Internal Revenue Bulletin 2005-50 (PDF rendition): IRS Revenue Procedures

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

Bulletin No. 200
5-50
December 12, 200
5
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 2005–88, page 1145.
This announcement solicits applications from potential partners
to participate in the 2006 IRS Individual e-file Partnership Pro-
gram. The partnership opportunities support RRA 98 which
requires the IRS to receive 80% of all returns electronically by
2007. RRA 98 authorized the IRS Commissioner to promote
the benefits and encourage the use of e-file services through
partnerships with various entities that offer low cost tax prepa-
ration and electronic filing of income tax returns for qualified
taxpayers. Applicants that are accepted as partners will have
a link(s) and description(s) of their services placed onirs.gov
(IRS e-file Partners Page).
INCOME TAX
REG–144620–04, page 1141.
Proposed regulations under section 704(b) of the Code pro-
vide rules for testing the substantiality of an allocation where
the partners are look-through entities or members of a consoli-
dated group, provide additional guidance on the effect of other
provisions, such as section 482, upon the tax treatment of a
partner with respect to the partner’s distributive share under
section 704(b), and revise the existing rules for determining
the partners’ interests in the partnership. A public hearing is
scheduled for February 15, 2006.
Rev. Proc. 2005–74, page 1098.
Substitute tax forms and schedules.Requirements are
set forth for privately designed and printed federal tax forms
and conditions under which the Service will accept computer
prepared, and computer-generated tax forms and schedules.
Rev. Proc. 2004–62 superseded.
EMPLOYEE PLANS
Notice 2005–87, page 1097.
Application of regulations under section 415; plan
amendments.This notice provides that when the final reg-
ulations under section 415 of the Code are published, the
grandfather rule of regulations section 1.415(a)–1(g)(3) for
preexisting benefits in defined benefit plans will be expanded.
Rev. Proc. 2005–76, page 1139.
Retroactive payment of benefits; multiemployer plan;
discretionary relief; extension.This procedure extends the
date by which certain qualified retirement plans must be in op-
erational compliance with reforming plan amendments in order
to be eligible for the treatment described in section 3.02 of
Rev. Proc. 2005–23, 2005–18 I.R.B. 991, which relates to
the Supreme Court decision inCentral Laborers’ Pension Fund
v. Heinz, 541 U.S. 739 (2004). Rev. Proc. 2005–23 modi-
fied.
EXEMPT ORGANIZATIONS
Announcement 2005–89, page 1149.
A list is provided of organizations now classified as private foun-
dations.
(Continued on the next page)
Fi
nding Lists begin on page ii.

ADMINISTRATIVE
Rev. Proc. 2005–75, page 1137.
This procedure provides guidance concerning when informa-
tion shown on a return in accordance with the applicable forms
and instructions will be adequate disclosure for purposes of
reducing an understatement of income tax under sections
6662(d) and 6694(a) of the Code. Rev. Proc. 2004–73
updated.
Announcement
2005–87, page 1144.
The purpose of
this announcement is to formally announce the
Compliance As
surance Process (CAP) pilot program for large
business tax
payers. The objective of the program is to reduce
taxpayer bur
den and uncertainty while assuring the Service of
the accuracy
of tax returns prior to filing, thereby reducing or
eliminating
the need for post-filing examinations.
December 12, 20052005–50 I.R.B.

The IRS Mission
Provide America’s taxpayers top quality service by helping
them understand and meet their tax responsibilities and by
applying the tax law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are compiled semiannually into Cumulative Bulletins,
which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement are not published; however, statements of internal
practices and procedures that affect the rights and duties of
taxpayers are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers
or technical advice to Service field offices, identifying details
and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B, Leg-
islation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Sec-
retary (Enforcement).
Part IV
.—Items of General Interest.
This par
t includes notices of proposed rulemakings, disbar-
ment an
d suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The c
ontents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S.Government Printing Office, Washington, DC 20402.
2005–50 I.R.B.December 12, 2005

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Part I. Rulings and Decisions Under the Internal Revenue Code
of 1986
Section 6662.—Imposition
of Accuracy-Related
Penalty on Underpayments
Guidance is provided concerning when informa-
tion shown on a return in accordance with the applica-
ble forms and instructions will be adequate disclosure
under section 6662(d) for purposes of reducing an un-
derstatement of income tax. See Rev. Proc. 2005-75,
page 1137.
Section 6694.—Under-
statement of Taxpayer’s
Liability by Income Tax
Return Preparer
Guidance is provided concerning when informa-
tion shown on a return inaccordance with the appli-
cable forms and instructions will be adequate disclo-
sure under section 6694(a) for purposes of reducing
an understatement of income tax due to a return pre-
parer’s unrealistic position. See Rev. Proc. 2005-75,
page 1137.
Section 7805.—Rules
and Regulations
26 CFR 301.7805–1: Rules and regulations.
A revenue procedure extends the date for multiem-
ployer plans to meet the requirements in Rev. Proc.
2005–23, which was issued as a result ofCentral La-
borers Pension Fund v. Heinz, 541 U.S. 739 (2004).
See Rev. Proc. 2005-76, page 1139.
2005–50 I.R.B.1096December 12, 2005

Part III. Administrative, Procedural, and Miscellaneous
Section 415 Regulations and
Preexisting Plans
Notice 2005–87
Purpose
This notice provides that when the fi-
nal regulations under § 415 of the Internal
Revenue Code are published, the grandfa-
ther rule of § 1.415(a)–1(g)(3) of the pro-
posed regulations for preexisting benefits
in defined benefit plans will be expanded.
Background
Section 415 of the Code provides vari-
ous limitations on benefits under qualified
defined benefit plans and annual additions
under qualified defined contribution plans.
The proposed regulations under § 415, is-
sued May 31, 2005, provide comprehen-
sive guidance regarding the limitations of
§ 415, including updates to the regulations
for numerous statutory changes. The reg-
ulations are proposed to apply to limita-
tion years beginning on or after January 1,
2007.
Section 1.415(a)–1(g)(3) of the pro-
posed regulations provides a grandfather
rule for preexisting benefits under which
a defined benefit plan will be considered
to satisfy the limitations of § 415(b) for
a participant with respect to benefits ac-
crued or payable under the plan as of the
effective date of the final regulations. This
grandfather rule applies only to benefits
accrued pursuant to plan provisions that
were adopted and in effect on May 31,
2005, and only if such plan provisions
meet the requirements of statutory pro-
visions, regulations, and other published
guidance in effect on May 31, 2005.
Commentators have expressed con-
cerns about the grandfather provision of
the proposed regulations. Commentators
asserted that plan sponsors should not
be required to apply the final regulations
before their effective date and noted that
the May 31, 2005, date would effectively
require them to apply the final regulations
retroactively (since any benefit provided
by a defined benefit plan adopted after
May 31, 2005, or benefits attributable to
a post-May 31, 2005, amendment will not
be covered by the grandfather rule).
Expansion of Grandfather Rule for
Preexisting Plans
The Treasury and Service intend that,
when the regulations under § 415 are fi-
nalized, the May 31, 2005, date that is in
the grandfather rule in §1.415(a)–1(g)(3)
will be replaced with a date that is not ear-
lier than the date of publication of the fi-
nal regulations. Thus, in the interim pe-
riod before final regulations are published,
plan sponsors who adopt new plans and
plan amendments will not be subject to the
interpretations set forth in the final reg-
ulations with respect to benefits accrued
prior to the effective date of the final reg-
ulations, if the plan provisions relating to
§ 415(b) meet the requirements of statu-
tory provisions, final regulations and other
published guidance in effect when the new
plan or the new amendment is adopted.
Additionally, in the interim period before
final regulations are published, plan provi-
sions will not be treated as failing to satisfy
the requirements of § 415 merely because
the plan’s definition of compensation for a
limitation year that is used for purposes of
applying the limitations of § 415 reflects
compensation for a plan year that is in ex-
cess of the limitation under § 401(a)(17)
that applies to that plan year.
Drafting Information
The principal author of this notice
is Kathleen Herrmann of the Employee
Plans, Tax Exempt and Government
Entities Division. For further informa-
tion regarding this notice, please contact
the Employee Plans taxpayer assistance
telephone service at (877) 829–5500 (a
toll-free number) between the hours of
8:00 a.m. and 6:30 p.m. Eastern Time,
Monday Through Friday. Ms. Herrmann
can be reached at (202) 283–9888 (not a
toll-free number).
December 12, 200510972005–50 I.R.B.

NOTE: This revenue procedure will be reproduced as the next revision of IRS Publication 1167,General Rules and Specifica-
tions for Substitute Forms and Schedules.
Rev. Proc. 2005-74
TABLE OF CONTENTS
PART 1 – INTRODUCTION TO SUBSTITUTE FORMS
SECTION 1.1 – OVERVIEW OF REVENUE PROCEDURE 2005-74...................................................... 1099
SECTION 1.2 – IRS CONTACTS.................................................................................... 1100
SECTION 1.3 – WHAT’S NEW..................................................................................... 1101
SECTION 1.4 – DEFINITIONS..................................................................................... 1101
SECTION 1.5 – AGREEMENT..................................................................................... 1103
PART 2 – GENERAL GUIDELINES FOR SUBMISSIONS AND APPROVALS
SECTION 2.1 – GENERAL SPECIFICATIONS FOR APPROVAL....................................................... 1103
SECTION 2.2 – HIGHLIGHTS OF PERMITTED CHANGES AND REQUIREMENTS..................................... 1104
SECTION 2.3 – VOUCHERS....................................................................................... 1105
SECTION 2.4 – RESTRICTIONS ON CHANGES..................................................................... 1107
SECTION 2.5 – GUIDELINES FOR OBTAINING IRS APPROVAL...................................................... 1107
SECTION 2.6 – OFFICE OF MANAGEMENT AND BUDGET (OMB) REQUIREMENTS FOR ALL
SUBSTITUTE FORMS
................................................................................ 1110
PART 3 – PHYSICAL ASPECTS AND REQUIREMENTS
SECTION 3.1 – GENERAL GUIDELINES FOR SUBSTITUTE FORMS.................................................. 1111
SECTION 3.2 – PAPER............................................................................................ 1112
SECTION 3.3 – PRINTING........................................................................................ 1113
SECTION 3.4 – MARGINS......................................................................................... 1114
SECTION 3.5 – EXAMPLES OF APPROVED FORMATS.............................................................. 1115
SECTION 3.6 – MISCELLANEOUS INFORMATION FOR SUBSTITUTE FORMS........................................ 1115
PART 4 – ADDITIONAL RESOURCES
SECTION 4.1 – GUIDANCE FRO
M OTHER REVENUE PROCEDURES
................................
................. 1116
SECTION 4.2 – ORDERING PUBLICATIONS........................................................................ 1116
SECTION 4.3 – ELECTRONIC TAX PRODUCTS..................................................................... 1117
SECTION 4.4 – FEDERAL TAX FORMS ON CD-ROM................................................................ 1117
PART 5 – REQUIREMENTS FOR SPECIFIC TAX RETURNS
SECTION 5.1 – TAX RETURNS (FORMS 1040, 1040A, 1120, ETC.)...................................................... 1118
SECTION 5.2 – CHANGES PERMITTED TO GRAPHICS (FORMS 1040A AND 1040)..................................... 1119
2005–50 I.R.B.1098December 12, 2005

SECTION 5.3 – CHANGES PERMITTED TO FORM 1040A GRAPHICS................................................. 1120
SECTION 5.4 – CHANGES PERMITTED TO FORM 1040 GRAPHICS.................................................. 1120
PART 6 – FORMAT AND CONTENT OF SUBSTITUTE RETURNS
SECTION 6.1 – ACCEPTABLE FORMATS FOR SUBSTITUTE FORMS AND SCHEDULES................................ 1121
SECTION 6.2 – ADDITIONAL INSTRUCTIONS FOR ALL FORMS..................................................... 1122
PART 7 – MISCELLANEOUS FORMS AND PROGRAMS
SECTION 7.1 – SPECIFICATIONS FOR SUBSTITUTE SCHEDULES K-1................................................ 1123
SECTION 7.2 – PROCEDURES FOR PRINTING IRS ENVELOPES..................................................... 1127
SECTION 7.3 – GUIDELINES FOR SUBSTITUTE FORMS 8655........................................................ 1129
PART 8 – ALTERNATIVE METHODS OF FILING
SECTION 8.1 – FORMS FOR ELECTRONICALLY FILED RETURNS................................................... 1129
SECTION 8.2 – EFFECT ON OTHER DOCUMENTS.................................................................. 1130
EXHIBITS
Exhibit A-1 – Schedule A (Preferred Format).......................................................................... 1131
Exhibit A-2 – Schedule A (Acceptable Format)......................................................................... 1132
Exhibit B-1 – Form 2106-EZ (Preferred Format)....................................................................... 1133
Exhibit B-2 – Form 2106-EZ (Acceptable Format)...................................................................... 1134
Exhibit C – Software Developers Voucher............................................................................. 1135
Exhibit D – Sample Check Sheet..................................................................................... 1135
Part 1
Introduction to Substitute Forms
Section 1.1 – Overview of Revenue Procedure 2005-74
1.1.1
Purpose
The purpose of this revenue procedure is to provide guidelines and general requirements
for the development, printing, and approval of substitute tax forms. Approval will be based on
these guidelines. After review and approval,submitted forms will beaccepted as substitutes
for official IRS forms.
1.1.2
Unique Forms
Certain unique specialized forms require the use of other additional publications to supple-
ment this publication. See Part 4.
1.1.3
Scope
The IRS accepts quality substitute tax forms that are consistent with the official forms and
do not have an adverse impact on our processing. The IRS Substitute Forms Unit administers
the formal acceptance and processing of these forms nationwide. While this program deals
primarily with paper documents, it also reviewsfor approval other processing and filing forms
such as those used in electronic filing.
December 12, 200510992005–50 I.R.B.

Only those substitute forms that comply fully with the requirements are acceptable. This
revenue procedure is updated as required to reflect pertinent tax year form changes and to meet
processing and/or legislative requirements.
1.1.4
Forms Covered by This
Revenue Procedure
The following types of forms are covered by this revenue procedure:
•IRS tax forms and their related schedules,
•Worksheets as they appear in instruction packages,
•Applications for permission to file returnselectronically and forms used as required docu-
mentation for electronically filed returns,
•Powers of Attorney,
•Over-the-counter estimated tax payment vouchers, and
•Forms and schedules relating to partnerships, exempt organizations, and employee plans.
1.1.5
Forms Not Cov
ered by
This Revenue
Procedure
The followin
g types of forms are not covered by this revenue procedure:
•W-2 and W-3 (see Publication 1141 for information on these forms),
•W-2c and W-3c (see Publication 1223 for information on these forms),
•941andScheduleB(Form941)(seePublication4436forinformationontheseforms),
•1096, 1098 series, 1099 series, 5498 series, W-2G, and 1042-S (see Publication 1179 for
information on these forms),
•Federal Tax Deposit (FTD) coupons, which may not be reproduced,
•Forms 1040-ES (OCR) and 1041-ES (OCR), which may not be reproduced,
•Forms 5500, 5500-EZ, and associated schedules (see the Department of Labor website at
w
ww.dol.govfor information on these forms),
•Requests for information or documentation initiated by the IRS,
•Forms used internally by the IRS,
•State tax forms,
•Forms developed outside the IRS, and
•General Instructions and Specific Instructions (not reviewed by the Substitute Forms Pro-
gram Unit).
Section 1.2 – IRS Contacts
1.2.1
Where To Send
Substitute Forms
Send your substitute forms for approval to the following offices (do not send forms with
taxpayer data):
FormOffice and Address
BSAForms(FINCENFamilyand
TD F 90-22 Family) and Form 8300
IRS Computing Center
BSA Compliance Branch
P.O. Box 32063
Detroit, MI 48232-0063
5500, 5500-EZ, and Schedules A through E,
G, H, I, P, R, SSA, and T for Form 5500
Check EFAST information at the
Department of Labor’s website at
w
ww.efast.dol.gov
All others (except W-2, W-2c, W-3, W-3c,
941, Schedule B (Form 941), 1096, 1098,
1099, 5498, W-2G, and 1042-S)
Internal Revenue Service
Attn: Substitute Forms Program
SE:W:CAR:MP:T:T:SP
1111 Constitution Avenue, NW
Room 6406
Washington, DC 20224
In addition, the Substitute Forms Program Unit can be contacted via email at
*
taxforms@irs.gov. Please enter “Substitute Forms” on the subject line.
2005–50 I.R.B.1100December 12, 2005

For questions about Forms W-2 and W-3, refer to IRS Publication 1141, General Rules and
Specifications for Substitute Forms W-2 and W-3. For Forms W-2c and W-3c, refer to IRS
Publication 1223, General Rules and Specifications for Substitute Forms W-2c and W-3c. For
Forms 941 and Schedule B (Form 941), refer to IRS Publication 4436, General Rules and Spec-
ifications for Substitute Form 941 and Schedule B (Form 941). For Forms 1096, 1098, 1099,
5498, W-2G, and 1042-S, refer toIRS Publication 1179, General Rules and Specifications for
Substitute Forms 1096, 1098, 1099, 5498, W-2G, and 1042-S.
Section 1.3 – What’s New
1.3.1
What’s New
The following changes have been madeto the Revenue Procedure for 2005:
•For timeliness, to save printing expenses, and because users of Publication 1167 have ac-
cess to the Internet and the IRS website, Publication 1167 will now only be released for
downloading from the IRS website. However, the original revenue procedure will continue
to be released in hard copy in the Internal Revenue Bulletin.
•Sections 2.3.7 through 2.3.9 have been added to provide specifications and approval infor-
mation for software developers who produce lockbox vouchers. Also, an example of the
format is provided in Exhibit C.
•The format for Schedule K-1 of Form 1041 has been changed and specifications have been
included in Section 7.1. Among other changes, all lines must now be included on the
substitute schedule.
•Section 7.3 of Publication 1167 has been redesignated to include guidelines for substitute
Forms 8655. Guidelines for Forms 5471 and5472 (old Section 7.3) have been eliminated
as these forms no longer require unique specifications.
•The IRS Tax Fax Program has been eliminated. References to the program in Publication
1167 have been deleted.
•The Exhibits section has been changed and updated. Some of the exhibits have been elim-
inated, some have been added, and some have been re-labeled.
Section 1.4 – Definitions
1.4.1
Substitute Form
A tax form (or related schedule) that differsinanywayfromtheofficialversionandis
intended to replace the form that is printed and distributed by the IRS. This term also covers
those approved substitute forms exhibited in this revenue procedure.
1.4.2
Printed/Preprinted
Form
A form produced using conventional printing processes, or a printed form which has been
reproduced by photocopying or a similar process.
1.4.3
Preprinted Pin-Fed
Form
A printed form that has marginal perforations for use with automated and high-speed print-
ing equipment.
1.4.4
Computer Prepared
Substitute Form
A preprinted form in which the taxpayer’s tax entry information has been inserted by a com-
puter, computer printer, or other computer-type equipment such as word processing equipment.
December 12, 200511012005–50 I.R.B.

1.4.5
Computer Generated Substitute
Tax Return or Form
A tax return or form that is entirely designed and printed using a computer printer such as a
laser printer, etc., on plain white paper. This return or form must conform to the physical layout
of the corresponding IRS form, although the typeface may differ. The text should match the
text on the officially printed form as closely aspossible. Condensed text and abbreviations will
be considered on a case-by-case basis.
Exception.All jurats (perjury statements) must be reproduced verbatim.
1.4.6
Manually Prepared
Form
A preprinted reproduced form in which the taxpayer’s tax entry information is entered by
an individual using a pen, pencil, typewriter, or other non-automated equipment.
1.4.7
Graphics
Parts of a printed tax form that are not tax amount entries or required text. Examples of
graphics are line numbers, captions, shadings,special indicators, borders, rules, and strokes
created by typesetting, photographics, photocomposition, etc.
1.4.8
Acceptable Reproduced
Form
A legible photocopy of an original form.
1.4.9
Supporting Statement
(Supplemental Schedule)
A document providing detailed information to support a line entry on an official or approved
substitute form and filed with (attached to) a tax return.
Note.A supporting statement is not a tax form and does not take the place of an official
form.
1.4.10
Specific Form Terms
The following specific terms are used throughout this revenue procedure in reference to all
substitute forms: format, sequence, line reference, item caption,and data entry field.
1.4.11
Format
The overall physical arrangement and general layout of a substitute form.
1.4.12
Sequence
Sequence is an integral part of the total format requirement. The substitute form should
show the same numeric and logical placement order of data, as shown on the official form.
1.4.13
Line Reference
The line numbers, letters, or alphanumericsused to identify each captioned line on an offi-
cial form. These line references are printedto the immediate left of each caption and/or data
entry field.
1.4.14
Item Caption
The text on each line of a form, which identifies the data required.
1.4.15
Data Entry Field
Designated areas for the entry of data such as dollar amounts, quantities, responses and
checkboxes.
2005–50 I.R.B.1102December 12, 2005

1.4.16
Advance Draft
A draft version of a new or revised form may be posted to the IRS website for information
purposes. Substitute forms may be submittedbased on these advance drafts, but any company
that receives forms approval based on these earlydrafts is responsible for monitoring and re-
vising forms to mirror any revisions in the final forms provided by the IRS.
Section1.5–Agreement
1.5.1
Important Stipulation
of This Revenue Procedure
Any person or company who uses substitute forms and makes all or part of the changes
specified in this revenue procedure agrees to the following stipulations:
•The IRS presumes that any required changes are made in accordance with these procedures
and will not be disruptive to the processing of the tax return.
•Should any of the changes be disruptive to the IRS’s processing of the tax return, the person
or company agrees to accept the determination of the IRS as to whether the form may
continue to be filed.
•The person or company agrees to work with the IRS in correcting noted deficiencies. No-
tification of deficiencies may be made by any combination of fax, letter, email, or phone
contact and may include the return of unacceptable forms for the re-submission of accept-
able forms.
Part 2
General Guidelines for Submissions and Approvals
Section 2.1 – General Specifications for Approval
2.1.1
Overview
If you produce any tax forms using IRS guidelines on permitted changes, you can generate
your own substitutes without further approval. If your changes are more extensive, you must
get IRS approval before using substitute forms. More extensive changes can include the use
of typefaces and sizes other than those found onthe official form and the condensing of line
item descriptions to save space.
2.1.2
Email Submissions
The Substitute FormsProgram now accepts substitute forms submissions via email. The
email address is*
taxforms@irs.gov. Please include “PDF Submissions” on the subject line.
Follow these guidelines.
•Your submission should include all the forms you wish to submit in one attached pdf file.
Do not email each form individually. Always include an approval check sheet.
•Emailing pdf submissions will not expedite review and approval. The pdf submissions will
be assigned a control number and put in queuealong with mailed-in paper submissions.
•Small (fewer than 15 forms), rather than large submissions should expedite processing.
•Optimize pdf files before submitting.
•The maximum allowable email attachment is 2.5 megabytes.
•The Substitute Forms Unit accepts zip files.
•An approval check sheet listing the forms you are submitting should always be included in
the pdf file along with the forms.
•To alleviate delays during the peak time of September through December, submit advance
draft forms as early as possible.
December 12, 200511032005–50 I.R.B.

If the guidelines are not followed, you may need to resubmit.
In addition to submitting forms via email,you may continue to send your submissions to:
Internal Revenue Service
SE:W:CAR:MP:T:T:SP
Attn: Substitute Forms Program
1111 Constitution Avenue, NW
Room 6406
Washington, DC 20024
2.1.3
Expediting the Process
Follow these basic guidelinesfor expediting the process.
•Always include a check sheet for the Substitute Forms Unit’s response.
•Follow Publication 1167 for general substitute form guidelines. Follow the specialized
publications produced by the Substitute Forms Unit for other specific forms.
•To spread out the workload, send in draft versions of substitute forms when they are posted.
Note.Be sure to make any changes to approved drafts before releasing final versions.
2.1.4
Schedules
Schedules are considered to be an integral part of a complete tax return. A schedule may be
included as part of a form or printed separately.
2.1.5
Examples of Schedules
That Must Be Submitted
with the Return
Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, is an ex-
ample of this situation. Its Schedules A through U have pages numbered as part of the basic
return. For Form 706 to be approved, the entire form including Schedules A through U must
be submitted.
2.1.6
Examples of Schedules
That Can Be Submitted
Separately
However, Schedules 1, 2, and 3 of Form 1040A are examples of schedules that can be sub-
mitted separately. Although printed by the IRS as a supplement to Form 1040A, none of these
schedules are required to be filed with Form 1040A. These schedules may be separated from
Form 1040A and submitted as substitute forms.
2.1.7
Use and Distribution of
Unapproved Forms
The IRS is continuing a program to identify and contact tax return preparers, forms devel-
opers, and software publishers who use or distribute unapproved forms that do not conform to
this revenue procedure. The use of unapproved forms hinders the processing of the returns.
Section 2.2 – Highlights of Permitted Changes and Requirements
2.2.1
Methods of
Reproducing Internal
Revenue Service Forms
Official IRS tax forms are supplied by the IRS. These forms may be provided in the tax-
payer’s tax package or over-the-counter. Forms can also be picked up at many IRS offices,
post offices, or libraries, and are available on CD-ROM and online atw
ww.irs.gov.
There are methods of reproducing IRS printed tax forms suitable for use as substitutes with-
out prior approval.
•You can photocopy most tax forms and use them instead of the official ones. The entire
substitute form, including entries, must be legible.
•You can reproduce any current tax form as cutsheets, snap sets, and marginally punched,
pin-fed forms as long as you use an official IRS version as the master copy.
•You can reproduce a form that requires a signature as a valid substitute form. Many tax
forms (including returns) have a taxpayer signature requirement as part of the form layout.
The jurat/perjury statement/signature line areas must be retained and worded exactly as on
2005–50 I.R.B.1104December 12, 2005

the official form. The requirement for a signature, by itself, does not prohibit a tax form
from being properly computer-generated.
Section 2.3 – Vouchers
2.3.1
Overview
All payment vouchers (Forms 940-V, 940-EZ(V), 941-V, 943-V, 945-V, 1040-V, and
2290-V) must be reproduced in conjunction with their forms. Substitute vouchers must be the
same size as the officially printed vouchers. Vouchers that are prepared for printing on a laser
printer may include a scan line.
2.3.2
Scan Line
Specifications
NNNNNNNNN AAAAAA NNN NNNNNNNNN
Item:AB CDEF G
A.Social Security Number/Employer Identification Number (SSN/EIN) has 9 numeric
spaces.
B.Check Digits have 2 alpha spaces.
C.Name Control has 4 alphanumeric spaces.
D.Master File Tax (MFT) Code has 2 numeric spaces (see below).
E.Taxpayer Identification Number (TIN) Type has 1 numeric space (see below).
F.Tax Period has 6 numeric spaces in year/month format (YYYYMM).
G.Transaction Code has 3 numeric spaces.
2.3.3
MFT Code
Code Number for Forms:
•1040 family – 30;
•940/940-EZ – 10;
•941 – 01;
•943 – 11;
•945 – 16; and
•2290 – 60.
2.3.4
TIN Type
Type Number for:
•Form1040family–0;and
•Forms 940, 940-EZ, 941, 943, 945, and 2290 – 2.
2.3.5
Voucher Size
The voucher size must be exactly 8.0′′x3.25′′(Forms 1040-ES and 1041-ES must be 7.625′′
x3.0′′). The document scan line must be vertically positioned 0.25 inches from the bottom of
the scan line to the bottom of the voucher. The last character on the right of the scan line must
be placed 3.5 inches from the right leading edge of the document. The minimum required
horizontal clear space betweencharacters is .014 inches. The line to be scanned must have a
clear band 0.25 inches in height from top to bottom of the scan line, and from border to border
of the document. “Clear band” means no printing except for dropout ink.
2.3.6
Print and Paper Weight
Vouchers must be imaged in black ink using OCR A, OCR B, or Courier 10. These fonts
may not be mixed in the scan line. The horizontal character pitch is 10 CPI. The preferred
paper weight is 20 to 24 pound OCR bond.
December 12, 200511052005–50 I.R.B.

2.3.7
Specifications for Software
Developers
Certain vouchers may be reproduced for use in the IRS lockbox system. These include the
1040 family, the 940 family, and 2290 vouchers. Software developers must follow these spe-
cific guidelines to produce scannable vouchers strictly for lockbox purposes. Also see Exhibit
C.
•The total depth must be 3.25 inches.
•The scan line must be .5 inches from the bottom edge and 1.75 inches from the left edge
of the voucher and left-justified.
•Software developers vouchers must be 8.5 inches wide (instead of 8 inches with a cut line).
Therefore, no vertical cut line is required.
•Scan line positioning must be exact.
•Do not use the over-the-counter format voucher and add the scan line to it.
•All scanned data must be in 12-point OCR A font.
•The 4-digt NACTP ID code should be placedunder the payment indicator arrow.
•Windowed envelopes must not display the scanline in order to avoid disclosure and privacy
issues.
Note.All software developers must ensure that their software uses OCR A font so taxpayers
will be able to print the vouchers in the correct font.
2.3.8
SpecificLinePositions
Follow these line specifications for entering taxpayer data in the lockbox vouchers.
Start Row
Start
ColumnWidth
End
Column
Line Specifications for
Taxpayer Data:
Taxpayer Name5663641
Taxpayer Address, Apt.5763641
Taxpayer City, State, ZIP5863641
Line Specifications for
Mail To Data:
MailAddress57433880
Mail City, State, ZIP58433880
Line Specifications for:
Scan Line6326n/an/a
2005–50 I.R.B.1106December 12, 2005

2.3.9
How to Get Approval
To receive approval, please send 50 samples ofyour vouchers for testing to the following
address.
Internal Revenue Service
Attn: Doris Bethea, C5-163
5000 Ellin Rd.
Lanham, MD 20706
For further information, contact either Doris Bethea,D
oris.E.Bethea@irs.gov, at 202-283-
0218 or Leticia Guzman,L
eticia.R.Guzman@irs.gov, at 202-283-0365.
Section 2.4 – Restrictions on Changes
2.4.1
What You Cannot
Do to Forms Suitable
for Substitute
Tax Forms
You cannot, without prior IRS approval, change any IRS tax form or use your own (non-
approved) versions including graphics, unless specifically permitted by this revenue procedure.
You cannot adjust any of the graphics on Forms 1040, 1040A, and 1040EZ (except in those
areas specified in Part 5 of this revenue procedure) without prior approval from the IRS Sub-
stitute Forms Unit.
You cannot use your own preprinted label o
n tax returns filed with the IRS unless you fully
comply with the criteria specified in Sec
tion 3.6.3 on the use of pre-addressed IRS labels.
Section 2.5 – Guidelines for Obtaining IRS Approval
2.5.1
Basic Requirements
Preparers who submit substitute privately designed, privately printed, computer generated,
or computer prepared tax forms must develop these substitutes using the guidelines established
in this part. These forms, unless excepted by the revenue procedure, must be approved by the
IRS before being filed.
2.5.2
Conditional Approval Based on
Advanced Drafts
The IRS cannot grant final approval of your substitute form until the official form has been
published. However, the IRS posts advance draft forms in the “Tax Professionals” area of its
website at:
w
ww.irs.gov/taxpros/lists/0,,id=97782,00.html
We encourage submission of proposed substitutes of these advance draft forms and will
grant conditional approval based solely on these early drafts. These advance drafts are subject
to significant change before forms are finalized. If these advance drafts are used as the basis
for your substitute forms, you will be responsible for subsequently updating your final forms to
agree with the final official version. These revisions need not be submitted for further approval.
Note.Approval of forms based on advance drafts will not be granted after the final version
of an official form is published.
2.5.3
Submission Procedures
Follow these general guidelines when submitting substitute forms for approval.
•Any alteration of forms must bewithin the limits acceptable to the IRS. It is possible that,
from one filing period to another, a change in law or a change in internal need (processing,
audit, compliance, etc.) may change the allowable limits for the alteration of the official
form.
•When specific approval of any substitute form(other than those specified in Part 1, Sec-
tion 1.2 – IRS Contacts) is desired, a sample of the proposed substitute form should be
December 12, 200511072005–50 I.R.B.

forwarded for consideration via email or by letter to the Substitute Forms Unit at the ad-
dressshowninSection1.2.
•Schedules and forms (for example, Forms 3468, 4136, etc.) that can be used with more
than one type of return (for example, 1040, 1041, 1120, etc.) should be submitted only
once for approval, regardless of the number of different tax returns with which they may
be associated. Also, all pages of multi-page forms or returns should be submitted in the
same package.
2.5.4
Approving Offices
Because only the Substitute Forms Unit is authorized to approve substitute forms, unnec-
essary delays may occur if forms are sent to the wrong office. The Substitute Forms Unit may
then coordinate the response with the initiator responsible for revising that particular form.
Such coordination may include allowing the initiator to officially approve the form. No IRS
office is authorized to allow deviations from this revenue procedure.
2.5.5
IRS Review of
Software Programs, etc.
The IRS does not review or approve the logic of specific software programs, nor does the
IRS confirm the calculations on the forms produced by these programs. The accuracy of the
program remains the responsibility of the software package developer, distributor, or user.
The Substitute Forms Unit is primarily concerned with the pre-filing quality review of the
final forms that are expected tobe processed by IRS field offices. For this purpose, you should
submit forms without including any taxpayer information such as names, addresses, monetary
amounts, etc.
2.5.6
When To Send
Proposed Substitutes
Proposed substitutes, which are required to be submitted per this revenue procedure, should
be sent as much in advance of the filing period as possible. This is to allow adequate time for
analysis and response.
2.5.7
Accompanying
Statement
When submitting sample substitutes, you should include an accompanying statement that
lists each form number and its changes from the official form (position, arrangement, appear-
ance, line numbers, additions, deletions, etc.). With eachof the items you should include a
detailed reason for the change.
When requesting approval, please include a check sheet. Check
sheets expedite the approval
process. The check sheet may look like the example in Exhibit D d
isplayed in the back of this
procedure or may be one of your own design. Please include your
fax number on the check
sheet.
2.5.8
Approval/Non
-
Approval Noti
ce
The Substitut
e Forms Unit will fax the check sheet or anapproval letter to the originator if
a fax number ha
s been provided, unless:
•The requester has asked for an emailresponse or for a formal letter; or
•Significant corrections to the submitted forms are required.
Notice of approval may impose qualificationsbefore using the substitutes. Notices of un-
approved forms may specify the changes required for approval and require re-submission of
the form(s) in question. Telephone contact is used when appropriate.
2.5.9
Duration of
Approval
Most signature tax returns and many of their schedules and related forms have the tax (li-
ability) year printed in the upper right corner. Approvals for these forms are usually good for
one calendar year (January through December of the year of filing). Quarterly tax forms in the
940 series and Form 720 require approval for any quarter in which the form has been revised.
2005–50 I.R.B.1108December 12, 2005

Because changes are made to a form every year, each new filing season generally requires
a new submission of a substitute form. Very rarely is updating the preprinted year the only
change made to a form.
2.5.10
Limited
Continued Use of an
Approved Change
Limited changes approved for one tax year may be allowed for the same form in the follow-
ing tax year. Examples are the use of abbreviated words, revised form spacing, compressed
text lines, and shortened captions, etc., which do not change the integrity of lines or text on the
official forms.
If substantial changes are made to the form, new substitutes must be submitted for approval.
If only minor editorial changes are made to the form, it is not subject to review. It is the re-
sponsibility of each vendor who has been granted permission to use substitute forms to monitor
and revise forms to mirror any revisions to official forms made by the Service. If there are any
questions, please contact the Substitute Forms Unit.
2.5.11
When Approval
Is Not Required
If you received written approval for a specific change on a form last year, you may make
the same change this year if the item is still present on the official form.
•The new substitute form does not have to be submitted to the IRS and written approval is
not required.
•However, the new substitute form must conform to the official current year IRS form in
other respects: date, Office of Management and Budget (OMB) approval number, attach-
ment sequence number, Paperwork Reduction Act Notice statement, arrangement, item
caption, line number, line reference, data sequence, etc.
•The new substitute must also comply with changes to this revenue procedure. The proce-
dure may have eliminated, added to, or otherwise changed the guideline(s) that affected the
change approved in the prior year.
•An approved change is authorized only for the period from a prior tax year substitute form
to a current tax year substitute form.
Exception.Forms with temporary, limited, or interim approvals (or with approvals that
state a change is not allowed in any other tax year) are subject to review in subsequent years.
2.5.12
Continuous-
Use Forms
Forms without preprinted tax years are called “continuous-use” forms. Continuous-use
forms are revised when a legislative change affects the form or a change will facilitate pro-
cessing. These forms may have revision dates that are valid for longer than one year.
2.5.13
IRS Website
Posting Schedule
A schedule of print dates (for annual and quarterly forms) and most current revision dates
(for continuous-use forms) are maintained on the IRS website. The Tax Products Posting
Schedule can be found atw
ww.irs.gov/formspubs/article/0,,id=103641,00.html. See Section
4.3.2.
2.5.14
Required Copies
Generally, you must send us one copy of each form being submitted for approval. However,
if you are producing forms for different computer systems (for example, IBM compatible vs.
Macintosh) or different types of printers (for example, laser vs. inkjet), and these forms differ
significantlyin appearance, submit one copy for each type of system or printer.
2.5.15
Requestor’s
Responsibility
Following receipt of an initial approval for a substitute forms package or a software output
program to print substitute forms, it is the responsibility of the originator (designer or distrib-
utor) to provide client firms or individuals with forms that meet the IRS’s requirements for
continuing acceptability.Examples of this responsibility include:
•Using the prescribed print paper, font size, legibility, state tax data deletion, etc., and
December 12, 200511092005–50 I.R.B.

•Informing all users of substitute forms of thelegal requirements of the Paperwork Reduc-
tion Act Notice, which is generally found in the instructions for the official IRS forms.
2.5.16
Source Code
The Substitute Forms Unit will assign a unique source code to each firm that submits sub-
stitute paper forms for approval. This source code will be a permanent identifier that should
be used on every submission by a particular firm.
The source code consists of three alpha characters and should generally be printed at the
bottom left margin area on the first page of every approved substitute form.
Section 2.6 – Office of Management and Budget (OMB) Requirements for All Substitute Forms
2.6.1
OMB Requirements
for All Substitute Forms
There are legal requirements of the Paperwork Reduction Act of 1995 (The Act). Public
Law 104-13 requires the following.
•OMB approve all IRS tax forms that are subject to the Act.
•Each IRS form contains (in the upper right corner) the OMB number, if assigned.
•Each IRS form (or its instructions) states why the IRS needs the information, how it will
be used, and whether or not the information is required to be furnished.
This information must be provided to every user of official or substitute tax forms.
2.6.2
Application of the Paperwork
Reduction Act
On forms that have been assigned OMB numbers:
•All substitute forms must contain in the upper right corner the OMB number that is on the
official form, and
•The required format is: OMB No. 1545-XXXX (Preferred) or OMB # 1545-XXXX (Ac-
ceptable).
2.6.3
Required
Explanation to Users
You must inform the users of your substitute forms of the IRS use and collection require-
ments stated in the instructions for official IRS forms.
•If you provide your users or customers with the official IRS instructions, each form must
retain either the Paperwork Reduction Act Notice (or Disclosure, Privacy Act, and Pa-
perwork Reduction Act Notice), or a reference to it as the IRS does on the official forms
(usually in the lower left corner of the forms).
•This notice reads, in part, “We ask for the information on this form to carry out the Internal
Revenue laws of the United States....”
Note.If the IRS instructions are not provided tousers of your forms, the exact text of the
Paperwork Reduction Act Notice (or Disclosure, Privacy Act, and Paperwork Reduction Act
Notice) must be furnished separately or on the form.
2.6.4
Finding the OMB
Number and Paperwork
Reduction Act Notice
The OMB number and the Paperwork Reduction Act Notice, or references to it, may be
found printed on an official form (or its instructions). The number and the notice are included
on the official paper format and in other formats produced by the IRS (for example, compact
disc (CD) or Internet download).
2005–50 I.R.B.1110December 12, 2005

Part 3
Physical Aspects and Requirements
Section 3.1 – General Guidelines for Substitute Forms
3.1.1
General Information
The official form is the standard. Because a substitute form is a variation from the official
form, you should know the requirements of the official form for the year of use before you
modify it to meet your needs. The IRS provides several means of obtaining the most frequently
used tax forms. These include the Internet and CD-ROM (see Part 4).
3.1.2
Design
Each form must follow the design of the official form as to format arrangement, item cap-
tion, line numbers, line references, and sequence.
3.1.3
State Tax
Information Prohibited
Generally, state tax information must not appearon the federal tax return, associated form,
or schedule that is filed with the IRS. Exceptions occur when amounts are claimed on, or re-
quired by, the federal return (for example, state and local income taxes, on Schedule A of Form
1040).
3.1.4
Vertical Alignment
of Amount Fields
IF a form is to be...THEN...
1.The entry column must have a vertical line or some
type of indicator in the amount field to separate dollars
from cents.
Manually prepared
2.The cents column must be at least 3/10′′wide.
1.Vertically align the amountentry fields where possible.
2.Use one of the following amount formats:
a) 0,000,000, or
Computer generated
b) 0,000,000.00.
1.You may remove the vertical line in the amount field
that separates dollars from cents.
2.Use one of the following amount formats:
a) 0,000,000, or
Computer prepared
b) 0,000,000.00.
3.1.5
Attachment
Sequence Number
Many individual income tax forms have a required “attachment sequence number” located
just below the year designation in the upper right corner of the form. The IRS uses this number
to indicate the order in which forms are to be attached to the tax return for processing. Some
of the attachment sequence numbers may change from year to year.
The following applies to computer prepared forms.
•The sequence number may be printed in no less than 12-point boldface type and centered
below the form’s year designation.
•The sequence number may alsobe placed following the year designation for the tax form
and separated with an asterisk.
•The actual number may be printed without labeling it the “Attachment Sequence Number.”
December 12, 200511112005–50 I.R.B.

3.1.6
Assembly of Forms
If developing software or forms for use by others, please inform your customers/clients that
the order in which the forms are arranged may affect the processing of the package. A return
must be arranged in the order indicated below.
IF the form is...THEN the sequence is...
1040• Form 1040, and
• Schedules and forms in attachment sequence number order.
Anyothertaxreturn
(Form 1120, 1120S,
1065, 1041, etc.)
• The tax returns,
• Directly associated schedules (Schedule D, etc.),
• Directly associated forms,
• Additional schedules in alphabetical order, and
• Additional forms in numerical order.
Supporting statements should then follow in the same sequence as the forms they support.
Additional information required should be attached last.
In this way, the forms are received in the order in which they must be processed. If you do
not send returns to us in order, processing may be delayed.
3.1.7
Paid Preparer’s
Information and
Signature Area
On Forms 1040EZ, 1040A, 1040, and 1120, etc., the “Paid Preparer’s Use Only” area may
not be rearranged or relocated. You may, however,add three extra lines to the paid preparer’s
address area without prior approval. This applies to other tax forms as well.
3.1.8
Some Common Reasons
for Requiring Changes to
Substitute Forms
Some reasons that substitute forms may require changes include the following.
•Failing to preprint certain amounts in entry spaces.
•Shading areas incorrectly.
•Failing to include a reference to the location of the Paperwork Reduction Act Notice.
•Not including parentheses for losses.
•Not including “Attach Statement” when appropriate.
•Including line references or entry spacesthat don’t match the official form.
•Printing text that is different from the official form.
•Altering the jurat.
Section 3.2 – Paper
3.2.1
Paper Content
The paper must be:
•Chemical wood writing paper that is equal to or better than the quality used for the official
form,
•At least 18 pound (17′′x22′′, 500 sheets), or
•At least 50 pound offset book (25′′x38′′, 500 sheets).
3.2.2
Paper with
Chemical Transfer
Properties
There are several kinds of paper prohibited for substitute forms. These are:
1. Carbon-bonded paper, and
2. Chemical transfer paper except when the following specifications are met:
a. Each ply within the chemical transfer set of forms must be labeled, and
b. Only the top ply (ply one and white in color), the one that contains chemical
on the back only (coated back), may be filed with the IRS.
2005–50 I.R.B.1112December 12, 2005

3.2.3
Example
A set containing three plies would be constructed as follows:ply one (coated back), “Fed-
eral Return, File with IRS”; ply two (coated front and back), “Taxpayer’s copy”; and ply three
(coated front), “Preparer’s copy.”
The file designation, “Federal Return, File with IRS” for ply one, must be printed in the
bottom right margin (just below the last line of the form) in 12-point boldface type.
It is not mandatory, but recommended, that the file designation “Federal Return, File with
IRS” be printed in a contrasting ink for visual emphasis.
3.2.4
Carbon Paper
Do not attach any carbon paper to anyreturnyoufilewiththeIRS.
3.2.5
Paper and Ink
Color
We prefer that the color and opacity of paper substantially duplicatesthat of the original
form. This means that your substitute must be printed in black ink and may be on white or on
the colored paper the IRS form is printed on. Forms 1040A and 1040 substitute reproductions
may be in black ink without the colored shading. The only exception to this rule is Form
1041-ES, which should always be printed with a very light gray shading in the color screened
area. This is necessary to assist us in expeditiously separating this form from the very similar
Form 1040-ES.
3.2.6
Page Size
Substitute or reproduced forms and computer prepared/generated substitutes may be the
same size as the official form or they may be the standard commercial size (8
1
/2′′x11′′). The
thickness of the stock cannot be less than .003 inches.
Section 3.3 – Printing
3.3.1
Printing Medium
The private printing of all substitute tax forms must be by conventional printing processes,
photocopying, computer graphics, or similar reproduction processes.
3.3.2
Legibility
All forms must have a high standard of legibility as to printing, reproduction, and fill-in
matter. Entries of taxpayer data may be no smaller than eight points. The IRS reserves the
right to reject those with poor legibility. The ink and printing method used must ensure that no
part of a form (including text, graphics, data entries, etc.) develops “smears” or similar quality
deterioration. This includes any subsequent copies or reproductions made from an approved
master substitute form, either during preparation or during IRS processing.
3.3.3
Type Font
Many federal tax forms are printed using “Helvetica” as the basic type font. We request that
you use this type font when composing substitute forms.
3.3.4
Print Spacing
Substitute forms should be printed using a 6 lines/inch vertical print option. They should
also be printed horizontally in 10 pitch pica (that is, 10 print characters per inch) or 12 pitch
elite (that is, 12 print positions per inch).
December 12, 200511132005–50 I.R.B.

3.3.5
Image Size
The image size of a printed substitute form should be as close as possible to that of the
official form. You may omit any text on both computer prepared and computer generated forms
that is solely instructional.
3.3.6
Title Area Changes
To allow a large top margin for marginal printing and more lines per page, the title line(s)
for all substitute forms (not including the form’s year designation and sequence number, when
present), may be photographically reduced by40 percent or reset as one line of type. When
reset as one line, the type size may be no smaller than 14-point. You may omit “Department
of the Treasury, Internal Revenue Service” and all reference to instructions in the form’s title
area.
3.3.7
Remove
Government Printing
Office Symbol and IRS
Catalog Number
When privately printing substitute tax forms, the Government Printing Office (GPO) sym-
bol and/or jacket number must be removed. In the same place using the same type size, print
the Employer Identification Number (EIN), theSocial Security Number (SSN) of the printer
or designer, or the IRS assigned source code. (We prefer this last number be printed in the
lower left area of the first page of each form.) Also, remove the IRS Catalog Number (Cat.
No.) if one is present in the bottom center margin, and the recycle symbol if the substitute is
not produced on recycled paper.
3.3.8
Printing on One
Side of Paper
While it is preferred that both sides of the paper be used for substitutes and reproduced
forms, resulting in the same page arrangement as that of the official form or schedule, the IRS
will accept your forms if only one side of the paper is used.
3.3.9
Photocopy
Equipment
The IRS does not undertake to approve or disapprove the specific equipment or process
used in reproducing official forms. Photocopies of forms must be entirely legible and satisfy
the conditions stated in this and other revenue procedures.
3.3.10
Reproductions
Reproductions of official forms and substitute forms that do not meet the requirements of
this revenue procedure may not be filed instead of the official forms. Illegible photocopies are
subject to being returned to the filer for re-submission of legible copies.
3.3.11
Removal of
Instructions
You may remove references to instructions. No prior approval is needed.
Exception.The words “For Paperwork Reduction Act Notice, see instructions” must be
retained or a similar statement indicating the location must be provided on each form.
Section 3.4 – Margins
3.4.1
Margin Size
The format of a reproduced tax form when printed on the page must have margins on all
sides at least as large as the margins on the official form. This allows room for IRS employees
to make necessary entries on the form during processing.
•A
1
/2-inch to
1
/4-inch margin must be maintained across the top, bottom, and both sides of
all substitute forms.
•The marginal, perforated strips containing pin-fed holes must be removed from all forms
priortofilingwiththeIRS.
3.4.2
Marginal Printing
Prior approval is not required for the marginal printing allowed when printed on an official
form or on a photocopy of an official form.
2005–50 I.R.B.1114December 12, 2005

•With the exception of the actual tax forms (for example, Forms 1040, 1040A, 1040EZ,
1120, 940, 941, etc.), you may print in the left vertical margin and in the left half of the
bottom margin.
•Printing is never allowed in the top right margin of the tax form (for example, Forms 1040,
1040A, 1040EZ, 1120, 940, 941, etc.). The Service uses this area to imprint a Document
Locator Number for each return. There are no exceptions to this requirement.
Section 3.5 – Examples of Approved Formats
3.5.1
Examples of
Approved Formats From
the Exhibits
Two sets of exhibits (Exhibits A-1 and 2; B-1 and 2) are at the end of this revenue procedure
as examples of how these guidelines may be used.Vertical spacing is six (6) lines to the inch.
A combination of upper-case and lower-case print font is acceptable in producing substitute
forms.
ThesamelogicmaybeappliedtoanyIRSformthat is normally reproducible as a substitute
form, with the exception of the tax return forms as discussed elsewhere. These exhibits may
be from a prior year and are not to be used as current substitute forms.
Section 3.6 – Miscellaneous Information for Substitute Forms
3.6.1
Filing Substitute
Forms
To be acceptable for filing, a substitute form must print out in a format that will allow the
filer to follow the same instructions as for filing official forms. These instructions are in the
taxpayer’s tax package or in the related form instructions. The form must be on the appropri-
ately sized paper, legible, and include a jurat where one appears on the published form.
3.6.2
Caution to Software
Publishers
The IRS has received returns produced by software packages with approved output where
either the form heading was altered or the lines were spaced irregularly. This produces an
illegible or unrecognizable return or a return with the wrong number of pages. We realize
that many of these problems are caused by individual printer differences but they may delay
input of return data and, in some cases, generate correspondence to the taxpayer. Therefore,
in the instructions to the purchasers of your product, both individual and professional, please
stress that their returns will beprocessed more efficiently if they are properly formatted. This
includes:
•Having the correct form numbers and titles at the top of the return, and
•Submitting the same number of pages as if the form were an official IRS form with the line
items on the proper pages.
3.6.3
Use Pre-Addressed
IRS Label
If you are a practitioner filling out a return for a client or a software publisher who prints
instruction manuals, stress the use of the pre-addressed label provided in the tax package the
IRS sent to the taxpayer, when available. The use of this label (or its precisely duplicated label
information) is extremely important for the efficient, accurate, and economical processing of
a taxpayer’s return. Labeled returns indicate that a taxpayer is an established filer and permits
the IRS to automatically accelerate processing of those returns. This results in quicker refunds,
less manual review by IRS functions, and greater accuracy in names, addresses, and postal
deliveries.
3.6.4
Caution to
Producers of
Software Packages
If you are producing a software package that generates name and address data onto the tax
return, do not under any circumstances program either the IRS preprinted check digits or a
practitioner derived name control to appear onanyreturnpreparedandfiledwiththeIRS.
December 12, 200511152005–50 I.R.B.

3.6.5
Programming
to Print Forms
Whenever applicable:
•Use only the following label information format for single filers:
JOHN Q. PUBLIC
310 OAK DRIVE
HOMETOWN, STATE 94000
•Use only the following information for joint filers:
JOHN Q. PUBLIC
MARY I. PUBLIC
310 OAK DRIVE
HOMETOWN, STATE 94000
Part 4
Additional Resources
Section 4.1 – Guidance From Other Revenue Procedures
4.1.1
General
Guidance for the substitute tax forms not covered in this revenue procedure and the re
venue
procedures that govern their use are as follows.
•Revenue Procedure 2005-65, IRS Publication 1141, General Rules and Specifications for
Substitute Forms W-2 and W-3.
•Revenue Procedure 2005-69, IRS Publication 1179, General Rules and Specifications for
Substitute Forms 1096, 1098, 1099, 5498, W-2G, and 1042-S.
•Revenue Procedure 2004-63, IRS Publication 1187, Specifications for Filing Forms
1042-S, Foreign Person’s U.S. Source Income Subject to Withholding, Electronically or
Magnetically.
•Revenue Procedure 2005-49, IRS Publication 1220, Specifications for Filing Forms 1098,
1099, 5498, and W-2G Electronically or Magnetically.
•Revenue Procedure 2003-31, IRS Publication 1223, General Rules and Specifications for
Substitute Forms W-2c and W-3c.
•Revenue Procedure 2005-21, IRS Publication 4436, General Rules and Specifications for
Substitute Form 941 and Schedule B (Form 941).
Section 4.2 – Ordering Publications
4.2.1
Sources for
Publications
The publications listed below are availableonly on the IRS website. Identify the requested
document by the IRS publication number.
•Publication 1141, the revenue procedure on specifications for private printing of Forms
W-2 and W-3.
•Publication 1167, the revenue procedure on substitute printed, computer-prepared, and
computer-generated tax forms and schedules.
•Publication 1179, the revenueprocedure on paper substituteinformation returns (Forms
1096, 1098, 1099, 5498, W-2G, and 1042-S).
•Publication 1220, the revenue procedure on electronic or magnetic reporting for informa-
tion returns (Forms 1098, 1099 series, 5498, and W-2G).
•Publication 1223, the revenue procedure on substitute Forms W-2c and W-3c.
•Publication 1239, Specifications for Filing Form 8027, Employer’s Annual Information
Return of Tip Income and Allocated Tips, Magnetically/Electronically.
•Publication 1245, electronic and magnetic reporting for Forms W-4.
•Publication 1345, Handbook for Authorized IRSe-fileProviders of Individual Income Tax
Returns. (This is an annual publication; tax year is subject to change).
2005–50 I.R.B.1116December 12, 2005

•Publication 1345-A, Filing Season Supplement For Authorized IRSe-fileProviders. This
publication, printed in the late fall, supplements Publication 1345.
•Publication 4436, the revenue procedure on substitute Form 941 and Schedule B (Form
941).
Section 4.3 – Electronic Tax Products
4.3.1
The IRS Website
Copies of tax forms with instructions, publications, draft forms, fillable forms, prior year
forms and publications, and other tax-related information may be found on the IRS website at
w
ww.irs.gov.
4.3.2
Tax Products
Posting Schedule
The IRS website provides a Tax Products Posting Schedule for the official forms released
for use by taxpayers. The schedule has three parts:
•Anticipated print dates of annual returns,
•Anticipated print dates of quarterly returns, and
•Last revision dates and target print dates for continuous-use forms.
Thesiteaddressisw
ww.irs.gov/formspubs/article/0,,id=103641,00.html. The site will be
updated weekly during peak printing periodsand as necessary at other times. The planned
dates are subject to change.
Section 4.4 – Federal Tax Forms on CD-ROM
4.4.1
Information
About Federal
Tax Forms CD-ROM
The CD-ROM contains over 3,000 tax forms and publications for small businesses, return
preparers, and others who frequently need current or prior year tax products. Most current
tax forms on the CD-ROM may be filled in electronically, then printed out for submission
and saved for recordkeeping. Other products on the CD-ROM include the Internal Revenue
Bulletins, Tax Supplements, and Internet resources for the tax professional with links to the
World Wide Web.
All necessary software to view the files mustbe installed from the CD-ROM. Software for
Adobe Acrobat Reader is included on the disk. The software will run under Windows 95/98/NT
and Macintosh System 7.5 and later versions ofthese programs. All products are presented in
Adobe’s Portable Document Format (PDF). In addition, tax publications are provided in the
Hyper Text Markup Language (HTML).
December 12, 200511172005–50 I.R.B.

4.4.2
System
Requirements and
How To Order the Federal Tax
Forms CD-ROM
For system requirements, contact the National Technical Information Service (NTIS) help
desk at 703-487-4608. Prices are subject to change.
The cost of the CD if purchased via the Internet ath
ttp://www.irs.gov/cdordersfrom NTIS,
is $25 (with no handling fee).
If purchased using the following methods,the cost for each CD is $25 (plus a $5 handling
fee). These methods are:
•By phone – 1-877-CDFORMS (1-877-233-6767),
•By fax – 703-605-6900,
•By mail using the order form contained in IRS Publication 1045
(Tax Professionals Guide), and
•By mail to:
National Technical Information Service
5285 Port Royal Road
Springfield, VA 22161
Part 5
Requirements for Specific Tax Returns
Section 5.1 – Tax Returns (Forms 1040, 1040A, 1120, etc.)
5.1.1
Acceptable Forms
Tax forms (such as Forms 1040, 1040A, and 1120) require a signature and establish tax
liability. Computer generated versions are acceptable under the following conditions.
•These substitute forms must be printed on plain white paper.
•Substitute forms must conform to the physical layout of the corresponding IRS form al-
though the typeface may differ. The text should match the text on the officially published
form as closely as possible. Condensed textand abbreviations will be considered on a
case-by-case basis.
Caution.All jurats (perjury statements) mustbe reproduced verbatim. No text can be
added, deleted, or changed in meaning.
•Various computer graphic print media such as laser printing, inkjet printing, etc., may be
used to produce the substitute forms.
•The substitute form must be the same number of pages and contain the same line text as
the official form.
•All substitute forms must be submitted for approval prior to their original use. You do not
need approval for a substitute form if its only change is the preprinted year and you had
received a prior year approval letter.
Exception.If the approval letter specifies a one time exception for your form, the next
year’s form must be approved.
5.1.2
Prohibited Forms
The following are prohibited.
•Computer generated tax forms (for example, Form 1040, etc.) on lined or color barred
paper.
•Tax forms that differ from the official IRS forms in a manner that makes them not standard
or unable to process.
5.1.3
Changes
Permitted to Forms
1040 and 1040A
Certain changes (listed in Sections 5.2 through 5.4) are permitted to the graphics of the form
without prior approval, but these changes apply to only acceptable preprinted forms. Changes
not requiring prior approval are good only for the annual filing period, which is the current tax
year. Such changes are valid in subsequent years only if the official form does not change.
2005–50 I.R.B.1118December 12, 2005

5.1.4
Other Changes
Not Listed
All changes not listed in Sections 5.2 through 5.4 require approval from the IRS before the
form can be filed.
Section 5.2 – Changes Permitted to Graphics (Forms 1040A and 1040)
5.2.1
Adjustments
You may make minor vertical and horizontal spacing adjustments to allo
w for computer or
word processing printing. This includes widening the amount columns
or tax entry areas if the
adjustments comply with other provisions stated in revenue procedu
res. No prior approval is
needed for these changes.
5.2.2
Name and Address Area
The horizontal rules and instructions within the name and address area may be removed and
the entire area left blank. No line or instruction can remain in the area. However, the statement
regarding use of the IRS label should be retained. The heavy ruled border (when present) that
outlines the name, address area, and social security number must not be removed, relocated,
expanded, or contracted.
5.2.3
Required Format
When the name and address area is left blank, the following format must be used when
printing the taxpayer’s name and address. Otherwise, unless the taxpayer’s preprinted label is
affixed over the information entered in this area, the lines must be filled in as shown below.
•1st name line (35 characters maximum).
•2nd name line (35 characters maximum).
•In-care-of name line (35 characters maximum).
•City, state (25 characters maximum), one blank character, & ZIP code.
5.2.4
Conventional
Name and
Address Data
When there is no in-care-of name line, the name and address will consist of only three lines
(singlefiler)orfourlines(jointfiler).Nameand address (joint filer) with no in-care-of name
line:
JOHN Z. JONES
MARY I. JONES
1234 ANYWHERE ST., APT. 111
ANYTOWN, STATE 12321
5.2.5
Example of
In-Care-Of
Name Line
Name and address (single filer) with in-care-of name line:
JOHN Z. JONES
C/O THOMAS A. JONES
4311 SOMEWHERE AVE.
SAMETOWN, STATE 54345
5.2.6
SSN and
Employer Identification
Number (EIN) Area
The vertical lines separating the format arrangement of the SSN/EIN may be removed.
When the vertical lines are removed, the SSNand EIN formats must be 000-00-0000 or
00-0000000, respectively.
5.2.7
Cents Column
•You may remove the vertical rule that separates the dollars from the cents.
•All entries in the amount column should have a decimal point following the whole dollar
amounts whether or not the vertical line that separates the dollars from the cents is present.
December 12, 200511192005–50 I.R.B.

•You may omit printing the cents, but all amounts entered on the form must follow a con-
sistent format. You are strongly urged to round off the figures to whole dollar amounts,
following the official form instructions.
•When several amounts are summed together, the total should be rounded off after addition
(that is, individual amounts should not be rounded off for computation purposes).
•When printing money amounts, you must use one of the following formats:
(a) 0,000,000.;
(b) 0,000,000.00.
•When there is no entry for aline, leave the line blank.
5.2.8
“Paid Preparer’s
Use Only” Area
On all forms, the paid preparer’s information area may not be rearranged or relocated. You
may add three lines and remove the horizontal rules in the preparer’s address area.
Section 5.3 – Changes Permitted to Form 1040A Graphics
5.3.1
General
No prior approval is needed for the followingchanges (for use with computer prepared
forms only).
5.3.2
Line 4 of
Form 1040A
This line may be compressed horizontally (to allow for same line entry for the name of the
qualifying child) by using the following caption: “Head of household; child’s name” (name
field).
5.3.3
Other Lines
Any line with text that takes up two or more vertical lines may be compressed to one line
by using contractions, etc., and by removing instructional references.
5.3.4
Page 2 of
Form 1040A
All lines must be present and numbered in the order shown on the official form. These lines
may also be compressed.
5.3.5
Color Screening
It is not necessary to duplicate the color screening used on the official form. A substitute
Form 1040A may be printed in black and white only with no color screening.
5.3.6
Other Changes
Prohibited
No other changes to the Form 1040A graphics are allowed without prior approval except
for the removal of instructions and references to instructions.
Section 5.4 – Changes Permitted to Form 1040 Graphics
5.4.1
General
No prior approval is needed for the followingchanges (for use with computer prepared
forms only). Specific line numbers in the following headings may have changed due to tax law
changes.
5.4.2
Line 4 of
Form 1040
This line may be compressed horizontally (to allow for a larger entry area for the name
of the qualifying child) by using the following caption: “Head of household; child’s name”
(name field).
2005–50 I.R.B.1120December 12, 2005

5.4.3
Line 6c of
Form 1040
The vertical lines separatingcolumns (1) through (4) may be removed. The captions may
be shortened to allow a one line caption for each column.
5.4.4
Other Lines
Any other line with text that takes up two or more vertical lines may be compressed to one
line by using contractions, etc., and by removing instructional references.
5.4.5
Line 21 – Other Income
The fill-in portion of this line may be expanded vertically to three lines. The amount entry
box must remain a single entry.
5.4.6
Line 44 of
Form 1040 – Tax
You may change the line caption to read “Tax” and computer print the words “Total includes
tax from” and either “Form(s) 8814” or “Form 4972.” If both forms are used, print both form
numbers. This specific line number may have changed.
5.4.7
Line 55 of
Form 1040 –
Other Credits
You may change the caption to read: “Other credits from Form” and computer print only
the form(s) that apply.
5.4.8
Color Screening
It is not necessary to duplicate the color screening used on the official form. A substitute
Form 1040 may be printed in black and white only with no color screening.
5.4.9
Other Changes
Prohibited
No other changes to the Form 1040 graphics arepermitted without prior approval except
for the removal of instructions and references to instructions.
Part 6
Format and Content of Substitute Returns
Section 6.1 – Acceptable Formats for Substitute Forms and Schedules
6.1.1
Exhibits and Use of Acceptable
Formats
Exhibits of acceptable formats for Schedule A, usually attached tothe Form 1040, and Form
2106-EZ are shown in the exhibits section of this revenue procedure.
•If your computer generated forms appear exactly like the exhibits, no prior authorization
is needed.
•You may computer generate forms not shown here, but you must design them by following
the manner and style of those in the exhibits section.
•Take care to observe other requirements and conditions in this revenue procedure. The IRS
encourages the submission of all proposed forms covered by this revenue procedure.
6.1.2
Instructions
The format of each substitute form or schedule must follow the format of the official form
or schedule as to item captions, line references, line numbers, sequence, form arrangement
and format, etc. Basically, try to make the form look like the official one, with readability and
consistency being primary factors. You may use periods and/or other similar special characters
to separate the various parts and sections of the form. Do not use alpha or numeric characters
for these purposes. All line numbers and items must be printed even though an amount is not
enteredontheline.
December 12, 200511212005–50 I.R.B.

6.1.3
Line Numbers
When a line on an official form is designated by a number or a letter, that designation (ref-
erence code) must be used on a substitute form. The reference code must be printed to the left
of the text of each line and immediately preceding the data entry field, even if no reference
code precedes the data entry field on the officialform. If an entry field contains multiple lines
and shows the line references once on the left and right side of the form, use the same number
of line references on the substitute form.
In addition, the reference code that is immediately before the data field must either be fol-
lowed by a period or enclosed in parentheses. There also must be at least two blank spaces
between the period or the right parenthesis and the first digit of the data field. (See example
below.)
6.1.4
Decimal Points
A decimal point (that is, a period) should be used for each money amount regardless of
whether the amount is reported in dollars and cents or in whole dollars, or whether or not the
vertical line that separates the dollars from the cents is present. The decimal points must be
vertically aligned when possible.
Example:
5 STATE & LOCAL INC. TAXES...............5.495.00
6 REAL ESTATE TAXES............................6.
7 PERSONAL PROPERTY TAXES............7.198.00
or
5 STATE & LOCAL INC. TAXES...............(5)495.00
6 REAL ESTATE TAXES.............................(6)
7 PERSONAL PROPERTY TAXES.............(7)198.00
6.1.5
Multi-Page Forms
When submitting a multi-page form, send all its pages in the same package.
Exception.If you will not be producing certain pages, please note that in your cover letter.
Section 6.2 – Additional Instructions for All Forms
6.2.1
Use of Your
Own Internal Control
Numbers and
Identifying Symbols
You may show the computer prepared internal control numbers and identifying symbols on
the substitute if using such numbers or symbols is acceptable to the taxpayer and the taxpayer’s
representative. Such information must not be printed in the top
1
/2inch clear area of any form
or schedule requiring a signature. Except for the actual tax return form (Forms 1040, 1120,
940, 941, etc.), you may print in the left vertical and bottom left margins. The bottom left
margin you may use extends 3
1
/2inches from the left edge of the form.
6.2.2
Descriptions for
Captions, Lines, etc.
Descriptions for captions, lines, etc., appearing on the substitute forms may be limited to one
print line by using abbreviations and contractions, and by omitting articles, prepositions, etc.
However, sufficient key words must be retained to permit ready identification of the caption,
line, or item.
6.2.3
Determining
Final Totals
Explanatory detail and/or intermediate calculations for determining final line totals may
be included on the substitute. We prefer that such calculations be submitted in the form of a
supporting statement. If intermediate calculations are included on the substitute, the line on
which they appear may not be numbered or lettered. Intermediate calculations may not be
printed in the right column. This column is reserved only for official numbered and lettered
lines that correspond to the ones on the official form. Generally, you may choose the format
for intermediate calculations or subtotals on supporting statements to be submitted.
2005–50 I.R.B.1122December 12, 2005

6.2.4
Instructional
Text on the Official Form
Text on the official form, which is solely instructional (for example, “See instructions,”
etc.), may generally be omitted from the substitute form.
6.2.5
Mixing Forms
ontheSamePageProhibited
You may not show more than one form or schedule on the same printout page. Both sides
of the paper may be printed for multi-page official forms, butit is unacceptable to intermix
single page schedules of forms except for Schedules A and B (Form 1040), which are printed
back to back by the IRS.
For instance, Schedule E can be printed on both sides of the paper because the official form
is multi-page, with page 2 continued on the back. However, do not print Schedule E on the
front page and Schedule SE on the back, or Schedule A on the front and Form 8615 on the
back, etc. Both pages of a substitute form must match the official form. The back page may
be left blank if the back page of the official form contains only the instructions.
6.2.6
Identifying
Substitutes
Identify all computer prepared substitutes clearly. Print the form designation
1
/2inch from
the top margin and 1
1
/2inches from the left margin. Print thetitle centered on the first line of
print. Print the taxable year and, where applicable, the sequence number on the same line
1
/2
inch to 1 inch from the right margin. Include the taxpayer’s name and SSN on all forms and
attachments. Also, print the OMB number as reflected on the official form.
6.2.7
Negative Amounts
Negative (or loss) amount entries should be enclosed in brackets or parentheses or include
a minus sign. This assists in accurate computation and input of form data. The IRS pre-prints
parentheses in negative data fields on many official forms. These parentheses should be re-
tained or inserted on printouts of affected substitute forms.
Part 7
Miscellaneous Forms and Programs
Section 7.1 – Specifications for Substitute Schedules K-1
7.1.1
Requirements
for Schedules K-1
That Accompany
Forms 1041, 1065, 1065-B,
and 1120S
Note.The formats for Schedules K-1 of Forms1065, 1120S, and 1041 have significantly
changed in 2004 and 2005.
Because of significant changes to improve processing, prior approval is now required for
substitute Schedules K-1 that accompany Form1041 (for estates and trusts), Form 1065 (for
partnerships), Form 1065-B (for electing large partnerships), or Form 1120S (for S corpora-
tions). Substitute Schedules K-1 should be as close as possible to exact replicas of copies of
the official IRS schedules and follow the same process for submitting other substitute forms
and schedules. Before releasing their substitute forms, software vendors are responsible for
making any subsequent changes that have been made to the final official IRS forms after the
draft forms have been posted.
If you feel you will suffer a financial hardship in producing the 2005 Schedule K-1 of Form
1041 because of the significant changes to the 2005 form and format, the IRS will consider
allowing deviations from the official form for tax year 2005 only. However, you must include
all information on the form. Only deviationsin placement and format will be considered. You
may prepare a justification and submit it to the IRS at*
taxforms@irs.govwith “Attn: Substitute
Forms” on the subject line or:
December 12, 200511232005–50 I.R.B.

Internal Revenue Service
Attn: Substitute Forms Program
SE:W:CAR:MP:T:T:SP
1111 Constitution Avenue, NW
Room 6406
Washington, D.C. 20224
Include the 6-digit form ID code in the upper right of Schedules K-1 of Forms 1041, 1065,
and 1120S.
•661105 for Form 1041,
•651105 for Form 1065, and
•671105 for Form 1120S.
Please allow white space around the 6-digit code.
Schedules K-1 that accompany Forms 1041, 1065, 1065-B, or 1120S must meet all specifi-
cations. The specifications include, but are not limited to, the following requirements.
•You will no longer be able to produce Schedules K-1 that contain only those lines or boxes
that taxpayers are required to use. All lines must be included.
•The words “*See attached statement for additional information.” must be preprinted in the
lower right hand side on Schedules K-1 of Forms 1041, 1065, and 1120S.
•All K-1s that are filed with the IRS should be printed on standard 8.5” x 11” paper (the
international standard (A4) of 8.27” x 11.69” may be substituted).
•Each recipient’s information must be on a separate sheet of paper. Therefore, you must
separate all continuously printed substitutes, by recipient, before filing with the IRS.
•No carbon copies or pressure-sensitive copies will be accepted.
•The Schedule K-1 must contain the name, address, and SSN or EIN of both the entity (es-
tate, trust, partnership, or S corporation) and the recipient (beneficiary, partner, or share-
holder).
•The Schedule K-1 must contain the tax year, the OMB number, the schedule number (K-1),
the related form number (1041, 1065, 1065-B, or 1120S), and the official schedule name
in substantially the same position and format as shown on the official IRS schedule.
•The Schedule K-1 must contain all the line items as shown on the official form, except for
the instructions, if any are printed on the back of the official Schedule K-1.
•The line items or boxes must be in the same order and arrangement as those on the official
form.
•The amount of each recipient’s share of eachitem must be shown. Furnishing a total
amount of each item and a percentage (or decimal equivalent) to be applied to such to-
tal amount by the recipient does not satisfy the law and the specifications of this revenue
procedure.
•State or local tax-related information maynot be included on the Schedules K-1 filed with
the IRS.
•The entity may have to pay a penalty if substitute Schedules K-1 are filed that do not con-
form to specifications.
•Additionally, the IRS may consider the Schedules K-1 that do not conform to specifications
as not being able to process and may return Forms 1041, 1065, 1065-B, or 1120S to the
entity to be filed correctly.
Schedules K-1 that are 2-D bar-coded will continue to require prior approval from the IRS
(see Sections 7.1.3 through 7.1.5).
7.1.2
Special Requirements
for Recipient Copies of
Schedules K-1
Standardization for reporting informationis required for recipient copies of substitute
Schedules K-1 of Forms 1041, 1065, 1065-B, and 1120S. Uniform visual standards are
provided to increase compliance by allowing recipients and practitioners to more easily
recognize a substitute Schedule K-1. The entity must furnish to each recipient a copy of
Schedule K-1 that meets the following requirements.
2005–50 I.R.B.1124December 12, 2005

•Include the 6-digit form ID code in the upper right of Schedules K-1 of Forms 1041, 1065,
and 1120S.
•661105 for Form 1041,
•651105 for Form 1065, and
•671105 for Form 1120S.
Please allow white space around the 6-digit code.
•You will no longer be able to produce Schedules K-1 that contain only those lines or boxes
that taxpayers are required to use. All lines must be included.
•Both pages 1 and 2 of Schedules K-1 of Forms 1065 and 1120S must be provided to each
recipient.
•The words “*See attached statement for additional information.” must be preprinted in the
lower right hand side on Schedules K-1 of Forms 1041, 1065, and 1120S.
•The Schedule K-1 must contain the name, address, and SSN or EIN of both the entity and
recipient.
•The Schedule K-1 must contain the tax year, the OMB number, the schedule number (K-1),
the related form number (1041, 1065, 1065-B, or 1120S), and the official schedule name
in substantially the same position and format as shown on the official IRS schedule.
•All applicable amounts and information required to be reported must be titled and numbered
in the same manner as shown on the officialIRS schedule. The line items or boxes must
be in the same order and arrangement and must be numbered like those on the official IRS
schedule.
•The Schedule K-1 must contain all items required for use by the recipient. The instructions
to the schedule must identify the line orbox number and code, if any, for each item as
shown in the official IRS schedule.
•The amount of each recipient’s share of eachitem must be shown. Furnishing a total
amount of each line item and a percentage (or decimal equivalent) to be applied to such
total amount by the recipient does not satisfy the law and the specifications of this revenue
procedure.
•Instructions to the recipient that are substantially similar to those on or accompanying the
official IRS schedule must be provided to aid in the proper reporting of the items on the
recipient’s income tax return. Where items are not reported to a recipient because they do
not apply, the related instructions may be omitted.
•The quality of the ink or other material used to generate recipients’ schedules must produce
clearly legible documents. In general, black chemical transfer inks are preferred.
•In order to assure uniformity of substitute Schedules K-1, the paper size should be standard
8.5” x 11” (the international standard (A4) of 8.27” x 11.69” may be substituted.)
•The paper weight, paper color, font type, font size, font color, and page layout must be such
that the average recipient can easily decipher the information on each page.
•State or local tax-related information may be included on recipient copies of substitute
Schedules K-1. All non-tax-related information should be separated from the tax informa-
tion on the substitute schedule to avoid confusion for the recipient.
•The legend “Important Tax Return Document Enclosed” must appear in a bold and con-
spicuous manner on the outside of the envelope that contains the substitute recipient copy
of Schedule K-1.
•The entity may have to pay a penalty if a substitute Schedule K-1 furnished to any recipient
does not conform to the specifications of this revenue procedure and results in impeding
processing.
7.1.3
Requirements
for Schedules K-1
with Two-Dimensional
(2-D) Bar Codes
In an effort to reduce the burden of manually transcribing tax documents, improve qual-
ity, and increase government efficiency, theIRS is pleased to providespecifications for 2-D
bar-coded substitute Schedules K-1 for Forms 1041, 1065, and 1120S. The IRS encourages
voluntary participation in adding 2-D barcoding.
Note.If software vendors do not want to produce bar-coded Schedules K-1, they may
produce the official IRS Schedules K-1 but cannot use the expedited process for approving
bar-coded K-1s and their parent returns as outlined in Section 7.1.5.
December 12, 200511252005–50 I.R.B.

In addition to the requirements in Sections 7.1.1 and 7.1.2, the bar-coded Schedules K-1
must meet the following specifications.
•The bar code should print in the space labeled “For IRS Use Only” on each Schedule K-1.
The entire bar code must print within the “For IRS Use Only” box surrounded by a white
space of at least
1
/4inch.
•Bar codes must print in PDF 417 format.
•The bar codes must always be in the specifiedformat with every field represented by at
least a field delimiter (carriage return). Leaving out a field in a bar code will cause every
subsequent field to be misread.
•Be sure to include the 6-digit form ID code in the upper right of Schedules K-1 of Forms
1041, 1065, and 1120S.
•661105 for Form 1041,
•651105 for Form 1065, and
•671105 for Form 1120S.
Please allow white space around the 6-digit code.
7.1.4
Approval
Process for
Bar-Coded Schedules K-1
Prior to releasing commercially available tax software that creates bar-coded Schedules K-1,
the printed schedule and the bar code must both be tested. Bar code testing must be done
using the final official IRS Schedule K-1. Bar code approval requests must be resubmitted for
any subsequent changes to the official IRS form that would affect the bar code. Below are
instructions and a sequence of events that will comprise the testing process.
•The IRS has released the final Schedule K-1 bar-code specifications by publishing them
on the IRS.gov website (seeh
ttp://www.irs.gov/efile/article/0,,id=129859,00.html).
•The IRS will publish a set of test documents that will be used to test the ability of tax
preparation software to create bar codes in the correct format.
•Software developers will submit two identical copies of the test documents – one to the
IRS and one to a contracted testing vendor.
•The IRS will use one set to ensure the printed schedules comply withstandard substitute
forms specifications.
•If the printed forms fail to meet the substitute form criteria, the IRS will inform the software
developer of the reason for noncompliance.
•The software developer must resubmit the Schedule(s) K-1 until they pass the substitute
forms criteria.
•The testing vendor will review the bar codes to ensure they meet the published bar-code
specifications.
•If the bar code(s) does not meet published specifications, the testing vendor will contact
the software developer directly informing them of the reason for noncompliance.
•Software developers must submit new bar-coded schedules until they pass the bar-code
test.
•When the bar code passes, the testing vendor will inform the IRS that the developer has
passed the bar-code test and the IRS will issue an overall approval for both the substitute
form and the bar code.
•After receiving this consolidated response, the software vendor is free to release software
for tax preparation as long as any subsequent revisions to the schedules do not change the
fields.
•Find the mailing address for the testing vendor below. Separate and simultaneous mailings
to the IRS and the vendor will reduce testing time.
7.1.5
Procedures
for Reducing Testing Time
In order to help provide incentives to the software development community to participate
in the Schedule K-1 2-D project, the IRS has committed to expediting the testing of bar-coded
Schedules K-1 and their associated parent returns. To receive this expedited service, follow
the instructions below.
2005–50 I.R.B.1126December 12, 2005

•Mail the parent returns (Forms 1065, 1120S,1041) and associated bar-coded Schedule(s)
K-1 to the appropriate address below in a separate package from all other approval requests.
Internal Revenue Service
Attn: Bar-Coded K-1
SE:W:CAR:MP:T:T:SP
1111 Constitution Avenue, NW
Room 6406
Washington, D.C. 20224
•Mail one copy of the parent form(s) and Schedule(s) K-1 to the IRS and another copy to
the testing vendor at the address below.
Northrop Grumman Information Tech
Attn: Bill Philpot, Product Assurance Manager
1800 Alexander Bell Drive
Suite 300
Reston, VA 20191
Phone: 703-453-1200
•Include multiple email and phone contact points in the packages.
•While the IRS can expedite bar-coded Schedules K-1 and their associated parent returns,
it cannot expedite the approvalof non-associated tax returns.
Section 7.2 – Procedures for Printing IRS Envelopes
7.2.1
Procedures for Printing IRS
Envelopes
Organizations are permitted to produce substitute tax return envelopes. Use of substitute
return envelopes that comply with the requirements set forth in this section will assist in de-
livery of mail by the U.S. Postal Service and facilitate internal sorting at the Internal Revenue
Service Centers.
Use the following 5-digit ZIP codes when mailing returns to the IRS Service Centers:
Service CenterZIP Code
Atlanta, GA39901
Kansas City, MO64999
Austin, TX73301
Philadelphia, PA19255
Memphis, TN37501
Andover, MA05501
Cincinnati, OH45999
Ogden, UT84201
Fresno, CA93888
7.2.2
Sorting Returns
by Form Type
Sorting returns by form type is accomplished bythe preprinted bar codes on return envelopes
included in each specific type of form or package mailed to the taxpayers. The 32 bit bar code
on the left of the address on each envelope identifies the type of form the taxpayer is filing, and
it assists in consolidating like returns for processing. Failure to use the envelopes furnished by
December 12, 200511272005–50 I.R.B.

the IRS results in additional processing time and effort, and possibly delays the timely deposit
of funds, processing of returns, and issuance of refund checks.
7.2.3
ZIP+4 or 9-Digit
ZIP Codes
The IRS will not furnish or sell bulk quantities of preprinted tax return envelopes to tax-
payers or tax practitioners. A suitable alternative has been developed that will accommodate
the sorting needs of both the IRS and the United States Postal Service (USPS). The alternative
is based on the use of ZIP+4, or 9-digit ZIP codes, for mailing various types of tax returns to
the IRS Service Centers. The IRS uses the last four digits to identify and sort the various form
types into separate groups for processing. Thelist of 4-digit extensions with the related form
designations is provided below.
ZIP+4Package
XXXXX-00021040
XXXXX-0005941
XXXXX-0006940
XXXXX-0008943
XXXXX-00111065
XXXXX-00121120
XXXXX-00131120S
XXXXX-00141040EZ
XXXXX-00151040A
XXXXX-0027990
XXXXX-00312290
7.2.4
Guidelines for
Having Envelopes Preprinted
You may use the preparers’ company names, addresses, and logos as long as you do not
interfere with the clear areas. The government recommends that the envelope stocks have an
average opacity of not less than 89 percent andcontain a minimum of 50 percent waste paper.
Use of carbon based ink is essential for effective address and bar-code reading. Envelope
construction can be of side seam or diagonal seam design. The government recommends that
the size of the envelope should be 5
3
/4inches by 9 inches. Continuous pin-fed construction
is not desirable, but is permissible, if the glued edge is at the top. This requirement is firm
because mail opening equipment is designed to open the bottom edge of each envelope.
7.2.5
Envelopes/ZIP
Codes
The above procedures or guidelines are written for the user having envelopes preprinted.
Many practitioners may not wish to have large quantities of envelopes with differing ZIP
codes/form designations preprinted due to low volume, warehousing, waste, etc. In this case,
the practitioner can type or machine print the addresses with the appropriate ZIP codes to ac-
commodate sorting. If the requirements/guidelines outlined in this section cannot be met, then
use only the appropriate 5-digit service center ZIP code.
2005–50 I.R.B.1128December 12, 2005

Section 7.3 – Guidelinesfor Substitute Forms 8655
7.3.1
Increased Standardization for
Forms 8655
Increased standardization for reporting information on substitute Forms 8655 is now re-
quired to aid in processing and for compliance purposes. Please follow the guidelines in Sec-
tion 7.3.2.
7.3.2
Requirements for Substitute
Forms 8655
Please follow these specific requirements when producing substitute Forms 8655.
•The first line of the title must be “Reporting Agent Authorization.”
•If you want to include a reference to “State Limited Power of Attorney,” it can be in paren-
theses under the title. “State” must be the first word within the parentheses.
•You must include “Form 8655” on the form.
•While the line numbers do not have to match the official form, the sequence of the infor-
mation must be in the same order.
•The size of any variable data must be printed in a font no smaller than 10-point.
•For adequate disclosure checks, the following must be included for each taxpayer:
(a) Name,
(b) EIN, and
(c) Address.
•At this time, Form 944 will not be required if Form 941 is checked. Only those forms that
the reporting agent company supports need to be listed.
•The jurat must be identical with the exception of references to line numbers.
•A contact name and number for the reporting agent is not required.
•Line 17, or the equivalent line, must include two checkboxes.
•Any state information included should be contained in a separate section of the substitute
form. Preferably this information will be in the same area as line 19 of the official form.
•All substitute Forms 8655 must be approved by the Substitute Forms Unit as outlined in
the Form 8655 specifications in Publication 1167.
•If you have not already been assigned a 3-letter source code, you will be given one when
your substitute form is approved. This source code should be included in the lower left
corner of the form.
Part 8
Alternative Methods of Filing
Section 8.1 – Forms for Electronically Filed Returns
8.1.1
Electronic Filing
Program
Electronic filing is a method by which qualified filers transmit tax return information di-
rectly to an IRS Service Center in the format of the official IRS forms. The IRS accepts both
refund and balance-due individual tax returns that are filed electronically.
December 12, 200511292005–50 I.R.B.

8.1.2
Applying to
Participate in IRSe-file
Anyone wishing to participate in IRSe-fileof tax returns must submit ane-fileapplica-
tion. The application can be completed and submitted electronically on the IRS website at
w
ww.irs.govor by filing Form 8633, Application to Participate in the IRSe-fileProgram.
8.1.3
Mailing
Instructions
IF submitting Form 8633 by...THEN mail it to...
Regular mailInternal Revenue Service
Andover Submission Processing Center
Attn: EFU Acceptance - Testing Stop 983
P.O. Box 4099
Woburn, MA 01888-4099
Overnight mailInternal Revenue Service
Andover Submission Processing Center
Attn: EFU Acceptance - Testing Stop 983
310 Lowell Street
Andover, MA 05501-0001
8.1.4
Obtaining the
Taxpayer Signature
Form 8453, U.S. Individual Income Tax Declaration for an IRSe-fileReturn, is the sig-
nature document for an electronically filed 1040, 1040A, or 1040EZ return not filed with an
electronic signature. Form 8453, which serves as a transmittal for associated nonelectronic
(paper) documents such as Forms 3115, 5713, 8283, and 8332, is a one-page form and can
only be approved through the Substitute Forms Program in that format. Form 8453-OL serves
the same purpose for taxpayers filing through online services. For specific information about
electronic filing, refer to Publication 1345, Handbook for Authorized IRSe-fileProviders of
Individual Income Tax Returns.
8.1.5
Guidelines for
Preparing Substitute Forms in the
Electronic Filing Program
A participant in the electronic filing program, who wants to develop a substitute form should
follow the guidelines throughout this publication and send a sample form for approval to the
Substitute Forms Unit at the address in Part 1. If you do not prepare Substitute Form 8453
using a font in which all IRS wording fitson a single page, the form will not be accepted.
Note.Use of unapproved forms could result in suspension of the participant from the elec-
tronic filing program.
Section 8.2 – Effect on Other Documents
8.2.1
Effect on Other
Documents
This revenue procedure supersedes Revenue Procedure 2004-62, 2004-2 C.B. 728.
2005–50 I.R.B.1130December 12, 2005

December 12, 200511312005–50 I.R.B.

2005–50 I.R.B.1132December 12, 2005

December 12, 200511332005–50 I.R.B.

2005–50 I.R.B.1134December 12, 2005

December 12, 200511352005–50 I.R.B.

Exhibit D
Check Sheet of IRS Substitute Forms Submitted on......
20:
Company:..............................................
Contact:................................................
Phone:.................................................
Fax:....................................................
Source Code:...........................................
Form
Number
Approved
With
Corrections
Must Be
Resubmitted
ApprovedComments
Authorized Name:
Title:
Reviewer’s Name:
Telephone:
Date:
2005–50 I.R.B.1136December 12, 2005

26 CFR 601.105: Examination of returns and claims
for refund, credit or abatement; determination of cor-
rect tax liability.
(Also Part I, §§ 6662, 6694; 1.6662–4, 1.6694–2.)
Rev. Proc. 2005–75
SECTION 1. PURPOSE
This revenue procedure updates Rev.
Proc. 2004–73, 2004–2 C.B. 999, and
identifies circumstances under which the
disclosure on a taxpayer’s return with re-
spect to an item or a position is adequate
for the purpose of reducing the understate-
ment of income tax under section 6662(d)
of the Internal Revenue Code (relating to
the substantial understatement aspect of
the accuracy-related penalty), and for the
purpose of avoiding the preparer penalty
under section 6694(a) (relating to under-
statements due to unrealistic positions).
This revenue procedure does not apply
with respect to any other penalty pro-
visions (including the disregard provi-
sions of the section 6662 accuracy-related
penalty, which are subject to an exception
for adequate disclosure).
This revenue procedure applies to any
returnfiledon2005taxformsforataxable
year beginning in 2005, and to any return
filed on 2005 tax forms in 2006 for short
taxable years beginning in 2006.
SEC. 2. CHANGES FROM REV. PROC.
2004–73
.01 Editorial changes have been made
in updating Rev. Proc. 2004–73.
.02 Section 1 clarifies that the disregard
provisions, and not the negligence provi-
sion, of the section 6662 accuracy penalty
are subject to an adequate disclosure ex-
ception (and that this revenue procedure is
not applicable to the exception for the dis-
regard provisions).
.03 Section 3.02 reflects the amendment
of section 6662(d)(1)(B) by section 819 of
the American Jobs Creation Act of 2004,
Pub. L. No. 108–357, 118 Stat. 1418
(2004) (the AJCA of 2004) which revises
the threshold for determining whether an
understatement is substantial for certain
corporations.
.04 Section 3.06 explains the effect of
tax law changes effective after December
31, 2005, on the use of this revenue proce-
dure for fiscal year and short year returns.
.05 Section 4.01 has been divided into
paragraphs: 4.01,General, and 4.02,
Items. The first paragraph provides gen-
eral guidance relevant to all items in the
revenue procedure, and the second para-
graph identifies the items for which the
entry of an amount on the line of a return
is adequate disclosure.
.06 Section 4.01(3) adds a new para-
graph cautioning that the entry of an
amount on a line will not provide adequate
disclosure when an understatement arises
from a related party transaction.
.07 Section 4.01(4) adds an example
(using Schedule M–3,Net Income (Loss)
Reconciliation for Corporations With To-
tal Assets of $10 Million or More) for dis-
closing an item on a line that does not
have a preprinted description identifying
that item.
.08 Section 4.01(5) adds a new para-
graph cautioning that the entry of an
amount on a line in conformity with this
revenue procedure will not provide ad-
equate disclosure for the section 6662
accuracy-related penalty if the item or
position is attributable to a tax shelter or
if it does not have a reasonable basis and
supporting records.The paragraph also
includes limitations on the effectiveness
of a disclosure for purposes of the section
6694 return preparer penalty.
.09 Section 4.02(1)(d) reflects the
enactment of section 170(f)(12) by sec-
tion 884 of the AJCA of 2004. Section
170(f)(12) concerns the amount that a
donor may deduct for a charitable con-
tribution of a qualified vehicle, boat, or
airplane having a value of more than $500.
SEC. 3. BACKGROUND
.01 If section 6662 applies to any por-
tion of an underpayment of tax required
to be shown on a return, an amount equal
to 20 percent of the portion of the under-
payment to which the section applies is
added to the tax. (The penalty rate is 40
percent in the case of gross valuation mis-
statements under section 6662(h).) Sec-
tion 6662(b)(2) applies to the portion of
an underpayment of taxthat is attributable
to a substantial understatement of income
tax.
.02 Section 6662(d)(1) provides that
there is a substantial understatement of in-
come tax if the amount of the understate-
ment exceeds the greater of 10 percent of
the amount of tax required to be shown on
thereturnforthetaxable year or $5,000.
Section 6662(d)(1)(B) provides special
rules for corporations. A corporation
(other than an S corporation or personal
holding company) has a substantial under-
statement of income tax if the amount of
the understatement exceeds the lesser of
10 percent of the tax required to be shown
on the return for a taxable year (or, if
greater, $10,000) or $10,000,000. Section
6662(d)(2) defines an understatement as
the excess of the amount of tax required to
be shown on the return for the taxable year
over the amount of the tax that is shown on
the return reduced by any rebate (within
the meaning of section 6211(b)(2)).
.03 In the case of an item not at-
tributable to a tax shelter, section
6662(d)(2)(B)(ii) provides that the amount
of the understatement is reduced by the
portion of the understatement attribut-
able to any item with respect to which
the relevant facts affecting the item’s tax
treatment are adequately disclosed in the
return or in a statement attached to the re-
turn, and there is a reasonable basis for the
tax treatment of the item by the taxpayer.
.04 Section 6694 imposes a penalty of
$250 on an income tax return preparer
for filing a return or claim for refund that
results in an understatement of liability
due to a position for which the preparer
knew or should have known that there
was not a realistic possibility of being sus-
tained on the merits and the position was
not disclosed in accordance with section
6662(d)(2)(B)(ii).
.05 In general, this revenue proce-
dure provides guidance for determining
when disclosure is adequate for purposes
of section 6662(d)(2)(B)(ii) and section
6694(a)(3). For purposes of this revenue
procedure, the taxpayer must furnish all
required information in accordance with
the applicable forms and instructions, and
the money amounts entered on these forms
must be verifiable. Annual guidance un-
der Treas. Reg. § 1.6662(f)(2) and Treas.
Reg. § 1.6694(e)(1) and (2) for returns
filed on 2004, 2003, and 2002 tax forms
is provided in Rev. Proc. 2004–73, Rev.
Proc. 2003–77, 2003–2 C.B. 964; and
Rev. Proc. 2002–66, 2002–2 C.B. 724,
respectively.
.06 Fiscal and short tax year returns.
(a) In general. This revenue procedure may
apply to a return for a fiscal tax year that
December 12, 200511372005–50 I.R.B.

begins in 2005 and ends in 2006. This rev-
enue procedure may also apply to a short
year return for a period beginning in 2006
where the return is to be filed before the
2006 forms are available. (Note that indi-
viduals are generally not put in this posi-
tion as a decedent’s final return for a frac-
tional part of a year is due the fifteenth day
of the fourth month following the close of
the12-month period which began with the
first day of such fractional part of the year.
SeeTreas. Reg. § 1.6072–1(b).) In the
case of fiscal year and short year returns,
the taxpayer must take into account any tax
law changes that are effective for tax years
beginning after December 31, 2005, even
though these changes are not reflected on
the form.
(b) Tax law changes effective after De-
cember 31, 2005. This document does
not take into account the effect of tax law
changes effective for tax years beginning
after December 31, 2005. If a line ref-
erenced in this revenue procedure is af-
fected by such a change and requires ad-
ditional reporting, a taxpayer may have
to file Form 8275,Disclosure Statement,
or Form 8275-R,Regulation Disclosure
Statement, until the Service prescribes cri-
teria for complying with the requirement.
SEC. 4. PROCEDURE
.01 General.
(1) Additional disclosure of facts rel-
evant to, or positions taken with respect
to, issues involving any of the items set
forth below is unnecessary for purposes
of reducing any understatement of income
tax under section 6662(d) (except as other-
wise provided in section 4.02(3) concern-
ing Schedules M–1 and M–3), provided
that the forms and attachments are com-
pleted in a clear manner and in accordance
with their instructions.
(2) The money amounts entered on the
forms must be verifiable, and the informa-
tion on the return must be disclosed in the
manner described below. For purposes of
this revenue procedure, a number is verifi-
able if, on audit, the taxpayer can demon-
strate the origin of the number (even if
that number is not ultimately accepted by
the Internal RevenueService) and the tax-
payer can show good faith in entering that
number on the applicable form.
(3) The disclosure of an amount as
provided in section 4.02 below is not ad-
equate when the understatement arises
from a transaction between related par-
ties. If an entry may present a legal issue
or controversy because of a related party
transaction, then that transaction and the
relationship must be disclosed on a Form
8275,Disclosure Statement,orForm
8275-R,Regulation Disclosure Statement.
(4) Where the amount of an item is
shown on a line that does not have a
preprinted description identifying that
item (such as on an unnamed line under
an “Other Expense” category) the tax-
payer must clearly identify the item by
includingthedescriptiononthatline.For
example, to disclose a bad debt for a sole
proprietorship, the words “bad debt” must
be written or typed on the line of Sched-
ule C that shows the amount of the bad
debt. Also, for Schedule M–3, Part II,
line 26, Other income (loss) items with
differences, or Part III, line 35, Other ex-
pense/deduction items with differences,
the entry must provide descriptive lan-
guage; for example, “Cost of non-compete
agreement deductible not capitalizable.”
If space limitations on a form do not allow
for an adequate description, the descrip-
tion must be continued on an attachment.
(5) Although a taxpayer may literally
meet the disclosure requirements of this
revenue procedure, the disclosure will
have no effect for purposes of the sec-
tion 6662 accuracy-related penalty if the
item or position on the return: (1) Does
not have a reasonable basis as defined
in Treas. Reg. § 1.6662–3(b)(3); (2) Is
attributable to a tax shelter item as defined
in section 6662(d)(2) and Treas. Reg.
§ 1.6662–4(g); or (3) Is not properly sub-
stantiated or the taxpayer failed to keep
adequate books and records with respect
to the item or position.SeeTreas. Reg.
§ 1.6694–2(c) regarding limitations on the
effectiveness of a disclosure regarding the
section 6694 return preparer penalty.
.02 Items.
(1) Form 1040, Schedule A,Itemized
Deductions:
(a) Medical and Dental Expenses:
Complete lines 1 through 4, supplying all
required information.
(b) Taxes: Complete lines 5 through 9,
supplying all required information. Line 8
must list each type of tax and the amount
paid.
(c) Interest Expenses: Complete lines
10 through 14, supplying all required in-
formation. This section 4.02(1)(c) does
not apply to (i) amounts disallowed under
section 163(d) unless Form 4952,Invest-
ment Interest Expense Deduction,iscom-
pleted, or (ii) amounts disallowed under
section 265.
(d) Contributions: Complete lines 15
through 18, supplying all required infor-
mation. Enter the amount of the contri-
bution reduced by the value of any sub-
stantial benefit (goods or services) pro-
vided by the donee organization in con-
sideration, in whole or in part. Entering
the value of the contribution unreduced by
the value of the benefit received will not
constitute adequate disclosure. If a con-
tribution of $250 or more is made, this
section will not apply unless a contem-
poraneous written acknowledgment, as re-
quired by section 170(f)(8), is obtained
from the donee organization. If a contri-
bution of property other than cash is made
and the amount claimed as a deduction ex-
ceeds $500, attach a properly completed
Form 8283,Noncash Charitable Contri-
butions,tothereturn. Inadditiontothe
Form 8283, if a contribution of a quali-
fied motor vehicle, boat, or airplane has a
value of more than $500, this section will
not apply unless a contemporaneous writ-
ten acknowledgment, as required by sec-
tion 170(f)(12), is obtained from the donee
organization and attached to the return. An
acknowledgment under section 170(f)(8)
is not required if an acknowledgment un-
der section 170(f)(12) is required.
(e) Casualty and Theft Losses: Com-
plete Form 4684,Casualties and Thefts,
and attach to the return. Each item or ar-
ticle for which a casualty or theft loss is
claimed must be listed on Form 4684.
(2) Certain Trade or Business Expenses
(including, for purposes of this section, the
following six expenses as they relate to the
rental of property):
(a) Casualty and Theft Losses: The pro-
cedure outlined in section 4.02(1)(e) must
be followed.
(b) Legal Expenses: The amount
claimed must be stated. This section
does not apply, however, to amounts prop-
erly characterized as capital expenditures,
personal expenses, or non-deductible lob-
bying or political expenditures, including
amounts that are required to be (or that
are) amortized over a period of years.
(c) Specific Bad Debt Charge-off: The
amount written off must be stated.
2005–50 I.R.B.1138December 12, 2005

(d) Reasonableness of Officers’ Com-
pensation: Form 1120, Schedule E,Com-
pensation of Officers, must be completed
when required by its instructions. The time
devoted to business must be expressed as
a percentage as opposed to “part” or “as
needed.” This section does not apply to
“golden parachute” payments, as defined
under section 280G. This section will not
apply to the extent that remuneration paid
or incurred exceeds the $1 million-em-
ployee-remuneration limitation, if applica-
ble.
(e) Repair Expenses: The amount
claimed must be stated. This section does
not apply, however, to any repair expenses
properly characterized as capital expendi-
tures or personal expenses.
(f) Taxes (other than foreign taxes): The
amount claimed must be stated.
(3) Differences in book and income tax
reporting.
(a) Form 1120, Schedule M–1,Recon-
ciliation of Income (Loss) per Books With
Income per Return,and
(b) Schedule M–3,Net Income (Loss)
Reconciliation for Corporations With To-
tal Assets of $10 Million or More,Form
1120: Column (b),Temporary Difference,
andColumn(c),Permanent Difference,of
Part II, (reconciliation of income (loss)
items) and Part III (reconciliation of ex-
pense/deduction items).
The information provided reasonably
must be expected to apprise the Service of
the nature of the potential controversy con-
cerning the tax treatment of the item. If
the information provided does not so ap-
prise the Service, a Form 8275 or Form
8275-R, must be used to adequately dis-
close the item (see Part II of the instruc-
tions for those forms).
Note: An item reported on a line with
a pre-printed description, shown on an
attached schedule, or “itemized” on
Schedule M–1 may represent the ag-
gregate amount of several transactions
producing that item (i.e.,agroupof
similar items, such as amounts paid or
incurred for supplies by a taxpayer en-
gagedinbusiness). Insomeinstances,
the potentially controversial item may
involve a portion of the amount dis-
closed on the schedule. The Service
will not be reasonably apprised of the
potential controversy by the amount
disclosed. In these instances, the tax-
payer must use Form 8275 or Form
8275-R regarding that portion of the
item.
The combining of unlike items, whether
on Schedule M–1 or Schedule M–3 (or
on an attachment when directed by the in-
structions), will not constitute an adequate
disclosure.
(4) Foreign Tax Items:
(a) International Boycott Transactions:
Transactions disclosed on Form 5713,
International Boycott Report.Schedule
A,International Boycott Factor (Sec-
tion 999(c)(1)); Schedule B,Specifically
Attributable Taxes and Income (Section
999(c)(2)); and Schedule C,Tax Effect
of the International Boycott Provisions,
must be completed when required by their
instructions.
(b) Treaty-Based Return Position:
Transactions and amounts under section
6114 or section 7701(b) as disclosed on
Form 8833,Treaty-Based Return Posi-
tion Disclosure Under Section 6114 or
7701(b).
(5) Other:
(a) Moving Expenses: Complete Form
3903,Moving Expenses, and attach to the
return.
(b) Employee Business Expenses:
Complete Form 2106,Employee Business
Expenses, or Form 2106-EZ,Unreim-
bursed Employee Business Expenses,and
attach to the return. This section does not
apply to club dues, or to travel expenses
for any non-employee accompanying the
taxpayer on the trip.
(c) Fuels Credit: Complete Form 4136,
Credit for Federal Tax Paid on Fuels,and
attach to the return.
(d) Investment Credit: Complete Form
3468,Investment Credit, and attach to the
return.
SEC. 5. EFFECTIVE DATE
This revenue procedure applies to any
return filed on a 2005 tax form for a taxable
year beginning in 2005, and to any return
filed on a 2005 tax form in 2006 for a short
taxable year beginning in 2006.
SEC. 6. DRAFTING INFORMATION
The principal author of this revenue
procedure is John Moran of the Office
of the Associate Chief Counsel, Proce-
dure & Administration (Administrative
Provisions & Judicial Practice Division).
For further information regarding this
revenue procedure, contact Branch 2 of
the Administrative Provisions & Judicial
Practice Division at (202) 622–4940 (not
a toll-free call).
26 CFR 601.201: Rulings and determination letters.
(Also, Part I, § 7805; § 301.7805–1.)
Rev. Proc. 2005–76
SECTION 1. PURPOSE
The purpose of this revenue procedure
is to extend the date by which a quali-
fied retirement plan must be in operational
compliance with a reforming plan amend-
ment in order to be eligible for the treat-
ment described in section 3.02 of Revenue
Procedure 2005–23, 2005–18 I.R.B. 991,
relating to the Supreme Court decision in
Central Laborers’ Pension Fund v. Heinz,
541 U.S. 739 (2004).
SECTION 2. BACKGROUND
Section 3.01 of Rev. Proc. 2005–23
provides that a qualified plan will not be
treated as having failed to satisfy the re-
quirements of § 401(a) of the Internal Rev-
enue Code merely because an amendment
that was adopted before June 7, 2004, vi-
olated § 411(d)(6) by adding or expand-
ing a provision under which a suspension
of benefits occurs. This treatment applies
only if a reforming amendment is adopted
and the plan complies operationally with
the reforming amendment. Section 3.03(1)
of Rev. Proc. 2005–23 provides that
the reforming amendment must provide
for the payment of retroactive benefits to
an affected plan participant with respect
to benefits that had accrued as of the ap-
plicable amendment date for the original
amendment. Section 3.03(2) of Rev. Proc.
2005–23 provides that the plan must be in
operational compliance with the reforming
amendment by January 1, 2006, with re-
spect to benefits payable through Decem-
ber 31, 2005. Pursuant to section 3.04
of Rev. Proc. 2005–23, the plan must
also provide an eligible participant, as de-
scribed in section 3.04(2), with the oppor-
tunity to elect retroactively to commence
the payment of benefits. The plan must
December 12, 200511392005–50 I.R.B.

provide notice of such election to each el-
igible participant on or before January 1,
2006.
SECTION 3. EXTENSION OF TIME
TO SATISFY SECTION 7805(b)
CONDITIONS
Thedatebywhichaplanmustbein
operational compliance with the reforming
amendment in order to be eligible for cer-
tain treatment described in section 3.01 of
Rev. Proc. 2005–23 is extended to Jan-
uary 1, 2007. Accordingly, the date as of
which a plan must provide for the payment
of retroactive benefits (as described in sec-
tion 3.03(2) of Rev. Proc. 2005–23) is ex-
tended to January 1, 2007. In addition, the
date on or before which a plan must pro-
vide notice to certain participants as de-
scribed in section 3.04(4) of Rev. Proc.
2005–23 is extended to January 1, 2007.
SECTION 4. EFFECT ON OTHER
DOCUMENTS
Rev. Proc. 2005–23 is modified.
SECTION 5. EFFECTIVE DATE
This revenue procedure is effective
December 12, 2005.
DRAFTING INFORMATION
The principal author of this revenue
procedure is Kathleen Herrmann of the
Employee Plans, Tax Exempt and Gov-
ernment Entities Division. Ms. Herrmann
may be reached at (202) 283–9888 (not a
toll-free number).
2005–50 I.R.B.1140December 12, 2005

Part IV. Items of General Interest
Notice of Proposed
Rulemaking and Notice of
Public Hearing
Partner’s Distributive Share
REG–144620–04
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemaking
and notice of public hearing.
SUMMARY: The proposed regulations
provide rules for testing the substantial-
ityofanallocationundersection704(b)
where the partners are look-through enti-
ties or members of a consolidated group,
provide additional guidance on the effect
of other provisions, such as section 482,
upon the tax treatment of a partner with
respect to the partner’s distributive share
under section 704(b), and revise the ex-
isting rules for determining the partners’
interests in a partnership. The proposed
regulations affect partnerships and their
partners. This document also provides no-
tice of a public hearing on these proposed
regulations.
DATES: Written or electronic comments
must be received by January 25, 2006.
Outlines of topics to be discussed at the
public hearing scheduled for February 15,
2006, at 10 a.m., must be received by Jan-
uary 25, 2006.
ADDRESSES: Send submissions to:
CC:PA:LPD:PR (REG–144620–04), room
5203, Internal Revenue Service, POB
7604, Ben Franklin Station, Washing-
ton, DC 20044. Submissions may be
hand-delivered Monday through Friday
between the hours of 8 a.m. and 4 p.m.
to: CC:PA:LPD:PR (REG–144620–04),
Courier’s Desk, Internal Revenue Service,
1111 Constitution Avenue, NW, Wash-
ington, DC, or sent electronically, via the
IRS internet site athttp://www.irs.gov/regs
or via the Federal eRule making Por-
tal athttp://www.regulations.gov(IRS
REG–144620–04). The public hearing
will be held in the Auditorium, Internal
Revenue Building, 1111 Constitution Av-
enue, NW, Washington, DC.
FOR FURTHER INFORMATION
CONTACT: Concerning the proposed
regulations, Timothy J. Leska, (202)
622–3050; concerning submissions and
the hearing, LaNita Van Dyke, (202)
622–7180 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Background
Subchapter K is intended to permit tax-
payers to conduct joint business activities
through a flexible economic arrangement
without incurring an entity-level tax. To
achieve this goal of a flexible economic
arrangement, partners are generally per-
mitted to decide among themselves how a
partnership’s items will be allocated. Sec-
tion 704(a) of the Internal Revenue Code
(Code) provides that a partner’s distribu-
tive share of income, gain, loss, deduc-
tion, or credit shall, except as otherwise
provided, be determined by the partnership
agreement.
Section 704(b) placesa significant lim-
itation on the general flexibility of section
704(a). Specifically, section 704(b) pro-
vides that a partner’s distributive share of
income, gain, loss, deduction, or credit (or
item thereof) shall be determined in ac-
cordance with the partner’s interest in the
partnership (determined by taking into ac-
count all facts and circumstances) if the al-
location to a partner under the partnership
agreement of income, gain, loss, deduc-
tion, or credit (or item thereof) does not
have substantial economic effect. Thus,
the statute provides that partnership allo-
cations either must have substantial eco-
nomic effect or must be in accordance with
the partner’s interest in the partnership.
Section 1.704–1(b)(2)(i) provides that
the determination of whether an allocation
of income, gain, loss, or deduction to a
partner has substantial economic effect in-
volves a two-part analysis. First, the al-
location must have economic effect within
the meaning of §1.704–1(b)(2)(ii). Sec-
ond, the economic effect of the allocation
must be substantial within the meaning of
§1.704–1(b)(2)(iii).
For an allocation to have economic ef-
fect,itmustbeconsistentwiththeunder-
lying economic arrangement of the part-
ners. This means that, in the event that
there is an economic benefit or burden that
corresponds to the allocation, the partner to
whom the allocation is made must receive
such economic benefit or bear such eco-
nomic burden. §1.704–1(b)(2)(ii)(a). Un-
der §1.704–1(b)(2)(ii)(b), an allocation of
income, gain, loss, or deduction (or item
thereof) to a partner generally has eco-
nomic effect if, and only if, throughout the
full term of the partnership, the partner-
ship agreement provides: (1) for the de-
termination and maintenance of the part-
ners’ capital accounts in accordance with
§1.704–1(b)(2)(iv); (2) for liquidating dis-
tributions to the partners to be made in
accordance with the positive capital ac-
count balances of the partners; and (3) for
each partner to be unconditionally obli-
gated to restore the deficit balance in the
partner’s capital account following the liq-
uidation of the partner’s partnership in-
terest. Inlieuofsatisfyingthethirdre-
quirement, the partnership may satisfy the
qualified income offset rules set forth in
§1.704–1(b)(2)(ii)(d). An allocation also
may be deemed to have economic effect if
it satisfies the economic effect equivalence
rules of §1.704–1(b)(2)(ii)(i).
Section 1.704–1(b)(2)(iii)(a) provides
as a general rule that the economic effect
of an allocation (or allocations) is sub-
stantial if there is a reasonable possibility
that the allocation (or allocations) will
affect substantially the dollar amounts to
be received by the partners from the part-
nership, independent of tax consequences.
Notwithstanding the previous sentence,
the economic effect of the allocation (or
allocations) is not substantial if, at the
time the allocation (or allocations) be-
comes part of the partnership agreement,
(1) the after-tax economic consequences
of at least one partner may, in present
value terms, be enhanced compared to
such consequencesif the allocation (or
allocations) were not contained in the
partnership agreement, and (2) there is a
strong likelihood that the after-tax eco-
nomic consequences of no partner will, in
present value terms, be substantially di-
minished compared to such consequences
if the allocation (or allocations) were not
contained in the partnership agreement. In
determining the after-tax economic benefit
or detriment to a partner, tax consequences
December 12, 200511412005–50 I.R.B.

that result from the interaction of the al-
location with such partner’s tax attributes
that are unrelated to the partnership will
be taken into account.
If the partnership agreement provides
for an allocation of income, gain, loss, de-
duction or credit to a partner that does not
have substantial economic effect, then the
partner’s distributive share of that item is
determined in accordance with the part-
ner’s interest in the partnership. Refer-
ences in section 704(b) or §1.704–1 to a
partner’s interest in the partnership, or to
the partners’ interests in the partnership,
signify the manner in which the partners
have agreed to share the economic bene-
fit or burden (if any) corresponding to the
income, gain, loss, deduction, or credit (or
item thereof) that is allocated, taking into
account all facts and circumstances relat-
ing to the economic arrangement of the
partners.
Section 1.704–1(b)(3)(i) provides that
all partners’ interests are presumed to be
equal (determined on aper capitabasis).
However, this presumption may be rebut-
ted by the taxpayer or the IRS by establish-
ing facts and circumstances that show that
the partners’ interests in the partnership are
otherwise.
Section 1.704–1(b)(1)(iii) provides that
an allocation that is respected under sec-
tion 704(b) nevertheless may be reallo-
cated under other provisions, such as sec-
tion 482, section 704(e)(2), section 706(d)
(and related assignment of income princi-
ples), and §1.751–1(b)(2)(ii).
On April 21, 2004, temporary regula-
tions (T.D. 9121, 2004–1 C.B. 903) re-
lating to the proper allocation of partner-
ship expenditures for foreign taxes were
published in theFederal Register(69 FR
21405). In the preamble to those regu-
lations, the IRS and the Treasury Depart-
ment indicated a concern that some part-
nerships are taking the position that, in de-
termining if the economic effect of a part-
nership allocation is substantial, they need
not consider the tax consequences to an
owner of the partner that result from the al-
location. This position is inconsistent with
the policies underlying the substantial eco-
nomic effect rules, because it would allow
a partnership to make tax-advantaged allo-
cations if the tax advantages of the alloca-
tions accrue to an owner of a partner, rather
than to the partner itself.
Explanation of Provisions
These proposed regulations provide
that the interaction of a partnership allo-
cation with the tax attributes of owners
of look-through entities must be taken
into account when testing the substantial-
ity of the allocation to a partner that is
a look-through entity. For this purpose,
look-through entities include partnerships,
S corporations, trusts, certain controlled
foreign corporations, and entities that are
disregarded for federal tax purposes, such
as qualified subchapter S subsidiaries un-
der section 1361(b)(3), entities that are
disregarded under §§301.7701–1 through
301.7701–3 of the Procedure and Admin-
istration Regulations, or qualified real es-
tate investment trusts (REIT) subsidiaries
within the meaning of section 856(i)(2).
In general, look-through entities are en-
tities that flow certain tax consequences
through to their owners. Although reg-
ulated investment companies (RICs) and
REITs have certain flow through charac-
teristics, the regulations do not include
them in the list of look-through entities,
because the Treasury Department and the
IRS believe that the burdens of a rule re-
quiring taxpayers to look through these
entities in determining the substantiality
of partnership allocations generally would
outweigh the benefits of such a rule. How-
ever, if necessary, RICs and REITs or
other look-through entities may be added
to the list of look-through entities in fu-
ture guidance. Comments are requested
regarding the treatment of controlled for-
eign corporations as look-through partners
for purposes of §1.704–1(b)(2)(iii)(a)(2)
of these proposed regulations. Specifi-
cally, comments are requested concerning
whether the rule should be limited to those
situations in which the controlled foreign
corporation owns greater than a threshold
minimum percentage interest in the part-
nership, or only by taking into account the
tax attributes of those U.S. shareholders of
the controlled foreign corporation owning
above a threshold percentage of the stock
of the controlled foreign corporation.
The regulations also provide that the in-
teraction of a partnership allocation with
the tax attributes of the consolidated group
must be taken into account when testing
the substantiality of the allocation to a part-
ner that is a member of a consolidated
group. A member of a consolidated group
is a member of a group filing (or required
to file) consolidated returns for the tax
year. See §1.1502–1(h).
The proposed regulations clarify that
for purposes of §1.704–1(b)(2)(iii)(a)(1),
the after-tax economicconsequences of a
partner resulting from an allocation or al-
locations must be compared to the after-tax
economic consequences to that partner if
the allocation or allocations were made in
accordance with the partners’ interests in
the partnership. The proposed regulations
also remove theper capitapresumption in
§1.704–1(b)(3)(i), which reaches the cor-
rect result in very few cases. Finally, the
regulations include an example illustrating
a fact pattern to which, apart from the ap-
plication of section 704(b), other sections
may apply.
Proposed Effective Date
These regulationsare generally pro-
posed to apply for partnership taxable
years beginning on or after the date on
which final regulations are published in
theFederal Register. No inference is
intended as to the tax consequences of
partnership allocations made in taxable
years beginning before the effective date
of these regulations.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a signifi-
cant regulatory action as defined in Exec-
utive Order 12866. Therefore, a regula-
tory assessment is not required. It has also
been determined that section 553(b) of the
Administrative Procedure Act (5 U.S.C.
chapter 5) does not apply to these regu-
lations, and because the regulation does
not impose a collection of information on
small entitles, the Regulatory Flexibility
Act (5 U.S.C. chapter 6) does not apply.
Pursuant to section 7805(f) of the Code,
this notice of proposed rulemaking will be
submitted to the Chief Counsel for Advo-
cacy of the Small Business Administration
for comment on its impact on small busi-
ness.
Comments and Public Hearing
Before these proposed regulations are
adopted as final regulations, consideration
will be given to any written (a signed origi-
nal and eight (8) copies)orelectroniccom-
2005–50 I.R.B.1142December 12, 2005

ments that are submitted timely to the IRS.
The IRS and Treasury Department request
comments on the clarity of the proposed
rules and how they can be made easier to
understand. All comments will be avail-
able for public inspection and copying.
A public hearing has been scheduled
forFebruary15,2006,at10a.m. inthe
Auditorium, Internal Revenue Building,
1111 Constitution Avenue, NW, Washing-
ton, DC. Because of access restrictions,
visitors will not be admitted beyond the
immediateentranceareamorethan30
minutes before the hearing starts. For in-
formation about having your name on the
building access list to attend the hearing,
see the FOR FURTHER INFORMATION
CONTACT portion of this preamble.
The rules of 26 CFR 601.601(a)(3) ap-
ply to the hearing. Persons who wish to
presentoralcommentsmustsubmitwrit-
ten or electronic comments by January 25,
2006, and an outline of the topics to be
discussed and the time to be devoted to
each topic (a signed original and eight (8)
copies) by January 25, 2006. A period of
10 minutes will be allotted to each person
for making comments. An agenda show-
ing the scheduling of the speakers will be
prepared after the deadline for receiving
outlines has passed. Copies of the agenda
will be available free of charge at the hear-
ing.
Drafting Information
The principal author of this regulation is
Timothy J. Leska, Office of the Associate
Chief Counsel (Passthroughs & Special In-
dustries). However, other personnel from
the IRS and Treasury Department partici-
pated in its development.
*****
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 1 is proposed
to be amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.704–1 is amended as
follows:
1. Paragraph (b)(1)(ii)(a)isamended
by adding a sentence at the end of the para-
graph.
2. Paragraph (b)(1)(iii) is amended
by revising the first three sentences and
adding a new fourth sentence.
3. Paragraphs (b)(2)(iii)(a), is redesig-
nated as paragraph (b)(2)(iii)(a)(1)andre-
vised.
4. New paragraph (b)(2)(iii)(a)(2)is
added.
5. The last two sentences of paragraph
(b)(3)(i) are removed.
6. Paragraph (b)(5)Example 29and
Example 30are added.
The additions and revisions read as fol-
lows:
§1.704–1 Partner’s distributive share.
*****
(b) * * *
(1) * * *
(ii)Effective dates.(a)***Paragraph
(b)(2)(iii)(a)(2) and paragraph (b)(5)Ex-
ample 30of this section apply to taxable
years beginning on or after the date on
which final regulations are published in the
Federal Register.
(iii)Effect of other sections. The deter-
mination of a partner’s distributive share
of income, gain, loss, deduction, or credit
(or item thereof) under section 704(b) and
this paragraph (b) is not conclusive as to
the tax treatment of a partner with respect
to such distributive share. For example, an
allocation of loss or deduction to a partner
that is respected under section 704(b) and
this paragraph (b) may not be deductible
by such partner if the partner lacks the req-
uisite motive for economic gain (see,e.g.,
Goldstein v. Commissioner, 364 F.2d 734
(2d. Cir. 1966)), or may be disallowed
for that taxable year (and held in suspense)
if the limitations of section 465 or sec-
tion 704(d) are applicable. Similarly, an
allocation that is respected under section
704(b) and this paragraph (b) nevertheless
may be reallocated under other provisions,
such as section 482, section 704(e)(2), sec-
tion 706(d) (and related assignment of in-
come principles), and §1.751–1(b)(2)(ii).
See paragraph (b)(5)Example 29of this
section. * * *
(2) * * *
(iii)Substantiality—(a)In gen-
eral—(1)Fundamental principles. Except
as otherwise provided in this paragraph
(b)(2)(iii), the economic effect of an al-
location (or allocations) is substantial
if there is a reasonable possibility that
the allocation (or allocations) will affect
substantially the dollar amounts to be
received by the partners from the partner-
ship, independent of tax consequences.
Notwithstanding the preceding sentence,
the economic effect of an allocation (or al-
locations) is not substantial if, at the time
the allocation (or allocations) becomes
part of the partnership agreement, the af-
ter-tax economic consequences of at least
one partner may, in present value terms, be
enhanced compared to such consequences
if the allocation (or allocations) were not
contained in the partnership agreement
(and, thus, the allocation or allocations
were allocated among the partners in ac-
cordance with the partners’ interests in
the partnership), and there is a strong
likelihood that the after-tax economic con-
sequences of no partner will, in present
value terms, be substantially diminished
compared to such consequences if the allo-
cation (or allocations) were not contained
in the partnership agreement (and, thus,
the allocation or allocations were allocated
among the partners in accordance with the
partners’ interests in the partnership). In
determining the after-tax economic benefit
or detriment to a partner, tax consequences
that result from the interaction of the al-
location with such partner’s tax attributes
that are unrelated to the partnership will be
taken into account. See paragraph (b)(5)
Examples 5and9of this section. The
economic effect of an allocation is not
substantial in the two situations described
in paragraphs (b)(2)(iii)(b)and(c)ofthis
section. However, even if an allocation is
not described therein, its economic effect
may be insubstantial under the general
rules stated in this paragraph (b)(2)(iii)(a).
References in this paragraph (b)(2)(iii)
to allocations include capital account ad-
justments made pursuant to paragraph
(b)(2)(iv)(k)ofthissection.
(2)Partners that are look-through enti-
ties or members of a consolidated group—
(i)Rule. For purposes of this paragraph
(b)(2)(iii), in determining the after-tax eco-
nomic benefit or detriment to any partner
that is a look-through entity, the tax conse-
quences that result from the interaction of
the allocation with the tax attributes of any
person that owns an interest in such a part-
ner, whether directly or indirectly through
December 12, 200511432005–50 I.R.B.

one or more look-through entities, must
be taken into account, and, in determin-
ing the after-tax economic benefit or detri-
ment to any partner that is a member of a
consolidated group (within the meaning of
§1.1502–1(h)), the tax consequences that
result from the interaction of the allocation
with the tax attributes of the consolidated
group and with the tax attributes of another
member with respect to a separate return
year must be taken into account. See para-
graph (b)(5)Example 30of this section.
(ii)Definition. For purposes of this
paragraph (b)(2)(iii)(a)(2), alook-through
entitymeans—
(A) A partnership;
(B) A subchapter S corporation;
(C) A trust;
(D) An entity that is disregarded for
Federal tax purposes, such as a qualified
subchapter S subsidiary under section
1361(b)(3), an entity that is disregarded
as an entity separate from its owner under
§§301.7701–1 through 301.7701–3 of this
chapter, or a qualified REIT subsidiary
within the meaning of section 856(i)(2).
(E) A controlled foreign corporation,
as defined in section 957(a), but only with
respect to allocations of items of income,
gain, loss, or deduction that enter into
the corporation’s computation of subpart
F income or would enter into that com-
putation if such items were allocated to
the corporation (collectively, subpart F
items). For purposes of this paragraph
(b)(2)(iii)(a)(2)(ii)(E),theruleinpara-
graph (b)(2)(iii)(a)(2)(i)ofthissection
shall apply only by taking into account the
tax attributes of a person that is a United
States shareholder of the controlled for-
eign corporation the amount of whose
inclusions of gross income under section
951(a) are affected by the partnership’s
allocations of subpart F items (or would
be affected if such items were allocated to
the corporation).
*****
(5)Examples.***
Example 29. (i) B, a domestic corporation, and
C, a controlled foreign corporation, form BC, a part-
nership organized under the laws of country X. B and
C each contribute 50 percent of the capital of BC. B
and C are wholly-owned subsidiaries of A, a domestic
corporation. Substantially all of BC’s income would
not be subpart F income if earned directly by C. The
BC partnership agreement provides that, for the first
fifteen years, BC’s gross income will be allocated 10
percent to B and 90 percent to C, and BC’s deduc-
tions and losses will be allocated 90 percent to B and
10 percent to C. The partnership agreement also pro-
vides that, after the initial fifteen year period, BC’s
gross income will be allocated 90 percent to B and 10
percent to C, and BC’s deductions and losses will be
allocated10percenttoBand90percenttoC.
(ii) Apart from the application of section 704(b),
the Commissioner may reallocate or otherwise not re-
spect the allocations under other sections. See para-
graph (b)(1)(iii) of this section. For example, BC’s
allocations of gross income, deductions, and losses
may be evaluated and reallocated (or not respected),
as appropriate, if it is determined that the allocations
result in the evasion of tax or do not clearly reflect
income under section 482.
Example 30. PRS is a partnership with three part-
ners, A, B, and C. A is a corporation that is a mem-
ber of a consolidated group within the meaning of
§1.1502–1(h). B is a subchapter S corporation that is
wholly owned by D, an individual. C is a partnership
with two partners, E, an individual, and F, a corpora-
tion that is a member of a consolidated group within
the meaning of §1.1502–1(h). For purposes of para-
graph (b)(2)(iii) of this section, in determining the af-
ter-tax economic benefit or detriment of an allocation
to A, the tax consequences that result from the inter-
action of the allocation to A with the tax attributes of
the consolidated group in which A is a member must
be taken into account. In determining the after-tax
economic benefit or detriment of an allocation to B,
the tax consequences that result from the interaction
of the allocation with the tax attributes of D must be
taken into account. In determining the after-tax eco-
nomic benefit or detriment of an allocation to C, the
tax consequences that result from the interaction of
the allocation with the tax attributes of E and the con-
solidated group in which F is a member must be taken
into account.
Mark E. Matthews,
Deputy Commissioner for
Services and Enforcement.
(Filed by the Office of the Federal Register on November 17,
2005, 8:45 a.m., and published in the issue of the Federal
Register for November 18, 2005, 70 F.R. 69919)
Compliance Assurance
Process
Announcement 2005–87
The Internal Revenue Service is con-
ducting a pilot program, the Compliance
Assurance Process (CAP), for large busi-
ness taxpayers. Under this pilot program,
the Service’s Large and Mid-size Busi-
ness Division is working with large busi-
ness taxpayers to identify and resolve is-
sues prior to the filing of a tax return.
The objective of the program is to reduce
taxpayer burden and uncertainty while as-
suring the Service of the accuracy of tax
returns prior to filing, thereby reducing
or eliminating the need for post-filing ex-
aminations. The CAP will reduce tax-
payer burden through the contemporane-
ous exchange of information about com-
pleted events and transactions that affect
tax liability, rather than through the tra-
ditional examination process. The CAP
will also foster compliance by helping the
Service achieve its goal of shortening ex-
amination cycles and increasing currency
for taxpayers while enhancing the accu-
rate, efficient, and timely final resolution
of increasingly complex corporate tax is-
sues. In addition, the program will as-
sist in increasing audit coverage by provid-
ing a more efficient use of audit resources.
Finally, the program will allow taxpayers
to better manage tax reserves and ensure
more precise reporting of earnings on fi-
nancial statements.
Several large business taxpayers volun-
teered to participate in the CAP pilot pro-
gram during the 2005 tax year. Upon its
conclusion, the Service will evaluate the
pilot program, consider necessary adjust-
ments, and determine whether to make the
program permanent.
DESCRIPTION OF PROGRAM
The CAP requires extensive coopera-
tion between the Service and participating
taxpayers. Throughout the tax year, these
taxpayers are expected to engage in full
disclosure of information concerning their
completed business transactions and their
proposed return treatment of all material
issues. Participating taxpayers that resolve
all material issues will be assured, prior to
the filing of the tax return, that the Service
will accept their tax return, if filed con-
sistent with the resolutions (described be-
low), and that no post-filing examination
will be required. If all issues cannot be re-
solved prior to the filing of the return, the
program will identify the remaining items
that will need to be resolved through tradi-
tional examination processes.
Significant aspects of the CAP include:
•Communication of information about
completed transactions in a manner
that is timely and allows a meaningful
analysis of material items affecting the
tax return;
•The review of significant transactions
immediately after completion, while
2005–50 I.R.B.1144December 12, 2005

knowledgeable personnel and neces-
sary records are most accessible;
•The sharing of all relevant data and
positions between the Service and the
taxpayer;
•The early identification of compliance
issues in need of resolution;
•Access to and willingness to partici-
pate in issue resolution methods; and
•Determination of return acceptance
prior to filing.
The program does not include providing
participating taxpayers with guidance on
or resolving prospective or incomplete
transactions outside of existing proce-
dures.
The Service has assigned an Account
Coordinator to each taxpayer participating
in the CAP pilot program. The Account
Coordinator serves as the primary point of
contact with the Service for issue resolu-
tion. The Account Coordinator will re-
view the taxpayer’s audit history and prior
tax issues and will become familiar with
relevant industry trends and current busi-
ness practices of the taxpayer. To ensure
proper and accurate evaluation of all tax
items, the Account Coordinator will con-
sult with Service specialists, Appeals per-
sonnel, and Chief Counsel advisors. Sim-
ilarly, participating taxpayers have desig-
nated personnel to act as the primary con-
tact for the Account Coordinator.
The Service has also asked the partici-
pating taxpayers, if relevant:
•To provide an industry overview;
•To prepare current organizational
charts reflecting all related entities
and the flow of relevant information
involving those entities;
•To give financial performance infor-
mation;
•To outline any anticipated significant
events that will affect reporting for the
tax year;
•To give access to accounting records
and systems; and
•To make available the necessary re-
sources for disclosure of requested in-
formation.
All information provided to the Service
in connection with the CAP concerning the
participating taxpayers’ tax liability and all
closing agreements entered into between
the Service and the participating taxpayers
are return information protected from dis-
closure by the confidentiality provisions of
section 6103.
A standardized memorandum of under-
standing (MOU), which sets the ground
rules for the CAP, has been executed be-
tween each participating taxpayer and the
assigned Account Coordinator. The MOU
defines specific objectives for the pro-
gram, sets parameters for the disclosure
of information, describes the methods of
communication, and serves as a statement
of the parties’ commitment to good-faith
participation in the CAP. Adherence to the
processes established by the MOU is an
integral part of resolving identified issues
and assuring the Service of the accuracy of
the tax return. Failure to comply with the
terms of the MOU may result in removal
of the taxpayer from the program.
The Account Coordinator and the
taxpayer will work together during the
process to identify and resolve issues. As
issues are resolved, the Account Coordi-
nator and the taxpayer will enter into Issue
Resolution Agreements (IRAs) record-
ing the resolutions. When necessary, the
parties may use existing issue resolution
processes, such as Fast Track Settlement
(Rev. Proc. 2003–40, 2003–1 C.B. 1044).
After the close of the tax year, the Account
Coordinator will incorporate the resolu-
tion of the identified issues in Form 906
closing agreement(s), based on the com-
pleted IRAs. The CAP does not change
or modify LMSB’s current authorities to
resolve cases.
If the taxpayer has fully complied with
the terms of the MOU, and all identified
issues have been resolved through closing
agreement(s), the Service will provide the
taxpayer with written confirmation that,
subject to the completion of a post-filing
review, it will accept the taxpayer’s re-
turn if it is filed consistent with the closing
agreement(s).
If the taxpayer has fully complied with
the terms of the MOU, but the Service and
the taxpayer cannot resolve all identified
issues prior to filing the tax return, the Ser-
vice will provide the taxpayer with written
confirmation that, subject to the comple-
tion of a post-filing review, it will accept
the taxpayer’s return as to the resolved is-
sues if the return is filed consistent with the
closing agreement(s).
Once the taxpayer files the return, the
Service and the taxpayer will participate in
a joint post-filing review to confirm that all
resolved issues were reported as agreed. It
is expected that this post-filing review will
be completed within 90 days of the filing
of the return. If the post-filing review re-
veals that the return is not consistent with
the terms of the closing agreement(s), or
reveals that there are items on the return
presenting material issues that were not
adequately disclosed, the Service will ex-
amine all inconsistent or inadequately dis-
closed issues through the traditional exam-
ination process. The taxpayer will retain
access to all available Appeals proceed-
ings with respect to any traditional exami-
nation that is conducted.
Although the CAP is not subject to the
restrictions in section 7605(b), the Service
will only reopen the year after the post-fil-
ing review has occurred and any tradi-
tional examination of inconsistent or in-
adequately disclosed issues has concluded
if the circumstances set out in section 5
of Rev. Proc. 2005–32, 2005–23 I.R.B.
1206, apply.
CONTACT INFORMATION
For further information regard-
ing this announcement, contact
Christopher Johnson, LMSB Com-
munications and Liaison Director, at (202)
283–8588 (not a toll-free number) or by
email atchris.johnson@irs.gov.
Request for Applications to
Participate in the 2006 IRS
Individual e-file Partnership
Program
Announcement 2005–88
The Stakeholder Partnerships, Educa-
tion and Communication (SPEC) function
within the Internal Revenue Service (IRS)
is continuing its efforts to establish IRS
e-file partnerships with various entities.
The IRS is seeking non-monetary e-file
December 12, 200511452005–50 I.R.B.

partnerships forFiling Season 2006.No
applications for funding (monetary com-
pensation) will be considered. A com-
mercial business, non-profit organization,
state government or local government
may submit applications. Applications are
not solicited from other Federal govern-
ment agencies. The program is an annual
program and covers the periodJanuary
through October 16, 2006. All prior
year partners must reapply for Filing
Season 2006.
BACKGROUND
The IRS Restructuring and Reform Act
of 1998 (RRA 98) requires the IRS to re-
ceive 80 percent of all returns electron-
ically by 2007. RRA 98 authorized the
IRS Commissioner to promote the bene-
fits of and encourage the use of e-file ser-
vices. As a result of RRA 98, the IRS en-
ters into non-monetary partnerships with
businesses to offer low cost income tax
preparation and electronic filing for quali-
fied taxpayers.
Continued opportunities for growth in
electronic tax administration are evident.
For Filing Season 2005, the IRS received
68 million electronically filed returns, an
increase of 11% over the previous year.
Visit the IRS web site,http://www.irs.gov,
for the most current results from market re-
search on individualtaxpayers, including
demographic data and psychographic stud-
ies. This research includes attitudinal sur-
veys, customer satisfaction surveys, Public
Service communications, tracking studies
and any focus group results.
The IRS accepts many forms and sched-
ules for electronic filing. Visit the IRS
web site for a completelisting of accepted
forms and schedules.
FILING SEASON 2006
For Filing Season 2006, the IRS will
focus on the 1040 series income tax re-
turns covering “IRSe-fileUsing a Tax Pre-
parer” and “IRSe-fileUsing a Personal
Computer.” Additional emphasis is being
placed on the following features: “Self-Se-
lect Personal Identification Number (PIN)
for e-file”, “Usinge-filefor Federal/State
Returns”, and “Electronic Payment Op-
tions” for balance due and estimated pay-
ment options.
A major area of emphasis is to reach
those taxpayers who continue to file com-
puter prepared paper returns (v-code). Re-
search indicates that the number of v-code
returns continues to increase (76% of all
v-code returns are prepared by paid pre-
parers). Emphasis should be placed on
converting v-code filers to electronically
file their returns through the marketing and
promotion of the benefits of e-file.
Participants should also reach those in-
dividuals eligible for the Earned Income
Tax Credit (EITC). It’s important to note
that many of the military families may also
qualify for EITC since supplemental pay-
ments and combat pay are exempt from the
income calculations.
Participants are encouraged to focus on
reducing the number of errors made on
electronically filed returns, including those
returns claiming EITC. The “EITC Assis-
tant” is an interactive web-based tool de-
signed to help tax professionals determine
whether or not their clients are eligible for
EITC, and why. The “EITC Assistant” is
a step taken by the IRS to maximize tax-
payer participation, minimize EITC errors
while increasing compliance. You can find
the “EITC Assistant” on the IRS web site
athttp://www.irs.gov/eitc.
The IRS expects all accepted partners
to aggressively market, promote and of-
fer e-file product and services through
October 16, 2006. The IRS will sup-
ply the partners with the key marketing
messages, when they become available,
that support electronic filing during the
Filing Season (January through April
15, 2006) and post- Filing Season (April
through October 16, 2006). These mes-
sages should be used in your promotion of
electronic filing and placed on your web
site. Utilization of these messages will
ensure uniformity and maximize public
awareness. For additional information on
the various e-file programs, features, and
market research, visit the IRS web site at
http://www.irs.gov.
Participants will receive hyperlinks
from the IRS web site —irs.gov(Partners
Page) — to the Participant’s web site. Po-
tential Participants may request links for
the following categories:
•IRSe-filePartners for Taxpayers
•IRSe-filePartners for Tax Profession-
als
•IRSe-filePartners for Financial Insti-
tutions/Employers
•IRSe-filePartners for Credit Card Pay-
ment Options.
PARTICIPATION STANDARDS &
REQUIREMENTS
Participants will abide by the following
standards and requirements, if applicable:
•The Participant was actively engaged
in the electronic tax preparation and
filing industry in 2004 and 2005.
•The Participant (Electronic Return
Originator, Intermediate Service
Provider, Software Developer, and
Transmitter) must be in good standing
with the IRS, comply with the e-file re-
quirements stated in the IRS Revenue
Procedure 2005–60, current versions
of Publications 1345,1345A, 3112, and
pass the annual Suitability and Partic-
ipants Acceptance Testing (PATS)
conducted by the IRS. You can find
the IRS e-file technical publications on
the IRS web site athttp://www.irs.gov.
•The Participant will comply with the
privacy provisions of 26 U.S.C. §7216
and U.S.C.§ 6103.
•The Participant will be required to
prove and display third-party certifica-
tions for the privacy/security/authen-
ticity of its online service. The Par-
ticipant’s web site should display the
third-party certification and privacy
seals. Participants must use software
that will enable their web sites to state
their privacy practices in a standard
machine-readable format that can be
retrieved automatically and interpreted
easilybyusers.
•Participants will comply with the se-
curity provisions in applicable De-
partment of Treasury/IRS rules in-
cluding, but not limited to, 31 C.F.R.
Part 10, IRS Rev. Proc. 2005–60,
current versions of IRS Publications
1345, 1345A, and 3112, and 26 U.S.C.
§7216. In addition, Participants must
comply with the Federal Trade Com-
mission’s Graham Leach Bliley Act to
protect the security of taxpayer infor-
mation.
2005–50 I.R.B.1146December 12, 2005

•The Participant will offer their prod-
ucts and services to filers of the 1040
Series returns, including complex
returns, balance due returns, Fed-
eral/State returns,and 1040EZ returns.
•The Participant will target individuals
eligible for EITC and v-coders.
•The Participant will focus on reduc-
ing the number of errors on electroni-
cally prepared returns, including those
returns claiming EITC.
•The Participant will offer a variety of
e-file features including the Self-Se-
lect PIN, Electronic Payment Options,
Federal/State e-file, Direct Deposit of
Refunds, etc.
•The Participant will market, promote
and offer e-file services through Octo-
ber 16, 2006. The Participant should
use the key marketing messages, pro-
vided by the IRS, for the promotion
of Filing Season and Post Filing Sea-
son electronic filing and place them on
your web site.
•The Participant will be permitted only
one (1)hyperlink on the IRSe-file
Partners Page per category:
•IRSe-filePartners for Taxpayer
•IRSe-filePartners for Tax Profes-
sionals
•IRSe-filePartners for Financial In-
stitutions/Employers
•IRSe-filePartners for Electronic
Payment Options.
•The Participant will provide the IRS
with a description (not to exceed 350
characters including spaces) for each
hyperlink placed on the IRSe-filePart-
ners Page. The hyperlink description
may describe multiple offers/services.
•The Participant will not have a URL(s)
containing the word “IRS.”
•The Participant will be required to sup-
plytheIRSwithalinktotheirwebsite
in their application orno less than ten
(10) business daysbefore the site is
expected to go live (start date of elec-
tronic filing). All sites must be exam-
ined before they can be posted on the
IRSe-filePartners Page. The purpose
of the review is to ensure each Partici-
pant’s web site complies with the stan-
dards and requirements set forth in this
announcement.
•The Participant will adhere to industry
best practices to ensure the taxpayer re-
turn information entrusted to them is
secure and the privacy of such infor-
mation is maintained. In any instance
where a Participant contracts with a
service provider to obtain technology
services, it will adhere to this standard.
To the extent multiple Participants rely
on a single service provider for front
or back office services (not ISP ser-
vices), it is even more critical that such
taxpayer security and privacy be main-
tained with respect to others who share
these services.
•A Participant’s web site must be func-
tionally adequate and consistent with
the Participant’s offer in permitting a
taxpayer to complete their return. Fail-
ure to comply may result in the Partici-
pant’s removal from the Partners Page.
•Whenever taxpayers are requested or
required to provide their SSN, it must
be part of a secure session. Participants
mustnotbepermittedtouseSSNsas
a requested field for registration pur-
poses or for establishing a taxpayer ac-
count on-line.
•The Participant will display the IRS
e-filelogo on the landing page of
its web site. The e-file logo and
guidelines can be downloaded from
http://www.irs.gov.
•The Participant will have a link(s) to
the IRS web site,http://www.irs.gov,
from its web site.
•The Participant’s web site will not con-
tain inappropriate content. Further, the
Participantwillensurethatallonline
advertising and hyperlinks posted on
its web site neither promote nor link to
inappropriate content.
•The Participant will clearly disclose its
customer service support options (in-
cluding associated fees, if any) and pri-
vacy policy on the landing page of its
web site. Participants must provide
taxpayers with a business contact point
by on-line form, email, mail, facsim-
ile or telephone number which the Par-
ticipant maintains and reviews. The
Participant must provide taxpayers a
method to obtain the status of their tax
return. Taxpayers can be directed to
“Where’s My Tax Refund?”located
on the Homepage of the IRS web site
athttp://www.irs.gov.
•The Participant will prominently dis-
play on the landing page of its web site
the promotion of income tax prepara-
tion and electronic filing for individu-
als eligible for EITC. Participants are
encouraged to offer a monetary incen-
tive (reduced return preparation and
electronic filing costs) to attract these
taxpayers.
•The Participant will disclose limita-
tions in the forms and schedules that
are likely to be needed to support
their offerings. The Participant should
clearly display a listing of the forms
and schedules that will be offered
either visible or accessible from the
Participant’s landing page.
•The Participant will clearly disclose ei-
ther visible or accessible from the Par-
ticipant’s landing page a listing of the
States that their software supports.
•The Participant is permitted to of-
fer commercial products and services
consistent with obtaining the posi-
tive consent of the user as described
in 26 U.S.C. 7616 before offering
fee-based products and services not
related to tax preparation.
•The Participant will include a feature
in their tax preparation software that
will “time out” the session after no
changes are made for a period of time
consistent with best practices approved
by privacy seal certification programs.
•The Participant, upon learning of an in-
appropriate disclosure of a taxpayer’s
return information to a member of the
public, such as another taxpayer or
other unauthorized party in the course
of providing e-file services as a result
of their hyperlink on the IRSe-file
Partners Page, will immediately notify
December 12, 200511472005–50 I.R.B.

the IRS of this disclosure and then shut
down its program immediately.
•The Participant will submit written
notification (e.g., email) to the IRS
of changes, additions and deletions to
URLs, link descriptions, etc.
•The Participant will submit Perfor-
mance Reports to the IRS Point of
Contact byMay 31, 2006,covering
Filing Season activity, and byNovem-
ber 15, 2006, covering post Filing
Season activity. The reports will cover
information such as e-file statistics (in-
cluding the number of EITC returns),
web site activity and anything else the
IRS deems necessary. The IRS Point
of Contact will provide written report-
ing instructions and requirements to
accepted Participants.
PERFORMANCE STANDARDS
•The IRS will have the accepted Par-
ticipant’s hyperlink(s) available on the
IRS web site for the start of electronic
filing, subject to the participant’s pass-
ing of the annual Suitability, PATS test-
ing, and web site review. Hyperlinks
will remain on the IRSe-filePartners
Page throughOctober 16, 2006, or at
the discretion of the IRS.
•The IRS will randomize on a daily ba-
sis the Participants’ offers listed on the
IRSe-filePartners Page.
•The IRS may establish a link from the
IRSe-filePartners Page to the Free File
web page.
•The IRS will accept, if appropriate,
the Participant’s written request for
changes/additions/deletions to a URL,
link description, etc.
•The IRS will review the Participant’s
web site(s) at any time to ensure that
participation requirements are met.
•The IRS will not endorse specific of-
ferings or products, but will promote
the IRSe-filePartners Page. A “Site
Disclaimer” will be displayed upon ex-
iting the IRS web site before the user
enters the Participant’s web site.
PARTICIPATION TERMS
The IRS Individuale-filePartnership
Program is an annual program, and all
prospective Participants, including return-
ing Participants, must reapply each year
following the guidelines in the Internal
Revenue Bulletin announcement adver-
tised onhttp://www.irs.gov.
•If the IRS determines that the Partici-
pant is not meeting the “Participation
Standards & Requirements,” the IRS
may terminate its partnership with the
Participant and remove the partici-
pant’s hyperlink(s) from the IRSe-file
Partners Page.
•The Participant will notify the IRS im-
mediately if it wishes to terminate its
partnership with the IRS. The notifica-
tion should be submitted through email
to the IRS Point of Contact or sent
to the Point of Contact’s address in-
dicated below in “IRS Point of Con-
tact/Application Submission.”
APPLICATION PROCESS
Applications should contain the follow-
ing information,if applicable:
•Provide Primary and Secondary Points
of Contact (name, title, address,
cell/telephone number, fax number
and email address) for discussion of
your application and program partici-
pation.
•Identify the Applicant’s secure web
site.
•Identify the Applicant’s tax prepara-
tion software and the States it will sup-
port.
•Identify the IRS forms and schedules
that support your offering(s).
•Include the Applicant’s Electronic
Filer Identification Number(s) (EFIN)
and/or Electronic Transmitter Identifi-
cation Number (ETIN).
•Identify the Applicant’s hyperlink(s)
and provide a short description(not
to exceed 350 characters including
spaces)of the services and products
to be promoted on the IRSe-filePart-
ners Page. In addition, the Applicant
should provide the associated URL(s).
The URL(s) cannot contain the word
“IRS.”Indicate the category for each
hyperlink:
•IRSe-filePartners for Taxpayers
•IRSe-filePartners for Tax Profes-
sionals
•IRSe-filePartners for Financial In-
stitutions/Employers
•IRSe-filePartners for Electronic
Payment Options.
•Identify the Applicant’s third party
administrators (i.e., VeriSign, Thawte,
Truste) that certify the privacy/secu-
rity/authenticity of its online service
and provide certification that the Ap-
plicant’s current status is active and in
good standing.
•Identify the Applicant’s communica-
tion vehicle(s) (i.e., web site, market-
ing/promotional products, etc.) to mar-
ket and promote your products and ser-
vices and IRSe-file. Describe the in-
centives, discounts, offers, benefits to
taxpayers or other specific approaches
to increasee-filevolumes.
•Describe steps the Applicant will take
to reach taxpayers that claim EITC.
This can include marketing/promo-
tional efforts, monetary incentives
(reduced return preparation and elec-
tronic filing costs).
•Describe steps the Applicant will take
to reduce errors on electronically filed
returns, including those returns claim-
ing EITC.
•Certify the Applicant’s compliance
with the privacy and disclosure provi-
sions of 26 U.S.C. 7216 and 26 U.S.C.
6103.
•Certify the Applicant’s compliance
with the Federal Trade Commission’s
Gramm-Leach Bliley (GLB) Act of
1999, Financial Privacy Rule and
Safeguard Rules.
2005–50 I.R.B.1148December 12, 2005

IRS POINT OF
CONTACT/APPLICATION
SUBMISSION
Applications to participate in the
IRS Individuale-filePartnership
Program should be submitted as a
Word document through email at
*WIe-filepartners@irs.gov(Please make
sure there is an asterisk before the WI
(Wage and Investment) when submitting
an application.) An application may also
be sent to Karen Bradley at the following
address:
Internal Revenue Service
5000 Ellin Road
Lanham, MD 20706
Attention: Karen Bradley
SE:W:CAR:SPEC:FO:IMS
C4–132
Ifyouwishtohaveahyperlink(s)
on the IRSe-filePartners Page for the
start of electronic filing, your applica-
tion must be submitted by December 30,
2005.If your application is received after
the deadline, there is no guarantee that it
will be accepted by the IRS.
Any questions regarding the devel-
opment of applications, the submis-
sion of Performance Reports, or any
other type of contact for this program
should be directed toKaren Bradley
at (202) 283–7034or through email to
*WIe-filepartners@irs.gov. Please make
sure there is an asterisk (*) before the WI
(Wage and Investment) for any type of
email contact.
APPLICATION EVALUATION
All applications will be evaluated based
on the required information provided to
the IRS and the applicant’s ability to ful-
fill their responsibilities. Prior year perfor-
mancewillalsobeconsideredwhenevalu-
ating applications from returning partners.
ACCEPTANCE/DENIAL OF
APPLICATION
If your application is accepted, you
will receive written notification from the
IRS. If your application is denied, you will
receive written notification from the IRS
with an explanation of the denial.
e-Help
If you have any questions related to
e-products/electronic filing, you can
contact the e-Help Desk toll-free at
1–866–255–0654. The e-Help desk assis-
tors are ready to respond to non-account
related questions and issues. You can also
go tohttp://www.irs.govwhere the IRS
houses a variety of information which im-
pacts the tax professional.
Foundations Status of Certain
Organizations
Announcement 2005–89
The following organizations have failed
to establish or have been unable to main-
tain their status as public charities or as op-
erating foundations. Accordingly, grantors
and contributors may not, after this date,
rely on previous rulings or designations
in the Cumulative List of Organizations
(Publication 78), or on the presumption
arising from the filing of notices under sec-
tion 508(b) of the Code. This listing does
notindicate that the organizations have lost
their status as organizations described in
section 501(c)(3), eligible to receive de-
ductible contributions.
Former Public Charities.The follow-
ing organizations (which have been treated
as organizations thatare not private foun-
dations described in section 509(a) of the
Code) are now classified as private foun-
dations:
ACHI, Inc., A Not for Profit Corporation,
Brooklyn, NY
African-American Health Network,
Cincinnati, OH
Agape Outreach and Development Center,
Kansas City, MO
All About Us, Inc., Johnstown, PA
American Associates of York Minster
Fund, Washington, DC
American Friends of B’Nai Levy
Foundation, Brooklyn, NY
American Youth Athletic and Scholarship
Fund, Inc., Bethel, OH
American Youth Institute, Atlanta, GA
Appalachian Domestic Violence
Collaborative, Jackson, OH
Appalachian Leadership Program,
Boone, NC
Assistance Dogs for Freedom, Inc.,
Northbrook, IL
Avondale Public Safety Task Force, Inc.,
Cincinnati, OH
Baptist Ministerial Association,
Laurel, MS
Bell Atlantic Classic Charities, Inc.,
Silver Spring, MD
Belpre Bike Rodeo Committee,
Belpre, OH
Bentley Woods, Inc., Lebanon, OH
Big Dog Little Dog, Los Angeles, CA
Bio Environmentally Degradable Polymer
Society, Inc., Wyoming, MN
Boyers Pond-Shekinah Ministries,
Central City, PA
Build a Dream Committee, Marion, OH
Burns Community Development
Foundation, Columbia, SC
Camp Mitakuye Oyasin, Inc., Alpine, UT
Capital City Pipes Housing &
Community Development Corporation,
Tallahassee, FL
Capital City South Foundation, Inc.,
Baton Rouge, LA
Career Explorers, Inc., Timonium, MD
C A R E S, Lincoln, NE
Careysburg Association of North
America, Marietta, GA
C A T S, Inc., of Ft. Walton Beach,
Ft. Walton Beach, FL
Center for Life & Family, Pittsburgh, PA
Central Ohio Association of Foster and
Adoptive Families, Columbus, OH
Charity Ball Organization, Granville, OH
Charity Riders of Central PA,
Harrisburg, PA
Chesterfield Wilson Community
Development, Inc., Miami, FL
Chesterfield Wilson Ministry, Inc.,
Miami, FL
Chicago Metropolitan Development
Association, Chicago, IL
Children Educational Program,
Jackson, MS
Childrens Hope Foundation Charitable
Trust, Newton Square, PA
Chosen Generation, Inc., Columbus, MS
Christianity Organization Relief for
Southern Sudan, Coon Rapids, MN
Cibolo Valley Animal Rescue, Cibolo, TX
College Resource Center of Wilmington,
Inc., Wilmington, DE
Columbus Development Committee, Inc.,
Whiteville, NC
Community Coordinating Council,
McCormick, SC
December 12, 200511492005–50 I.R.B.

CommunityOrientedPolicing
Partnership, Monroeville, PA
Community Potential, Inc.,
Binghamton, NY
Community Public Housing,
Lawndale, CA
Community Safety Network, Oakland, CA
Concerned Students of Texas,
San Antonio, TX
Constitution Day, Inc., El Monte, CA
Covingtons Family Care, Inc.,
Nashville, TN
Creative Humanitarianism International,
Chicago, IL
Creative Unity Youth Artist Foundation,
Los Angeles, CA
Daymetro Community Family Action
Agency Cooperative Foundation, Inc.,
Englewood, OH
Deliverance Outreach Ministry,
Columbia, SC
Destiny Outreach Center, Columbus, OH
Disability Sports and Recreation Council
of Mid-Missouri, Columbia, MO
Don Abel Memorial Wrestling
Foundation, Eudora, KS
Dowell Baseball Association, Duquoin, IL
Dr. Bert W. and Blanche B. Pollum
Conservancy, Inc., Dubois, PA
Dress for Success Columbus, Powell, OH
Drop the Guns Try the Son K O G,
Lorain, OH
Ellensburg Electronic Community
Foundation, Ellensburg, WA
Elm St. Opportunity Center, Inc.,
Fernandina Beach, FL
Emerging Leaders Foundation,
Corpus Christi, TX
Family Care Communities of
Pennsylvania, Inc., Lancaster, PA
First Wheels of Wilson County, Inc.,
Lebanon, TN
Florida Healthnet, Inc., Longboat Key, FL
Foundation for Advancement of Worker
Health and Safety, Washington, DC
Fox Economic Educational Development,
Inc., Mobile, AL
Franklin County Forest and Farmland
Conservancy, Inc., Shippensburg, PA
Freedom Brass Band of Northeast Ohio,
Inc., Cuyahoga Falls, OH
Freedom Channel, Inc., Washington, DC
Friends of a Feather, Frederic, WI
Friends of Harmon Field Foundation, Inc.,
Franklin, OH
Friends of Rock Point, Inc.,
Burlington, VT
Friends of Santa Clara Del Cobre, Inc.,
Jamaica, NY
Friendship Community Development
Corporation, Columbia, SC
G&VCommunityServices,Inc.,
Fernandina, FL
Galveston County T L C, Inc.,
Santa Fe, TX
Gamut International Foundation,
Pittsburgh, PA
Garland City Volunteer Fire Department,
Garland City, AR
Gauvin We Care Foundation,
St. Marys, KS
Gensoc Org, Inc., Frazier Park, CA
Georgia Speakout Project, Inc.,
Atlanta, GA
Go Forward, Inc., Cincinnati, OH
Go Women, Inc., Winchester, KY
Gods Army Ministry, Inc., Bronx, NY
G O S P E L Life Ministries,
Independence, MO
Great American Artists, Terrace Park, OH
Great Miami Education & Conservation
Group, Inc., Cincinnati, OH
Greater Dallas Congress of National
Black Churches, Inc., Dallas, TX
Greater Pittsburgh Supported Employment
Association, Inc., Pittsburgh, PA
Greater Toledo Housing Foundation, Inc.,
Sylvania, OH
Greek Theater, Inc., Winston Salem, NC
Habitats for Vets by Vets, Summit, NJ
Hampden-Sydney Gentleman,
Handen-Sydney
Harris House, Inc., Waycross, GA
Harvest Home of Hope Dayton, Inc.,
Trotwood, OH
Heart Healer Ministries, Inc.,
West Mifflin, PA
Hearts of Gold Cloggers, Florence, KY
Help The Needy, Woodland Park, CO
His Love & Truth Ministries,
Mountainair, NM
Homeownership Network Services,
Columbus, OH
HORSE,Yankton,SD
Horse Education and Rescue Alliance of
the United States, Newark Valley, NY
Housing Access, Inc., Louisville, KY
Human Potential Foundation,
Birmingham, AL
Humane Association of Simpson County,
Franklin, KY
Ideas for Better Living, Overland Park, KS
Impactos Humanos Foundation
Corporation, Alpharetta, GA
Inet University, Inc., Hershey, PA
Institute for Caribbean and International
Studies, Washington, DC
Institute for Creative Understanding,
Columbus, OH
Interdenominational Christian Mens
Network, Inc., South Easton, MA
International Society of Chairborne
Philosophers Poets Artists Student,
Sacramento, CA
Jack Parish Foundation, Terrace Park, OH
Jeffreys Charitable Trust, Leetsdale, PA
John Leopold Weil and Geraldine Rickard
Weil Memorial Charitable Foundation,
W. Newton, MA
Juniata County Girls Softball Association,
Mifflintown, PA
Kesher Center for Jewish Studies, Inc.,
Cedarhurst, NY
Kids-World Tennis Association, Inc.,
Middletown, CT
Korean American Government Employees
Association, Los Angeles, CA
Kuji Foundation, Inc., Guilford, CT
Labrador Retriever Adoption & Rescue of
Central Ohio, Galena, OH
Leadership Forum Coalition,
Fairfax City, VA
Learning Tree Childcare Center,
Chattanooga, TN
Lone Star Leadership Council,
San Antonio, TX
Lone Star Leadership Foundation,
Fort Worth, TX
Longevityplus, Virginia Beach, VA
Lord Is My Life Ministries, Irvine, CA
Love Conquers All Outreach Ministries &
Mission, Gaston, NC
Loves 180, Inc., Columbus, OH
Maggie Rogers Foundation, Inc.,
Schaumburg, IL
Main Street Gallipolis, Inc.,
Gallipolis, OH
Manne Du Jour, Inc., East Orange, NJ
Margalla Institute of Health Sciences,
Inc., Riverside, CA
Mary Washington Alliance,
Fredericksburg, VA
Master Builders Ministries, Inc.,
Fairfield, OH
McDonalds Charitable Trust, Marrero, LA
Medex Foundation for Advancement of
WomeninHealthCare,Yarmouth,ME
Mens Christian Fellowship of the Ozarks,
West Plains, MO
Mentoring Plus, Inc., Glen Allen, VA
Mentoring Student Athletes Foundation,
Gahanna, OH
Miles for Smiles, Concord, NH
2005–50 I.R.B.1150December 12, 2005

Milestone Food Umbrella, Inc.,
Lithonia, GA
Miraculous Ministries, Oxford, OH
Missionary City USA, Millersport, OH
Missionary Program of Hawaii, Aiea, HI
Mount Zion Community Development
Corporation, Ft. Mill, SC
Mt. Calvary Multicultural Child Care
Center, Harrisburg, PA
Mt. Laurel Skating & Recreation
Corporation, Piscataway, NJ
Mt. Sinai Medical Center Health Care
Foundation, Inc., Cleveland, OH
Myron Wentz Foundation, Inc.,
Salt Lake City, UT
National Homeownership Corporation,
Montebello, CA
Naval Lodge Charities, Inc.,
Washington, DC
NEEV Foundation, Los Angeles, CA
Nevada Trap Shooting Hall of Fame,
Yerington, NV
New Beginning Community Outreach,
Inc., Grand Bay, AL
New Birth Community Services
Corporation, Ft. Lauderdale, FL
New Hope Christian Academy,
Albuquerque, NM
New Southwest Jewish Archives Clearing
House & Research, Potomac, MD
No Phase Artspace, Inc., Roanoke, VA
North Florida Youth Sports Foundation,
Inc., Lake City, FL
North Park Community Development
Corporation, Dallas, TX
Northwest Ohio Football Coaches
Association, Maumee, OH
Nykolz II Cultural Center, Forest Hill, TX
O Grifs New Directions Group Home,
San Diego, CA
OasisofLoveCareCenters,
Inc., Toledo, OH
Odissea Foundation, Inc.,
San Francisco, CA
Ohio Appalachian Dance Festival,
Norwich, OH
Ohio Valley Creation Education
Association, Beverly, OH
Old Kings Orchard Community Center,
Inc., Decatur, IL
One to One Citizen Advocacy, Inc.,
Fort Collins, CO
Open Way Life Ministries, Melissa, TX
Operation Stray Cat, Inc.,
Baton Rouge, LA
Overseas Pakistanis Educational Network
Open, Woodside, NY
Partnership for Land Use Management,
Doylestown, PA
Pathways Health and Wellness, Inc.,
Mount Vernon, OH
Pennsylvanians for Responsible
Agriculture, Annville, PA
Pequot Lakes Boys Traveling Basketball
Team, Brainerd, MN
Perseus Foundation, Inc.,
Gaithersburg, MD
Philip S. Muccio Medical Research
Foundation, Inc., Columbus, OH
Platte Canyon Educational Foundation,
Baily, CO
Positive Alternatives for Change,
Newark, OH
Prevention Education for Adults Children
& Everyone, Inc., Snellville, GA
Pro Inner City Chamber of Commerce,
Inc., Dayton, OH
Project Cleveland2000, Cleveland, OH
Puailoa Tavete Community Foundation,
Malaeimi, AS
Raw Basketball Organization,
Cincinnati, OH
Reliable Cash Management Association,
Gurnee, IL
Relief Interactive, Springfield, VA
Retrouvaille Columbus, Pataskala, OH
Ricardo Montalban-Nosotros Foundation,
Inc., Los Angeles, CA
R I S E Ministries, Inc., Decatur, GA
River Park Advisory Council, Chicago, IL
Rock Contemporary Christian Radio, Inc.,
Akron, OH
Rosa Batie 488, Inc., Lake City, FL
Russart, American Center for
Humanitarian Aid to Russia and
CIS, San Francisco, CA
Santa Barbara Equine Assistance
& Evacuation Team, Inc.,
Santa Barbara, CA
Santa Barbara Free Thinkers, Ventura, CA
Save-Society Against Violent
Entertainment, Inc., Rogers, AR
Schoolworld Internet Education
Foundation, Inc., Fairfield, OH
Shawn Stephen Cohen Drama Memorial
Fund, Palm Coast, FL
Shelby Farms Conservancy, Inc.,
Memphis, TN
Shepherding Ministries, Greenville, SC
Sheridan Oaks Pastors Retreat,
Boyceville, WI
Sierra Leone Aid Foundation, Inc.,
New York, NY
Skateland Artistic Booster Club,
Klamath Falls, OR
Snow Shoe Ambulance & Rescue Service,
Snow Shoe, PA
Snowhill Community Services,
Malone, FL
Society for the Preservation of Putnam
County Antiquities & Greenways,
Carmel, NY
Solve, Inc., Silverado, CA
Somali Community Organization of
Illinois, Inc., Chicago, IL
S O N Ministries, Inc., Brentwood, CA
Sounds of Hope, Inc., New York, NY
South Florida Employment Training
and Development Corporation,
Miami Shores, FL
Southeast Arkansas Kennel Club Search
& Rescue Team, Jefferson, AR
Southern Maryland Mariners Youth
Baseball Organization, Inc.,
Waldorf, MD
Special Needs Outreach, Inc.,
Winter Garden, FL
Starlight Economic Development, Inc.,
Chunchula, AL
Steamboat Hill Corporation, Dayton, OH
Stop the Violence Lets Talk, Inc.,
New London, CT
STRS Ohio 80th, Inc., Columbus, OH
Sudanese Christian Outreach, Inc.,
Omaha, NE
Sunshine Sewing School, St. Louis, MO
Take Me Out to the Ball Game, Inc.,
Columbus, OH
Taters Charities, Inc., Norwich, CT
TBDC Housing, Inc., Toledo, OH
Tennessee Minority Health Care
Coalition, Inc., Nashville, TN
Thespis Theatricals, Cincinnati, OH
Thomas Slave Chapel Foundation, Inc.,
Bedford, VA
Tiffy-Mac Therapeutic Equestrian Center,
Gansevoort, NY
Tiny Toon Town Daycare Center,
Hillside, IL
Torne Valley Preservation Association,
Inc., Hillburn, NY
Tower of Refuge & Strength, Inc.,
Staten Island, NY
Tower Project, Inc., Cincinnati, OH
Tree of Life Aftercare Program, Inc.,
Louisville, KY
Tree of Life Outreach Development, Inc.,
Miami, FL
Tri-State Childrens Charity,
Cranberry Township, PA
Twinsburg Athletic Club, Twinsburg, OH
UBD Corporation, Baltimore, MD
December 12, 200511512005–50 I.R.B.

Uniformed Safety Education Officers,
Inc., Olathe, KS
United Christian Coalition, Inc.,
Margate, FL
Universal Center Corp., Memphis, TN
USNA Parents Club of the Texas Gulf
Coast, Inc., Houston, TX
Vietnamese American Buddhist
Association of Cincinnati, Inc.,
Maineville, OH
Virgin Healthcare Foundation U S A, Inc.,
New York, NY
Virginia Foundation for Housing
Preservation, Richmond, VA
Washington D C Vietnamese Community
Center, Inc., Washington, DC
Washington HOOPS, Inc., Seattle, WA
Washington Senior Care Corporation,
Pittsburgh, PA
Water Safety Foundation, Tustin, CA
Way to Freedom, Sacramento, CA
Wesley J. Kline Foundation for Pet
Therapy, Inc., Des Moines, IA
Wiley Kennedy Foundation,
Columbia, SC
World-Wide Indigenous Missions
Associates, Reslands, CA
Worship Ministries International,
Gilbert, AZ
If an organization listed above submits
information that warrants the renewal of
its classification as a public charity or as
a private operating foundation, the Inter-
nalRevenueServicewillissuearulingor
determinationletterwiththerevisedclas-
sification as to foundation status. Grantors
and contributors may thereafter rely upon
such ruling or determination letter as pro-
videdinsection1.509(a)–7oftheIncome
Tax Regulations. It is not the practice of
the Service to announce such revised clas-
sification of foundation status in the Inter-
nal Revenue Bulletin.
2005–50 I.R.B.1152December 12, 2005

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the ef-
fect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is be-
ingextendedtoapplytoavariationofthe
fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that the
same principle also applies to B, the earlier
ruling is amplified. (Compare withmodi-
fied,below).
Clarifiedis used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion.
It is not used where a position in a prior
ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
withamplifiedandclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
beingstatedinanewruling.
Supersededdescribes a situation where
the new ruling does nothing more than re-
state the substance and situation of a previ-
ously published ruling (or rulings). Thus,
the term is used to republish under the
1986 Code and regulations the same po-
sition published under the 1939 Code and
regulations. The term is also used when
it is desired to republish in a single rul-
ing a series of situations, names, etc., that
were previously published over a period of
time in separate rulings. If the new rul-
ing does more than restate the substance
of a prior ruling, a combination of terms
is used. For example,modifiedandsu-
persededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is self
contained. In this case, the previously pub-
lished ruling is first modified and then, as
modified, is superseded.
Supplementedis used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names in
subsequent rulings. After the original rul-
ing has been supplemented several times, a
new ruling may be published that includes
the list in the original ruling and the ad-
ditions, and supersedes all prior rulings in
the series.
Suspendedis used in rare situations
to show that the previous published rul-
ings will not be applied pending some
future action such as the issuance of new
or amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
DC—Dummy Corporation.
DE—Donee.
Del. Order
—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
December 12, 2005i2005–50 I.R.B.

Numerical Finding List
1
Bulletins 2005–27 through 2005–50
Announcements:
2005-46, 2005-27 I.R.B.63
2005-47, 2005-28 I.R.B.71
2005-48, 2005-29 I.R.B.111
2005-49, 2005-29 I.R.B.119
2005-50, 2005-30 I.R.B.152
2005-51, 2005-32 I.R.B.283
2005-52, 2005-31 I.R.B.257
2005-53, 2005-31 I.R.B.258
2005-54, 2005-32 I.R.B.283
2005-55, 2005-33 I.R.B.317
2005-56, 2005-33 I.R.B.318
2005-57, 2005-33 I.R.B.318
2005-58, 2005-33 I.R.B.319
2005-59, 2005-37 I.R.B.524
2005-60, 2005-35 I.R.B.455
2005-61, 2005-36 I.R.B.495
2005-62, 2005-36 I.R.B.495
2005-63, 2005-36 I.R.B.496
2005-64, 2005-37 I.R.B.537
2005-65, 2005-38 I.R.B.587
2005-66, 2005-39 I.R.B.613
2005-67, 2005-40 I.R.B.678
2005-68, 2005-39 I.R.B.613
2005-69, 2005-40 I.R.B.681
2005-70, 2005-40 I.R.B.682
2005-71, 2005-41 I.R.B.714
2005-72, 2005-41 I.R.B.692
2005-73, 2005-41 I.R.B.715
2005-74, 2005-42 I.R.B.764
2005-75, 2005-42 I.R.B.764
2005-76, 2005-42 I.R.B.765
2005-77, 2005-44 I.R.B.855
2005-78, 2005-44 I.R.B.918
2005-79, 2005-45 I.R.B.941
2005-80, 2005-46 I.R.B.967
2005-81, 2005-45 I.R.B.941
2005-82, 2005-45 I.R.B.941
2005-83, 2005-45 I.R.B.941
2005-84, 2005-48 I.R.B.1064
2005-85, 2005-48 I.R.B.1065
2005-86, 2005-48 I.R.B.1069
2005-87, 2005-50 I.R.B.1144
2005-88, 2005-50 I.R.B.1145
2005-89, 2005-50 I.R.B.1149
Notices:
2005-48, 2005-27 I.R.B.9
2005-49, 2005-27 I.R.B.14
2005-50, 2005-27 I.R.B.14
2005-51, 2005-28 I.R.B.74
2005-52, 2005-28 I.R.B.75
Notices— Continued:
2005-53, 2005-32 I.R.B.263
2005-54, 2005-30 I.R.B.127
2005-55, 2005-32 I.R.B.265
2005-56, 2005-32 I.R.B.266
2005-57, 2005-32 I.R.B.267
2005-58, 2005-33 I.R.B.295
2005-59, 2005-35 I.R.B.443
2005-60, 2005-39 I.R.B.606
2005-61, 2005-39 I.R.B.607
2005-62, 2005-35 I.R.B.443
2005-63, 2005-35 I.R.B.448
2005-64, 2005-36 I.R.B.471
2005-65, 2005-39 I.R.B.607
2005-66, 2005-40 I.R.B.620
2005-67, 2005-40 I.R.B.621
2005-68, 2005-40 I.R.B.622
2005-69, 2005-40 I.R.B.622
2005-70, 2005-41 I.R.B.694
2005-71, 2005-44 I.R.B.863
2005-72, 2005-47 I.R.B.976
2005-73, 2005-42 I.R.B.723
2005-74, 2005-42 I.R.B.726
2005-75, 2005-45 I.R.B.929
2005-76, 2005-46 I.R.B.947
2005-77, 2005-46 I.R.B.951
2005-78, 2005-46 I.R.B.952
2005-79, 2005-46 I.R.B.952
2005-80, 2005-46 I.R.B.953
2005-81, 2005-47 I.R.B.977
2005-82, 2005-47 I.R.B.978
2005-83, 2005-49 I.R.B.1075
2005-84, 2005-46 I.R.B.959
2005-85, 2005-46 I.R.B.961
2005-86, 2005-49 I.R.B.1075
2005-87, 2005-50 I.R.B.1097
2005-88, 2005-48 I.R.B.1060
2005-89, 2005-49 I.R.B.1077
Proposed Regulations:
REG-106030-98, 2005-42 I.R.B.739
REG-144615-02, 2005-40 I.R.B.625
REG-150088-02, 2005-43 I.R.B.774
REG-150091-02, 2005-43 I.R.B.780
REG-131739-03, 2005-36 I.R.B.494
REG-130241-04, 2005-27 I.R.B.18
REG-138362-04, 2005-33 I.R.B.299
REG-138647-04, 2005-41 I.R.B.697
REG-144620-04, 2005-50 I.R.B.1141
REG-144898-04, 2005-48 I.R.B.1062
REG-149436-04, 2005-35 I.R.B.454
REG-156518-04, 2005-38 I.R.B.582
REG-158080-04, 2005-43 I.R.B.786
REG-104143-05, 2005-41 I.R.B.708
REG-105847-05, 2005-47 I.R.B.987
REG-111257-05, 2005-42 I.R.B.759
Proposed Regulations— Continued:
REG-114371-05, 2005-45 I.R.B.930
REG-114444-05, 2005-45 I.R.B.934
REG-121584-05, 2005-37 I.R.B.523
REG-122857-05, 2005-39 I.R.B.609
REG-129782-05, 2005-40 I.R.B.675
REG-133578-05, 2005-39 I.R.B.610
Revenue Procedures:
2005-35, 2005-28 I.R.B.76
2005-36, 2005-28 I.R.B.78
2005-37, 2005-28 I.R.B.79
2005-38, 2005-28 I.R.B.81
2005-39, 2005-28 I.R.B.82
2005-40, 2005-28 I.R.B.83
2005-41, 2005-29 I.R.B.90
2005-42, 2005-30 I.R.B.128
2005-43, 2005-29 I.R.B.107
2005-44, 2005-29 I.R.B.110
2005-45, 2005-30 I.R.B.141
2005-46, 2005-30 I.R.B.142
2005-47, 2005-32 I.R.B.269
2005-48, 2005-32 I.R.B.271
2005-49, 2005-31 I.R.B.165
2005-50, 2005-32 I.R.B.272
2005-51, 2005-33 I.R.B.296
2005-52, 2005-34 I.R.B.326
2005-53, 2005-34 I.R.B.339
2005-54, 2005-34 I.R.B.353
2005-55, 2005-34 I.R.B.367
2005-56, 2005-34 I.R.B.383
2005-57, 2005-34 I.R.B.392
2005-58, 2005-34 I.R.B.402
2005-59, 2005-34 I.R.B.412
2005-60, 2005-35 I.R.B.449
2005-61, 2005-37 I.R.B.507
2005-62, 2005-37 I.R.B.507
2005-63, 2005-36 I.R.B.491
2005-64, 2005-36 I.R.B.492
2005-65, 2005-38 I.R.B.564
2005-66, 2005-37 I.R.B.509
2005-67, 2005-42 I.R.B.729
2005-68, 2005-41 I.R.B.694
2005-69, 2005-44 I.R.B.864
2005-70, 2005-47 I.R.B.979
2005-71, 2005-47 I.R.B.985
2005-72, 2005-49 I.R.B.1078
2005-73, 2005-49 I.R.B.1090
2005-74, 2005-50 I.R.B.1098
2005-75, 2005-50 I.R.B.1137
2005-76, 2005-50 I.R.B.1139
Revenue Rulings:
2005-38, 2005-27 I.R.B.6
2005-39, 2005-27 I.R.B.1
2005-40, 2005-27 I.R.B.4
1
A cumulative list of all revenue rulings, revenueprocedures, Treasury decisions, etc., publishedin Internal Revenue Bulletins 2005–1 through 2005–26 is in Internal Revenue Bulletin
2005–26, dated June 27, 2005.
2005–50 I.R.B.iiDecember 12, 2005

Revenue Rulings— Continued:
2005-41, 2005-28 I.R.B.69
2005-42, 2005-28 I.R.B.67
2005-43, 2005-29 I.R.B.88
2005-44, 2005-29 I.R.B.87
2005-45, 2005-30 I.R.B.123
2005-46, 2005-30 I.R.B.120
2005-47, 2005-32 I.R.B.261
2005-48, 2005-32 I.R.B.259
2005-49, 2005-30 I.R.B.125
2005-50, 2005-30 I.R.B.124
2005-51, 2005-31 I.R.B.163
2005-52, 2005-35 I.R.B.423
2005-53, 2005-35 I.R.B.425
2005-54, 2005-33 I.R.B.289
2005-55, 2005-33 I.R.B.284
2005-56, 2005-35 I.R.B.427
2005-57, 2005-36 I.R.B.466
2005-58, 2005-36 I.R.B.465
2005-59, 2005-37 I.R.B.505
2005-60, 2005-37 I.R.B.502
2005-61, 2005-38 I.R.B.538
2005-62, 2005-38 I.R.B.557
2005-63, 2005-39 I.R.B.603
2005-64, 2005-39 I.R.B.600
2005-65, 2005-41 I.R.B.684
2005-66, 2005-41 I.R.B.686
2005-67, 2005-43 I.R.B.771
2005-68, 2005-44 I.R.B.853
2005-69, 2005-44 I.R.B.852
2005-70, 2005-45 I.R.B.919
2005-71, 2005-45 I.R.B.923
2005-72, 2005-46 I.R.B.944
2005-73, 2005-48 I.R.B.1050
2005-75, 2005-49 I.R.B.1073
2005-76, 2005-49 I.R.B.1072
2005-77, 2005-49 I.R.B.1071
Social Security Contribution and Benefit
Base; Domestic Employee Coverage
Threshold:
2005-85, 2005-46 I.R.B.961
Tax Conventions:
2005-47, 2005-28 I.R.B.71
2005-72, 2005-41 I.R.B.692
2005-77, 2005-44 I.R.B.855
Treasury Decisions:
9208, 2005-31 I.R.B.157
9209, 2005-31 I.R.B.153
9210, 2005-33 I.R.B.290
9211, 2005-33 I.R.B.287
9212, 2005-35 I.R.B.429
9213, 2005-35 I.R.B.440
9214, 2005-35 I.R.B.435
9215, 2005-36 I.R.B.468
9216, 2005-36 I.R.B.461
9217, 2005-37 I.R.B.498
Treasury Decisions— Continued:
9218, 2005-37 I.R.B.503
9219, 2005-38 I.R.B.538
9220, 2005-39 I.R.B.596
9221, 2005-39 I.R.B.604
9222, 2005-40 I.R.B.614
9223, 2005-39 I.R.B.591
9224, 2005-41 I.R.B.688
9225, 2005-42 I.R.B.716
9226, 2005-43 I.R.B.772
9227, 2005-45 I.R.B.924
9228, 2005-47 I.R.B.972
9229, 2005-48 I.R.B.1051
December 12, 2005iii2005–50 I.R.B.

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2005–27 through 2005–50
Announcements:
84-26
Obsoleted by
REG-149436-04, 2005-35 I.R.B.454
2004-72
Updated and superseded by
Ann. 2005-59, 2005-37 I.R.B.524
2005-36
Modified by
Rev. Proc. 2005-66, 2005-37 I.R.B.509
2005-53
Corrected by
Ann. 2005-61, 2005-36 I.R.B.495
Notices:
89-111
Amplified by
Notice 2005-61, 2005-39 I.R.B.607
2001-42
Modified by
Rev. Proc. 2005-66, 2005-37 I.R.B.509
2004-43
Amplified by
Notice 2005-83, 2005-49 I.R.B.1075
2004-57
Superseded by
Notice 2005-79, 2005-46 I.R.B.952
2005-4
Modified by
Notice 2005-62, 2005-35 I.R.B.443
Notice 2005-80, 2005-46 I.R.B.953
2005-10
Clarified by
Notice 2005-64, 2005-36 I.R.B.471
2005-38
Modified by
Notice 2005-64, 2005-36 I.R.B.471
2005-42
Amplified by
Notice 2005-86, 2005-49 I.R.B.1075
2005-51
Modified and superseded by
Notice 2005-57, 2005-32 I.R.B.267
2005-60
Superseded by
Notice 2005-84, 2005-46 I.R.B.959
Notices— Continued:
2005-66
Supplemented by
Notice 2005-81, 2005-47 I.R.B.977
Proposed Regulations:
REG-108524-00
Corrected by
Ann. 2005-68, 2005-39 I.R.B.613
REG-142686-01
Withdrawn by
Ann. 2005-55, 2005-33 I.R.B.317
REG-100420-03
Corrected by
Ann. 2005-57, 2005-33 I.R.B.318
REG-102144-04
Corrected by
Ann. 2005-56, 2005-33 I.R.B.318
Revenue Procedures:
64-54
Obsoleted by
Rev. Rul. 2005-43, 2005-29 I.R.B.88
66-33
Obsoleted by
Rev. Rul. 2005-43, 2005-29 I.R.B.88
69-13
Obsoleted by
Rev. Rul. 2005-43, 2005-29 I.R.B.88
70-8
Modified by
Rev. Proc. 2005-46, 2005-30 I.R.B.142
71-1
Obsoleted by
Rev. Rul. 2005-43, 2005-29 I.R.B.88
72-22
Obsoleted by
Rev. Rul. 2005-43, 2005-29 I.R.B.88
83-77
Superseded by
Rev. Proc. 2005-63, 2005-36 I.R.B.491
87-8
Obsoleted by
Rev. Proc. 2005-44, 2005-29 I.R.B.110
87-9
Obsoleted by
Rev. Proc. 2005-44, 2005-29 I.R.B.110
89-20
Superseded by
Rev. Proc. 2005-52, 2005-34 I.R.B.326
Revenue Procedures— Continued:
90–11
Modified by
Rev. Proc. 2005-40, 2005-28 I.R.B.83
90-30
Section4supersededby
Rev. Proc. 2005-54, 2005-34 I.R.B.353
Section5supersededby
Rev. Proc. 2005-55, 2005-34 I.R.B.367
Section6supersededby
Rev. Proc. 2005-56, 2005-34 I.R.B.383
Section7supersededby
Rev. Proc. 2005-58, 2005-34 I.R.B.402
Section8supersededby
Rev. Proc. 2005-59, 2005-34 I.R.B.412
90-31
Section4supersededby
Rev. Proc. 2005-52, 2005-34 I.R.B.326
Section5supersededby
Rev. Proc. 2005-54, 2005-34 I.R.B.353
Section6supersededby
Rev. Proc. 2005-55, 2005-34 I.R.B.367
Section7supersededby
Rev. Proc. 2005-56, 2005-34 I.R.B.383
Section8supersededby
Rev. Proc. 2005-58, 2005-34 I.R.B.402
Section9supersededby
Rev. Proc. 2005-59, 2005-34 I.R.B.412
93-22
Obsoleted by
Rev. Proc. 2005-44, 2005-29 I.R.B.110
98-18
Obsoleted by
Rev. Proc. 2005-45, 2005-30 I.R.B.141
99-39
Superseded by
Rev. Proc. 2005-60, 2005-35 I.R.B.449
2000-27
Modified and superseded by
Rev. Proc. 2005-66, 2005-37 I.R.B.509
2000-31
Superseded by
Rev. Proc. 2005-60, 2005-35 I.R.B.449
2000-49
Superseded by
Rev. Proc. 2005-41, 2005-29 I.R.B.90
2001-9
Superseded by
Rev. Proc. 2005-60, 2005-35 I.R.B.449
2001-16
Superseded by
Rev. Proc. 2005-42, 2005-30 I.R.B.128
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2005–1 through 2005–26 is in Internal Revenue Bulletin 2005–26, dated June 27, 2005.
2005–50 I.R.B.ivDecember 12, 2005

Revenue Procedures— Continued:
2002-9
Modified and amplified by
Rev. Rul. 2005-42, 2005-28 I.R.B.67
Rev. Proc. 2005-35, 2005-28 I.R.B.76
Rev. Proc. 2005-43, 2005-29 I.R.B.107
Rev. Proc. 2005-47, 2005-32 I.R.B.269
2002-49
Modified, amplified, and superseded by
Rev. Proc. 2005-62, 2005-37 I.R.B.507
2004-50
Superseded by
Rev. Proc. 2005-49, 2005-31 I.R.B.165
2004-54
Superseded by
Rev. Proc. 2005-65, 2005-38 I.R.B.564
2004-58
Superseded by
Rev. Proc. 2005-69, 2005-44 I.R.B.864
2004-59
Modified by
Rev. Proc. 2005-71, 2005-47 I.R.B.985
2004-62
Superseded by
Rev. Proc. 2005-74, 2005-50 I.R.B.1098
2004-64
Modified by
Ann. 2005-71, 2005-41 I.R.B.714
2004-73
Updated by
Rev. Proc. 2005-75, 2005-50 I.R.B.1137
2005-1
Amplified by
Rev. Proc. 2005-68, 2005-41 I.R.B.694
2005-3
Amplified by
Rev. Proc. 2005-61, 2005-37 I.R.B.507
Rev. Proc. 2005-68, 2005-41 I.R.B.694
2005-6
Modified by
Rev. Proc. 2005-66, 2005-37 I.R.B.509
2005-10
Superseded by
Rev. Proc. 2005-67, 2005-42 I.R.B.729
2005-16
Modified by
Rev. Proc. 2005-66, 2005-37 I.R.B.509
2005-23
Modified by
Rev. Proc. 2005-76, 2005-50 I.R.B.1139
2005-65
Corrected by
Ann. 2005-78, 2005-44 I.R.B.918
Revenue Rulings:
65-109
Obsoleted by
Rev. Rul. 2005-43, 2005-29 I.R.B.88
68-549
Obsoleted by
Rev. Rul. 2005-43, 2005-29 I.R.B.88
74-203
Revoked by
Rev. Rul. 2005-59, 2005-37 I.R.B.505
82-29
Modified and clarified by
Rev. Proc. 2005-39, 2005-28 I.R.B.82
2004-45
Amplified by
Notice 2005-86, 2005-49 I.R.B.1075
2004-107
Supplemented and superseded by
Rev. Rul. 2005-76, 2005-49 I.R.B.1072
2004-108
Supplemented and superseded by
Rev. Rul. 2005-75, 2005-49 I.R.B.1073
2005-41
Corrected by
Ann. 2005-50, 2005-30 I.R.B.152
Treasury Decisions:
9149
Removed by
T.D. 9221, 2005-39 I.R.B.604
9186
Corrected by
Ann. 2005-53, 2005-31 I.R.B.258
9193
Corrected by
Ann. 2005-62, 2005-36 I.R.B.495
9205
Corrected by
Ann. 2005-63, 2005-36 I.R.B.496
9206
Corrected by
Ann. 2005-49, 2005-29 I.R.B.119
9207
Corrected by
Ann. 2005-52, 2005-31 I.R.B.257
9210
Corrected by
Ann. 2005-64, 2005-37 I.R.B.537
December 12, 2005v2005–50 I.R.B.
U.S. GPO: 2005—320–797/20035