses. Section 402 of the Amer-
ican Jobs
Creation Act of 2004 (AJCA) en-
acted new
section 904(g) of the Code to
provide f
or the recapture of overall domes-
tic losse
s. These regulations provide guid-
ance need
ed to comply with these changes,
as well a
s updated guidance with respect to
overall
foreign losses and separate limita-
tion los
ses, and affect individuals and cor-
poratio
ns claiming foreign tax credits. The
text of t
hese temporary regulations also
serves
as the text of the proposed regula-
tions (
REG–141399–07) published in this
issue o
f the Bulletin.
DATES:
Effective Date:These regulations
are eff
ective on December 21, 2007.
Applic
ability Dates:For dates of
applic
ability, see §§1.904(f)–1T(g),
1.904(
f)–2T(e), 1.904(f)–7T(f), 1.904(f)–
8T(c)
, 1.904(g)–1T(f), 1.904(g)–2T(d),
1.904
(g)–3T(i), and 1.1502–9T(e).
FOR FU
RTHER INFORMATION
CONTA
CT: Jeffrey L. Parry, (202)
622–3
850 (not a toll-free number).
SUPPLEMENTAR
Y INFORMATION:
Background
Section 402 of
the AJCA enacted new
section 904(g
) of the Code to provide for
the recharact
erization of U.S. source in-
come as forei
gn source income where a
taxpayer’s f
oreign tax credit limitation has
been reduced
as a result of an overall do-
mestic loss.
See Public Law 108–357, 118
Stat. 1418 (O
ctober 22, 2004), as cor-
rected by th
e Gulf Opportunity Zone Act
of 2005, Pub
lic Law 109–135, 119 Stat.
2577 (Decem
ber 22, 2005). The primary
reason for e
nacting these provisions was
“to create
parity in the treatment of overall
domestic l
osses and overall foreign losses
in order to
prevent the double taxation of
income.” H
.R. Rep. No. 108–548, at 187
(June 16,
2004); see also S. Rep. No.
108–192,
at 19–20 (November 7, 2003).
When a U.S
. source loss is allocated to
reduce fo
reign source income, the foreign
tax credi
t limitation is reduced for the tax-
able year
, which may result in excess for-
eign tax
credits. Any such excess foreign
taxes ma
y be credited, if at all, in a sub-
sequent
(or the preceding) taxable year. In
additio
n, U.S. source taxable income in a
subsequ
ent taxable year is not offset by the
U.S. so
urce loss allocatedto foreign source
income
in the prior taxable year, and U.S.
taxons
uch U.S. source taxable income
cannot
be offset by the foreign tax credit
carryf
orward. This may lead to the dou-
ble tax
ation of foreign source income over
time.
The overall domestic loss recapture
provi
sions amend this result.
Secti
on 904(g)(1) generally provides
that a
portion of a taxpayer’s U.S. source
incom
e is recharacterized as foreign
sourc
e income in an amount equal to the
lesse
r of (1) the amount of the overall do-
mest
ic loss for years prior to such taxable
year
and (2) fifty percent of the taxpayer’s
U.S.
source income for such taxable year.
Sect
ion 904(g)(2) generally defines an
over
all domestic loss for this purpose as
any
domestic loss to the extent it offsets
for
eign source taxable income for the cur-
ren
t year or any preceding taxable year by
rea
son of a carryback. Section 904(g)(4)
pro
vides that the Secretary of the Treasury
shall prescri
be such regulations as may be
necessary to c
oordinate the overall domes-
tic loss provi
sions with the overall foreign
loss provisi
ons.
Similar rules
were first enacted as a part
of the Tax Ref
orm Act of 1976, Public Law
94–455, 90 St
at. 1531 (1976), in section
904(f) to dea
l with overall foreign losses.
Under the ove
rall foreign loss provisions,
a portion of
foreign source taxable income
earned afte
r an overall foreign loss year is
recharacte
rized as U.S. source taxable in-
come for for
eign tax credit purposes. Un-
less a taxp
ayer elects a higher percentage,
generally
no more than 50 percent of the
foreign so
urce taxable income earned in
any partic
ular taxable year is recharacter-
ized as U.S
. source taxable income. Re-
capturin
g the overall foreign loss reduces
the forei
gn tax credit limitation in one or
more year
s following an overall foreign
loss.
The separ
ate limitation loss provisions
of sectio
n 904(f)(5) were added by the Tax
Reform Ac
t of 1986, Public Law 99–514,
100 Stat
. 2085 (1986) (the 1986 Act)
and amen
ded by the Technical and Mis-
cellane
ous Revenue Act of 1988, Public
Law 100–
647, 102 Stat. 3342 (1988).
Other a
mendments to the overall foreign
loss pr
ovisions were made by the AJCA as
well.
Regula
tions addressing overall for-
eign lo
sses under section 904(f) were
publis
hedintheFederal Register(T.D.
8153, 1
987–2 C.B. 174 [52 FR 31992])
on Aug
ust 25, 1987 (the 1987 regulations)
and up
dated by regulations published in
theFe
deral Register(T.D. 9260, 2006–1
C.B. 1
001 [71 FR 24516]) on April 25,
2006 (
the 2006 regulations). Additional
guid
ance was provided in Notice 89–3,
1989
–1 C.B. 623, regarding ordering rules
for t
he allocation of net operating losses,
over
all foreign losses, and separate limita-
tion
losses; the recapture of overall foreign
loss
es and separate limitation losses; and
the
allocation of U.S. source losses. The
sec
tion 904(f) regulations have not been
ame
nded to reflect changes to the Code
sin
ce the Tax Reform Act of 1976 or to
inc
orporate the rules of Notice 89–3. See
§6
01.601(d)(2)(ii)(b).
2008–8 I.R.B.447February 25, 2008

These temporary regulations provide
guidance needed tocomply with enact-
ment of the overall domestic loss regime,
as well as provide updated guidance with
respect to overall foreign losses and sepa-
rate limitation losses.
Explanation of Provisions
I. Overall Domestic Losses
The temporary regulations include
rules in §§1.904(g)–1T and 1.904(g)–2T
which address the establishment, mainte-
nance, and recapture of overall domestic
loss accounts.
A. Overall domestic loss accounts
Section 1.904(g)–1T(b)(1) provides
that taxpayers must establish overall do-
mestic loss accounts for an overall domes-
tic loss. It further provides that a separate
overall domestic loss account must be
maintained for each separate category of
foreign source income that is offset by a
domestic loss.
Section 1.904(g)–1T(b)(2) explains
when an overall domestic loss is sus-
tained. Generally, an overall domestic loss
is treated as sustained in the later of the
taxable years in which the domestic loss
is incurred or the foreign source income
offset by the domestic loss is earned. Ac-
cordingly, in the case of a domestic loss
that is carried back to offset foreign source
income in a prior taxable year in which the
taxpayer elects to credit foreign taxes, the
resulting overall domestic loss is treated as
sustained in the taxable year the domestic
loss is incurred, not in the prior taxable
year in which the domestic loss offsets
foreign source income. In the case of a do-
mestic loss that is carried forward to offset
foreign source income in a later taxable
year, however, the overall domestic loss is
treated as sustained in the year in which
the domestic loss offsets foreign source
income, not the earlier year in which the
domestic loss is incurred. Accordingly,
if a taxpayer incurs a domestic loss in
a pre-2007 taxable year, and the loss is
carried forward as part of a net operating
loss and applied to offset foreign source
income in a post-2006 taxable year, the
resulting overall domestic loss is treated
as sustained in the post-2006 taxable year.
Section 1.904(g)–1T(c) provides that
an overall domestic loss is sustained when
a domestic loss offsets foreign source tax-
able income in the same taxable year or a
preceding taxable year by reason of a car-
ryback, provided the taxpayer has elected
to take a credit for its foreign taxes in the
year of the offset. A domestic loss is the
amount by which U.S. source gross in-
come is exceeded by deductions properly
allocated and apportioned thereto. See
§1.904(g)–1T(c).
Section 1.904(g)–1T(d) describes ad-
ditions to overall domestic loss accounts.
This includes any overall domestic losses
of the taxpayer, as determined above,
as well as any allocation from another
taxpayer of an overall domestic loss ac-
count under §1.1502–9T, described in Part
V of this preamble, and certain adjust-
ments for capital gains and losses. Section
1.904(g)–1T(e) describes reductions to
overall domestic loss accounts, including
reductions for recaptured amounts and any
allocation to another taxpayer of an overall
domestic loss accountunder §1.1502–9T.
B. Recapture of overall domestic losses
Section 1.904(g)–2T provides that
overall domestic losses are recaptured by
treating a portion of a taxpayer’s U.S.
source taxable income as foreign source
income. If the taxpayer has overall domes-
tic loss accounts attributable to more than
one separate category, the recharacterized
income will be allocated among those cat-
egories on apro ratabasis. The amount
of U.S. source income subject to recapture
is the lesser of the aggregate balance in
the overall domestic loss account, or fifty
percent of the taxpayer’s U.S. source tax-
able income. Unlike the overall foreign
loss recapture provisions in section 904(f),
section 904(g) does not permit a taxpayer
to elect to recharacterize more than fifty
percent of its U.S. source taxable income.
Recapture continues until the balance in
the overall domestic loss account has been
reduced to zero.
II. Separate Limitation Losses
As discussed below, the 1987 regula-
tions do not reflect the enactment of the
separate limitation loss provisions of sec-
tion 904(f)(5) as part of the 1986 Act.
These temporary regulations include new
provisions regarding the establishment and
recapture of separate limitation loss ac-
counts. Section 1.904(f)–7T provides that
taxpayers must establish a separate limita-
tion loss account with respect to a separate
category to the extent a foreign source loss
in that category offsets foreign source in-
come in another separate category. This
section also provides definitions and rules
relating to the maintenance of these ac-
counts.
Section 1.904(f)–8T provides rules for
the recapture of separate limitation loss
accounts. Separate limitation loss ac-
counts are recaptured by recharacterizing
a portion of the foreign source income
in the separate category with the loss ac-
count as income in the separate category
in which foreign source income of a prior
year was offset to create the loss account.
The amount of foreign source income sub-
ject to recharacterization is the lesser of
the balance in a separate limitation loss
account or the amount of foreign source
income for the taxable year in that same
separate category. There is no fifty-per-
cent limitation with respect to separate
limitation loss account recapture. If there
is more than one separate limitation loss
account in a single separate category and
the aggregate balance in all those loss
accounts exceeds the income in the sepa-
rate category, incomeis recharacterized in
proportion to the balance in each account.
Recapture with respect to a particular sep-
arate limitation loss account continues
until the balance in the separate limitation
loss account has been reduced to zero.
III. Overall Foreign Loss
The 1987 regulations set forth rules
governing the determination and mainte-
nance of overall foreign loss accounts, as
well as the recapture of overall foreign
losses and the allocation of net operating
losses and net capital losses. The regula-
tions do not reflect changes made to the
overall foreign loss rules of section 904(f)
as part of the 1986 Act and certain sub-
sequent changes to section 904(f), such
as the enactment in the AJCA of section
904(f)(3)(D), addressing dispositions of
stock in controlled foreign corporations.
These temporary regulations update the
existing regulations to take into account
certain changes made to the overall for-
eign loss rules since the 1987 regulations
were promulgated.
Section 1.904(f)–1(a) states that the
1987 regulations apply to taxpayers that
February 25, 20084482008–8 I.R.B.

sustain overall foreign losses (as defined
in paragraph (c) of that section) in taxable
years beginning after December 31, 1975.
However, paragraph (c) of that section
only defines overall foreign losses for tax-
able years beginning after December 31,
1982, and before January 1, 1987.
While it is beyond the scope of this
project to undertake a full revision of the
1987 regulations to reflect all intervening
statutory changes made to section 904(f),
the Treasury Department and the IRS be-
lieve that as part of this regulations project
the principles of the 1987 regulations
should be extended to apply to overall
foreign losses sustained in taxable years
beginning after December 31, 1986, mod-
ified so as to take into account statutory
amendments. New §1.904(f)–1T(a)(2)
adopts such a rule.
The Treasury Department and the IRS
believe the application of the fifty-percent
limitation on the amount of foreign source
income subject to recapture in a taxable
year under the overall foreign loss recap-
ture provisions also needs to be clarified
as part of this regulations project. Section
1.904(f)–2(c)(1) provides that the amount
of foreign source taxable income subject to
recapture in a taxable year is the lesser of
the balance in the applicable overall for-
eign loss account in a given separate cate-
gory or fifty percent of the taxpayer’s for-
eign source taxable income in that same
separate category. For example, recapture
of a general category overall foreign loss
would be limited to the lesser of the bal-
ance in the general category overall for-
eign loss account or fifty percent of the
general category taxable income for the
taxable year.
The legislative history to the 1986 Act
clarifies that the fifty-percent limitation
is to be applied to the full amount of the
taxpayer’s foreign source income, not on
a separate-category-by-separate-category
basis. See H.R. Conf. Rep. No. 99–841 at
II–590 (1986). This clarification was in-
corporated by reference into Notice 89–3,
paragraph 3(b), and reflected in instruc-
tions to Form 1118(Foreign Tax Credit —
Corporations). The temporary regulations
modify the fifty-percent limitation to re-
flect this clarification.
Section 1.904(f)–2T(c)(1) provides that
the foreign source taxable income subject
to recharacterization is the lesser of the
aggregate amount of maximum potential
recapture in all overall foreign loss ac-
counts or fifty percent of the taxpayer’s to-
tal foreign source income. If the aggregate
amount of maximum potential recapture in
all overall foreign loss accounts exceeds
fifty percent of the taxpayer’s total foreign
source taxable income, foreign source tax-
able income in each separate category with
an overall foreign loss account is rechar-
acterized in an amount equal to the sepa-
rate category’s allocable portion of the sec-
tion 904(f)(1) recapture amount. The max-
imum potential recapture from any sepa-
rate category is the lesser of the balance in
the overall foreign loss account or the for-
eign source taxable income for the current
year in the same separate category.
Other revisions to the 1987 regula-
tions include updating provisions to reflect
statutory and regulatory changes affect-
ing capital gains and losses, in particular
those provisions that were superseded by
the regulations promulgated under section
904(b) in T.D. 9141, 2004–2 C.B. 359
(July 20, 2004). In addition, §1.904(f)–3
is made obsolete by the ordering rules
added in §1.904(g)–3T and is removed
accordingly.
IV. Coordination of Overall Foreign
Losses, Separate Limitation Losses, and
Overall Domestic Losses
Under the specific grant of regulatory
authority in section 904(g)(4), these tem-
porary regulations provide ordering rules
for coordinating the section 904(f) over-
all foreign loss and separate limitation loss
provisions and the section 904(g) overall
domestic loss provisions.
Section 1.904(g)–3T provides ordering
rules for the allocation of net operating
losses, net capital losses, U.S. source
losses, and separate limitation losses, and
the recapture of separate limitation losses,
overall foreign losses, and overall domes-
tic losses. While these rules generally
follow the ordering rules set forth in No-
tice 89–3, some changes were appropriate
to take into account the enactment of the
overall domestic loss provisions.
A. Step One: Allocation of net operating
loss and net capital loss carryovers
These temporary regulations generally
follow the rules of Notice 89–3 for the
carryover and carryback of net operating
losses. Under §1.904(g)–3T(b)(1), net op-
erating losses that are carried back to a
prior year are allocated to income in the
carryback year in accordance with the al-
location rules for absorbing and allocating
net operating loss carryovers. However,
the income against which the net operat-
ing loss is allocated is the income after ap-
plication of the overall foreign loss, sep-
arate limitation loss and overall domestic
loss allocation and recapture rules for the
carryback year.
The rules for net operating loss carry-
forwards vary for full and partial carry-
overs of the net operating loss. In the
case of a full net operating loss carryover,
the U.S. source losses and foreign losses
in separate categories that are part of the
net operating loss are carried forward and
combined with U.S. source income or loss
and foreign source income or loss in the
same categories as the respective portions
of the net operating loss.
In the case of a partial net operating loss
carryover, several steps apply. In applying
these steps it is important to distinguish the
net operating loss, which is the total net
operating loss, and the net operating loss
carryover, which is the portion of the net
operating loss that is absorbed in the carry-
over year. First, the U.S. source portion of
the net operating loss (but not in excess of
the net operating loss carryover) is carried
over to the extent of U.S. source income
in the carryover year. Second, the sepa-
rate limitation losses that are part of the
net operating loss are tentatively carried to
the extent of taxable income in the same
separate category. This amount is tenta-
tive because the total amount of matching
net operating losses and separate limita-
tion income may exceedthe net operating
loss carryover amount remaining after the
first step. To the extent the total amount
of these tentative loss carryovers is in fact
limited by the amount of the remaining net
operating loss carryover, then the tentative
carryovers in each separate category are
reduced on apro ratabasis so that their
sum equals the amount of the remaining
net operating loss carryover amount.
Third, any net operating loss carryover
remaining after the first and second steps is
carried over proportionately from any re-
maining loss in each separate category and
combined with foreign source loss, if any,
in the same separate categories in the car-
ryover year. Finally, any remaining U.S.
2008–8 I.R.B.449February 25, 2008

source loss is carried over to the extent of
the net operating loss carryover remaining
after the third step, if any, and combined
with U.S. source loss, if any, in the carry-
over year.
The temporary regulations deviate from
the net operating loss rules of Notice 89–3
in the final two steps. The temporary reg-
ulations require the U.S. source loss and
foreign source losses in the separate cate-
gories that are carried over to be combined
with U.S. source income or loss and for-
eign source income or loss in the same cat-
egories as the respective portions of the net
operating loss. Then, the temporary reg-
ulations provide these losses are allocated
against other income as part of the gen-
eral loss allocation rules for current year
losses. Notice 89–3, however, requires the
allocation of the net operating loss against
income in other separate categories before
allocation of current year losses. The Trea-
sury Department and the IRS believe there
is no difference in result whether the net
operating losses carried into a taxable year
are allocated before or at the same time
as current year losses, given the treatment
of U.S. losses in §1.904(g)–3T. However,
the approach of the temporary regulations
provides added simplicity in application of
the ordering rules as well as greater consis-
tency with the rules for full net operating
loss carryovers.
The rules for the allocation of net oper-
ating losses apply similarly to net capital
loss carryovers.
B. Step Two: Allocation of separate
limitation losses
Separate limitation losses are first allo-
cated to separate limitation income for the
taxable year in other separate categories on
a proportionate basis. Separate limitation
loss accounts are increased as a result of
any such allocations. To the extent the sep-
arate limitation losses exceed separate lim-
itation income for the year, those losses are
allocated against U.S. income, if any, for
the taxable year and overall foreign loss
accounts are increased.
Unlike Notice 89–3, the temporary reg-
ulations also provide that offsetting sep-
arate limitation loss accounts are netted
against one another. For example, if a
taxpayer has a separate limitation loss ac-
count in the general category with respect
to passive category income, and in the
next year incurs a passive category sepa-
rate limitation loss that offsets general cat-
egory income, the two accounts will be
netted against each other, rather than both
being carried forward until each one is re-
captured.
C. Step Three: Allocation of U.S. source
loss
U.S. source losses are allocated against
separate limitation income on a propor-
tionate basis, and overall domestic loss
accounts are increased appropriately. Un-
der the ordering rules in Notice 89–3,
U.S. losses sustained in the current taxable
year are allocated after all other losses
are allocated and after separate limita-
tion losses and overall foreign losses are
recaptured. With the addition of section
904(g), Congress expressed that domestic
losses and foreign source losses should be
treated with greater parity. To that end, the
Treasury Department and the IRS believe
the ordering rules of Notice 89–3 should
be amended. Accordingly, the temporary
regulations provide that U.S. losses are
allocated in the same manner as foreign
losses, before any income is recharacter-
ized.
D. Step Four: Recapture of overall foreign
loss accounts
To the extent a taxpayer has any sep-
arate limitation income for the taxable
year after losses are allocated in steps one
through three, a portion of such income
will be subject to recharacterization in or-
der to recapture prior year overall foreign
losses, if any.
E. Step Five: Recapture of separate
limitation loss accounts
To the extent a taxpayer has any sepa-
rate limitation income for the taxable year
after overall foreign losses are recaptured
in step four, then such income will be sub-
ject to recharacterization in order to recap-
ture prior year separate limitation losses, if
any.
F. Step Six: Recapture of overall domestic
loss accounts
To the extent a taxpayer has any U.S.
source income after losses are allocated in
steps one through three, but not taking into
account any foreign source income that is
recharacterized as U.S. source income un-
der step four, then a portion of such income
will be subject to recharacterization in or-
der to recapture prior year overall domestic
losses, if any.
The temporary regulations coordinate
the overall foreign loss and overall domes-
tic loss regimes by providing that the re-
capture of overall foreign and domestic
loss accounts is done independently. Ac-
cordingly, income recharacterized under
one recapture provision is not taken into
account in determining the amount of in-
come subject to recharacterization under
the other recapture provision. For exam-
ple, foreign source income that is rechar-
acterized as U.S. source income in order
to recapture an overall foreign loss ac-
count will not then be included in the de-
termination of U.S. source income subject
to recharacterization as foreign source in-
come in order to recapture an overall do-
mestic loss account.
V. Consolidated Overall Domestic Loss
Accounts—§1.1502–9T
Section 1.1502–9T revises §1.1502–9
to include rules for the application of sec-
tion 904(g) to consolidated groups and
their members. Section 1.1502–9 provides
rules only for the application of section
904(f) to consolidated groups and their
members. Under those rules, consolidated
overall foreign loss (COFL) accounts
and consolidated separate limitation loss
(CSLL) accounts are determined by the
consolidated group on an aggregate basis
under the principles of §§1.1502–11 and
1.1502–12. When a new member joins
the group, its separate overall foreign loss
and separate limitation loss accounts are
combined with the appropriate COFL and
CSLL accounts of the group. When a
member leaves the group, it is allocated
apro rataportion of each of the group’s
COFL and CSLL accounts based on the
member’s share of the group’s assets that
generate income subject to recharacteriza-
tion under the corresponding loss account.
The temporary regulations do not alter
these provisions addressing COFL and
CSLL accounts. The revisions simply
extend these principles to provide parallel
treatment for consolidated overall domes-
tic loss accounts.
February 25, 20084502008–8 I.R.B.

Effective/Applicability Dates
The effective date for these regulations
is December 21, 2007. The regulations
generally apply to taxable years beginning
after December 21, 2007. However, tax-
payers may choose to apply the overall do-
mestic loss provisions of the regulations
in other taxable years beginning after De-
cember 31, 2006. In the alternative, tax-
payers may use any reasonable method
consistently applied for those years, in-
cluding one based on the ordering rules of
Notice 89–3.
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 assess-
ment is not required. For applicability
of the Regulatory Flexibility Act, see
the cross-referenced notice of proposed
rulemaking published elsewhere in this
issue of the Bulletin. Pursuant to section
7805(f), these regulations have been sub-
mitted to the Chief Counsel for Advocacy
of the Small BusinessAdministration for
comment on its impact on small business.
Drafting Information
The principal author of these regula-
tions is Jeffrey L. Parry of the Office of
Chief Counsel (International). However,
other personnel from the Treasury Depart-
ment and the IRS participated in their de-
velopment.
*****
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 in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.904(g)–3T also issued under
26 U.S.C. 904(g)(4). * * *
Par. 2. Section 1.904–0 is amended by
revising the section heading and introduc-
tory text to read as follows:
§1.904–0 Outline of regulation provisions.
This section lists the headings for
§§1.904–1 through 1.904–7.
*****
Par. 3. Section 1.904(b)–0 is
added. The entries for §§1.904(b)–1 and
1.904(b)–2 in §1.904–0 are redesignated
as entries in new §1.904(b)–0.
§1.904(b)–0 Outline of regulation
provisions.
This section lists the headings for
§§1.904(b)–1 and 1.904(b)–2.
Par. 4. Section 1.904(f)–0 is added and
amended as follows:
1. The entries for §§1.904(f)–1,
1.904(f)–2, 1.904(f)–3, 1.904(f)–4,
1.904(f)–5, 1.904(f)–6 and 1.904(f)–12
in §1.904–0 are redesignated as entries in
new §1.904(f)–0.
2. The entry for §1.904(f)–1(a) is re-
designated as §1.904(f)–1(a)(1) and a new
entry for §1.904(f)–1(a)(2) is added.
3. The entries for §1.904(f)–1(d)(2),
(d)(3), and (d)(4) are revised and the entry
for §1.904(f)–1(d)(5) is removed.
4. The entries for §1.904(f)–2(c) and
(c)(1) are revised.
5. The entries for §1.904(f)–3 are re-
moved.
6. New entries for §§1.904(f)–7 and
1.904(f)–8 are added.
The additions and revisions read as fol-
lows:
§1.904(f)–0 Outline of regulation
provisions.
This section lists the headings for
§§1.904(f)–1 through 1.904(f)–8 and
1.904(f)–12.
§1.904(f)–1 Overall foreign loss and the
overall foreign loss account.
(a)(1) Overview of regulations.
(2) [Reserved]. For further guidance,
see the entry for §1.904(f)–1T(a)(2) in
§1.904(f)–0T.
*****
(d) * * *
(2) Overall foreign losses of another
taxpayer.
(3) Additions to overall foreign loss ac-
count created by loss carryovers.
(4) [Reserved]. For further guidance,
see the entry for §1.904(f)–1T(d)(4) in
§1.904(f)–0T.
*****
§1.904(f)–2 Recapture of overall foreign
losses.
*****
(c) and (c)(1) [Reserved].For
further guidance, see the entries
for §1.904(f)–2T(c) and (c)(1) in
§1.904(f)–0T.
*****
§1.904(f)–7 Separate limitation loss and
the separate limitation loss account.
[Reserved]. For further guidance,
see the entries for §1.904(f)–7T in
§1.904(f)–0T.
§1.904(f)–8 Recapture of separate
limitation loss accounts.
[Reserved]. For further guidance,
see the entries for §1.904(f)–8T in
§1.904(f)–0T.
Par. 5. Section 1.904(f)–0T is added to
read as follows:
§1.904(f)–0T Outline of regulation
provisions (temporary).
This section lists the headings for
§§1.904(f)–1T, 1.904(f)–2T, 1.904(f)–7T
and 1.904(f)–8T.
§1.904(f)–1T Overall foreign loss and the
overall foreign loss account (temporary).
(a)(1) [Reserved]. For further guid-
ance, see the entry for §1.904(f)–1(a)(1) in
§1.904(f)–0.
(2) Application to post-1986 taxable
years.
(b) through (d)(3) [Reserved].
For further guidance, see the entries
for §1.904(f)–1(b) through (d)(3) in
§1.904(f)–0.
(d)(4) Adjustments for capital gains and
losses.
(e) through (f) [Reserved].For
further guidance, see the entries for
§1.904(f)–1(e) through (f) in §1.904(f)–0.
(g) Effective/applicability date.
(h) Expiration date.
2008–8 I.R.B.451February 25, 2008

§1.904(f)–2T Recapture of overall foreign
loss (temporary).
(a) and (b) [Reserved]. For fur-
ther guidance, see the entries for
§1.904(f)–2(a) and (b) in §1.904(f)–0.
(c) Section 904(f)(1) recapture.
(1) In general.
(c)(2) through (d) [Reserved].
For further guidance, see the entries
for §1.904(f)–2(c)(2) through (d) in
§1.904(f)–0.
(e) Effective/applicability date.
(f) Expiration date.
§1.904(f)–7T Separate limitation loss
and the separate limitation loss account
(temporary).
(a) Overview of regulations.
(b) Definitions.
(1) Separate category.
(2) Separate limitation income.
(3) Separate limitation loss.
(c) Separate limitation loss account.
(d) Additions to separate limitation loss
accounts.
(1) General rule.
(2) Separate limitation losses of another
taxpayer.
(3) Additions to separate limitation loss
account created by loss carryovers.
(e) Reductions of separate limitation
loss accounts.
(1) Pre-recapture reduction for amounts
allocated to other taxpayers.
(2) Reduction for offsetting loss ac-
counts.
(3) Reduction for amounts recaptured.
(f) Effective/applicability date.
(g) Expiration date.
§1.904(f)–8T Recapture of separate
limitation loss accounts (temporary).
(a) In general.
(b) Effect of recharacterization of sepa-
rate limitation income on associated taxes.
(c) Effective/applicability date.
(d) Expiration date.
Par. 6. Section 1.904(f)–1 is amended
as follows:
1. Redesignate paragraph (a) as (a)(1).
2. Add a new paragraph (a)(2).
3. In paragraph (d)(1), remove the lan-
guage “paragraph (d)(4) of this section”
and add the language “paragraph (d)(3) of
this section” in its place.
4. Remove paragraphs (d)(2), (d)(5),
andExample 4andExample 5in paragraph
(f).
5. Redesignate paragraph (d)(3) as
paragraph (d)(2), and paragraph (d)(4) as
paragraph (d)(3).
6.In newly-redesignated para-
graph (d)(3), remove the language
“§1.904(f)–1(d)(5)” and add the language
“§1.904(f)–1(d)(4)” in its place.
7. Add new paragraphs (d)(4) and (g).
The revisions and additions read as fol-
lows:
§1.904(f)–1 Overall foreign loss and the
overall foreign loss account.
*****
(a) * * *
(2) [Reserved].
For further guidance,
see §1.904(f)–
1T(a)(2).
*****
(d) * * *
(4) [Reserved]. For further guidance,
see §1.904(f)–1T(d)(4).
*****
(g) [Reserved]. For further guidance,
see §1.904(f)–1T(g).
Par. 7. Section 1.904(f)–1T is added to
read as follows:
§1.904(f)–1T Overall foreign loss and the
overall foreign loss account (temporary).
(a)(1) [Reserved]. For further guid-
ance, see §1.904(f)–1(a)(1).
(2)Application to post-1986 taxable
years. The principles of §§1.904(f)–1
through 1.904(f)–5 shall apply to overall
foreign loss sustained in taxable years
beginning after December 31, 1986, mod-
ified so as to take into account the effect
of statutory amendments.
(b) through (d)(3) [Reserved]. For fur-
ther guidance, see §1.904(f)–1(b) through
(d)(3).
(d)(4)Adjustments for capital gains
and losses. If a taxpayer has capital
gains or losses, the taxpayer shall make
adjustments to such capital gains and
losses to the extent required under section
904(b)(2) and §1.904(b)–1 before apply-
ing the provisions of §1.904(f)–1T. See
§1.904(b)–1(h).
(e) and (f) [Reserved]. For further guid-
ance, see §1.904(f)–1(e) and (f).
(g)Effective/applicability date.This
section applies to taxable years beginning
after December 21, 2007.
(h)Expiration date. The applicability
of this section expires on December 20,
2010.
Par. 8. Section 1.904(f)–2 is amended
as follows:
1. Revise paragraph (c)(1).
2. Revise paragraph (c)(5)Example 4.
3. Add a new paragraph (e).
The revisions and addition read as fol-
lows:
§1.904(f)–2 Recapture of overall foreign
losses
.
*****
(c) * * * (1) [Reserved]. For further
guidance, see §1.904(f)–2T(c)(1).
(5) * * *
Example 4. [Reserved]. For further
guidance see §1.904(f)–2T(c)(5)Example
4.
*****
(e) [Reserved]. For further guidance,
see §1.904(f)–2T(e).
Par. 9. Section 1.904(f)–2T is added to
read as follows:
§1.904(f)–2T Recapture of overall foreign
losses (temporary).
(a) and (b) [Reserved]. For further
guidance, see §1.904(f)–2(a) and (b).
(c)Section 904(f)(1) recapture—(1)In
general. In a year in which a taxpayer
elects the benefits of section 901 or 30A,
the amount of foreign source taxable in-
come subject to recharacterization in a tax-
able year in which paragraph (a) of this
section is applicable is the lesser of the ag-
gregate amount of maximum potential re-
capture in all overall foreign loss accounts
or fifty percent of the taxpayer’s total for-
eign source taxable income. If the aggre-
gate amount of maximum potential recap-
ture in all overall foreign loss accounts ex-
ceeds fifty percent of the taxpayer’s to-
tal foreign source taxable income, foreign
source taxable income in each separate cat-
egory with an overall foreign loss account
is recharacterized in an amount equal to the
section 904(f)(1) recapture amount, mul-
tiplied by the maximum potential recap-
ture in the overall foreign loss account, di-
vided by the aggregate amount of maxi-
February 25, 20084522008–8 I.R.B.

mum potential recapture in all overall for-
eign loss accounts. The maximum poten-
tial recapture in any account is the lesser of
the balance in that overall foreign loss ac-
count (after reduction of such accounts in
accordance with §1.904(f)–1(e)) or the for-
eign source taxable income for the year in
the same separate category as the loss ac-
count. If, in any year, in accordance with
section 164(a) and section 275(a)(4)(A), a
taxpayer deducts rather than credits its for-
eign taxes, recapture is applied to the ex-
tent of the lesser of—
(i) The balance in the overall foreign
loss account in each separate category; or
(ii) Foreign source taxable income mi-
nus foreign taxes in each separate category.
(c)(2) through (5)Example 3[Re-
served]. For further guidance, see
§1.904(f)–2(c)(2) through (5)Example 3.
Example 4. Y Corporation is a domestic corpo-
ration that does business in the United States and
abroad. On December 31, 2007, the balance in Y’s
general category overall foreign loss account is $500,
all of which is attributable to a loss incurred in 2007.
Y has no other loss accounts subject to recapture. For
2008, Y has U.S. source taxable income of $400 and
foreign source taxable income of $300 in the general
category and $900 in the passive category. Under
paragraph (c)(1) of this section, the amount of Y’s
general category income subject to recharacterization
is the lesser of the aggregate maximum potential re-
capture or 50 percent of the total foreign source tax-
able income. In this case Y’s aggregate maximum
potential recapture is $300 (the lesser of the $500
balance in the general category overall foreign loss
account or $300 foreign source income in the gen-
eral category for the year), which is less than $600,
or 50 percent of total foreign source taxable income
($1200 x 50%). Therefore, pursuant to paragraph (c)
of this section, $300 of foreign source income in the
general category is recharacterized as U.S. source in-
come. The balance in Y’s general category overall
foreign loss account is reduced by $300 to $200 in
accordance with §1.904(f)–1(e)(2).
(c)(5)Example 5through (d) [Re-
served]. For further guidance, see
§1.904(f)–2(c)(5)Example 5through
§1.904(f)–2(d).
(e)Effective/applicability date.This
section applies to taxable years beginning
after December 21, 2007.
(f)Expiration date. The applicability of
this section expires on December 20, 2010.
Par. 10. Section 1.904(f)–3 is revised
to read as follows:
§1.904(f)–3 Allocation of net operating
losses and net capital losses.Forrules
relating to the allocation of net oper-
ating losses and net capital losses, see
§1.904(g)–3T.
Par.11.Sections 1.904(f)–7,
1.904(f)–7T, 1.904(f)–8, and 1.904(f)–8T
are added to read as follows:
§1.904(f)–7 Separate limitation loss and
the separate limitation loss account.
[Reserved]. For further guidance, see
§1.904(f)–7T.
§1.904(f)–7T Separate limitation loss
and the separate limitation loss account
(temporary).
(a)Overview of regulations.This
section provides rules for determining a
taxpayer’s separate limitation losses, for
establishing separate limitation loss ac-
counts, and for making additions to and re-
ductions from such accounts for purposes
of section 904(f). Section 1.904(f)–8T
provides rules for recharacterizing the
balance in any separate limitation loss ac-
count under the general recharacterization
rule of section 904(f)(5)(C).
(b)Definitions. The definitions in para-
graphs (b)(1) through (4) of this section
apply for purposes of this section and
§§1.904(f)–8T and 1.904(g)–3T.
(1)Separate categorymeans each sep-
arate category of income described in sec-
tion 904(d) and any other category of in-
come described in §1.904–4(m). For ex-
ample, income subject to section 901(j) or
904(h)(10) is income in a separate cate-
gory.
(2)Separate limitation incomemeans,
with respect to any separate category, the
taxable income from sources outside the
United States, separately computed for
that category for the taxable year. Sepa-
rate limitation income shall be determined
by taking into account any adjustments
for capital gains and losses under sec-
tion 904(b)(2) and §1.904(b)–1. See
§1.904(b)–1(h)(1)(i).
(3)Separate limitation lossmeans,
with respect to any separate category, the
amount by which the foreign source gross
income in that category is exceeded by
the sum of expenses, losses and other de-
ductions (not including any net operating
loss deduction under section 172(a) or
any expropriation loss or casualty loss
described in section 907(c)(4)(B)(iii))
properly allocated and apportioned thereto
for the taxable year. Separate limitation
losses are determined separately for each
separate category. Accordingly, income
and deductions attributable to a separate
category are not netted with income and
deductions attributable to another sepa-
rate category for purposes of determining
the amount of a separate limitation loss.
Separate limitation losses shall be deter-
mined by taking into account any adjust-
ments for capital gains and losses under
section 904(b)(2) and §1.904(b)–1. See
§1.904(b)–1(h)(1)(i).
(c)Separate limitation loss account.
Any taxpayer that sustains a separate
limitation loss that is allocated to reduce
separate limitation income of the taxpayer
under the rules of §1.904(g)–3T must es-
tablish a separate limitation loss account
for the loss. The taxpayer must establish
separate loss accounts for each separate
category in which a separate limitation loss
is incurred that is allocated to reduce other
separate limitation income. A separate
account must then be established for each
separate category to which a portion of the
loss is allocated. The balance in any sepa-
rate limitation lossaccount represents the
amount of separate limitation income that
is subject to recharacterization (as income
in another separate category) in a subse-
quent year pursuant to §1.904(f)–8T and
section 904(f)(5)(F). From year to year,
amounts may be added to or subtracted
from the balance in such loss accounts, as
provided in paragraphs (d) and (e) of this
section.
(d)Additions to separate limitation loss
accounts—(1)General rule. A taxpayer’s
separate limitation loss as defined in para-
graph (b)(3) of this section shall be added
to the applicable separate limitation loss
accounts at the end of the taxable year to
the extent that the separate limitation loss
has reduced separate limitation income in
one or more other separate categories of
the taxpayer during the taxable year. For
rules with respect to net operating loss car-
ryovers, see paragraph (d)(3) of this sec-
tion and §1.904(g)–3T.
(2)Separate limitation losses of an-
other taxpayer. If any portion of any
separate limitation loss account of another
taxpayer is allocated to the taxpayer in
accordance with §1.1502–9T (relating to
consolidated separate limitation losses)
the taxpayer shall add such amount to
its applicable separate limitation loss ac-
count.
(3)Additions to separate limitation loss
account created by loss carryovers.The
2008–8 I.R.B.453February 25, 2008

taxpayer shall add to each separate limi-
tation loss account all net operating loss
carryovers to the current taxable year to
the extent that separate limitation losses in-
cluded in the net operating loss carryovers
reduced foreign source income in other
separate categories for the taxable year.
(e)Reductions of separate limitation
loss accounts. The taxpayer shall subtract
the following amounts from its separate
limitation loss accounts at the end of its
taxable year in the following order as ap-
plicable:
(1)Pre-recapture reduction for
amounts allocated to other taxpayers.A
separate limitation loss account is reduced
by the amount of any separate limitation
loss account which is allocated to another
taxpayer in accordance with §1.1502–9T
(relating to consolidated separate limita-
tion losses).
(2)Reduction for offsetting loss ac-
counts. A separate limitation account is
reduced to take into account any netting
of separate limitation loss accounts under
§1.904(g)–3T(c).
(3)Reduction for amounts recaptured.
A separate limitation loss account is re-
duced by the amount of any separate
limitation income that is earned in the
same separate category as the separate
limitation loss that resulted in the account
and that is recharacterized in accordance
with §1.904(f)–8T (relating to recapture
of separate limitation losses) or section
904(f)(5)(F) (relating to recapture of sep-
arate limitation loss accounts out of gain
realized from dispositions).
(f)Effective/applicability date.This
section applies to taxpayers that sustain
separate limitation losses in taxable years
beginning after December 21, 2007. For
taxable years beginning after December
31, 1986, and on or before December 21,
2007, see section 904(f)(5).
(g)Expiration date. The applicability
of this section expires on December 20,
2010.
§1.904(f)–8 Recapture of separate
limitation loss accounts.
[Reserved]. For further guidance, see
§1.904(f)–8T.
§1.904(f)–8T Recapture of separate
limitation loss accounts (temporary).
(a)In general. A taxpayer shall re-
capture a separate limitation loss account
as provided in this section. If the tax-
payer has a separate limitation loss ac-
count or accounts in any separate cate-
gory (the “loss category”) and the loss cat-
egory has income in a subsequent taxable
year, the income shall be recharacterized
as income in that other category or cate-
gories. The amount of income recharac-
terized shall not exceed the separate lim-
itation loss accounts for the loss category
as determined under §1.904(f)–7T, includ-
ing the aggregate separate limitation loss
accounts from the losscategory not previ-
ously recaptured under this paragraph (a).
If the taxpayer has more than one separate
limitation loss account in a loss category,
and there is not enough income in the loss
category to recapture the entire amount in
all the loss accounts, then separate limita-
tion income in the loss category shall be
recharacterized as separate limitation in-
come in the separate limitation loss cate-
gories on a proportionate basis. This is de-
termined by multiplying the total separate
limitation income subject to recapture by
a fraction, the numerator of which is the
amount in a particular loss account and the
denominator of which is the total amount
in all loss accounts for the separate cate-
gory.
(b)Effect of recapture of separate
limitation income on associated taxes.
Recharacterization of income under para-
graph (a) of this section shall not result
in the recharacterization of any tax. The
rules of §1.904–6, including the rules that
the taxes are allocated on an annual basis
and that foreign taxes paid on U.S. source
income shall be allocated to the separate
category that includes that U.S. source
income (see §1.904–6(a)), shall apply for
purposes of allocating taxes to separate
categories. Allocation of taxes pursuant
to §1.904–6 shall be made before the re-
capture of any separate limitation loss
accounts of the taxpayer pursuant to the
rules of this section.
(c)Effective/applicability date.This
section applies to taxpayers that sustain
separate limitation losses in taxable years
beginning after December 21, 2007. For
taxable years beginning after December
31, 1986, and on or before December 21,
2007, see section 904(f)(5).
(d)Expiration date. The applicability
of this section expires on December 20,
2010.
Par. 12. Section 1.904(g)–0 is added to
read as follows:
§1.904(g)–0 Outline of regulation
provisions.
This section lists the headings for
§§1.904(g)–1 through 1.904(g)–3.
§1.904(g)–1 Overall domestic loss and
the overall domestic loss account.
[Reserved]. For further guidance,
see the entries for §1.904(g)–1T in
§1.904(g)–0T.
§1.904(g)–2 Recapture of overall
domestic losses.
[Reserved]. For further guidance,
see the entries for §1.904(g)–2T in
§1.904(g)–0T.
§1.904(g)–3 Ordering rules for the
allocation of net operating losses, net
capital losses, U.S. source losses, and
separate limitation losses, and for
recapture of separate limitation losses,
overall foreign losses, and overall
domestic losses.
[Reserved]. For further guidance,
see the entries for §1.904(g)–3T in
§1.904(g)–0T.
Par. 13. Section 1.904(g)–0T is added
to read as follows:
§1.904(g)–0T Outline of regulation
provisions (temporary).
This section lists the headings for
§§1.904(g)–1T through 1.904(g)–3T.
§1.904(g)–1T Overall domestic loss
and the overall domestic loss account
(temporary).
(a) Overview of regulations.
(b) Overall domestic loss accounts.
(1) In general.
(2) Taxable year in which overall do-
mestic loss is sustained.
(c) Determination of a taxpayer’s over-
all domestic loss.
(1) Overall domestic loss defined.
February 25, 20084542008–8 I.R.B.

(2) Domestic loss defined.
(3) Qualified taxable year defined.
(4) Method of allocation and apportion-
ment of deductions.
(d) Additions to overall domestic loss
accounts.
(1) General rule.
(2) Overall domestic loss of another
taxpayer.
(3) Adjustments for capital gains and
losses.
(e) Reductions of overall domestic loss
accounts.
(1) Pre-recapture reduction for amounts
allocated to other taxpayers.
(2) Reduction for amounts recaptured.
(f) Effective/applicability date.
(g) Expiration date.
§1.904(g)–2T Recapture of overall
domestic losses (temporary).
(a) In general.
(b) Determination of U.S. source tax-
able income for purposes of recapture.
(c) Section 904(g)(1) recapture.
(d) Effective/applicability date.
(e) Expiration date.
§1.904(g)–3T Ordering rules for the
allocation of net operating losses, net
capital losses, U.S. source losses, and
separate limitation losses, and for
recapture of separate limitation losses,
overall foreign losses, and overall
domestic losses (temporary).
(a) In general.
(b) Step One: Allocation of net operat-
ing loss and net capital loss carryovers.
(1) In general.
(2) Full net operating loss carryover.
(3) Partial net operating loss carryover.
(4) Net capital loss carryovers.
(c) Step Two: Allocation of separate
limitation losses.
(d) Step Three: Allocation of U.S.
source losses.
(e) Step Four: Recapture of overall for-
eign loss accounts.
(f) Step Five: Recapture of separate
limitation loss accounts.
(g) Step Six: Recapture of overall do-
mestic loss accounts.
(h) Examples.
(i) Effective/applicability date.
(j) Expiration date.
Par.14.Sections 1.904(g)–1,
1.904(g)–1T, 1.904(g)–2, 1.904(g)–2T,
1.904(g)–3, and 1.904(g)–3T are added to
read as follows:
§1.904(g)–1 Overall domestic loss and
the overall domestic loss account.
[Reserved]. For further guidance, see
§1.904(g)–1T.
§1.904(g)–1T Overall domestic loss
and the overall domestic loss account
(temporary).
(a)Overview of regulations.This
section provides rules for determining a
taxpayer’s overall domestic losses, for es-
tablishing overall domestic loss accounts,
and for making additions to and reduc-
tions from such accounts for purposes
of section 904(g). Section 1.904(g)–2T
provides rules for recapturing the balance
in any overall domestic loss account un-
der the general recharacterization rule of
section 904(g)(1). Section 1.904(g)–3T
provides ordering rules for the allocation
of net operating losses, net capital losses,
U.S. source losses, and separate limitation
losses, and the recapture of separate lim-
itation losses, overall foreign losses and
overall domestic losses.
(b)Overall domestic loss ac-
counts—(1)In general. Any taxpayer that
sustains an overall domestic loss under
paragraph (c) of this section must estab-
lish an account for such loss. Separate
overall domestic loss accounts must be
maintained with respect to each separate
category in which foreign source income
is offset by the domestic loss. The bal-
ance in each overall domestic loss account
represents the amount of such overall do-
mestic loss subject to recapture in a given
year. From year to year, amounts may be
added to or subtracted from the balances
in such accounts as provided in paragraphs
(d)and(e)ofthissection.
(2)Taxable year in which overall do-
mestic loss is sustained. When a taxpayer
incurs a domestic loss that is carried back
as part of a net operating loss to offset for-
eign source income in a qualified taxable
year, as defined in paragraph (c)(3) of this
section, the resulting overall domestic loss
is treated as sustained in the later year in
which the domestic loss was incurred and
not in the earlier year in which the loss off-
set foreign source income. Similarly, when
a taxpayer incurs a domestic loss that is
carried forward as part of a net operating
loss and applied to offset foreign source
income in a later taxable year, the result-
ing overall domestic loss is treated as sus-
tained in the later year in which the do-
mestic loss offsets foreign source income
and not in the earlier year in which the loss
was incurred. For example, if a taxpayer
incurs a domestic loss in the 2007 taxable
year that is carried back to the 2006 quali-
fied taxable year and offsets foreign source
income in 2006, the resulting overall do-
mestic loss is treated as sustained in the
2007 taxable year. If a taxpayer incurs a
domestic loss in a pre-2007 taxable year
that is carried forward to a post-2006 quali-
fied taxable year and offsets foreign source
income in the post-2006 year, the result-
ing overall domestic loss is treated as sus-
tained in the post-2006 year. The over-
all domestic loss account is established at
the end of the later of the taxable year in
which the domestic loss arose or the quali-
fied taxable year to which the loss is car-
ried and applied to offset foreign source
income, and will be recaptured from U.S.
source income arising in subsequent tax-
able years.
(c)Determination of a taxpayer’s over-
all domestic loss—(1)Overall domestic
loss defined. For taxable years beginning
after December 31, 2006, a taxpayer sus-
tains an overall domestic loss—
(i) In any qualified taxable year in
which its domestic loss for such taxable
year offsets foreign source taxable income
for the taxable year or for any preceding
qualified taxable year by reason of a car-
ryback; and
(ii) In any other taxable year in which
the domestic loss for such taxable year off-
sets foreign source taxable income for any
preceding qualified taxable year by reason
of a carryback.
(2)Domestic loss defined. For purposes
of this section and §§1.904(g)–2T and
1.904(g)–3T, the termdomestic lossmeans
the amount by which the U.S. source gross
income for the taxable year is exceeded by
the sum of the expenses, losses and other
deductions properly apportioned or allo-
cated to such income, taking into account
any net operating loss carried forward
from a prior taxable year, but not any loss
carried back. If a taxpayer has any capital
gains or losses, the amount of the tax-
payer’s domestic loss shall be determined
by taking into account adjustments under
2008–8 I.R.B.455February 25, 2008

section 904(b)(2) and §1.904(b)–1. See
§1.904(b)–1(h)(1)(iii).
(3)Qualified taxable year de-
fined. For purposes of this section and
§§1.904(g)–2T and 1.904(g)–3T, the term
qualified taxable yearmeans any taxable
year for which the taxpayer chooses the
benefits of section 901.
(4)Method of allocation and apportion-
ment of deductions. In determining its
overall domestic loss, a taxpayer shall al-
locate and apportion expenses, losses, and
other deductions to U.S. gross income in
accordance with sections 861(b) and 865
and the regulations thereunder, including
§§1.861–8T through 1.861–14T.
(d)Additions to overall domestic loss
accounts—(1)General rule. A taxpayer’s
overall domestic loss as determined under
paragraph (c) of this section shall be added
to the applicable overall domestic loss ac-
count at the end of its taxable year to the
extent that the overall domestic loss either
reduces foreign source income for the year
(but only if such year is a qualified taxable
year) or reduces foreign source income for
a qualified taxable year to which the loss
has been carried back.
(2)Overall domestic loss of another
taxpayer. Ifanyportionofanyoverall
domestic loss of another taxpayer is allo-
cated to the taxpayer in accordance with
§1.1502–9T (relating to consolidated over-
all domestic losses) the taxpayer shall add
such amount to its applicable overall do-
mestic loss account.
(3)Adjustments for capital gains and
losses. If the taxpayer has capital gains or
losses, the amount by which an overall do-
mestic loss reduces foreign source income
in a taxable year shall be determined in
accordance with §1.904(b)–1(h)(1)(i) and
(iii).
(e)Reductions of overall domestic loss
accounts. The taxpayer shall subtract the
following amounts from its overall domes-
tic loss accounts at the end of its taxable
year in the following order, if applicable:
(1)Pre-recapture reduction for
amounts allocated to other taxpayers.An
overall domestic loss account is reduced
by the amount of any overall domestic loss
which is allocated to another taxpayer in
accordance with §1.1502–9T (relating to
consolidated overall domestic losses).
(2)Reduction for amounts recaptured.
An overall domestic loss account is re-
duced by the amount of any U.S. source in-
come that is recharacterized in accordance
with §1.904(g)–2T(c) (relating to recap-
ture under section 904(g)(1)).
(f)Effective/applicability date.This
section applies to any taxpayer that sus-
tains an overall domestic loss for a taxable
year beginning after December 21, 2007.
Taxpayers may choose to apply this sec-
tion to overall domestic losses sustained
in other taxable years beginning after De-
cember 31, 2006, as well.
(g)Expiration date. The applicability
of this section expires on December 20,
2010.
§1.904(g)–2 Recapture of overall
domestic losses.
[Reserved]. For further guidance, see
§1.904(g)–2T.
§1.904(g)–2T Recapture of overall
domestic losses (temporary).
(a)In general. A taxpayer shall re-
capture an overall domestic loss as pro-
vided in this section. Recapture is ac-
complishedbytreatingaportionofthe
taxpayer’s U.S. source taxable income as
foreign source income. The recharacter-
ized income is allocated among and in-
creases foreign source income in separate
categories in proportion to the balances of
the overall domestic loss accounts with re-
spect to those separate categories. As a
result, if the taxpayer elects the benefits
of section 901, the taxpayer’s foreign tax
credit limitation is increased. As provided
in §1.904(g)–1T(f)(2), the balance in a tax-
payer’s overall domestic loss account with
respect to a separate category is reduced at
the end of each taxable year by the amount
of loss recaptured during that taxable year.
Recapture continues until such time as the
amount of U.S. source income recharacter-
ized as foreign source income equals the
amount in the overall domestic loss ac-
count.
(b)Determination of U.S. source tax-
able income for purposes of recapture.
For purposes of determining the amount
of an overall domestic loss subject to re-
capture, the taxpayer’s taxable income
from U.S. sources shall be computed in
accordance with the rules set forth in
§1.904(g)–1T(c)(4).
(c)Section 904(g)(1) recapture.The
amount of any U.S. source taxable income
subject to recharacterization in a taxable
year in which paragraph (a) of this section
is applicable is the lesser of the aggregate
balance in taxpayer’s overall domestic loss
accounts in each separate category (after
reduction of such account in accordance
with §1.904(g)–1T(e)) or fifty percent of
the taxpayer’s U.S. source taxable income
(as determined under paragraph (b) of this
section).
(d)Effective/applicability date.This
section applies to any taxpayer that sus-
tains an overall domestic loss for a taxable
year beginning after December 21, 2007.
Taxpayers may choose to apply this sec-
tion to overall domestic losses sustained
in other taxable years beginning after De-
cember 31, 2006, as well.
(e)Expiration date. The applicability
of this section expires on December 20,
2010.
§1.904(g)–3 Ordering rules for the
allocation of net operating losses, net
capital losses, U.S. source losses, and
separate limitation losses, and for
recapture of separate limitation losses,
overall foreign losses, and overall
domestic losses.
[Reserved]. For further guidance, see
§1.904(g)–3T.
§1.904(g)–3T Ordering rules for the
allocation of net operating losses, net
capital losses, U.S. source losses, and
separate limitation losses, and for
recapture of separate limitation losses,
overall foreign losses, and overall
domestic losses (temporary).
(a)In general. This section provides or-
dering rules for the allocation of net oper-
ating losses, net capital losses, U.S. source
losses, and separate limitation losses, and
for recapture of separate limitation losses,
overall foreign losses, and overall domes-
tic losses. The rules must be applied in the
order set forth in paragraphs (b) through
(g)ofthissection.
(b)Step One: Allocation of net op-
erating loss and net capital loss carry-
overs—(1)In general. Net operating
losses from a current taxable year are
carried forward or back to a taxable year
in the following manner. Net operating
losses that are carried forward pursuant
to section 172 are combined with income
or loss in the carryover year in the man-
ner described in this paragraph (b). The
February 25, 20084562008–8 I.R.B.

combined amounts are then subject to
the ordering rules provided in paragraphs
(c) through (g) of this section. Net op-
erating losses that are carried back to a
prior taxable year pursuant to section 172
are allocated to income in the carryback
year in the manner set forth in paragraphs
(b)(2) and (3), (c), and (d) of this section.
The income in the carryback year to which
the net operating loss is allocated is the
foreign source income in each separate
category and the U.S. source income af-
ter the application of sections 904(f) and
904(g) to income and loss in that previous
year, including as a result of net operating
loss carryovers or carrybacks from taxable
years prior to the current taxable year.
(2)Full net operating loss carryover.
If the full net operating loss (that remains
after carryovers to other taxable years) is
less than or equal to the taxable income in
a particular taxable year (carryover year),
and so can be carried forward in its entirety
to such carryover year, U.S. source losses
and foreign source losses in separate cate-
gories that are part of a net operating loss
from a particular taxable year that is car-
ried forward in its entirety shall be com-
bined with the U.S. income or loss and the
foreign source income or loss in the same
separate categories in the carryover year.
(3)Partial net operating loss carryover.
If the full net operating loss (that remains
after carryovers to other taxable years) ex-
ceeds the taxable income in a carryover
year, and so cannot be carried forward in
its entirety to such carryover year, the fol-
lowing rules apply:
(i) First, any U.S. source loss (not to
exceed the net operating loss carryover)
shall be carried over to the extent of any
U.S. source income in the carryover year.
(ii) If the net operating loss carryover
exceeds the U.S. source loss carryover de-
termined under paragraph (b)(3)(i) of this
section, then separate limitation losses that
are part of the net operating loss shall be
tentatively carried over to the extent of
separate limitation income in the same sep-
arate category in the carryover year. If
the sum of the potential separate limita-
tion loss carryovers determined under the
preceding sentence exceeds the amount of
the net operating loss carryover reduced
by any U.S. source loss carried over un-
der paragraph (b)(3)(i) of this section, then
the potential separate limitation loss carry-
overs shall be reducedpro rataso that their
sum equals such amount.
(iii) If the net operating loss carryover
exceeds the sum of the U.S. and sepa-
rate limitation loss carryovers determined
under paragraphs (b)(3)(i) and (ii) of this
section, then a proportionate part of the
remaining loss from each separate cate-
gory shall be carried over to the extent of
such excess and combined with the foreign
source loss, if any, in the same separate cat-
egories in the carryover year.
(iv) If the net operating loss carryover
exceeds the sum of all the loss carryovers
determined under paragraphs (b)(3)(i), (ii),
and (iii) of this section, then any U.S.
source loss not carried over under para-
graph (b)(3)(i) of this section shall be car-
ried over to the extent of such excess and
combined with the U.S. source loss, if any,
in the carryover year.
(4)Netcapitallosscarryovers.Rules
similar to the rules of paragraphs (b)(1)
through (3) of this section apply for pur-
poses of determining the components of a
net capital loss carryover to a taxable year.
(c)Step Two: Allocation of separate
limitation losses. The taxpayer shall al-
locate separate limitation losses sustained
during the taxable year (increased, if ap-
propriate, by any losses carried over under
paragraph (b) of this section), in the fol-
lowing manner:
(1) the taxpayer shall allocate its sepa-
rate limitation losses for the year to reduce
its separate limitation income in other sep-
arate categories on a proportionate basis,
and increase its separate limitation loss ac-
counts appropriately. To the extent a sep-
arate limitation loss in one separate cate-
gory is allocated to reduce separate limita-
tion income in a second separate category,
and the second category has a separate lim-
itation loss account from a prior taxable
year with respect to the first category, the
two separate limitation loss accounts shall
be netted one against the other.
(2) If the taxpayer’s separate limitation
losses for the taxableyear exceed the tax-
payer’s separate limitation income for the
year, so that the taxpayer has separate lim-
itation losses remaining after the applica-
tion of paragraph (c)(1) of this section, the
taxpayer shall allocate those losses to its
U.S. source income for the taxable year,
to the extent thereof, and shall increase
its overall foreign loss accounts appropri-
ately.
(d)Step Three: Allocation of U.S.
source losses. The taxpayer shall allocate
U.S. source losses sustained during the
taxable year (increased, if appropriate, by
any losses carried over under paragraph
(b) of this section) to separate limitation
income on a proportionate basis, and shall
increase its overall domestic loss accounts
appropriately.
(e)Step Four: Recapture of overall for-
eign loss accounts. If the taxpayer’s sepa-
rate limitation income for the taxable year
(reduced by any losses carried over under
paragraph (b) of this section) exceeds the
sum of the taxpayer’s U.S. source loss and
separate limitation losses for the year, so
that the taxpayer has separate limitation
income remaining after the application of
paragraphs (c)(1) and (d) of this section,
then the taxpayer shall recapture prior year
overall foreign losses, if any, in accordance
with §§1.904(f)–2 and 1.904(f)–2T.
(f)Step Five: Recapture of separate
limitation loss accounts. To the extent the
taxpayer has remaining separate limitation
income for the year after the application
of paragraph (e) of this section, then the
taxpayer shall recapture prior year separate
limitation loss accounts, if any, in accor-
dance with §1.904(f)–8T.
(g)Step Six: Recapture of overall do-
mestic loss accounts. If the taxpayer’s U.S.
source income for theyear (reduced by any
losses carried over under paragraph (b) of
this section or allocated under paragraph
(c) of this section, but not increased by
any recapture of overall foreign loss ac-
counts under paragraph (e) of this section)
exceeds the taxpayer’s separate limitation
losses for the year, so that the taxpayer has
U.S. source income remaining after the ap-
plication of paragraph (c)(2) of this sec-
tion, then the taxpayer shall recapture its
prior year overall domestic losses, if any,
in accordance with §1.904(g)–2T.
(h)Examples. The following examples
illustrate the rules of this section. Unless
otherwise noted, all corporations use the
calendar year as the U.S. taxable year.
Example 1.(i)Facts. (A) Z Corporation is a do-
mestic corporation with foreign branch operations in
Country B. For 2009, Z has a net operating loss of
($500), determined as follows:
General
Passive
US
($300)$0($200)
2008–8 I.R.B.457February 25, 2008

(B) For 2008, Z had the following taxable income
and losses after application of section 904(f) and (g)
to income and loss in 2008:
General
Passive
US
$400$200$110
(ii)Net operating loss allocation. Because Z’s
taxable income for 2008 exceeds its total net operat-
ing loss for 2009, the full net operating loss is carried
back. Under Step 1, each component of the net oper-
ating loss is carried back and combined with its same
category in 2008. See paragraph (b)(2) of this sec-
tion. After allocation of the net operating loss, Z has
the following taxable income and losses for 2008:
General
Passive
US
$100$200($90)
(iii)Loss allocation. Under Step 3, the ($90) of
U.S. loss is allocated proportionately to reduce the
general category and passive category income. Ac-
cordingly, $30 ($90 × $100/$300) of the U.S. loss is
allocated to general category income and $60 ($90
× $200/$300) of the U.S. loss is allocated to passive
category income, with a corresponding creation or in-
crease to Z’s overall domestic loss accounts.
Example 2.(i)Facts. (A) X Corporation is a
domestic corporation with foreign branch operations
in Country C. As of January 1, 2007, X has no loss
accounts subject to recapture. For 2007, X has a net
operating loss of ($1400), determined as follows:
General
Passive
US
($400)($200)($800)
(B) X has no taxable income in 2005 or 2006
available for offset by a net operating loss carryback.
For 2008, X has the following taxable income and
losses:
General
Passive
US
$500($100)$1200
(ii)Net operating loss allocation. Under Step 1,
because X’s total taxable income for 2008 of $1600
($1200 + $500 - $100) exceeds the total 2007 net
operating loss, the full $1400 net operating loss is
carried forward. Under paragraph (b)(2) of this sec-
tion, each component of the net operating loss is car-
ried forward and combined with its same category in
2008. After allocation of the net operating loss, X has
the following taxable income and losses:
General
Passive
US
$100($300)$400
(iii)Loss allocation. Under Step 2, $100 of the
passive category loss offsets the $100 of general cate-
gory income, resulting in a passive category separate
limitation loss account with respect to general cate-
gory income, and the other $200 of passive category
loss offsets $200 of the U.S. source taxable income,
resulting in the creation of an overall foreign loss ac-
count in the passive category.
Example 3.(i)Facts. Assume the same facts as in
Example 2, except that in 2008, X had the following
taxable income and losses:
General
Passive
US
$200($100)$1200
(ii)Net operating loss allocation. Under Step
1, because the total net operating loss for 2007 of
($1400) exceeds total taxable income for 2008 of
$1300 ($1200 + $200 - $100), X has a partial net
operating loss carryover to 2008 of $1300. Under
paragraph (b)(3)(i) of this section, first, the $800
U.S. source component of the net operating loss is
allocated to U.S. income for 2008. The tentative gen-
eral category carryover under paragraph (b)(3)(ii) of
this section ($200) does not exceed the remaining net
operating loss carryover amount ($500). Therefore,
$200 of the general category component of the net
operating loss is next allocated to the general cate-
gory income for 2008. Under paragraph (b)(3)(iii)
of this section, the remaining $300 of net operating
loss carryover ($1300 - $800 - $200) is carried over
proportionally from the remaining net operating
loss components in the general category ($200, or
$400 total general category loss -$200 general cat-
egory loss already allocated) and passive category
($200). Therefore, $150 ($300 × $200/$400) of the
remaining net operating loss carryover is carried over
from the general category for 2007 and combined
with the general category for 2008, and $150 ($300
× $200/$400) of the remaining net operating loss
carryover is carried over from the passive category
for 2007 and combined with the passive category
for 2008. After allocation of the net operating loss
carryover from 2007 to the appropriate categories for
2008, X has the following taxable income and losses:
General
Passive
US
($150)($250)$400
(iii)Loss allocation. Under Step 2, the losses in
the general and passive categories fully offset the U.S.
source income, resulting in the creation of general
category and passive category overall foreign loss ac-
counts.
Example 4.(i)Facts. Assume the same facts as in
Example 2, except that in 2008, X has the following
taxable income and losses:
General
Passive
US
$200$200($200)
(ii)Net operating loss allocation. Under Step 1,
because the total net operating loss of ($1400) ex-
ceeds total taxable income for 2008 of $200 ($200 +
$200 - $200), X has a partial net operating loss carry-
over to 2008 of $200. Because X has no U.S. source
income in 2008, under paragraph (b)(3)(i) of this sec-
tion no portion of the U.S. source component of the
net operating loss is initially carried into 2008. Be-
cause the total tentative carryover under paragraph
(b)(3)(ii) of this section of $400 ($200 in each of
the general and passive categories) exceeds the net
operating loss carryover amount, the tentative carry-
over from each separate category is reduced propor-
tionately by $100 ($200 × $200/$400). Accordingly,
$100 ($200 - $100) of the general category compo-
nent of the net operating loss is carried forward and
$100 ($200 - $100) of the passive category compo-
nent of the net operating loss is carried forward and
combined with income in the same respective cate-
gories for 2008. After allocation of the net operating
loss carryover from 2007, X has the following taxable
income and losses:
General
Passive
US
$100$100($200)
(iii)Loss allocation. Under Step 3, the $200 U.S.
source loss offsets the remaining $100 of general cat-
egory income and $100 of passive category income,
resulting in the creation of overall domestic loss ac-
counts with respect to the general and passive cate-
gories.
Example 5.(i)Facts. Assume the same facts as in
Example 2, except that in 2008, X has the following
taxable income and losses:
General
Passive
US
$800($100)$100
(ii)Net operating loss allocation. Under Step
1, because X’s total net operating loss in 2007 of
($1400) exceeds its total taxable income for 2008 of
$800 ($100 + $800 - $100), X has a partial net operat-
ing loss carryover to 2008 of $800. Under paragraph
(b)(3)(i) of this section, $100 of the U.S. source com-
ponent of the net operating loss is allocated to U.S.
income for 2008. The tentative general category car-
ryover under paragraph (b)(3)(ii) of this section does
not exceed the remaining net operating loss carry-
over amount. Therefore,$400 of the general cate-
gory component of the net operating loss is allocated
to reduce general category income in 2008. Under
paragraph (b)(3)(iii) of this section, of the remaining
$300 of net operating loss carryover ($800 - $100 -
$400), $200 is carried forward from the passive cat-
egory component of the net operating loss and com-
bined with the passive category for 2008. Under para-
graph (b)(3)(iv) of this section, the remaining $100
($300 - $200) of net operating loss carryover is car-
ried forward from the U.S. source component of the
net operating loss and combined with the U.S. source
income (loss) for 2008. After allocation of the net op-
erating loss carryover from 2007, X has the following
taxable income and losses:
General
Passive
US
$400($300)($100)
(iii)Loss allocation. (A) Under Step 2, the $300
passive category loss offsets the $300 of income in the
general category, resulting in the creation of a passive
category separate limitation loss account with respect
to the general category.
(B) Under Step 3, the $100 U.S. source loss off-
sets the remaining $100 of the general category in-
come, resulting in the creation of an overall domestic
loss account with respect to the general category.
Example 6.(i)
Facts. (A) Y Corporation is a do-
mestic corporation with foreign branch operations in
Country D. Y has no net operating losses and does
not make an election to recapture more than the re-
quired amount of overall foreign losses. As of Jan-
uary 1, 2007, Y has a ($200) general category over-
all foreign loss (OFL) account and a ($200) general
category separate limitation loss (SLL) account with
respect to the passive category. For 2007, Y has $400
of passive category income that is fully offset by a
($400) domestic loss in that taxable year, giving rise
February 25, 20084582008–8 I.R.B.

to the creation of an overall domestic loss (ODL) ac-
count with respect to the passive category. As of Jan-
uary 1, 2008, Y has the following balances in its OFL,
SLL, and ODL accounts:
General
US
OFLPassive SLL Passive ODL
$200$200$400
(B) In 2008, Y has the following taxable income
and losses:
General
Passive
US
$400($100)$600
(ii)Loss allocation. Under Step 2, the $100 of
passive category loss offsets $100 of the general cat-
egory income, creating a passive category SLL ac-
count of $100 with respect to the general category.
Because there is an offsetting general category SLL
account of $200 with respect to the passive category
from a prior taxable year, the two accounts are netted
against each other so that all that remains is a $100
general category SLL account with respect to the pas-
sive category.
(iii)OFL account recapture. Under Step 4, 50
percent of the remaining $300, or $150, of income in
the general category is subject to recharacterization
as U.S. source income as a recapture of part of the
OFL account in the general category.
(iv)SLL account recapture. Under Step 5, $100
of the remaining $150 of income in the general cate-
gory is recharacterized as passive category income as
a recapture of the general category SLL account with
respect to the passive category.
(v)ODL account recapture.UnderStep6,50per-
cent of the $600, or $300, of U.S. source income is
subject to recharacterization as foreign source passive
category income as a recapture of a part of the ODL
account with respect to the passive category. None of
the $150 of general category income that was rechar-
acterized as U.S. source income under Step 5 is in-
cluded here as income subject to recharacterization
in connection with recapture of the overall domestic
loss account.
(vi)Results. (A) After the allocation of loss and
recapture of loss accounts,X has the following tax-
able income and losses for 2008:
General
Passive
US
$50$400$450
(B) As of January 1, 2009, Y has the following
balances in its OFL, SLL and ODL accounts:
General
Passive
US
OFL
Passive
SLL
General
SLL
Passive
ODL
$50$0$0$100
(i)Effective/applicability date.This
section applies to taxable years beginning
after December 21, 2007. Taxpayers may
choose to apply this section to other tax-
able years beginning after December 31,
2006, as well.
(j)Expiration date. The applicability of
this section expires on December 20, 2010.
Par. 15. Section 1.904(i)–0 is added.
The entries for §1.904(i)–1 in §1.904–0
are redesignated as entries for new
§1.904(i)–0.
§1.904(i)–0 Outline of regulation
provisions.
This section lists the headings for
§1.904(i)–1.
Par. 16. Section 1.904(j)–0 is added.
The entries for §1.904(j)–1 in §1.904–0
are redesignated as entries for new
§1.904(j)–0.
§1.904(j)–0 Outline of regulation
provisions.
This section lists the headings for
§1.904(j)–1.
Par. 17. Section 1.1502–9 is revised to
read as follows:
§1.1502–9 Consolidated overall foreign
losses, separate limitation losses, and
overall domestic losses.
[Reserved]. For further guidance, see
§1.1502–9T.
Par. 18. Section 1.1502–9T is added to
read as follows:
§1.1502–9T Consolidated overall foreign
losses, separate limitation losses, and
overall domestic losses (temporary).
(a)In general. This section provides
rules for applying section 904(f) and (g)
(including its definitions and nomencla-
ture) to a group and its members. Gener-
ally, section 904(f) concerns rules relating
to overall foreign losses (OFLs) and sepa-
rate limitation losses (SLLs) and the con-
sequences of such losses. Under section
904(f)(5), losses are computed separately
in each category of income described in
section 904(d)(1) or §1.904–4(m) (sepa-
rate category). Section 904(g) concerns
rules relating to overall domestic losses
(ODLs) and the consequences of such
losses. Paragraph (b) of this section de-
fines terms and provides computational
and accounting rules, including rules re-
garding recapture. Paragraph (c) of this
section provides rules that apply to OFLs,
SLLs, and ODLs when a member becomes
or ceases to be a member of a group.
Paragraph (d) of this section provides a
predecessor and successor rule. Paragraph
(e) of this section provides effective dates.
(b)Consolidated application of section
904(f) and (g). A group applies section
904(f) and (g) for a consolidated return
year in accordance with that section, sub-
ject to the following rules:
(1)Computation of CSLI or CSLL
and consolidated U.S.-source taxable in-
come or CDL. The group computes its
consolidated separate limitation income
(CSLI) or consolidated separate limitation
loss (CSLL) for each separate category
under the principles of §1.1502–11 by ag-
gregating each member’s foreign-source
taxable income or loss in such separate
category computed under the principles of
§1.1502–12, and taking into account the
foreign portion of the consolidated items
described in §1.1502–11(a)(2) through
(8) for such separate category. The group
computes its consolidated U.S.-source
taxable income or consolidated domestic
loss (CDL) under similar principles.
(2)Netting CSLLs, CSLIs, and consol-
idated U.S.-source taxable income.The
group applies section 904(f)(5) to deter-
mine the extent to which a CSLL for a
separate category reduces CSLI for an-
other separate category or consolidated
U.S.-source taxable income.
(3)Netting CDL and CSLI. The group
applies section 904(g)(2) to determine the
extent to which a CDL reduces CSLI.
(4)CSLL, COFL, and CODL accounts.
To the extent provided in section 904(f),
the amount by which a CSLL for a separate
category (the loss category) reduces CSLI
for another separate category (the income
category) shall result in the creation of (or
addition to) a CSLL account for the loss
category with respect to the income cat-
egory. Likewise, the amount by which a
CSLL for a loss category reduces consoli-
dated U.S.-source taxable income will cre-
ate (or add to) a consolidated overall for-
eign loss account (a COFL account). To
the extent provided in section 904(g), the
amount by which a CDL reduces CSLI
shall result in the creation of (or addition
to) a consolidated overall domestic loss
(CODL) account for the income category
reduced by the CDL.
(5)Recapture of COFL, CSLL, and
CODL accounts. In the case of a COFL ac-
count for a loss category, section 904(f)(1)
and (3) recharacterizes some or all of the
foreign-source income in the loss category
2008–8 I.R.B.459February 25, 2008

as U.S.-source income. In the case of a
CSLL account for a loss category with
respect to an income category, section
904(f)(5)(C) and (F)recharacterizes some
or all of the foreign-source income in the
loss category as foreign-source income
in the income category. In the case of a
CODL account, section 904(g)(3) rechar-
acterizes some of the U.S.-source income
as foreign-source income in the separate
category that was offset by the CDL. The
COFL account, CSLL account, or CODL
account is reduced to the extent income
is recharacterized with respect to such
account.
(6)Intercompany transactions—(i)
Nonapplication of section 904(f) disposi-
tion rules. Neither section 904(f)(3) (in
the case of a COFL account) nor section
904(f)(5)(F) (in the case of a CSLL ac-
count) applies at the time of a disposition
that is an intercompany transaction to
which §1.1502–13 applies. Instead, sec-
tion 904(f)(3) and (5)(F) applies only at
such time and only to the extent that the
group is required under §1.1502–13 (with-
out regard to section 904(f)(3) and (5)(F))
to take into account any intercompany
items resulting from the disposition, based
on the COFL or CSLL account existing
attheendoftheconsolidated return year
during which the group takes the inter-
company items into account.
(ii)Examples. Paragraph (b)(6)(i) of
this section is illustrated by the follow-
ing examples. The identity of the par-
ties and the basic assumptions set forth
in §1.1502–13(c)(7)(i) apply to the exam-
ples. Except as otherwise stated, assume
further that the consolidated group recog-
nizes no foreign-source income other than
as a result of the transactions described.
The examples are as follows:
Example 1. (i) On June 10, year 1, S transfers
nondepreciable property with a basis of $100 and a
fair market value of $250 to B in a transaction to
which section 351 applies. The property was pre-
dominantly used without the United States in a trade
or business, within the meaning of section 904(f)(3).
B continues to use the property without the United
States. The group has a COFL account in the rele-
vant loss category of $120 as of December 31, year
1.
(ii) Because the contribution from S to B is an
intercompany transaction, section 904(f)(3) does not
apply to result in any gain recognition in year 1. See
paragraph (b)(5)(i) of this section.
(iii) On January 10, year 4, B ceases to be a mem-
ber of the group. Because S did not recognize gain
in year 1 under section 351, no gain is taken into ac-
count in year 4 under §1.1502–13. Thus, no portion
of the group’s COFL account is recaptured in year 4.
For rules requiring apportionment of a portion of the
COFL account to B, see paragraph (c)(2) of this sec-
tion.
Example 2. (i) The facts are the same as in para-
graph (i) ofExample 1. On January 10, year 4, B sells
the property to X for $300. As of December 31, year
4, the group’s COFL account is $40. (The COFL ac-
count was reduced between year 1 and year 4 due to
unrelated foreign-sourceincome taken into account
by the group.)
(ii) B takes into account gain of $200 in year 4.
The $40 COFL account in year 4 recharacterizes $40
of the gain as U.S. source. See section 904(f)(3).
Example 3. (i) On June 10, year 1, S sells nonde-
preciable property with a basis of $100 and a fair mar-
ket value of $250 to B for $250 cash. The property
was predominantly used without the United States in
a trade or business, within the meaning of section
904(f)(3). The group has a COFL account in the rele-
vant loss category of $120 as of December 31, year 1.
B predominantly uses the property in a trade or busi-
ness without the United States.
(ii) Because the sale is an intercompany transac-
tion, section 904(f)(3) does not require the group to
take into account any gain in year 1. Thus, under
paragraph (b)(5)(i) of this section, the COFL account
is not reduced in year 1.
(iii) On January 10, year 4, B sells the property to
X for $300. As of December 31, year 4, the group’s
COFL account is $60. (The COFL account was re-
duced between year 1 and year 4 due to unrelated for-
eign-source income taken into account by the group.)
(iv) In year 4, S’s $150 intercompany gain and
B’s $50 corresponding gain are taken into account to
produce the same effect on consolidated taxable in-
come as if S and B were divisions of a single corpora-
tion. See §1.1502–13(c). All of B’s $50 correspond-
ing gain is recharacterized under section 904(f)(3). If
S and B were divisions of a single corporation and
the intercompany sale were a transfer between the
divisions, B would succeed to S’s $100 basis in the
property and would have $200 of gain ($60 of which
would be recharacterized under section 904(f)(3)), in-
stead of a $50 gain. Consequently, S’s $150 inter-
company gain and B’s $50 corresponding gain are
taken into account, and $10 of S’s gain is recharacter-
ized under section 904(f)(3) as U.S. source income to
reflect the $10 difference between B’s $50 recharac-
terized gain and the $60 recomputed gain that would
have been recharacterized.
(c)Becoming or ceasing to be a mem-
ber of a group—(1)Adding separate ac-
counts on becoming a member. At the time
that a corporation becomes a member of a
group (a new member), the group adds to
the balance of its COFL, CSLL or CODL
account the balance of the new member’s
corresponding OFLaccount, SLL account
or ODL account. A new member’s OFL
account corresponds to a COFL account if
the account is for the same loss category. A
new member’s SLL account corresponds
to a CSLL account if the account is for the
same loss category and with respect to the
same income category. A new member’s
ODL account corresponds to a CODL ac-
count if the account is with respect to the
same income category. If the group does
not have a COFL, CSLL or CODL account
corresponding to the new member’s ac-
count, it creates a COFL, CSLL or CODL
account with a balance equal to the balance
of the member’s account.
(2)Apportionment of consolidated ac-
count to departing member—(i)In gen-
eral. A group apportions to a member that
ceases to be a member (a departing mem-
ber) a portion of each COFL, CSLL and
CODL account as of the end of the year
during which the member ceases to be a
member and after the group makes the ad-
ditions or reductions to such account re-
quired under paragraphs (b)(4), (b)(5) and
(c)(1) of this section (other than an addi-
tion under paragraph (c)(1) of this section
attributable to a member becoming a mem-
ber after the departing member ceases to be
a member). The group computes such por-
tion under paragraph (c)(2)(ii) of this sec-
tion, as limited by paragraph (c)(2)(iii) of
this section. The departing member carries
such portion to its first separate return year
after it ceases to be a member. Also, the
group reduces each account by such por-
tion and carries such reduced amount to its
first consolidated return year beginning af-
ter the year in which the member ceases
to be a member. If two or more mem-
bers cease to be members in the same year,
the group computes the portion allocable
to each such member (and reduces its ac-
counts by such portion) in the order that the
members cease to be members.
(ii)Departing member’s portion of
group’s account. A departing member’s
portion of a group’s COFL, CSLL or
CODL account for a loss category is com-
puted based upon the member’s share
of the group’s assets that generate in-
come subject to recapture at the time
that the member ceases to be a member.
Under the characterization principles of
§§1.861–9T(g)(3) and 1.861–12T, the
group identifies the assets of the departing
member and the remaining members that
generate U.S.-source income (domestic
assets) and foreign-source income (for-
eign assets) in each separate category.
The assets are characterized based upon
the income that the assets are reasonably
expected to generate after the member
ceases to be a member. The member’s
portion of a group’s COFL or CSLL ac-
February 25, 20084602008–8 I.R.B.

count for a loss category is the group’s
COFL or CSLL account, respectively,
multiplied by a fraction, the numerator of
which is the value of the member’s for-
eign assets for the loss category and the
denominator of which is the value of the
foreign assets of the group (including the
departing member) for the loss category.
The member’s portion of a group’s CODL
account for each income category is the
group’s CODL account multiplied by a
fraction, the numerator of which is the
value of the member’s domestic assets and
the denominator of which is the value of
the domestic assets of the group (includ-
ing the departing member). The value of
the domestic and foreign assets is deter-
mined under the asset valuation rules of
§1.861–9T(g)(1) and (2) using either tax
book value or fair market value under the
method chosen by the group for purposes
of interest apportionment as provided in
§1.861–9T(g)(1)(ii). For purposes of this
paragraph (c)(2)(ii), §1.861–9T(g)(2)(iv)
(assets in intercompany transactions) shall
apply, but §1.861–9T(g)(2)(iii) (adjust-
ments for directly allocated interest) shall
not apply. If the group uses the tax book
value method, the member’s portions of
COFL, CSLL, and CODL accounts are
limited by paragraph (c)(2)(iii) of this
section. In addition, for purposes of this
paragraph (c)(2)(ii), the tax book value of
assets transferred in intercompany trans-
actions shall be determined without regard
to previously deferred gain or loss that is
taken into account by the group as a result
of the transaction in which the member
ceases to be a member. The assets should
be valued at the time the member ceases
to be a member, but values on other dates
may be used unless this creates substantial
distortions. For example, if a member
ceases to be a member in the middle of
the group’s consolidated return year, an
average of the values of assets at the be-
ginning and end of the year (as provided
in §1.861–9T(g)(2)) may be used or, if a
member ceases to be a member in the early
part of the group’s consolidated return
year, values at the beginning of the year
may be used, unless this creates substan-
tial distortions.
(iii)Limitation on member’s portion for
groups using tax book value method.Ifa
group uses the tax book value method of
valuing assets for purposes of paragraph
(c)(2)(ii) of this section and the aggre-
gate of a member’s portions of COFL and
CSLL accounts for a loss category (with
respect to one or more income categories)
determined under paragraph (c)(2)(ii) of
this section exceeds 150 percent of the ac-
tual fair market value of the member’s for-
eign assets in the loss category, the mem-
ber’s portion of the COFL or CSLL ac-
counts for the loss category shall be re-
duced (proportionately, in the case of mul-
tiple accounts) by such excess. In addition,
if the aggregate of a member’s portions
of CODL accounts (with respect to one or
more income categories) determined under
paragraph (c)(2)(ii) of this section exceeds
150 percent of the actual fair market value
of the member’s domestic assets, the mem-
ber’s portion of the CODL accounts shall
be reduced (proportionately, in the case of
multiple accounts) by such excess. This
rule does not apply in the case of COFL
or CSLL accounts if the departing mem-
ber and all other members that cease to be
members as part of the same transaction
own all (or substantially all) the foreign as-
sets in the loss category. In the case of
CODL accounts, this rule does not apply if
the departing member and all other mem-
bers that cease to be members as part of the
same transaction own all (or substantially
all) the domestic assets.
(iv)Determination of values of domes-
tic and foreign assets binding on depart-
ing member. The group’s determination of
the value of the member’s and the group’s
domestic and foreign assets for a loss cate-
gory is binding on the member, unless the
Commissioner concludes that the determi-
nation is not appropriate. The common
parent of the group must attach a statement
to the return for the taxable year that the
departing member ceases to be a member
of the group that sets forth the name and
taxpayer identification number of the de-
parting member, the amount of each COFL
and CSLL for each loss category and each
CODL that is apportioned to the depart-
ing member under this paragraph (c)(2),
the method used to determine the value
of the member’s and the group’s domestic
and foreign assets in each such loss cate-
gory, and the value of the member’s and
the group’s domestic and foreign assets in
each such loss category. The common par-
ent must also furnish a copy of the state-
ment to the departing member.
(v)Anti-abuse rule. If a corporation be-
comes a member and ceases to be a mem-
ber, and a principal purpose of the corpo-
ration becoming and ceasing to be a mem-
ber is to transfer the corporation’s OFL ac-
count, SLL account or ODL account to
the group or to transfer the group’s COFL,
CSLL or CODL account to the corpora-
tion, appropriate adjustments will be made
to eliminate the benefit of such a trans-
fer of accounts. Similarly, if any member
acquiresassetsordisposesofassets(in-
cluding a transfer of assets between mem-
bers of the group and the departing mem-
ber) with a principal purpose of affecting
the apportionment of accounts under para-
graph (c)(2)(i) of this section, appropriate
adjustments will be made to eliminate the
benefit of such acquisition or disposition.
(vi)Examples. The following examples
illustrate the rules of this paragraph (c):
Example 1. (i) On November 6, year 1, S, a mem-
ber of the P group, a consolidated group with a calen-
dar consolidated return year, ceases to be a member
of the group. On December 31, year 1, the P group
has a $40 COFL account for the general category, a
$20 CSLL account for the general category (that is,
the loss category) with respect to the passive category
(that is, the income category), and a $10 CODL ac-
count with respect to the passive category (that is, the
income category). No member of the group has for-
eign-source income or loss in year 1. The group ap-
portions its interest expense according to the tax book
value method.
(ii) On November 6, year 1, the group identifies
S’s assets and the group’s assets (including S’s assets)
expected to produce foreign-source general category
income. Use of end-of-the-year values will not create
substantial distortions in determining the relative val-
ues of S’s and the group’s relevant assets on Novem-
ber 6, year 1. The group determines that S’s relevant
assets have a tax book value of $2,000 and a fair mar-
ket value of $2,200. Also, the group’s relevant assets
(including S’s assets) have a tax book value of $8,000.
On November 6, year 1, S has no assets expected to
produce U.S. source income.
(iii) Under paragraph (c)(2)(ii) of this section, S
takes a $10 COFL account for the general category
($40 x $2000/$8000) and a $5 CSLL account for the
general category with respect to the passive category
($20 x $2000/$8000). S does not take any portion of
the CODL account. The limitation described in para-
graph (c)(2)(iii) of this section does not apply because
the aggregate of the COFL and CSLL accounts for the
general category that are apportioned to S ($15) is less
than 150 percent of the actual fair market value of S’s
general category foreign assets ($2,200 x 150%).
Example 2. (i) Assume the same facts as inExam-
ple 1, except that the fair market value of S’s general
category foreign assets is $4 as of November 6, year
1.
(ii) Under paragraph (c)(2)(iii) of this section, S’s
COFL and CSLL accounts for the general category
must be reduced by $9, which is the excess of $15 (the
aggregate amount of the accounts apportioned under
paragraph (c)(2)(ii) of this section) over $6 (150 per-
cent of the $4 actual fair market value of S’s general
2008–8 I.R.B.461February 25, 2008

category foreign assets). S thus takes a $4 COFL ac-
count for the general category ($10 - ($9 x $10/$15))
and a $2 CSLL account for the general category with
respect to the passive category ($5 - ($9 x $5/$15)).
Example 3. (i) Assume the same facts as inExam-
ple 1, except that S also has assets that are expected
to produce U.S. source income.
(ii) On November 6, year 1, the group identifies
S’s assets and the group’s assets (including S’s as-
sets) expected to produce U.S. source income. Use
of end-of-the-year values will not create substantial
distortions in determining the relative values of S’s
and the group’s relevant assets on November 6, year
1. The group determines that S’s relevant assets have
a tax book value of $3,000 and a fair market value of
$2,500. Also, the group’s relevant assets (including
S’s assets) have a tax book value of $6,000.
(iii) Under paragraph (c)(2)(ii) of this section, S
takes a $5 CODL account ($10 x $3,000/$6,000), in
addition to the COFL and CSLL accounts determined
inExample 1. The limitation described in paragraph
(c)(2)(iii) of this section does not apply because the
CODL account that is apportioned to S ($5) is less
than 150 percent of the actual fair market value of S’s
U.S. assets ($2,500 x 150%).
(d)Predecessor and successor.Aref-
erence to a member includes, as the con-
text may require, a reference to a prede-
cessor or successor of the member. See
§1.1502–1(f).
(e)Effective/applicability date.This
section applies to consolidated return years
beginning after December 21, 2007. Tax-
payers may choose to apply the provisions
of this section relating to overall domes-
tic losses to other consolidated return years
beginning after December 31, 2006, as
well. For rules relating to overall for-
eign losses and separate limitation losses
in consolidated return years beginning on
or before December 21, 2007, see 26 CFR
1.1502–9 (revised as of April 1, 2007).
(f)Expiration date. The applicability of
this section expires on December 20, 2010.
Linda E. Stiff,
Deputy Commissioner for
Services and Enforcement.
Approved December 14, 2007.
Eric Solomon,
Assistant Secretary of
theTreasury(TaxPolicy).
(Filed by the Office of the Federal Register on December 20,
2007, 8:45 a.m., and published in the issue of the Federal
Register for December 21, 2007, 72 F.R. 72592)
Section 6103.—Confi-
dentiality and Disclosure
of Returns and Return
Information
26 CFR 301.6103(j)(1)–1: Disclosures of return in-
formation reflected on returns to officers and employ-
ees of the Department of Commerce for certain sta-
tistical purposes and related activities.
T.D. 9372
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 301
Disclosure of Return
Information to the Bureau
of the Census
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulation.
SUMMARY: This document contains
a final regulation relating to the list of
items of return information disclosed to
the Bureau of the Census (Bureau). The
regulation adds two items of return infor-
mation for use in producing demographic
statistics programs, including the Bureau’s
Small Area Income and Poverty Esti-
mates (SAIPE). The final regulation also
removes four items that the Bureau has
indicated are no longer necessary. This
regulation facilitates the assistance of the
IRS to the Bureau in its statistics programs
and requires no action by taxpayers and
has no effect on their tax liabilities.
DATES:Effective Date:This regulation is
effective on December 27, 2007.
Applicability Date:For dates of appli-
cability, see §301.6103(j)(1)–1.
FOR FURTHER INFORMATION
CONTACT: Glenn Melcher, (202)
622–4570 (not a toll-free number).
SUPP
LEMENTARY INFORMATION:
Background
Under section 6103(j)(1), upon written
request from the Secretary of Commerce,
the Treasury Secretary is to furnish to the
Bureau of the Census (Bureau) return in-
formation as may be prescribed by Trea-
sury regulations for the purpose of, but
only to the extent necessary in, structur-
ing censuses and conducting related statis-
tical activities authorized by law. Section
301.6103(j)(1)–1 of the regulations further
defines such purposes by reference to 13
U.S.C. chapter 5 and provides an itemized
description of the return information au-
thorized to be disclosed for such purposes.
This document adopts a final regula-
tion that authorizes the IRS to disclose the
additional items of return information that
have been requested by the Secretary of
Commerce in developing and preparing
demographic statistics, including statu-
torily mandated Small Area Income and
Poverty Estimates (SAIPE). The final
regulation also removes certain items of
return information that are authorized to
bedisclosedintheexistingregulationbut
that the Secretary of Commerce has indi-
cated are no longer needed.
The final regulation in this issue of
the Bulletin amends the Procedure and
Administration Regulations (26 CFR Part
301) relating to Internal Revenue Code
(Code) section 6103(j)(1). The final
regulation contains rules relating to the
disclosure of return information reflected
on returns to officers and employees of the
Department of Commerce for structuring
censuses and conducting related statistical
activities authorized by law.
A notice of proposed rulemaking
(REG–147195–04, 2005–1 C.B. 888 [70
FR 12166–01]) was published in theFed-
eral Registeron March 11, 2005. No
comments were received from the pub-
lic in response to the notice of proposed
rulemaking. No public hearing was re-
quested or held. The proposed regulation
is adopted by this Treasury decision.
Explanation of Provisions
As duly requested by the Secretary of
Commerce and set forth in the proposed
regulation, this final regulation permits
disclosure to the Bureau of earned in-
come and the number of Earned Income
Credit-eligible qualifying children.
The regulation also removes four items
of return information that the Bureau
indicated it no longer requires. These
items are: 1) end-of-year code; 2) months
February 25, 20084622008–8 I.R.B.

actively operated; 3) total number of doc-
uments and the total amount reported on
the Form 1096 (Annual Summary and
Transmittal of U.S. Information Returns)
transmitting Forms 1099–MISC (Mis-
cellaneous Income); and 4) Form 941
(Employer’s QUARTERLY Federal Tax
Return)indicator and business address on
Schedule C (Profit or Loss From Business)
of Form 1040. Accordingly, the regulation
has removed these items of return infor-
mation from those that may be disclosed
to the Bureau.
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 determined
that section 553(b) of the Administrative
Procedure Act (5 U.S.C. chapter 5) does
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. Pursuant to section 7805(f)
of the Code, the NPRM preceding this reg-
ulation was submitted to the Chief Counsel
for Advocacy of the Small Business Ad-
ministration for comment on its impact on
small businesses.
Drafting Information
The principal author of this regulation
is Glenn Melcher, Office of the Associate
Chief Counsel (Procedure & Administra-
tion).
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR Part 301 is
amended as follows:
PART 301—PROCEDURE AND
ADMINISTRATION
Paragraph 1. The authority citation for
part 301 continues to read in part as fol-
lows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 301.6103(j)(1)–1 is
amended by:
1. Revising paragraphs (b)(1) intro-
ductory text and (b)(3) introductory text,
(b)(3)(xvii), (b)(3)(xviii), (b)(3)(xix),
(b)(3)(xx), (b)(3)(xxi), (b)(3)(xxii),
(b)(3)(xxiii), (b)(3)(xxiv), and (e).
2. Adding paragraphs (b)(1)(xvi) and
(b)(1)(xvii).
3. Removing and reserving paragraph
(b)(3)(xxv).
The revisions and additions read as fol-
lows:
§301.6103(j)(1)–1 Disclosures of return
information reflected on returns to officers
and employees of the Department of
Commerce for certain statistical purposes
and related activities.
*****
(b)Disclosure of return information re-
flected on returns to officers and employ-
ees of the Bureau of the Census.(1)Of-
ficers or employees of the Internal Rev-
enue Service will disclose the following
return information reflected on returns of
individual taxpayers to officers and em-
ployees of the Bureau of the Census for
purposes of, but only to the extent neces-
sary in, conducting and preparing, as au-
thorized by chapter 5 of title 13, United
States Code, intercensal estimates of popu-
lation and income for all geographic areas
included in the population estimates pro-
gram and demographic statistics programs,
censuses, and related program evaluation:
*****
(xvi) Earned Income (as defined in sec-
tion 32(c)(2)).
(xvii) Number of Earned Income Tax
Credit-eligible qualifying children.
*****
(b)(3) Officers or employees of the In-
ternal Revenue Service will disclose the
following business-related return infor-
mation reflected on returns of taxpayers
to officers and employees of the Bureau
of the Census for purposes of, but only
to the extent necessary in, conducting
and preparing, as authorized by chapter
5 of title 13, United States Code, demo-
graphic and economic statistics programs,
censuses, and surveys. (The “returns of
taxpayers” include, but are not limited to:
Form 941; Form 990 series; Form 1040
series and Schedules C and SE; Form
1065 and all attending schedules and Form
8825; Form 1120 series and all attend-
ing schedules and Form 8825; Form 851;
Form 1096; and other business returns,
schedules and forms that the Internal Rev-
enue Service may issue.):
*****
(xvii) Principal industrial activity code,
including the business description.
(xviii) Consolidated return indicator.
(xix) Wages, tips, and other compensa-
tion.
(xx) Social Security wages.
(xxi) Deferred wages.
(xxii) Social Security tip income.
(xxiii) Total Social Security taxable
earnings.
(xxiv) Gross distributions from em-
ployer-sponsored and individual retire-
ment plans from Form 1099–R.
(xxv) [Reserved].
*****
(e)Effective/applicability date.This
section is applicable to disclosures to the
Bureau of the Census on or after Decem-
ber 27, 2007.
LindaE.Stiff,
Deputy Commissioner for
Services and Enforcement.
Approved December 18, 2007.
Eric Solomon,
Assistant Secretary of
theTreasury(TaxPolicy).
(Filed by the Office of the Federal Register on December 26,
2007, 8:45 a.m., and published in the issue of the Federal
Register for December 27, 2007, 72 F.R. 73261)
26 CFR 301.6103(j)(1)–1T: Disclosures of return in-
formation reflected on returns to officers and employ-
ees of the Department of Commerce for certain sta-
tistical purposes and related activities (temporary).
T.D. 9373
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 301
Disclosure of Return
Information to the Bureau
of the Census
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Temporary regulation.
2008–8 I.R.B.463February 25, 2008

SUMMARY: This document contains a
temporary regulation that adds an addi-
tional item of return information that may
be disclosed to the Bureau of the Census
(Bureau). The regulation adds one item of
return information for use in the Bureau’s
annual Survey of Industrial Research and
Development. The temporary regulation
provides guidance to IRS personnel re-
sponsible for disclosing the information.
This regulation facilitates the assistance of
the IRS to the Bureau in its statistics pro-
grams and requires no action by taxpayers
and has no effect on their tax liabilities.
The text of the temporary regulation also
serves as the text of the proposed regula-
tion (REG–147832–07) set forth in this
issue of the Bulletin.
DATES:Effective Date:This regulation is
effective on December 31, 2007.
Applicability Date:For dates of appli-
cability, see §301.6103(j)(1)–1T(e).
FOR FURTHER INFORMATION
CONTACT: Glenn Melcher, (202)
622–4570 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
Under section 6103(j)(1)(A), upon
written request from the Secretary of Com-
merce, the Treasury Secretary is to furnish
to the Bureau of the Census (Bureau) re-
turn information as may be prescribed
by Treasury regulations for the purpose
of, but only to the extent necessary in,
structuring censuses and conducting re-
lated statistical activities authorized by
law. Section 301.6103(j)(1)–1 of the reg-
ulations further defines such purposes by
reference to 13 U.S.C. chapter 5 and pro-
vides an itemized description of the return
information authorized to be disclosed for
such purposes.
This document adopts a temporary reg-
ulation that authorizes the IRS to disclose
an additional item of return information,
which has been requested by the Secre-
tary of Commerce, that is necessary for the
Bureau’s annual Survey of Industrial Re-
search and Development.
The temporary regulation in this issue
of the Bulletin amends the Procedure and
Administration Regulations (26 CFR Part
301) relating to Internal Revenue Code
(Code) section 6103(j)(1)(A). This amend-
ment to the regulation contains rules re-
lating to the disclosure of return informa-
tion reflected on returns to officers and em-
ployees of the Department of Commerce
for structuring censuses and conducting
related statistical activities authorized by
law.
Explanation of Provisions
By letter dated February 6, 2006, the
Secretary of Commerce requested that
an additional item of return information
be disclosed to the Bureau for purposes
related to the Bureau’s annual Survey of
Industrial Research and Development.
Specifically, the Secretary of Commerce
requested categorical information on to-
tal qualified research expenses in three
ranges: greater than zero, but less than $1
million; greater than or equal to $1 mil-
lion, but less than $3 million; and, greater
than or equal to $3 million. The request
indicates that becauseof the small number
of companies with research and devel-
opment expenses it is difficult to design
an efficient sample that produces reliable
estimates. Data on total qualified research
expenses from the Form 6765,Credit for
Increasing Research Activities, will assist
the Bureau in identifying companies that
are actively engaged in research and de-
velopment activities for the annual Survey
of Industrial Research and Development.
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 this regulation. For
applicability of the Regulatory Flexibility
Act (5 U.S.C. chapter 6), please refer to the
cross-referenced notice of proposed rule-
making published elsewhere in this issue
of the Bulletin. Pursuant to section 7805(f)
of the Code, this regulation has been sub-
mitted 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 this temporary
regulation is Glenn Melcher, Office of the
Associate Chief Counsel (Procedure &
Administration).
*****
Amendments to the Regulations
Accordingly, 26 CFR Part 301 is
amended as follows:
PART 301—PROCEDURE AND
ADMINISTRATION
Paragraph 1. The authority citation for
part 301 continues to read in part as fol-
lows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 301.6103(j)(1)–1T is
amended by revising paragraphs (a), (b),
and (e) and removing paragraph (f) to read
as follows:
§301.6103(j)(1)–1T Disclosure of return
information reflected on returns to officers
and employees of the Department of
Commerce for certain statistical purposes
and related activities (temporary).
(a) through (b)(3)(xxiv) [Reserved]. For
further guidance, see §301.6103(j)1)–1(a)
and (b)(1) through (b)(3)(xxiv).
(xxv) From Form 6765 (when filed with
corporation income tax returns) — total
qualified research expenses.
*****
(e)Effective/applicability date.This
section is applicable to disclosures to the
Bureau of Economic Analysis on or after
July 6, 2006. The amendment to paragraph
(b)(3)(xxv) of this section is applicable to
disclosures to the Bureau of the Census
on or after December 31, 2007. The ap-
plicability of the amendment to paragraph
(b)(3)(xxv) expires on or before December
28, 2010.
LindaE.Stiff,
Deputy Commissioner for
Services and Enforcement.
Approved December 18, 2007.
Eric Solomon,
Assistant Secretary of
theTreasury(TaxPolicy).
(Filed by the Office of the Federal Register on December 28,
2007, 8:45 a.m., and published in the issue of the Federal
Register for December 31, 2007, 72 F.R. 74192)
February 25, 20084642008–8 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous
2008 Calendar Year Resident
Population Estimates
Notice 2008–22
This notice informs (1) state and lo-
cal housing credit agencies that allocate
low-income housing tax credits under
§ 42 of the Internal Revenue Code and
(2) states and other issuers of tax-exempt
private activity bonds under § 141, of
the proper population figures to be used
for calculating the 2008 calendar year
population-based component of the state
housing credit ceiling (Credit Ceiling)
under § 42(h)(3)(C)(ii), the 2008 calen-
dar year volume cap (Volume Cap) under
§ 146, and the 2008 volume limit (Volume
Limit) under § 142(k)(5).
The population figures both for the
population-based component of the Credit
Ceiling and for the Volume Cap are de-
termined by reference to § 146(j). That
section provides generally that determina-
tions of population for any calendar year
are made on the basis of the most recent
census estimate of the resident population
of a state (or issuing authority) released
by the U.S. Census Bureau before the
beginning of such calendar year. Section
142(k)(5) provides that the Volume Limit
is based on the State population.
The population-based component of
the Credit Ceiling and the Volume Cap
are adjusted for inflation pursuant to
§§ 42(h)(3)(H) and 146(d)(2), respec-
tively. The adjustments for the 2008
calendar year were published in Rev. Proc.
2007–66, 2007–45 I.R.B. 970. Section
3.08 of Rev. Proc. 2007–66 provides
that, for calendar year 2008, the amounts
used under § 42(h)(3)(C)(ii) to calculate
the Credit Ceiling is the greater of $2.00
multiplied by the State population (see
the resident population figures provided
below) or $2,325,000. Further, section
3.16 of Rev. Proc. 2007–66 provides
that the amounts used under § 146(d)(1)
to calculate the Volume Cap for calendar
year 2008 is the greater of $85 multiplied
by the State population (see the resident
population figures provided below) or
$262,095,000.
The proper population figures for calcu-
lating the Credit Ceiling, the Volume Cap,
and the Volume Limit for the 2008 cal-
endar year are the estimates of the resi-
dent population of the 50 states, the Dis-
trict of Columbia, and Puerto Rico released
by the U.S. Census Bureau on Decem-
ber 27, 2007, in Press Release CB07–184.
The proper population figures for calcu-
lating the Credit Ceiling, the Volume Cap,
and the Volume Limit for the 2008 calen-
dar year for the insular areas (American
Samoa, Guam, Northern Mariana Islands,
and U.S. Virgin Islands) are the figures re-
leased electronically by the U.S. Census
Bureau on July 17, 2003, and referenced in
Census Bureau Tip Sheet TP03–16, dated
August 8, 2003. For convenience, these
estimates are reprinted below.
Resident
Population Figures
Alabama
4,627,851
Alaska683,478
American Samoa
57,663
Arizona
6,338,755
Arkansas2,834,797
Califo
rnia
36,553,215
Colorado
4,861,515
Connecticut
3,502,309
Delaware864,764
D.C.
588,292
Florida
18,251,243
Georgia
9,544,750
Guam
17
3,456
H
awaii
1
,283,388
Idaho1,499,402
Illinois
12,852,548
Indiana
6,345,289
Iowa2,988,046
Kansas
2,775,997
Kentucky4,241,474
2008–8 I.R.B.465February 25, 2008

Louisiana4,293,204
Maine1,317,207
Maryland
5,618,344
Massachusett
s
6,449,755
Michigan10,071,822
Minnesota
5,197,621
Mississippi
2,918,785
Missouri
5,878,415
Montana
957,861
Nebraska
1,774,571
Nevada
2,565,382
New Hampshire
1,315,828
New Jersey
8,685,9
20
New Mexico
1,969,915
New Yor
k
19,297
,729
North Carolina9,061,032
North Dakota
639,715
Northern Mariana Islands
84,546
Ohio11,466,917
Okla
homa
3,61
7,316
Oregon
3,747,455
Pennsylvania12,432,792
Puerto Rico
3,
941,459
Rh
ode Island
1,057,832
South Carolina4,407,709
South Dakota796,214
Tennessee
6,156,719
Texas23,904,380
U.S. Virgin Islands108,448
Utah
2,645,330
Vermont
621,254
Virginia7,712,091
Washington6,468,424
West Virginia
1,812,035
Wisconsin
5,601,640
Wyoming
522,830
The principal authors of this notice are
Christopher J. Wilson, Office of the As-
sociate Chief Counsel (Passthroughs and
Special Industries) and Timothy L. Jones,
Office of the Associate Chief Counsel (Fi-
nancial Institutions and Products). For fur-
ther information regarding this notice, con-
tact Mr. Wilson at (202) 622–3040 (not a
toll-free call).
Update for Weighted Average
Interest Rates, Yield Curves,
and Segment Rates
Notice 2008–24
This notice provides guidance as to the
corporate bond weighted average interest
February 25, 20084662008–8 I.R.B.

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
January 2008 is 6.16 percent. Pursuant
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%
February2008
5.945.345.94
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 seg-
ment rates, and the funding transitional
segment rates used to compute the tar-
get normal cost and the funding target.
Pursuant to Notice 2007–81, the monthly
corporate bond yield curve derived from
January 2008 data is in Table I at the end
of this notice. The spot first, second, and
third segment rates for the month of Jan-
uary 2008 are, respectively, 4.39, 6.01,
and 6.72. The three 24-month average
corporate bond segment rates applicable
for February 2008 under the election of
§ 430(h)(2)(G)(iv) are as follows:
First
Segment
Second
Segment
Third
Segment
5.285.956.45
The transitional segment rates under
§ 430(h)(2)(G) applicable for February
2008, taking into account the corporate bond weighted average of 5.94 stated
above, are as follows:
For Plan Years
Beginning in
First
Segment
Second
Segment
Third
Segment
2008
5.725.94
6.11
2008–8 I.R.B.467February 25, 2008

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 January 2008 is 4.33 percent.
The Service has determined this rate as the
monthly average of the daily determina-
tion of yield on the 30-year Treasury bond
maturing in May 2037.
MINIMUM PRESENT VALUE
SEGMENT RATES
Generally for plan years beginning af-
ter December 31, 2007, the applicable in-
terest rates under § 417(e)(3)(D) are seg-
ment rates computed without regard to a
24 month average. For plan years begin-
ning in 2008 through 2011, the applica-
ble interest rate is the monthly spot seg-
ment rate blended with the applicable rate
under § 417(e)(3)(A)(ii)(II) as in effect
for plan years beginning in 2007. Notice
2007–81 provides guidelines for determin-
ing the minimum present value segment
rates. Pursuant to that notice, the min-
imum present value transitional segment
rates determined for January 2008, tak-
ing into account the January 2008 30-year
Treasury rate of 4.33 stated above, are as
follows:
For Plan Years
Beginning in
First
Segment
Second
Segment
Third
Segment
20084.344.674.81
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.
February 25, 20084682008–8 I.R.B.

Table I
Monthly Yield Curve for January 2008
Maturity YieldMaturity YieldMaturity YieldMaturity YieldMaturity Yield
0.5
4.06
20.5
6.49
40.5
6.74
60.5
6.83
80.5
6.87
1.04.0621.0
6.51
41.0
6.75
61.06.8381.06.87
1.5
4.09
21.56.5241.56.7561.5
6.83
81.5
6.87
2.04.1622.0
6.53
42.0
6.75
62.06.8382.06.87
2.54.2522.56.5442.56.7562.5
6.83
82.5
6.88
3.04.3723.0
6.55
43.06.7663.06.8483.06.88
3.54.5123.56.5643.5
6.76
63.5
6.84
83.5
6.88
4.0
4.65
24.0
6.57
44.06.7664.06.8484.06.88
4.5
4.78
24.56.5744.5
6.77
64.5
6.84
84.5
6.88
5.0
4.92
25.06.5845.0
6.77
65.0
6.84
85.0
6.88
5.55.0425.5
6.59
45.5
6.77
65.5
6.84
85.5
6.88
6.0
5.16
26.06.6046.06.7766.06.8486.06.88
6.55.2726.5
6.61
46.5
6.78
66.5
6.84
86.5
6.88
7.0
5.38
27.06.6147.06.7867.0
6.85
87.06.88
7.55.4827.5
6.62
47.5
6.78
67.56.8587.5
6.88
8.0
5.57
28.06.6348.06.7868.0
6.85
88.06.88
8.55.6528.5
6.63
48.5
6.79
68.56.8588.5
6.88
9.0
5.73
29.0
6.64
49.06.7969.0
6.85
89.0
6.88
9.5
5.80
29.5
6.65
49.5
6.79
69.5
6.85
89.5
6.89
10.0
5.87
30.0
6.6550.0
6.79
70.0
6.85
90.06.89
10.5
5.93
30.5
6.66
50.5
6.79
70.56.85
90.5
6.89
11.05.9931.06.66
51.0
6.8071.0
6.85
91.06.89
11.5
6.04
31.5
6.67
51.5
6.80
71.5
6.8691.5
6.89
12.0
6.09
32.06.67
52.0
6.8072.06.86
92.06.89
12.5
6.13
32.5
6.68
52.5
6.80
72.5
6.8692.5
6.89
13.06.1733.06.68
53.0
6.8073.06.86
93.06.89
13.5
6.21
33.5
6.69
53.5
6.81
73.5
6.8693.5
6.89
14.06.2434.0
6.69
54.0
6.8174.06.86
94.06.89
14.5
6.27
34.5
6.70
54.5
6.81
74.5
6.8694.5
6.89
15.0
6.30
35.0
6.70
55.0
6.81
75.0
6.8695.0
6.89
15.5
6.32
35.5
6.71
55.5
6.81
75.5
6.8695.5
6.89
16.0
6.35
36.06.71
56.0
6.8176.06.86
96.06.89
16.5
6.37
36.5
6.71
56.5
6.82
76.5
6.8796.5
6.89
17.0
6.39
37.06.72
57.0
6.8277.06.87
97.06.89
17.5
6.41
37.5
6.72
57.5
6.82
77.5
6.8797.5
6.90
18.06.4238.06.73
58.
06.82 78.06.87
98.06.90
18.
56.44
38.
56.73
58.
56.82
78.
56.87 98.5
6.90
19.0
6.4
5
39.0
6.7359.06.82
79.0
6.87
99.06.90
19.56.4739.56.7459.56.8379.56.8799.5
6.90
20.06.4840.06.7460.06.8380.06.87100.0
6.90
2008–8 I.R.B.469February 25, 2008

Part IV. Items o
fGeneralInterest
Notice of Proposed
Rulemaking by
Cross-Reference to
Temporary Regulations
and Notice of Public Hearing
Treatment of Overall Foreign
and Domestic Losses
REG–141399–07
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 Bulletin,
the IRS is issuing temporary regulations
that provide guidance relating to the re-
capture of overall foreign and domestic
losses. Changes to the applicable law
were made by the American Jobs Cre-
ation Act of 2004, as corrected by the
Gulf Opportunity Zone Act of 2005. The
temporary regulations provide guidance
needed to comply with these changes, as
well as updated guidance with respect to
overall foreign losses and separate limi-
tation losses, and affect individuals and
corporations claimingforeign tax credits.
The text of those temporary regulations
(T.D. 9371) published in this issue of the
Bulletin also serves as the text of these
proposed regulations. This document also
provides a notice of public hearing on
these proposed regulations.
DATES: Written or electronic comments
must be received by March 20, 2008. Out-
lines of topics to be discussed at the pub-
lic hearing scheduled for April 10, 2008,
at 10 a.m. must be received by March 20,
2008.
ADDRESSES: Send submissions to
CC:PA:LPD:PR (REG–141399–07), 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–141399–07),
Courier’s desk, Internal Revenue Ser-
vice, 1111 Constitution Avenue, NW,
Washington, DC 20044, or sent elec-
tronically, via the Federal eRulemak-
ing Portal atwww.regulations.gov(IRS
REG–141399–07). The public hearing
will be held in the IRS Auditorium, Inter-
nal Revenue Building, 1111 Constitution
Avenue, NW, Washington, DC.
FOR FUR
THER INFORMATION
CONTAC
T: Concerning the regulations,
Jeffre
y L. Parry, (202) 622–3850 (not a
toll-
free number); concerning submis-
sions
of comments, the hearing, and/or
to be p
laced on the building access list
to att
end the hearing, Richard Hurst,
Richa
rd.A.Hurst@irscounsel.treas.gov.
SUPPLEMENTARY INFORMATION:
Background and Explanation of
Provisions
Tempo
rary regulations in this issue of
the B
ulletin amend the Income Tax Reg-
ulat
ions (26 CFR Part 1) providing rules
rela
ting to the recapture of overall domes-
tic l
osses under section 904(g) as well as
the r
ecapture of overall foreign losses and
sep
arate limitation losses under section
904
(f). The text of those regulations also
ser
ves as the text of these proposed reg-
ula
tions. The preamble to the temporary
reg
ulations explains the temporary regula-
ti
ons and these proposed regulations. The
re
gulations affect individuals and corpora-
ti
ons claiming foreign tax credits.
Special Analyses
It has been determined that this no-
tice of proposed rulemaking is not a
significant regulatory action as defined
in Executive Order 12866. Therefore,
a regulatory assessment is not required.
It has also been determined that section
553(b) of the Administrative Procedure
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
Regulatory Flexibility Act (5 U.S.C.
chapter 6) does not apply. Pursuant to
section 7805(f), these regulations have
been submitted to the Chief Counsel
for Advocacy of the Small Business
Administration for comment on its impact
on small business.
Comments and Public Hearing
Before these proposed regulations are
adopted as final regulations, consideration
will be given to any electronic or written
comments (a signed original and eight (8)
copies) that are submitted timely to the
IRS. The Treasury Department and the
IRS specifically request comments on the
clarity of the proposed regulations and
how they may be made easier to under-
stand. Moreover, the Treasury Department
and the IRS are considering providing
additional guidance on overall domestic
losses and separate limitation losses, as
well as further revisions to the overall
foreign loss provisions of the 1987 regu-
lations. Comments are welcome on this
ongoing project, particularly with regard
to the need to provide for guidance on the
application of the overall domestic loss
provisions to income earned through for-
eign or domestic trusts, as well as guidance
regarding the recapture of overall foreign
losses and separate limitation losses on
the disposition of property under section
904(f)(3) and (f)(5)(F). In addition, the
Treasury Department and the IRS are con-
tinuing to study whether additional rules
to better coordinate the overall foreign
loss and overall domestic loss regimes
would be appropriate, including whether
a netting rule should apply to offsetting
overall foreign loss accounts and overall
domestic loss accounts. The Treasury De-
partment and the IRS welcome additional
comments in this regard. All comments
will be available for public inspection and
copying.
A public hearing has been scheduled
for April 10, 2008, in the Auditorium,
Internal Revenue Building, 1111 Constitu-
tion Avenue, NW, Washington, DC. Due to
building security procedures, visitors must
enter at the Constitution Avenue entrance.
In addition, all visitors must present photo
identification to enter the building. Be-
cause of access restrictions, visitors will
not be admitted beyond the immediate
entrance more than 30 minutes before
the hearing starts. For information about
having your name placed on the build-
ing access list to attend the hearing, see
theFOR FURTHER INFORMATION
CONTACTsection of this preamble.
February 25, 20084702008–8 I.R.B.

The rules of 26 CFR 601.601(a)(3) ap-
ply to the hearing. Persons who wish to
present oral comments at the hearing must
submit electronic or written comments by
March 20, 2008, and an outline of the top-
icstobediscussedandthetimetobede-
voted to each topic (signed original and
eight (8) copies) by March 20, 2008. A pe-
riod of 10 minutes will be allotted to each
person for making comments.
An agenda showing the scheduling of
the speakers will be prepared after the
deadline for receiving outlines has passed.
Copies of the agenda will be available free
of charge at the hearing.
Drafting Information
The principal author of these regula-
tions is Jeffrey L. Parry of the Office of
Chief Counsel (International). However,
other personnel from the Treasury Depart-
ment and the IRS participated in their de-
velopment.
*****
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 in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.904(g)–3 also issued under
26 U.S.C. 904(g)(4) * * *
Par. 2. Section 1.904–0 is amended
by revising the entries for §1.904(f)–1(a),
(d)(2), (d)(3), and (d)(4), and for
§1.904(f)–2(c) and (c)(1), and adding en-
tries for §§1.904(f)–7 and 1.904(f)–8 to
read as follows:
§1.904–0 Outline of regulation provisions
for section 904.
*****
§1.904(f)–1 Overall foreign loss and the
overall foreign loss account.
*****
(a)(1) and (a)(2) [The text of these en-
tries is the same as the text of the en-
tries for §1.904(f)–1T(a)(1) and (a)(2) in
§1.904(f)–0T published elsewhere in this
issue of the Bulletin.]
*****
(d)(2), (d)(3), and (d)(4) [The text of
these entries is the same as the text of
the entries for §1.904(f)–1T(d)(2), (d)(3),
and (d)(4) in §1.904(f)–0T published else-
where in this issue of the Bulletin.]
*****
§1.904(f)–2 Recapture of overall foreign
losses.
*****
(c) and (c)(1) [The text of these en-
tries is the same as the text of the en-
tries for §1.904(f)–2T(c) and (c)(1) in
§1.904(f)–0T published elsewhere in this
issue of the Bulletin.]
*****
§1.904(f)–7 Separate limitation loss and
the separate limitation loss account.
[The text of the entries for this sec-
tion is the same as the text of the en-
tries for §1.904(f)–7T(a) through (f) in
§1.904(f)–0T published elsewhere in this
issue of the Bulletin.]
§1.904(f)–8 Recapture of separate
limitation loss accounts.
[The text of the entries for this sec-
tion is the same as the text of the en-
tries for §1.904(f)–8T(a) through (c) in
§1.904(f)–0T published elsewhere in this
issue of the Bulletin.]
Par. 3. In §1.904(f)–1, paragraph (a)(2)
is added, and paragraph (d)(4) is revised,
to read as follows:
§1.904(f)–1 Overall foreign loss and the
overall foreign loss account.
(a)(1)***
(2) [The text of the proposed amend-
ments to §1.904(f)–1(a)(2) is the same as
the text of §1.904(f)–1T(a)(2) published
elsewhere in this issue of the Bulletin.]
*****
(d) * * *
(4) [The text of the proposed amend-
ments to §1.904(f)–1(d)(4) is the same as
the text of §1.904(f)–1T(d)(4) published
elsewhere in this issue of the Bulletin.]
*****
Par. 4. Section 1.904(f)–2(c)(1) and
(c)(5)Example 4. are revised to read as
follows:
§1.904(f)–2 Recapture of overall foreign
losses.
*****
(c)***(1)[Thetextoftheproposed
amendments to §1.904(f)–2(c)(1) is the
same as the text of §1.904(f)–2T(c)(1)
published elsewhere in this issue of the
Bulletin.]
*****
(5) * * *
Example 4. [The text of the proposed amend-
ments to §1.904(f)–2(c)(5)Example 4.isthesameas
the text of §1.904(f)–2T(c)(5)Example 4. published
elsewhere in this issue of the Bulletin.]
*****
Par. 5. Sections 1.904(f)–7 and
1.904(f)–8 are added to read as follows:
§1.904(f)–7 Separate limitation loss and
the separate limitation loss account.
[The text of proposed §1.904(f)–7 is
the same as the text of §1.904(f)–7T(a)
through (f) published elsewhere in this is-
sue of the Bulletin.]
§1.904(f)–8 Recapture of separate
limitation loss accounts.
[The text of
proposed §1.904(f)–8 is
the same as t
he text of §1.904(f)–8T(a)
through (c)
published elsewhere in this is-
sue of the Bu
lletin.]
Par. 6. Sect
ion1.904(g)–0isaddedto
read as foll
ows:
§1.904(g)–0 Outline of regulation
provisions.
*****
§1.904(g)–1 Overall domestic loss and
the overall domestic loss account.
[The text of the entries for this section
is the same as the text for §1.904(g)–1T(a)
through (f) in §1.904(g)–0T published
elsewhere in this issue of the Bulletin.]
§1.904(g)–2 Recapture of overall
domestic losses.
[The text of the entries for this section
is the same as the text for §1.904(g)–2T(a)
2008–8 I.R.B.471February 25, 2008

through (d) in §1.904(g)–0T published
elsewhere in this issue of the Bulletin.]
§1.904(g)–3 Ordering rules for the
allocation of net operating losses, net
capital losses, U.S. source losses, and
separate limitation losses, and for
recapture of separate limitation losses,
overall foreign losses, and overall
domestic losses.
[The text of the entries for this section
is the same as the text for §1.904(g)–3T(a)
through (i) in §1.904(g)–0T published
elsewhere in this issue of the Bulletin.]
Par.7.Sections 1.904(g)–1,
1.904(g)–2, and 1.904(g)–3 are added to
read as follows:
§1.904(g)–1 Overall domestic loss and
the overall domestic loss account.
[The text of proposed §1.904(g)–1 is
the same as the text of §1.904(g)–1T(a)
through (f) published elsewhere in this is-
sue of the Bulletin.]
§1.904(g)–2 Recapture of overall
domestic losses.
[The text of proposed §1.904(g)–2 is
the same as the text of §1.904(g)–2T(a)
through (d) published elsewhere in this is-
sue of the Bulletin.]
§1.904(g)–3 Ordering rules for the
allocation of net operating losses, net
capital losses, U.S. source losses, and
separate limitation losses, and for
recapture of separate limitation losses,
overall foreign losses, and overall
domestic losses.
[The text of proposed §1.904(g)–3 is
the same as the text of §1.904(g)–3T(a)
through (i) published elsewhere in this is-
sue of the Bulletin.]
Par. 8. Section 1.1502–9 is revised to
read as follows:
§1.1502–9 Consolidated overall foreign
losses and separate limitation losses.
[The text of proposed §1.1502–9 is the
same as the text of §1.1502–9T(a) through
(e) 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 December 20,
2007, 8:45 a.m., and published in the issue of the Federal
Register for December 21, 2007, 72 F.R. 72646)
Notice of Proposed
Rulemaking by
Cross-Reference to
Temporary Regulations
Disclosure of Return
Information to the Bureau
of the Census
REG–147832–07
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemaking
by cross-reference to temporary regula-
tion.
SUMMARY: In this issue of the Bulletin,
the IRS is issuing a regulation (T.D. 9373)
that would add an additional item of re-
turn information that may be disclosed to
the Bureau of the Census (Bureau) for use
in the Bureau’s annual Survey of Indus-
trial Research and Development. This pro-
posed regulation provides guidance to IRS
personnel responsible for disclosing the in-
formation. This regulation facilitates the
assistance of the IRS to the Bureau in its
statistics programs and requires no action
by taxpayers and has no effect on their tax
liabilities.
DATES: Written and electronic comments
and requests for a public hearing must be
received by March 31, 2008.
ADDRESSES: Send submissions to:
CC:PA:LPD:PR (REG–147832–07), room
5203, Internal Revenue Service, P.O. Box
7604, Ben Franklin Station, Washing-
ton, DC 20044. Submissions may be
hand-delivered Monday through Friday
betweenthehoursof8a.m. and4p.m.
to CC:PA:LPD:PR (REG–147832–07),
Courier’s Desk, Internal Revenue Ser-
vice, 1111 Constitution Avenue, NW,
Washington, DC, or sent electroni-
cally via the Federal eRulemaking Por-
tal atwww.regulations.gov(IRS and
REG–147832–07).
FOR FURTHER INFORMATION
CONTACT: Concerning submission of
comments, Richard Hurst, (202) 622–7180
(not a toll-free number); concerning the
notice of proposed rulemaking, Glenn
Melcher, (202) 622–4570 (not a toll-free
number).
SUPPLEMENTARY INFORMATION:
Background
Under section 6103(j)(1)(A), upon
written request from the Secretary of Com-
merce, the Treasury Secretary is to furnish
to the Bureau of the Census (Bureau) re-
turn information as may be prescribed by
Treasury regulations for the purpose of,
but only to the extent necessary in, struc-
turing censuses and conducting related
statistical activitiesauthorized by law.
Section 301.6103(j)(1)–1 of the regulation
provides an itemized description of the
items of return information authorized to
be disclosed for this purpose. Periodically,
the disclosure regulation is amended to re-
flect the changing needs of the Bureau for
data for its statutorily authorized statistical
activities.
This document contains a proposed reg-
ulation authorizing IRS personnel to dis-
close an additional item of return informa-
tion that has been requested by the Secre-
tary of Commerce.
A temporary regulation in this issue
of the Bulletin amends the Procedure and
Administration Regulations (26 CFR Part
301) relating to Internal Revenue Code
(Code) section 6103(j). The amendments
to the regulation contain rules relating
to the disclosure of return information
reflected on returns to officers and em-
ployees of the Department of Commerce
for structuring censuses and conducting
related statistical activities authorized by
law. Specifically, the amendment to the
regulation authorizes the IRS to disclose
an additional item of return information
that has been requested by the Secretary
of Commerce that is necessary for the
Bureau’s annual Survey of Industrial Re-
search and Development.
February 25, 20084722008–8 I.R.B.

The text of the temporary regulation
also serves as the text of this proposed reg-
ulation. The preamble to the temporary
regulation explains the proposed regula-
tion.
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
assessment is not required. It also has
been determined thatsection 553(b) of the
Administrative Procedure Act (5 U.S.C.
chapter 5) does not apply to these regu-
lations, and because the regulation does
not impose a collection of information
on small entities, the Regulatory Flexi-
bility Act (5 U.S.C. chapter 6) does not
apply. Pursuant to section 7805(f) of
the Code, this proposed regulation has
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 regulation is
adopted as a final regulation, considera-
tion will be given to any electronic and
written comments (a signed original and
eight (8) copies) that are submitted timely
to the IRS. The IRS and Treasury Depart-
ment specifically request comments on
the clarity of the proposed regulation and
how it can be made easier to understand.
All comments will be available for public
inspection and copying. A public hearing
may be scheduled if requested in writing
by a person who timely submits com-
ments. If a public hearing is scheduled,
notice of the date, time, and place for the
hearing will be published in theFederal
Register.
Drafting Inf
ormation
The principal author of this proposed
regulation is Glenn Melcher, Office of the
Associate Chief Counsel (Procedure &
Administration).
*****
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 301 is pro-
posed to be amended as follows:
PART 301—PROCEDURE AND
ADMINISTRATION
Paragraph 1. The authority citation for
part 301 continues to read in part as fol-
lows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section §301.6103(j)(1)–1
is amended by revising paragraphs
(b)(3)(xxv) and (e) to read as follows:
§301.6103(j)(1)–1 Disclosure of return
information reflected on returns to officers
and employees of the Department of
Commerce for certain statistical purposes
and related activities.
*****
(b) * * *
(3) * * *
(xxv) [The text of proposed amended
paragraph (b)(3)(xxv) is the same as the
text of §301.6103(j)(1)–1T(b)(3)(xxv)
published elsewhere in this issue of the
Bulletin].
*****
(e) [The text of proposed amended
paragraph (e) is the same as the text of
§301.6103(j)(1)–1T(e) published else-
where in this issue of the Bulletin].
LindaE.Stiff,
Deputy Commissioner for
Services and Enforcement.
(Filed by the Office of the Federal Register on December 28,
2007, 8:45 a.m., and published in the issue of the Federal
Register for December 31, 2007, 72 F.R. 74246)
Announcement of Disciplinary Actions Involving
Attorneys, Certified Public Accountants, Enrolled Agents,
and Enrolled Actuaries — Reinstatements, Suspensions,
Censures, Disbarments, and Resignations
Announcement 2008-5
Under Title 31, Code of Federal Regu-
lations, Part 10, attorneys, certified public
accountants, enrolled agents, and enrolled
actuaries may not accept assistance from,
or assist, any person who is under disbar-
ment or suspension from practice before
the Internal Revenue Service if the assis-
tance relates to a matter constituting prac-
tice before the Internal Revenue Service
and may not knowingly aid or abet another
person to practice before the Internal Rev-
enue Service during a period of suspen-
sion, disbarment, or ineligibility of such
other person.
To enable attorneys, certified public
accountants, enrolled agents, and enrolled
actuaries to identify persons to whom
these restrictions apply, the Director, Of-
fice of Professional Responsibility, will
announce in the Internal Revenue Bulletin
their names, their city and state, their pro-
fessional designation, the effective date
of disciplinary action, and the period of
suspension. This announcement will ap-
pear in the weekly Bulletin at the earliest
practicable date after such action and will
continue to appear in the weekly Bulletins
for five successive weeks.
2008–8 I.R.B.473February 25, 2008

Reinstatement To Practice Before the Internal Revenue
Service
Under Title 31, Code of Federal Reg-
ulations, Part 10, The Director, Office of
Professional Responsibility, may entertain
a petition for reinstatement for any attor-
ney, certified public accountant, enrolled
agent, or enrolled actuary censured, sus-
pended, or disbarred, from practice before
the Internal Revenue Service.
The following individuals’ eligibility to
practice before the Internal Revenue Ser-
vice has been restored:
NameAddressDesignationDate of Reinstatement
Cohen, PeterEdison, NJCPAJune 01, 2004
Brunelle, Roswell J.Queensbury, NYCPAJune 10, 2004
Cohick, Jeffrey S.Newville, PAEnrolled AgentOctober 30, 2004
Cotroneo, NicholasMcLean, VACPAFebruary 28, 2007
Layson, David A.Corydon, INAttorneyOctober 06, 2007
Tomasulo, Maria V.Wantagh, NYCPAOctober 16, 2007
Emeziem, Kelechi C.Antioch, CAAttorneyOctober 17, 2007
Johnston, Gregory A.Muscatine, IAAttorneyOctober 17, 2007
Shapiro, Sidney C.West Palm Beach, FLCPAOctober 29, 2007
Hubbard, Cynthia A.Geneva, ILAttorneyOctober 31, 2007
Moss, Steve E.Henderson, NCCPANovember 29, 2007
Schaffer, Robert J.Baiting Hollow, NYCPADecember 04, 2007
Woods, Dalton C.Carrollton, TXEnrolled AgentDecember 04, 2007
Brown, Arthur I.Miami, FLCPADecember 14, 2007
Consent Suspensions From Practice Before the Internal
Revenue Service
Under Title 31, Code of Federal Regu-
lations, Part 10, an attorney, certified pub-
lic accountant, enrolled agent, or enrolled
actuary, in order to avoid the institution
or conclusion of a proceeding for his or
her disbarment or suspension from prac-
tice before the Internal Revenue Service,
may offer his or her consent to suspension
from such practice. The Director, Office
of Professional Responsibility, in his dis-
cretion, may suspend an attorney, certified
public accountant, enrolled agent, or en-
rolled actuary in accordance with the con-
sent offered.
The following individuals have been
placed under consent suspension from
practice before the Internal Revenue Ser-
vice:
NameAddressDesignationDate of Suspension
Bauman, John J.Battle Creek, MICPAIndefinite
from
October 1, 2007
Montgomery, Dwight M.Redlands, CAAttorneyIndefinite
from
October 1, 2007
February 25, 20084742008–8 I.R.B.

NameAddressDesignationDate of Suspension
Deku, John V.Toledo, OHAttorneyIndefinite
from
October 8, 2007
Ying, William F.Beverly Hills, CACPAIndefinite
from
October 9, 2007
Brill, Ann M.Sheboygan, WICPAIndefinite
from
October 10, 2007
Benvin, Anne C.Phoenix, AZEnrolled AgentIndefinite
from
October 22, 2007
Kingman, William B.San Antonio, TXAttorneyIndefinite
from
October 22, 2007
Nurney, J. ChristopherHatboro, PACPAIndefinite
from
October 22, 2007
Wren, Gary M.Redding, CAEnrolled AgentIndefinite
from
October 29, 2007
Beck, Brian S.Boston, MACPAIndefinite
from
November 1, 2007
Draper, Jeffrey L.Olathe, KSCPAIndefinite
from
November 1, 2007
Ehrlich, Gary P.Chevy Chase, MDCPAIndefinite
from
November 1, 2007
Garrison, John C.Prairie Village, KSCPAIndefinite
from
November 1, 2007
Greenslit, WayneKeene, NHCPAIndefinite
from
November 1, 2007
Moran, Philip D.Salem, MAAttorneyIndefinite
from
November 1, 2007
Wright, CoryReno, NVCPAIndefinite
from
November 1, 2007
Turbeville, Mary A.Geyserville, CAEnrolled AgentIndefinite
from
November 16, 2007
2008–8 I.R.B.475February 25, 2008

NameAddressDesignationDate of Suspension
Saffold, Rodger P.Cleveland, OHCPAIndefinite
from
December 1, 2007
Voss, Patrick W.Metairie, LACPAIndefinite
from
December 1, 2007
Rosner, Ronald I.Manahawkin, NJCPAIndefinite
from
December 13, 2007
Johnson, Jr., StanleyMiami, FLAttorneyIndefinite
from
December 14, 2007
Expedited Suspensions From Practice Before the Internal
Revenue Service
Under Title 31, Code of Federal Regu-
lations, Part 10, the Director, Office of Pro-
fessional Responsibility, is authorized to
immediately suspend from practice before
the Internal RevenueService any practi-
tioner who, within five years from the date
the expedited proceeding is instituted (1)
has had a license to practice as an attor-
ney, certified public accountant, or actuary
suspended or revoked for cause or (2) has
been convicted of certain crimes.
The following individuals have been
placed under suspension from practice be-
fore the Internal Revenue Service by virtue
of the expedited proceeding provisions:
NameAddressDesignationDate of Suspension
Crotts, William P.Phoenix, AZAttorneyIndefinite
from
October 16, 2007
Daugherty, Troy L.Olathe, KSAttorneyIndefinite
from
October 16, 2007
Driscoll, Jr., Wilfred C.Somerset, MAAttorneyIndefinite
from
October 16, 2007
Shah, Ashok S.Manalapan, NJCPAIndefinite
from
October 16, 2007
Sheline, Calvin L.Camp Verde, AZCPAIndefinite
from
October 16, 2007
Bosse, Leigh D.Hillsborough, NHAttorneyIndefinite
from
October 24, 2007
Webb, James E.Nashville, TNCPAIndefinite
from
October 25, 2007
February 25, 20084762008–8 I.R.B.

NameAddressDesignationDate of Suspension
Gottschalk, Don E.Cedar Falls, IAAttorneyIndefinite
from
October 31, 2007
Joy, Steven B.Paton, IAAttorneyIndefinite
from
October 31, 2007
Smallwood, Teresa L.Durham, NCAttorneyIndefinite
from
November 2, 2007
Donaldson, James F.Denver, COAttorneyIndefinite
from
November 15, 2007
Roux, Johnathan M.Fair Oaks, CACPAIndefinite
from
November 20, 2007
Linville, Wiley T.Denver, COAttorneyIndefinite
from
December 4, 2007
Andrade, Sergio R.Inver Grove Hghts, MNAttorneyIndefinite
from
December 13, 2007
Arzani, Mitzi H.Charlotte, NCCPAIndefinite
from
December 13, 2007
Catron, Stephen B.Knoxville, TNAttorneyIndefinite
from
December 13, 2007
Coulagouri, Louis A.Moorestown, NJAttorneyIndefinite
from
December 13, 2007
Crown, Charles K.Blakeslee, PACPAIndefinite
from
December 13, 2007
George, Philip J.Great Falls, VAAttorneyIndefinite
from
December 13, 2007
Heitz, John P.Oneill, NEAttorneyIndefinite
from
December 13, 2007
Jones, William F.Park Rapids, MNAttorneyIndefinite
from
December 13, 2007
Khoury, Arthur M.Lawrence, MAAttorneyIndefinite
from
December 13, 2007
2008–8 I.R.B.477February 25, 2008

NameAddressDesignationDate of Suspension
McGree, Charles A.Fort Payne, ALAttorneyIndefinite
from
December 13, 2007
Nason, George H.Franklin, TNAttorneyIndefinite
from
December 13, 2007
Owen, Thomas A.Arlington, TXAttorneyIndefinite
from
December 13, 2007
Ozulumba, MichaelBoston, MAAttorneyIndefinite
from
December 13, 2007
Phillips, Mark A.Elm Grove, WIAttorneyIndefinite
from
December 13, 2007
Simpson, Joseph H.Amite, LAAttorneyIndefinite
from
December 13, 2007
Sipes, Laura A.St. Charles, MOAttorneyIndefinite
from
December 13, 2007
Sullivan, Joseph O.Warwick, NYAttorneyIndefinite
from
December 13, 2007
Szegda, Michael A.Old Tappan, NJAttorneyIndefinite
from
December 13, 2007
Misch, Paul M.Akron, OHAttorneyIndefinite
from
December 17, 2007
Brenner, Allen L.Long Beach, NYAttorneyIndefinite
from
December 20, 2007
Cook, Rirchard B.Cockeysville, MDAttorneyIndefinite
from
December 20, 2007
Shang, Wade V.S. San Francisco, CACPAIndefinite
from
December 20, 2007
February 25, 20084782008–8 I.R.B.

Suspensions From Practice Before the Internal Revenue
Service After Appeal
Under Title 31, Code of Federal Regu-
lations, Part 10, after a decision is issued
by an Administrative Law Judge, either
party may appeal to the Secretary of the
Treasury. The following individuals have
been placed under suspension from prac-
tice before the Internal Revenue Service
AFTERan appeal:
NameAddressDe
signationEffective Date
Andrews, Ted E.Avon, INCPAIndefinite
from
October 19, 2007
Disbarments From Practice Before the Internal Revenue
Service After Notice and an Opportunity for a Proceeding
Under Title 31, Code of Federal Regu-
lations, Part 10, after notice and an oppor-
tunity for a proceeding before an adminis-
trative law judge, the following individu-
als have been disbarred from practice be-
fore the Internal Revenue Service:
NameAddressDesignationEffective Date
Ruocchio, RaymondHavertown, PACPAApril 30, 2007
Roseman, Eric W.Scottsdale, AZCPAAugust 20, 2007
Solomon, StanleyBrooklyn, NYCPASeptember 04, 2007
Marks, RobertMedfield, MAAttorneyOctober 15, 2007
Censure Issued by Consent
Under Title 31, Code of Federal Reg-
ulations, Part 10, in lieu of a proceeding
being instituted or continued, an attorney,
certified public accountant, enrolled agent,
or enrolled actuary, may offer his or her
consent to the issuance of a censure. Cen-
sure is a public reprimand.
The following individuals have con-
sented to the issuance of a Censure:
NameAddressDesignationDate of Censure
Villarreal, RicardoHouston, TXEASeptember 24, 2007
Meisgeier, Deborah K.Richmond, TXEAOctober 16, 2007
O’Brien, Colleen D.Winter Park, FLCPAOctober 24, 2007
Staver, Peter J.Southgate, MIAttorneyNovember 06, 2007
Weiss, IraPittsburgh, PAAttorneyNovember 29, 2007
Orr, William S.Kerrville, TXCPADecember 04, 2007
2008–8 I.R.B.479February 25, 2008

NameAddressDesignationDate of Censure
Whitsitt, RichardPanama City, FLCPADecember 04, 2007
Foundations Status of Certain
Organizations
Announcement 2008–13
The following organizations have failed
to establish or have been unable to main-
tain their status as public charities or as op-
erating foundations. Accordingly, grantors
and contributors may not, after this date,
rely on previous rulings or designations
in the Cumulative List of Organizations
(Publication 78), or on the presumption
arising from the filing of notices under sec-
tion 508(b) of the Code. This listing does
notindicate that the organizations have lost
their status as organizations described in
section 501(c)(3), eligible to receive de-
ductible contributions.
Former Public Charities.The follow-
ing organizations (which have been treated
as organizations thatare not private foun-
dations described in section 509(a) of the
Code) are now classified as private foun-
dations:
4 God Only, Forth Worth, TX
Adaptive Solutions Technologies, Inc.,
Port Allen, LA
AESOP, Inc., Cedar Hill, TX
All About Alzheimers, Inc.,
Rochester Hills, MI
American Eye Disease Association,
Brooklyn, NY
Arden Health Resource Service,
Springdale, AR
Arizona Center for Public Policy,
Scottsdale, AZ
Baal Perazim Ministries, Inc.,
Brentwood, NY
Barton Springs Heritage Association, Inc.,
Austin, TX
Bolivian Conservation Fund,
Chestertown, MD
Capital City Recovery, Dacula, GA
Care Outreach Ministries, Inc., Carmel, IN
Challenged Drop-In Center, Inc.,
Van Wert, OH
Cherubim, Tujunga, CA
Community Care Foundation, Inc.,
Mission Hills, CA
Creative Technology Enrichment Center,
Inc., Hamlet, NC
Crosbys NPO, Lynnwood, WA
Cultural Education Program, Inc.,
Waterville, ME
Delaware Self Help Corporation,
Newark, DE
Diabetes Research Education and Support
Group, Fort Smith, AR
Dolo Siakor Memorial Basketball &
Soccer Association, Inc., Parkville, MD
Dorcus Foundation, Orlando, FL
Dr. Harb S. & Santosh K. Hayre
Foundation, Houston, TX
Family Patterns, Inc., Moreland, GA
First Stop Community Development
Corporation, Washington, DC
Friends of the Poor, Inc., Stuart, FL
Friends of Tagalog on Site, Inc.,
Long Beach, NJ
Georgia Cardiac and Vascular Research,
Inc., Gainesville, GA
Gregorys Journey, Williamsport, PA
Healing Hearts Foundation, Inc.,
Miami Lakes, FL
Heaven on Earth Foundation,
Alvarado, TX
Heritage Affordable Housing, Seattle, WA
Houston Carnival Arts Committee,
Houston, TX
Independent Constructs Counseling
Center of St. Louis, Inc., St. Louis, MO
Jacksonville Scottish Rite Association,
Inc., Jacksonville, FL
Jenkins Youth Foundation,
Moreno Valley, CA
Jerusalem Store House, Wylie, TX
Jesus and Me Youth Outreach Ministries,
Gastonia, NC
Jomada Ministry Foundation, Inc.,
Tinian, MP
Junior Volleyball, Inc., Fort Morgan, CO
Kids Nutrition Program, Inc., Lula, GA
Kidshealth 2020, Inc., Cleveland, OH
Kitsap Dental Mission Support
Organization, Silverdale, WA
Kittredge Club, Inc., New York, NY
Kiwanis Club of Mill Hall Pennsylvania
Foundation, Mill Hall, PA
KKIS Keep Kids in School, Inc.,
Sugar Land, TX
Kwon Foundation, Glendale, CA
Latria, Inc., Indianapolis, IN
Light the Way Home, Inc., Houston, TX
Main Street Crossing, Tomball, TX
Making Waves, Nashville, TN
Massachusetts Institute for Justice, Inc.,
Newburyport, MA
Mid-South Youth Center, Carbondale, IL
Millenium Estate Living,
Missouri City, TX
Monadnock Children’s Relief Foundation,
Jaffrey, NH
Moore Faith Center, Houston, MS
Nu, Inc., New Orleans, LA
Nuevas Faces of Hope, Inc.,
Paradise Valley, AZ
Ocotillo Village Housing Corporation,
Benson, AZ
Open Ears Music Collaboration, Inc.,
New York, NY
Pass It Along, Inc., Oklahoma City, OK
Peoples Court of Final Appeal, Inc.,
Chicago, IL
Plymouth Area Chamber of Commerce
Foundation, Inc., Plymouth, MA
Positive Motivational Institute,
Inglewood, CA
Prison Reform, Inc., Chicago, IL
Project SOS, Las Vegas, NV
Psychsource, Inc., Roswell, GA
Real Enterprises of Washington,
Glenoma, WA
Richard Wells Walker Scholarship
Foundation, Inc., Oriental, NC
Rohnert Park Boards and Blades
Corporation, Rohnert Park, CA
Seventh Woman Foundation, Inc.,
Silver Springs, MD
Shiloh Resource Community and
Development Center, Baltimore, MD
SMAJ Homebound Hair Care Services,
Inc., Gretna, LA
Society of Support Foundation,
Canyon Country, CA
Sonrise-First Love Second Chance
International, Tomball, TX
Southern California Lions-Quest Support
Foundation, Fullerton, CA
Stilwell Housing Assistance Corporation,
Muskogee, OK
Support & Training for Adoptive & Foster
Families, Jackson, MI
Susan Shadeko-Oshinuga Foundation,
Carson, CA
February 25, 20084802008–8 I.R.B.

Texas Civil War Museum, Inc.,
White Settlement, TX
Texas Springs Alliance, Austin, TX
Trinity’s Foundation for Children With
Special Needs, Inc., Washington, DC
Tru Life Community Resource Center,
Inc., Tarpon Springs, FL
Trust for Philadelphia Treasures,
Philadelphia, PA
Turn Off the TV, Inc., Athens, GA
Union for the Conservation of Raptors,
Hancock, ME
United Human Rights Congress,
Los Angeles, CA
Uprise, Inc., Detroit, MI
Urban Conservation League,
San Diego, CA
Verle and Eleanor Hammond Foundation,
Ashburn, VA
Visual Voices, Inc., Pittsburgh, PA
Westerville South High School PTO,
Westerville, OH
Wiredmd, Inc., New Haven, CT
World of Endangered Species,
Placerville, CA
XCEL Development, Spartanburg, SC
If an organization listed above submits
information that warrants the renewal of
its classification as a public charity or as
a private operating foundation, the Inter-
nal Revenue Service will issue a ruling or
determination letter with the revised clas-
sification as to foundation status. Grantors
and contributors maythereafter rely upon
such ruling or determination letter as pro-
vided in section 1.509(a)–7 of the Income
Tax Regulations. It is not the practice of
the Service to announce such revised clas-
sification of foundation status in the Inter-
nal Revenue Bulletin.
Deletions From Cumulative
List of Organizations
Contributions to Which
are Deductible Under Section
170 of the Code
Announcement 2008–14
The Internal Revenue Service has re-
voked its determination that the organi-
zations listed below qualify as organiza-
tions described in sections 501(c)(3) and
170(c)(2) of the Internal Revenue Code of
1986.
Generally, the Service will not disallow
deductions for contributions made to a
listed organization on or before the date
of announcement in the Internal Revenue
Bulletin that an organization no longer
qualifies. However, the Service is not
precluded from disallowing a deduction
for any contributions made after an or-
ganization ceases to qualify under section
170(c)(2) if the organization has not timely
filed a suit for declaratory judgment under
section 7428 and if the contributor (1) had
knowledge of the revocation of the ruling
or determination letter, (2) was aware that
such revocation was imminent, or (3) was
in part responsible for or was aware of the
activities or omissions of the organization
that brought about this revocation.
If on the other hand a suit for declara-
tory judgment has been timely filed,
contributions from individuals and orga-
nizations described in section 170(c)(2)
that are otherwise allowable will continue
to be deductible. Protection under sec-
tion 7428(c) would begin on February 25,
2008, and would end on the date the court
first determines that the organization is
not described in section 170(c)(2) as more
particularly set forth in section 7428(c)(1).
For individual contributors, the maximum
deduction protected is $1,000, with a hus-
band and wife treated as one contributor.
This benefit is not extended to any indi-
vidual, in whole or in part, for the acts or
omissions of the organization that were
the basis for revocation.
JudahYouthMinistries
Red Bank, NJ
Little League Baseball
West Warwick, RI
Youth Sports Systems, Inc.
Albuquerque, NM
Miss Crestline Scholarship Pageant
Committee
Crestline, OH
Millcreek Development Corp.
Philadelphia, PA
Jeff & Ann Mowrey Charitable Supporting
Organization
Columbia, MD
Pacoima Athletic Club
Arleta, CA
Families on The Move
New Brunswick, NJ
Credit Foundation of America
Irvine, CA
Family Pride, Inc.
Cataula, GA
Bear Soldier Industries
Bismarck, ND
Equal Opportunity Housing DBA Home
Star Magic
Denver, CO
One Particular Harbour Foundation
Wyoming, MI
Soulfire Films
Brooklyn, NY
Gottlieb Family Foundation
Lawrence, NY
Coltrin Family Foundation
Sandy, UT
Crock 39 Foundation
Irving, TX
Community Outreach Development
Foundation
Gulfport, MS
Lakhdar Barouche Foundation, Inc.
New York, NY
Don Luscombe Aviation History
Foundation
Phoenix, AZ
Americas Youth Apprenticeship
Enterprises, Inc.
Oklahoma City, OK
The Educational Charitable Supporting
Organization
Millersville, MD
Family to Family Americans for Prostate
Cancer Awareness and Support
Carson City, NV
The Douglas and Valerie Wood Charitable
Supporting Organization
Latrobe, PA
2008–8 I.R.B.481February 25, 2008

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the ef-
fect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is be-
ingextendedtoapplytoavariationofthe
fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that the
same principle also applies to B, the earlier
ruling is amplified. (Compare withmodi-
fied,below).
Clarifiedis used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion.
It is not used where a position in a prior
ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
withamplifiedandclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
beingstatedinanewruling.
Supersededdescribes a situation where
the new ruling does nothing more than re-
state the substance and situation of a previ-
ously published ruling (or rulings). Thus,
the term is used to republish under the
1986 Code and regulations the same po-
sition published under the 1939 Code and
regulations. The term is also used when
it is desired to republish in a single rul-
ing a series of situations, names, etc., that
were previously published over a period of
time in separate rulings. If the new rul-
ing does more than restate the substance
of a prior ruling, a combination of terms
is used. For example,modifiedandsu-
persededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is self
contained. In this case, the previously pub-
lished ruling is first modified and then, as
modified, is superseded.
Supplementedis used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names in
subsequent rulings. After the original rul-
ing has been supplemented several times, a
new ruling may be published that includes
the list in the original ruling and the ad-
ditions, and supersedes all prior rulings in
the series.
Suspendedis used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of cases
in litigation, or the outcome of a Service
study.
Abbreviations
The fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
DC—Dummy Corporation.
DE—Donee.
Del. Order
—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
February 25, 2008i2008–8 I.R.B.

Numerical Finding List
1
Bulletins 2008–1 through 2008–8
Announcements:
2008-1, 2008-1 I.R.B.246
2008-2, 2008-3 I.R.B.307
2008-3, 2008-2 I.R.B.269
2008-4, 2008-2 I.R.B.269
2008-5, 2008-4 I.R.B.333
2008-6, 2008-5 I.R.B.378
2008-7, 2008-5 I.R.B.379
2008-8, 2008-6 I.R.B.403
2008-9, 2008-7 I.R.B.444
2008-10, 2008-7 I.R.B.445
2008-11, 2008-7 I.R.B.445
2008-12, 2008-7 I.R.B.446
2008-13, 2008-8 I.R.B.480
2008-14, 2008-8 I.R.B.481
Notices:
2008-1, 2008-2 I.R.B.251
2008-2, 2008-2 I.R.B.252
2008-3, 2008-2 I.R.B.253
2008-4, 2008-2 I.R.B.253
2008-5, 2008-2 I.R.B.256
2008-6, 2008-3 I.R.B.275
2008-7, 2008-3 I.R.B.276
2008-8, 2008-3 I.R.B.276
2008-9, 2008-3 I.R.B.277
2008-10, 2008-3 I.R.B.277
2008-11, 2008-3 I.R.B.279
2008-12, 2008-3 I.R.B.280
2008-13, 2008-3 I.R.B.282
2008-14, 2008-4 I.R.B.310
2008-15, 2008-4 I.R.B.313
2008-16, 2008-4 I.R.B.315
2008-17, 2008-4 I.R.B.316
2008-18, 2008-5 I.R.B.363
2008-19, 2008-5 I.R.B.366
2008-20, 2008-6 I.R.B.406
2008-21, 2008-7 I.R.B.431
2008-22, 2008-8 I.R.B.465
2008-23, 2008-7 I.R.B.433
2008-24, 2008-8 I.R.B.466
Proposed Regulations:
REG-104713-07, 2008-6 I.R.B.409
REG-111583-07, 2008-4 I.R.B.319
REG-114126-07, 2008-6 I.R.B.410
REG-141399-07, 2008-8 I.R.B.470
REG-147832-07, 2008-8 I.R.B.472
Revenue Procedures:
2008-1, 2008-1 I.R.B.1
2008-2, 2008-1 I.R.B.90
Revenue Procedures— Continued:
2008-3, 2008-1 I.R.B.110
2008-4, 2008-1 I.R.B.121
2008-5, 2008-1 I.R.B.164
2008-6, 2008-1 I.R.B.192
2008-7, 2008-1 I.R.B.229
2008-8, 2008-1 I.R.B.233
2008-9, 2008-2 I.R.B.258
2008-10, 2008-3 I.R.B.290
2008-11, 2008-3 I.R.B.301
2008-12, 2008-5 I.R.B.368
2008-13, 2008-6 I.R.B.407
2008-14, 2008-7 I.R.B.435
Revenue Rulings:
2008-1, 2008-2 I.R.B.248
2008-2, 2008-2 I.R.B.247
2008-3, 2008-2 I.R.B.249
2008-4, 2008-3 I.R.B.272
2008-5, 2008-3 I.R.B.271
2008-6, 2008-3 I.R.B.271
2008-7, 2008-7 I.R.B.419
2008-8, 2008-5 I.R.B.340
2008-9, 2008-5 I.R.B.342
Tax Conventions:
2008-8, 2008-6 I.R.B.403
Treasury Decisions:
9368, 2008-6 I.R.B.382
9369, 2008-6 I.R.B.394
9370, 2008-7 I.R.B.428
9371, 2008-8 I.R.B.447
9372, 2008-8 I.R.B.462
9373, 2008-8 I.R.B.463
9375, 2008-5 I.R.B.344
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2007–27 through 2007–52 is in Internal Revenue Bulletin
2007–52, dated December 26, 2007.
2008–8 I.R.B.iiFebruary 25, 2008

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2008–1 through 2008–8
Notices:
2001-16
Modified by
Notice 2008-20, 2008-6 I.R.B.406
2006-107
Modified by
Notice 2008-7, 2008-3 I.R.B.276
2007-30
Modified and superseded by
Notice 2008-14, 2008-4 I.R.B.310
2007-54
Clarified by
Notice 2008-11, 2008-3 I.R.B.279
Proposed Regulations:
REG-209020-86
Corrected by
Ann. 2008-11, 2008-7 I.R.B.445
REG-113891-07
Hearing scheduled by
Ann. 2008-4, 2008-2 I.R.B.269
Revenue Procedures:
2007-1
Superseded by
Rev. Proc. 2008-1, 2008-1 I.R.B.1
2007-2
Superseded by
Rev. Proc. 2008-2, 2008-1 I.R.B.90
2007-3
Superseded by
Rev. Proc. 2008-3, 2008-1 I.R.B.110
2007-4
Superseded by
Rev. Proc. 2008-4, 2008-1 I.R.B.121
2007-5
Superseded by
Rev. Proc. 2008-5, 2008-1 I.R.B.164
2007-6
Superseded by
Rev. Proc. 2008-6, 2008-1 I.R.B.192
2007-7
Superseded by
Rev. Proc. 2008-7, 2008-1 I.R.B.229
2007-8
Superseded by
Rev. Proc. 2008-8, 2008-1 I.R.B.233
Revenue Procedures— Continued:
2007-39
Superseded by
Rev. Proc. 2008-3, 2008-1 I.R.B.110
2007-52
Superseded by
Rev. Proc. 2008-9, 2008-2 I.R.B.258
Revenue Rulings:
2007-4
Supplemented and superseded by
Rev. Rul. 2008-3, 2008-2 I.R.B.249
Treasury Decisions:
9362
Corrected by
Ann. 2008-9, 2008-7 I.R.B.444
Ann. 2008-12, 2008-7 I.R.B.446
9363
Corrected by
Ann. 2008-10, 2008-7 I.R.B.445
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2007–27 through 2007–52 is in Internal Revenue Bulletin 2007–52, dated December 26,
2007.
February 25, 2008iii2008–8 I.R.B.

INDEX
Internal Revenue Bulletins 2008–1 through
2008–8
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
Alternative funding schedule, amortization (Ann 2) 3,307
Benefit restrictions for underfunded pension plans, hearing for
REG–113891–07 (Ann 4) 2,269
Claims submitted to IRS Whistleblower Office under section
7623 (Notice 4) 2,253
Defined benefit plan, accrued benefits (RR 7) 7,419
Defined contribution plans, diversification of employer securi-
ties, extension of certain transitional rules (Notice 7) 3,276
Determination letters, issuing procedures (RP 6) 1,192
Full funding limitations, weighted average interest rates, seg-
ment rates for:
January 2008 (Notice 17) 4,316
February 2008 (Notice 24) 8,466
Letter rulings:
And determination letters, areas which will not be issued
from:
Associates Chief Counsel and Division Counsel (TE/GE)
(RP 3) 1,110
Associate Chief Counsel (International) (RP 7) 1,229
And general information letters, procedures (RP 4) 1,121
User fees, request for letter rulings (RP 8) 1,233
Proposed Regulations:
26 CFR 1.430; 1.436; benefit restrictions for underfunded
pension plans, hearing for REG–113891–07 (Ann 4) 2,269
Stocks, statutory stock options, information reporting require-
ments (Notice 8) 3,276
Supplemental health insurance, HIPAA (Notice 23) 7,433
Technical advice to IRS employees (RP 5) 1,164
Transitional guidance for new funding rules and funding-related
benefits limitations under PPA ’06, uniform effective date (No-
tice 21) 7,431
EMPLOYMENT TAX
Claims submitted to IRS Whistleblower Office under section
7623 (Notice 4) 2,253
Frivolous tax return positions (Notice 14) 4,310
Interest-free adjustments and claims for refund of employment
taxes (REG–111583–07) 4,319
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions
(RP 1) 1,1
Proposed Regulations:
26 CFR 31.6011(a)–1, –4, –5, amended; 31.6205–1,
amended; 31.6302–0, –1, amended; 31.6402(a)–1, –2,
amended; 31.6413(a)–2, amended; 31.6414–1, amended;
interest-free adjustments and claims for refund of employ-
ment taxes (REG–111583–07) 4,319
Technical Advice Memoranda (TAMs) (RP 2) 1,90
ESTATE TAX
Claims submitted to IRS Whistleblower Office under section
7623 (Notice 4) 2,253
Frivolous tax return positions (Notice 14) 4,310
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions
(RP 1) 1,1
Technical Advice Memoranda (TAMs) (RP 2) 1,90
EXCISE TAX
Claims submitted to IRS Whistleblower Office under section
7623 (Notice 4) 2,253
Frivolous tax return positions (Notice 14) 4,310
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions
(RP 1) 1,1
Supplemental healthinsurance, HIPAA (Notice 23) 7,433
Technical Advice Memoranda (TAMs) (RP 2) 1,90
EXEMPT ORGANIZATIONS
Annual notice to donors regarding pending and settled declara-
tory judgment suits (Ann 1) 1,246
Claims submitted to IRS Whistleblower Office under section
7623 (Notice 4) 2,253
Frivolous tax return positions (Notice 14) 4,310
Letter rulings:
And determination letters:
Areas which will not be issued from Associates Chief
Counsel and Division Counsel (TE/GE) (RP 3) 1,110
Exemption application determination letter rulings under
sections 501 and 521 (RP 9) 2,258
And general information letters, procedures (RP 4) 1,121
User fees, request for letter rulings (RP 8) 1,233
List of organizations classifiedas private foundations (Ann 13)
8,480
2008–8 I.R.B.ivFebruary 25, 2008

EXEMPT ORGANIZATIONS—Cont.
Revocations (Ann 3) 2,269;(Ann14)8,481
Technical advice to IRS employees (RP 5) 1,164
Transitional relief and filing procedures, charitable trust
(Notice 6) 3,275
GIFT TAX
Claims submitted to IRS Whistleblower Office under section
7623 (Notice 4) 2,253
Frivolous tax return positions (Notice 14) 4,310
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions
(RP 1) 1,1
Technical Advice Memoranda (TAMs) (RP 2) 1,90
INCOME TAX
Annual notice to donors regarding pending and settled declara-
tory judgment suits (Ann 1) 1,246
Calculating and apportioning the section 11(b)(1) additional tax
under section 1561 for controlled groups (TD 9369) 6,394;
(REG–104713–07) 6,409
Cell captive guidance:
Insurance, protected cell company (Notice 19) 5,366
Insurance, risk shifting and risk distribution (RR 8) 5,340
Certain outbound reorganizations and section 351 exchanges
(Notice 10) 3,277
Charitable contributions, recordkeeping requirements
(Notice 16) 4,315
Claims submitted to IRS Whistleblower Office under section
7623 (Notice 4) 2,253
Clarification of transitional relief under Notice 2007–54
(Notice 11) 3,279
Consolidated returns, loss disallowance (Notice 9) 3,277
Consumer Price Index (CPI) adjustments, certain loans under
section 1274A for 2008 (RR 3) 2,249
Corporations, health insurance costs of 2-percent shareholder-
employees, S corporation (Notice 1) 2,251
Credits:
Foreign tax credit, redeterminations, correction (Ann 9) 7,
444;correction(Ann11)7,445; correction (Ann 12) 7,446
Reduction of foreign tax creditlimitation categories under
section 904(d) (TD 9368) 6,382; (REG–114126–07) 6,
410
Low-income housing credit:
2008 population figures used for calculation (Notice 22) 8,
465
Indian Housing Block Grant (IHBG) Program (RR 6) 3,
271
Satisfactory bond, “bond factor” amounts for the period:
January through March 2008 (RR 2) 2,247
Deductions, dependency exemption, qualifying relative
(Notice 5) 2,256
Disclosure of return information to the Bureau of the Census (TD
9372) 8,462; (TD 9373) 8,463; (REG–147832–07) 8,472
INCOME TAX—Cont.
Disciplinary actionsinvolving attorneys,certified public accoun-
tants, enrolled agents, and enrolled actuaries (Ann 5) 4,333
Electronic tax administration, guidance necessary to facilitate –
updating section 7216 regulations (TD 9375) 5,344
Employer-provided vehicles, cents-per-mile valuation rule, max-
imum vehicle values (RP 13) 6,407
Foreign currency, debt characterization, exchange traded notes,
prepaid forwards (RR 1) 2,248
Frivolous tax return positions (Notice 14) 4,310
Guidance to tax return preparers, consents to disclose and con-
sents to use tax return information in the Form 1040 series
(RP 12) 5,368
Insurance companies:
Loss payment patterns and discount factors for the 2007 acci-
dent year (RP 10) 3,290
Proposed AG VACARVM and proposed Life PBR (Notice 18)
5,363
Salvage discount factors for the 2007 accident year (RP 11) 3,
301
Interest:
Investment:
Federal short-term, mid-term, and long-term rates for:
January 2008 (RR 4) 3,272
February 2008 (RR 9) 5,342
Interim standards under section 6694(a) (Notice 13) 3,282
Letter rulings:
And determination letters, areas which will not be issued
from:
Associates Chief Counsel and Division Counsel (TE/GE)
(RP 3) 1,110
Associate Chief Counsel (International) (RP 7) 1,229
And information letters issued byAssociate Offices, determi-
nation letters issued by Operating Divisions (RP 1) 1,1
Marketing of refund anticipation loans (RALs) and certain other
products in connection with the preparation of a tax return
(Ann 7) 5,379
Mortgage insurance premiums, allocation and information re-
porting for 2007 (Notice 15) 4,313
Penalties, substantial understatement, preparer penalty (RP 14)
7,435
Prepaid forward contracts, exchange traded notes (Notice 2) 2,
252
Preparer signature requirements under section 6695(b)
(Notice 12) 3,280
Private foundations, organizations now classified as (Ann 13) 8,
480
Proposed Regulations:
26 CFR 1.904–0, amended; 1.904(f)–1, –2, amended;
1.904(f)–7, –8, added; 1.904(g)–0 thru –3, added;
1.1502–9, revised; treatment ofoverall foreign and domes-
tic losses (REG–141399–07) 8,470
26 CFR 1.904–2(i), added; 1.904–4, –5, revised; 1.904–7(g),
added; 1.904(f)–12(h), added; reduction of foreign
tax credit limitation categories under section 904(d)
(REG–114126–07) 6,410
February 25, 2008v2008–8 I.R.B.

INCOME TAX—Cont.
26 CFR 1.1561–0, –2, added; 1.1563–1, amended; calculating
and apportioning the section 11(b)(1) additional tax under
section 1561 for controlled groups (REG–104713–07) 6,
409
26 CFR 301.6103(j)(1)–1, amended; disclosure of return in-
formation to the Bureau of the Census (REG–147832–07)
8,472
Publications:
Update to Publication 1187, Specifications for Filing Form
1042-S, Foreign Person’s U.S. Source Income Subject
to Withholding, Electronically or Magnetically (Revised
12-2006) (Ann 6) 5,378
Regulations:
26 CFR 1.904–0, amended; 1.904(b)–0, added; 1.904(f)–0,
–0T, –1T, –2T, –7, –7T, –8, –8T, added; 1.904(f)–1, –2,
–3, amended; 1.904(g)–0, –0T, –1, –1T, –2, –2T, –3, –3T,
added; 1.904(i)–0, added; 1.904(j)–0, added; 1.1502–9, re-
vised; 1.1502–9T, added; treatment of overall foreign and
domestic losses (TD 9371) 8,447
26 CFR 1.904–0, –2, –2T, –4, –4T, –5, –5T, –7, –7T, amended;
1.904(f)–12, –12T, amended; reduction of foreign tax credit
limitation categories under section 904(d) (TD 9368) 6,382
26 CFR 1.905–3T, –4T, amended; foreign tax credit, notifica-
tion of foreign tax redeterminations, correction to TD 9362
(Ann 9) 7,444
26 CFR 1.1502–47T, added; 1.1561–0T, added; 1.1561–2, re-
moved; 1.1561–2T, amended; 1.1563–1T, amended; calcu-
lating and apportioning the section 11(b)(1) additional tax
under section 1561 for controlled groups (TD 9369) 6,394
26 CFR 300.0, amended; 300.7, .8, added; user fees relating to
enrollment to perform actuarial services (TD 9370) 7,428
26 CFR 301.6103(j)(1)–1, amended; disclosure of return in-
formation to the Bureau of the Census (TD 9372) 8,462
26 CFR 301.6103(j)(1)–1T, amended; disclosure of return in-
formation to the Bureau of the Census (TD 9373) 8,463
26 CFR 301.7216–0, added; 301.7216–1, –2, –3, revised;
guidance necessary to facilitate electronic tax administra-
tion, update (TD 9375) 5,344
Returns required on magnetic media, corrections to TD 9363
(Ann 10) 7,445
Revocations, exempt organizations (Ann 3) 2,269; (Ann 14) 8,
481
Stocks, statutory stock options, information reporting require-
ments (Notice 8) 3,276
Tax conventions:
Updated tax tables for Belgium, Denmark, Finland, and Ger-
many tax conventions (Ann 8) 6,403
U.S.-Mexico income tax treaty, treatment of Mexico’s im-
puesto empresarial a tasa unica (IETU) (Notice 3) 2,253
Tax shelter, listed transactions (Notice 20) 6,406
Technical Advice Memoranda (TAMs) (RP 2) 1,90
Treatment of overall foreign and domestic losses (TD 9371) 8,
447; (REG–141399–07) 8,470
User fees relating to enrollment to perform actuarial services (TD
9370) 7,428
INCOME TAX—Cont.
Wash sales, individual retirement accounts, Roth IRAs (RR 5) 3,
271
SELF-EMPLOYMENT TAX
Claims submitted to IRS Whistleblower Office under section
7623 (Notice 4) 2,253
Frivolous tax return positions (Notice 14) 4,310
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions
(RP 1) 1,1
Technical Advice Memoranda (TAMs) (RP 2) 1,90
2008–8 I.R.B.viFebruary 25, 2008

February 25, 20082008–8 I.R.B.

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