Internal Revenue Bulletin 2002-17 (PDF rendition): IRS Revenue Procedures

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

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.
SPECIAL ANNOUNCEMENT
Announcement 2002–48, page 809.
New IRS brochure entitled Home-Based Business Tax
Avoidance Schemes. . .At A Glance.The schemes
described in the document claim to offer tax “relief,” but actu-
ally result in illegal tax avoidance. The promoters of these
schemes claim that by setting up a bogus home-based busi-
ness, individual taxpayers can deduct most, or all, of their per-
sonal expenses as business expenses.
INCOME TAX
Rev. Rul. 2002–20, page 794.
Charitable remainder trusts; qualified charitable
remainder unitrusts; recipient trusts.This ruling provides
that, in three situations, a charitable remainder unitrust may
pay the unitrust amounts to a second trust for the life of an
individual, who is financially disabled as defined in section
6511(h)(2)(A) of the Code. In each situation, the use of the uni-
trust amounts by the second trust is consistent with the man-
ner in which the individual’s own assets would be used, and the
individual is, therefore, considered to have received the unitrust
amounts directly from the charitable remainder unitrust for pur-
poses of section 664(d)(2)(A). Rev. Rul. 76–270 amplified and
superseded.
Rev. Rul. 2002–21, page 793.
Low-income housing credit; tax-exempt bond financing.
Amounts received from investing proceeds of tax-exempt
bonds are counted toward satisfying the 50-percent aggregate
basis test under section 42(h)(4)(B) of the Code.
Notice 2002–29, page 797.
Section 469 and gain recognition election.This document
explains the effect under section 469 of the Code of a deemed
sale of property on January 1, 2001, pursuant to an election
under section 311(e) of the Taxpayer Relief Act of 1997.
Announcement 2002–44, page 809.
Electronic submission of Form 8850.This document
announces that Form 8850,Pre-Screening Notice and Cer-
tification Request for the Work Opportunity and Welfare-to-
Work Credits,may be submitted electronically to State
Employment Security Agencies (SESAs) and sets forth the
requirements that any electronic system must meet.
ADMINISTRATIVE
Notice 2002–20, page 796.
Industry Issue Resolution Program.This document
announces that the Industry Issue Resolution (I I R) Program, a
pilot program aimed at resolving contentious tax issues involv-
ing business, is being made permanent and expanded to be
available to all business taxpayers. Taxpayers as well as indus-
try associations and other groups representing taxpayers are
invited to suggest issues and possible options for resolution.
(Continued on the next page)
Announcements of Declaratory Judgment Proceedings Under Section 7428 begin on page 810.
Finding Lists begin on page ii.
Bulletin No. 2002–17
April 29, 2002

ADMINISTRATIVE
Notice 2002–30, page 797.
Credit for sales of fuel produced from a nonconventional
source, inflation adjustment factor, and reference price.
This notice publishes the nonconventional source fuel credit,
inflation adjustment factor, and reference price under section
29 of the Code for calendar year 2001. This data is used to
determine the credit allowable on sales of fuel produced from
a nonconventional source.
Rev. Proc. 2002–24, page 798.
Qualified mortgage bonds; mortgage credit certificates;
national median gross income.Guidance is provided con-
cerning the use of the national and area median gross income
figures by issuers of qualified mortgage bonds and mortgage
credit certificates in determining the housing cost/income ratio
described in section 143(f) of the Code. Rev. Proc. 2001–35
obsoleted, except as provided in section 5.02 of this proce-
dure.
Rev. Proc. 2002–25, page 800.
This procedure sets forth the maximum face amount of quali-
fied zone academy bonds that may be issued by each state,
the District of Columbia, and the possessions of the United
States during 2002.
Rev. Proc. 2002–27, page 802.
Depreciation of tires.This document provides a safe harbor
method of accounting (the original tire capitalization method)
for the cost of original and replacement tires for certain
vehicles owned by taxpayers, procedures for a qualifying tax-
payer to obtain automatic consent from the Commissioner to
change to the original tire capitalization method, and an
optional procedure for certain qualifying taxpayers to settle
open taxable years using the original tire capitalization method.
Rev. Proc. 2002–9 modified and amplified.
April 29, 20022002–17 I.R.B.

The IRS Mission
Provide America’s taxpayers top quality service by helping
them understand and meet their tax responsibilities and by
applying the tax law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are consolidated semiannually into Cumulative Bulle-
tins, which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the Bul-
letin. All published rulings apply retroactively unless otherwise
indicated. Procedures relating solely to matters of internal
management are not published; however, statements of inter-
nal 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 rev-
enue ruling. In those based on positions taken in rulings to tax-
payers 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.—1986 Code.
This part includes rulings and decisions based on provisions of
the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A, Tax
Conventions and Other Related Items, and Subpart B, Legisla-
tion 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 part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.
The first Bulletin for each month includes a cumulative index for
the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the first Bulletin of the succeeding semiannual
period, respectively.
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402.
2002–17 I.R.B.April 29, 2002

This page is reserved for missing children Tristen Thorne and Anna Torres
April 29, 20022002–17 I.R.B.

Part I. Rulings and Decisions Under the Internal Revenue Code of 1986
Section 25.—Interest on
Certain Home Mortgages
26 CFR 1.25–4T: Qualified mortgage credit certifi-
cate program (temporary).
Guidance is provided for the use of the national
and area median gross income figures by issuers of
qualified mortgage bonds and mortgage credit cer-
tificates in determining the housing cost/income
ratio described in section 143(f)(5) of the Code. See
Rev. Proc. 2002–24, page 798.
Section 42.—Low-Income
Housing Credit
26 CFR 1.42–1T: Limitation on low-income housing
credit allowed with respect to qualified low-income
buildings receiving housing credit allocations from
a state or local housing credit agency (temporary).
(Also §§ 103, 146.)
Low-income housing credit; tax-
exempt bond financing. Amounts
received from investing proceeds of tax-
exempt bonds are counted toward satisfy-
ing the 50-percent aggregate basis test
under section 42(h)(4)(B) of the Code.
Rev. Rul. 2002–21
ISSUE
Are amounts received from investing
proceeds of tax-exempt bonds counted
toward satisfying the 50-percent aggre-
gate basis test under § 42(h)(4)(B) of the
Internal Revenue Code?
FACTS
Partnership was formed to develop and
operate in StateXa low-income housing
building in accordance with § 42. In
December 1999, the State X bond-issuing
authority (Issuer) issued at par $5.7 mil-
lion of tax-exempt housing bonds, and
loaned the $5.7 million to Partnership to
finance a portion of the construction of
the low-income housing project. Issuer
received an allocation of § 146 volume
cap in the amount of $5.7 million for the
bonds. Principal payments on this financ-
ing are to be applied within a reasonable
period to redeem the bonds.
Partnership’s aggregate basis for the
building and the land on which the build-
ing is located is $11.8 million. Partner-
ship earned $300,000 in investment earn-
ings from investing the original $5.7
million of proceeds of the bonds. The
sum of these amounts, $6 million, was
expended on construction of the building.
LAW AND ANALYSIS
Section 42(a) provides for a tax credit
for investment in qualified low-income
residential rental buildings placed in ser-
vice after December 31, 1986.
Section 42(h)(1)(A) provides that the
amount of credit determined under § 42
for any taxable year with respect to any
building shall not exceed the housing
credit dollar amount allocated to the
building under § 42(h).
Section42(h)(4)(A)providesthat
§ 42(h)(1) does not apply to any portion
of the credit otherwise allowable under
§ 42(a) which is attributable to eligible
basis financed by any obligation the inter-
est on which is exempt from tax under
§ 103 if—
(i) the obligation is taken into
account under § 146, and
(ii) principal payments on the financ-
ing are applied within a reasonable period
to redeem obligations the proceeds of
which were used to provide the financing.
Section 42(h)(4)(B) provides that, if
50 percent or more of the aggregate basis
of any building and the land on which the
building is located is financed with tax-
exemptobligationsspecifiedin
§ 42(h)(4)(A), § 42(h)(1) does not apply
to any portion of the low-income housing
credit allowable under § 42(a) with
respect to the building.
Section 1.42–1T(f)(1) of the temporary
Income Tax Regulations provides that no
housing credit allocation is required in
order to claim a credit under § 42 with
respect to the entire qualified basis (as
defined in § 42(c)) of a qualified low-
income building if 70 percent or more of
the aggregate basis of the building and
the land on which the building is located
is financed with the proceeds of tax-
exempt bonds which are taken into
account for purposes of the volume cap
under § 146. The reference to 70 percent
in § 1.42–1T(f)(1) has been superseded
by an amendment to § 42(h)(4)(B), which
changed 70 percent to 50 percent. Rev-
enue Reconciliation Act of 1989, P.L.
101–239, § 7108(j).
Except as otherwise provided, § 103
provides that gross income does not
include interest on any state or local
bond. An exception under § 103(b)(1) is
that interest on a private activity bond is
included in gross income unless it is a
qualified bond within the meaning of
§ 141. Generally, § 141(e)(2) requires that
a qualified bond meet the volume cap
requirements of § 146.
Section 146(a) provides that a private
activity bond issued as part of an issue
meets the volume cap requirements if the
aggregate face amount of the private
activity bonds issued pursuant to the
issue, when added to the aggregate face
amount of tax-exempt private activity
bonds previously issued by the issuing
authority during the calendar year, does
not exceed the authority’s volume cap for
the calendar year.
Proceeds is not specifically defined for
purposes of § 1.42–1T(f)(1). However,
for other purposes of the Code, tax-
exempt bond proceeds are generally
defined to include amounts received from
investing proceeds. See § 1.148–1(b) of
the Income Tax Regulations. Accordingly,
given the similarity of purposes for deter-
mining bond proceeds under § 1.42–
1T(f)(1) and the tax-exempt bond provi-
sions of the Code, it is appropriate to treat
proceeds for purposes of § 1.42–1T(f)(1)
to include amounts received from invest-
ing proceeds.
In the present situation, Partnership
properly includes the $300,000 amount
from investing proceeds to determine if it
met the 50-percent aggregate basis test in
§ 42(h)(4)(B). Because $6 million
($5,700,000 plus $300,000) is greater
than 50 percent of the aggregate basis of
the building and the land ($11,800,000),
Partnership satisfies the 50-percent test in
§ 42(h)(4)(B).
HOLDING
Amounts received from investing pro-
ceeds of tax-exempt bonds are counted
toward satisfying the 50-percent aggre-
gate basis test under § 42(h)(4)(B).
2002–17 I.R.B.793April 29, 2002

DRAFTING INFORMATION
The principal author of this revenue
ruling is Jack Malgeri of the Office of the
Associate Chief Counsel (Passthroughs
and Special Industries). For further infor-
mation regarding this revenue ruling, con-
tact Mr. Malgeri at (202) 622–3040 (not a
toll-free number).
Section 103.—Interest on
State and Local Bonds
26 CFR 1.103–1: Interest upon obligations of a
state, territory, etc.
Are amounts received from investing proceeds
of tax-exempt bonds counted toward satisfying the
50-percent aggregate basis test under§42(h)(4)(B)
of the Internal Revenue Code? See Rev. Rul. 2002–
21, page 793.
Guidance is provided for the use of the national
and area median gross income figures by issuers of
qualified mortgage bonds and mortgage credit cer-
tificates in determining the housing cost/income
ratio described in section 143(f)(5) of the Code. See
Rev. Proc. 2002–24, page 798.
Section 143.—Mortgage
Revenue Bonds: Qualified
Mortgage Bond and Qualified
Veterans’Mortgage Bond
26 CFR 6a.103A–2: Qualified mortgage bond.
Guidance is provided for the use of the national
and area median gross income figures by issuers of
qualified mortgage bonds and mortgage credit cer-
tificates in determining the housing cost/income
ratio described in section 143(f)(5) of the Code. See
Rev. Proc. 2002–24, page 798.
Section 146.—Volume Cap
Are amounts received from investing proceeds
of tax-exempt bonds counted toward satisfying the
50-percent aggregate basis test under§42(h)(4)(B)
of the Internal Revenue Code? See Rev. Rul. 2002–
21, page 793.
Section 167.—Depreciation
If a taxpayer has a depreciable interest in a
qualifying vehicle and chooses to account for the
cost of original and replacement tires under the
original tire capitalization method, are the qualify-
ing vehicle’s tires treated as part of the vehicle for
depreciation purposes? See Rev. Proc. 2002–27,
page 802.
Section 168.—Accelerated
Cost Recovery System
Under the original tire capitalization method,
what is the applicable depreciation method, recov-
ery period, and convention for the cost of a qualify-
ing vehicle’s original tires for purposes of§168 of
the Internal Revenue Code? See Rev. Proc. 2002–
27, page 802.
Section 446.—General Rule
for Methods of Accounting
26 CFR 1.446.1: General rule for methods of
accounting.
If a taxpayer changes its treatment of the cost of
a qualifying vehicle’s original and replacement tires
to the original tire capitalization method, is this
change a change in method of accounting under
§446(e) of the Internal Revenue Code? See Rev.
Proc. 2002–27, page 802.
Section 481.—Adjustments
Required by Changes in
Method of Accounting
26 CFR 1.481–1: Adjustments in general.
If a taxpayer changes its treatment of the cost of
a qualifying vehicle’s original and replacement tires
to the original tire capitalization method, is an
adjustment under§481 of the Internal Revenue
Code taken into account in computing taxable
income? See Rev. Proc. 2002–27, page 802.
Section 664.—Charitable
Remainder Trusts
26 CFR 1.664–3: Charitable remainder unitrust.
Charitable remainder trusts; quali-
fied charitable remainder unitrusts;
recipient trusts. This ruling provides
that, in three situations, a charitable
remainder unitrust may pay the unitrust
amounts to a second trust for the life of
an individual, who is financially disabled
as defined in section 6511(h)(2)(A) of the
Code. In each situation, the use of the
unitrust amounts by the second trust is
consistent with the manner in which the
individual’s own assets would be used,
and the individual is, therefore, consid-
ered to have received the unitrust
amounts directly from the charitable
remainder unitrust for purposes of section
664(d)(2)(A).
Rev. Rul. 2002–20
ISSUE
May a trust qualify as a charitable
remainder unitrust under§664 of the
Internal Revenue Code, if the unitrust
amounts are paid to a separate trust for
the life of an individual who is“finan-
ciallydisabled,”asdefinedin
§6511(h)(2)(A)?
FACTS
An individual concurrently creates
TrustA, a trust that otherwise qualifies as
a charitable remainder unitrust, and a
separate trust, TrustB. Under the govern-
ing instrument of TrustA, annual unitrust
amounts will be paid to TrustBfor the
life ofC.Cis an individual who is finan-
cially disabled, that is,Cis unable to
manageC’s own financial affairs by rea-
son of a medically determinable physical
or mental impairment that can be
expected to result in death or that has
lasted or can be expected to last for a
continuous period of not less than 12
months.
Situation 1. Under the governing
instrument of TrustB, a designated por-
tion of the amount it receives from Trust
Awill be paid toCeach month. If, at any
time in the sole judgment of the trustee,
the monthly payment toCis insufficient
to provide adequately for the care, sup-
port, and maintenance ofC, or is insuffi-
cient for the needs ofCfor any reason,
additional amounts will be paid as needed
to or on behalf ofCfrom TrustB. Upon
C’s death, the balance remaining in Trust
Bwill be distributed toC’s estate.
Situation 2. Under the governing
instrument of TrustB, the trustee may
make distributions of income and princi-
pal, as determined in the trustee’s sole
and absolute discretion, for the financial
aid and best interests ofCin a manner
April 29, 20027942002–17 I.R.B.

that supplements but does not supplant
any governmental benefits otherwise
available toC. UponC’s death, the bal-
ance remaining in TrustBwill be distrib-
uted toC’s estate.
Situation 3. Under the governing
instrument of TrustB, the trustee may
make distributions of income and princi-
pal, as determined in the trustee’s sole
and absolute discretion, for the financial
aid and best interests ofCin a manner
that supplements but does not supplant
any governmental benefits otherwise
available toC. UponC’s death, the gov-
erning instrument requires the trustee to
reimburse the state for the total costs of
medical assistance provided toCunder
the state’s Medicaid plan.Cis given a
testamentary general power of appoint-
ment over the balance remaining in Trust
B.IfCfails to exercise the power, the
balance will be distributed, in equal
shares, toC’s sister and toX, a charitable
organization.
LAW AND ANALYSIS
A charitable remainder unitrust is a
trust from which a unitrust amount is pay-
able at least annually during its term with
an irrevocable remainder interest held for
the benefit of charity. Under§664
(d)(2)(A), the unitrust amount is a fixed
percentage (not less than 5 percent and
not more than 50 percent) of the net fair
market value of the trust assets, valued
annually. The unitrust amount is to be
paid to one or more persons (at least one
of which is not an organization described
in§170(c) and, in the case of individuals,
only to an individual who is living at the
time of the creation of the trust) for a
term of years (not in excess of 20 years)
or for the life or lives of the individual or
individuals.
Section 1.664–3(a)(5)(i) of the Income
Tax Regulations provides that the period
for which the unitrust amount is payable
begins with the first year of the charitable
remainder trust and continues either for
the life or lives of a named individual or
individuals or for a term of years not to
exceed 20 years. Only an individual or an
organization described in§170(c) may
receive an amount for the life of an indi-
vidual.
In general, a charitable remainder uni-
trust may pay unitrust amounts to a sec-
ond trust only for a term of 20 years or
less. InSituations 1,2, and3, the unitrust
amounts are payable to TrustBfor the
life ofC, not for a term of years. How-
ever, in each of these situations, the sole
function of TrustBis to receive and
administer the unitrust amounts for the
benefit ofC, who is unable to manageC’s
own financial affairs by reason of a medi-
cally determinable mental or physical
impairment. UponC’s death, the assets
remaining in TrustBwill be distributed
either toC’s estate or, after reimbursing
the state for any Medicaid benefits pro-
vided toC, will be subject toC’s general
power of appointment. In these situations,
the use of the assets in TrustBduringC’s
life and atC’s death is consistent with the
manner in whichC’s own assets would be
used.C, therefore, is considered to have
received the unitrust amounts directly
from TrustAfor purposes of§664
(d)(2)(A). Accordingly, the term of Trust
Amay be for the life ofCand is not lim-
ited to a term of years.
The same result would apply if TrustA
were a charitable remainder annuity trust.
HOLDING
A trust may qualify as a charitable
remainder unitrust under§664 if the uni-
trust amounts will be paid for the life of a
financially disabled individual to a sepa-
rate trust that will administer these pay-
ments on behalf of that individual and,
upon the individual’s death, will distrib-
ute the remaining assets either to the indi-
vidual’s estate or, after reimbursing the
state for any Medicaid benefits provided
to the individual, subject to the individu-
al’s general power of appointment.
EFFECT ON OTHER REVENUE
RULINGS
Rev. Rul. 76–270 (1976–2 C.B. 194)
which addresses facts covered bySitua-
tion 1, is amplified and superseded.
DRAFTING INFORMATION
The principal author of this revenue
ruling is Jan Bennett Geier of the Office
of Associate Chief Counsel (Passthroughs
and Special Industries). For further infor-
mation regarding this revenue ruling, con-
tact Ms. Geier at (202) 622–7830 (not a
toll-free call).
Section 1397E.—Credit to
Holders of Qualified Zone
Academy Bonds
What is the allocation for each State, the District
of Columbia, and each possession of the United
States of the national limitation amount of Qualified
Zone Academy Bonds for calendar year 2002? See
Rev. Proc. 2002–25, page 800.
2002–17 I.R.B.795April 29, 2002

Part III. Administrative, Procedural, and Miscellaneous
Industry Issue Resolution
Program
Notice 2002–20
1. INTRODUCTION
This Notice invites submission of
issues by taxpayers, representatives and
associations for resolution under the
Internal Revenue Service’sIndustry Issue
Resolution (IIR) Program. Notice
2000–65 (2000–2 C.B. 599), announced
the Industry Issue Resolution Pilot Pro-
gram. The objective of the pilot program
was to provide guidance to resolve fre-
quently disputed tax issues common to a
significant number of large or mid-size
business taxpayers. This effort was part of
the IRS’s strategy to resolve issues in a
manner other than the traditional post-
filing examination process. Seven issues
of the twenty-four submitted were
selected for the pilot program. Thus far,
five of the projects have resulted in pub-
lished guidance.
After evaluating the pilot program and
concluding that it was highly successful,
the Service has determined that the IIR
program should be made permanent. The
objective is to provide guidance to
resolve frequently disputed or burden-
some issues and the program is expanded
to address issues common to any size
business taxpayers. The Large and Mid-
Size Business Division (LMSB) and
Small Business/Self-Employed Division
(SB/SE) will jointly undertake the opera-
tional responsibility for the projects in the
program. Resolution of contentious issues
other than by the examination process is a
strategic goal of both LMSB and SB/SE.
Taxpayers, as well as industry associa-
tions and other groups representing tax-
payers, are invited to suggest issues and
possible options for resolution. Parties
submitting suggestions may be asked to
meet with government representatives
and to provide additional information.
After analysis and review, the Service, the
Office of Chief Counsel, and Treasury
intend to select issues to address in the
IIR program.
The form of resulting guidance may
vary depending on the issue. However,
the most likely form of guidance will be
a Revenue Ruling or a Revenue Proce-
dure that permits taxpayers to adopt a rec-
ommended treatment of the issue on
future returns. In many cases, this may
require filing a request for a change in
method of accounting. For examples of
the types of guidance that could be issued
under this permanent program, see those
published as a result of the IIR pilot pro-
gram on the Digital Daily atwww.irs.gov.
Suggestions for issues for the IIR pro-
gram should be forwarded as provided in
section 3 of this Notice by April 30, 2002.
LMSB, SB/SE, the Office of Chief Coun-
sel and Treasury will evaluate the sugges-
tions with a view to selecting issues
drawn from diverse industries. In review-
ing potential issues for the program, the
selection criteria will include the suitabil-
ity of the issue for the program, the like-
lihood that timely guidance can be pro-
vided, and the availability of appropriate
staffing and other resources. Projects
selected for the program are expected to
be included on the Treasury and IRS
Guidance Priorities List for the business
plan year ending in 2003. The principal
focus of the program is to resolve issues
arising in future years. However, depend-
ing on the circumstances, resolution also
may be provided for certain issues for
prior years.
Parties whose topics are accepted will
be notified and may be asked to provide
additional information and legal analysis
of the issue. The issues selected for the
program will be announced publicly.
2. ISSUES APPROPRIATE FOR THE
PROGRAM
The objective of the IIR program is to
provide guidance to resolve frequently
disputed or burdensome tax issues that
are common to a significant number of
business taxpayers. Therefore, issues
most appropriate to the program generally
will have two or more of the following
characteristics:
•There is uncertainty about the appropri-
ate tax treatment of a given factual situ-
ation.
•The uncertainty results in frequent,
often repetitive examinations of the
same issue.
•The uncertainty results in significant
taxpayer burden.
•The issue is material and impacts a sig-
nificant number of taxpayers, either
within an industry or across industry
lines.
•Factual determination is a major com-
ponent of the issue.
The following issues are not suitable:
•Issues unique to one or a small number
of taxpayers.
•Issues under the jurisdiction of the
Commissioner, Tax Exempt and Gov-
ernment Entities Division (e.g.,
employee plans).
•Issues regarding transactions that lack a
bona fidebusiness purpose or are done
with a significant purpose of reducing
or avoiding federal taxes.
•Issues involving transfer pricing or
international tax treaties.
3. REQUESTING CONSIDERATION
UNDER THE IIR PROGRAM
No particular format is required for
submissions in response to this Notice.
However, submissions should briefly
describe the proposed issue and explain
why there is a need for guidance. Submis-
sions may include an analysis of how the
issue may be resolved. In addition, sub-
missions should state the number of tax-
payers estimated to be affected by the
issue. All submissions will be available
for public inspection and copying in their
entirety. Therefore, comments should not
include taxpayer-specific information of a
confidential nature. Letters should include
the name and telephone number of a per-
son to contact should further clarification
be needed. Issues previously submitted
under the pilot program, but not selected,
must be resubmitted to be considered for
this permanent program.
Submission of issues for resolution
under the IIR program should be e-mailed
toPFTG2@IRS.gov. Alternatively, sub-
missions may be faxed or mailed to:
April 29, 20027962002–17 I.R.B.

Internal Revenue Service
Att’n: Alex Shojay
Office of Pre-filing and Technical
Services
Large and Mid-Size Business
Division LM:PFTG
Mint Building. 3
rd
Floor M-3-330
1111Constitution Avenue NW
Washington, DC 20224
Fax: 202–283–8406
4. ADDITIONAL INFORMATION
ABOUT THE PROGRAM
Project staffing. The Service and
Treasury will staff each project with a
team (the IIR team) that will analyze such
information as may be appropriate and
propose a resolution. This resolution will
require the approval of those officials
normally responsible for approving the
type of guidance to be issued. IIR team
members will include appropriate person-
nel from LMSB and SB/SE, the Office of
Chief Counsel, Appeals and Treasury.
Other Service personnel, as needed, also
may be team members. In some circum-
stances, the Service may find it necessary
to hire outside experts.
Communication with requesting tax-
payer or group and other interested
parties. As part of its efforts to formulate
a recommendation for a resolution posi-
tion, the IIR team may meet with the sub-
mitting taxpayer or group, and possibly
with other interested parties. It is antici-
pated that the submitting party and other
interested parties will be given the oppor-
tunity to present factual data and legal
analysis. The IIR team may seek addi-
tional factual development or legal analy-
sis from the submitting party or other
sources.
Any solicitation of input from affected
persons will be done within the require-
ments of the Federal Advisory Committee
Act (FACA). The Service does not intend
to form advisory committees during this
process. Input is welcome from interested
parties, but they will not be invited to
enter into negotiations or to participate in
the decision-making process with respect
to the proposed resolution of the issue.
Potential inspection of books and
records. An IIR team may consider the
inspection of an individual taxpayer’s
records desirable as part of the factual
research necessary to develop its position.
Although a team may request such
inspection, any such inspection will be
voluntary. Any inspection of a taxpayer’s
records under this program, whether at
the initiative of the taxpayer or the team,
will not preclude or impede (under
§7605(b) of the Internal Revenue Code
or any IRS administrative provisions) a
later examination or inspection of records
with respect to any tax year nor subject
the IRS to any procedural restrictions
(suchasprovidingnoticeunder
§7605(b)) that otherwise might apply
before beginning such examination or
inspection.
Disclosure of information provided
by interested parties. Interested parties
are encouraged to provide whatever infor-
mation is necessary to permit the Service
and Treasury to reach an appropriate reso-
lution of an issue. However, this informa-
tion may be subject to disclosure under
the Freedom of Information Act (FOIA).
5. FURTHER INFORMATION
For further information regarding this
notice, contact Susan Blake, Senior Pro-
gram Analyst, of the LMSB Pre-filing
and Technical Services Office at (202)
283–8414 (not a toll-free number).
Section 469 and Gain
Recognition Election Notice
Notice 2002–29
This notice explains the effect under
§469 of the Internal Revenue Code of a
deemed sale of property on January 1,
2001, pursuant to an election under
§311(e) of the Taxpayer Relief Act of
1997 (TRA 97) (1997–4 (Vol. 1) C. B. 1,
49–50).
Section 1(h), as amended in 1997, pro-
vides for a reduced capital gains rate for
qualified5-yeargain.Section
1(h)(2)(B)(ii) limits the amount of quali-
fied 5-year gain to that determined by
taking into account only property for
which the holding period begins after
December 31, 2000. Section 311(e) of
TRA 97 provides that a noncorporate tax-
payer may elect to treat a capital asset or
property used in the trade or business (as
defined in§1231(b) of the Code) held by
the taxpayer on January 1, 2001, as hav-
ing been sold on January 1, 2001, for an
amount equal to its fair market value and
as having been reacquired for an amount
equal to its fair market value on the same
date (mark-to-market election).
Section 469(g)(1)(A) provides that, if
a taxpayer disposes of the taxpayer’s
entire interest in any passive activity (or
former passive activity) in a fully taxable
transaction that does not involve a dispo-
sition to a related party, then the excess of
the loss from the activity for the taxable
year (including any suspended passive
activity loss) over any net income or gain
for the taxable year from all other passive
activities shall be treated as a loss which
is not from a passive activity. As a result,
if§469(g)(1)(A) applies, the excess loss
from the activity over any net income
from all passive activities is no longer
subject to the limitations of§469.
A question has arisen whether electing
a deemed sale of property under§311(e)
of TRA 97 is treated as a disposition of
that property under§469(g)(1)(A).
In a technical correction to§311(e),
§414(a)(2) of the Job Creation and
Worker Assistance Act of 2002, Pub. L.
No. 107–147, 116 Stat. 21, clarifies that a
mark-to-market election is not a disposi-
tion for purposes of§469(g)(1)(A). Thus,
the gain included in gross income by rea-
son of a mark-to-market election may be
passive activity gross income that can be
offset by passive activity deductions, but
the election does not otherwise affect the
determination of the passive activity loss
that is disallowed under§469.
The principal author of this notice is
Tara P. Volungis of the Office of Associ-
ate Chief Counsel (Passthroughs and Spe-
cial Industries). For further information
regarding this notice, contact Ms. Vol-
ungis at (202) 622–3080 (not a toll-free
call).
Nonconventional Source Fuel
Credit, Section 29 Inflation
Adjustment Factor, and
Section 29 Reference Price
Notice 2002–30
This notice publishes the nonconven-
tional source fuel credit, inflation adjust-
ment factor, and reference price under
§29 of the Internal Revenue Code for
calendar year 2001. These are used to
2002–17 I.R.B.797April 29, 2002

determine the credit allowable on fuel
produced from a nonconventional source
under§29. The calendar year 2001
inflation-adjusted credit applies to the
sales of barrel-of-oil equivalent of quali-
fied fuels sold by a taxpayer to an unre-
lated person during the 2001 calendar
year, the domestic production of which is
attributable to the taxpayer.
BACKGROUND
Section 29(a) provides for a credit for
producing fuel from a nonconventional
source, measured in barrel-of-oil equiva-
lent of qualified fuels, the production of
which is attributable to the taxpayer and
sold by the taxpayer to an unrelated per-
son during the tax year. The credit is
equal to the product of $3.00 and the
appropriate inflation adjustment factor.
Section 29(b)(1) and (2) provides for a
phaseout of the credit. The credit allow-
able under§29(a) must be reduced by an
amount which bears the same ratio to the
amount of the credit (determined without
regard to§29(b)(1)) as the amount by
which the reference price for the calendar
year in which the sale occurs exceeds
$23.50 bears to $6.00. The $3.00 in
§29(a) and the $23.50 and $6.00 must
each be adjusted by multiplying these
amounts by the 2001 inflation adjustment
factor. In the case of gas from a tight for-
mation, the $3.00 amount in§29(a) must
not be adjusted.
Section 29(c)(1) defines the term
“qualified fuels”to include oil produced
from shale and tar sands; gas produced
from geopressurized brine, Devonian
shale, coal seams, or a tight formation, or
biomass; and liquid, gaseous, or solid
synthetic fuels produced from coal
(including lignite), including such fuels
when used as feedstocks.
Section 29(d)(1) provides that the
credit is to be applied only for sale of
qualified fuels the production of which is
within the United States (within the
meaning of§638(1)) or a possession of
the United States (within the meaning of
§638(2)).
Section 29(d)(2)(A) requires that the
Secretary, not later than April 1 of each
calendar year, determine and publish in
the Federal Register the inflation adjust-
ment factor and the reference price for the
preceding calendar year.
Section 29(d)(2)(B) defines“inflation
adjustment factor”for a calendar year as
the fraction the numerator of which is the
GNP implicit price deflator for the calen-
dar year and the denominator of which is
the GNP implicit price deflator for calen-
dar year 1979. The term“GNP implicit
price deflator”means the first revision of
the implicit price deflator for the gross
national product as computed and pub-
lished by the Department of Commerce.
Section 29(d)(2)(C) defines“reference
price”to mean with respect to a calendar
year the Secretary’s estimate of the
annual average wellhead price per barrel
for all domestic crude oil the price of
which is not subject to regulation by the
United States.
Section 29(d)(3) provides that in the
case of a property or facility in which
more than one person has an interest,
except to the extent provided in regula-
tions prescribed by the Secretary, produc-
tion from the property or facility (as the
case may be) must be allocated among
the persons in proportion to their respec-
tive interests in the gross sales from the
property or facility.
Section 29(d)(5) and (6) provides that
the term“barrel-of-oil equivalent”with
respect to any fuel generally means that
amount of the fuel which has a Btu con-
tent of 5.8 million.
INFLATION ADJUSTMENT FACTOR
AND REFERENCE PRICE
The inflation adjustment factor for cal-
endar year 2001 is 2.0917. The reference
price for calendar year 2001 is $21.86.
These amounts will be published in the
Federal Register on April 5, 2002.
PHASEOUT CALCULATION
Because the calendar year 2001 refer-
ence price does not exceed $23.50 multi-
plied by the inflation adjustment factor,
the phaseout of the credit provided for in
§29(b)(1) does not occur for any quali-
fied fuel sold in calendar year 2001.
CREDIT AMOUNT
The nonconventional source fuel credit
under§29(a) is $6.28 per barrel-of-oil
equivalent of qualified fuels ($3.00 x
2.0917). This amount will be published in
the Federal Register on April 5, 2002.
DRAFTING INFORMATION
CONTACT
The principal author of this notice is
Jaime Park of the Office of Associate
Chief Counsel (Passthroughs and Special
Industries). For further information
regarding this notice, contact Ms. Park at
(202) 622–3120 (not a toll-free call).
26 CFR 601.601: Rules and regulations.
(Also Part I,§§25, 103, 143; 1.25–4T, 1.103–1,
6a.103A–2.)
Rev. Proc. 2002–24
SECTION 1. PURPOSE
This revenue procedure provides guid-
ance concerning the United States and
area median gross income figures that are
to be used by issuers of qualified mort-
gage bonds, as defined in§143(a) of the
Internal Revenue Code, and issuers of
mortgage credit certificates, as defined in
§25(c), in computing the housing cost/
income ratio described in§143(f)(5).
SECTION 2. BACKGROUND
.01 Section 103(a) provides that,
except as provided in§103(b), gross
income does not include interest on any
state or local bond. Section 103(b)(1) pro-
vides that§103(a) shall not apply to any
private activity bond that is not a“quali-
fied bond”within the meaning of§141.
Section 141(e) provides that the term
“qualified bond”includes any private
activity bond that (1) is a qualified mort-
gage bond, (2) meets the volume cap
requirements under§146, and (3) meets
the applicable requirements under§147.
.02 Section 143(a)(1) provides that the
term“qualified mortgage bond”means a
bond that is issued as part of a“qualified
mortgage issue”. Section 143(a)(2)(A)
provides that the term“qualified mort-
gage issue”means an issue of one or
more bonds by a state or political subdi-
vision thereof, but only if (i) all proceeds
of the issue (exclusive of issuance costs
and a reasonably required reserve) are to
be used to finance owner-occupied resi-
dences; (ii) the issue meets the require-
ments of subsections (c), (d), (e), (f), (g),
(h), (i), and (m)(7) of§143; (iii) the issue
does not meet the private business tests of
April 29, 20027982002–17 I.R.B.

paragraphs (1) and (2) of§141(b); and
(iv) with respect to amounts received
more than 10 years after the date of issu-
ance, repayments of $250,000 or more of
principal on financing provided by the
issue are used not later than the close of
the first semi-annual period beginning
after the date the prepayment (or com-
plete repayment) is received to redeem
bonds that are part of the issue.
.03 Section 143(f) imposes eligibility
requirements concerning the maximum
income of mortgagors for whom financ-
ing may be provided by qualified mort-
gage bonds. Section 25(c)(2)(A)(iii)(IV)
provides that recipients of mortgage
credit certificates must meet the income
requirements of§143(f). Generally,
under§§143(f)(1) and 25(c)(2)(A)
(iii)(IV), these income requirements are
met only if all owner-financing under a
qualified mortgage bond and all certified
indebtedness amounts under a mortgage
credit certificate program are provided to
mortgagors whose family income is 115
percent or less of the applicable median
family income. Under§143(f)(6), the
income limitation is reduced to 100 per-
cent of the applicable median family
income if there are fewer than three indi-
viduals in the family of the mortgagor.
.04 Section 143(f)(4) provides that the
term“applicable median family income”
means the greater of (A) the area median
gross income for the area in which the
residence is located or (B) the statewide
median gross income for the state in
which the residence is located.
.05 Section 143(f)(5) provides for an
upward adjustment of the income limita-
tions in certain high housing cost areas.
Under§143(f)(5)(C), a high housing cost
area is a statistical area for which the
housing cost/income ratio is greater than
1.2. The housing cost/income ratio is
determined under§143(f)(5)(D) by
dividing (a) the applicable housing price
ratio by (b) the ratio that the area median
gross income bears to the median gross
income for the United States. The appli-
cable housing price ratio is the new hous-
ing price ratio (new housing average pur-
chase price for the area divided by the
new housing average purchase price for
the United States) or the existing housing
price ratio (existing housing average area
purchase price divided by the existing
housing average purchase price for the
United States), whichever results in the
housing cost/income ratio being closer to
1. This income adjustment applies only to
bonds issued and nonissued bond
amounts elected after December 31,
1988.
.06 The Department of Housing and
Urban Development (HUD) has com-
puted the median gross income for the
United States, the states, and statistical
areas within the states. The income infor-
mation was released to the HUD regional
offices on January 31, 2002, and may be
obtained by calling the HUD reference
service at 1–800–245–2691. The income
information is also available at HUD’s
World Wide Web site,http:huduser.org\
datasets\il.html, which provides a menu
from which you may select the year and
type of data of interest. The Internal Rev-
enue Service annually publishes only the
median gross income for the United
States.
.07 The most recent nationwide aver-
age purchase prices and average area pur-
chase price safe harbor limitations were
published on September 6, 1994, in Rev.
Proc. 94–55 (1994–2 C.B. 716).
SECTION 3. APPLICATION
.01 When computing the housing cost/
income ratio under§143(f)(5), issuers of
qualified mortgage bonds and mortgage
credit certificates must use $54,400 as the
median gross income for the United
States. See section 2.06 of this revenue
procedure.
.02 When computing the housing cost/
income ratio under§143(f)(5), issuers of
qualified mortgage bonds and mortgage
credit certificates must use the area
median gross income figures released by
HUD on January 31, 2002. See section
2.06 of this revenue procedure.
SECTION 4. EFFECT ON OTHER
REVENUE PROCEDURES
.01 Rev. Proc. 2001–35 (2001–22 C.B.
1293) is obsolete except as provided in
section 5.02 of this revenue procedure.
.02 This revenue procedure does not
affect the effective date provisions of
Rev. Rul. 86–124 (1986–2 C.B. 27).
Those effective date provisions will
remain operative at least until the Service
publishes a new revenue ruling that con-
forms the approach to effective dates set
forth in Rev. Rul. 86–124 to the general
approach taken in this revenue procedure.
SECTION 5. EFFECTIVE DATES
.01 Issuers must use the United States
and area median gross income figures
specified in section 3 of this revenue pro-
cedure for commitments to provide
financing that are made, or (if the pur-
chase precedes the financing commit-
ment) for residences that are purchased,
in the period that begins on January 31,
2002, and ends on the date when these
United States and area median gross
income figures are rendered obsolete by a
new revenue procedure.
.02 Notwithstanding section 5.01 of
this revenue procedure, issuers may con-
tinue to rely on the United States and area
median gross income figures specified in
Rev. Proc. 2001–35 with respect to bonds
originally sold and nonissued bond
amounts elected not later than May 29,
2002, if the commitments or purchases
described in section 5.01 are made not
later than July 28, 2002.
DRAFTING INFORMATION
The principal author of this revenue
procedure is Zoran Stojanovic of the
Office of Assistant Chief Counsel
(Exempt Organizations/Employment Tax/
Government Entities). For further infor-
mation regarding this revenue procedure,
contact Mr. Stojanovic at (202) 622–3980
(not a toll-free call).
2002–17 I.R.B.799April 29, 2002

26 CFR 601.601: Rules and regulations.
(Also Part I,§1397E.)
Rev. Proc. 2002–25
SECTION 1. PURPOSE
Pursuant to§1397E(e)(2) of the Inter-
nal Revenue Code, this revenue proce-
dure allocates among the States the 2002
national limitation amount of Qualified
Zone Academy Bonds (“Bond”or
“Bonds”) that may be issued for the cal-
endar year 2002. For this purpose“State”
includes the District of Columbia and the
possessions of the United States.
SECTION 2. BACKGROUND
.01 Section 226 of the Taxpayer Relief
Act of 1997, Pub. L. 105–34, 111 Stat.
821 (1997), added§1397E to the Internal
Revenue Code to provide a credit to hold-
ers of Bonds under certain circumstances
so that the Bonds generally can be issued
without discount or interest. Ninety-five
percent of Bond proceeds are to be used
for qualified purposes, as defined by
§1397E(d)(5), with respect to a qualified
zoneacademy,asdefinedby
§1397E(d)(4).
.02 Section 1397E(e)(1), as amended
by§608 of the Job Creation and Worker
Assistance Act of 2002, Pub. L. 107–147,
116 Stat. 21 (2002), provides that the
national limitation amount of Bonds that
may be issued is $400 million for each of
the years 1998, 1999, 2000, 2001, 2002,
and 2003. This amount is to be allocated
among the States by the Secretary on the
basis of their respective populations
below the poverty level (as defined by the
Office of Management and Budget) and is
to be further allocated by each State to
qualified zone academies within the State.
.03 Section 1397E(e)(4), as amended,
by§509 of the Tax Relief Extension Act
of 1999, Pub. L. 106–170, 113 Stat. 1860
(1999) provides that any carryforward of
a limitation amount may be carried only
to the first 2 years (3 years for carryfor-
wards from 1998 or 1999) following the
unused limitation year. For this purpose a
limitation amount shall be treated as used
on a first-in first-out basis.
.04 Rev. Proc. 98–9 (1998–1 C.B.
341), Rev. Proc. 98–57 (1998–2 C.B.
682), Rev. Proc. 2000–10 (2000–1 C.B.
287), and Rev. Proc. 2001–14 (2001–1
C.B. 343), respectively, allocated the
national limitation for 1998, 1999, 2000,
and 2001 among the States.
SECTION 3. NATIONAL QUALIFIED
ZONE ACADEMY BOND
LIMITATION FOR 2002
The 2002 national limitation amount
for Bonds is $400 million. This amount is
allocated among the States as follows:
STATE
MAXIMUM FACE
AMOUNT OF BONDS
THAT MAY BE
ISSUED DURING 2002
(thousands of dollars)
ALABAMA$ 7,683
ALASKA634
ARIZONA7,061
ARKANSAS5,589
CALIFORNIA53,149
COLORADO4,105
CONNECTICUT2,621
DELAWARE862
DISTRICT OF COLUMBIA898
FLORIDA19,196
GEORGIA10,400
HAWAII1,376
IDAHO1,927
ILLINOIS16,827
INDIANA6,032
IOWA2,465
KANSAS3,004
KENTUCKY5,637
LOUISIANA8,736
MAINE1,269
MARYLAND4,632
MASSACHUSETTS7,528
MICHIGAN11,884
April 29, 20028002002–17 I.R.B.

STATE
MAXIMUM FACE
AMOUNT OF BONDS
THAT MAY BE
ISSUED DURING 2002
(thousands of dollars)
MINNESOTA3,411
MISSISSIPPI4,284
MISSOURI5,266
MONTANA1,628
NEBRASKA1,771
NEVADA2,035
NEW HAMPSHIRE766
NEW JERSEY7,970
NEW MEXICO3,578
NEW YORK29,441
NORTH CAROLINA10,903
NORTH DAKOTA730
OHIO13,847
OKLAHOMA6,032
OREGON4,572
PENNSYLVANIA12,710
RHODE ISLAND1,017
SOUTH CAROLINA4,787
SOUTH DAKOTA802
TENNESSEE9,814
TEXAS36,059
UTAH2,537
VERMONT850
VIRGINIA6,391
WASHINGTON7,097
WEST VIRGINIA2,968
WISCONSIN6,199
WYOMING646
AMERICAN SAMOA418
GUAM426
NORTHERN MARIANAS381
PUERTO RICO26,727
VIRGIN ISLANDS422
SECTION 4. EFFECTIVE DATE
This revenue procedure is effective
April 29, 2002, and applies to Bonds
issued after March 9, 2002.
DRAFTING INFORMATION
The principal author of this revenue
procedure is Zoran Stojanovic of the
Office of Assistant Chief Counsel (Ex-
empt Organizations/Employment Tax/
Government Entities). For further infor-
mation regarding this revenue procedure,
contact Mr. Stojanovic at (202) 622–3980
(not a toll-free call).
2002–17 I.R.B.801April 29, 2002

26 CFR 601.204: Changes in accounting periods
and in methods of accounting.
(Also Part I,§§167,168, 446, 481; 1.446–1,
1.481–1.)
Rev. Proc. 2002–27
SECTION 1. PURPOSE
This revenue procedure provides a safe
harbor method of accounting for the cost
of original and replacement tires for cer-
tain vehicles (original tire capitalization
method) used in various business activi-
ties. This revenue procedure also explains
how a taxpayer can obtain automatic con-
sent from the Commissioner of Internal
Revenue to change to the original tire
capitalization method, including rules
relating to the limitations, terms, and con-
ditions the Commissioner deems neces-
sary to make the change. In addition, this
revenue procedure provides an optional
procedure for a taxpayer to settle open
taxable years using the original tire capi-
talization method if the taxpayer’s treat-
ment of original and replacement tire
expenditures is an issue under consider-
ation in examination, before an area
appeals office, or before the United States
Tax Court (Tax Court) or is an issue
pending in examination.
SECTION 2. BACKGROUND
.01 Section 162 of the Internal Rev-
enue Code allows a deduction for all ordi-
nary and necessary business expenses
paid or incurred during the taxable year in
carrying on any trade or business. How-
ever,§263(a) prohibits a deduction for
capital expenditures. Capital expenditures
include the cost of acquisition, construc-
tion, or erection of buildings, machinery
and equipment, furniture and fixtures, and
similar property having a useful life sub-
stantially beyond the taxable year. Section
1.263(a)–2(a) of the Income Tax Regula-
tions. These capital expenditures are sub-
ject to the allowance for depreciation.
.02 Section 167(a) provides a depre-
ciation allowance for the exhaustion,
wear and tear of property used in a trade
or business or held for the production of
income. The depreciation deduction pro-
vided by§167(a) for tangible property
placed in service after 1986 generally is
determined under§168. This section pre-
scribes two methods of accounting for
determining depreciation allowances: (1)
the general depreciation system (GDS) in
§168(a); and (2) the alternative deprecia-
tion system (ADS) in§168(g). Under
either depreciation system, the deprecia-
tion deduction is computed by using a
prescribed depreciation method, recovery
period, and convention. For purposes of
either GDS or ADS, the applicable recov-
ery period is determined by reference to
class life or by statute.
Rev. Proc. 87–56 (1987–2 C.B. 674)
sets forth the class lives of property that
are necessary to compute the depreciation
allowances under§168. The revenue pro-
cedure establishes two broad categories
of depreciable assets: (1) asset classes
00.11 through 00.4 that consist of specific
assets used in all business activities; and
(2) asset classes 01.1 through 80.0 that
consist of assets used in specific business
activities.
.03 Several court decisions and rev-
enue rulings have considered the
expense-versus-capital expenditure issue
regarding truck tires. InW.H. Tompkins
Co. v. Commissioner, 47 B.T.A. 292
(1942), the court stated that the recovery
of the cost of short-lived truck tires and
tubes should not be associated with the
depreciation of much longer-lived trucks
because the tires and tubes are easily
separable from the truck and are not a
part of the truck’s mechanism. The court
held, therefore, that the cost of truck tires
and tubes consumable within the taxable
year are currently deductible as an
expense in the year of purchase.See also
Zelco, Inc. v. Commissioner, 331 F.2d
418, 421 (1st Cir. 1964) (a lessor of trail-
ers and tractors used by interstate motor
carriers was not required to treat those
vehicles’tires as a part of the leased
vehicles, and the cost of trailer and trac-
tor tires and tubes with an average useful
life of 12 months could be deducted cur-
rently);Interstate Truck Service, Inc. v.
Commissioner, T.C. Memo. 1958–219 (a
taxpayer in the motor freight transporta-
tion business can currently deduct the
cost of tires and tubes on trucks, tractors,
and trailers because on average all of the
tires and tubes were consumable in less
than one year). In Rev. Rul. 59–249
(1959–2 C.B. 55), the Service announced
that it would follow the holdings of
TompkinsandInterstatefor tires pur-
chased on new commercial trucking
equipment and used in motor freight
transportation. Rev. Rul. 68–134 (1968–1
C.B. 63) discussesZelcoand holds that
the principles of Rev. Rul. 59–249 are
applicable to tires in the case of a tax-
payer who is a purchaser-lessor of new
commercial trucking equipment.
Accordingly, truck, trailer, and tractor
tires are not treated as part of the vehicle
for depreciation purposes. Rather, these
tires are considered to be separate assets
and, as such, their cost is currently
deductible by a taxpayer provided they
are consumable in less than one year.
However, the cost of truck, trailer, and
tractor tires with an average useful life to
a taxpayer of more than one year cannot
be currently deducted as an operating
expense. Their cost must be capitalized
and recovered through depreciation.
Because truck, trailer, and tractor tires are
not considered part of the vehicle for
depreciation purposes, they are not asso-
ciated with any of the specific transporta-
tion assets included in the specific asset
classes of Rev. Proc. 87–56 (that is, asset
classes 00.241, 00.242, 00.26, and 00.27).
Therefore, in accordance with§168 and
Rev. Proc. 87–56, all truck, trailer, and
tractor tires that must be capitalized,
whether original or replacement, are
depreciated as assets used in specific
business activities (that is, asset classes
01.1 through 80.0 of Rev. Proc. 87–56).
For example, if a taxpayer’s business
activity is described in asset class 42.0,
Motor Transport—Freight, original and
replacement truck, trailer, and tractor
tires, like the other assets in this class,
would have a 5-year recovery period for
GDS purposes and an 8-year recovery
period for ADS purposes.
.04 Under§446(b), the Commissioner
has broad authority to determine whether
a method of accounting clearly reflects
income. If a taxpayer’s method of
accounting does not clearly reflect
income, the computation of taxable
income must be made under a method
that, in the opinion of the Secretary, does
clearly reflect income.See Thor Power
Tool Co. v. Commissioner, 439 U.S. 522
(1979) (1979–1 C.B. 167);Commissioner
v. Hansen, 360 U.S. 446 (1959) (1959–2
C.B. 460);§1.446–1(c)(2)(ii).
.05 Section 446(e) and§1.446–1(e)
provide that, except as otherwise pro-
vided, a taxpayer must secure the consent
April 29, 20028022002–17 I.R.B.

of the Commissioner before changing a
method of accounting for federal income
tax purposes. Section 1.446–1(e)(3)(ii)
authorizes the Commissioner to prescribe
administrative procedures setting forth
the limitations, terms, and conditions
deemed necessary to permit a taxpayer to
obtain consent to change a method of
accounting.
.06 Since the issuance of the court
decisions and revenue rulings previously
discussed, the quality of tires has
improved significantly. Most tires manu-
factured in recent years have useful lives
in excess of a year, although some tax-
payers, because of the nature of their
business activities, still consume their
tires within a year. To minimize disputes
regarding the useful lives of original tires
and replacement tires for certain vehicles,
the Internal Revenue Service will permit
a taxpayer that complies with the require-
ments of this revenue procedure to
account for the cost of original tires and
replacement tires for certain vehicles
using the original tire capitalization
method described in section 5 of this rev-
enue procedure.
SECTION 3. DEFINITIONS
The following definitions apply solely
for purposes of this revenue procedure:
.01Qualifying Vehicle. A qualifying
vehicle is a vehicle for which deprecia-
tion is determined under§168 and that is
described in asset class 00.241, 00.242,
00.26, or 00.27 of Rev. Proc. 87–56, or a
converter dolly (converter gear) for which
depreciation is determined under§168.
.02Original Tires. Original tires are
the first set of tires installed on a qualify-
ing vehicle acquired by the taxpayer
whether or not the vehicle was equipped
with tires when acquired.
.03Replacement Tires. Replacement
tires are all other tires installed on a
qualifying vehicle following acquisition
of the vehicle by taxpayer.
SECTION 4. SCOPE
.01 This revenue procedure applies to
a taxpayer that has a depreciable interest
in its qualifying vehicles and that chooses
to account for the cost of original tires
and replacement tires for all of its quali-
fying vehicles under the original tire capi-
talization method described in section 5
of this revenue procedure.
.02 A taxpayer that chooses not to
account for the cost of original tires and
replacement tires for all of its qualifying
vehicles under the original tire capitaliza-
tion method described in section 5 of this
revenue procedure must account for the
cost of these tires in accordance with sec-
tion 2.03 of this revenue procedure.
SECTION 5. ORIGINAL TIRE
CAPITALIZATION METHOD
.01In General. Under the original tire
capitalization method, a qualifying vehi-
cle’s tires are treated as part of the vehicle
and not as separate assets. In addition,
under the original tire capitalization
method, the rotation of a tire from one
vehicle to another (for example, from a
tractor to a trailer) is not treated as a
change in use within the meaning of
§168(i)(5). A taxpayer that uses the origi-
nal tire capitalization method described in
this section must use this method for the
original and replacement tires of all of its
qualifying vehicles.
.02Description of Method. Under the
original tire capitalization method, a tax-
payer:
(1) must capitalize the cost of the
original tires of a qualifying vehicle and
depreciate these tires under§168 by
using the same depreciation method,
recovery period, and convention appli-
cable to the vehicle on which the tires are
first installed;
(2) must treat the original tires of
the qualifying vehicle as being disposed
of at the same time the vehicle on which
the tires were first installed is disposed of
by the taxpayer; and
(3) must deduct the cost of the
replacement tires of the qualifying
vehicle as an expense in the taxable year
the replacement tires are installed on the
vehicle by the taxpayer.
SECTION 6. CHANGE IN METHOD
OF ACCOUNTING
.01In General. A change in a taxpay-
er’s treatment of the cost of a qualifying
vehicle’s original tires and replacement
tires is a change in method of accounting
to which§§446 and 481 apply.
.02Issue Not Under Consideration or
Not Pending. If a taxpayer within the
scope of this revenue procedure wants to
change to the original tire capitalization
method for its first or second taxable year
ending on or after December 31, 2001,
(year of change) and the treatment of its
qualifying vehicle’s original tires or
replacement tires is not an issue under
consideration in examination, before an
area appeals office, or before a federal
court (within the meaning of section 3.09
of Rev. Proc. 2002–9, 2002–3 I.R.B. 327,
as modified by Rev. Proc. 2002–19,
2002–13 I.R.B. 696, and as modified and
clarified by Announcement 2002–17,
2002–8 I.R.B. 561), or is not an issue
pending in examination (within the mean-
ing of section 6.03(6) of Rev. Proc. 2002–
9), on April 3, 2002, the taxpayer must
follow the automatic change in method of
accounting provisions in Rev. Proc.
2002–9 (or its successor) with the follow-
ing modifications:
(1) The scope limitations in section
4.02 of Rev. Proc. 2002–9 do not apply. If
the taxpayer is under examination, before
an area appeals office, or before a federal
court regarding any income tax issue
other than the treatment of its qualifying
vehicle’s original tires or replacement
tires, the taxpayer must provide a copy of
the Form 3115,Application for Change in
Accounting Method, to the examining
officer, appeals officer, or government
counsel (whichever is applicable) at the
same time it files the copy of the Form
3115 with the national office. The Form
3115 must contain the name(s) and tele-
phone number(s) of the examining
officer, appeals officer, or government
counsel, as appropriate.
(2) To assist the Service in process-
ing changes in method of accounting
under this section of the revenue proce-
dure, and to ensure proper handling, sec-
tion 6.02(4)(a) of Rev. Proc. 2002–9is
modified to require that a Form 3115 filed
under this revenue procedure include the
statement:“Automatic Change Filed
Under Rev. Proc. 2002–27.”This state-
ment should be legibly printed or typed
on the appropriate line on any Form 3115
filed under this revenue procedure.
2002–17 I.R.B.803April 29, 2002

(3) The change to the original tire
capitalization method will be made using
a“cut-off method.”Under the cut-off
method, only a qualifying vehicle’s origi-
nal and replacement tires placed in ser-
vice by a taxpayer on or after the begin-
ning of the year of change are accounted
for under the original tire capitalization
method. A qualifying vehicle’s original
and replacement tires placed in service by
the taxpayer before the year of change
continue to be accounted for under the
taxpayer’s former method of accounting.
Because no items are duplicated or omit-
ted from income when the cut-off method
is used to effect a change in accounting
method, no§481(a) adjustment is neces-
sary.
.03Issue Under Consideration or
Issue Pending. If a taxpayer within the
scope of this revenue procedure wants to
change to the original tire capitalization
method for its year of change (as defined
in section 6.02 of this revenue procedure)
and the treatment of its qualifying vehi-
cle’s original tires or replacement tires is
an issue under consideration in examina-
tion, before an area appeals office, or
before a federal court (within the meaning
of section 3.09 of Rev. Proc. 2002–9), or
is an issue pending in examination
(within the meaning of section 6.03(6) of
Rev. Proc. 2002–9), on April 3, 2002, the
taxpayer must follow the automatic
change in method of accounting provi-
sions in Rev. Proc. 2002–9 (or its succes-
sor) with the following modifications:
(1) The scope limitations in section
4.02 of Rev. Proc. 2002–9 do not apply.
The taxpayer must provide a copy of the
Form 3115 to the examining officer,
appeals officer, or government counsel
(whichever is applicable) at the same time
it files the copy of the Form 3115 with
the national office. The Form 3115 must
contain the name(s) and telephone num-
ber(s) of the examining officer, appeals
officer, or government counsel, as appro-
priate.
(2) To assist the Service in process-
ing changes in method of accounting
under this section of the revenue proce-
dure, and to ensure proper handling, sec-
tion 6.02(4)(a) of Rev. Proc. 2002–9is
modified to require that a Form 3115 filed
under this revenue procedure include the
statement:“Automatic Change Filed
Under Rev. Proc. 2002–27.”This state-
ment should be legibly printed or typed
on the appropriate line on any Form 3115
filed under this revenue procedure.
(3) The change to the original tire
capitalization method will be made using
a cut-off method. Under the cut-off
method, only a qualifying vehicle’s origi-
nal and replacement tires placed in ser-
vice by a taxpayer on or after the begin-
ning of the year of change are accounted
for under the original tire capitalization
method. A qualifying vehicle’s original
and replacement tires placed in service by
the taxpayer before the year of change
continue to be accounted for under the
taxpayer’s former method of accounting.
But see section 6.03(4) of this revenue
procedure. Because no items are dupli-
cated or omitted from income when the
cut-off method is used to effect a change
in accounting method, no§481(a) adjust-
ment is necessary.
(4) Section 7 of Rev. Proc. 2002–9
does not apply. The taxpayer does not
receive audit protection in connection
with a change to the original tire capitali-
zation method. Accordingly, the Service
may require the taxpayer to change its
method of accounting for a qualifying
vehicle’s original and replacement tires
for any taxable year before the year of
change.
.04Special Rule for Certain Taxpayers
with Issue Under Consideration or Issue
Pending. If a taxpayer is within the scope
of this revenue procedure and the treat-
ment of its qualifying vehicle’s original
tires or replacement tires is an issue under
consideration (within the meaning of sec-
tion 3.09 of Rev. Proc. 2002–9) in exami-
nation, before an area appeals office, or
before the Tax Court, or is an issue pend-
ing in examination (within the meaning of
section 6.03(6) of Rev. Proc. 2002–9), on
April 3, 2002, the taxpayer may change to
the original tire capitalization method for
its first or second taxable year ending on
or after December 31, 2001, under section
6.03 of this revenue procedure or, alterna-
tively, for an earlier taxable year under
section 7 of this revenue procedure. See
also section 6.05 of this revenue proce-
dure for deemed consent situations.
.05Special Rule for Certain Taxpayers
Deemed to Have Obtained Consent.A
taxpayer within the scope of this revenue
procedure will be deemed to have
obtained the consent of the Commissioner
to change to the original tire capitaliza-
tion method (as described in section 5 of
this revenue procedure) for all of its
qualifying vehicles’original tires and
replacement tires placed in service before
the year of change (as defined in section
6.02 of this revenue procedure) if: (1) the
taxpayer treated these tires in the same
manner as permitted under the original
tire capitalization method in all taxable
years since the tires were placed in ser-
vice by the taxpayer; or (2) the taxpayer
changed its treatment of these tires in a
taxable year ending on or before Decem-
ber 31, 2001, for which an original fed-
eral income tax return has been filed as of
April 3, 2002, to the original tire capitali-
zation method, with or without a§481(a)
adjustment, and treated the tires under
that method in all taxable years since the
taxpayer changed to the original tire capi-
talization method. Any taxpayer described
in this section 6.05 will be deemed to
have obtained the consent of the Commis-
sioner to change to the original tire capi-
talization method as of the beginning of
the first taxable year in which the tax-
payer used the original tire capitalization
method, and is not required to file a Form
3115 under this section 6.
However, if the taxpayer’s treatment
of its qualifying vehicle’s original tires or
replacement tires is an issue under con-
sideration in examination, before an area
appeals office, or before a federal court
(within the meaning of section 3.09 of
Rev. Proc. 2002–9), or is an issue pending
in examination (within the meaning of
section 6.03(6) of Rev. Proc. 2002–9), on
April 3, 2002, the taxpayer does not
receive audit protection in connection
with the change to the original tire capi-
talization method. Accordingly, the Ser-
vice may require the taxpayer to change
its method of accounting for a qualifying
vehicle’s original and replacement tires
for any taxable year before the first tax-
able year in which the taxpayer used the
original tire capitalization method. The
procedures in section 7 of this revenue
procedure apply for any taxable year
before the first taxable year in which the
taxpayer used the original tire capitaliza-
tion method if the taxpayer’s treatment of
its qualifying vehicle’s original tires or
replacement tires is an issue under con-
sideration in examination, before an area
April 29, 20028042002–17 I.R.B.

appeals office, or before the Tax Court, or
is an issue pending in examination, on
April 3, 2002.
.06Changes Not Made under this Rev-
enue Procedure. A taxpayer that wants to
change to the original tire capitalization
method described in section 5 of this rev-
enue procedure that does not change its
method of accounting under section 6 or
7 of this revenue procedure must follow
the change in method of accounting pro-
visions in Rev. Proc. 2002–9 (or any suc-
cessor). This change must be made with a
§481(a) adjustment.
SECTION 7. OPTIONAL
SETTLEMENT FOR TAXPAYERS
UNDER EXAMINATION, BEFORE AN
AREA APPEALS OFFICE, OR
BEFORE THE TAX COURT
.01In General. If a taxpayer is within
the scope of this revenue procedure, the
treatment of the cost of its qualifying
vehicles’original tires or replacement
tires is an issue under consideration
(within the meaning of section 3.09 of
Rev. Proc. 2002–9) in examination,
before an area appeals office, or before
the Tax Court, or is an issue pending in
examination (within the meaning of sec-
tion 6.03(6) of Rev. Proc. 2002–9), on
April 3, 2002, and the taxpayer does not
change to the original tire capitalization
method under section 6.03 of this revenue
procedure, the Service offers to settle the
original and replacement tires issue by
changing the taxpayer’s method of
accounting for the cost of original and
replacement tires to the original tire capi-
talization method in the earliest open tax-
able year after which there is no closed
taxable year.
.02Terms of Settlement.
(1) The Service will change the tax-
payer’s method of accounting for the cost
of original and replacement tires to the
original tire capitalization method
described in section 5 of this revenue pro-
cedure.
(2) The change to the original tire
capitalization method will be made using
a cut-off method in the earliest open tax-
able year after which there is no closed
taxable year.
(3) The taxpayer must reflect the
settlement on its federal income tax
returns for any affected succeeding tax-
able years. For example, an amount
required to be capitalized during a taxable
year covered by the settlement should be
depreciated in that taxable year and in
affected succeeding taxable years
(whether or not covered by the settle-
ment) in accordance with the taxpayer’s
method of accounting for depreciation.
(4) The Service will not require the
taxpayer to change its method of account-
ing for the cost of its qualifying vehicles’
original and replacement tires to a method
other than the original tire capitalization
method for any taxable year for which a
federal income tax return has been filed
as of the date of the closing agreement or
other appropriate settlement agreement,
provided that:
(a) the taxpayer has complied with
all the applicable provisions of the clos-
ing agreement or other appropriate settle-
ment agreement;
(b) there has been no taxpayer
fraud, malfeasance, or misrepresentation
of a material fact;
(c) there has been no change in
the material facts on which the closing
agreement or other appropriate settlement
agreement was based; and
(d) there has been no change in
the applicable law on which the closing
agreement or other appropriate settlement
agreement was based.
(5) The taxpayer must execute a
closing agreement under§7121 or other
appropriate settlement agreement as
described in section 7.05 of this revenue
procedure.
.03Procedures for Requesting the
Settlement.
(1)Initiating the request.
(a)Taxable years under examina-
tion or in Appeals. A taxpayer that wants
to request a settlement under this section
for taxable years under examination or in
Appeals must submit its request in writ-
ing to the first line examination manager
or appeals officer (whichever is appli-
cable) on or before September 3, 2002.
(b)Taxable years before the Tax
Court. A taxpayer that wants to request a
settlement under this section for taxable
years before the Tax Court must submit
its request in writing to the Chief Counsel
attorney assigned to the case on or before
the earlier of September 3, 2002, or the
date that is 30 days before the date the
case is first set for trial, which is the date
scheduled for the calendar call.
(2)Statement of facts, law, and
arguments. The request for settlement
must include the following information:
(a) the taxpayer’s name, address,
telephone number, and taxpayer identifi-
cation number;
(b) the taxable years covered by
the proposed settlement;
(c) the taxpayer’s earliest open
taxable year after which there is no closed
taxable year;
(d) the taxpayer’s current method
of accounting for the cost of its qualifying
vehicles’original and replacement tires;
and
(e) a statement of the material
facts, including the capitalized amount
and the deductible amount computed
under the original tire capitalization
method for each taxable year under
examination, before an area appeals
office, or before the Tax Court, and an
explanation of the computations used to
determine those amounts.
(3)Perjury statement. The request
for settlement must be accompanied by
the following declaration:“Under penal-
ties of perjury, I declare that I have exam-
ined this request, including accompanying
documents, and, to the best of my knowl-
edge and belief, the request contains all
the relevant facts relating to the request,
and such facts are true, correct, and com-
plete.”This declaration must be signed
by, or on behalf of, the taxpayer by an
individual with the authority to bind the
taxpayer in these matters. The declaration
may not be signed by the taxpayer’s rep-
resentative.
.04Procedures for Processing the
Request.
(1)Receipt of request acknowl-
edged. The first line examination man-
ager, appeals officer, or Chief Counsel
attorney (whichever is applicable) will
acknowledge receipt of the taxpayer’s
request for settlement in writing within 15
business days of receipt.
(2)Factual development. The first
line examination manager, appeals
officer, or Chief Counsel attorney (which-
ever is applicable) will contact the tax-
payer to discuss any questions the Service
may have, or ask for additional informa-
tion believed to be necessary to execute
the settlement (for example, to verify the
correctness of the taxpayer’s informa-
tion).
2002–17 I.R.B.805April 29, 2002

(3)Acceptance. The first line
examination manager, appeals officer, or
Chief Counsel attorney (whichever is
applicable) will accept the taxpayer’s
request for settlement if the request com-
plies with the applicable terms of this rev-
enue procedure. For taxable years before
the Tax Court, the settlement is subject to
the approval of the Court.
(4)Notification of acceptance. The
first line examination manager, appeals
officer, or Chief Counsel attorney (which-
ever is applicable) will notify the tax-
payer in writing when the Service agrees
to the settlement requested by the tax-
payer.
.05Procedures for Implementing the
Settlement.
(1)Closing agreement or other
appropriate settlement agreement re-
quired. A taxpayer implementing a settle-
ment is required to execute a closing
agreement under§7121 or other appro-
priate settlement agreement.
(2)Contents of closing agreement
or other appropriate settlement. A closing
agreement must comply with the require-
ments of Rev. Proc. 68–16 (1968–1 C.B.
770) and must be substantially in the
form set forth in the APPENDIX of this
revenue procedure. Settlement agree-
ments in cases pending before the Tax
Court must conform substantially to the
provisions set forth in the APPENDIX of
this revenue procedure and must conform
to the rules and procedures of the Tax
Court.
(3)Review and execution of closing
agreement or other appropriate settle-
ment.
(a)Taxpayers under examination.
The first line examination manager will
prepare a closing agreement. The first
line examination manager should submit
the closing agreement to the appropriate
Territory Manager (LMSB) or Territory
Manager, Compliance (SB/SE) (which-
ever is applicable) and his or her assigned
counsel for review prior to submitting the
closing agreement to the taxpayer for
execution. Failure by the examination
manager to submit the closing agreement
to the Territory Manager or his or her
assigned counsel for review will not
invalidate the closing agreement. After
the closing agreement has been executed
by the taxpayer, it will be executed on
behalf of the Service by the appropriate
Director, Field Operations (LMSB) or
Area Director, Field Compliance (SB/SE)
(whichever is applicable).
(b)Taxpayers before an area
appeals office. The appeals officer or
appeals team case leader will prepare a
closing agreement. After the closing
agreement has been executed by the tax-
payer, it will be executed on behalf of the
Service by an authorized official from
Appeals.
(c)Taxpayers before the Tax
Court. For docketed taxable years before
the Tax Court, the taxpayer and the Chief
Counsel attorney must prepare an appro-
priate settlement document, settlement
stipulation, or stipulated decision docu-
ment, pursuant to the rules and proce-
dures of the court. The settlement docu-
ment, settlement stipulation, or stipulated
decision document is subject to the
approval of the court.
(4)Amended returns.
(a)In general. In cases pending
before examination or appeals, the Ser-
vice will make the adjustments necessary
to reflect the settlement to the taxpayer’s
returns for the taxable years under exami-
nation or before an area appeals office. In
cases pending before the Tax Court, the
settlement agreement will include adjust-
ments necessary to reflect the settlement
with respect to the year(s) before the
court. The taxpayer is required to file
amended returns to reflect the settlement
for any other affected taxable years for
which a federal income tax return has
been filed as of the date of the closing
agreement or other appropriate settlement
agreement. The amended returns must
include the adjustments to taxable income
necessary to reflect the new method and
any collateral adjustments to taxable
income or tax liability resulting from the
change. A taxpayer eligible to file a quali-
fied amended return under Rev. Proc.
94–69 (1994–2 C.B. 804) may satisfy the
requirements of this section by filing a
qualified amended return in accordance
with that revenue procedure.
(b)Time and manner. The tax-
payer must file any required amended
returns prior to the date it executes the
closing agreement or other appropriate
settlement agreement. The taxpayer must
provide a copy of the amended returns to
the first line examination manager,
appeals officer, or Chief Counsel attorney
(whichever is applicable) before the clos-
ing agreement or other appropriate settle-
ment agreement is executed.
.06Effect on Other Offices of the Ser-
vice. If a taxpayer is before an area
appeals office or the Tax Court regarding
the treatment of the cost of its qualifying
vehicles’original and replacement tires
and does not settle this issue under the
provisions of this section 7, an appropri-
ate representative from an area appeals
office or Chief Counsel office may settle
a particular taxpayer’s case involving this
issue on a more favorable or less favor-
able basis than provided in this revenue
procedure. For example, an appeals
officer may settle a case based on the haz-
ards of litigation.
SECTION 8. EFFECTIVE DATE
01.In general. This revenue procedure
is effective for taxable years ending on or
after December 31, 2001.
02.Form 3115 pending with the Ser-
vice. If a taxpayer filed a Form 3115 with
the national office to make the change in
method of accounting authorized by this
revenue procedure, and this Form 3115 is
pending with the national office on April
3, 2002, the taxpayer may make the
change under this revenue procedure.
However, the national office will process
the Form 3115 in accordance with the
authority under which it was filed unless
the taxpayer notifies the national office
by July 2, 2002, that it intends to make
the method change under this revenue
procedure. If the taxpayer timely notifies
the national office that it wants to make
the method change under this revenue
procedure, any user fee submitted with
the Form 3115 will be returned to the tax-
payer.
SECTION 9. EFFECT ON OTHER
DOCUMENTS
Rev. Proc. 2002–9 is modified and
amplified to include this accounting
method change in section 2 of the
APPENDIX.
April 29, 20028062002–17 I.R.B.

DRAFTING INFORMATION
The principal author of this revenue
procedure is Mark Pitzer of the Office of
Associate Chief Counsel (Passthroughs
and Special Industries). For further infor-
mation regarding this revenue procedure,
contact Charlotte Chyr at (202) 622–3110
(not a toll-free call).
APPENDIX
Department of the Treasury Internal Revenue Service
Closing Agreement on Final Determination Covering Specific Matters
Under§7121 of the Internal Revenue Code, [insert taxpayer’s name, address, telephone number, and identifying number](“the
taxpayer”) and the Commissioner of Internal Revenue (“the Commissioner”) make the following closing agreement:
WHEREAS:
1. The accounting method issue covered by this closing agreement is the taxpayer’s method of accounting for the cost of its
qualifying vehicles’original and replacement tires. The definitions of qualifying vehicle, original tires, and replacement tires set
forth in section 3 of Rev. Proc. 2002–27, apply for purposes of this closing agreement.
2. The taxable year(s) covered by this closing agreement are [insert applicable taxable year(s) covered by the agreement].
3. Under the taxpayer’s present method of accounting for the cost of its qualifying vehicles’original and replacement tires, the
taxpayer [describe in detail the taxpayer’s current method of accounting being changed: for example,“deducts the cost of its quali-
fying vehicles’original and replacement tires when purchased”].
4. The taxpayer and the Commissioner relied on the following facts and representations in making this closing agreement: [insert
relevant facts, including the amounts capitalized or deducted under the original tire capitalization method for each taxable year
under examination, before an area appeals office, or before the Tax Court, an explanation of the computations used to determine
those amounts, and a statement of whether the amounts capitalized or deducted for each of those taxable years is taken into account
for federal income tax purposes].
5. [If applicable, insert:] The taxpayer has filed an amended return(s) for the taxable year(s) ended [insert applicable affected
succeeding taxable year(s) for which a federal income tax return has been filed as of the date of the closing agreement] to reflect
the change in method of accounting for the cost of the qualifying vehicles’original and replacement tires described in this closing
agreement.
6. [If applicable, insert:] A stipulated decision has been entered by the [insert name of federal court] with respect to the taxable
year(s) ended [insert date(s)] that reflects taxable income for such year(s) computed using the original tire capitalization method
described in section 5 of Rev. Proc. 2002–27 for the cost of the qualifying vehicles’original and replacement tires.
NOW IT IS HEREBY DETERMINED AND AGREED for federal income tax purposes:
1. That the Service is changing the taxpayer’s method of accounting for the cost of its qualifying vehicles’original and replace-
ment tires to the original tire capitalization method of accounting described in section 5 of Rev. Proc. 2002–27, for the taxable year
ended [insert earliest open taxable year after which there is no closed taxable year].
2. That the change in method of accounting is to be made on a cut-off basis.
3. That the adjustment(s) to tax attributable to the adjustment(s) to taxable income resulting from the change in the method of
accounting for the cost of the qualifying vehicles’original and replacement tires (including the current year adjustment(s) and any
collateral adjustments to taxable income or tax liability resulting from the change) for each taxable year covered by the closing
agreement are as follows: [insert the adjustments to each taxable year covered by the closing agreement in table form].
4. That the change in method of accounting for the cost of the qualifying vehicles’original and replacement tires is a change in
method of accounting within the meaning of Rev. Proc. 2002–27. As such, the provisions of§446 and the regulations thereunder
apply to the original tire capitalization method of accounting described in section 5 of Rev. Proc. 2002–27 for the cost of the quali-
fying vehicles’original and replacement tires.
5. That, under section 7.02(4) of Rev. Proc. 2002–27, the Service will not require the taxpayer to change its method of account-
ing for the cost of its qualifying vehicles’original and replacement tires to a method other than the original tire capitalization
method for [insert taxable year(s) for which a federal income tax return has been filed as of the date of this closing agreement],
provided that: (a) the taxpayer has complied with all the applicable provisions of this closing agreement; (b) there has been no tax-
payer fraud, malfeasance, or misrepresentation of a material fact; (c) there has been no change in the material facts on which this
closing agreement was based; and (d) there has been no change in the applicable law on which this closing agreement was based.
6. That the Service is not precluded from challenging the computation of the amounts capitalized or deducted for any taxable
year covered by this closing agreement on a basis unrelated to the original tire capitalization method (for example, that all or a
portion of the cost of a qualifying vehicle’s original or replacement tires is not incurred under§461).
2002–17 I.R.B.807April 29, 2002

7. [If applicable, insert:] That the following additional conditions also apply: [insert, for example, conditions with respect to
waiving restrictions on assessment and collection, paying any tax, abating any overassessment, or refunding or crediting any tax
overpayment].
8. That the taxpayer accepts this settlement and agrees to the applicable terms of Rev. Proc. 2002–27.
This agreement is final and conclusive except:
(1) The matter it relates to may be reopened in the event of fraud, malfeasance, or misrepresentation of a material fact;
(2) It is subject to the Internal Revenue Code sections that expressly provide that effect be given to their provisions (including
any stated exception for§7122) notwithstanding any law or rule of law; and
(3) If it relates to a tax period ending after the date of this agreement, it is subject to any law enacted after the agreement date,
that applies to the tax period.
By signing, the parties certify that they have read and agreed to the terms of this document.
Taxpayer (other than individual):
By:
Date:
Title:
Commissioner of Internal Revenue:
By:
Date:
Title:
Instructions
This agreement must be signed and filed in triplicate. (All copies must have original signatures.) The original and copies of the
agreement must be identical. The name of the taxpayer must be stated accurately. The agreement may relate to one or more years.
If an attorney or agent signs the agreement for the taxpayer, the power of attorney (or a copy) authorizing that person to sign
must be attached to the agreement.
If the taxpayer is a corporation, the agreement must be dated and signed with the name of the corporation, the signature and title
of an authorized officer or officers, or the signature of an authorized attorney or agent. It is not necessary that a copy of an enabling
corporate resolution be attached.
Use additional pages if necessary and identify them as part of this agreement.
Please see Rev. Proc. 68–16 (1968–1 C.B. 770) for a detailed description of practices and procedures applicable to most closing
agreements.
April 29, 20028082002–17 I.R.B.

Part IV. Items of General Interest
Electronic Submission of
Form 8850
Announcement 2002–44
Form 8850
Employers submit Form 8850,Pre-
Screening Notice and Certification
Request for the Work Opportunity and
Welfare-to-Work Credits, to State
Employment Security Agencies (SESAs)
as part of the process of obtaining those
tax credits. The Internal Revenue Service
will allow the electronic submission of
Forms 8850 with SESAs that choose to
establish a system to electronically
receive this form. In general, the elec-
tronic system must meet the requirements
described in paragraphs (1) through (6)
below.
For purposes of this announcement,
“employer”refers to an employer
required to submit a Form 8850 or an
authorized employer representative.
Requirements
(1)In General. The electronic system
must ensure that the information received
is the information sent, and it must docu-
ment all occasions of access that result in
the submission of a Form 8850. In addi-
tion, the design and operation of the elec-
tronic system, including access proce-
dures, must make it reasonably certain
that the persons signing the Form 8850,
accessing the system, and submitting the
Form 8850 are the job applicant and
employer identified in the form.
(2)Same Information as Paper Form
8850. The electronic submission must
provide the SESA with exactly the same
information as the paper Form 8850.
(3)Jurat and Signature Requirements.
The electronic submission must be signed
by the job applicant and the employer
under penalties of perjury.
(A)Jurat. The jurats (perjury state-
ments) must contain the language that
appears on the paper Form 8850 for the
job applicant and the employer, respec-
tively. The electronic system must inform
the job applicant and the employer that
they must make the declaration contained
in the applicable jurat and that the decla-
ration is made by signing the Form 8850.
The instructions and the language of each
jurat must immediately follow the infor-
mation provided by the job applicant or
the employer, as applicable, and must
immediately precede that person’s elec-
tronic signature.
(B)Electronic Signatures. The elec-
tronic signatures must (1) identify the job
applicant whose name is on the electronic
Form 8850 and the employer submitting
the electronic Form 8850, and (2) authen-
ticate and verify the submission. For this
purpose, the terms“authenticate”and
“verify”have the same meaning as they
do when applied to a written signature on
a paper Form 8850. An electronic signa-
ture can be in any form that satisfies the
foregoing requirements. The electronic
signature of the employer must be the
final entry in the submission.
(4)Copies of Electronic Form 8850.
The electronic system must enable the
employer to supply and, upon request by
the Internal Revenue Service, the
employer must supply (A) a hard copy of
the electronic Form 8850 submitted to the
SESA and (B) a statement that, to the best
of the employer’s knowledge, the elec-
tronic Form 8850 was submitted by the
employer with respect to the named job
applicant. The hard copy of the electronic
Form 8850 must provide exactly the same
information as, but need not be a fac-
simile of, the paper Form 8850.
(5)Retention of Forms 8850 by the
SESAs and Employers. Electronic Forms
8850 have the same status as paper Forms
8850. Therefore, guidance that applies to
paper Forms 8850 also applies to elec-
tronic Forms 8850. For example, as is the
case for paper Forms 8850, electronic
Forms 8850 are required to be retained by
employers under their established record-
keeping systems. For further information,
see Rev. Proc. 98–25 (1998–1 C.B. 689)
(information regarding the retention of
records within an Automatic Data Pro-
cessing System).
Drafting Information
The principal author of this announce-
ment is Robert Wheeler. For further infor-
mation regarding this announcement, con-
tact Karin Loverud at (202) 622–6080
(not a toll-free call).
IRS Issues Document Warning
Taxpayers to be Aware of
Home-Based Business Tax
Avoidance Schemes
Announcement 2002–48
The Internal Revenue Service just
released a new brochure entitledHome-
Based Business Tax Avoidance Schemes
. . .At A Glance. The schemes described
in the document claim to offer tax
“relief,”but actually result in illegal tax
avoidance.
The promoters of these schemes claim
that by setting up a bogus home-based
business, individual taxpayers can deduct
most, or all, of their personal expenses as
business expenses. The brochure includes
some examples of personal expenses that
are not deductible but are commonly
claimed as business expenses in home-
based business tax avoidance schemes.
The brochure explains that no matter
how convincing the claims that are found
in marketing materials for these schemes
may appear, nondeductible personal liv-
ing expenses cannot be transformed into
deductible business expenses. The tax
code firmly establishes that a clear busi-
ness purpose and profit motive must exist
in order to generate and claim allowable
business expenses.
Taxpayers who claimed such deduc-
tions on a past tax return should file an
amended return as soon as possible to
limit possible interest and penalties on top
of any taxes they might owe.
To find out more about home-based
business tax avoidance schemes, order
IRS Document 01300 (02–2002) by call-
ing1–800–829–2437,orvisit
www.irs.gov.
2002–17 I.R.B.809April 29, 2002

Notice of Disposition of
Declaratory Judgment
Proceedings Under Section
7428
This announcement serves notice to
donors that on January 14, 2002, the
United States Tax Court entered a Deci-
sion accepting the agreement of the par-
ties regarding the organization described
below. The organization listed below is
recognized as an organization described
in section 501(c)(3) which is exempt from
tax under section 501(a) for taxable years
prior to January 1, 2001. Pursuant to the
Decision, the organization listed below is
not recognized as an organization
described in section 501(c)(3) and is not
exempt from tax under section 501(a) for
taxable years beginning January 1, 2001.
Living Truth Ministries
Austin, TX
This announcement serves notice to
donors that on February 15, 2002, the
United States Tax Court entered a deci-
sion accepting the agreement of the par-
ties that the organization listed below is
not recognized as an organization
described in section 501(c) and is not
exempt from taxation under section
501(a), effective October 1, 1996.
Endowment for Paso Del Norte
Schools, Inc.
El Paso, TX
April 29, 20028102002–17 I.R.B.

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as“rulings”) that
have an effect on previous rulings use the
following defined terms to describe the
effect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus, if
an earlier ruling held that a principle
applied to A, and the new ruling holds
that the same principle also applies to B,
the earlier ruling is amplified. (Compare
withmodified, below).
Clarifiedis used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously
published ruling and points out an essen-
tial difference between them.
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 pub-
lished position. (Compare withamplified
andclarified, 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
rulings that are obsoleted because of
changes in law or regulations. A ruling
may also be obsoleted because the sub-
stance has been included in regulations
subsequently adopted.
Revokeddescribes situations where the
position in the previously published rul-
ing is not correct and the correct position
is being stated in the new ruling.
Supersededdescribes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a
period of time in separate rulings. If the
new ruling does more than restate the
substance of a prior ruling, a combination
of terms is used. For example,modified
andsupersededdescribes a situation
where the substance of a previously pub-
lished ruling is being changed in part and
is continued without change in part and it
is desired to restate the valid portion of
the previously published ruling in a new
ruling that is self contained. In this case,
the previously published ruling is first
modified and then, as modified, is super-
seded.
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
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rul-
ings 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 following abbreviations in current
use and formerly used will appear in
material published in the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign Corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Intemal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statements of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.
2002–17 I.R.B.iApril 29, 2002

Numerical Finding List
1
Bulletins 2002–1 through 2002–16
Announcements:
2002–1, 2002–2 I.R.B.304
2002–2, 2002–2 I.R.B.304
2002–3, 2002–2 I.R.B.305
2002–4, 2002–2 I.R.B.306
2002–5, 2002–4 I.R.B.420
2002–6, 2002–5 I.R.B.458
2002–7, 2002–5 I.R.B.459
2002–8, 2002–6 I.R.B.494
2002–9, 2002–7 I.R.B.536
2002–10, 2002–7 I.R.B.539
2002–11, 2002–6 I.R.B.494
2002–12, 2002–8 I.R.B.553
2002–13, 2002–7 I.R.B.540
2002–14, 2002–7 I.R.B.540
2002–15, 2002–7 I.R.B.540
2002–16, 2002–7 I.R.B.541
2002–17, 2002–8 I.R.B.561
2002–18, 2002–10 I.R.B.621
2002–19, 2002–8 I.R.B.561
2002–20, 2002–8 I.R.B.561
2002–21, 2002–8 I.R.B.562
2002–22, 2002–8 I.R.B.562
2002–23, 2002–8 I.R.B.563
2002–24, 2002–9 I.R.B.606
2002–25, 2002–10 I.R.B.621
2002–26, 2002–11 I.R.B.629
2002–27, 2002–11 I.R.B.629
2002–28, 2002–11 I.R.B.630
2002–29, 2002–11 I.R.B.631
2002–30, 2002–11 I.R.B.632
2002–31, 2002–15 I.R.B.747
2002–32, 2002–12 I.R.B.664
2002–33, 2002–12 I.R.B.666
2002–34, 2002–13 I.R.B.702
2002–35, 2002–12 I.R.B.667
2002–36, 2002–13 I.R.B.703
2002–37, 2002–13 I.R.B.703
2002–38, 2002–14 I.R.B.738
2002–39, 2002–14 I.R.B.738
2002–40, 2002–15 I.R.B.747
2002–41, 2002–14 I.R.B.739
2002–42, 2002–14 I.R.B.739
2002–43, 2002–16 I.R.B.792
Court Decisions:
2073, 2002–14 I.R.B.718
Notices:
2002–1, 2002–2 I.R.B.283
2002–2, 2002–2 I.R.B.285
2002–3, 2002–2 I.R.B.289
2002–4, 2002–2 I.R.B.298
2002–5, 2002–3 I.R.B.320
2002–6, 2002–3 I.R.B.326
2002–7, 2002–6 I.R.B.489
2002–8, 2002–4 I.R.B.398
2002–9, 2002–5 I.R.B.450
Notices:—Continued
2002–10, 2002–6 I.R.B.490
2002–11, 2002–7 I.R.B.526
2002–12, 2002–7 I.R.B.526
2002–13, 2002–8 I.R.B.547
2002–14, 2002–8 I.R.B.548
2002–15, 2002–8 I.R.B.548
2002–16, 2002–9 I.R.B.567
2002–17, 2002–9 I.R.B.567
2002–18, 2002–12 I.R.B.644
2002–19, 2002–10 I.R.B.619
2002–21, 2002–14 I.R.B.730
2002–22, 2002–14 I.R.B.731
2002–23, 2002–15 I.R.B.742
2002–24, 2002–16 I.R.B.785
2002–25, 2002–15 I.R.B.743
2002–26, 2002–15 I.R.B.743
2002–28, 2002–16 I.R.B.785
Proposed Regulations:
REG–209135–88, 2002–4 I.R.B.418
REG–209114–90, 2002–9 I.R.B.576
REG–107100–00, 2002–7 I.R.B.529
REG–107366–00, 2002–12 I.R.B.645
REG–118861–00, 2002–12 I.R.B.651
REG–105344–01, 2002–2 I.R.B.302
REG–112991–01, 2002–4 I.R.B.404
REG–115054–01, 2002–7 I.R.B.530
REG–119436–01, 2002–3 I.R.B.377
REG–120135–01, 2002–8 I.R.B.552
REG–125450–01, 2002–5 I.R.B.457
REG–125626–01, 2002–9 I.R.B.604
REG–142299–01, 2002–4 I.R.B.418
REG–159079–01, 2002–6 I.R.B.493
REG–165706–01, 2002–16 I.R.B.787
REG–167648–01, 2002–16 I.R.B.790
REG–102740–02, 2002–13 I.R.B.701
Revenue Procedures:
2002–1, 2002–1 I.R.B.1
2002–2, 2002–1 I.R.B.82
2002–3, 2002–1 I.R.B.117
2002–4, 2002–1 I.R.B.127
2002–5, 2002–1 I.R.B.173
2002–6, 2002–1 I.R.B.203
2002–7, 2002–1 I.R.B.249
2002–8, 2002–1 I.R.B.252
2002–9, 2002–3 I.R.B.327
2002–10, 2002–4 I.R.B.401
2002–11, 2002–7 I.R.B.526
2002–12, 2002–3 I.R.B.374
2002–13, 2002–8 I.R.B.549
2002–14, 2002–5 I.R.B.450
2002–15, 2002–6 I.R.B.490
2002–16, 2002–9 I.R.B.572
2002–17, 2002–13 I.R.B.676
2002–18, 2002–13 I.R.B.678
2002–19, 2002–13 I.R.B.696
2002–20, 2002–14 I.R.B.732
Revenue Procedures—Continued:
2002–22, 2002–14 I.R.B.733
2002–23, 2002–15 I.R.B.744
2002–26, 2002–15 I.R.B.746
Revenue Rulings:
2002–1, 2002–2 I.R.B.268
2002–2, 2002–2 I.R.B.271
2002–3, 2002–3 I.R.B.316
2002–4, 2002–4 I.R.B.389
2002–5, 2002–6 I.R.B.461
2002–6, 2002–6 I.R.B.460
2002–7, 2002–8 I.R.B.543
2002–8, 2002–9 I.R.B.564
2002–9, 2002–10 I.R.B.614
2002–10, 2002–10 I.R.B.616
2002–11, 2002–10 I.R.B.608
2002–12, 2002–11 I.R.B.624
2002–13, 2002–12 I.R.B.637
2002–14, 2002–12 I.R.B.636
2002–15, 2002–13 I.R.B.668
2002–16, 2002–15 I.R.B.740
2002–17, 2002–14 I.R.B.716
2002–18, 2002–16 I.R.B.779
2002–19, 2002–16 I.R.B.778
Tax Conventions:
2002–14 I.R.B.725
Treasury Decisions:
8968, 2002–2 I.R.B.274
8969, 2002–2 I.R.B.276
8970, 2002–2 I.R.B.281
8971, 2002–3 I.R.B.308
8972, 2002–5 I.R.B.443
8973, 2002–4 I.R.B.391
8974, 2002–3 I.R.B.318
8975, 2002–4 I.R.B.379
8976, 2002–5 I.R.B.421
8977, 2002–6 I.R.B.463
8978, 2002–7 I.R.B.500
8979, 2002–6 I.R.B.466
8980, 2002–6 I.R.B.477
8981, 2002–7 I.R.B.496
8982, 2002–8 I.R.B.544
8983, 2002–9 I.R.B.565
8984, 2002–13 I.R.B.668
8985, 2002–14 I.R.B.707
8986, 2002–16 I.R.B.780
1
A cumulative list of all revenue rulings, revenue
procedures, Treasury decisions, etc., published in
Internal Revenue Bulletins 2001–27 through 2001–53 is
in Internal Revenue Bulletin 2002–1, dated January 7, 2002.
April 29, 2002ii2002–17 I.R.B.

Finding List of Current Actions
on Previously Published Items
2
Bulletins 2002–1 through 2002–16
Announcements:
2001–83
Modified by
Ann. 2002–36, 2002–13 I.R.B.703
2002–9
Corrected by
Ann. 2002–30, 2002–11 I.R.B.632
Ann. 2002–35, 2002–12 I.R.B.667
Notices:
90–24
Modified and superseded by
Notice 2002–24, 2002–16 I.R.B.785
98–31
Supplemented by
Ann. 2002–37, 2002–13 I.R.B.703
98–43
Modified and superseded by
Notice 2002–5, 2002–3 I.R.B.320
2000–11
Obsoleted by
Notice 2002–3, 2002–2 I.R.B.289
2001–10
Revoked by
Notice 2002–8, 2002–4 I.R.B.398
2001–61
Supplemented by
Notice 2002–15, 2002–8 I.R.B.548
2001–68
Supplemented by
Notice 2002–15, 2002–8 I.R.B.548
Proposed Regulations:
REG–209135–88
Corrected by
Ann. 2002–15, 2002–7 I.R.B.540
Ann. 2002–30, 2002–11 I.R.B.632
REG–251502–96
Withdrawn by
Ann. 2002–33, 2002–12 I.R.B.666
REG–107100–00
Corrected by
Ann. 2002–30, 2002–11 I.R.B.632
REG–105344–01
Corrected by
Ann. 2002–7, 2002–5 I.R.B.459
Proposed Regulations:—Continued
REG–112991–01
Corrected by
Ann. 2002–30, 2002–11 I.R.B.632
Ann. 2002–38, 2002–14 I.R.B.738
REG–115054–01
Corrected by
Ann. 2002–30, 2002–11 I.R.B.632
REG–119436–01
Corrected by
Ann. 2002–30, 2002–11 I.R.B.632
REG–120135–01
Corrected by
Ann. 2002–30, 2002–11 I.R.B.632
REG–125450–01
Corrected by
Ann. 2002–30, 2002–11 I.R.B.632
REG–125626–01
Corrected by
Ann. 2002–30, 2002–11 I.R.B.632
REG–126485–01
Corrected by
Ann. 2002–30, 2002–11 I.R.B.632
REG–137519–01
Corrected by
Ann. 2002–30, 2002–11 I.R.B.632
REG–142299–01
Corrected by
Ann. 2002–15, 2002–7 I.R.B.540
Ann. 2002–30, 2002–11 I.R.B.632
REG–142686–01
Corrected by
Ann. 2002–30, 2002–11 I.R.B.632
REG–159079–01
Corrected by
Ann. 2002–30, 2002–11 I.R.B.632
Revenue Procedures:
84–37
Modified by
Rev. Proc. 2002–1, 2002–1 I.R.B.1
84–57
Obsoleted by
T.D. 8976, 2002–5 I.R.B.421
87–50
Modified by
Rev. Proc. 2002–10, 2002–4 I.R.B.401
89–45
Superseded by
Rev. Proc. 2002–23, 2002–15 I.R.B.744
Revenue Procedures:—Continued
96–13
Modified by
Rev. Proc. 2002–1, 2002–1 I.R.B.1
97–27
Modified and amplified by
Rev. Proc. 2002–19, 2002–13 I.R.B.696
98–49
Obsoleted by
T.D. 8976, 2002–5 I.R.B.421
99–49
Modified and superseded by
Rev. Proc. 2002–9, 2002–3 I.R.B.327
2000–20
Modified by
Rev. Proc. 2002–6, 2002–1 I.R.B.203
2000–46
Superseded by
Rev. Proc. 2002–22, 2002–14 I.R.B.733
2001–1
Superseded by
Rev. Proc. 2002–1, 2002–1 I.R.B.1
2001–2
Superseded by
Rev. Proc. 2002–2, 2002–1 I.R.B.82
2001–3
Superseded by
Rev. Proc. 2002–3, 2002–1 I.R.B.117
2001–4
Superseded by
Rev. Proc. 2002–4, 2002–1 I.R.B.127
2001–5
Superseded by
Rev. Proc. 2002–5, 2002–1 I.R.B.173
2001–6
Superseded by
Rev. Proc. 2002–6, 2002–1 I.R.B.203
2001–7
Superseded by
Rev. Proc. 2002–7, 2002–1 I.R.B.249
2001–8
Superseded by
Rev. Proc. 2002–8, 2002–1 I.R.B.252
2001–13
Corrected by
Ann. 2002–5, 2002–4 I.R.B.420
2001–16
Modified by
Ann. 2002–26, 2002–11 I.R.B.629
2001–27
Supplemented by
Rev. Proc. 2002–20, 2002–14 I.R.B.732
2
A cumulative list of current actions on previously published
items in Internal Revenue Bulletins 2001–27 through 2001–53 is
in Internal Revenue Bulletin 2002–1, dated January 7, 2002.
2002–17 I.R.B.iiiApril 29, 2002

Revenue Procedures:—Continued
2001–36
Superseded by
Rev. Proc. 2002–3, 2002–1 I.R.B.117
2001–41
Superseded by
Rev. Proc. 2002–2, 2002–1 I.R.B.82
2001–51
Superseded by
Rev. Proc. 2002–3, 2002–1 I.R.B.117
2002–3
Modified by
Rev. Proc. 2002–22 I.R.B.733
2002–6
Modified by
Notice 2002–1, 2002–2 I.R.B.283
2002–8
Modified by
Notice 2002–1, 2002–2 I.R.B.283
2002–9
Modified and clarified by
Ann. 2002–17, 2002–8 I.R.B.561
Modified and amplified by
Rev. Rul. 2002–9, 2002–10 I.R.B.614
Rev. Proc. 2002–17, 2002–13 I.R.B.676
Rev. Proc. 2002–19, 2002–13 I.R.B.696
Revenue Rulings:
55–261
Distinguished by
Rev. Rul. 2002–19, 2002–16 I.R.B.778
55–747
Revoked by
Notice 2002–8, 2002–4 I.R.B.398
61–146
Distinguished by
Rev. Rul. 2002–3, 2002–3 I.R.B.316
64–328
Modified by
Notice 2002–8, 2002–4 I.R.B.398
66–110
Modified by
Notice 2002–8, 2002–4 I.R.B.398
73–304
Superseded by
Rev. Proc. 2002–26, 2002–15 I.R.B.746
73–305
Superseded by
Rev. Proc. 2002–26, 2002–15 I.R.B.746
79–151
Distinguished by
Rev. Rul. 2002–19, 2002–16 I.R.B.778
79–284
Superseded by
Rev. Proc. 2002–26, 2002–15 I.R.B.746
Revenue Rulings:—Continued
89–29
Obsoleted by
T.D. 8976, 2002–5 I.R.B.421
92–19
Supplemented in part by
Rev. Rul. 2002–12, 2002–11 I.R.B.624
2002–7
Corrected by
Ann. 2002–13, 2002–7 I.R.B.540
Treasury Decisions:
8971
Corrected by
Ann. 2002–20, 2002–8 I.R.B.561
8972
Corrected by
Ann. 2002–23, 2002–8 I.R.B.563
8973
Corrected by
Ann. 2002–14, 2002–7 I.R.B.540
8975
Corrected by
Ann. 2002–21, 2002–8 I.R.B.562
8976
Corrected by
Ann. 2002–21, 2002–8 I.R.B.562
8978
Corrected by
Ann. 2002–39, 2002–14 I.R.B.738
April 29, 2002iv2002–17 I.R.B.