Internal Revenue Bulletin 2001-36 (PDF rendition): IRS Revenue Procedures

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INCOME TAX
Rev. Rul. 2001–43, page 209.
Federal rates; adjusted federal rates; adjusted feder-
al long-term rate and the long-term exempt rate. For
purposes of sections 382, 1274, 1288, and other sections
of the Code, tables set forth the rates for September 2001.
Announcement 2001–88, page 220.
The Service invites comments on proposed changes to
the substitute forms requirements for the partner copy of
Schedule K-1 (Form 1065) and Schedule K-1 (Form 1065-B).
EXEMPT ORGANIZATIONS
Announcement 2001–85, page 219.
A list is provided of organizations now classified as private
foundations.
ADMINISTRATIVE
Rev. Proc. 2001–42, page 212.
Insurance companies; modified endowment contracts;
uniform closing agreement. This revenue procedure pro-
vides procedures by which an issuer may remedy an inad-
vertent non-egregious failure to comply with the modified
endowment contract rules under section 7702A of the Code.
Rev. Proc. 99–27 superseded.
Notice 2001–47, page 212.
This notice provides an additional period for comments
before the Treasury Department and the IRS finalize regula-
tions section 1.469–7, which was published as a proposed
regulation (PS–39–89, 1991–1 C.B. 983). Section 1.469–7
will provide rules relating to the treatment of self-charged
items of income and expense for purposes of applying the
limitations on passive activity losses and credits.
Announcement 2001–91, page 221.
A payer may rely on a Form W-9,
Request for Taxpayer
Identification Number and Certification, received from an
investment advisor or introducing broker authorized to trans-
mit that form (or an electronic version) as the payee’s agent,
provided certain conditions are met.
Internal Revenue
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Bulletin No. 2001–36
September 4, 2001
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
Department of the Treasury
Internal Revenue Service
Finding Lists begin on page ii.
Index for July and August begins on page iv.

September 4, 20012001–36 I.R.B.
The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing offi-
cial rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly and may be obtained
from the Superintendent of Documents on a subscription
basis. Bulletin contents are consolidated semiannually into
Cumulative Bulletins, which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of in-
ternal management are not published; however, statements
of internal practices and procedures that affect the rights
and duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service on
the application of the law to the pivotal facts stated in the
revenue ruling. In those based on positions taken in rulings
to taxpayers or technical advice to Service field offices,
identifying details and information of a confidential nature
are deleted to prevent unwarranted invasions of privacy and
to comply with statutory requirements.
Rulings and procedures reported in the Bulletin do not have
the force and effect of Treasury Department Regulations,
but they may be used as precedents. Unpublished rulings
will not be relied on, used, or cited as precedents by Service
personnel in the disposition of other cases. In applying pub-
lished rulings and procedures, the effect of subsequent leg-
islation, regulations, court decisions, rulings, and proce-
dures must be considered, and Service personnel and oth-
ers concerned are cautioned against reaching the same con-
clusions in other cases unless the facts and circumstances
are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B,
Legislation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to
these subjects are contained in the other Parts and Sub-
parts. Also included in this part are Bank Secrecy Act Admin-
istrative Rulings. Bank Secrecy Act Administrative Rulings
are issued by the Department of the Treasury’s Office of the
Assistant Secretary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.
The first Bulletin for each month includes a cumulative index
for the matters published during the preceding months.
These monthly indexes are cumulated on a semiannual basis,
and are published in the first Bulletin of the succeeding semi-
annual period, respectively.
The IRS Mission
Provide America’s taxpayers top quality service by help-
ing them understand and meet their tax responsibilities
and by applying the tax law with integrity and fairness to
all.
Introduction
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402.

2001–36 I.R.B.209September 4, 2001
Section 42.—Low-Income
Housing Credit
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of September 2001. See Rev. Rul. 2001–43, on this
page.
Section 280G.—Golden
Parachute Payments
Federal short-term, mid-term, and long-term
rates are set forth for the month of September 2001.
See Rev. Rul. 2001–43, on this page.
Section 382.—Limitation on Net
Operating Loss Carryforwards
and Certain Built-In Losses
Following Ownership Change
The adjusted applicable federal long-term rate is
set forth for the month of September 2001. See Rev.
Rul. 2001–43, on this page.
Section 412.—Minimum Funding
Standards
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of September 2001. See Rev. Rul. 2001–43, on this
page.
Section 467.—Certain Payments
for the Use of Property or
Services
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of September 2001. See Rev. Rul. 2001–43, on this
page.
Section 468.—Special Rules for
Mining and Solid Waste
Reclamation and Closing Costs
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of September 2001. See Rev. Rul. 2001–43, on this
page.
Section 482.—Allocation of
Income and Deductions Among
Taxpayers
Federal short-term, mid-term, and long-term
rates are set forth for the month of September 2001.
See Rev. Rul. 2001–43, on this page.
Section 483.—Interest on
Certain Deferred Payments
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of September 2001. See Rev. Rul. 2001–43, on this
page.
Section 642.—Special Rules for
Credits and Deductions
Federal short-term, mid-term, and long-term
rates are set forth for the month of September 2001.
See Rev. Rul. 2001–43, on this page.
Section 807.—Rules for Certain
Reserves
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of September 2001. See Rev. Rul. 2001–43, on this
page.
Section 846.—Discounted
Unpaid Losses Defined
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of September 2001. See Rev. Rul. 2001–43, on this
page.
Section 1274.—Determination
of Issue Price in the Case of
Certain Debt Instruments Issued
for Property
(Also Sections 42, 280G, 382, 412, 467, 468, 482,
483, 642, 807, 846, 1288, 7520, 7872.)
Federal rates; adjusted federal rates;
adjusted federal long-term rate and the
long-term exempt rate. For purposes of
sections 382, 1274, 1288, and other sec-
tions of the Code, tables set forth the rates
for September 2001.
Rev. Rul. 2001–43
This revenue ruling provides various
prescribed rates for federal income tax
purposes for September 2001 (the current
month). Table 1 contains the short-term,
mid-term, and long-term applicable fed-
eral rates (AFR) for the current month for
purposes of section 1274(d) of the Inter-
nal Revenue Code. Table 2 contains the
short-term, mid-term, and long-term ad-
justed applicable federal rates (adjusted
AFR) for the current month for purposes
of section 1288(b). Table 3 sets forth the
adjusted federal long-term rate and the
long-term tax-exempt rate described in
section 382(f). Table 4 contains the ap-
propriate percentages for determining the
low-income housing credit described in
section 42(b)(2) for buildings placed in
service during the current month. Finally,
Table 5 contains the federal rate for deter-
mining the present value of an annuity, an
interest for life or for a term of years, or a
remainder or a reversionary interest for
purposes of section 7520.
Part I. Rulings and Decisions Under the Internal Revenue Code of 1986

REV. RUL. 2001–43 TABLE 1
Applicable Federal Rates (AFR) for September 2001
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-Term
AFR3.82%3.78%3.76%3.75%
110% AFR4.20%4.16%4.14%4.12%
120% AFR4.59%4.54%4.51%4.50%
130% AFR4.97%4.91%4.88%4.86%
Mid-Term
AFR4.82%4.76%4.73%4.71%
110% AFR5.31%5.24%5.21%5.18%
120% AFR5.79%5.71%5.67%5.64%
130% AFR6.29%6.19%6.14%6.11%
150% AFR7.27%7.14%7.08%7.04%
175% AFR8.50%8.33%8.25%8.19%
Long-Term
AFR5.57%5.49%5.45%5.43%
110% AFR6.13%6.04%6.00%5.97%
120% AFR6.70%6.59%6.54%6.50%
130% AFR7.27%7.14%7.08%7.04%
September 4, 20012102001–36 I.R.B.
REV. RUL. 2001–43 TABLE 2
Adjusted AFR for September 2001
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term
adjusted AFR2.90%2.88%2.87%2.86%
Mid-term
adjusted AFR3.73%3.70%3.68%3.67%
Long-term
adjusted AFR4.85%4.79%4.76%4.74%
REV. RUL. 2001–43 TABLE 3
Rates Under Section 382 for September 2001
Adjusted federal long-term rate for the current month 4.85%
Long-term tax-exempt rate for ownership changes during the current month (the highest of the
adjusted federal long-term rates for the current month and the prior two months.)5.00%
REV. RUL. 2001–43 TABLE 4
Appropriate Percentages Under Section 42(b)(2) for September 2001
Appropriate percentage for the 70% present value low-income housing credit 8.21%
Appropriate percentage for the 30% present value low-income housing credit3.52%

2001–36 I.R.B.211September 4, 2001
Section 1288.—Treatment of
Original Issue Discounts on Tax-
Exempt Obligations
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of September 2001. See Rev. Rul. 2001–43, page
209.
Section 7520.—Valuation Tables
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of September 2001. See Rev. Rul. 2001–43, page
209.
Section 7702A.—Modified
Endowment Contract Defined
Procedures are provided by which an issuer may
remedy an inadvertent non-egregious failure to com-
ply with the modified endowment contract rules
under § 7702A. Rev. Proc. 99–27 is superseded. See
Rev. Proc. 2001–42, page 212.
Section 7872.—Treatment of
Loans With Below-Market
Interest Rates
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of September 2001. See Rev. Rul. 2001–43, page
209.
REV. RUL. 2001–43 TABLE 5
Rate Under Section 7520 for September 2001
Applicable federal rate for determining the present value of an annuity, an interest for life or a term
of years, or a remainder or reversionary interest5.8%

September 4, 20012122001–36 I.R.B.
Limitations on Passive Activity
Losses and Credits—Treatment
of Self-Charged Items of Income
and Expense
Notice 2001–47
On April 5, 1991, the Treasury Depart-
ment and the Internal Revenue Service pub-
lished in the Federal Register a notice of pro-
posed rulemaking (PS–39–89, 1991–1 C.B.
983 [56 Fed. Reg. 14034]) relating to the
treatment of self-charged items of income
and expense for purposes of applying the
limitations on passive activity losses and
passive activity credits under § 469 of the In-
ternal Revenue Code. The comment period
for those regulations ended in 1991 and sev-
eral comments were received.
Treasury and the Service intend to fi-
nalize regulations under § 1.469–7.
Given the length of time since the regula-
tions were proposed and the number of
amendments that have been made to the
statutory provisions since that time, Trea-
sury and the Service believe that an addi-
tional comment period is appropriate.
Consideration will be given to all com-
ments previously submitted in response to
the notice of proposed rulemaking pub-
lished in 1991 as well as to any additional
written comments on proposed regula-
tions § 1.469–7 that are submitted timely
to the Service in response to this notice.
Written (a signed original and eight (8)
copies) or electronic comments must be re-
ceived by November 5, 2001. Send written
comments to: Internal Revenue Service,
NT 2001–47, CC:PSI:3, P.O. Box 7604,
Ben Franklin Station, Washington, DC.
Comments may be hand delivered Monday
through Friday between the hours of 8 a.m.
and 5 p.m. to the courier’s desk at 1111
Constitution Avenue, NW, Washington, DC.
Alternatively, taxpayers may submit com-
ments electronically to Notice.Com
ments@m1.irscounsel.treas.gov. All sub-
missions will be open to public inspection.
The principal author of this notice is
Paul B. Myers of the Office of Associate
Chief Counsel (Passthroughs and Special
Industries). For further information re-
garding this notice, contact Paul B. Myers
or Danielle Grimm at (202) 622-3080 (not
a toll-free call).
26 CFR § 301.7121–1: Closing agreements.
(Also Part 1, section 7702A)
Rev. Proc. 2001–42
SECTION 1. PURPOSE
This revenue procedure provides the
procedures by which an issuer may rem-
edy an inadvertent non-egregious failure
to comply with the modified endowment
contract rules under § 7702A of the Inter-
nal Revenue Code.
SECTION 2. BACKGROUND
.01 Definition of a modified endowment
contract (“MEC”).
(1) Section 7702A(a) provides that a
life insurance contract is a MEC if the
contract—
(a) is entered into on or after June
21, 1988, and fails to meet the “7-pay
test” of § 7702A(b), or
(b) is received in exchange for a
contract described in paragraph (a) of this
section 2.01(1).
(2) A contract fails to meet the 7-pay
test if the accumulated amount paid under
the contract at any time during the first 7
contract years exceeds the sum of the net
level premiums which would have to be
paid on or before such time if the contract
were to provide for paid-up “future bene-
fits” (as defined in §§ 7702A(e)(3) and
7702(f)(4)) after the payment of 7 level
annual premiums.
(3) Section 72(e)(11) provides that,
for purposes of determining amounts in-
cludible in gross income, all MECs issued
by the same company to the same contract
holder during any calendar year are
treated as one MEC.
.02 Tax treatment of amounts received
under a MEC. Section 72(e)(10) provides
that a MEC is subject to the rules of
§ 72(e)(2)(B), which tax non-annuity dis-
tributions on an income-out-first basis,
and the rules of § 72(e)(4)(A) (as
modified by §§ 72(e)(10)(A)(ii) and
72(e)(10)(B)), which generally deem
loans and assignments or pledges of any
portion of the value of a MEC to be non-
annuity distributions. Moreover, under
§ 72(v), the portion of any annuity or non-
annuity distribution received under a
MEC that is includible in gross income is
subject to a 10% additional tax unless the
distribution is made on or after the date on
which the taxpayer attains age 59 1/2, is at-
tributable to the taxpayer’s becoming dis-
abled (within the meaning of § 72(m)(7)),
or is part of a series of substantially equal
periodic payments (not less frequently than
annually) made for the life (or life ex-
pectancy) of the taxpayer or the joint lives
(or joint life expectancies) of such taxpayer
and the taxpayer’s beneficiary.
.03 Need for a correction mechanism.
(1) The Internal Revenue Service
(“Service”) became aware of situations in
which, as a result of inadvertent non-egre-
gious failures to comply with the MEC
rules, life insurance premiums had been
collected which exceed the 7-pay limit
provided by § 7702A(b). This could pro-
duce significant unforeseen tax conse-
quences for the contract holders. To allow
issuers to remedy such situations, Rev.
Proc. 99–27, 1999–1 C.B. 1186, set forth
the circumstances under which the Service
would enter into closing agreements which
would provide that contracts identified in
the closing agreements would not be
treated as MECs. Rev. Proc. 99–27 ap-
plied only to requests for relief that were
received by the Service on or before May
31, 2001, generally permitted an issuer to
make only one request for correction, and
excluded certain contracts from the proce-
dure’s correction mechanism.
(2) Some issuers were unable to
comply with the May 31, 2001, deadline
in Rev. Proc. 99–27 or filed a timely sub-
mission for some contracts but desire to
file supplemental submissions for addi-
tional contracts. Also, issuers desire to
correct contracts that were not correctable
under Rev. Proc. 99–27. To allow issuers
to remedy such situations, the Service
under the circumstances described below
will enter into closing agreements which
will provide that contracts identified in
the closing agreements will not be treated
as MECs.
SECTION 3. DEFINITIONS
The following definitions and rules
apply solely for purposes of this revenue
procedure.
.01 Testing period. The 7-year period
described in § 7702A(b) or such addi-
Part III. Administrative, Procedural, and Miscellaneous

2001–36 I.R.B.213September 4, 2001
tional period as may be required under
§ 7702A(c)(3) if a contract undergoes a
material change.
.02 Amount paid. The amount paid
under a contract in any “contract year” (as
defined in § 7702A(e)(2)) equals the pre-
miums paid for the contract during the
year, reduced by amounts to which
§ 72(e) applies (determined without re-
gard to § 72(e)(4)(A)) but not including
amounts includible in gross income. For
this purpose, premiums paid do not in-
clude—
(1) any portion of any premium paid
during the contract year that is returned
(with interest) to the contract holder
within 60 days after the end of the con-
tract year in order to comply with the 7-
pay test, or
(2) the “cash surrender value” (as de-
fined in § 7702(f)(2)(A)) of another life
insurance contract (other than a contract
that fails the 7-pay test) exchanged for the
contract.
.03 7-pay premium. (1)In general. Ex-
cept as otherwise provided in section
3.03(2) of this revenue procedure, the 7-
pay premium for a contract is the net level
premium (computed in accordance with
the rules in § 7702A(c)) that would have to
be paid for the contract if the contract were
to provide for paid up future benefits after
the payment of 7 level annual premiums.
(2) 7-pay premium for a contract
that undergoes a material change.If a
contract (other than a contract that fails
the 7-pay test) is materially changed, the
contract is treated as newly issued on the
date of the material change and the 7-pay
premium for the changed contract is an
amount equal to the excess, if any, of—
(a) the net level premium (com-
puted in accordance with the rules in
§ 7702A(c)) that would have to be paid
for the changed contract if the contract
were to provide for paid up future benefits
after the payment of 7 level annual premi-
ums, over
(b) a “proportionate share of the
cash surrender value” (as defined in sec-
tion 3.04 of this revenue procedure) under
the contract.
.04 Proportionate share of cash surren-
der value. The proportionate share of the
cash surrender value of a contract is the
amount obtained by multiplying—
(1) the “cash surrender value” (as de-
fined in § 7702(f)(2)(A)) of the contract,
by
(2) a fraction, the numerator of
which is the net level premium (computed
in accordance with the rules in
§ 7702A(c)) that would have to be paid
for the changed or new contract if such
contract were to provide for paid up fu-
ture benefits after the payment of 7 level
annual premiums, and the denominator of
which is the net single premium (deter-
mined using the rules in § 7702) for such
contract at that time.
.05 Overage.A contract’s overage is
the amount of the excess, if any, of—
(1) the sum of amounts paid under
the contract during the testing period for
the contract year and all prior contract
years, over
(2) the sum of the 7-pay premiums
for the contract year and all prior contract
years of the testing period.
.06 Overage earnings.The overage
earnings for a contract year is the amount
obtained by multiplying—
(1) the sum of a contract’s overage
for the contract year and its cumulative
overage earnings for all prior contract
years, by—
(2) the earnings rate set forth in sec-
tion 3.07 of this revenue procedure.
.07 Earnings rates. (1) Contracts other
than variable contracts.Except as other-
wise provided in sections 3.07(3) and
3.07(8) of this revenue procedure, the
earnings rate applicable to a contract year
is the “general account total return” (as
defined in section 3.07(2) of this revenue
procedure) for the calendar year in which
the contract year begins.
(2) General account total return.
The general account total return is the cal-
endar year arithmetic average of the
monthly interest rates described as
Moody’s Corporate Bond Yield Average -
Monthly Average Corporates as published
by Moody’s Investors Service Inc., or any
successor thereto.
(3)Variable contracts described in
§ 817(d). (a) Pre-2001 contract years.
The earnings rate applicable to a contract
year that begins before January 1, 2001, is
the rate set forth in the following table for
the calendar year in which the contract
year begins.
Calendar YearEarnings Rate
198813.5%
198917.4%
19901.4%
199125.4%
19925.9%
199313.9%
1994-1.0%
199523.0%
199614.3%
199717.8%
199819.7%
199912.8%
2000-5.5%

September 4, 20012142001–36 I.R.B.
(b) Post-2000 contract years.Ex-
cept as otherwise provided in section
3.07(8), the earnings rate applicable to a
contract year that begins after December
31, 2000, is equal to the sum of—
(i) 10 percent of the general
account total return (as defined in section
3.07(2) of this revenue procedure), and
(ii) 90 percent of the “separate
account total return” (as defined in section
3.07(4) of this revenue procedure) for the
calendar year in which the contract year
begins.
(4) Separate account total return.
Except as otherwise provided in section
3.07(8), the separate account total return
equals—
(a) 75 percent of the “equity fund
total return” (as defined in section 3.07(5)
of this revenue procedure), plus
(b) 25 percent of the “bond fund
total return” (as defined in section 3.07(6)
of this revenue procedure), less
(c) 1.1 percentage point.
(5) Equity fund total return.The eq-
uity fund total return equals—
(a) the “calendar year percentage
return” (as defined in section 3.07(7) of
this revenue procedure) represented by
the end-of-year values of the Standard
and Poor’s (S&P) 500 Total Return Index,
with daily dividend reinvestment, as pub-
lished by The McGraw-Hill Companies,
Inc., or any successor thereto, less
(b) 1.5 percentage point.
(6) Bond Fund Total Return.The
bond fund total return equals—
(a) the “calendar year percentage
return” (as defined in section 3.07(7) of
this revenue procedure) represented by
the end-of-year values of the Merrill
Lynch Corporate Bond Master Bond
Index, Total Return, as published by Mer-
rill Lynch & Company, Inc., or any suc-
cessor thereto, less
(b) 1.0 percentage point.
(7) Calendar year percentage return.
The calendar year percentage return for
an index described in section 3.07(5) or
section 3.07(6) of this revenue procedure
is calculated by—
(a) dividing the end-of-year value
of the index for the calendar year by the
end-of-year value of the index for the im-
mediately preceding calendar year, and
(b) subtracting 1 from the result
obtained under paragraph (a) of this sec-
tion 3.07(7).
(8) If the general account total return
or the separate account total return for a
calendar year cannot be determined be-
cause the calendar year in which the con-
tract year begins has not ended, then the
earnings rate for the contract year (or por-
tion thereof) is determined using the gen-
eral account total return and, if applicable,
the average separate account total return,
for the 3 calendar years immediately pre-
ceding the calendar year in which the con-
tract year begins.
.08 Proportionate share of overage
earnings allocable to taxable distribu-
tions. The proportionate share of overage
earnings allocable to taxable distributions
under a contract is the amount obtained
by multiplying—
(1) the total amount of the taxable
distributions under the contract, by
(2) a fraction, the numerator of
which is the contract’s cumulative over-
age earnings and the denominator of
which is the total income on the contract.
.09 Total income on a contract.The
total income on a contract as of any date
is an amount equal to the excess, if any,
of—
(1) the contract’s cash surrender
value (as defined in § 7702(f)(2)(A)) on
such date, over
(2) the premiums paid under the con-
tract before such date, reduced by
amounts to which § 72(e) applies (deter-
mined without regard to § 72(e)(4)(A))
but not including amounts includible in
the contract holder’s gross income.
.10 Distribution frequency factor. The
distribution frequency factor for a con-
tract is—
(1) .8, if—
(a) the interest rate with respect to
any portion of a policy loan that could be
made under the contract at any time (in-
cluding policy loans that could be made
after a contractually specified date in the
future) is guaranteed not to exceed the
sum of:
(i) 1 percentage point, plus
(ii) the rate at which earnings
are credited to the portion of the contract’s
cash surrender value (as defined in
§ 7702(f)(2)(A)) that is allocable to such
portion of the policy loan; or
(b) the contract holder has an op-
tion to make a partial withdrawal of the
contract’s cash surrender value that re-
duces the “death benefit” (as defined in
§ 7702(f)(3)) under the contract by less
than an amount determined by multiply-
ing—
(i) the death benefit under the
contract immediately before the with-
drawal, by
(ii) the percentage obtained
by dividing the withdrawn amount by the
contract’s cash surrender value (as defin-
ed in § 7702(f)(2)(A)) immediately before
the withdrawal; and
(2) .5 for all other contracts.
.11 Applicable percentage. (1) In gen-
eral. The applicable percentage for a con-
tract is—
(a) 15%, if the death benefit under
the contract is less than $50,000,
(b) 28%, if the death benefit under
the contract is equal to or exceeds
$50,000 but is less than $180,000, and
(c) 36%, if the death benefit under
the contract is equal to or exceeds
$180,000.
(2) Determination of amount of
death benefit. For purposes of determin-
ing the applicable percentage, the death
benefit under the contract will be the
death benefit (as defined in section
7702(f)(3)) as of any date within 120 days
of the date of the request for closing
agreement, or the last day the contract is
in force.
.12 Reported amount.The reported
amount for a contract is the amount that—
(1) the issuer reports on a timely
filed information return as includible in
the contract holder’s gross income, or
(2) the contract holder includes in
gross income on a timely filed income tax
return.
.13 Aggregation of contracts. All
MECs issued by the same issuer to the
same contract holder during any calendar
year are treated as one MEC.
SECTION 4. SCOPE
.01 Applicability.Except as provided
in section 4.02 of this revenue procedure,
the issuer of a contract can use this rev-
enue procedure to remedy the failure of
the contract to comply with the require-
ments of § 7702A.
.02 Inapplicability.The Service may
exclude a contract from the correction
mechanism provided under this revenue
procedure if the contract’s status as a
MEC resulted from a failure to comply
with the requirements of § 7702A that—

(1) are attributable to one or more
defective interpretations or positions that
the Service determines to be a significant
feature of a program to sell investment
oriented contracts, or
(2) arises where the controlling
statutory provision, as supplemented by
any legislative history or guidance pub-
lished by the Service, is clear on its face
and the Service determines that failure to
follow the provision results in a signifi-
cant increase in the investment orientation
of a contract.
.03 Example.Pursuant to section 4.02,
the Service generally will not apply the
correction mechanism under this revenue
procedure to a MEC if the contract pro-
vides for paid-up future benefits after the
payment of less than 7 level annual pre-
miums.
SECTION 5. PROCEDURE
.01 Request for a ruling. An issuer that
seeks relief under this revenue procedure
must submit a request for a ruling that
meets the requirements of Rev. Proc.
2001–1, 2001–1 I.R.B. 1 (or any succes-
sor). Additionally, the submission must
contain the following information:
(1) a specimen copy of each contract
form;
(2) the policy number and original
issue date for each contract;
(3) the taxpayer identification num-
ber of each contract holder;
(4) the “death benefit” (as defined in
section 7702(f)(3)) under each contract
for purposes of determining the 7-pay
premium for the contract;
(5) the 7-pay premium assumed by
the issuer when the contract was issued;
(6) the cash surrender value (within
the meaning of § 7702(f)(2)(A)) of each
contract at the end of each contract year;
(7) a description of the defect[s] that
caused the contract[s] to fail to comply
with the 7-pay test, including an explana-
tion of how and why the defect[s] arose;
(8) a description of the administra-
tive procedures the issuer has imple-
mented to ensure that none of its contracts
will inadvertently fail the 7-pay test in the
future;
(9) a description of any material
change[s] in the benefits under (or in the
other terms of) any contract together with
the date[s] on which the material
change[s] occurred;
(10) for any contract with regard to
which a contract holder directly or indi-
rectly received (or was deemed to have
received) any distribution to which § 72
applies—
(a) the date and amount of each
distribution,
(b) the amount of the distribution
includible in the contract holder’s gross
income,
(c) the amount of gross income re-
ported to the contract holder and to the
Service on a timely filed information re-
turn as a result of the distribution,
(d) the date on which the contract
holder attained [or will attain] age 59 1/2,
(e) whether the distribution is at-
tributable to the contract holder becoming
disabled (within the meaning of
§ 72(m)(7)), and,
(f) whether the distribution is part
of a series of substantially equal periodic
payments (not less frequently than annu-
ally) made for the life (or life expectancy)
of the contract holder or the joint lives (or
joint life expectancies) of the contract
holder and his or her beneficiary;
(11) a template (see, for example,
section 5.03(3) of this revenue procedure)
setting forth the following information for
each contract:
(a) the cumulative amounts paid
under the contract within each contract
year of the testing period,
(b) the contract’s cumulative 7-
pay premium,
(c) the overage, if any, for each
contract year,
(d) the earnings rate applicable for
each contract year;
(e) the overage earnings for each
contract year; and,
.02 Closing agreement. The issuer also
must submit a proposed closing agree-
ment, executed by the issuer, in substan-
tially the same form as the model closing
agreement in section 6 of this revenue
procedure. The amount shown in section
1(A) of the closing agreement is the sum
of the amounts required to be paid (deter-
mined under section 5.03 of this revenue
procedure) for all of the contracts covered
by the agreement.
.03 Determination of amount required
to be paid with regard to a contract.
(1) General rule. Except as pro-
vided in section 5.03(2) of this revenue
procedure, the amount required to be paid
with regard to a contract is the sum of—
(a) the income tax (determined
using the applicable percentage for the
contract under section 3.11 of this revenue
procedure) and the additional tax under
section 72(v) with regard to amounts
(other than reported amounts (as defined
in section 3.12 of this revenue procedure))
received (or deemed received) under the
contract during the period commencing
with the date 2 years before the date on
which the contract first failed to satisfy the
MEC rules and ending on the effective
date of the closing agreement;
(b) any interest computed under
§ 6621(a)(2) as if the amounts determined
under section 5.03(1)(a) of this revenue
procedure are underpayments by the con-
tract holder[s] for the tax year[s] in which
the amounts are received (or deemed re-
ceived); and
(c) an amount, not less than $0,
obtained by multiplying—
(i) the excess, if any, of the con-
tract’s cumulative overage earnings over
the proportionate share of overage earn-
ings allocable to taxable distributions
under the contract, by
(ii) the applicable percentage
for the contract, and by
(iii) the distribution frequency
factor for the contract under section 3.10
of this revenue procedure.
(2) Special rule for contracts with de
minimis overage earnings. If the overage
earnings of a contract at all times during
the testing period do not exceed $75, then
the amount required to be paid with re-
gard to the contract is determined without
regard to paragraphs (a) and (b) of section
5.03(1) of this revenue procedure.
(3) Examples of the determination of
the amount required to be paid with re-
gard to a contract.
(a) Example 1. A, an individual,
purchases a life insurance contract other
than a contract described in section
3.07(3) or 4.02 of this revenue proce-
dure. The death benefit of the contract
exceeds $180,000 on every day within
120 days of the date of the request for
closing agreement. The net level pre-
mium (assuming paid-up future benefits
after seven annual premium payments)
for the contract is $10,490. The contract
provides that, within 60 days after the
end of a contract year, the issuer will re-
turn (with interest) the amount of any ex-
2001–36 I.R.B.215September 4, 2001

cess premium that would cause the con-
tract to be a MEC under § 7702A.
The interest rate on all portions of any
policy loans will always exceed the rate at
which interest is credited to the contract’s
associated cash value by more than 1 per-
centage point. A partial withdrawal of the
cash surrender value (within the meaning
of § 7702(f)(2)(A)) always reduces the
death benefit by an amount not less than
the amount determined by multiplying the
death benefit immediately before the
withdrawal by the percentage obtained by
dividing the withdrawn amount by the
cash surrender value immediately before
the withdrawal.
A pays a premium of $10,000 when the
contract is issued on January 1, 1991. At
the beginning of each of the next 6 con-
tract years, A pays additional premiums of
$10,750, $10,800, $10,700, $11,500,
$11,000, and $10,000, respectively. Due
to an inadvertent error, the issuer fails to
return any of the excess premiums.
The issuer desires to enter into a clos-
ing agreement to remedy the failure to
comply with § 7702A. Pursuant to sec-
tion 5.01(10) of this revenue procedure,
the issuer prepares the following template
with regard to the contract.
September 4, 20012162001–36 I.R.B.
ContractCumulativeCumulativeOverageEarningsOverage
YearAmounts7-PayRateEarnings
PaidPremiums
1 (1991)10,00010,49009.2%0
2 (1992)20,75020,98008.6%0
3 (1993)31,55031,470807.5%6.00
4 (1994)42,25041,9602908.3%24.57
5 (1995)53,75052,4501,3007.8%103.78
6 (1996)64,75062,9401,8107.7%149.71
7 (1997)74,75073,4301,3207.6%121.91
Prior to A’s payment of the $10,800
premium at the beginning of contract year
3, the cumulative premiums paid for the
contract do not exceed the contract’s cu-
mulative 7-pay premiums. Therefore,
there are no overage earnings in contract
years 1 and 2.
Upon payment of the $10,800 premium
at the beginning of contract year 3, how-
ever, the cumulative amount paid for the
contract ($31,550) exceeds the contract’s
cumulative 7-pay premiums ($31,470) by
$80. As the earnings rate for the calendar
year in which contract year 3 begins is
7.5%, the contract’s overage earnings for
contract year 3 equal $6 ($80 x 7.5%).
For contract year 4, the overage is $290
($42,250 - $41,960). The cumulative
overage earnings for all prior contract
years equal $6.00. The earnings rate is
8.3%. The overage earnings for contract
year 4 equal $24.57 (($290 + $6) x 8.3%).
For contract year 5, the overage is
$1,300 ($53,750 - $52,450). The cumula-
tive overage earnings for all prior contract
years equal $30.57 ($6 + $24.57). The
earnings rate is 7.8%. The overage earn-
ings for contract year 5 equal $103.78
(($1,300 + $30.57) x 7.8%).
For contract year 6, the overage is
$1,810 ($64,750 - $62,940). The cumula-
tive overage earnings for all prior contract
years equal $134.35 ($6 + $24.57 +
$103.78). The earnings rate is 7.7%. The
overage earnings for contract year 6 equal
$149.71 ($1,810 + $134.35) x 7.7%).
For contract year 7, the overage is
$1,320 ($74,750 - $73,430). The cumula-
tive overage earnings for all prior contract
years equal $284.06 ($6 + $24.57 +
$103.78 + $149.71). The earnings rate is
7.6%. The overage earnings for contract
year 7 equal $121.91 (($1,320 + $284.06)
x 7.6%).
The cumulative overage earnings for
the contract equal $405.97 ($6 + $24.57 +
$103.78 + $149.71 + $121.91). Under
sections 3.10 and 3.11 of this revenue
procedure, the distribution frequency fac-
tor is .5 and the applicable percentage is
36%. Accordingly, the amount required
to be paid with regard to the contract
under section 5.03 of this revenue proce-
dure is $73.07 ($405.97 x .5 x 36%).
(b) Example 2. The facts are the
same as in example 1 except that, at the
beginning of contract year 5, A receives
$3,000 as a policy loan. The contract’s
cash value (within the meaning of
§ 72(e)(3)(A)(i)) immediately prior to the
loan is $58,500, which exceeds A’s invest-
ment in the contract ($53,750) by $4,750.
Each year A pays the interest on the pol-
icy loan. The issuer does not file a timely
information return with regard to the
deemed distribution resulting from the
policy loan and A does not include the
distribution in gross income reported on
the income tax return for the taxable years
in which the deemed distribution is re-
ceived. The total income on the contract
(as defined in section 3.09 of this revenue
procedure) is $14,500.
The amount required to be paid with re-
gard to the contract under section 5.03 of
this revenue procedure is the sum of-
(1) an amount equal to the income
tax (determined using a 36% tax rate) and
the additional tax under section 72(v)
with regard to the $3,000 deemed distrib-
ution in contract year 5;
(2) interest computed under section
6621(a)(2) as if the amounts determined
under (1) were underpayments for the tax-
able year in which the distributions are
deemed to have occurred; and
(3) 36% of $160.99, which is the ex-
cess of the contract’s cumulative overage
earnings over the proportionate share of
the overage earnings allocable to taxable
distributions ($405.97 - $83.99), multi-
plied by the distribution frequency factor
(.5).

The proportionate share of overage
earnings allocable to taxable distribu-
tions is obtained by multiplying the
total amount of the taxable distribution
under the contract ($3,000), by a frac-
tion, the numerator of which is the con-
tract’s cumulative overage earnings
($405.97) and the denominator of which
is the total income on the contract
($14,500).
.04 Payment of amount.The issuer is
required to pay the amount determined
under section 5.03 of this revenue proce-
dure within thirty (30) days of the date of
execution of the closing agreement by the
Service. Payment shall be made by check
payable to the “United States Treasury”
delivered, together with a fully executed
copy of the closing agreement, to Internal
Revenue Service, Philadelphia Service
Center, 11601 Roosevelt Boulevard,
Philadelphia, Pennsylvania 19154, Atten-
tion: Chief, Receipt and Control Branch,
DP3190.
.05 Correction of contracts. (1) Gen-
eral rules. If, on the date of the execution
of the closing agreement by the Service,
the testing period (as defined in section
3.01 of this revenue procedure) for a con-
tract has more than ninety (90) days re-
maining, then the issuer must bring the
contract into compliance with § 7702A.
The issuer may bring a contract into com-
pliance with § 7702A either by either in-
creasing the contract’s death benefit or re-
turning the contract’s excess premiums
and earnings thereon to the contract
holder. The issuer shall take the correc-
tive action required under this section
5.05(1) within ninety (90) days of the date
of execution of the closing agreement by
the Service.
(2) No corrective action required if
Service executes closing agreement on a
date within 90 days of the expiration of
testing period. If the testing period for a
contract expires on or before the date
within 90 days of the execution of the
closing agreement by the Service, then
the issuer is not required to take any cor-
rective action under section 5.05(1) of
this revenue procedure.
SECTION 6. MODEL CLOSING
AGREEMENT
Effective as of the date executed by
Internal Revenue Service _________
CLOSING AGREEMENT AS TO
FINAL DETERMINATION COVERING
SPECIFIC MATTERS
THIS CLOSING AGREEMENT
(“Agreement”), made pursuant to section
7121 of the Internal Revenue Code (the
“Code”) by and between [taxpayer’s
name, address, and identifying number]
(“Taxpayer”), and the Commissioner of
Internal Revenue (the “Service”).
WHEREAS,
A. Taxpayer is the issuer of one or
more modified endowment contracts, as
defined in section 7702A of the Code;
B. On
, Taxpayer pursuant
to Rev. Proc. 2001–1, 2001–1 I.R.B. 1,
submitted to the Service a request for a
ruling that
modified endowment
contracts (the “Contract[s]”), which are
identified on Exhibit A to this Agreement,
be treated as contracts that are not modi-
fied endowment contracts.
C. Taxpayer represents that the Con-
tract[s] is [are] not described in section
4.02 of Rev. Proc. 2001–42.
D. Taxpayer represents that the cumu-
lative “overage earnings,” within the
meaning of section 3.06 of Rev. Proc.
2001–42, for the Contract[s] equal
$_____.
E. Taxpayer represents that the total of
the amounts determined under section
5.03(1)(a), (b), and (c) of Rev. Proc.
2001–42, after taking the special rule in
section 5.03(2) of the revenue procedure
into account, with regard to the Con-
tract[s] are $
, $, and
$______, respectively.
F. To ensure that the Contracts are not
treated as modified endowment contracts,
Taxpayer and the Service have entered
into this Agreement.
NOW THEREFORE, IT IS HERE-
BY FURTHER DETERMINED AND
AGREED BETWEEN TAXPAYER AND
THE SERVICE AS FOLLOWS:
1. In consideration for the agreement of
the Service as set forth in Section 2
below, Taxpayer agrees as follows:
(A) To pay to the Service the sum of
dollars and cents ($_____)
at the time and in the manner described in
Section 3 below;
(B) The amount paid pursuant to
Section 1(A) above is not deductible by
Taxpayer, nor is such amount refundable,
subject to credit or offset, or otherwise re-
coverable by Taxpayer from the Service;
(C) For purposes of its information
reporting and withholding obligations
under the Code, no holder’s investment in
any Contract may be increased by any
portion of—
(i) the sum set forth in Section
1(A) above, or
(ii) the excess of the cumulative
overage earnings over the proportionate
share of overage earnings included in
gross income reported to the Service on a
timely filed information return or income
tax return with regard to amounts re-
ceived under any Contract; and
(D) To bring Contract[s] for which
the testing period (as defined in section
3.01 of Revenue Procedure 2001–42) will
not have expired on or before the date 90
days after the execution of this Agreement
into compliance with § 7702A, either by
an increase in death benefit[s] or the re-
turn of the excess premiums and earnings
thereon to the contract holder[s].
2. In consideration of the agreement of
Taxpayer set forth in Section 1 above, the
Service and Taxpayer agree as follows:
(A) To treat each Contract as having
satisfied the requirements of section
7702A during the period from the date of
issuance of the Contract through and in-
cluding the later of—
(i) date of the execution of this
Agreement, and
(ii) the date of the corrective ac-
tions described in Section 1(D) above;
(B) To treat the corrective action de-
scribed in 1(D) above as having no effect
on the date the Contract was issued or en-
tered into;
(C) To waive civil penalties for fail-
ure of Taxpayer to satisfy the reporting,
withholding, and/or deposit require-
ments for income subject to tax under
§ 72(e)(10) that was received or deemed
received by a contract holder under a
Contract in a calendar year ending prior
to the date of execution of this Agree-
ment; and
(D) To treat no portion of the sum
described in Section 1(A) above as in-
come to the holders of the Contracts.
3. The actions required of Taxpayer in
Section 1(D) above shall be taken by Tax-
payer within ninety (90) days of the date
of execution of this Agreement by the
Service. Payment of the amount de-
scribed in Section 1(A) above shall be
made within thirty (30) days of the date of
2001–36 I.R.B.217September 4, 2001

execution of this Agreement by the Ser-
vice by check payable to the “United
States Treasury,” delivered together with
a fully executed copy of this Agreement,
to Internal Revenue Service, Philadelphia
Service Center, 11601 Roosevelt Boule-
vard, Philadelphia, Pennsylvania 19154,
Attention: Chief, Receipt and Control
Branch, DP3190.
4. This Agreement is, and shall be con-
strued as being, for the benefit of Tax-
payer. The holder[s] of Contract[s] cov-
ered by this Agreement are intended
beneficiaries of this Agreement. This
Agreement shall not be construed as cre-
ating any liability of an issuer to the hold-
ers of the Contract[s].
5. Neither the Service nor Taxpayer
shall endeavor by litigation or other means
to attack the validity of this Agreement.
6. This Agreement may not be cited or
relied upon as precedent in the disposition
of any other matter.
NOW THIS CLOSING AGREEMENT
FURTHER WITNESSETH, that Tax-
payer and the Service mutually agree that
the matters so determined shall be final
and conclusive, except as follows:
1. The matter to which this Agreement
relates may be reopened in the event of
fraud, malfeasance, or misrepresentation
of material facts set forth herein.
2. This Agreement is subject to sections
of the Code that expressly provide that ef-
fect be given to their provisions notwith-
standing any other law or rule of law ex-
cept § 7122 of the Code.
3. This Agreement is subject to any leg-
islation enacted subsequent to the date of
execution hereof if the legislation pro-
vides that it is effective with respect to
closing agreements.
September 4, 20012182001–36 I.R.B.
IN WITNESS WHEREOF, the parties have subscribed their names in triplicate.
Taxpayer
Date Signed:
By:
_______________________________
Title/Office
Commissioner of Internal Revenue
Date Signed: By: _______________________________
_______________________________
Title/Office
SECTION 7. EFFECTIVE DATE
This revenue procedure is effective Au-
gust 6, 2001, the date this revenue proce-
dure was made available to the public.
SECTION 8. EFFECT ON OTHER
DOCUMENTS.
This revenue procedure supersedes
Rev. Proc. 99–27.
SECTION 9. PAPERWORK
REDUCTION ACT
The collections of information con-
tained in this revenue procedure have
been reviewed and approved by the Of-
fice of Management and Budget in accor-
dance with the Paperwork Reduction Act
(44 U.S.C. 3507) under control number
1545 –1752.
The collection of information and re-
porting burden are in section 5 of this rev-
enue procedure. This information will be
used to determine whether an issuer may
remedy failures to comply with the re-
quirements of § 7702A. The likely re-
spondents are insurance companies.
The estimated total annual reporting
burden is 1000 hours.
The estimated annual burden per re-
spondent varies from 50 hours to 150
hours with an average of 100 hours. The
estimated number of respondents is 10.
The estimated annual frequency of the
responses is one time.
An agency may not conduct or sponsor,
and a person is not required to respond to,
a collection of information unless the col-
lection of information displays a valid
OMB control number.
Books and records relating to a collec-
tion of information must be retained as
long as their contents may become mater-
ial in the administration of any internal
revenue law. Generally tax returns and
tax return information are confidential, as
required by 26 U.S.C. 6103.
DRAFTING INFORMATION
For further information regarding this
revenue procedure, contact Donald Drees
of Financial Institutions and Products at
(202) 622-3970 (not a toll-free call).

Foundations Status of Certain
Organizations
Announcement 2001–85
The following organizations have
failed to establish or have been unable to
maintain their status as public charities or
as operating foundations. Accordingly,
grantors and contributors may not, after
this date, rely on previous rulings or des-
ignations in the Cumulative List of Orga-
nizations (Publication 78), or on the pre-
sumption arising from the filing of notices
under section 508(b) of the Code. This
listing does notindicate that the organiza-
tions have lost their status as organiza-
tions described in section 501(c)(3), eligi-
ble to receive deductible contributions.
Former Public Charities.The follow-
ing organizations (which have been
treated as organizations that are not pri-
vate foundations described in section
509(a) of the Code) are now classified as
private foundations:
100 Black Men of Valdosta, Inc.,
Valdosta, GA
Affordable Housing Concepts, Inc.,
Clayton, GA
Alliance for a Responsible Swine
Industry, Inc., Burgaw, NC
Alternatives to Violence Project USA,
Inc., Albany, GA
American Saddlebreed Special
Commissioned, Inc., Madison, GA
Arc of Union Co., Maynardville, TN
At-Risk Childrens-Teens Shelter, Inc.,
Atlanta, GA
Atlanta Doo-Wopp Association, Inc.,
Fayetteville, GA
Atlanta World Basketball Championships
Organizing Comm., Inc.,
Atlanta, GA
Barbara A. Hayes Breast Cancer
Foundation, Inc., Melbourne, FL
Bartow Blaze Fastpitch Softball, Inc.,
Bartow, FL
Bay County Council for Children, Inc.,
Panama City, FL
Birth Health, Inc., Atlanta, GA
Blacks United for Youth-Cobb, Inc.,
Marietta, GA
Building Hope, Inc., Atlanta, GA
Camp Kaleidoscope, Inc., Alpharetta, GA
Center Court, Inc., Baton Rouge, LA
Chosen Ministries, Inc., Augusta, GA
Christian Mental Health Services, Inc.,
Duluth, GA
Circle of Love, Inc., College Park, GA
Citizens Coalition for Responsible
Power, Inc., Tampa, FL
Community Reinvestment Concepts, Inc.,
Clayton, GA
Consumer Law Center of the South, Inc.,
Atlanta, GA
Cup, Inc., Decatur, GA
Dale Davis Foundation, Inc.,
Boca Raton, FL
Economical Hope Development, Inc.,
Morrow, GA
Emmanuel Southside Community
Enrichment Center, Inc., Atlanta, GA
Fishing Hall of Fame, Inc.,
Daytona Beach, FL
Freemind Generation, Inc., Atlanta, GA
Friends of Bowden, Inc., East Point, GA
Friends of Georgia Cycling, Inc.,
Sharpsburg, GA
Friends of Ghana, Inc., Macon, GA
Friends of Goethe, Inc., Atlanta, GA
Froghop, Inc., Atlanta, GA
Fulton Parks Foundation, Inc., Atlanta, GA
Fundacor Heart Foundation, Inc.,
Woodstock, GA
Global Health Service, Charlotte, NC
Golf Hall of Fame, Inc., Atlanta, GA
Greater Atlanta Inner City Games, Inc.,
Atlanta, GA
Greyt Friends, Inc., Marietta, GA
Hall of Success, Inc., Atlanta, GA
Help our Youth USA International, Inc.,
Ellenwood, GA
Hot Club of Atlanta, Inc., Decatur, GA
Jesse Solomon Scholarship Foundation,
Inc., Madison, FL
John Chambers, Inc., Atlanta, GA
Kennesaw Youth Football Association,
Kennesaw, GA
Korean-American Helping Hands
Organization, Inc., Mableton, GA
Lee’s Mill Action Team, Inc.,
Plymouth, NC
Lifeline Academy, Inc., College Park, GA
Little Rock Housing Authority Technical
Assistance Organization,
Little Rock, AR
Maarji Institute, Inc., Fayetteville, GA
Macon County Community Housing
Development Corporation,
Montezuma, GA
Mary Lin Capital Campaign, Inc.,
Atlanta, GA
Marys Covenant Child Care and
Learning Center, Inc., Atlanta, GA
Med. Help International, Inc.,
Melbourne Beach, FL
Mike Elk Foundation, Carrollton, GA
Ministry Resource Group, Inc.,
Atlanta, GA
Montgomery Improvement 40th
Anniversary Foundation,
Montgomery, AL
Morven Landmarks, Inc., Columbus, GA
National Community Development, Inc.,
Plantation, FL
Nehemiah Community Development
Corporation, Inc., Riverdale, GA
Oakwood Non Profit Housing
Corporation, Mt. Dora, FL
Outreach Center, Inc., La Grange, GA
Owens Community Caring & Sharing,
Inc., Decatur, GA
Park Terrace Living Center, Lebanon, TN
Partnership of Atlanta Congregations,
Inc., Atlanta, GA
Peachtree Christian Foundation, Inc.,
Atlanta, GA
Pediatric Life Support International, Inc.,
Macon, GA
Philippine Medical Society of Florida,
Inc., East Coast Chapter,
Neptune Beach, FL
Portsbridge Foundation, Inc.,
Dunwoody, GA
Prime Life Foundation, Inc., Plano, TX
Rest Haven Nursing Home Auxiliary,
Ripley, MS
Rosslyn Counseling Ministry, Inc.,
Jonesboro, GA
Safe Start USA, Inc., Winter Park, FL
Sanford Festivals, Inc., Sanford, NC
Skua Productions, Inc., Atlanta, GA
Smith College Club of Atlanta,
Atlanta, GA
Solid Rock Ranch, Inc., Valdosta, GA
South Central Community Development
Corp., Memphis, TN
South Georgia Soccer Club, Inc.,
Douglas, GA
Southeast Community Development
Corporation, Memphis, TN
Southside Mega Flood Task Force, Inc.,
Albany, GA
Suwanee Community Development
Corp., Live Oak, FL
Sword of the Word, Inc., Augusta, GA
Twenty-First Century Senior Services,
Inc., Memphis, TN
2001–36 I.R.B.219September 4, 2001
Part IV. Items of General Interest

Tybee Island Land Trust, Inc.,
Tybee Island, GA
Uhuru, Inc., Atlanta, GA
United Christian Childrens Fund,
Winter Springs, FL
United States Deaf Table Tennis
Association, St. Augustine, FL
Vaughan Perry Foundation, Inc.,
Marion, AL
Vaughan Thomasville Foundation, Inc.,
Thomasville, AL
Victory Network, Inc., Albany, GA
We Share, Inc., College Park, GA
Wilbur Foundation, Inc., Atlanta, GA
Wild Care, Inc., Denver, NC
Youth United for Prosperity,
Norcross, GA
If an organization listed above sub-
mits information that warrants the re-
newal of its classification as a public
charity or as a private operating founda-
tion, the Internal Revenue Service will
issue a ruling or determination letter
with the revised classification as to
foundation status. Grantors and contrib-
utors may thereafter rely upon such rul-
ing or determination letter as provided
in section 1.509(a)–7 of the Income Tax
Regulations. It is not the practice of the
Service to announce such revised classi-
fication of foundation status in the Inter-
nal Revenue Bulletin.
September 4, 20012202001–36 I.R.B.
The IRS Invites Your Comments on Proposed Changes to Substitute Forms Requirements for the
Partner Copy of Schedule K-1 (Form 1065) and Schedule K-1 (Form 1065–B)
Announcement 2001–88
BackgroundBased on recommendations of the Information Reporting Program Advisory Committee (IRPAC), the In-
ternal Revenue Service (IRS) plans to revise Publication 1167, Substitute Printed, Computer-Prepared,
and Computer-Generated Tax Forms and Schedules. It will provide revised substitute forms requirements
for the copies of Schedule K-1 (Form 1065) and Schedule K-1 (Form 1065–B) furnished to partners, ef-
fective for the 2002 Schedule K-1.
The purpose of these revisions is to:
• Make the substitute forms requirements more specific.
• Set uniform visual standards that all taxpayers can recognize as representing a Schedule K-1.
PurposeThe purpose of this announcement is to request comments on proposed changes to the substitute forms
requirements for Schedule K-1 (Form 1065) and Schedule K-1 (Form 1065–B).
Revisions toThe instructions in Publication 1167 would be supplemented by the following proposed requirements:
Publication 1167
• Copies of substitute Schedules K-1 furnished to partners must be clear and legible.
• The substitute schedule must show the tax year, schedule number (K-1), related form number (1065 or
1065–B), and title exactly as shown on the official IRS schedule. This information must be promi-
nently displayed together in one area of the schedule.
• The line items on the substitute schedule must be in the same order as those on the official IRS sched-
ule. The wording for each line and instruction must be substantially the same as the official schedule.
• The schedule must contain all items required for use by the partner, but is not required to show lines
that do not have entries required for the particular partner. If line items are omitted, do not renumber
the remaining lines. The remaining lines must have the same letters or numbers as the corresponding
lines on the official schedule. Instructions should be provided to make it clear that the number and
order of the items relate to the official schedule.
• Either the official IRS version of the Partner’s Instructions for Schedule K-1 or substantially similar in-
structions must be furnished with the partner’s copy of Schedule K-1. If line items on a substitute
schedule have been omitted on a partner’s substitute Schedule K-1 because they do not apply to that
partner, the corresponding line instructions may be omitted from that partner’s substitute instructions.
• Logos are permitted on the substitute schedules, along with other information which is helpful to the
partners’ understanding of their tax responsibilities. Such information should be segregated in a man-
ner that avoids confusion with the required Schedule K-1 tax items.

2001–36 I.R.B.221September 4, 2001
Benefit to By providing clear and consistent reporting of tax information to its partners, partnerships will make it
Partnershipseasier for its partners to comply with their tax responsibilities. Partnerships will spend less time explain-
ing to partners the tax information they have received and how it relates to their income tax returns.
Benefit to PartnersIncome tax information the partners receive will be understandable and will be properly reflected on their
income tax returns. Partners will receive fewer notices from the IRS.
Benefit to the IRSThe IRS will receive more accurate returns, which in turn will reduce the need to contact taxpayers.
Comments RequestedThe IRS would like to receive comments on the proposed revisions to Publication 1167 regarding Sched-
ule K-1 (Form 1065) and Schedule K-1 (Form 1065–B) from partnerships, partners, and other interested
parties by October 1, 2001.
Please e-mail comments to the Substitute Forms Program Unit at tfp@publish.no.irs.gov. Please enter
“Substitute Forms” on the Subject Line. You can also mail comments to Internal Revenue Service, Sub-
stitute Forms Program, W:CAR:MP:FP:S:CS, 1111 Constitution Avenue, NW, Room 5244, Washington,
DC 20224. After the end of the comment period, the IRS will evaluate the comments and release a re-
vised version of Publication 1167. Although we will not be able to respond to each comment, we will
carefully consider all of them.
The Internal Revenue Service
Will Permit Electronic
Submission of Forms W-9 by
Certain Intermediaries
Announcement 2001–91
Background
In Announcement 98–27 (1998–1 C.B.
865) the Internal Revenue Service (the
“Service”) announced that it will allow
payers to establish a system to electroni-
cally receive Form W-9, “Request for
Taxpayer Identification Number and Cer-
tification”from payees. The “Instruc-
tions for the Requester of Form W-9”
were revised to describe a proper elec-
tronic system.
The Service will also allow a payer
with an electronic system to electronically
receive a Form W-9 from an investment
advisor or introducing broker authorized
to transmit that form as the payee’s agent.
To receive a Form W-9 from an invest-
ment advisor or introducing broker, a
payer’s electronic system must meet the
requirements described below. The Ser-
vice will revise the instructions to Form
W-9 to reflect the provisions of this an-
nouncement.
Definitions
For purposes of this announcement,
the term “payer” means a person re-
quired to file an information return for
payments described in §§ 3406(b)(2) and
(3) of the Internal Revenue Code. The
term “payee” means the person required
to submit Form W-9 to the payer. The
term “investment advisor” means a corpo-
ration, partnership or individual regis-
tered with the Securities and Exchange
Commission (“SEC”) under the Invest-
ment Advisers Act of 1940. The term “in-
troducing broker” means a broker-dealer
that is regulated by the SEC and the Na-
tional Association of Securities Dealers,
Inc., and that is not a payer.
Reliance
A payer receiving a Form W-9 from an
investment advisor or introducing broker
authorized to transmit the Form W-9 to
the payer may rely on it as if the form had
been received directly from the payee, for
purposes of filing information returns and
determining the payer’s backup withhold-
ing obligations under § 3406. The advi-
sor or broker must represent in writing
(which may include electronic means) to
the payer that the payee authorized the ad-
visor or broker to transmit the Form W-9
to the payer.
The Form W-9 received from the in-
vestment advisor or introducing broker
may be either the original paper Form
W-9 or an electronic version (including a
facsimile). An electronic version must be
received by the payer through a system
that meets the requirements described
below. This announcement does not
apply to situations in which a broker acts
as a payee’s agent with respect to “readily
tradable instruments” pursuant to the spe-
cial rule in § 31.3406(h)–3(d) of the Em-
ployment Tax Regulations. Therefore, in
the case of readily tradable instruments,
the payer may rely on a taxpayer identifi-
cation number provided by the broker (in-
cluding by electronic means) unless certi-
fication is required and the broker notifies
the payer that the number was not certi-
fied.
Electronic System Requirements
(1) In general. The electronic system
must ensure that the information received
by the payer is the information sent by the
investment advisor or introducing broker.
The system must document all occasions
of user access that result in the submis-
sion. In addition, the design and opera-
tion of the electronic system, including
access procedures, must make it reason-
ably certain that the person accessing the
system and submitting the Form W-9 is
the investment advisor or introducing bro-
ker.
(2) Same information as paper Form
W-9. The electronic submission must
provide the payer with exactly the same
information as the paper Form W-9.
(3)Signature requirements and per-
jury statement. The electronic submission

must be signed with the payee’s electronic
signature, but only in situations where
Form W-9 and its instructions require a
signature by the payee.
(A) Electronic signature. In addition
to identifying the payee to whom the
Form W-9 relates, the electronic signa-
ture must authenticate and verify the
submission. For this purpose, the terms
“authenticate” and “verify” have the same
meanings as they do when applied to a
written signature on a paper Form W-9.
An electronic signature can be in any
form that satisfies the foregoing require-
ments. The electronic signature must be
the final entry in the submission.
(B) Perjury statement. The elec-
tronic signature on Form W-9 must be
under penalties of perjury. The perjury
statement must contain the language that
appears on the paper Form W-9. The elec-
tronic system must inform the payee that,
by signing, the payee makes the declara-
tion contained in the perjury statement.
The perjury statement must immediately
precede the electronic signature.
(4) Copies of electronic Forms W-9.
Upon request by the Service, the payer
must supply a hard copy of the electronic
Form W-9 and a statement that, to the best
of the payer’s knowledge, the electronic
Form W-9 was submitted by the invest-
ment advisor or introducing broker acting
as the payee’s agent. The hard copy of
the electronic Form W-9 must provide ex-
actly the same information as, but need
not be a facsimile of, the paper Form W-9.
(5) Effective date.This announcement
applies to Forms W-9 submitted to payers
by payees through investment advisors or
introducing brokers on or after September
4, 2001.
For further information regarding this
announcement, contact Nathan Rosen of
the Office of the Associate Chief Counsel
(Procedure & Administration), Adminis-
trative Provisions and Judicial Practice
Division, at (202) 622-4910 (not a toll-
free call).
September 4, 20012222001–36 I.R.B.

2001–36 I.R.B.iSeptember 4, 2001
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”)
that have an effect on previous rulings
use the following defined terms to de-
scribe the effect:
Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus,
if an earlier ruling held that a principle
applied to A, and the new ruling holds
that the same principle also applies to B,
the earlier ruling is amplified. (Compare
with modified, below).
Clarified is used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously
published ruling and points out an essen-
tial difference between them.
Modified is used where the substance
of a previously published position is
being changed. Thus, if a prior ruling
held that a principle applied to A but not
to B, and the new ruling holds that it ap-
plies to both A and B, the prior ruling is
modified because it corrects a published
position. (Compare with amplified and
clarified, above).
Obsoleted describes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used
in a ruling that lists previously published
rulings that are obsoleted because of
changes in law or regulations. A ruling
may also be obsoleted because the sub-
stance has been included in regulations
subsequently adopted.
Revoked describes situations where the
position in the previously published rul-
ing is not correct and the correct position
is being stated in the new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a pe-
riod of time in separate rulings. If the
new ruling does more than restate the
substance of a prior ruling, a combination
of terms is used. For example, modified
and superseded describes a situation
where the substance of a previously pub-
lished ruling is being changed in part and
is continued without change in part and it
is desired to restate the valid portion of
the previously published ruling in a new
ruling that is self contained. In this case
the previously published ruling is first
modified and then, as modified, is super-
seded.
Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and
that list is expanded by adding further
names in subsequent rulings. After the
original ruling has been supplemented
several times, a new ruling may be pub-
lished that includes the list in the original
ruling and the additions, and supersedes
all prior rulings in the series.
Suspended is used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The following abbreviations in current use and for-
merly used will appear in material published in the
Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security
Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign Corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statements of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.
Definition of Terms

September 4, 2001ii2001–36 I.R.B.
Numerical Finding List
1
Bulletins 2001–27 through 2001–35
Announcements:
2001–69, 2001–27 I.R.B. 23
2001–70, 2001–27 I.R.B. 23
2001–71, 2001–27 I.R.B. 26
2001–72, 2001–28 I.R.B. 39
2001–73, 2001–28 I.R.B. 40
2001–74, 2001–28 I.R.B. 40
2001–75, 2001–28 I.R.B. 42
2001–76, 2001–29 I.R.B. 67
2001–77, 2001–30 I.R.B. 83
2001–78, 2001–30 I.R.B. 87
2001–79, 2001–31 I.R.B. 97
2001–80, 2001–31 I.R.B. 98
2001–81, 2001–33 I.R.B. 175
2001–82, 2001–32 I.R.B. 123
2001–83, 2001–35 I.R.B. 205
2001–84, 2001–35 I.R.B. 206
2001–86, 2001–35 I.R.B. 207
2001–87, 2001–35 I.R.B. 208
2001–90, 2001–35 I.R.B. 208
Court Decisions:
2070, 2001–31 I.R.B. 90
Notices:
2001–39, 2001–27 I.R.B. 3
2001–41, 2001–27 I.R.B. 2
2001–42, 2001–30 I.R.B. 70
2001–43, 2001–30 I.R.B. 72
2001–44, 2001–30 I.R.B. 77
2001–45, 2001–33 I.R.B. 129
2001–46, 2001–32 I.R.B. 122
2001–48, 2001–33 I.R.B. 130
2001–49, 2001–34 I.R.B. 188
2001–50, 2001–34 I.R.B. 189
2001–51, 2001–34 I.R.B. 190
2001–52, 2001–35 I.R.B. 203
Proposed Regulations:
REG–110311–98, 2001–35 I.R.B. 204
REG–106917–99, 2001–27 I.R.B. 4
REG–103735–00, 2001–35 I.R.B. 204
REG–103736–00, 2001–35 I.R.B. 204
REG–100548–01, 2001–29 I.R.B. 67
Railroad Retirement Quarterly Rates:
2001–27, I.R.B. 1
Revenue Procedures:
2001–39, 2001–28 I.R.B. 38
2001–40, 2001–33 I.R.B. 130
2001–41, 2001–33 I.R.B. 173
2001–43, 2001–34 I.R.B. 191
2001–44, 2001–35 I.R.B. 203
Revenue Rulings:
2001–30, 2001–29 I.R.B. 46
2001–33, 2001–32 I.R.B. 118
2001–34, 2001–28 I.R.B. 31
2001–35, 2001–29 I.R.B. 59
2001–36, 2001–32 I.R.B. 119
2001–37, 2001–32 I.R.B. 100
2001–38, 2001–33 I.R.B. 124
2001–39, 2001–33 I.R.B. 125
2001–41, 2001–35 I.R.B. 193
Treasury Decisions:
8947, 2001–28 I.R.B. 36
8948, 2001–28 I.R.B. 27
8949, 2001–28 I.R.B. 33
8950, 2001–28 I.R.B. 34
8951, 2001–29 I.R.B. 63
8952, 2001–29 I.R.B. 60
8953, 2001–29 I.R.B. 44
8954, 2001–29 I.R.B. 47
8955, 2001–32 I.R.B. 101
8956, 2001–32 I.R.B. 112
8957, 2001–33 I.R.B. 125
8958, 2001–34 I.R.B. 183
8959, 2001–34 I.R.B. 185
8960, 2001–34 I.R.B. 176
8961, 2001–35 I.R.B. 194
8962, 2001–35 I.R.B. 201
8963, 2001–35 I.R.B. 197
1
A cumulative list of all revenue rulings, revenue
procedures, Treasury decisions, etc., published in
Internal Revenue Bulletins 2001–1 through 2001–26
is in Internal Revenue Bulletin 2001–27, dated July
2, 2001.

2001–36 I.R.B.iiiSeptember 4, 2001
Finding List of Current Actions on
Previously Published Items
1
Bulletins 2001–27 through 2001–35
Announcements:
2000–48
Modified by
Notice 2001–43, 2001–30 I.R.B. 72
Notices:
2001–4
Modified by
Notice 2001–43, 2001–30 I.R.B. 72
2001–9
Modified by
Notice 2001–46, 2001–32 I.R.B. 122
2001–15
Supplemented by
Notice 2001–51, 2001–34 I.R.B. 190
Proposed Regulations:
LR–97–79
Withdrawn by
REG–100548–01, 2001–29 I.R.B. 67
LR–107–84
Withdrawn by
REG–100548–01, 2001–29 I.R.B. 67
REG–110311–98
Supplemented by
T.D. 8961, 2001–35 I.R.B. 194
REG–106917–99
Corrected by
Ann. 2001–86, 2001–35 I.R.B. 207
REG–103735–00
Supplemented by
T.D. 8961, 2001–35 I.R.B. 194
REG–103736–00
Supplemented by
T.D. 8961, 2001–35 I.R.B. 194
REG–107186–00
Corrected by
Ann. 2001–71, 2001–27 I.R.B. 26
REG–130477–00
Supplemented by
Ann. 2001–82, 2001–32 I.R.B. 123
REG–130481–00
Supplemented by
Ann. 2001–82, 2001–32 I.R.B. 123
Revenue Procedures:
93–27
Clarified by
Rev. Proc. 2001–43, 2001–34 I.R.B. 191
97–13
Modified by
Rev. Proc. 2001–39, 2001–28 I.R.B. 38
98–44
Superseded by
Rev. Proc. 2001–40, 2001–33 I.R.B. 130
Revenue Procedures—continued:
2000–20
Modified by
Notice 2001–42, 2001–30 I.R.B. 70
2000–39
Corrected by
Ann. 2001–73, 2001–28 I.R.B. 40
2001–2
Modified by
Rev. Proc. 2001–41, 2001–33 I.R.B. 173
2001–6
Modified by
Notice 2001–42, 2001–30 I.R.B. 70
Revenue Rulings:
57–589
Obsoleted by
REG–106917–99, 2001–27 I.R.B. 4
65–316
Obsoleted by
REG–106917–99, 2001–27 I.R.B. 4
68–125
Obsoleted by
REG–106917–99, 2001–27 I.R.B. 4
69–563
Obsoleted by
REG–106917–99, 2001–27 I.R.B. 4
70–379
Obsoleted by
Rev. Rul. 2001–39, 2001–33 I.R.B. 125
74–326
Obsoleted by
REG–106917–99, 2001–27 I.R.B. 4
78–179
Obsoleted by
REG–106917–99, 2001–27 I.R.B. 4
92–19
Supplemented by
Rev. Rul. 2001–38, 2001–33 I.R.B. 124
Treasury Decisions:
8948
Corrected by
Ann. 2001–90, 2001–35 I.R.B. 208
1
A cumulative list of current actions on previously
published items in Internal Revenue Bulletins
2001–1 through 2001–26 is in Internal Revenue
Bulletin 2001–27, dated July 2, 2001.

INDEX
Internal Revenue Bulletins
2001–27 through 2001–35
The abbreviation and number in paren-
thesis following the index entry refer to
the specific item; numbers in roman and
italic type following the paranthesis
refer to the Internal Revenue Bulletin in
which the item may be found and the
page number on which it appears.
Key to Abbreviations:
AnnAnnouncement
CDCourt Decision
DODelegation Order
EOExecutive Order
PLPublic Law
PTEProhibited Transaction
Exemption
RPRevenue Procedure
RRRevenue Ruling
SPRStatement of Procedural
Rules
TCTax Convention
TDTreasury Decision
TDOTreasury Department Order
EMPLOYEE PLANS
Defined benefit pension plan, transfer of
excess assets (TD 8948) 28, 27; correc-
tion (Ann 90) 35, 208
Determination letters:
Future of the determination letter pro-
gram (Ann 83) 35, 205
Qualified plans, simplifying applica-
tion procedures (Ann 77) 30, 83
Full funding limitations:
Weighted average interest rate for:
June 2001 (Notice 39) 27, 3
July 2001 (Notice 48) 33, 130
August 2001 (Notice 52) 35, 203
Nondiscrimination requirements and
rules:
A defined benefit replacement alloca-
tion, cross-testing (RR 30) 29, 46
Certain defined contribution retirement
plans (TD 8954) 29, 47
Governmental and church plans, relief
from (Notice 46) 32, 122
Qualified plans:
Remedial amendment period under
EGTRRA (Notice 42) 30, 70
Required minimum distribution, alter-
native model amendment (Ann 82)
32,123
Regulations:
26 CFR 1.401(a)(4)–0, –8, revised;
1.401(a)(4)–9, –12, amended; non-
discrimination requirements for cer-
tain defined contribution retirement
plans (TD 8954) 29, 47
26 CFR 1.420–1, added; minimum cost
requirement permitting the transfer
of excess assets of a defined benefit
pension plan to a retiree health ac-
count (TD 8948) 28, 27; correction
(Ann 90) 35, 208
26 CFR 301.7701–7, amended; classi-
fication of certain pension and em-
ployee benefit trusts, and investment
trusts as domestic trusts for federal
tax purposes (TD 8962) 35, 201
Trusts, classification of certain pension
and employee benefit trusts, and in-
vestment trusts as domestic trusts for
federal tax purposes (TD 8962) 35,
201
EMPLOYMENT TAX
Back wages subject to FICA and FUTA
taxes, year paid (CD 2070) 31, 90
Electronic furnishing of payee statements,
voluntary, hearing (Ann 71) 27, 26
Federal tax deposits, removal of Federal
Reserve banks as depositaries (TD
8952) 29, 60
Interest-free adjustments, underpayments
of employment taxes (TD 8959) 34,
185
Penalties for underpayments of deposits
and overstated deposit claims (TD
8947) 28, 36
Railroad retirement, rate determination,
quarterly:
July 1, 2001, 27, 1
Regulations:
26 CFR 31.6205–1(a)(6), revised; in-
terest-free adjustments with respect
to underpayments of employment
taxes (TD 8959) 34, 185
26 CFR 31.6302–1, revised; 31.6302
(c)–4, revised; 301.6656–1, –2, re-
moved; 301.6656–3, redesignated as
301.6656–1; 602.101, amended;
penalties for underpayments of de-
posits and overstated deposit claims
(TD 8947) 28, 36
26 CFR 31.6302–1, amended; 31.6302
(c)–3, amended; 301.6302–1T, re-
moved; removal of Federal Reserve
banks as federal depositaries (TD
8952) 29, 60
26 CFR 301.6323(j)–1, added; with-
drawal of notice of federal tax lien in
certain circumstances (TD 8951) 29, 63
Tax liens, federal, circumstances for with-
drawal of notice (TD 8951) 29, 63
ESTATE TAX
Automatic extension of time to file Form
706 (TD 8957) 33, 125
Filing locations for estate, gift, and gener-
ation-skipping transfer tax returns, re-
vised (Ann 74) 28, 40
Generation-skipping transfer tax, auto-
matic allocation, election (Notice 50)
34, 189
Regulations:
26 CFR 20.6075–1, revised; 20.6081
–1, revised; 602.101, amended; es-
tate tax return, Form 706, extension
to file (TD 8957) 33, 125
EXCISE TAX
Excise tax return filing, payment, and
deposit requirements (TD 8963) 35,
197
Form 2290SP, Declaración del Im-
puesto sobre el Uso de Vehículos Pe-
sados en las Carreteras, new (Ann 69)
27, 23
Regulations:
26 CFR 40.0–1, amended; 40.6011
(a)–1, –2, amended; 40.6071(a)–1,
amended; 40.6071(a)–2, removed;
40.6091–1, amended; 40.6101–1, re-
vised; 40.6109(a)–1, revised;
40.6151(a)–1, revised; 40.6302(c)
–1, –2, revised; 40.6302(c)–3,
amended; 40.6302(c)–4, removed;
40.9999–1, removed; deposits of ex-
cise taxes (TD 8963) 35, 197
EXEMPT
ORGANIZATIONS
List of organizations classified as pri-
vate foundations (Ann 70) 27, 23;
(Ann 72) 28, 39; (Ann 76) 29, 67;
(Ann 78) 30, 87; (Ann 79) 31, 97;
(Ann 84) 35, 206
Revocations (Ann 81) 33, 175
September 4, 2001iv2001–36 I.R.B.
EMPLOYEE PLANS—
Cont.
EMPLOYMENT TAX—
Cont.

2001–36 I.R.B.vSeptember 4, 2001
Filing locations for estate, gift, and gener-
ation-skipping transfer tax returns, re-
vised (Ann 74) 28, 40
Generation-skipping transfer tax, auto-
matic allocation, election (Notice 50)
34, 189
INCOME TAX
Accounting periods, rules and procedures
for (REG–106917–99) 27, 4; correc-
tion (Ann 86) 35, 207
Backup withholding rate for amounts paid
after August 6, 2001 (Ann 80) 31, 98
Bonds, tax and revenue anticipation, safe
harbor (Notice 49) 34, 188
Business and traveling expenses, per
diemallowances (Ann 73) 28, 40
Collapsible corporations, withdrawal of
proposed regulations LR–107–84
(REG–100548–01) 29, 67
Corporations, consolidated groups:
Tentative carryback adjustments (TD
8950) 28, 34
Special aggregate stock ownership
rules (TD 8949) 28, 33
Corporations:
Consolidated income tax return filers,
withdrawal of proposed regulations
LR–97–79 (REG–100548–01) 29,
67
Mexican subsidiary formed to comply
with foreign law (RR 39) 33, 125
Credits:
Low-income housing credit:
Carryovers to qualified states,
2001 National Pool (RP 44) 35,
203
Satisfactory bond, “bond factor”
amounts for the period, July
through September 2001 (RR 37)
32, 100
Disclosure of return information, Census
of Agriculture (TD 8958) 34, 183
Earned income credit, eligibility after de-
nial (TD 8953) 29, 44
Electronic and magnetic media:
Filing, specifications for Form 1042–S,
Foreign Person’s U.S. Source In-
come Subject to Withholding (RP
40) 33, 130
Information reporting seminars, Form
1042–S (Ann 87) 35, 208
Electronic filing for partnerships, exemp-
tion from (Ann 75) 28, 42
Electronic furnishing of payee state-
ments, voluntary, hearing (Ann 71) 27,
26
Federal tax deposits, removal of Federal
Reserve banks as depositaries (TD
8952) 29, 60
Forms:
1042–S, specifications for filing mag-
netically or electronically (RP 40)
33, 130
2290SP, Declaración del Impuesto
sobre el Uso de Vehículos Pesados
en las Carreteras, new (Ann 69) 27,
23
Insurance companies:
Differential earnings rate and recom-
puted differential earnings rate for
mutual life insurance companies (RR
33) 32, 118
Prevailing mortality and morbidity ta-
bles (RR 38) 33, 124
Interest:
Investment:
Federal short-term, mid-term, and
long-term rates for:
July 2001 (RR 34) 28, 31
August 2001 (RR 36) 32,119
Inventory:
LIFO:
Price indexes used by department
stores for:
May 2001 (RR 35) 29, 59
June 2001 (RR 41) 35, 193
Notional principal contract (NPC), con-
tingent nonperiodic payments (Notice
44) 30, 77
Partnerships, unvested partnership profits
interests (RP 43) 34, 191
Penalties for underpayments of deposits
and overstated deposit claims (TD
8947) 28, 36
Private foundations, organizations now
classified as (Ann 70) 27, 23; (Ann
72) 28, 39; (Ann 76) 29, 67; (Ann 78)
30, 87; (Ann 79) 31, 97; (Ann 84) 35,
206
Proposed Regulations:
26 CFR 1.341–1(b), –2, –5, –4(a),
–4(c), withdrawn; withdrawal of
proposed regulations relating to col-
lapsible corporations (REG–
100548–01) 29, 67
26 CFR 1.441–0 through –4, added;
1.441–1T through 4T, removed;
1.442–1, revised; 1.442–2T, –3T, re-
moved; 1.706–1, amended; 1.706
–1T, removed; 1.898–4, amended;
1.1378–1, added; 5c.442–1, re-
moved; 5f.442–1, removed;
18.1378–1, removed; changes in ac-
counting periods (REG–106917–99)
27, 4; correction (Ann 86) 35, 207
26 CFR 1.1502–2, –3, –7, –8, –11, –21,
–22, –75, –78, –79, withdrawn; with-
drawal of proposed regulations relat-
ing to corporations filing consolidated
returns (REG–100548–01) 29, 67
26 CFR 1.6011–4, amended; 301.
6111–2, amended; modification of
tax shelter rules II (REG–
103735–00, REG–110311–98,
REG–103736–00) 35, 204
Recognition of gain on:
Certain distributions of stock or securi-
ties in connection with an acquisition
(TD 8960) 34, 176
Certain transfers to foreign trusts and
estates (TD 8956) 32, 112
Regulations:
26 CFR 1.32–3, added; 1.32–3T, re-
moved; 602.101(b), amended; eligi-
bility requirements after denial of the
earned income credit (TD 8953) 29,
44
26 CFR 1.355–0, amended; 1.355–7T,
added; guidance under section
355(e); recognition of gain on cer-
tain distributions of stock or securi-
ties in connection with an acquisition
(TD 8960) 34, 176
26 CFR 1.679–0 through –7, added;
1.958–1, revised; 1.958–2, amended;
foreign trusts that have U.S. beneficia-
ries (TD 8955) 32, 101
26 CFR 1.684–1, through –5, added;
recognition of gain on certain trans-
fers to certain foreign trusts and es-
tates (TD 8956) 32, 112
26 CFR 1.732–3, added; 1.1502–34,
amended; special aggregate stock
ownership rules (TD 8949) 28, 33
26 CFR 1.1502–78, amended;
1.1502–78T, removed; guidance on
filing an application for a tentative
carryback adjustment in a consoli-
dated return context (TD 8950) 28, 34
26 CFR 1.6011–4T, amended;
301.6111–2T, amended; 301.6112
–1T, amended; modification of tax
shelter rules II (TD 8961) 35, 194
INCOME TAX—Cont.
INCOME TAX—Cont.
GIFT TAX

26 CFR 1.6302–1, –2, revised;
301.6656–1, –2, removed; 301.6656
–3, redesignated as 301.6656–1;
602.101, amended; penalties for un-
derpayments of deposits and over-
stated deposit claims (TD 8947) 28,
36
26 CFR 1.6302–1, –2, amended;
1.1461–1, amended; 1.1502–5(a)(1),
amended; 1.6151–1(d)(1), amended;
removal of Federal Reserve banks as
federal depositaries (TD 8952) 29, 60
26 CFR 301.6103(j)(5)–1, added;
301.6103(j)(5)–1T, removed; disclo-
sure of return information to officers
and employees of the Department of
Agriculture for certain statistical pur-
poses and related activities, Census of
Agriculture (TD 8958) 34, 183
26 CFR 301.6323(j)–1, added; with-
drawal of notice of federal tax lien in
certain circumstances (TD 8951) 29,
63
26 CFR 301.7701–7, amended; classifi-
cation of certain pension and em-
ployee benefit trusts, and investment
trusts as domestic trusts for federal tax
purposes (TD 8962) 35, 201
Tax conventions:
French social security, tax treatment of
(Notice 41) 27, 2
Tax exempt bonds, private activity bonds
(RP 39) 28, 38
Tax liens, federal, circumstances for with-
drawal of notice (TD 8951) 29, 63
Tax shelters:
Basis shifting tax avoidance transac-
tions (Notice 45) 33, 129
Listed transactions (Notice 51) 34, 190
Modification of tax shelter rules II (TD
8961) 35, 194; (REG–103735–00,
REG–110311–98, REG–103736–00)
35, 204
Technical advice, from Associates Chief
Counsel and Division Counsel/Associ-
ate Chief Counsel (TE/GE), frivolous
issues (RP 41) 33, 173
Trusts:
Classification of certain pension and
employee benefit trusts, and invest-
ment trusts as domestic trusts for
federal tax purposes (TD 8962) 35,
201
Foreign trusts that have U.S. beneficia-
ries (TD 8955) 32, 101
Withholdings, payments to nonqualified
intermediaries and foreign trusts, U. S.
withholding agents (Notice 43) 30, 72
September 4, 2001vi2001–36 I.R.B.
INCOME TAX—Cont.INCOME TAX—Cont.

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