Internal Revenue Bulletin 2008-43 (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
8-43
October 27, 2008
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
INCOME TAX
Notice 2008–72, page 998.
2008 Section 43 inflation adjustment factor.This notice
announces the applicable inflation adjustment factor and phase-
out amount for the enhanced oil recovery credit for the 2008
calendar year.
Notice 2008–89, page 999.
2008 marginal production rates.This notice announces
the applicable percentage under section 613A of the Code to
be used in determining percentage depletion for marginal prop-
erties for the 2008 calendar year.
Notice 2008–90, page 1000.
Charitable contributions of inventory property under
section 170(e)(3) of the Code.This notice announces that
the Service and the Treasury Department intend to issue guid-
ance under section 170(e) that will allow a taxpayer making a
qualified contribution to compute the deductible amount and
adjustment to cost of goods sold either under the special rules
applicable to qualified contributions under section 170(e)(3)
or under the general rules applicable to contributions under
section 170(e)(1). The notice also provides that, pending the
issuance of further guidance, the Service will not challenge a
taxpayer that makes the computation under either set of rules
provided all other applicable requirements are met.
Notice 2008–91, page 1001.
This notice announces that a controlled foreign corporation
(CFC) may choose to exclude certain obligations held by the
CFC from the definition of the term “United States property”
for purposes of section 956 of the Code.
Notice 2008–92, page 1001.
Insurance-dedicated money market funds.This notice
provides guidance that an insurance-dedicated money market
fund’s participation in Treasury’s Temporary Guarantee Pro-
gram for Money Market Funds won’t result in a violation of the
section 817(h) diversification requirements in the case of a
segregated asset account that invests in the insurance-dedi-
cated money market fund.
Rev. Proc. 2008–60, page 1006.
This procedure informs all taxpayers who hold a surety bond
or a Treasury Direct Account (TDA) pursuant to former section
42(j)(6) of the Code how to make the election, allowed by sec-
tion 3004(i)(2)B)(ii) of the Housing Assistance Tax Act of 2008,
to discontinue the surety bond or TDA.
EMPLOYEE PLANS
Notice 2008–93, page 1002.
Weighted average interest rate update; corporate bond
indices; 30-year Treasury securities; segment rates.
This notice contains updates for the corporate bond weighted
average interest rate for plan years beginning in October
2008; the 24-month average segment rates; the funding
transitional segment rates applicable for October 2008; and
the minimum present value transitional rates for September
2008.
(Continued on the next page)
Fi
nding Lists begin on page ii.
Index for July through October begins on page vi.

EXEMPT ORGANIZATIONS
T.D. 9423, page 966.
REG–142333–07, page 1008.
Final, temporary, and proposed regulations under sections
170, 507, 509, 6033, and 6043 of the Code affect tax-ex-
empt organizations required to file an annual return under
section 6033. The regulations provide guidance relating
to the computation of public support, new procedures for
organizations seeking classification as public charities, and
guidance regarding the reporting of other information required
on the annual return.
Announcement 2008–97, page 1010.
The IRS has revoked its determination that Northern California
Housing of Stockton, CA; 1st United Charitable Trust of Glen-
dale, AZ; HarrisWelburn Company of Upper Marlboro, MD; Bond
Endowment Fund, Inc., of Timonium, MD; and Northern Lights
Jr. Drum & Bugle Corps Association of Vancouver, WA, qualify
as organizations described in sections 501(c)(3) and 170(c)(2)
of the Code.
ADMINISTRATIVE
Notice 2008–92, page 1001.
Insurance-dedicated money market funds.This notice
provides guidance that an insurance-dedicated money market
fund’s participation in Treasury’s Temporary Guarantee Pro-
gram for Money Market Funds won’t result in a violation of the
section 817(h) diversification requirements in the case of a
segregated asset account that invests in the insurance-dedi-
cated money market fund.
Announcement 2008–96, page 1010.
This document cancels a public hearing on proposed regula-
tions (REG–143453–05, 2008–32 I.R.B. 310) under section
179B of the Code relating to the deduction of qualified capital
costs paid or incurred by a small business refiner to comply
with the highway diesel fuel sulfur control requirements of the
Environmental Protection Agency.
Announcement 2008–102, page 1011.
This document provides notice of a public hearing on Octo-
ber 30, 2008, on proposed regulations (REG–103146–08,
2008–37 I.R.B. 701) relating to the return and information
statement requirements under section 6039 of the Code. The
regulations reflect changes to section 6039 made by section
403 of the Tax Relief and Health Care Act of 2006. The regula-
tions affect corporations that issue statutory stock options and
provide guidance to assist corporations in complying with the
return and information statement requirements under section
6039.
October 27, 20082008–43 I.R.B.

The IRS Mission
Provide Americ
a’s taxpayers top quality service by helping them
understand an
d meet their tax responsibilities and by applying
the tax law with
integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are compiled semiannually into Cumulative Bulletins,
which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement are not published; however, statements of internal
practices and procedures that affect the rights and duties of
taxpayers are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers
or technical advice to Service field offices, identifying details
and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B, Leg-
islation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Secre-
tary (Enforcement).
Part IV
.—Items of General Interest.
This par
t includes notices of proposed rulemakings, disbar-
ment an
d suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The c
ontents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S.Government Printing Office, Washington, DC 20402.
2008–43 I.R.B.October 27, 2008

October 27, 20082008–43 I.R.B.

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 817.—
Treatment
of Variable Co
ntracts
26 CFR 1.817-5: Diversification requirements for
variable annuity, endowment, and life insurance con-
tracts.
This notice provides guidance that an insur-
ance-dedicated money market fund’s participation
in Treasury’s Temporary Guarantee Program for
Money Market Funds won’t result in a violation of
the section 817(h) diversification requirements in the
case of a segregated asset account that invests in the
insurance-dedicated money market fund. See Notice
2008-92, page 1001.
Section 6033.—Returns by
Exempt Organizations
26 CFR 1.60
33–2: Returns by exempt organizations
(taxable y
ears beginning after December 31, 1969)
and by cert
ain nonexempt organizations (taxable
years begi
nning after December 31, 1980).
T.D. 9423
Departmen
toftheTreasury
Internal
Revenue Service
26 CFR Par
ts 1 and 602
Implementation of Form 990
AGENCY:
Internal Revenue Service
(IRS), T
reasury.
ACTION: Final and temporary regula-
tions.
SUMMARY
: This document contains fi-
nal and t
emporary regulations necessary to
impleme
nt the redesigned Form 990, “Re-
turn of
Organization Exempt From Income
Tax.”T
he final regulations contained in
this do
cument make only nonsubstantive
revisi
ons to comply withFederal Regis-
terreq
uirements. The temporary regula-
tions
make revisions to the regulations un-
der se
ction6033andsection6043toal-
low fo
r new threshold amounts for report-
ing co
mpensation, to require that compen-
satio
n be reported on a calendar year ba-
sis,
and to modify the scope of organiza-
tion
s subject to information reporting re-
quir
ements upon a substantial contraction.
The t
emporary regulations also eliminate
the advance ru
ling process for new orga-
nizations, ch
ange the public support com-
putation peri
od for organizations described
in sections 1
70(b)(1)(A)(vi) and 509(a)(1)
and in sectio
n 509(a)(2) to five years, con-
sistent with
the revised Form 990, and clar-
ify that supp
ort must be reported using the
organizati
on’s overall method of account-
ing. All tax
-exempt organizations required
under secti
on 6033 of the Internal Revenue
Code (Code)
to file annual information re-
turns are af
fected by these temporary reg-
ulations.
The text of these temporary reg-
ulations a
lso serves as the text of the pro-
posed regu
lations (REG–142333–07) pub-
lished in t
his issue of the Bulletin.
DATES:Eff
ective Date:These regulations
are effec
tive on September 9, 2008.
Applicabi
lity Date:These regulations
apply to t
axable years beginning on or after
January 1
, 2008.
FOR FURTH
ER INFORMATION
CONTACT:
TerriHarrisat(202)
622–6070
(not a toll-free number).
SUPPLEME
NTARY INFORMATION:
Paperwor
kReductionAct
The colle
ction of information contained
in these
temporary regulations has been
reviewe
d and approved by the Office of
Managem
ent and Budget in accordance
with the
Paperwork Reduction Act of 1995
(44 U.S.
C. 3507(d)) under control number
1545–21
17. An agency may not conduct
or spon
sor, and a person is not required
to resp
ond to, a collection of information
unless
it displays a valid control number
assign
ed by the Office of Management
and Bud
get. Books or records relating to a
colle
ction of information must be retained
as lon
g as their contents may become ma-
teria
l in the administration of any internal
reven
ue law. Generally, tax returns and
tax re
turn information are confidential, as
requ
ired by 26 U.S.C. 6103.
Back
ground
Form
990
Unde
r section 6033 of the Code, or-
gani
zations that are exempt from Federal
income tax und
er section 501(a) are gener-
ally required
to file an annual information
return report
ing gross income, receipts,
disbursemen
ts and such other information
as the IRS req
uires. Certain exceptions
to this filin
g requirement apply. For ex-
ample, churc
hes are not required to file
annual info
rmation returns. The Treasury
regulation
s direct that the annual infor-
mation retu
rn shall be filed on Form 990,
“Return of O
rganization Exempt From
Income Tax”
or Form 990–PF, “Return of
Private Fo
undation or Section 4947(a)(1)
Nonexempt
Charitable Trust Treated as
aPrivateF
oundation.”The regulations
further sp
ecify certain information to be
reported
on the return.
The IRS rev
ises forms and instructions
on an annu
al basis to reflect changes in the
law and ev
olving tax administration needs.
On Decemb
er 20, 2007, the IRS released
a redesig
ned Form 990. The Form 990
had not be
en significantly revised since
1979, an
d both the IRS and stakeholders
regarde
d the form as needing major revi-
sion to k
eep pace with changes in the law
and with
the increasing size, diversity, and
comple
xity of the exempt sector. The new
form in
corporates manyrecommendations
made in
public comments on the discus-
sion dr
aft released on June 14, 2007. With
the exc
eption of certain smaller organiza-
tions
for which there is a graduated transi-
tion p
eriod, organizations must begin us-
ing th
e new form for the 2008 tax year
(retu
rns filed in 2009). The current Form
990 wi
ll be used for tax year 2007 (returns
file
d in 2008) but will be replaced with the
rede
signed Form 990 beginning with the
2008
tax year. Earlier this year, the IRS re-
leas
ed draft instructions for the new form
and s
chedules for public comment.
Thes
e regulations make the revisions
that
must be made to the regulations under
sect
ions 6033 and 6043 of the Code to
imp
lement the Form 990 redesign. For ex-
amp
le, the regulation that currently gives
org
anizations a choice of using either the
cal
endar year or the organization’s an-
nua
l accounting period as the basis for
re
porting compensation of officers, direc-
to
rs, trustees and certain employees and
co
ntractors is revised to require calendar
ye
ar reporting. Revisions are also made
2008–43 I.R.B.966October 27, 2008

to allow for new threshold amounts for
reporting compensation and to expand
the scope of organizations subject to in-
formation reporting requirements upon a
substantial contraction.
In addition, as discussed in further
detail in this preamble, these regulations
eliminate the advance ruling process and
change the public support computation
period for organizations described in sec-
tions 170(b)(1)(A)(vi) and 509(a)(1) and
in section 509(a)(2) to five years, consis-
tent with the revised Schedule A,“Public
Charity Status and Public Support”to the
redesigned Form 990. These regulations
also clarify that support must be reported
using the organization’s overall method of
accounting.
Private Foundation Status and Advance
Rulings
Public support tests
Under present law, as established in
the Tax Reform Act of 1969, an organ-
ization described insection 501(c)(3) of
the Code is a private foundation unless
it meets one of the exceptions described
in sections 509(a)(1) through 509(a)(4).
Organizations that are described in section
509(a)(1), (2), (3) or (4) are classified as
public charities, and are not subject to var-
ious excise taxes in Chapter 42 that apply
to private foundations. The Code defines
two major categories of organizations that
are considered public charities and not pri-
vate foundations because they are broadly
publicly supported: (1) organizations de-
scribed in section 170(b)(1)(A)(vi), which
are not private foundations because they
are referenced in section 509(a)(1); and
(2) organizations described in section
509(a)(2).
Section 170(b)(1)(A)(vi) encompasses
organizations that normally receive a sub-
stantial part of their support from a gov-
ernmental unit or from direct or indirect
contributions from the general public. The
regulations under section 170 provide that
an organization will be described in section
170(b)(1)(A)(vi) if itnormally receives at
least 33
1
/3percent of its support from gov-
ernmental units or from the general pub-
lic. See §1.170A–9(f). Alternatively, an
organization can meet a “facts and circum-
stances” test, under which it may qualify
as a section 170(b)(1)(A)(vi) organization
if it normally receives at least 10 percent of
its support from governmental units or the
general public, and can establish that, un-
der all the facts and circumstances, it nor-
mally receives a substantial part of its sup-
port from governmental units or the gen-
eral public.
Section 509(a)(2) encompasses orga-
nizations that normally receive more than
one-third of their support from a com-
bination of gifts, grants, contributions,
membership fees, and gross receipts from
performing exempt function activities, and
normally receive not more than one-third
of their support from investment income
and unrelated business taxable income.
The major difference between the section
509(a)(2) and section 170(b)(1)(A)(vi)
tests is that the former includes in support
gross receipts from exempt function activ-
ities, for example, admission proceeds for
a museum or ticket sales for a symphony,
while the latter does not. As noted, sec-
tion 509(a)(2) also includes an investment
income limitation. For ease of reference,
the tests in sections 170(b)(1)(A)(vi) and
509(a)(2) will be referred to collectively
as the public support tests.
The statute does not define, for either
provision, the meaning of “normally.” The
current regulations for both public support
tests generally use a rolling four-year com-
putation period, with two exceptions: new
organizations and organizations that expe-
rience “substantial and material changes”
in their sources of support for the current
year are permitted to use a five-year com-
putation period. For any particular taxable
year, the four-year computation period is
the four years immediately preceding the
current taxable year. For example, for tax-
able year 1998, the computation period
would be taxable years 1994, 1995, 1996,
and 1997. The regulations further provide
that if the public support test is met for the
four-year computation period, the organi-
zation will be considered to meet the pub-
lic support test for the taxable year being
tested and the immediately succeeding tax-
able year. In the example above, a section
170(b)(1)(A)(vi) organization would meet
the public support test for 1998 and 1999
if the support it received from the general
public and from governmental units for the
years 1994 through 1997 exceeded 33
1
/3
percent of the total support it received for
those years.
The effect of the current rule regarding
the subsequent taxable year is that an or-
ganization must fail to meet a public sup-
porttesttwoyearsinarowtobecomea
private foundation. In the example above,
the organization met the public support test
for 1998 and 1999, based on support re-
ceived during the four-year computation
period 1994 through 1997. If the organi-
zation does not meet a public support test
for the 1995 through 1998 computation pe-
riod, it is still a public charity in 1999
because it met a support test for taxable
year 1998. However, if the organization
again does not meet a public support test
for the 1996 through 1999 computation pe-
riod, the organization becomes a private
foundation effective at the beginning of its
taxable year 2000.
Advance rulings
In its application for recognition of
tax-exempt status (Form 1023,“Applica-
tion for Recognition of Exemption Under
Section 501(c)(3) of the Internal Revenue
Code”), a section 501(c)(3) organization
also requests a determination of its private
foundation status, that is, whether it is a
private foundation and, if not, the Code
provision excepting it from private foun-
dation classification. Under the current
statute and regulations, an organization
can request either an advance ruling or a
definitive ruling addressing the organiza-
tion’s exemption under section 501(c)(3)
and its private foundation status under
section 509(a).
Under the current regulations, a new or-
ganization applying for exemption can re-
quest a definitive ruling as to its founda-
tion status only if it has completed its first
tax year consisting of at least eight full
months. In lieu of the general four-year
computation period for public support, a
new organization requesting a definitive
ruling tests its public support based on the
years it has been in existence. If an or-
ganization qualifies as an organization de-
scribed in section 509(a)(1) or (2) based on
the support received in its initial year(s) of
existence, the IRS issues a definitive rul-
ing stating that the organization is recog-
nized as exempt under section 501(c)(3)
and classified as a public charity.
If a new organization has not yet com-
pleted its first tax year consisting of at least
eight full months at the time it applies for
October 27, 20089672008–43 I.R.B.

recognition of tax exemption, or if the or-
ganization so elects, it requests an “ad-
vance ruling” regarding its private founda-
tion status in its application for exemption.
Current regulations provide for an advance
ruling period of two or three years, depend-
ing on the length of the organization’s first
tax year, and an additional “extended ad-
vance ruling period” of three more years
if the organization requests. These current
regulations have been overridden. In the
conference report to the Tax Reform Act of
1984, Congress directed that the advance
ruling period in all cases be five years. See
H.R. Rep. No. 98–861, 98
th
Cong., 2d
Sess. 1 (1984), 1984–3 C.B. (Vol. 2) 1090.
The advance ruling period gives new or-
ganizations time to build up broad public
support in the first few years of their exis-
tence. In lieu of the general four-year com-
putation period for public support, a new
organization requesting an advance ruling
tests its public support over the first five
years of its existence as an organization de-
scribed in section 501(c)(3). If an organi-
zation demonstrates to the IRS’s satisfac-
tion that it can reasonably be expected to
meet a public support test during its first
five years, the IRS issues an advance rul-
ing stating that the organization is recog-
nized as exempt under section 501(c)(3)
and classified as a public charity during its
first five years. With limited exceptions,
donors can rely on this advance ruling as
to public charity status.
At the end of the initial five-year ad-
vance ruling period, the organization is re-
quired to file Form 8734,“Support Sched-
ule for Advance Ruling Period”to estab-
lish that it actually met a public support
test. As noted above, for this purpose, pub-
lic support is calculated over the five-year
advance ruling period, rather than over a
four-year period. If the organization meets
a public support test for its advance rul-
ing period, the IRS issues a definitive rul-
ing letter classifying the organization as
a public charity. If the organization does
not meet a public support test for its ad-
vance ruling period, or the organization
fails to submit Form 8734, the IRS reclas-
sifies the organization as a private founda-
tion as of its first taxable year and pub-
lishes notice of the change in status in
the Internal Revenue Bulletin and Publi-
cation 78, “Cumulative List of Organiza-
tions Described in Section 170(c) of the In-
ternal Revenue Code of 1986,”which can
be searched atwww.irs.gov.Once notice
of a change in status is published, donors
can no longer automatically rely on the ad-
vance ruling for charitable contribution de-
duction purposes and must assume that the
organization is a private foundation. See
§601.601(d)(2)(ii)(b).
An organization that is reclassified as a
private foundation is subject to the section
4940 investment income tax and the sec-
tion 507 termination tax for its five-year
advance ruling period. The other Chapter
42 excise taxes applicable to private foun-
dations do not apply during the five-year
advance ruling period. In year six, the
reclassified organization is subject to all
Chapter 42 excise taxes that apply to pri-
vate foundations.
The advance ruling process is complex
and burdensome for both taxpayers and
the IRS and provides little tax administra-
tion or compliance benefit. While statis-
tics vary from year to year, approximately
95 percent of the organizations that receive
advance rulings later receive definitive rul-
ings that the organizations are public char-
ities at the end of the advance ruling pe-
riod. The current regulations governing
advance rulings are complex, and, as dis-
cussed above, were overridden in part by
the Tax Reform Act of 1984. Moreover,
the public support information that is re-
ported on Form 8734 will be captured on
Schedule A of the redesigned Form 990.
For these reasons, in its 2003 report, the
IRS Advisory Committee for Tax Exempt
and Governmental Entities, a group that in-
cludes representatives of exempt organiza-
tions and practitioners, recommended that
the advance ruling process be eliminated.
The IRS believes that it can more effec-
tively deploy its compliance resources by
eliminating the advance ruling process and
Form 8734 and instead monitoring public
charity status based on public support in-
formation reported on the revised Sched-
ule A, to the redesigned Form 990. The
revised Schedule A sets forth easier-to-fol-
low rules for calculating public support
and captures all of the information neces-
sary for the IRS to monitor and verify com-
pliance with the public support tests.
Explanation of Provisions
Private Foundation Status and Advance
Rulings
The temporary regulations eliminate
the advance ruling process and provide in-
stead that an organization will be a public
charity in its first five years if it can show,
in its application for exemption, that it can
reasonably be expected to receive the req-
uisite public support during such period.
The temporary regulations also change
the public support computation period for
purposes of sections 170(b)(1)(A)(vi) and
509(a)(1) and section 509(a)(2) from a
four-year period prior to the tested year
to a five-year period that includes the
current year. The temporary regulations
also eliminate the substantial and material
changes exception, which is made ob-
solete by the establishment of a general
five-year computation period. In addi-
tion, §1.170A–9T(f), which corresponds
to §1.170A–9(e) of the prior regulations
and governs section 170(b)(1)(A)(vi) or-
ganizations, has been revised throughout
to simplify some of the language and to
provide a better “road map” of what the
provisions are designed to do.
Elimination of Advance Ruling Process
The temporary regulations eliminate
advance rulings and the Form 8734 filing
requirement for all new section 501(c)(3)
organizations. Under the temporary reg-
ulations, if, at the time of the initial ap-
plication for exemption, an organization
can establish to the satisfaction of the IRS
that the organization can reasonably be ex-
pected to meet a public support test during
its first five years, the organization quali-
fies as publicly supported for its first five
years as a section 501(c)(3) organization.
The IRS will issue a determination letter
stating that the organization is exempt
under section 501(c)(3) and is classified
as a public charity. The organization will
be a public charity for its first five years,
regardless of the level of public support
it in fact receives during this period. In
addition, unlike a new organization’s pub-
lic charity status under an advance ruling,
which was conditioned on its ultimate sat-
isfaction of a public support test on a Form
8734 filed with the IRS, under the tempo-
rary regulations a new organization that
can show it can reasonably be expected to
2008–43 I.R.B.968October 27, 2008

meet a public support test will be classified
as a public charity for all purposes during
its first five years. The organization will
not owe any section 4940 tax or section
507 termination tax with respect to its first
five years. Beginning with the organiza-
tion’s sixth year, if the organization cannot
establish that it is not a private foundation,
such as a public charity or a supporting or-
ganization under section 509(a)(3), it will
be liable for the section 4940 excise tax
and other Chapter 42 excise taxes appli-
cable to private foundations for any year
for which it cannot establish that it is not
a private foundation.
The standards for whether an organiza-
tion can reasonably be expected to be pub-
licly supported are drawn from the existing
regulations. A new organization required
to file Form 990 or Form 990–EZ,“Short
Form Return of Organization Exempt From
Income Tax,”will be required to report its
support on Schedule A every year, but it
willnotberequiredtofileForm8734after
its first five years. Organizations will be
required to meet a public support test using
the general five-year computation period
beginning in their sixth taxable years. The
five-year computation period is discussed
in detail in this preamble.
Computation Period for Public Support
The temporary regulations change the
computation period for public support
from a four-year period comprised of the
four years prior to the tested year to a
five-year period that includes the cur-
rent year. Because all organizations will
use a five-year computation period under
the temporary regulations, the temporary
regulations eliminate the substantial and
material change exception, which allowed
organizations to use a five-year compu-
tation period rather than the four-year
computation period under certain circum-
stances.
An organization that meets a public
support test for the current taxable year
is treated as publicly supported for the
current taxable year and the immediately
succeeding taxable year. Thus, for ex-
ample, a calendar year organization that
meets a public support test for taxable year
2011, based on the five-year computation
period 2007 through 2011, is a public
charity for taxable years 2011 and 2012.
If the organization cannot meet a public
support test for taxable year 2012 (based
on the five-year computation period 2008
through 2012), it still will be a public
charity for taxable year 2012, because it
met the public support test for taxable year
2011 (based on the five-year computation
period 2007 through 2011). If, however,
the organization cannot meet a public sup-
port test for taxable year 2013 as well,
basedonthecomputationperiod2009
through 2013, the organization will be
classified as a private foundation as of the
beginning of taxable year 2013. Because
an organization that cannot meet a public
support test for the current taxable year is
at risk of private foundation classification
as of the first day of the subsequent taxable
year, organizations may wish to carefully
monitor their public support calculations.
The IRS and the Treasury Department
recognize that an organization may not be
able to compute its public support for the
current taxable yearuntil some time in the
subsequent taxable year. In the example
above, taxable year 2013 may have already
begun by the time the calendar year or-
ganization computes its public support for
taxable year 2012 and realizes (perhaps
for the first time) that it is at risk of be-
ing classified as a private foundation as of
January 1, 2013. Moreover, the organiza-
tion may not know definitively that it is a
private foundation for taxable year 2013
until some time in 2014, when it is able
to definitively calculate its public support.
Accordingly, the IRS will not assert pri-
vate foundation excise taxes and/or penal-
ties for all or part of the first taxable year
in which an organization is reclassified as a
private foundation due to failure to satisfy
a public support test in cases where the im-
position of such taxes would lead to unfair
or inequitable results, such as where the
change in the organization’s public support
was unforeseeable or due to circumstances
beyond the organization’s control. Orga-
nizations that believe that the imposition
of private foundation excise taxes and/or
penalties against them for all or part of the
first year in which they are reclassified as
a private foundation would be unfair or in-
equitable should contact the IRS, Exempt
Organizations, Rulings and Agreements,
Washington, DC, at (202) 283–4905. An
organization will be required to provide to
the IRS all of the relevant facts and circum-
stances establishing that the imposition of
private foundation taxes would be unfair
or inequitable. Comments are requested
regarding the specific circumstances that
may warrant relief.
The existing regulations contain
numerous examples reflecting the
four-year computation period.The
temporary regulations update the ex-
amples to reflect the new computa-
tion period. These examples are in
§1.170A–9T(f)(9), §1.509(a)–3T(c)(6)
and §1.509(a)–3T(e)(3).
Method of Accounting
Previously, when a section 501(c)(3)
organization computed its public support,
it was required to use the cash method of
accounting to report the amount of public
support it received on Schedule A, even
if it used the accrual method of account-
ing in keeping its books under section 446,
andinotherwisereportingonForm990.
Under these temporary regulations, when
a section 501(c)(3) organization computes
its public support and reports the informa-
tion on Schedule A, it must use the same
accounting method that it uses in keeping
its books under section 446 and that it oth-
erwise uses to report on its Form 990. An
organization that uses the accrual method
will not be able to use the support informa-
tion reported on Form 990 for prior years
(because that support was reported using
the cash method) to compute its public
support for the current year, and instead
must report all support for the computation
period on the accrual method.
Reliance
These temporary regulations provide
that donors may rely on an organization’s
ruling that the organization is described
in sections 170(b)(1)(A)(vi) and 509(a)(1)
or in section 509(a)(2) until notice of a
change in status is provided to the public
(suchasbypublicationintheInternal
Revenue Bulletin), unless the donor was
responsible for or aware of the act or
failure to act that results in the organiza-
tion’s loss of public charity status. This
rule is substantively the same as the rules
contained in the current regulations. The
regulations further provide that donors
may rely on advance rulings that expire
on or after June 9, 2008, until notice of a
change in status is provided to the public
(suchasbypublicationintheInternal
Revenue Bulletin).
October 27, 20089692008–43 I.R.B.

Effective/Applicability Date and
Transition Rules
These temporary regulations are effec-
tive on September 9, 2008, and apply to
taxable years beginning on or after January
1, 2008. All organizations, including orga-
nizations that received a definitive ruling
prior to the effective date of these regula-
tions, must use the new five-year computa-
tion period to calculate public support for
their first taxable year beginning on or af-
ter January 1, 2008 and for all subsequent
taxable years.
These regulations provide a transition
rule under which an organization that can-
not meet a public support test for its first
taxable year beginning on or after January
1, 2008, using the five-year computation
period will continue to qualify as a public
charity for its 2008 taxable year if it satis-
fied a public support test for its 2007 tax-
able year, based on public support received
over the four-year period 2003 through
2006.
These regulations also provide a transi-
tion rule under which organizations that re-
ceived advance rulings that expire on or af-
ter June 9, 2008, are treated as new public
charities under the newregulations, that is,
public charities for all purposes without re-
gard to public support in fact received dur-
ing the first five years of their existence as
section 501(c)(3) organizations. This rule
effectively applies the temporary regula-
tions to all organizations that are in their
advance ruling period as of the effective
date of these temporary regulations. As
such, these organizations will not have to
file Form 8734 at the end of the advance
ruling period. Grantors and contributors
can rely upon these organizations’ advance
ruling letter as if it were a definitive rul-
ing letter. The IRS plans to send follow-up
letters to such organizations explaining the
new rules. An organization that did not
timely file Form 8734 at the expiration of
its advance ruling period is not covered by
the transition rule. Such an organization
must file information with the IRS estab-
lishing that it met a public support test dur-
ing its advance ruling period in order to
qualify as a public charity during its first
five years.
Forms 1023 filed prior to the effective
date of these regulations that have not yet
been processed by the IRS will be pro-
cessed under the new regulations. The IRS
will issue definitive rulings regarding pri-
vate foundation status to such organiza-
tions.
Community Trust Rules
Sections 1.170A–9(f)(10) through
1.170A–9(f)(14), which establish rules
for when multiple trusts can be treated as
a single entity for purposes of the pub-
lic support tests, provide old transition
rules that are obsolete, and, therefore, the
transition rules are being deleted in these
temporary regulations.
Compensation Reporting
Current §1.6033–2(a)(2)(ii)(g) requires
that exempt organizations report on Form
990 the names and addresses of all of-
ficers, directors, trustees, and persons
having responsibilities or powers similar
to those of officers, directors or trustees,
of the organization. The reference to a
person having responsibilities and pow-
ers similar to those of officers, directors
or trustees is meant to capture those per-
sons who function as officers, directors
or trustees of the organization, regardless
of title, as well as the key employees of
the organization. The redesigned Form
990 expanded the definition of key em-
ployee to cover not only persons having
responsibilities or powers similar to those
of officers, directors or trustees, but also
persons who manage a discrete segment
or activity of the organization that rep-
resents a substantial portion of the ac-
tivities, assets, income, or expenses of
the organization. The redesigned Form
990 requires reporting for only those key
employees whose compensation exceeds
$150,000. These temporary regulations
add key employees to the list of persons
in §1.6033–2T(a)(2)(ii)(g)whomaybe
required to be reported on Form 990, as
prescribed by publication, form or instruc-
tions.
Current §1.6033–2(a)(2)(ii)(g)re-
quires that exempt organizations that
make payments of more than $30,000
annually to employees and independent
contractors report these persons’ names
and addresses on Form 990. Current
§1.6033–2(a)(2)(ii)(h) requires a schedule
showing the compensation or other pay-
ments made to the persons listed in para-
graph (a)(2)(ii)(g). The redesigned Form
990 requires an organization to report, for
each person listed (other than a key em-
ployee or a former director or trustee of
the organization), compensation and other
payments totaling more than $100,000
annually paid by the organization and its
related organizations to the person. For
key employees, the redesigned Form 990
requiresanorganizationtoreportcom-
pensation and other payments totaling
more than $150,000 annually paid by the
organization and its related organizations
to the person. For former directors and
trustees, the redesigned Form 990 requires
an organization to report compensation
and other payments totaling more than
$10,000 annually paid by the organiza-
tion and its related organizations to the
person solely on account of the person’s
past services as a director or trustee of the
organization. As amended in these tempo-
rary regulations, §1.6033–2T(a)(2)(ii)(g)
gives the Commissioner discretion to re-
vise the threshold amount for reporting by
form and instruction.
Furthermore, the current rule in
§1.6033–2(a)(2)(ii)(h), which requires
generally the reporting of compensation
paid by an organization during its an-
nual accounting period (or during the
calendar year ending within such pe-
riod), imposes no requirement that the
compensation reported on Form 990 be
consistent with what is reported on Form
W–2,“Wage and Tax Statement,” or Form
1099–MISC,“Miscellaneous Income.”
The current rule permits, but does not re-
quire, a fiscal year organization to report
paid compensation on a calendar year ba-
sis. The redesigned Form 990 (Part VII
and Schedule J) requires that compensa-
tion reported as paid to officers and other
employees be consistent with Form W–2
(box 5) and that compensation reported
as paid to directors, individual trustees,
and independent contractors be consis-
tent with Form 1099–MISC (box 7). As
amended by these temporary regulations,
§1.6033–2T(a)(2)(ii)(h) requires an organ-
ization to report compensation it has paid
during the calendar year ending with or
within the organization’s annual account-
ing period, or during such other period
as specified by form or form instructions.
The rule in these temporary regulations
will ensure consistency in compensation
reporting, provide greater certainty about
what compensation is to be reported, and
reduce the reporting burden for most filing
2008–43 I.R.B.970October 27, 2008

organizations. A fiscal year organization
will continue to be required to use fiscal
year accounting when reporting aggregate
compensation as an expense item (Form
990, Part IX). In addition, an organization
will not be required to reconcile compen-
sation for individuals reported in Part VII
with compensation forsuch individuals
included in its Part IX statement of ex-
penses.
Asset Disposition Reporting
Schedule N,“Liquidation, Termina-
tion, Dissolution, or Significant Disposi-
tion of Assets,”of the redesigned Form
990 requires information about organiza-
tions that liquidate, terminate, or dissolve,
or sell, exchange, dispose of or other-
wise transfer more than 25 percent of
the organization’s assets. The collection
of this information is authorized by sec-
tion 6033, the general authorization for
the collection of information on Form
990. The collection of information with
respect to liquidations, dissolutions, ter-
minations and substantial contractions is
also authorized by section 6043(b). While
section 6043(b) and its companion penalty
provision section 6652(c) contemplate a
separate return, since 1981 this informa-
tion has been collected on Form 990.
In order to eliminate the potential for
inconsistency and confusion by taxpay-
ers, the regulationsunder section 6043(b)
have been amended so that they are
consistent with section 6033 and the re-
designed Schedule N. Generally, current
§1.6043–3(b)(8) excuses from the infor-
mation reporting requirement of section
6043(b) organizations other than former
section 501(c)(3) organizations. The IRS
believes that this exception is too broad,
because information reporting from other
exempt organizations may facilitate sound
tax administration. Therefore, these tem-
porary regulations amend §1.6043–3(b)(8)
to provide discretion to narrow the excep-
tion and require reporting from organiza-
tions exempt under other Code sections
by form or form instructions. In addition,
these temporary regulations remove the
definition of “substantial contraction” in
§1.6043–3(d)(1), leaving this term to be
defined by form or form instructions.
Private Foundation Termination
Section 1.507–2, which addresses pri-
vate foundation terminations under sec-
tion 507(b), contains references to the
four-year computation period for pub-
lic support and old transition rules re-
lated to 12-month terminations that are
obsolete. These temporary regulations
revise §1.507–2 to delete references to
the four-year computation period and the
transition rules related to 12-month termi-
nations.
Revisions to Comply withFe d e r a l
Register
The final regulations make various non-
substantive revisions to comply withFed-
eral Registerrequirements. For exam-
ple, the undesignated flush language pre-
ceding prior §1.170A–9(a) was designated
as paragraph (a), and all following para-
graphs were redesignated accordingly.
Special Analyses
It has been determined that this Trea-
sury decision is not a significant regula-
tory action as defined in Executive Order
12866. Therefore, a regulatory assessment
is not required. It has also been deter-
mined that section 553(b) of the Admin-
istrative Procedure Act (5 U.S.C. chapter
5) does not apply. It is hereby certified
that the collection of information in this
regulation will not have a significant eco-
nomic impact on a substantial number of
small entities. This certification is based
on the fact that burden on tax-exempt en-
tities will be reduced by (1) eliminating
the separate advance ruling process and the
additional process forsubsequently seek-
ing a definitive ruling, (2) clarifying rules
regarding the method of accounting and
period for reportingcertain items, and (3)
providing discretion for the IRS to narrow
or clarify circumstances under which re-
porting is required. Accordingly, a Regu-
latory Flexibility Analysis under the Reg-
ulatory Flexibility Act (5 U.S.C. chapter 6)
is not required. Pursuant to section 7805(f)
of the Code, these regulations have been
submitted to the Chief Counsel for Advo-
cacy of the Small Business Administration
for comment on its impact on small busi-
ness.
Drafting Information
The principal author of this regulation
is Terri Harris, Office of Associate Chief
Counsel (Tax Exempt and Government
Entities). However, other personnel from
the IRS and the Treasury Department par-
ticipated in their development.
*****
Amendments to the Regulations
Accordingly, 26 CFR parts 1 and 602
are amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.170A–9 is amended
as follows:
1. Paragraphs (a), (b), (c), (d), (e), (f),
(g), (h) and (i) are redesignated as para-
graphs (b), (c), (d), (e), (f), (g), (h), (i) and
(j), respectively.
2. The undesignated text following the
section heading is designated as paragraph
(a).
3. The newly-designated paragraphs (a)
and (d) are revised.
4. New paragraph (k) is added.
The addition and revisions read as fol-
lows:
§1.170A–9 Definition of section
170(b)(1)(A) organization.
(a) The termsection 170(b)(1)(A) or-
ganizationas used in the regulations un-
der section 170 means any organization
described in paragraphs (b) through (j) of
this section, effective with respect to tax-
able years beginning after December 31,
1969, except as otherwise provided. Sec-
tion 1.170–2(b) shall continue to be ap-
plicable with respect to taxable years be-
ginning prior to January 1, 1970. The
termone or more organizations described
in section 170(b)(1)(A) (other than clauses
(vii) and (viii))as used in sections 507 and
509 of the Internal Revenue Code (Code)
and the regulations means one or more
organizations described in paragraphs (b)
through (f) of this section, except as modi-
fied by the regulations under part II of sub-
chapter F of chapter 1 or under chapter 42.
October 27, 20089712008–43 I.R.B.

*****
(d)Hospitals and medical research or-
ganizations—(1)Hospitals. An organiza-
tion (other than one described in paragraph
(d)(2) of this section) is described in sec-
tion 170(b)(1)(A)(iii) if—
(i) It is a hospital; and
(ii) Its principal purpose or function is
the providing of medical or hospital care
or medical education or medical research.
(A) The termhospitalincludes—
(1) Federal hospitals; and
(2) State, county, and municipal hos-
pitals which are instrumentalities of gov-
ernmental units referred to in section
170(c)(1) and otherwise come within the
definition. A rehabilitation institution,
outpatient clinic, or community mental
health or drug treatment center may qual-
ify as a “hospital” within the meaning of
paragraph (d)(1)(i) of this section if its
principal purpose or function is the pro-
viding of hospital or medical care. For
purposes of this paragraph (d)(1)(ii), the
termmedical careshall include the treat-
ment of any physical or mental disability
or condition, whether on an inpatient or
outpatient basis, provided the cost of such
treatment is deductible under section 213
by the person treated. An organization, all
the accommodations of which qualify as
being part of a “skilled nursing facility”
within the meaning of 42 U.S.C. 1395x(j),
may qualify as a “hospital” within the
meaning of paragraph(d)(1)(i) of this sec-
tion if its principal purpose or function
is the providing of hospital or medical
care. For taxable years ending after June
28,1968,thetermhospitalalso includes
cooperative hospital service organizations
which meet the requirements of section
501(e) and §1.501(e)–1.
(B) The termhospitaldoes not, how-
ever, include convalescent homes or
homes for children or the aged, nor
does the term include institutions whose
principal purpose or function is to train
handicapped individuals to pursue some
vocation. An organization whose princi-
pal purpose or function is the providing
of medical education or medical research
will not be considered a “hospital” within
the meaning of paragraph (d)(1)(i) of this
section, unless it is also actively engaged
in providing medical or hospital care to
patients on its premises or in its facilities,
on an inpatient or outpatient basis, as an
integral part of its medical education or
medical research functions. See, how-
ever, paragraph (d)(2) of this section with
respect to certain medical research organi-
zations.
(2)Certain medical research organi-
zations—(i)Introduction. A medical re-
search organization is described in section
170(b)(1)(A)(iii) if the principal purpose
or functions of such organization are med-
ical research and if it is directly engaged in
the continuous active conduct of medical
research in conjunction with a hospital. In
addition, for purposes of the 50 percent
limitation of section 170(b)(1)(A) with
respect to a contribution, during the calen-
dar year in which the contribution is made
such organization must be committed to
spendsuchcontribution for such research
before January 1 of the fifth calendar year
which begins after the date such contri-
bution is made. An organization need
not receive contributions deductible un-
der section 170 to qualify as a medical
research organization and such organi-
zation need not be committed to spend
amounts to which the limitation of sec-
tion 170(b)(1)(A) does not apply within
the 5-year period referred to in this para-
graph (d)(2)(i). However, the requirement
of continuous active conduct of medical
research indicates that the type of organ-
ization contemplated in this paragraph
(d)(2) is one which is primarily engaged
directly in the continuous active conduct
of medical research, as compared to an in-
active medical research organization or an
organization primarily engaged in funding
the programs of other medical research
organizations. As in the case of a hospi-
tal, since an organization is ordinarily not
described in section 170(b)(1)(A)(iii) as
a hospital unless it functions primarily as
a hospital, similarly a medical research
organization is not so described unless it is
primarily engaged directly in the continu-
ous active conduct of medical research in
conjunction with a hospital. Accordingly,
the rules of this paragraph (d)(2) shall
only apply with respect to such medical
research organizations.
(ii)General rule. An organization
(other than a hospital described in para-
graph (d)(1) of this section) is described
in section 170(b)(1)(A)(iii) only if within
the meaning of this paragraph (d)(2):
(A) The principal purpose or functions
of such organization are to engage primar-
ily in the conduct of medical research; and
(B) It is primarily engaged directly in
the continuous active conduct of medi-
cal research in conjunction with a hospital
which is—
(1) Described in section 501(c)(3);
(2) A Federal hospital; or
(3) An instrumentality of a governmen-
tal unit referred to in section 170(c)(1).
(C) In order for a contribution to
such organization to qualify for purposes
of the 50 percent limitation of section
170(b)(1)(A), during the calendar year in
which such contribution is made or treated
as made, such organization must be com-
mitted (within the meaning of paragraph
(d)(2)(viii) of this section) to spend such
contribution for such active conduct of
medical research before January 1 of the
fifth calendar year beginning after the date
such contribution is made. For the mean-
ing of the term “medical research” see
paragraph (d)(2)(iii) of this section. For
the meaning of the term “principal purpose
or functions” see paragraph (d)(2)(iv) of
this section. For the meaning of the term
“primarily engaged directly in the contin-
uous active conduct of medical research”
see paragraph (d)(2)(v) of this section. For
the meaning of the term “medical research
in conjunction with a hospital” see para-
graph (d)(2)(vii) of this section.
(iii)Definition of medical research.
Medical researchmeans the conduct of
investigations, experiments, and studies
to discover, develop, or verify knowledge
relating to the causes, diagnosis, treat-
ment, prevention, or control of physical
or mental diseases and impairments of
man. To qualify as a medical research
organization, the organization must have
or must have continuously available for
its regular use the appropriate equipment
and professional personnel necessary to
carry out its principal function. Medical
research encompasses the associated dis-
ciplines spanning the biological, social
and behavioral sciences. Such disciplines
include chemistry (biochemistry, physi-
cal chemistry, bioorganic chemistry, etc.),
behavioral sciences (psychiatry, physi-
ological psychology, neurophysiology,
neurology, neurobiology, and social psy-
chology, etc.), biomedical engineering
(applied biophysics, medical physics, and
medical electronics, for example, devel-
oping pacemakers and other medically
related electrical equipment), virology,
immunology, biophysics, cell biology,
2008–43 I.R.B.972October 27, 2008

molecular biology, pharmacology, toxi-
cology, genetics, pathology, physiology,
microbiology, parasitology, endocrinol-
ogy, bacteriology, and epidemiology.
(iv)Principal purpose or functions.
An organization must be organized for
the principal purpose of engaging primar-
ily in the conduct of medical research in
order to be an organization meeting the
requirements of this paragraph (d)(2). An
organization will normally be considered
to be so organized if it is expressly or-
ganized for the purpose of conducting
medical research and is actually engaged
primarily in the conduct of medical re-
search. Other facts and circumstances,
however, may indicate that an organiza-
tion does not meet the principal purpose
requirement of this paragraph (d)(2)(iv)
even where its governing instrument so
expressly provides. An organization that
otherwise meets all of the requirements
of this paragraph (d)(2) (including this
paragraph (d)(2)(iv)) to qualify as a med-
ical research organization will not fail to
so qualify solely because its governing
instrument does not specifically state that
its principal purpose is to conduct medical
research.
(v)Primarily engaged directly in the
continuous active conduct of medical re-
search. (A) In order for an organization
to be primarily engaged directly in the
continuous active conduct of medical re-
search, the organization must either devote
a substantial part of its assets to, or ex-
pend a significant percentage of its endow-
ment for, such purposes, or both. Whether
an organization devotes a substantial part
of its assets to, or makes significant ex-
penditures for, such continuous active con-
duct depends upon the facts and circum-
stances existing in each specific case. An
organization will be treated as devoting
a substantial part of its assets to, or ex-
pending a significant percentage of its en-
dowment for, such purposes if it meets
the appropriate test contained in paragraph
(d)(2)(v)(B) of this section. If an organi-
zation fails to satisfy both of such tests, in
evaluating the facts and circumstances, the
factor given most weight is the margin by
which the organization failed to meet such
tests. Some of the other facts and circum-
stances to be considered in making such a
determination are—
(1) If the organization fails to satisfy the
tests because it failed to properly value its
assets or endowment, then upon determi-
nation of the improper valuation it devotes
additional assets to, or makes additional
expenditures for, such purposes, so that it
satisfies such tests on an aggregate basis
for the prior year in addition to such tests
for the current year;
(2) The organization acquires new as-
sets or has a significant increase in the
value of its securities after it had developed
a budget in a prior year based on the assets
then owned and the then current values;
(3) The organization fails to make ex-
penditures in any given year because of
the interrelated aspects of its budget and
long-term planning requirements, for ex-
ample, where an organization prematurely
terminates an unsuccessful program and
because of long-term planning require-
ments it will not be able to establish a fully
operational replacement program immedi-
ately; and
(4) The organization has as its objective
to spend less than a significant percentage
in a particular year but make up the dif-
ference in the subsequent few years, or to
budget a greater percentage in an earlier
year and a lower percentage in a later year.
(B) For purposes of this section, an or-
ganization which devotes more than one
half of its assets to the continuous active
conduct of medical research will be con-
sideredtobedevotingasubstantialpart
of its assets to such conduct within the
meaning of paragraph (d)(2)(v)(A) of this
section. An organization which expends
funds equaling 3.5 percent or more of the
fair market value of its endowment for
the continuous active conduct of medi-
cal research will be considered to have
expended a significant percentage of its
endowment for such purposes within the
meaning of paragraph (d)(2)(v)(A) of this
section.
(C) Engaging directly in the continu-
ous active conduct of medical research
does not include the disbursing of funds to
other organizations for the conduct of re-
search by them or the extending of grants
or scholarships to others. Therefore, if an
organization’s primary purpose is to dis-
burse funds to other organizations for the
conduct of research by them or to extend
grants or scholarships to others, it is not
primarily engaged directly in the continu-
ous active conduct of medical research.
(vi)Special rules. The following rules
shall apply in determining whether a sub-
stantial part of an organization’s assets are
devoted to, or its endowment is expended
for, the continuous active conduct of med-
ical research activities:
(A) An organization may satisfy the
tests of paragraph (d)(2)(v)(B) of this sec-
tion by meeting such tests either for a com-
putation period consisting of the imme-
diately preceding taxable year, or for the
computation period consisting of the im-
mediately preceding four taxable years. In
addition, for taxableyears beginning in
1970, 1971, 1972, 1973, and 1974, if an
organization meets such tests for the com-
putation period consisting of the first four
taxable years beginning after December
31, 1969, an organization will be treated
as meeting such tests, not only for the tax-
able year beginning in 1974, but also for
the preceding four taxable years. Thus, for
example, if a calendar year organization
failed to satisfy such tests for a computa-
tion period consisting of 1969, 1970, 1971,
and 1972, but on the basis of a compu-
tation period consisting of the years 1970
through 1973, it expended funds equaling
3.5 percent or more of the fair market value
of its endowment for the continuous ac-
tive conduct of medical research, such or-
ganization will be considered to have ex-
pended a significant percentage of its en-
dowment for such purposes for the tax-
able years 1970 through 1974. In apply-
ing such tests for a four-year computa-
tion period, although the organization’s ex-
penditures for the entire four-year period
shall be aggregated, the fair market value
of its endowment for each year shall be
summed, even though, in the case of an
asset held throughout the four-year period,
the fair market value of such an asset will
be counted four times. Similarly, the fair
market value of an organization’s assets for
each year of a four-year computation pe-
riod shall be summed.
(B) Any property substantially all
the use of which is “substantially re-
lated” (within the meaning of section
514(b)(1)(A)) to the exercise or perfor-
mance of the organization’s medical re-
search activities will not be treated as part
of its endowment.
(C) The valuation of assets must be
made with commonly accepted methods of
valuation. A method of valuation made in
accordance with the principles stated in the
regulations under section 2031 constitutes
an acceptable method of valuation. Assets
October 27, 20089732008–43 I.R.B.

may be valued as of any day in the organi-
zation’s taxable year to which such valua-
tion applies, provided the organization fol-
lows a consistent practice of valuing such
asset as of such date in all taxable years.
For purposes of paragraph (d)(2)(v) of this
section, an asset held by the organization
for part of a taxable year shall be taken
into account by multiplying the fair market
value of such asset by a fraction, the nu-
merator of which is the number of days in
such taxable year that the organization held
such asset and the denominator of which is
the number of days in such taxable year.
(vii)Medical research in conjunction
with a hospital. The organization need not
be formally affiliated with a hospital to be
considered primarily engaged directly in
the continuous active conduct of medical
research in conjunction with a hospital, but
in any event there must be a joint effort on
the part of the research organization and
the hospital pursuant to an understanding
that the two organizations will maintain
continuing close cooperation in the active
conduct of medical research. For exam-
ple, the necessary joint effort will normally
be found to exist if the activities of the
medical research organization are carried
on in space located within or adjacent to
a hospital, the organization is permitted to
utilize the facilities (including equipment,
case studies, etc.) of the hospital on a con-
tinuing basis directly in the active conduct
of medical research, and there is substan-
tial evidence of the close cooperation of
the members of the staff of the research
organization and members of the staff of
the particular hospital or hospitals. The
active participation in medical research by
members of the staff of the particular hos-
pital or hospitals will be considered to be
evidence of such close cooperation. Be-
cause medical research may involve sub-
stantial investigation, experimentation and
study not immediately connected with hos-
pital or medical care, the requisite joint
effort will also normally be found to ex-
ist if there is an established relationship
between the research organization and the
hospital which provides that the coopera-
tion of appropriate personnel and the use of
facilities of the particular hospital or hos-
pitals will be required whenever it would
aid such research.
(viii)Commitment to spend contribu-
tions. The organization’s commitment
that the contribution will be spent within
the prescribed time only for the prescribed
purposes must be legally enforceable. A
promise in writing to the donor in consid-
eration of his making a contribution that
such contribution will be so spent within
the prescribed time will constitute a com-
mitment. The expenditure of contributions
received for plant, facilities, or equipment,
used solely for medical research purposes
(within the meaning of paragraph (d)(2)(ii)
of this section), shall ordinarily be con-
sidered to be an expenditure for medical
research. If a contribution is made in other
than money, it shall be considered spent
for medical research if the funds from the
proceeds of a disposition thereof are spent
by the organization within the five-year
period for medical research; or, if such
property is of such a kind that it is used on
a continuing basis directly in connection
with such research, it shall be considered
spent for medical research in the year
in which it is first so used. A medical
research organization will be presumed
to have made the commitment required
under this paragraph (d)(2)(viii) with re-
spect to any contribution if its governing
instrument or by-laws require that every
contribution be spent for medical research
before January 1 of the fifth year which
begins after the date such contribution is
made.
(ix)Organizational period for new
organizations. A newly created organ-
ization, for its “organizational” period,
shall be considered to be primarily en-
gaged directly in the continuous active
conduct of medical research in conjunc-
tion with a hospital within the meaning
of paragraphs (d)(2)(v) and (d)(2)(vii) of
thissectionifduringsuchperiodtheor-
ganization establishes to the satisfaction
of the Commissioner that it reasonably
can be expected to be so engaged by the
end of such period. The information to
be submitted shall include detailed plans
showing the proposed initial medical re-
search program, architectural drawings
for the erection of buildings and facilities
to be used for medical research in accor-
dance with such plans, plans to assemble a
professional staff and detailed projections
showing the timetable for the expected
accomplishment of the foregoing. The
“organizational” period shall be that pe-
riod which is appropriate to implement
the proposed plans, giving effect to the
proposed amounts involved and the mag-
nitude and complexity of the projected
medical research program, but in no event
in excess of three years following organi-
zation.
(x)Examples. The application of this
paragraph (d)(2) may be illustrated by the
following examples:
Example 1. N, an organization referred to in sec-
tion 170(c)(2), was created to promote human knowl-
edge within the field of medical research and medical
education. All of N’s assets were contributed to it by
A and consist of a diversified portfolio of stocks and
bonds. N’s endowment earns 3.5 percent annually,
which N expends in the conduct of various medical
research programs in conjunction with Y hospital. N
is located adjacent to Y hospital, makes substantial
use of Y’s facilities, and there is close cooperation be-
tween the staffs of N and Y. N is directly engaged in
the continuous active conduct of medical research in
conjunction with a hospital, meets the principal pur-
pose test described in paragraph (d)(2)(iv) of this sec-
tion, and is therefore an organization described in sec-
tion 170(b)(1)(A)(iii).
Example 2. O, an organization referred to in sec-
tion 170(c)(2), was created to promote human knowl-
edge within the field of medical research and medical
education. All of O’s assets consist of a diversified
portfolio of stocks and bonds. O’s endowment earns
3.5 percent annually, which O expends in the conduct
of various medical research programs in conjunction
with certain hospitals. However, in 1974, O receives
a substantial bequest of additional stocks and bonds.
O’s budget for 1974 does not take into account the
bequest and as a result O expends only 3.1 percent
of its endowment in 1974. However, O establishes
that it will expend at least 3.5 percent of its endow-
ment for the active conduct of medical research for
taxable years 1975 through 1978. O is therefore di-
rectly engaged in the continuous active conduct of
medical research in conjunction with a hospital for
taxable year 1975. Since O also meets the principal
purpose test described in paragraph (d)(2)(iv) of this
section, it is therefore an organization described in
section 170(b)(1)(A)(iii) for taxable year 1975.
Example 3. M, an organization referred to in sec-
tion 170(c)(2), was created to promote human knowl-
edge within the field of medical research and medi-
cal education. M’s activities consist of the conduct of
medical research programs in conjunction with vari-
ous hospitals. Under such programs, researchers em-
ployed by M engage in research at laboratories set
aside for M within the various hospitals. Substan-
tially all of M’s assets consists of 100 percent of the
stock of X corporation, which has a fair market value
of approximately 100 million dollars. X pays M ap-
proximately 3.3 million dollars in dividends annually,
which M expends in the conduct of its medical re-
search programs. Since M expends only 3.3 percent
of its endowment, which does not constitute a sig-
nificant percentage, in the active conduct of medical
research, M is not an organization described in sec-
tion 170(b)(1)(A)(iii) because M is not engaged in the
continuous active conduct of medical research.
(xi)Special rule for organizations with
existing ruling. This paragraph (d)(2)(xi)
shall apply to an organization that prior
to January 1, 1970, had received a rul-
2008–43 I.R.B.974October 27, 2008

ing or determination letter which has not
been expressly revoked holding the organ-
ization to be a medical research organiza-
tion described in section 170(b)(1)(A)(iii)
and with respect to which the facts and cir-
cumstances on which the ruling was based
have not substantially changed. An organ-
ization to which this paragraph (d)(2)(xi)
applies shall be treated as an organization
described in section 170(b)(1)(A)(iii) for
a period not ending prior to 90 days af-
ter February 13, 1976 (or where appro-
priate, for taxable years beginning before
such 90th day). In addition, with respect to
a grantor or contributor under sections 170,
507, 545(b)(2), 556(b)(2), 642(c), 4942,
4945, 2055, 2106(a)(2), and 2522, the sta-
tus of an organization to which this para-
graph (d)(2)(xi) applies will not be affected
until notice of change of status under sec-
tion 170(b)(1)(A)(iii) is made to the pub-
lic (such as by publication in the Inter-
nal Revenue Bulletin). The preceding sen-
tence shall not apply if the grantor or con-
tributor had previously acquired knowl-
edge that the Internal Revenue Service had
given notice to such organization that it
would be deleted from classification as a
section 170(b)(1)(A)(iii) organization.
*****
(k)Effective/applicability date.This
section shall apply to taxable years begin-
ning after December 31, 1969. The ap-
plicability of paragraph (f) of this section
shall be limited to taxable years beginning
before January 1, 2008.
Par. 3. Section 1.170A–9T is added to
read as follows:
§1.170A–9T Definition of section
170(b)(1)(A) organization (temporary).
(a) through (e) [Reserved]. For further
guidance, see §1.170A–9(a) through (e).
(f)Definition of section 170(b)(1)
(A)(vi) organization—(1)In general.
An organization is described in section
170(b)(1)(A)(vi) if it—
(i)Isreferredtoinsection170(c)(2)
(other than an organization specifically de-
scribed in paragraphs (b) through (e) of
this section); and
(ii) Normally receives a substantial part
of its support from a governmental unit re-
ferred to in section 170(c)(1) or from direct
or indirect contributions from the general
public (“publicly supported”). For pur-
poses of this paragraph (f)(1)(ii), an organ-
ization is publicly supported if it meets the
requirements of either paragraph (f)(2) of
this section (33
1
/3percent support test) or
paragraph (f)(3) of this section (facts and
circumstances test). Paragraph (f)(4) of
this section defines normally for purposes
of the 33
1
/3percent support test, the facts
and circumstances test and for new orga-
nizations in the first 5 years of the organ-
ization’s existence as a section 501(c)(3)
organization. Paragraph (f)(5) of this sec-
tion provides for determinations of foun-
dation classification and rules for reliance
by donors and contributors. Paragraphs
(f)(6), (7), and (8) of this section list the
items that are included and excluded from
the term support. Paragraph (f)(9) of this
section provides examples of the applica-
tion of this paragraph. Types of organiza-
tions that, subject to the provisions of this
paragraph, generally qualify under section
170(b)(1)(A)(vi) as “publicly supported”
are publicly or governmentally supported
museums of history, art, or science, li-
braries, community centers to promote the
arts, organizations providing facilities for
the support of an opera, symphony orches-
tra, ballet, or repertory drama or for some
other direct service to the general public.
(2)Determination whether an organi-
zation is “publicly supported”;33
1
/3per-
cent support test. An organization is pub-
licly supported if the total amount of sup-
port (see paragraphs (f)(6), (7), and (8)
of this section) that the organization nor-
mally (see paragraph (f)(4)(i) of this sec-
tion) receives from governmental units re-
ferred to in section 170(c)(1), from contri-
butions made directly or indirectly by the
general public, or from a combination of
these sources, equals at least 33
1
/3percent
of the total support normally received by
the organization. See paragraph (f)(9)Ex-
ample 1of this section.
(3)Determination whether an organi-
zation is “publicly supported”;facts and
circumstances test. Even if an organiza-
tion fails to meet the 33
1
/3percent sup-
port test, it is publicly supported if it nor-
mally receives a substantial part of its sup-
port from governmental units, from con-
tributions made directly or indirectly by
the general public, or from a combination
of these sources, and meets the other re-
quirements of this paragraph (f)(3). In or-
der to satisfy the facts and circumstances
test, an organization must meet the require-
ments of paragraphs (f)(3)(i) and (f)(3)(ii)
of this section. In addition, the organi-
zation must be in the nature of an organ-
ization that is publicly supported, taking
into account all relevant facts and circum-
stances, including the factors listed in para-
graphs (f)(3)(iii)(A) through (E) of this
section.
(i)Ten percent support limitation.The
percentage of support (see paragraphs
(f)(6), (7) and (8) of this section) nor-
mally (see paragraph (f)(4) of this section)
received by an organization from gov-
ernmental units, from contributions made
directly or indirectlyby the general public,
or from a combination of these sources,
must be substantial. For purposes of this
paragraph (f)(3), an organization will not
be treated as normally receiving a sub-
stantial amount of governmental or public
support unless the total amount of gov-
ernmental and public support normally
received equals at least 10 percent of the
total support normally received by such
organization.
(ii)Attraction of public support.An
organization must be so organized and
operated as to attract new and additional
public or governmental support on a con-
tinuous basis. An organization will be
considered to meet this requirement if
it maintains a continuous andbona fide
program for solicitation of funds from the
general public, community, or member-
ship group involved, or if it carries on
activities designed to attract support from
governmental units or other organiza-
tions described in section 170(b)(1)(A)(i)
through (vi). In determining whether an
organization maintains a continuous and
bona fideprogram for solicitation of funds
from the general public or community,
consideration will be given to whether
the scope of its fundraising activities is
reasonable in light of its charitable activ-
ities. Consideration will also be given to
the fact that an organization may, in its
early years of existence, limit the scope
of its solicitation to persons deemed most
likely to provide seed money in an amount
sufficient to enable it to commence its
charitable activities and expand its solici-
tation program.
(iii) In addition to the requirements set
forth in paragraphs (f)(3)(i) and (ii) of this
section that must be satisfied, all pertinent
facts and circumstances, including the fol-
lowing factors, will be taken into consid-
eration in determining whether an organ-
October 27, 20089752008–43 I.R.B.

ization is “publicly supported” within the
meaning of paragraph (f)(1) of this sec-
tion. However, an organization is not gen-
erally required to satisfy all of the factors
in paragraphs (f)(3)(iii)(A) through (E) of
this section. The factors relevant to each
case and the weight accorded to any one
of them may differ depending upon the na-
ture and purpose of the organization and
the length of time it has been in existence.
(A)Percentage of financial support.
The percentage of support received by an
organization from public or governmental
sources will be taken into consideration
in determining whether an organization
is “publicly supported.” The higher the
percentage of support above the 10 per-
cent requirement of paragraph (f)(3)(i) of
this section from public or governmen-
tal sources, the lesser will be the burden
of establishing the publicly supported
nature of the organization through other
factors described in this paragraph (f)(3),
while the lower the percentage, the greater
will be the burden. If the percentage of
the organization’s support from public
or governmental sources is low because
it receives a high percentage of its total
support from investment income on its en-
dowment funds, such fact will be treated
as evidence of compliance with this sub-
division if such endowment funds were
originally contributed by a governmental
unit or by the general public. However,
if such endowment funds were origi-
nally contributed by a few individuals or
members of their families, such fact will
increase the burden on the organization
of establishing compliance with the other
factors described in paragraph (f)(3)(iii)
of this section.
(B)Sources of support. The fact that
an organization meets the requirement of
paragraph (f)(3)(i) of this section through
support from governmental units or di-
rectly or indirectly from a representative
number of persons, rather than receiving
almost all of its support from the mem-
bers of a single family, will be taken into
consideration in determining whether an
organization is “publicly supported.” In
determining what is a “representative
number of persons,” consideration will be
given to the type of organization involved,
the length of time it has been in existence,
and whether it limits its activities to a par-
ticular community or region or to a special
field which can be expected to appeal to a
limited number of persons.
(C)Representative governing body.
The fact that an organization has a gov-
erning body which represents the broad
interests of the public, rather than the
personal or private interests of a limited
number of donors (or persons standing in
a relationship to such donors which is de-
scribed in section 4946(a)(1)(C) through
(G)), will be taken into account in deter-
mining whether an organization is “pub-
licly supported.” An organization will be
treated as meeting thisrequirementifit
has a governing body (whether designated
in the organization’s governing instrument
or bylaws as a Board of Directors, Board
of Trustees, etc.) which is comprised of
public officials acting in their capacities as
such; of individuals selected by public of-
ficials acting in theircapacities as such; of
persons having special knowledge or ex-
pertise in the particular field or discipline
in which the organization is operating;
of community leaders, such as elected or
appointed officials, clergymen, educators,
civic leaders, or other such persons repre-
senting a broad cross-section of the views
and interests of the community; or, in the
case of a membership organization, of
individuals elected pursuant to the organ-
ization’s governing instrument or bylaws
by a broadly based membership.
(D)Availability of public facilities or
services; public participation in programs
or policies.(1) The fact that an organiza-
tion is of the type which generally provides
facilities or services directly for the benefit
of the general public on a continuing basis
(such as a museum or library which holds
open its building or facilities to the public,
a symphony orchestra which gives public
performances, a conservation organization
which provides educational services to the
public through the distribution of educa-
tional materials, or an old age home which
provides domiciliary or nursing services
for members of the general public) will be
considered evidence that such organization
is “publicly supported.”
(2) The fact that an organization is an
educational or research institution which
regularly publishes scholarly studies that
arewidelyusedbycollegesanduniversi-
ties or by members of the general public
will also be considered evidence that such
organization is “publicly supported.”
(3) Similarly, the following factors will
also be considered evidence that an organ-
ization is “publicly supported”:
(i) The participation in, or sponsor-
ship of, the programs of the organization
by members of the public having special
knowledge or expertise, public officials,
or civic or community leaders.
(ii) The maintenance of a definitive pro-
gram by an organization to accomplish its
charitable work in the community, such as
combating community deterioration in an
economically depressed area that has suf-
fered a major loss of population and jobs.
(iii) The receipt of a significant part
of its funds from a public charity or gov-
ernmental agency to which it is in some
way held accountable as a condition of the
grant, contract, or contribution.
(E)Additional factors pertinent to
membership organizations. The following
are additional factors to be considered in
determining whether a membership organ-
ization is “publicly supported”:
(1) Whether the solicitation for dues-
paying members is designed to enroll a
substantial number of persons in the com-
munity or area, or in a particular profession
or field of special interest (taking into ac-
count the size of the area and the nature of
the organization’s activities).
(2) Whether membership dues for indi-
vidual (rather than institutional) members
have been fixed at rates designed to make
membership available to a broad cross sec-
tion of the interested public, rather than to
restrict membership to a limited number of
persons.
(3) Whether the activities of the or-
ganization will be likely to appeal to per-
sons having some broad common interest
or purpose, such as educational activities
in the case of alumni associations, musi-
cal activities in the case of symphony so-
cieties, or civic affairs in the case of par-
ent-teacher associations. SeeExamples 2
through5contained in paragraph (f)(9) of
this section for illustrations of this para-
graph (f)(3).
(4)Definition of normally; general
rule—(i)Normally; 33
1
/3percent support
test. An organization meets the 33
1
/3per-
cent support test for its current taxable
year and the taxable year immediately suc-
ceeding its current year, if, for the current
taxable year and the 4 taxable years imme-
diately preceding the current taxable year,
2008–43 I.R.B.976October 27, 2008

the organization meets the 33
1
/3percent
support test on an aggregate basis.
(ii)Normally;facts and circumstances
test. An organization meets the facts and
circumstances test for its current taxable
year and the taxable year immediately
succeeding its current year, if, for the cur-
rent taxable year and the 4 taxable years
immediately preceding the current taxable
year, the organization meets the facts and
circumstances test on an aggregate basis.
In the case of paragraphs (f)(3)(iii)(A) and
(B) of this section, facts pertinent to the
5-year period may also be taken into con-
sideration. The combination of factors set
forth in paragraphs (f)(3)(iii)(A) through
(E) of this section that an organization
“normally” must meet does not have to be
the same for each 5-year period so long
as there exists a sufficient combination of
factors to show compliance with the facts
and circumstances test.
(iii)Special rule. The fact that an or-
ganization has normally met the require-
ments of the 33
1
/3percent support test for
a current taxable year, but is unable nor-
mally to meet such requirements for a suc-
ceeding taxable year, will not in itself pre-
vent such organization from meeting the
facts and circumstances test for such suc-
ceeding taxable year.
(iv)Example. The application of para-
graphs (f)(4)(i), (ii), and (iii) of this section
may be illustrated by the following exam-
ple:
Example. (i) X is recognized as an organization
described in section 501(c)(3). On the basis of sup-
port received during taxable years 2008, 2009, 2010,
2011 and 2012, it meets the 33
1
/3percent support test
for taxable year 2012 (thecurrent taxable year). X
also meets the 33
1
/3support test for 2013, as the im-
mediately succeeding taxable year.
(ii) In taxable years 2009, 2010, 2011, 2012 and
2013, in the aggregate, X does not receive at least
33
1
/3percent of its support from governmental units
referred to in section 170(c)(1), from contributions
made directly or indirectly by the general public, or
from a combination of these sources. X still meets the
33
1
/3percent support test for taxable year 2013 based
on the aggregate support received for taxable years
2008 through 2012.
(iii) In taxable years 2010, 2011, 2012, 2013 and
2014, in the aggregate, X does not receive at least
33
1
/3percent of its support from governmental units
referred to in section 170(c)(1), from contributions
made directly or indirectly by the general public, or
from a combination of these sources. X does not meet
the 33
1
/3percent support test for taxable year 2014.
(iv) Based on the aggregate support and other fac-
tors listed in paragraphs (f)(3)(iii)(A) through (E) of
this section for taxable years 2009, 2010, 2011, 2012,
and 2013, X meets the facts and circumstances test
for taxable year 2013 and for taxable year 2014 (as
the immediately succeeding taxable year). There-
fore, X is still an organization described in section
170(b)(1)(A)(vi) for taxable year 2014, even though
Xdidnotmeetthe33
1
/3percent support test for that
year.
(v)Normally; first five years of an
organization’s existence. (A) An organi-
zation meets the 33
1
/3public support test
or the facts and circumstances test during
itsfirstfivetaxableyearsasasection
501(c)(3) organization if the organization
can reasonably be expected to meet the
requirements of the 33
1
/3percent sup-
port test or the facts and circumstances
test during that period. With respect to
such organization’s sixth taxable year, the
organization shall be described in sec-
tion 170(b)(1)(A)(vi) if it meets the 33
1
/3
percent support test or the facts and cir-
cumstances test under the definitions of
normally set forth in paragraphs (f)(4)(i)
through (iii) of this section for its sixth
taxable year (based on support received in
its second through sixth taxable years), or
for its fifth taxable year (based on support
received in its first through fifth taxable
years).
(B)Basic consideration. In determin-
ing whether an organization can reason-
ably be expected (within the meaning of
paragraph (f)(4)(v)(A) of this section) to
meet the requirements of the 33
1
/3percent
support test or the facts and circumstances
test during its first five taxable years, the
basic consideration is whether its organi-
zational structure, current or proposed pro-
grams or activities, and actual or intended
method of operation are such as can rea-
sonably be expected to attract the type of
broadly based support from the general
public, public charities, and governmental
units that is necessary to meet such tests.
The factors that are relevant to this deter-
mination, and the weight accorded to each
of them, may differ from case to case, de-
pending on the nature and functions of the
organization. The information to be con-
sidered for this purpose shall consist of all
pertinent facts and circumstances relating
to the requirements set forth in paragraph
(f)(3) of this section.
(vi)Example. The application of para-
graph (f)(4)(v) of this section may be illus-
trated by the following example:
Example. (i) Organization Y was formed in
January 2008, and uses a December 31 taxable
year. After September 9, 2008, and before De-
cember 31, 2008, Organization Y filed Form 1023
requesting recognition of exemption as an organiza-
tion described in section 501(c)(3) and in sections
170(b)(1)(A)(vi) and 509(a)(1). In its application,
Organization Y established that it can reasonably
be expected to operate as a public charity under
paragraph (f)(4)(v) of this section. Subsequently,
Organization Y received a ruling or determination
letter that it is an organization described in sec-
tion 501(c)(3) and sections 170(b)(1)(A)(vi) and
509(a)(1) effective as of the date of its formation.
(ii) Organization Y is described in sections
170(b)(1)(A)(vi) and 509(a)(1) for its first 5 taxable
years (the taxable years ending December 31, 2008,
through December 31, 2012).
(iii) Organization Y can qualify as a public char-
ity beginning with the taxable year ending Decem-
ber 31, 2013, if Organization Y can meet the require-
ments of paragraphs (f)(2) through (3) of this section
or §1.509(a)–3T(a) through (b) for the taxable years
ending December 31, 2009, through December 31,
2013, or for the taxable years ending December 31,
2008, through December 31, 2012.
(5)Determinations on foundation clas-
sification and reliance. (i) A ruling or
determination letter that an organization
is described in section 170(b)(1)(A)(vi)
may be issued to an organization. Such
determination may be made in conjunction
with the recognition of the organization’s
tax-exempt status or at such other time as
the organization believes it is described
in section 170(b)(1)(A)(vi). The ruling or
determination letter that the organization
is described in section 170(b)(1)(A)(vi)
may be revoked if, upon examination,
the organization has not met the require-
ments of paragraph (f) of this section.
The ruling or determination letter that
the organization is described in section
170(b)(1)(A)(vi) also may be revoked if
the organization’s application for a ruling
or determination contained one or more
material misstatements of fact or if such
application was part of a scheme or plan
to avoid or evade any provision of the
Internal Revenue Code. The revocation of
the determination that an organization is
described in section 170(b)(1)(A)(vi) does
not preclude revocation of the determina-
tion that the organization is described in
section 501(c)(3).
(ii)Status of grantors or contribu-
tors. For purposes of sections 170, 507,
545(b)(2), 642(c), 4942, 4945, 2055,
2106(a)(2), and 2522, grantors or contrib-
utors may rely upon a determination letter
or ruling that an organization is described
in section 170(b)(1)(A)(vi) until the In-
ternal Revenue Service publishes notice
of a change of status (for example, in the
Internal Revenue Bulletin or Publication
October 27, 20089772008–43 I.R.B.

78, “Cumulative List of Organizations De-
scribed in Section 170(c) of the Internal
Revenue Code of 1986,”which can be
searched atwww.irs.gov). For this pur-
pose, grantors or contributors also may
rely on an advance ruling that expires on
or after June 9, 2008. However, a grantor
or contributor may not rely on such an
advance ruling or any determination letter
or ruling if the grantor or contributor was
responsible for, or aware of, the act or
failure to act that resulted in the organiza-
tion’s loss of classification under section
170(b)(1)(A)(vi) or acquired knowledge
that the Internal Revenue Service had
given notice to such organization that it
would be deleted from such classification.
(6)Definition of support;meaning of
general public—(i)In general. In deter-
mining whether the 33
1
/3percent support
test or the 10 percent support limitation de-
scribed in paragraph (f)(3)(i) of this sec-
tion is met, contributions by an individ-
ual, trust, or corporation shall be taken into
account assupportfrom direct or indirect
contributions from the general public only
totheextentthatthetotalamountofthe
contributions by any such individual, trust,
or corporation during the period described
in paragraphs (f)(4)(i) or (ii) of this sec-
tion does not exceed 2 percent of the or-
ganization’s total support for such period,
except as provided in paragraph (f)(6)(ii)
of this section. Therefore, any contribu-
tion by one individual will be included in
full in the denominator of the fraction de-
termining the 33
1
/3percent support or the
10 percent support limitation, but will be
includible in the numerator of such frac-
tion only to the extent that such amount
does not exceed 2 percent of the denom-
inator. In applying the 2 percent limita-
tion, all contributions made by a donor
and by any person or persons standing
in a relationship to the donor that is de-
scribed in section 4946(a)(1)(C) through
(G) and the regulations relating to sec-
tion 4946(a)(1)(C) through (G) shall be
treated as made by one person. The 2
percent limitation shall not apply to sup-
port received from governmental units re-
ferred to in section 170(c)(1) or to con-
tributions from organizations described in
section 170(b)(1)(A)(vi), except as pro-
vided in paragraph (f)(6)(v) of this sec-
tion. For purposes of paragraphs (f)(2),
(f)(3)(i) and (f)(7)(iii)(A)(2) of this sec-
tion, the termindirect contributions from
the general publicincludes contributions
received by the organization from organi-
zations (such as section 170(b)(1)(A)(vi)
organizations) that normally receive a sub-
stantial part of their support from direct
contributions from the general public, ex-
cept as provided in paragraph (f)(6)(v) of
this section. See the examples in para-
graph (f)(9) of this section for the appli-
cation of this paragraph (f)(6)(i). For pur-
poses of this paragraph (f), the termcon-
tributionsincludes qualified sponsorship
payments (as defined in §1.513–4) in the
form of money or property (but not ser-
vices).
(ii)Exclusion of unusual grants.(A)
For purposes of applying the 2 percent lim-
itation described in paragraph (f)(6)(i) of
this section to determine whether the 33
1
/3
percent support test or the 10 percent sup-
port limitation in paragraph (f)(3)(i) of this
section is satisfied, one or more contribu-
tions may be excluded from both the nu-
merator and the denominator of the ap-
plicable support fraction if such contribu-
tions meet the requirements of paragraph
(f)(6)(iii) of this section. The exclusion
provided by this paragraph (f)(6)(ii) is gen-
erally intended to apply to substantial con-
tributions or bequests from disinterested
parties, which contributions or bequests—
(1) Are attracted by reason of the pub-
licly supported nature of the organization;
(2) Are unusual or unexpected with re-
spect to the amount thereof; and
(3) Would, by reason of their size, ad-
versely affect the status of the organiza-
tion as normally being publicly supported
for the applicable period described in para-
graph (f)(4) of this section.
(B) In the case of a grant (as defined
in §1.509(a)–3(g)) that meets the require-
ments of this paragraph (f)(6)(ii), if the
terms of the granting instrument (whether
executed before or after 1969) require that
the funds be paid to the recipient organi-
zation over a period of years, the amount
received by the organization each year pur-
suant to the terms of such grant may be ex-
cluded for such year. However, no item of
gross investment income may be excluded
under this paragraph (f)(6). The provisions
of this paragraph (f)(6) shall apply to ex-
clude unusual grants made during any of
the applicable periods described in para-
graph(f)(4)or(f)(6)ofthissection. See
paragraph (f)(6)(iv) of this section as to re-
liance by a grantee organization upon an
unusual grant ruling under this paragraph
(f)(6).
(iii)Determining factors. In determin-
ing whether a particular contribution may
be excluded under paragraph (f)(6)(ii) of
this section all pertinent facts and circum-
stances will be taken into consideration.
No single factor will necessarily be deter-
minative. For some of the factors sim-
ilar to the factors to be considered, see
§1.509(a)–3T(c)(4).
(iv)Grantors and contributors.Prior
to the making of any grant or contribution
that will allegedly meet the requirements
for exclusion under paragraph (f)(6)(ii) of
this section, a potential grantee organiza-
tion may request a determination whether
such grant or contribution may be so ex-
cluded. Requests for such determination
may be filed by the grantee organization.
The issuance of such determination will
be at the sole discretion of the Commis-
sioner. The organization must submit all
information necessary to make a determi-
nation on the factors referred to in para-
graph (f)(6)(iii) of this section. If a favor-
able ruling is issued, such ruling may be re-
lied upon by the grantor or contributor of
the particular contribution in question for
purposes of sections 170, 507, 545(b)(2),
642(c), 4942, 4945, 2055, 2106(a)(2), and
2522 and by the grantee organization for
purposes of paragraph (f)(6)(ii) of this sec-
tion.
(v)Grants from public charities.Pur-
suant to paragraph (f)(6)(i) of this section,
contributions received from a governmen-
tal unit or from a section 170(b)(1)(A)(vi)
organization are not subject to the 2
percent limitation described in para-
graph (f)(6)(i) of this section unless such
contributions represent amounts which
have been expressly or impliedly ear-
marked by a donor to such governmental
unit or section 170(b)(1)(A)(vi) organ-
ization as being for, or for the benefit
of, the particular organization claim-
ing section 170(b)(1)(A)(vi) status. See
§1.509(a)–3(j)(3) for examples illustrating
the rules of this paragraph (f)(6)(v).
(7)Definition of support; special rules
and meaning of terms—(i)Definition of
support. For purposes of this paragraph
(f)(7), the term “support” shall be as de-
fined in section 509(d) (without regard to
section 509(d)(2)). The term “support”
does not include—
2008–43 I.R.B.978October 27, 2008

(A) Any amounts received from the ex-
ercise or performance by an organization
of its charitable, educational, or other pur-
pose or function constituting the basis for
its exemption under section 501(a). In
general, such amounts include amounts re-
ceived from any activity the conduct of
which is substantially related to the fur-
therance of such purpose or function (other
than through the production of income); or
(B) Contributions of services for which
a deduction is not allowable.
(ii) For purposes of the 33
1
/3percent
support test and the 10 percent support
limitation in paragraph (f)(3)(i) of this
section, all amounts received that are de-
scribed in paragraphs (f)(7)(i)(A) or (B) of
this section are to be excluded from both
the numerator and the denominator of the
fractions determining compliance with
such tests, except as provided in paragraph
(f)(7)(iii) of this section.
(iii)Organizations dependent primar-
ily on gross receipts from related activi-
ties. (A) Notwithstanding the provisions
of paragraph (f)(7)(i) of this section, an
organization will not be treated as satis-
fying the 33
1
/3percent support test or the
10 percent support limitation in paragraph
(f)(3)(i) of this section if it receives—
(1) Almost all of its support (as defined
in section 509(d)) from gross receipts from
related activities; and
(2) An insignificant amount of its sup-
port from governmental units (without re-
gard to amounts referred to in paragraph
(f)(7)(i)(A) of this section) and contribu-
tions made directly or indirectly by the
general public.
(B)Example. The application of this
paragraph (f)(7)(iii) may be illustrated by
the following example:
Example. Z, an organization described in section
501(c)(3), is controlled by A, its president. Z received
$500,000 during the period consisting of the current
taxable year and the fourimmediately preceding
taxable years under a contract with the Department
of Transportation, pursuant to which Z has engaged
in research to improve a particular vehicle used pri-
marily by the Federal government. During this same
period, the only other support received by Z consisted
of $5,000 in small contributions primarily from Z’s
employees and business associates. The $500,000
amount constitutes support under sections 509(d)(2)
and 509(a)(2)(A). Underthese circumstances, Z
meets the conditions of paragraphs (f)(7)(iii)(A)(1)
and (2) of this section and will not be treated as
meeting the requirements of either the 33
1
/3percent
support test or the facts and circumstances test. As
to the rules applicable to organizations that fail to
qualify under section 170(b)(1)(A)(vi) because of
the provisions of this paragraph (f)(7)(ii), see section
509(a)(2) and the accompanying regulations. For the
distinction between gross receipts (as referred to in
section 509(d)(2)) and gross investment income (as
referred to in section 509(d)(4)), see §1.509(a)–3(m).
(iv)Membership fees. For purposes
of this paragraph (f)(7), the termsupport
shall include “membership fees” within
the meaning of §1.509(a)–3(h) (that is, if
the basic purpose for making a payment
is to provide support for the organization
rather than to purchase admissions, mer-
chandise, services, or the use of facilities).
(8)Support from a governmental unit.
(i) For purposes of the 33
1
/3percent sup-
port test and the 10 percent support limita-
tion described in paragraph (f)(3)(i) of this
section, the termsupport from a govern-
mental unitincludes any amounts received
from a governmental unit, including do-
nations or contributions and amounts re-
ceived in connection with a contract en-
tered into with a governmental unit for the
performance of services or in connection
with a government research grant. How-
ever, such amounts will not constitute sup-
port from a governmental unit for such pur-
poses if they constitute amounts received
from the exercise or performance of the or-
ganization’s exempt functions as provided
in paragraph (f)(7)(i)(A) of this section.
(ii) For purposes of paragraph (f)(8)(i)
of this section, any amount paid by a gov-
ernmental unit to an organization is not
to be treated as received from the exer-
cise or performance of its charitable, edu-
cational, or other purpose or function con-
stituting the basis for its exemption un-
der section 501(a) (within the meaning of
paragraph (f)(7)(i)(A) of this section) if the
purpose of the payment is primarily to en-
able the organizationtoprovideaservice
to, or maintain a facility for, the direct ben-
efit of the public (regardless of whether
part of the expense of providing such ser-
vice or facility is paid for by the public),
rather than to serve the direct and immedi-
ate needs of the payor. For example—
(A) Amounts paid for the maintenance
of library facilities which are open to the
public;
(B) Amounts paid under government
programs to nursing homes or homes for
the aged in order to provide health care or
domiciliary services to residents of such
facilities; and
(C) Amounts paid to child placement
or child guidance organizations under gov-
ernment programs for services rendered
to children in the community, are consid-
ered payments the purpose of which is pri-
marily to enable the recipient organiza-
tion to provide a service or maintain a fa-
cility for the direct benefit of the public,
rather than to serve the direct and immedi-
ate needs of the payor. Furthermore, any
amount received from a governmental unit
under circumstances such that the amount
would be treated as a “grant” within the
meaning of §1.509(a)–3(g) will generally
constitute “support from a governmental
unit” described in this paragraph (f)(8),
rather than an amount described in para-
graph (f)(7)(i)(A) of this section.
(9)Examples. The application of para-
graphs (f)(1) through (8) of this section
maybeillustratedbythefollowingexam-
ples:
Example 1. (i) M is recognized as an organization
described in section 501(c)(3). For the years 2008
through 2012 (the applicable period with respect to
the taxable year 2012 under paragraph (f)(4) of this
section), M received support (as defined in para-
graphs (f)(6) through (8) of this section) of $600,000
from the following sources:
October 27, 20089792008–43 I.R.B.

Investment income
$ 300,000
City R (a governmental unit described in section 170(c)(1))40,000
United Fund (an organization described in section 170(b)(1)(A)(vi))40,000
Contributions220,000
Total support
$ 600,000
(ii) With respect to the taxable year 2012, M’s public support is computed as follows:
Support from a governmental unit described in section 170(c)(1)40,000
Indirect contributions from the general public (United Fund)40,000
Contributions by various donors (no one having made contributions that total in excess of $12,000 – 2 percent of total support)50,000
Six contributions (each in excess of $12,000 — 2 percenttotal support) 6 x $12,000
72,000
202,000
(iii) M’s support from governmental units re-
ferred to in section 170(c)(1) and from direct and
indirect contributions from the general public (as
defined in paragraph (f)(6) of this section) with re-
spect to the taxable year 2012 normally exceeds 33
1
/3
percent of M’s total support ($202,000/$600,000
= 33.67 percent) for the applicable period (2008
through 2012). M meets the 33
1
/3percent support
test with respect to 2012 and is therefore publicly
supported for the taxable years 2012 and 2013.
Example 2. N is recognized as an organization de-
scribed in section 501(c)(3). It was created to main-
tain public gardens containing botanical specimens
and displaying statuary and other art objects. The fa-
cilities, works of art, and a large endowment were all
contributed by a single contributor. The members of
the governing body of the organization are unrelated
to its creator. The gardens are open to the public with-
out charge and attract a substantial number of visi-
tors each year. For the current taxable year and the
four taxable years immediately preceding the current
taxable year, 95 percent of the organization’s total
support was received from investment income from
its original endowment. N also maintains a mem-
bership society that is supported by members of the
general public who wish to contribute to the upkeep
of the gardens by paying a small annual member-
ship fee. Over the 5-year period in question, these
fees from the general public constituted the remain-
ing 5 percent of the organization’s total support for
such period. Under these circumstances, N does not
meet the 33
1
/3percent support test for its current tax-
able year. Furthermore, because only 5 percent of
its total support is, with respect to the current tax-
able year, normally received from the general pub-
lic, N does not satisfy the 10 percent support limi-
tation described in paragraph (f)(3)(i) of this section
and therefore does not qualify as publicly supported
under the facts and circumstances test. Because N
has failed to satisfy the 10 percent support limitation
under paragraph (f)(3)(i) of this section, none of the
other requirements or factors set forth in paragraphs
(f)(3)(iii)(A) through (E) of this section can be con-
sidered in determining whether N qualifies as a pub-
licly supported organization. For its current taxable
year, N therefore is not an organization described in
section 170(b)(1)(A)(vi).
Example 3. (i) O, an art museum, is recognized
as an organization described in section 501(c)(3).
In 1930, O was founded in S City by the members
of a single family to collect, preserve, interpret,
and display to the public important works of art. O
is governed by a Board of Trustees that originally
consisted almost entirely of members of the found-
ing family. However, since 1945, members of the
founding family or persons standing in a relationship
to the members of such family described in section
4946(a)(1)(C) through (G) have annually constituted
less than one-fifth of the Board of Trustees. The
remaining board members are citizens of S City
from a variety of professions and occupations who
represent the interests and views of the people of S
City in the activities carried on by the organization
rather than the personal or private interests of the
founding family. O solicits contributions from the
general public and for the current taxable year and
each of the four taxable years immediately preceding
the current taxable year, O has received total con-
tributions (in small sums of less than $100, none of
which exceeds 2 percent of O’s total support for such
period) in excess of $10,000. These contributions
from the general public (as defined in paragraph
(f)(6) of this section) represent 25 percent of the or-
ganization’s total support for such 5-year period. For
this same period, investment income from several
large endowment funds has constituted 75 percent
of O’s total support. O expends substantially all of
its annual income for its exempt purposes and thus
depends upon the funds it annually solicits from the
public as well as its investment income in order to
carry out its activities on a normal and continuing
basis and to acquire new works of art. O has, for
the entire period of its existence, been open to the
public and more than 300,000 people (from S City
and elsewhere) have visited the museum in each of
the current taxable year and the four most recent
taxable years.
(ii) Under these circumstances, O does not meet
the 33
1
/3percent support test for its current year be-
cause it has received only 25 percent of its total sup-
port for the applicable 5-year period from the general
public. However, under the facts set forth above, O
has met the 10 percent support limitation under para-
graph (f)(3)(i) of this section, as well as the require-
ments of paragraph (f)(3)(ii) of this section. Under
all of the facts set forth in this example, O is consid-
ered as meeting the requirements of the facts and cir-
cumstances test on the basis of satisfying paragraphs
(f)(3)(i) and (ii) of this section and the factors set forth
in paragraphs (f)(3)(iii)(A) through (D) of this sec-
tion. O is therefore publicly supported for its current
taxable year and the immediately succeeding taxable
year.
Example 4. (i) In 1960, the P Philharmonic Or-
chestra was organized in T City through the combined
efforts of a local music society and a local women’s
club to present to the public a wide variety of musi-
cal programs intended to foster music appreciation in
the community. P is recognized as an organization
described in section 501(c)(3). The orchestra is com-
posed of professional musicians who are paid by the
association. Twelve performances open to the pub-
lic are scheduled each year. A small admission fee
is charged for each of these performances. In addi-
tion, several performances are staged annually with-
out charge. During the current taxable year and the
four taxable years immediately preceding the current
taxable year, P has received separate contributions of
$200,000 each from A and B (not members of a single
family) and support of $120,000 from the T Commu-
nity Chest, a public federated fundraising organiza-
tion operating in T City. P depends on these funds
in order to carry out its activities and will continue to
depend on contributions of this type to be made in the
future. P has also begun a fundraising campaign in an
attempt to expand its activities for the coming years.
P is governed by a Board of Directors comprised of
5 individuals. A faculty member of a local college,
the president of a local music society, the head of a
local banking institution, a prominent doctor, and a
member of the governing body of the local chamber
of commerce currently serve on P’s Board and repre-
sent the interests and views of the community in the
activities carried on by P.
(ii) With respect to P’s current taxable year, P’s
sources of support are computed on the basis of the
current taxable year and the four taxable years imme-
diately preceding the current taxable year, as follows:
2008–43 I.R.B.980October 27, 2008

Contributions
$520,000
Receipts from performances100,000
Total support
$ 620,000
Less:
Receipts from performances (excluded under paragraph (f)(7)(i)(A) ofthis section)100,000
Total support for purposes of paragraphs (f)(2) and (f)(3)(i) of this section
$ 520,000
(iii) For purposes of paragraphs (f)(2) and (f)(3)(i) of this section, P’s support is computed as follows:
T Community Chest (indirect support from the general public)
$ 120,000
Two contributions (each in excess of $10,400 — 2 percent of total support) 2 x $10,400
20,800
Total
$ 140,800
(iv) P’s support from the direct and indirect con-
tributions from the general public does not meet the
33
1
/3percent support test ($140,800/$520,000 = 27
percent of total support). However, because P re-
ceives 27 percent of its total support from the gen-
eral public, it meets the 10 percent support limita-
tion under paragraph (f)(3)(i) of this section. P also
meets the requirements of paragraph (f)(3)(ii) of this
section. As a result of satisfying these requirements
and the factors set forth in paragraphs (f)(3)(iii)(A)
through (D) of this section, P is considered to meet
the facts and circumstances test and therefore quali-
fies as a publicly supported organization under para-
graph (f)(1) of this section for its current taxable year
and the immediately succeeding taxable year.
Example 5. (i) Q is recognized as an organization
described in section 501(c)(3). It is a philanthropic
organization founded in 1965 by C for the purpose of
making annual contributions to worthy charities. C
created Q as a charitable trust by the transfer of ap-
preciated securities worth $500,000 to Q. Pursuant to
the trust agreement, C and two other members of his
family are the sole trustees of Q and are vested with
the right to appoint successor trustees. In each of the
current taxable year and the four taxable years im-
mediately preceding the current taxable year, Q re-
ceived $15,000 in investment income from its orig-
inal endowment. Each year Q makes a solicitation
for funds by operating a charity ball at C’s residence.
Guests are invited and requested to make contribu-
tions of $100 per couple. During the 5-year period
at issue, $15,000 was received from the proceeds of
these events. C and his family have also made con-
tributions to Q of $25,000 over the 5-year period at
issue. Q makes disbursements each year of substan-
tially all of its net income to the public charities cho-
sen by the trustees.
(ii) Q’s sources of support for the current taxable
year and the four taxable years immediately preced-
ing the current taxable year as follows:
Investment income
$ 60,000
Contributions40,000
Total support
$ 100,000
(iii) For purposes of paragraphs (f)(2) and (f)(3)(i) of this section, Q’s support is computed as follows:
Contributions from the general public
$ 15,000
One contribution (in excess of $ 2,000 —2 percent of total support) 1 X $2,000
2,000
Total
$ 17,000
(
iv) Q’s support from the general public does not
meet the 33
1
/3percent support test ($17,000/$100,000
= 17 percent of total support). Thus, Q’s classifica-
t
ion as a “publicly supported” organization depends
on whether it meets the requirements of the facts and
circumstances test. Even though it satisfies the 10
percent support limitation under paragraph (f)(3)(i) of
this section, its method of solicitation makes it ques-
tionable whether Q satisfies the requirements of para-
graph (f)(3)(ii) of this section. Because of its method
of operating, Q also has a greater burden of estab-
lishing its publicly supported nature under paragraph
(f)(3)(iii)(A) of this section. Based upon the forego-
ing and upon Q’s failure to receive favorable consid-
eration under the remaining factors set forth in para-
graphs (f)(3)(iii)(B), (C) and (D) of this section, Q
does not satisfy the facts and circumstances test.
(10)Community trust; introduction.
Community trusts have often been estab-
lished to attract large contributions of a
capital or endowment nature for the benefit
of a particular community or area, and of-
ten such contributions have come initially
f
rom a small number of donors. While the
c
ommunity trust generally has a governing
b
ody comprised of representatives of the
p
articular community or area, its contri-
b
utions are often received and maintained
in the form of separate trusts or funds,
which are subject to varying degrees of
control by the governing body. To qualify
as a “publicly supported” organization, a
community trust must meet the 33
1
/3per-
cent support test, or,if it cannot meet that
test, be organized and operated so as to
attract new and additional public or gov-
ernmental support on a continuous basis
sufficient to meet the facts and circum-
stances test. Such facts and circumstances
test includes a requirement of attraction
of public support in paragraph (f)(3)(ii)
of this section which, as applied to com-
munity trusts, generally will be satisfied if
t
hey seek gifts and bequests from a wide
r
ange of potential donors in the commu-
n
ity or area served, through banks or trust
c
ompanies, through attorneys or other pro-
f
essional persons, or in other appropriate
ways that call attention to the commu-
nity trust as a potential recipient of gifts
and bequests made for the benefit of the
community or area served. A community
trust is not required to engage in periodic,
community-wide, fundraising campaigns
directed toward attracting a large num-
ber of small contributions in a manner
similar to campaigns conducted by a com-
munity chest or united fund. Paragraph
(f)(11) of this section provides rules for
determining the extent to which separate
trusts or funds may be treated as compo-
nent parts of a community trust, fund or
foundation (herein collectively referred to
October 27, 20089812008–43 I.R.B.

as a “community trust”, and sometimes
referred to as an “organization”) for pur-
poses of meeting the requirements of this
paragraph for classification as a publicly
supported organization. Paragraph (f)(12)
of this section contains rules for trusts or
funds that are prevented from qualifying
as component parts of a community trust
by paragraph (f)(11) of this section.
(11) Community trusts; requirements
for treatment as a single entity—(i)Gen-
eral rule. For purposes of sections 170,
501, 507, 508, 509, and Chapter 42,
any organization that meets the require-
ments contained in paragraphs (f)(11)(iii)
through (iv) of this section will be treated
as a single entity, rather than as an aggre-
gation of separate funds, and except as
otherwise provided, all funds associated
with such organization (whether a trust,
not-for-profit corporation, unincorporated
association, or a combination thereof)
which meet the requirements of paragraph
(f)(11)(ii) of this section will be treated as
component parts of such organization.
(ii)Componentpartofacommunity
trust. In order to be treated as a compo-
nent part of a community trust referred to
in this paragraph (f)(11) (rather than as a
separate trust or not-for-profit corporation
or association), a trust or fund:
(A) Must be created by a gift, bequest,
legacy, devise, or other transfer to a com-
munity trust which is treated as a single en-
tity under this paragraph (f)(11); and
(B) May not be directly or indirectly
subjected by the transferor to any material
restriction or condition (within the mean-
ing of §1.507–2T(a)(7)) with respect to
the transferred assets. For purposes of this
paragraph (f)(11)(ii)(B), if the transferor
is not a private foundation, the provisions
of §1.507–2T(a)(7) shall be applied to the
trust or fund as if the transferor were a
private foundation established and funded
by the person establishing the trust or
fund and such foundation transferred all
its assets to the trust or fund. Any transfer
made to a fund or trust which is treated
as a component part of a community trust
under this paragraph (f)(11)(ii) will be
treated as a transfer made “to” a “publicly
supported” community trust for purposes
of section 170(b)(1)(A) and 507(b)(1)(A)
if such community trust meets the require-
ments of section 170(b)(1)(A)(vi) as a
“publicly supported” organization at the
time of the transfer, except as provided in
paragraph (f)(4)(v)(B) of this section or
§1.508–1(b)(4) and (6) (relating, gener-
ally, to reliance by grantors and contribu-
tors). See also paragraphs (f)(12)(ii) and
(iii) of this section for special provisions
relating to split-interest trusts and certain
private foundations described in section
170(b)(1)(F)(iii).
(iii)Name. The organization must be
commonly known as a community trust,
fund, foundation or other similar name
conveying the concept of a capital or
endowment fund to support charitable
activities (within the meaning of section
170(c)(1) or (2)(B)) in the community or
area it serves.
(iv)Common instrument. All funds of
the organization must be subject to a com-
mon governing instrument or a master trust
or agency agreement (herein referred to as
the “governing instrument”), which may
be embodied in a single document or sev-
eral documents containing common lan-
guage. Language in an instrument of trans-
fer to the community trust making a fund
subject to the community trust’s govern-
ing instrument or master trust or agency
agreement will satisfythe requirements of
this paragraph (f)(11)(iv). In addition, if
a community trust adopts a new govern-
ing instrument (or creates a corporation)
to put into effect new provisions (apply-
ing to future transfers to the community
trust), the adoption of such new govern-
ing instrument (or creation of a corporation
with a governing instrument) which con-
tains common language with the existing
governing instrument shall not preclude
the community trust from meeting the re-
quirements of this paragraph (f)(11)(iv).
(v)Common governing body.(A)The
organization must have a common govern-
ing body or distribution committee (herein
referred to as the “governing body”) which
either directs or, in the case of a fund desig-
nated for specified beneficiaries, monitors
the distribution of all of the funds exclu-
sively for charitable purposes (within the
meaning of section 170(c)(1) or (2)(B)).
For purposes of this paragraph (f)(11)(v), a
fund is designated for specified beneficia-
ries only if no person is left with the discre-
tion to direct the distribution of the fund.
(B)Powers of modification and re-
moval. The fact that the exercise of
any power described in this paragraph
(f)(11)(v)(B) is reviewable by an appro-
priate State authority will not preclude the
community trust from meeting the require-
ments of this paragraph (f)(11)(v)(B). Ex-
cept as provided in paragraph (f)(11)(v)(C)
of this section, the governing body must
have the power in the governing instru-
ment, the instrument of transfer, the reso-
lutions or by-laws of the governing body,
a written agreement, or otherwise—
(1) To modify any restriction or condi-
tion on the distribution of funds for any
specified charitable purposes or to speci-
fied organizations if in the sole judgment
of the governing body (without the neces-
sity of the approval of any participating
trustee, custodian, oragent), such restric-
tion or condition becomes, in effect, un-
necessary, incapable of fulfillment, or in-
consistent with the charitable needs of the
community or area served;
(2) To replace any participating trustee,
custodian, or agent for breach of fiduciary
duty under State law; and
(3) To replace any participating trustee,
custodian, or agent for failure to produce a
reasonable (as determined by the govern-
ing body) return of net income (within the
meaning of paragraph (f)(11)(v)(F) of this
section) over a reasonable period of time
(as determined by the governing body).
(C)Transitional rule—(1)Notwith-
standing paragraph (f)(11)(v)(B) of this
section, if a community trust meets the re-
quirements of paragraph (f)(11)(v)(C)(3)
of this section, then in the case of any
instrument of transfer which is executed
before July 19, 1977, and is not revoked
or amended thereafter (with respect to any
dispositive provision affecting the transfer
to the community trust), and in the case of
any instrument of transfer which is irrevo-
cable on January 19, 1982, the governing
body must have the power to cause pro-
ceedings to be instituted (by request to the
appropriate State authority):
(i) To modify any restriction or condi-
tion on the distribution of funds for any
specified charitable purposes or to speci-
fied organizations if in the judgment of the
governing body such restriction or condi-
tion becomes, in effect, unnecessary, inca-
pable of fulfillment, or inconsistent with
the charitable needs of the community or
area served; and
(ii) To remove any participating trustee,
custodian, or agent for breach of fiduciary
duty under State law.
(2) The necessity for the governing
body to obtain the approval of a partic-
2008–43 I.R.B.982October 27, 2008

ipating trustee to exercise the powers
described in paragraph (f)(11)(v)(C)(1)of
this section shall be treated as not prevent-
ingthegoverningbodyfromhavingsuch
power, unless (and until) such approval
has been (or is) requested by the governing
body and has been (or is) denied.
(3) Paragraph (f)(11)(v)(C)(1)ofthis
section shall not apply unless the com-
munity trust meets the requirements of
paragraph (f)(11)(v)(B) of this section,
with respect to funds other than those
under instruments of transfer described
in the first sentence of such paragraph
(f)(11)(v)(C)(1) of this section, by January
19, 1978, or such later date as the Commis-
sioner may provide for such community
trust, and unless the community trust does
not, once it so complies, thereafter solicit
for funds that will not qualify under the
requirements of paragraph (f)(11)(v)(B) of
this section.
(D)Inconsistent State law—(1)For
purposes of paragraphs (f)(11)(v)(B)(1),
(2), or (3), (f)(11)(v)(C)(1)(i) or (ii) or
(f)(11)(v)(E) of this section, if a power de-
scribed in such a provision is inconsistent
with State law even if such power were
expressly granted to the governing body
by the governing instrument and were
accepted without limitation under an in-
strument of transfer, then the community
trust will be treated as meeting the require-
ments of such a provision if it meets such
requirements to the fullest extent possible
consistent with State law (if such power is
or had been so expressly granted).
(2) For example, if, under the condi-
tions of paragraph (f)(11)(v)(D)(1)ofthis
section, the power to modify is inconsis-
tent with State law, but the power to insti-
tute proceedings to modify, if so expressly
granted, would be consistent with State
law, the community trust will be treated
as meeting such requirements to the fullest
extent possible if the governing body has
the power (in the governing instrument or
otherwise) to institute proceedings to mod-
ify a condition or restriction. On the other
hand, if in such a case the community trust
has only the power to cause proceedings to
be instituted to modify a condition or re-
striction, it will not be treated as meeting
such requirements to the fullest extent pos-
sible.
(3) In addition, if, for example,
under the conditions of paragraph
(f)(11)(v)(D)(1) of this section, the power
to modify and the power to institute pro-
ceedings to modify a condition or restric-
tion is inconsistent with State law, but
the power to cause such proceedings to
be instituted would be consistent with
State law, if it were expressly granted in
the governing instrument and if the ap-
proval of the State Attorney General were
obtained, then the community trust will
be treated as meeting such requirements
to the fullest extent possible if it has the
power (in the governing instrument or
otherwise) to cause such proceedings to
be instituted, even ifsuch proceedings can
be instituted only with the approval of the
State Attorney General.
(E)Exercise of powers. The govern-
ingbodyshall(byresolutionorotherwise)
commit itself to exercise the powers de-
scribed in paragraphs (f)(11)(v) (B), (C)
and (D) of this section in the best inter-
ests of the community trust. The govern-
ing body will be considered not to be so
committed where it has grounds to exer-
cise such a power and fails to exercise it by
taking appropriate action. Such appropri-
ate action may include, for example, con-
sulting with the appropriate State authority
prior to taking action to replace a partici-
pating trustee.
(F)Reasonable return. In addi-
tion to the requirements of paragraphs
(f)(11)(v)(B), (C), (D) or (E) of this sec-
tion, the governing body shall (by resolu-
tion or otherwise) commit itself to obtain
information and take other appropriate
steps with the view to seeing that each par-
ticipating trustee, custodian, or agent, with
respect to each restricted trust or fund that
is, and with respect to the aggregate of the
unrestricted trusts or funds that are, a com-
ponent part of the community trust, ad-
ministers such trust or fund in accordance
with the terms of its governing instrument
and accepted standards of fiduciary con-
duct to produce a reasonable return of net
income (or appreciation where not incon-
sistent with the community trust’s need for
current income), with due regard to safety
of principal, in furtherance of the exempt
purposes of the community trust (except
for assets held for the active conduct of
the community trust’s exempt activities).
In the case of a low return of net income
(and, where appropriate, appreciation),
the Internal Revenue Service will exam-
ine carefully whether the governing body
has, in fact, committed itself to take the
appropriate steps. For purposes of this
paragraph (f)(11)(v)(F), any income that
has been designated by the donor of the
gift or bequest to which such income is
attributable as being available only for the
use or benefit of a broad charitable pur-
pose, such as the encouragement of higher
education or the promotion of better health
care in the community, will be treated as
unrestricted. However, any income that
has been designated for the use or ben-
efit of a named charitable organization
or agency or for the use or benefit of a
particular class of charitable organizations
or agencies, the members of which are
readily ascertainable and are less than five
in number, will be treated as restricted.
(vi)Common reports. The organiza-
tion must prepare periodic financial re-
ports treating all of the funds which are
held by the community trust, either directly
or in component parts, as funds of the or-
ganization.
(12)Community trusts; treatment of
trusts and not-for-profit corporations and
associations not included as components.
(i) For purposes of sections 170, 501, 507,
508, 509 and Chapter 42, any trust or
not-for-profit corporation or association
that is alleged to be a component part of
a community trust, but that fails to meet
the requirements of paragraph (f)(11)(ii)
of this section, shall not be treated as a
component part of a community trust and,
if a trust, shall be treated as a separate
trust and be subject to the provisions of
section 501 or section 4947(a)(1) or (2), as
the case may be. If such organization is a
not-for-profit corporation or association, it
will be treated as a separate entity, and, if
it is described in section 501(c)(3), it will
be treated as a private foundation unless it
is described in section 509(a)(1), (2), (3),
or (4). In the case of a fund that is ulti-
mately treated as not being a component
part of a community trust pursuant to this
paragraph (f)(12), if the Forms 990 filed
annually by the community trust included
financial information with respect to such
fund and treated such fund in the same
manner as other component parts thereof,
such returns filed by the community trust
prior to the taxable year in which the
Commissioner notifies such fund that it
will not be treated as a component part
will be treated as its separate return for
purpose of Subchapter A of Chapter 61 of
Subtitle F, and the first such return filed by
October 27, 20089832008–43 I.R.B.

the community trust will be treated as the
notification required of the separate entity
for purposes of section 508(a).
(ii) If a transfer is made in trust to a
community trust to make income or other
payments for a period of a life or lives in
being or a term of years to any individual
or for any noncharitable purpose, followed
by payments to or for the use of the com-
munity trust (such as in the case of a char-
itable remainder annuity trust or a chari-
table remainder unitrust described in sec-
tion 664 or a pooled income fund described
in section 642(c)(5)), such trust will be
treated as a component part of the commu-
nity trust upon the termination of all inter-
vening noncharitable interests and rights to
the actual possession or enjoyment of the
property if such trust satisfies the require-
ments of paragraph (f)(11) of this section
at such time. Until such time, the trust will
be treated as a separate trust. If a transfer is
made in trust to a community trust to make
income or other payments to or for the use
of the community trust, followed by pay-
ments to any individual or for any nonchar-
itable purpose, such trust will be treated
as a separate trust rather than as a compo-
nent part of the community trust. See sec-
tion 4947(a)(2) and the regulations relat-
ing to section 4947(a)(2) for the treatment
of such split-interesttrusts. The provisions
of this paragraph (f)(12)(ii) provide rules
only for determining when a charitable re-
mainder trust or pooled income fund may
be treated as a component part of a com-
munity trust and are not intended to pre-
clude a community trust from maintaining
a charitable remainder trust or pooled in-
come fund. For purposes of grantors and
contributors, a pooled income fund of a
publicly supported community trust shall
be treated no differently than a pooled in-
come fund of any other publicly supported
organization.
(iii) An organization described in sec-
tion 170(b)(1)(F)(iii) will not ordinarily
satisfy the requirements of paragraph
(f)(11)(ii) of this section because of the
unqualified right of the donor to designate
the recipients of the income and principal
of the trust. Such organization will there-
fore ordinarily be treated as other than
a component part of a community trust
under paragraph (f)(12)(i) of this section.
However, see section 170(b)(1)(F)(iii)
and the regulations relating to section
170(b)(1)(F)(iii) with respect to the treat-
ment of contributions to such organiza-
tions.
(13)Method of accounting. For pur-
poses of section 170(b)(1)(A)(vi), an
organization’s support will be determined
under the method of accounting on the
basis of which the organization regularly
computes its income in keeping its books
under section 446. For example, if a
grantor makes a grant to an organization
payable over a term of years, such grant
will be includible in the support fraction of
the grantee organization under the method
of accounting on the basis of which the
grantee organization regularly computes
its income in keeping its books under sec-
tion 446.
(14)Transition rules. (i) An organiza-
tion that received an advance ruling, that
expires on or after June 9, 2008, that it will
be treated as an organization described in
sections 170(b)(1)(A)(vi) and 509(a)(1)
or in section 509(a)(2) will be treated as
meeting the requirements of paragraph
(f)(4)(v) of this section for the first five
taxable years of its existence as a section
501(c)(3) organization unless the Internal
Revenue Service issued the organization a
proposed determination prior to Septem-
ber 9, 2008, that the organization is not
described in sections 170(b)(1)(A)(vi) and
509(a)(1) or in section 509(a)(2).
(ii) Paragraph (f)(4)(v) of this section
shall not apply to an organization that re-
ceived an advance ruling that expired prior
to June 9, 2008, and that did not timely
file with the Internal Revenue Service the
required information to establish that it
is an organization described in sections
170(b)(1)(A)(vi) and 509(a)(1) or in sec-
tion 509(a)(2).
(iii) An organization that fails to
meet a public support test for its first
taxable year beginning on or after Jan-
uary 1, 2008, under the regulations in
this section may use the prior test set
forth in §1.170A–9(e)(4)(i) and (ii) or
§1.509(a)–3(c)(1) as in effect before
September 9, 2008, (as contained in
26 CFR part 1 revised April 1, 2008)
to determine whether the organization
may be publicly supported for its 2008
taxable year based on its satisfaction of a
public support test for taxable year 2007,
computed over the period 2003 through
2006.
(iv)Examples. The application of this
paragraph(f)(14)maybeillustratedbythe
following examples:
Example 1. (i) Organization X was formed in
January 2004 and uses a June 30 taxable year. Or-
ganization X received an advance ruling letter that
it is recognized as an organization described in sec-
tion 501(c)(3) effective as of the date of its formation
and that it is treated as a public charity under sections
170(b)(1)(A)(vi) and 509(a)(1) during the five-year
advance ruling period that will end on June 30, 2008.
This date is within 90 days before September 9, 2008.
(ii) Under the transition rule, Organization X is a
public charity described in sections 170(b)(1)(A)(vi)
and 509(a)(1) for the taxable years ending June
30, 2004, through June 30, 2008. Organization X
does not need to establish within 90 days after June
30, 2008, that it met a public support test under
§1.170A–9(e) or §1.509(a)–3, as in effect prior to
September 9, 2008, (as contained in 26 CFR part 1
revised April 1, 2008), for its advance ruling period.
(iii) Organization X can qualify as a public
charity beginning with the taxable year ending June
30, 2009, if Organization X can meet the require-
ments of paragraphs (f)(4)(i) or (ii) of this section
or §1.509(a)–3T(c)(1) for the taxable years ending
June 30, 2005, through June 30, 2009, or for the
taxable years ending June 30, 2004, through June 30,
2008. In addition, for its taxable year ending June 30,
2009, Organization X may qualify as a public charity
by availing itself of the transition rule contained in
paragraph (f)(14)(iii) of this section, which looks to
support received by X in the taxable years ending
June 30, 2004, through June 30, 2007.
Example 2.(i)OrganizationYwasformedinJan-
uary 2000, and uses a December 31 taxable year. Or-
ganization Y received a final determination that it was
recognized as tax-exemptunder section 501(c)(3) and
as a public charity prior to September 9, 2008.
(ii) For taxable year 2008, Organization Y will
qualify as publicly supported if it meets the require-
ments under either paragraphs (f)(4)(i) or (ii) of this
section or §1.509(a)–3T(c)(1) for the five-year period
January 1, 2004, through December 31, 2008. Organ-
ization Y will also qualify as publicly supported for
taxable year 2008 if it meets the requirements under
either §1.170A–9(e)(4)(i) or (ii) or §1.509(a)–3(c)(1)
as in effect prior to September 9, 2008, (as contained
in 26 CFR part 1 revised April 1, 2008) for taxable
year 2007, using the four-year period from January
1, 2003, through December 31, 2006.
(g)through(j)[Reserved]. Forfurther
guidance, see §1.170A–9(g) through (j).
(k)Effective/applicability date—(1)Ef-
fective date. These regulations are effec-
tive on September 9, 2008.
(2)Applicability date. The regulations
in paragraph (f) of this section shall apply
to tax years beginning on or after January
1, 2008.
(3)Expiration date. The applicability
of this section expires on September 8,
2011.
Par. 4. Section 1.507–2 is amended
by adding new paragraph (h) to read as
follows:
2008–43 I.R.B.984October 27, 2008

§1.507–2 Special rules; transfer to, or
operation as, public charity.
*****
(h)Effective/applicability date.This
section shall apply to tax years beginning
before January 1, 2008.
Par. 5. Section 1.507–2T is added to
read as follows:
§1.507–2T Special rules; transfer to, or
operation as, public charity (temporary).
(a)Transfer to public charities—(1)
General rule. Under section 507(b)(1)(A)
a private foundation, with respect to which
there have not been either willful repeated
acts (or failures to act) or a willful and
flagrant act (or failure to act) giving rise
to liability for tax under chapter 42, may
terminate its private foundation status by
distributing all of its net assets to one or
more organizations described in section
170(b)(1)(A) (other than in clauses (vii)
and (viii)) each of which has been in ex-
istence and so described for a continuous
period of at least 60 calendar months im-
mediately preceding such distribution.
Because section 507(a) does not apply to
such a termination, a private foundation
which makes such a termination is not
required to give the notification described
in section 507(a)(1). A private founda-
tion that terminates its private foundation
status under section 507(b)(1)(A) does
not incur tax under section 507(c) and,
therefore, no abatement of such tax under
section 507(g) is required.
(2)Effect of current ruling.Aprivate
foundation seeking to terminate its pri-
vate foundation status pursuant to section
507(b)(1)(A) may rely on a ruling or de-
termination letter issued to a potential dis-
tributee organization that such distributee
organization is an organization described
in section 170(b)(1)(A)(i), (ii), (iii), (iv),
(v) or (vi) in accordance with the provi-
sions of §1.509(a)–7.
(3)Organizations described in more
than one clause of section 170(b)(1)(A).
For purposes of this paragraph and section
507(b)(1)(A), the parenthetical term “other
than in clauses (vii) and (viii)” shall refer
only to an organization that is described
only in section 170(b)(1)(A)(vii) or (viii).
Thus, an organization described in section
170(b)(1)(A)(i), (ii), (iii), (iv), (v), or (vi)
will not be precluded from being a dis-
tributee described in section 507(b)(1)(A)
merely because it also appears to meet the
description of an organization described
in section 170(b)(1)(A)(vii) or (viii).
(4)Applicability of chapter 42 to
foundations terminating under section
507(b)(1)(A). An organization that termi-
nates its private foundation status pursuant
to section 507(b)(1)(A) will remain sub-
ject to the provisions of chapter 42 until
the distribution of all of its net assets to
distributee organizations described in sec-
tion 507(b)(1)(A) has been completed.
(5)Return required from organizations
terminating private foundation status un-
der section 507(b)(1)(A).
(i) An organization that terminates its
private foundation status under section
507(b)(1)(A) is required to file a return
under the provisions of section 6043(b),
rather than under the provisions of section
6050.
(ii) An organization that terminates its
private foundation status under section
507(b)(1)(A) is not required to comply
with section 6104(d) for the taxable year
in which such termination occurs.
(6)Distribution of net assets.Aprivate
foundation will meet the requirement that
it “distribute all of its net assets” within the
meaning of section 507(b)(1)(A) only if it
transfers all of its right, title, and interest
in and to all of its net assets to one or
more organizations referred to in section
507(b)(1)(A).
(7)Effect of restrictions and conditions
upon distributions of net assets—(i)In
general. In order to effectuate a transfer
of “all of its right, title, and interest in and
to all of its net assets” within the mean-
ing of paragraph (a)(6) of this section, a
transferor private foundation may not im-
pose any material restriction or condition
that prevents the transferee organiza-
tion referred to in section 507(b)(1)(A)
(herein sometimes referred to as the “pub-
lic charity”) from freely and effectively
employing the transferred assets, or the
income derived therefrom, in furtherance
of its exempt purposes. Whether or not a
particular condition or restriction imposed
upon a transfer of assets is material (within
the meaning of this paragraph (a)(7)) must
be determined from all of the facts and
circumstances of the transfer. Some of the
more significant facts and circumstances
to be considered in making such a deter-
mination are—
(A) Whether the public charity (includ-
ing a participating trustee, custodian, or
agent in the case of a community trust) is
the owner in fee of the assets it receives
from the private foundation;
(B) Whether such assets are to be held
and administered by the public charity in a
manner consistent with one or more of its
exempt purposes;
(C) Whether the governing body of the
public charity has the ultimate authority
and control over such assets, and the in-
come derived therefrom; and
(D) Whether, and to what extent, the
governing body of the public charity is or-
ganized and operated so as to be indepen-
dent from the transferor.
(ii)Independent governing body.As
provided in paragraph (a)(7)(i)(D) of this
section, one of the more significant facts
and circumstances to be considered in
making the determination whether a par-
ticular condition or restriction imposed
upon a transfer of assets is material within
the meaning of this paragraph (a)(7) is
whether, and the extent to which, the gov-
erning body is organized and operated so
as to be independent from the transferor.
In turn, the determination as to such factor
must be determined from all of the facts
and circumstances. Some of the more
significant facts and circumstances to be
considered in making such a determina-
tion are—
(A) Whether, and to what extent, mem-
bers of the governing body are comprised
of persons selected by the transferor pri-
vate foundation or disqualified persons
with respect thereto, or are themselves
such disqualified persons;
(B) Whether, and to what extent, mem-
bers of the governing body are selected by
public officials acting in their capacities as
such; and
(C) How long a period of time each
member of the governing body may serve
as such. In the case of a transfer that is
to a community trust, the community trust
shall meet this paragraph (a)(7)(ii)(C) if,
with respect to terms of office beginning
after the date of transfer:
(1) its governing body is comprised of
members who may serve a period of not
more than ten consecutive years; and
(2) Upon completion of a period of ser-
vice (beginning before or after the date
of transfer), no member may serve again
within a period consisting of the lesser of
October 27, 20089852008–43 I.R.B.

5 years or the number of consecutive years
the member has immediately completed
serving.
(iii)Factors not adversely affecting de-
termination. The presence of some or all
of the following factors will not be con-
sidered as preventing the transferee “from
freely and effectively employing the trans-
ferred assets, or the income derived there-
from, in furtherance of its exempt pur-
poses” (within the meaning of paragraph
(a)(7)(i) of this section):
(A)Name. The fund is given a name
or other designation which is the same as
or similar to that of the transferor private
foundation or otherwise memorializes the
creator of the foundation or his family.
(B)Purpose. The income and assets of
the fund are to be used for a designated
purpose or for one or more particular sec-
tion 509(a)(1), (2), or (3) organizations,
and such use is consistent with the char-
itable, educational, or other basis for the
exempt status of the public charity under
section 501(c)(3).
(C)Administration. The transferred as-
sets are administered in an identifiable or
separate fund, some or all of the princi-
pal of which is not to be distributed for a
specified period, if thepublic charity (in-
cluding a participating trustee, custodian,
or agent in the case of a community trust)
is the legal and equitable owner of the fund
and the governing bodyexercises ultimate
and direct authority and control over such
fund, as, for example, a fund to endow a
chair at a university or a medical research
fund at a hospital. In the case of a com-
munity trust, the transferred assets must be
administered in or as a component part of
the community trust within the meaning of
§1.170A–9T(f)(11).
(D)Restrictions on disposition.The
transferor private foundation transfers
property the continued retention of which
by the transferee is required by the trans-
feror if such retention is important to the
achievement of charitable or other similar
purposes in the community because of
the peculiar features of such property, as,
for example, where a private foundation
transfers a woodlandpreserve which is to
be maintained by the public charity as an
arboretum for the benefit of the commu-
nity. Such a restriction does not include a
restrictiononthedispositionofaninvest-
ment asset or the distribution of income.
(iv)Adverse factors. The presence of
any of the following factors will be con-
sidered as preventing the transferee “from
freely and effectively employing the trans-
ferred assets, or the income derived there-
from, in furtherance of its exempt pur-
poses” (within the meaning of paragraph
(a)(7)(i) of this section):
(A)Distributions.(1) With respect to
distributions made after April 19, 1977, the
transferor private foundation, a disquali-
fied person with respect thereto, or any
person or committee designated by, or pur-
suant to the terms of an agreement with,
such a person (hereinafter referred to as
donor), reserves the right, directly or in-
directly, to name (other than by designa-
tion in the instrument of transfer of partic-
ular section 509(a)(1), (2), or (3) organiza-
tions) the persons to which the transferee
public charity must distribute, or to direct
the timing of such distributions (other than
bydirectionintheinstrument of transfer
that some or all of the principal, as op-
posed to specific assets, not be distributed
for a specified period) as, for example,
by a power of appointment. The Inter-
nal Revenue Service will examine care-
fully whether the seeking of advice by the
transferee from, or the giving of advice by,
any donor after the assets have been trans-
ferred to the transferee constitutes an in-
direct reservation of a right to direct such
distributions. In any such case, the reser-
vation of such a right will be considered
to exist where the only criterion consid-
ered by the public charity in making a
distribution of income or principal from
a donor’s fund is advice offered by the
donor. Whether there is a reservation of
such a right will be determined from all
of the facts and circumstances, including,
but not limited to, the factors contained in
paragraphs (a)(7)(iv)(A)(2)and(3)ofthis
section.
(2) The presence of some or all of the
following factors will indicate that the
reservation of such a right does not exist:
(i) There has been an independent in-
vestigation by the staff of the public char-
ity evaluating whether the donor’s advice
is consistent with specific charitable needs
most deserving of support by the public
charity (as determined by the public char-
ity).
(ii) The public charity has promulgated
guidelines enumerating specific charitable
needs consistent with the charitable pur-
poses of the public charity and the donor’s
advice is consistent with such guidelines.
(iii) The public charity has instituted an
educational program publicizing to donors
and other persons the guidelines enumer-
ating specific charitable needs consistent
with the charitable purposes of the public
charity.
(iv) The public charity distributes funds
in excess of amounts distributed from the
donor’s fund to the same or similar types of
organizations or charitable needs as those
recommended by the donor.
(v) The public charity’s solicitations
(written or oral) for funds specifically state
that such public charity will not be bound
by advice offered by the donor.
(3) The presence of some or all of the
following factors will indicate the reserva-
tion of such a right does exist:
(i) The solicitations (written or oral) of
funds by the public charity state or imply,
or a pattern of conduct on the part of the
public charity createsan expectation, that
the donor’s advice will be followed.
(ii) The advice of a donor (whether or
not restricted to a distribution of income
or principal from the donor’s trust or fund)
is limited to distributions of amounts from
the donor’s fund, and the factors described
in paragraph (a)(7)(iv)(A)(2)(i)or(ii)of
this section are not present.
(iii) Only the advice of the donor as to
distributions of such donor’s fund is so-
licited by the public charity and no pro-
cedure is provided for considering advice
from persons other than the donor with re-
spect to such fund.
(iv) For the taxable year and all prior
taxable years the public charity follows the
advice of all donors with respect to their
funds substantially all of the time.
(B) Other action or withholding of ac-
tion. The terms of the transfer agreement,
or any expressed or implied understanding,
required the public charity to take or with-
hold action with respect to the transferred
assets which is not designed to further one
or more of the exempt purposes of the pub-
lic charity, and such action or withhold-
ing of action would, if performed by the
transferor private foundation with respect
to such assets, have subjected the trans-
feror to tax under chapter 42 (other than
with respect to the minimum investment
return requirement of section 4942(e)).
(C)Assumption of leases, contractual
obligations, or liabilities. The public char-
2008–43 I.R.B.986October 27, 2008

ity assumes leases, contractual obligations,
or liabilities of the transferor private foun-
dation, or takes the assets thereof subject to
such liabilities (including obligations un-
der commitments or pledges to donees of
the transferor private foundation), for pur-
poses inconsistent with the purposes or
best interests of the public charity, other
than the payment of the transferor’s chap-
ter 42 taxes incurred prior to the transfer to
the public charity to the extent of the value
of the assets transferred.
(D)Retention of investment assets.The
transferee public charity is required by any
restriction or agreement (other than a re-
striction or agreement imposed or required
by law or regulatory authority), express or
implied, to retain any securities or other
investment assets transferred to it by the
private foundation. In a case where such
transferred assets consistently produce a
low annual return of income, the Internal
Revenue Service will examine carefully
whether the transferee is required by any
such restriction or agreement to retain such
assets.
(E)Right of first refusal. An agreement
is entered into in connection with the trans-
fer of securities or other property which
grants directly or indirectly to the trans-
feror private foundation or any disquali-
fied person with respect thereto a right of
first refusal with respect to the transferred
securities or other property when and if
disposed of by the public charity, unless
such securities or other property was ac-
quired by the transferor private foundation
subject to such right of first refusal prior to
October 9, 1969.
(F)Relationships. An agreement is en-
tered into between the transferor private
foundation and the transferee public char-
ity which establishes irrevocable relation-
ships with respect to the maintenance or
management of assets transferred to the
public charity, such as continuing relation-
ships with banks, brokerage firms, invest-
ment counselors, or other advisors with re-
gard to the investments or other property
transferred to the public charity (other than
a relationship with a trustee, custodian,
or agent for a community trust acting as
such). The transfer of property to a public
charity subject to contractual obligations
which were established prior to November
11, 1976, between the transferor private
foundation and persons other than disqual-
ified persons with respect to such founda-
tion will not be treated as prohibited un-
der the preceding sentence, but only if such
contractual obligations were not entered
into pursuant to a plan to terminate the pri-
vate foundation status of the transferor un-
der section 507(b)(1)(A) and if the contin-
uation of such contractual obligations is in
the best interests of the public charity.
(G)Other conditions. Any other con-
dition is imposed on action by the public
charity which prevents it from exercising
ultimate control over the assets received
from the transferor private foundation for
purposes consistent with its exempt pur-
poses.
(v)Examples. The provisions of this
paragraph (a)(7) may be illustrated by the
following examples:
Example 1. The M Private Foundation transferred
all of its net assets to the V Cancer Institute, a public
charity described in section 170(b)(1)(A)(iii). Prior
to the transfer, M’s activities consisted of making
grants to hospitals and universities to further research
into the causes of cancer. Under the terms of the
transfer, V is required to keep M’s assets in a separate
fund and use the income and principal to further can-
cer research. Although the assets may be used only
for a limited purpose, this purpose is consistent with
and in furtherance of V’s exempt purposes, and does
not prevent the transfer from being a distribution for
purposes of section 507(b)(1)(A).
Example 2. The N Private Foundation transferred
all of its net assets to W University, a public char-
ity described in section 170(b)(1)(A)(ii). Under the
terms of the transfer, W is required to use the income
and principal to endow a chair at the university to be
known as the “John J. Doe Memorial Professorship”,
named after N’s creator. Although the transferred as-
sets are to be used for a specified purpose by W, this
purpose is in furtherance of W’s exempt educational
purposes, and there are no conditions on investment
or reinvestment of the principal or income. The use
of the name of the foundation’s creator for the chair
is not a restriction which would prevent the trans-
fer from being a distribution for purposes of section
507(b)(1)(A).
Example 3. The O Private Foundation transferred
all of its net assets to X Bank as trustee for the Q Com-
munity Trust, a community trust that is a public char-
ity described in section 170(b)(1)(A)(vi). Under the
terms of the transfer, X is to hold the assets in trust
for Q and is directed to distribute the income annu-
ally to the Y Church, a public charity described in
section 170(b)(1)(A)(i). The distribution of income
to Y Church is consistent with Q’s exempt purposes.
If the trust created by this transfer otherwise meets
the requirements of §1.170A–9T(f)(11) as a compo-
nent part of the Q Community Trust, the assets trans-
ferred by O to X will be treated as distributed to one
or more public charities within the meaning of sec-
tion 507(b)(1)(A). The direction to distribute the in-
come to Y Church meets the conditions of paragraph
(a)(7)(iii)(B) of this section and will therefore not dis-
qualify the transfer under section 507(b)(1)(A).
Example 4. (i) The P Private Foundation trans-
ferred all of its net assets to Z Bank as trustee for the R
Community Trust, a community trust that is a public
charity described in section 170(b)(1)(A)(vi). Under
the terms of the transfer, Z is to hold the assets in trust
for R and distribute the income to those public chari-
ties described in section 170(b)(1)(A)(i) through (vi)
that are designated by B, the creator of P. R’s gov-
erning body has no authority during B’s lifetime to
vary B’s direction. Under the terms of the transfer, it
is intended that Z retain the transferred assets in their
present form for a period of 20 years, or until the date
of B’s death if it occurs before the expiration of such
period. Upon the death of B, R will have the power
to distribute the income to such public charities as it
selects and may dispose of the corpus as it sees fit.
(ii) Under paragraph (a)(7)(iv)(A) or (D) of this
section, as a result of the restrictions imposed with
respect to the transferred assets, there has been no
distribution of all P’s net assets within the meaning
of section 507(b)(1)(A) at the time of the transfer.
In addition, P has not transferred its net assets to a
component part of R Community Trust, but rather to
a separate trust described in §1.170A–9T(f)(12).
(b)Operation as a public charity—(1)
In general. Under section 507(b)(1)(B),
an organization can terminate its private
foundation status if the organization—
(i) Meets the requirements of section
509(a)(1), (2) or (3) for a continuous pe-
riod of 60 calendar months beginning with
the first day of any taxable year that begins
after December 31, 1969;
(ii) In compliance with section
507(b)(1)(B)(ii) and paragraph (b)(3) of
this section, properly notifies the Internal
Revenue Service, in such manner as may
be provided by published guidance, pub-
lication, form or instructions, before the
commencement of such 60-month period,
that it is terminating its private foundation
status; and
(iii) Properly establishes immediately
after the expiration of such 60-month pe-
riod that such organization has complied
with the requirements of section 509(a)(1),
(2) or (3) during the 60-month period, in
the manner described in paragraph (b)(4)
of this section.
(2)Relationship of section 507(b)(1)(B)
to section 507(a), (c), and (g). Because
section 507(a) does not apply to a termi-
nation described in section 507(b)(1)(B),
a private foundation’s notification that it
is commencing a termination pursuant to
section 507(b)(1)(B) will not be treated as
a notification described in section 507(a)
even if the private foundation does not suc-
cessfully terminate its private foundation
status pursuant to section 507(b)(1)(B).
A private foundation that terminates its
private foundation status under section
507(b)(1)(B) does not incur tax under sec-
October 27, 20089872008–43 I.R.B.

tion 507(c) and, therefore, no abatement of
such tax under section 507(g) is required.
(3)Notification of termination.In
order to comply with the requirements
under section 507(b)(1)(B)(ii), an organ-
ization shall before the commencement
of the 60-month period under section
507(b)(1)(B)(i) notify the Internal Rev-
enue Service, in such manner as may be
provided by published guidance, publica-
tion, form or instructions, of its intention
to terminate its private foundation status.
Such notification shall contain the follow-
ing information:
(i) The name and address of the private
foundation.
(ii) Its intention to terminate its private
foundation status.
(iii) The Code section under which it
seeks classification (section 509(a)(1), (2)
or (3)).
(iv) If section 509(a)(1) is applicable,
the clause of section 170(b)(1)(A) in-
volved.
(v) The date its regular taxable year be-
gins.
(vi) The date of commencement of the
60-month period.
(4)Establishment of termination.Inor-
der to comply with the requirements un-
der section 507(b)(1)(B)(iii), an organiza-
tion shall within 90 days after the expira-
tion of the 60-month period file such infor-
mation with the Internal Revenue Service,
in such manner as may be provided by pub-
lished guidance, publication, form or in-
structions, as is necessary to make a de-
termination as to the organization’s status
as an organization described under section
509(a)(1), (2) or (3) and the accompany-
ing regulations. See paragraph (c) of this
sectionastotheinformationrequiredtobe
submitted under this paragraph (b)(4).
(5)Incomplete information.Thefail-
ure to supply, within the required time, all
oftheinformationrequiredbyparagraph
(b)(3) or (4) of this section is not alone suf-
ficient to constitute a failure to satisfy the
requirements of section 507(b)(1)(B). If
the information that is submitted within the
required time is incomplete and the organi-
zation supplies the necessary additional in-
formation at the request of the Commis-
sioner within the additional time period al-
lowed by him, the original submission will
be considered timely.
(6)Application of special rules and fil-
ing requirements. An organization that has
terminated its private foundation status un-
der section 507(b)(1)(B) is not required to
comply with the special rules set forth in
section 508(a) and (b). Such organization
is also not required to file a return under the
provisions of section 6043(b) or 6050 by
reason of termination of its private founda-
tion status under the provisions of section
507(b)(1)(B).
(7)Extension of time to assess defi-
ciencies. If a private foundation files a
notification (defined in paragraph (b)(3)
of this section) that it intends to begin a
60-month termination pursuant to section
507(b)(1)(B) and does not file a request for
an advance ruling pursuant to paragraph
(d) of this section, such private foundation
may file with the notification described
in paragraph (b)(3) of this section a con-
sent under section 6501(c)(4) to the effect
that the period of limitation upon assess-
ment under section 4940 for any taxable
year within the 60-month termination pe-
riod shall not expire prior to one year af-
ter the date of expiration of the time pre-
scribed by law for the assessment of a de-
ficiency for the last taxable year within the
60-month period. Such consents, if filed,
will ordinarily be accepted by the Com-
missioner. See paragraph (e)(3) of this sec-
tion for an illustration of the procedure re-
quired to obtain a refund of the tax im-
posed by section 4940 in a case where such
a consent is not in effect.
(c)Sixty-month terminations—(1)
Method of determining normal sources
of support. (i) In order to meet the re-
quirements of section 507(b)(1)(B) for the
60-month termination period as a section
509(a)(1) or (2) organization, an organiza-
tion must meet the requirements of section
509(a)(1) or (2), as the case may be, for
a continuous period of at least 60 calen-
dar months. In determining whether an
organization seeking status under section
509(a)(1) as an organization described in
section170(b)(1)(A)(iv)or(vi)orunder
section 509(a)(2) normally meets the re-
quirements set forth under such sections,
support received in taxable years prior to
the commencement of the 60-month pe-
riod shall not be taken into consideration,
except as otherwise provided in this sec-
tion.
(ii) For purposes of section
507(b)(1)(B), an organization will be con-
sideredtobeasection509(a)(1)organiza-
tion described in section 170(b)(1)(A)(vi)
for a continuous period of 60 calendar
months only if the organization satisfies
the provisions of §1.170A–9T(f), other
than §1.170A–9T(f)(4)(v), based upon
aggregate data for such entire period.
The calculation of public support shall
be made over the period beginning with
the date of the commencement of the
60-month period, and ending with the last
day of the 60-month period.
(iii) For purposes of section
507(b)(1)(B), an organization will be
considered to be a section 509(a)(2)
organization only if such organization
meets the support requirements set forth
in section 509(a)(2)(A) and (B) and the
accompanying regulations, other than
§1.509(a)–3T(d), for the continuous
period of 60 calendar months prescribed
under section 507(b)(1)(B). The calcu-
lation of public support shall be made
over the period beginning with the date
of the commencement of the 60-month
period, and ending with the last day of the
60-month period.
(2)Organizational and operational
tests. In order to meet the requirements
of section 507(b)(1)(B) for the 60-month
termination period as an organization
described in section 170(b)(1)(A)(i), (ii),
(iii), (iv), or (v) or section 509(a)(3), as the
case may be, an organization must meet
the requirements of the applicable provi-
sions for a continuous period of at least 60
calendar months.For purposes of section
507(b)(1)(B), an organization will be con-
sideredtobesuchanorganizationonlyif
it satisfies the requirements of the appli-
cable provision (including with respect to
section 509(a)(3), the organizational and
operational test set forth in subparagraph
(A) thereof) at the commencement of such
60-month period and continuously there-
after during such period.
(d)Advance rulings for 60-month
terminations—(1)In general.Anor-
ganization that files the notification re-
quired by section 507(b)(1)(B)(ii) that it
is commencing a 60-month termination
may obtain an advance ruling from the
Commissioner that it can be expected
to satisfy the requirements of section
507(b)(1)(B)(i) during the 60-month pe-
riod. Such an advance ruling may be is-
sued if the organization can reasonably be
expected to meet the requirements of sec-
tion 507(b)(1)(B)(i) during the 60-month
2008–43 I.R.B.988October 27, 2008

period. The issuance of a ruling will be
discretionary with the Commissioner.
(2)Basic consideration. In determining
whether an organization can reasonably be
expected (within the meaning of paragraph
(d)(1) of this section) to meet the require-
ments of section 507(b)(1)(B)(i) for the
60-month period, the basic consideration
is whether its organizational structure (tak-
ing into account any revisions made prior
to the beginning of the 60-month period),
current or proposed programs or activities,
actual or intended method of operation,
and current or projected sources of support
are such as to indicate that the organization
is likely to satisfy the requirements of sec-
tion 509(a)(1), (2), or (3) and paragraph (d)
of this section during the 60-month period.
In making such a determination, all perti-
nent facts and circumstances shall be con-
sidered.
(3)Reliance by grantors and con-
tributors. For purposes of sections 170,
545(b)(2), 642(c), 4942, 4945, 2055,
2106(a)(2), and 2522, grants or contribu-
tions to an organization which has obtained
a ruling referred to in this paragraph will
be treated as made to an organization de-
scribed in section 509(a)(1), (2), or (3), as
the case may be, until the Internal Revenue
Service publishes notice that such advance
ruling is being revoked (such as by pub-
lication in the Internal Revenue Bulletin).
However, a grantor or contributor may
notrelyonsuchanadvancerulingifthe
grantor or contributor was responsible for,
or aware of, the act or failure to act that re-
sulted in the organization’s failure to meet
the requirements of section 509(a)(1), (2),
or (3), or acquired knowledge that the
Internal Revenue Service had given no-
tice to such organization that its advance
ruling would be revoked. Prior to the
making of any grant or contribution which
allegedly will not result in the grantee’s
failure to meet the requirements of section
509(a)(1), (2), or (3), a potential grantee
organization may request a ruling whether
such grant or contribution may be made
without such failure. A request for such
ruling may be filed by the grantee organi-
zation with the Internal Revenue Service.
The issuance of such ruling will be at the
sole discretion of the Commissioner. The
organization must submit all information
necessary to make a determination on the
factors referred to in paragraph (d)(2) of
this section. If a favorable ruling is is-
sued, such ruling may be relied upon by
the grantor or contributor of the particu-
lar contribution in question for purposes
of sections 170, 507, 545(b)(2), 642(c),
4942, 4945, 2055, 2106(a)(2), and 2522.
(4)Reliance by organization.Anor-
ganization obtaining an advance ruling
pursuant to this paragraph cannot rely on
such a ruling. Consequently, if the or-
ganization does not pay the tax imposed
by section 4940 for any taxable year or
years during the 60-month period, and it
is subsequently determined that such tax
is due for such year or years (because the
organization did not in fact complete a
successful termination pursuant to section
507(b)(1)(B) and was not treated as an or-
ganization described in section 509(a)(1),
(2), or (3) for such year or years), the
organization is liable for interest in accor-
dance with section 6601 if any amount of
tax under section 4940 has not been paid
on or before the last date prescribed for
payment. However, because any failure to
pay such tax during the 60-month period
(or prior to the revocation of such ruling)
is due to reasonable cause, the penalty
under section 6651 with respect to the tax
imposed by section 4940 shall not apply.
(5)Extension of time to assess deficien-
cies. The advance ruling described in para-
graph (d)(1) of this section shall be issued
only if such organization’s request for an
advance ruling is filed with a consent un-
der section 6501(c)(4) to the effect that the
period of limitation upon assessment under
section 4940 for any taxable year within
the advance ruling period shall not expire
prior to 1 year after the date of the expira-
tion of the time prescribed by law for the
assessment of a deficiency for the last tax-
able year within the 60-month period.
(e)Effect on grantors or contributors
and on the organization itself—(1)Effect
of satisfaction of requirements for termi-
nation; treatment during the termination
period. In the event that an organiza-
tion satisfies the requirements of section
507(b)(1)(B) for termination of its private
foundation status during the continuous
60-month period, such organization shall
be treated for such entire 60-month period
in the same manner as an organization
described in section 509(a)(1), (2) or (3),
as the case may be.
(2)Failure to meet termination re-
quirements—(i)In general. Except as
otherwise provided in paragraphs (e)(2)(ii)
and (d) of this section, any organization
that fails to satisfy the requirements of
section 507(b)(1)(B) for termination of its
private foundation status during the con-
tinuous 60-month period shall be treated
as a private foundation for the entire
60-month period, for purposes of sec-
tions 507 through 509 and chapter 42, and
grants or contributions to such an organi-
zation shall be treated as made to a private
foundation for purposes of sections 170,
507(b)(1)(A), 4942, and 4945.
(ii)Certain 60-month terminations.
Notwithstanding paragraph (e)(2)(i) of this
section, if an organization fails to satisfy
the requirements of section 509(a)(1), (2)
or (3) for the continuous 60-month period
but does satisfy the requirements of section
509(a)(1), (2) or (3), as the case may be,
for any taxable year or years during such
60-month period, the organization shall be
treated as a section 509(a)(1), (2) or (3)
organization for such taxable year or years
and grants or contributions made during
such taxable year or years shall be treated
as made to an organization described in
section 509(a)(1), (2) or (3). In addition,
sections 507 through 509 and chapter 42
shall not apply to such organization for any
taxable year within such 60-month period
for which it does meet such requirements.
For purposes of determining whether an
organization satisfies the requirements of
section 509(a)(1), (2) or (3) for any taxable
year in the 60-month period, the calcula-
tion of public support shall be made over
the period beginning with the date of the
commencement of the 60-month period,
and ending with the last day of the taxable
year being tested. The organization shall
not be treated as a section 509(a)(1) or
(2) organization for any taxable year dur-
ing the 60-month period solely by reason
of having met a public support test for
the preceding year. In addition, the tran-
sition rules in §1.170–9T(f)(14)(iii) and
§1.509(a)–3T(n)(iii) shall not apply.
(iii)Aggregate tax benefit. For purposes
of section 507(d), the organization’s aggre-
gate tax benefit resulting from the organi-
zation’s section 501(c)(3) status shall con-
tinue to be computed from the date from
which such computation would have been
made, but for the notice filed under sec-
tion 507(b)(1)(B)(ii), except that any tax-
able year within such 60-month period for
which such organization meets the require-
October 27, 20089892008–43 I.R.B.

ments of section 509(a)(1), (2), or (3) shall
be excluded from such computations.
(iv)Excess business holdings.See
section 4943 and the accompanying reg-
ulations for rules relating to decreases
in a private foundation’s holdings in a
business enterprise which are caused by
the foundation’s failure to terminate its
private foundation status after giving the
notification for termination under section
507(b)(1)(B)(ii).
(3)Example. The provisions of this
paragraph (e) may be illustrated by the fol-
lowing example:
Example. Y, a calendar year private foundation,
notifies the Internal Revenue Service that it intends
to terminate its private foundation status by convert-
ing into a publicly supported organization described
in section 170(b)(1)(A)(vi) and that its 60-month ter-
mination period will commence on January 1, 2010.
Y does not obtain a ruling described in paragraph (d)
of this section. Based upon its support for 2010, Y
does not qualify as a publicly supported organization
within the meaning of §1.170A–9T(f) and this para-
graph for 2010. Consequently, in order to avoid the
risks of penalties and interest if Y fails to terminate
within the 60-month period, Y files its 2010 return
as a private foundation and pays the tax imposed by
section 4940. Because a consent (described in para-
graph (b)(7) of this section), which would prevent the
period of limitations for all years in the 60-month pe-
riod from expiring, is not in effect, in order to be able
to file a claim for refund, Y and the Internal Rev-
enue Service must agree to extend the period of limi-
tation for all taxes imposed under chapter 42 for 2010.
Based on the aggregate data for the entire 60-month
period (2010 through 2014), Y does qualify as a pub-
licly-supported organization for the entire 60-month
period. Consequently, Y is treated as a publicly-sup-
ported organization for the entire 60-month period. Y
files a claim for refund for the taxes paid under sec-
tion 4940 for 2010, and such taxes are refunded.
(f)Effective/applicability date—(1)Ef-
fective date. These regulations are effec-
tive on September 9, 2008.
(2)Applicability date. The regulations
in this section shall apply to taxable years
beginning on or after January 1, 2008.
(3)Expiration date. The applicability
of this section expires on September 8,
2011.
Par. 6. Section 1.509(a)–3 is amended
by adding new paragraph (n) to read as
follows:
§1.509(a)–3 Broadly, publicly supported
organizations.
*****
(n)Effective/applicability date.This
section shall apply to taxable years begin-
ning after December 31, 1969. The appli-
cability of paragraphs (a)(2), (a)(3)(i), (c),
(d), (e) and (k) of this section shall be lim-
ited to taxable years beginning before Jan-
uary 1, 2008.
Par. 7. Section 1.509(a)–3T is added to
read as follows:
§1.509(a)–3T Broadly, publicly supported
organizations (temporary).
(a)(1) [Reserved]. For further guid-
ance, see §1.509(a)–3(a)(1).
(2)One-third support test.Anorgani-
zation will meet the one-third support test
if it normally (within the meaning of para-
graph (c) or (d) of this section) receives
more than one-third of its support in each
taxable year from any combination of—
(i) Gifts, grants, contributions, or mem-
bership fees; and
(ii) Gross receipts from admissions,
sales of merchandise, performance of ser-
vices, or furnishing of facilities, in an
activity that is not an unrelated trade or
business (within the meaning of section
513), subject to certain limitations de-
scribed in paragraph (b) of this section,
from permitted sources. For purposes of
this section, governmental units, organi-
zations described in section 509(a)(1) and
persons other than disqualified persons
with respect to the organization shall be
referred to as permitted sources. For pur-
poses of this section, the amount of sup-
port received from the sources described
in paragraph (a)(2)(i) of this section and
this paragraph (a)(2)(ii) (subject to the
limitations referred to in this paragraph
(a)(2)) will be referred to as the numera-
tor of the one-third support fraction, and
the total amount of support received (as
defined in section 509(d)) will be referred
to as the denominator of the one-third
support fraction. For purposes of section
509(a)(2), §1.509(a)–3(f) distinguishes
gifts and contributions from gross re-
ceipts; §1.509(a)–3(g) distinguishes grants
from gross receipts; §1.509(a)–3(h) de-
fines membership fees; §1.509(a)–3(i)
defines “any bureau or similar agency
of a governmental unit”; §1.509(a)–3(j)
describes the treatment of certain indirect
forms of support; paragraph (k) of this
section describes the method of account-
ing for support; §1.509(a)–3(l) describes
the treatment of gross receipts from sec-
tion 513(a)(1), (2), or (3) activities; and
§1.509(a)–3(m) distinguishes gross re-
ceipts from gross investment income.
(3)Not-more-than-one-third support
test—(i)In general. An organization will
meet the not-more-than-one-third support
testundersection509(a)(2)(B)ifitnor-
mally (within the meaning of paragraph
(c) or (d) of this section) receives not
more than one-third of its support in each
taxable year from the sum of its gross
investment income (as defined in section
509(e)) and the excess (if any) of the
amount of its unrelated business taxable
income (as defined in section 512) derived
from trades or businesses that were ac-
quired by the organization after June 30,
1975, over the amount of tax imposed on
such income by section 511. For purposes
of this section the amount of support re-
ceivedfromitemsdescribedinsection
509(a)(2)(B) will be referred to as the
numerator of the not-more-than-one-third
support fraction, and the total amount of
support (as defined in section 509(d)) will
be referred to as the denominator of the
not-more-than-one-third support fraction.
For purposes of section 509(a)(2), para-
graph (m) of this section distinguishes
gross receipts from gross investment in-
come. For purposes of section 509(e),
gross investment income includes the
items of investment income described in
§1.512(b)–1(a).
(a)(3)(ii) through (b) [Reserved]. For
further guidance, see §1.509(a)–3(a)(3)(ii)
through (b).
(c)Normally—(1)In general—(i)Def-
inition. The support tests set forth in sec-
tion 509(a)(2) are to be computed on the
basis of the nature of the organization’s
normal sources of support. An organi-
zation will be considered as normally re-
ceiving one third of its support from any
combination of gifts, grants, contributions,
membership fees, and gross receipts from
permitted sources (subject to the limita-
tions described in §1.509(a)–3(b)) and not
more than one third of its support from
items described in section 509(a)(2)(B) for
its current taxable year and the taxable year
immediately succeeding its current year, if,
for the current taxable year and the four
taxable years immediately preceding the
current taxable year, the aggregate amount
of the support received during the applica-
ble period from gifts, grants, contributions,
membership fees, and gross receipts from
permitted sources (subject to the limita-
tions described in §1.509(a)–3(b)) is more
than one third, and the aggregate amount of
2008–43 I.R.B.990October 27, 2008

the support received from items described
in section 509(a)(2)(B) is not more than
one third, of the total support of the organ-
ization for such 5-year period.
(ii)First five years of an organization’s
existence. See paragraph (d)(1) of this sec-
tion for the definition of “normally” for or-
ganizations in the first five years of their
existence.
(2)Terminations under section
507(b)(1)(B). For the special rules appli-
cable to the term normally as applied to
private foundations that elect to terminate
their private foundation status pursuant
to the 60-month procedure provided in
section 507(b)(1)(B), see the regulations
under such section.
(3)Exclusion of unusual grants.For
purposes of applying the 5-year aggrega-
tion test for support set forth in paragraph
(c)(1) of this section, one or more contribu-
tions may be excluded from the numerator
of the one-third support fraction and from
the denominator of both the one-third sup-
port and not-more-than-one-third support
fractions only if such a contribution meets
the requirements of this paragraph (c)(3).
The exclusion provided by this paragraph
(c)(3) is generally intended to apply to sub-
stantial contributions and bequests from
disinterested parties, which contributions
or bequests—
(i) Are attracted by reason of the pub-
licly supported nature of the organization;
(ii) Are unusual or unexpected with re-
spect to the amount thereof; and
(iii) Would by reason of their size, ad-
versely affect the status of the organization
as normally meeting the one-third support
test for any of the applicable periods de-
scribed in this paragraph (c) or paragraph
(d) of this section. In the case of a grant (as
defined in §1.509(a)–3(g)) that meets the
requirements of this paragraph (c)(3), if the
terms of the granting instrument (whether
executed before or after 1969) require that
the funds be paid to the recipient organi-
zation over a period of years, the amount
received by the organization each year pur-
suant to the terms of such grant may be ex-
cluded for such year. However, no item
described in section 509(a)(2)(B) may be
excluded under this paragraph (c)(3). The
provisions of this paragraph (c)(3) shall
apply to exclude unusual grants made dur-
ing any of the applicable periods described
in this paragraph (c) or paragraph (d) of
this section. See paragraph (c)(5)(ii) of
this section as to reliance by a grantee or-
ganization upon an unusual grant ruling
under this paragraph (c)(3).
(4)Determining factors. In determin-
ing whether a particular contribution may
be excluded under paragraph (c)(3) of this
section, all pertinent facts and circum-
stances will be taken into consideration.
No single factor will necessarily be de-
terminative. Among the factors to be
considered are—
(i) Whether the contribution was made
by any person (or persons standing in a
relationship to such person which is de-
scribed in section 4946(a)(1)(C) through
(G)) who created the organization, previ-
ously contributed a substantial part of its
support or endowment, or stood in a po-
sition of authority, such as a foundation
manager (within the meaning of section
4946(b)), with respect to the organization.
A contribution made by a person other than
those persons described in this paragraph
(c)(4)(i) will ordinarily be given more fa-
vorable consideration than a contribution
made by a person described in this para-
graph (c)(4)(i);
(ii) Whether the contribution was a be-
quest or aninter vivostransfer. A bequest
will ordinarily be given more favorable
consideration than aninter vivostransfer;
(iii) Whether the contribution was in
the form of cash, readily marketable secu-
rities, or assets which further the exempt
purposes of the organization, such as a gift
ofapaintingtoamuseum;
(iv) Except in the case of a new or-
ganization, whether, prior to the receipt
of the particular contribution, the organ-
ization has carried on an actual program
of public solicitation and exempt activities
and has been able to attract a significant
amount of public support;
(v) Whether the organization may rea-
sonably be expected to attract a significant
amount of public support subsequent to
the particular contribution. In this connec-
tion, continued reliance on unusual grants
to fund an organization’s current operat-
ing expenses (as opposed to providing new
endowment funds) may be evidence that
the organization cannot reasonably be ex-
pected to attract future support from the
general public;
(vi) Whether, prior to the year in which
the particular contribution was received,
the organization met the one-third support
test described in paragraph (c)(1) of this
section without the benefit of any exclu-
sions of unusual grants pursuant to para-
graph (c)(3) of this section;
(vii) Whether neither the contributor
nor any person standing in a relationship
to such contributor which is described in
section 4946(a)(1)(C) through (G) con-
tinues directly or indirectly to exercise
control over the organization;
(viii) Whether the organization has
a representative governing body as de-
scribed in §1.509(a)–3(d)(3)(i); and
(ix) Whether material restrictions
or conditions (within the meaning of
§1.507–2T(a)(7)) have been imposed by
the transferor upon the transferee in con-
nection with such transfer.
(5)Grantors and contributors.Priorto
the making of any grant or contribution
expected to meet the requirements for ex-
clusion under paragraph (c)(3) of this sec-
tion, a potential grantee organization may
request a ruling whether such grant or con-
tribution may be so excluded. Requests
forsuchrulingmaybefiledbythegrantee
organization. The issuance of such de-
termination will be at the sole discretion
of the Commissioner. The organization
must submit all information necessary to
make a determination of the applicability
of paragraph (c)(3) of this section, includ-
ing all information relating to the factors
described in paragraph (c)(4) of this sec-
tion. If a favorable ruling is issued, such
ruling may be relied upon by the grantor or
contributor of the particular contribution
in question for purposes of sections 170,
507, 545(b)(2), 642(c), 4942, 4945, 2055,
2106(a)(2), and 2522 and by the grantee or-
ganization for purposes of paragraph (c)(3)
of this section.
(6)Examples. The application of the
principles set forth in this paragraph are
illustrated by the examples as follows. For
purposes of these examples, the termgen-
eral publicis defined as persons other than
disqualified persons and other than per-
sons from whom the foundation received
gross receipts in excess of the greater of
$5,000 or 1 percent of its support in any
taxable year, the termgross investment
incomeis as defined in section 509(e),
and the termgross receiptsis limited to
receipts from activities which are not un-
related trades or businesses (within the
meaning of section 513).
Example 1. (i) For the years 2008 through 2012,
X, an organization exempt under section 501(c)(3)
October 27, 20089912008–43 I.R.B.

that makes scholarship grants to needy students of a
particular city, received support from the following
sources:
2008
Gross receipts (general public) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 35,000
Contributions(substantialcontributors) ....................................................................................36,000
Grossinvestmentincome ...............................................................................................29,000
Totalsupport ...................................................................................................100,000
2009
Gross receipts (general public) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34,000
Contributions(substantialcontributors) ....................................................................................
35,000
Gross inve
stmentincome ...............................................................................................
31,000
Totalsupport ...................................................................................................100,000
2010
Gross receipts (general public) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35,000
Contributions(substantialcontributors) ....................................................................................30,000
Grossinvestmentincome ...............................................................................................
35,000
Total su
pport ...................................................................................................
100,000
2011
Gross re
ceipts(generalpublic) ...........................................................................................
33,000
Contributions(substantialcontributors) ....................................................................................32,000
Grossinvestmentincome ...............................................................................................
35,000
Totalsupport ...................................................................................................100,000
2012
Gross receipts (general public) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31,000
Contributions(substantialcontributors) ....................................................................................39,000
Grossinvestmentincome ...............................................................................................30,000
Totalsupport ...................................................................................................100,000
(ii) In applying section 509(a)(2) to the taxable
yea
r 2012, on the basis of paragraph (c)(1)(i) of this
section, the total amount of support from gross re-
ceipts from the general public ($168,000) for the pe-
ri
od 2008 through 2012, was more than one third, and
the total amount of support from gross investment in-
come ($160,000) was less than one third, of X’s to-
ta
l support for the same period ($500,000). For the
taxable years 2012 and 2013, X is therefore consid-
ered normally to receive more than one third of its
su
pport from the public sources described in section
509(a)(2)(A) and less than one third of its support
fromitemsdescribedinsection509(a)(2)(B).The
f
act that X received less than one third of its support
from section 509(a)(2)(A) sources in 2012 and more
than one third of its support from items described in
s
ection 509(a)(2)(B) in 2011 does not affect its status
because it met the normally test over a 5-year period.
Example 2. Assume the same facts as inExam-
p
le 1except that in 2012, X also received an unex-
pected bequest of $50,000 from A, an elderly widow
who was interested in encouraging the work of X,
but had no other relationship to it. Solely by reason
of the bequest, A became a disqualified person. X
used the bequest to create 5 new scholarships. Its op-
erations otherwise remained the same. Under these
circumstances X could not meet the 5-year support
test because the total amount received from gross re-
ceipts from the general public ($168,000) would not
be more than one-third of its total support for the
5-year period ($550,000). Because A is a disqual-
ified person, her bequest cannot be included in the
numerator of the one-third support test under section
509(a)(2)(A). However, based on the factors set forth
in p
aragraph (c)(4) of this section, A’s bequest may be
excluded as an unusual grant under paragraph (c)(3)
of this section. Therefore, X will be considered to
ha
ve met the support test for the taxable years 2012
and 2013.
Example 3. Y, an organization described in sec-
ti
on 501(c)(3), was created by A, the holder of all
the common stock in M corporation, B, A’s wife, and
C, A’s business associate. The purpose of Y was to
sp
onsor and equip athletic teams for underprivileged
children in the community. Each of the three creators
makes small cash contributions to Y. A, B, and C have
b
een active participants in the affairs of Y since its
creation. Y regularly raises small amounts of contri-
butions through fundraising drives and selling admis-
s
ion to some of the sponsored sporting events. The
operations of Y are carried out on a small scale, usu-
ally being restricted to the sponsorship of two to four
b
aseball teams of underprivileged children. In 2009,
M recapitalizes and creates a first and second class of
6 percent nonvoting preferred stock, most of which
is held by A and B. In 2010, A contributes 49 per-
cent of his common stock in M to Y. A’s contribution
of M’s common stock was substantial and constitutes
90 percent of Y’s total support for 2010. A combina-
tion of the facts and circumstances described in para-
graph (c)(4) of this section preclude A’s contribution
of M’s common stock in 2010 from being excluded
as an unusual grant under paragraph (c)(3) of this sec-
tion for purposes of determining whether Y meets the
one-third support test under section 509(a)(2).
Example 4. (i) M is organized in 2009 to promote
the
appreciation of ballet in a particular region of the
United States. Its principal activities consist of erect-
ing a theater for the performance of ballet and the or-
ga
nization and operation of a ballet company. M re-
ceives a determination letter that it is an organization
described in section 501(c)(3) and that it is a public
ch
arity described in section 509(a)(2). The governing
body of M consists of 9 prominent unrelated citizens
residing in the region who have either an expertise in
ba
llet or a strong interest in encouraging appreciation
of the art form.
(ii) In 2010, Z, a private foundation, proposes to
m
ake a grant of $500,000 in cash to M to provide suf-
ficient capital for M to commence its activities. Al-
though A, the creator of Z, is one of the nine mem-
b
ers of M’s governing body, was one of M’s original
founders, and continues to lend his prestige to M’s ac-
tivities and fund raising efforts, A does not, directly
o
r indirectly, exercise any control over M. M also re-
ceives a significant amount of support from a num-
ber of smaller contributions and pledges from other
members of the general public. M charges admission
to the ballet performances to the general public.
(iii) Although the support received in 2010 will
not impact M’s status as a public charity for its first 5
taxable years, it will be relevant to the determination
of whether M meets the one-third support test under
section 509(a)(2) for the 2014 taxable year, using the
computation period 2010 through 2014. Within the
appropriate timeframe, M may submit a request for
a private letter ruling that the $500,000 contribution
from Z qualifies as an unusual grant.
2008–43 I.R.B.992October 27, 2008

(iv) Under the above circumstances, even though
A was a founder and member of the governing body
of M, M may exclude Z’s contribution of $500,000
in 2010 as an unusual grant under paragraph (c)(3)
of this section for purposes of determining whether
M meets the one-third support test under section
509(a)(2) for 2014.
Example 5. (i) Assume the same facts asExample
4. In 2013, B, a widow, passes away and bequeaths
$4 million to M. During 2009 through 2013, B made
small contributions to M, none exceeding $10,000 in
any year. During 2009 through 2013, M received
approximately $550,000 from receipts for admissions
and contributions from the general public. At the time
ofB’sdeath,nopersonstandinginarelationshiptoB
described in section 4946(a)(1)(C) through (G) was
a member of M’s governing body. B’s bequest was
in the form of cash and readily marketable securities.
The only condition placed upon the bequest was that
it be used by M to advance the art of ballet.
(ii) Although the support received in 2013 will not
impact M’s status as a public charity for its first five
taxable years, it will be relevant to the determination
of whether M meets the one-third support test under
section 509(a)(2) for future years. Within the appro-
priate timeframe, M may submit a request for a pri-
vate letter ruling that the $4 million bequest from B
qualifies as an unusual grant.
(iii) Under the above circumstances, M may ex-
clude B’s bequest of $4 million in 2013 as an unusual
grant under paragraph (c)(3) of this section for pur-
poses of determining whether M meets the one-third
support test under section 509(a)(2) for 2014 and sub-
sequent years.
Example 6. (i) N is a research organization that
was created by A in 2009 for the purpose of carrying
on economic studies primarily through persons re-
ceivinggrantsfromNandengaginginthesaleofeco-
nomic publications. N received a determination letter
that it is described in section 501(c)(3) and that it is
a public charity described in section 509(a)(2). N’s
five-member governing body consists of A, A’s sons,
B and C, and two unrelated economists. In 2009, A
made a contribution to N of $100,000 to help estab-
lish the organization. During 2009 through 2013, A
made annual contributions to N averaging $20,000 a
year. During the same period, N received annual con-
tributions from members of the general public aver-
aging $15,000 per year and receipts from the sale of
its publications averaging $50,000 per year. In 2013,
Bmadeaninter vivoscontribution to N of $600,000
in cash and readily marketable securities.
(ii) Although the support received in 2013 will
not impact N’s status as a public charity for its first
5 taxable years, it will be relevant to the determina-
tion of whether N meets the one-third support test un-
der section 509(a)(2) for future years. In determining
whether B’s contribution of $600,000 in 2013 may be
excluded as an unusual grant, the support N received
in 2009 through 2013 is relevant in considering the
factor described in paragraph (c)(4)(vi) of this sec-
tion, notwithstanding that N received a determination
letter that it is described in section 509(a)(2).
(iii) Based on the application of the factors in
paragraphs (c)(4)(i) through (ix) of this section to N’s
circumstances, in particular the facts that B is a dis-
qualified person described in section 4946(a)(1)(D)
and N does not have a representative governing body
as described in paragraphs (c)(4)(viii) and (d)(3)(i)
of this section, N cannot exclude B’s contribution of
$600,000 in 2013 as an unusual grant under para-
graph (c)(3) of this section for purposes of determin-
ing whether N meets the one-third support test under
section 509(a)(2) for 2014 and future years.
Example 7. (i) O is an educational organization
created in 2009. O received a determination letter
that it is described in section 501(c)(3) and that it is
a public charity described in section 509(a)(2). The
governing body of O has 9 members, consisting of A,
a prominent civic leader and 8 other unrelated civic
leaders and educators in the community, all of whom
participated in the creation of O. During 2009 through
2013, the principal source of income for O has been
receipts from the sale of its educational periodicals.
These sales have amounted to $200,000 for this pe-
riod. Small contributions amounting to $50,000 have
also been received during the same period from mem-
bers of the governing body, including A, as well as
other members of the general public.
(ii) In 2013, A contributed $750,000 of the non-
voting stock of S, a closely held corporation, to O. A
retained a substantial portion of the voting stock of S.
By a majority vote, the governing body of O decided
to retain the S stock for a period of at least 5 years.
(iii) Although the support received in 2013 will
not impact O’s status as a public charity for its first
5 taxable years, it will be relevant to the determina-
tion of whether O meets the one-third support test un-
der section 509(a)(2) for future years. In determining
whether A’s contribution of the S stock in 2013 may
be excluded as an unusual grant, the support O re-
ceived in 2009 through 2013 is relevant in consider-
ing the factor described in paragraph (c)(4)(vi) of this
section, notwithstanding that O received a determina-
tion letter that it is described in section 509(a)(2).
(iv) Based on the application of the factors in
paragraphs (c)(4)(i) through (ix) of this section to
O’s circumstances, in particular the facts that A is a
foundation manager within the meaning of section
4946(b) and A’s contribution is in the form of closely
held stock, O cannot exclude A’s contribution of the
S stock in 2013 as an unusual grant under paragraph
(c)(3) of this section for purposes of determining
whether O meets the one-third support test under
section 509(a)(2) for 2014 and future years.
(d)Definition of normally—first
five years of an organization’s exis-
tence—(1)In general. An organization
meets the one-third support test and the
not-more-than-one-third support test dur-
ing its first five taxable years as a section
501(c)(3) organization if the organization
can reasonably be expected to meet the
requirements of the one-third support test
and the not-more-than-one-third support
test during that period. With respect to
such organization’s sixth taxable year, the
organization shall be described in section
509(a)(2) if it meets the one-third support
test and the not-more-than-one-third sup-
port test under the definition of normally
set forth in paragraph (c)(1)(i) of this sec-
tion for its sixth taxable year (based on
support received in its second through
sixth taxable years), or for its fifth taxable
year (based on support received in its first
through fifth taxable years).
(2)Basic consideration. In deter-
mining whether an organization can
reasonably be expected (within the
meaning of paragraph (c)(1)(i) of this
section) to meet the one-third support
test under section 509(a)(2)(A) and the
not-more-than-one-third support test un-
der section 509(a)(2)(B) described in
paragraph (c) of this section during its first
5 taxable years, the basic consideration
is whether its organizational structure,
current or proposed programs or activ-
ities, and actual or intended method of
operation are such as to attract the type
of broadly based support from the general
public, public charities, and governmen-
tal units that is necessary to meet such
tests. The factors that are relevant to
this determination, and the weight ac-
corded to each of them, may differ from
case to case, depending on the nature and
functions of the organization. An organ-
ization cannot reasonably be expected
to meet the one-third support test and
the not-more-than-one-third support test
where the facts indicate that an organiza-
tion is likely during its first five taxable
years to receive less than one-third of its
support from permitted sources (subject to
the limitations of paragraph (b) of this sec-
tion) or to receive more than one-third of
its support from items described in section
509(a)(2)(B).
(3)Factors taken into account.All
pertinent facts and circumstances shall be
taken into account under paragraph (d)(2)
of this section in determining whether the
organizational structure, programs or ac-
tivities, and method of operation of an or-
ganization are such as to enable it to meet
the tests under section 509(a)(2) during its
first five taxable years. Some of the perti-
nent factors are:
(i) Whether the organization has or will
have a governing body which is comprised
of public officials, or individuals chosen
by public officials acting in their capacity
as such, of persons having special knowl-
edge in the particular field or discipline
in which the organization is operating, of
community leaders, such as elected offi-
cials, clergymen, and educators, or, in the
case of a membership organization, of in-
dividuals elected pursuant to the organiza-
tion’s governing instrument or bylaws by
October 27, 20089932008–43 I.R.B.

a broadly based membership. This charac-
teristic does not exist if the membership of
the organization’s governing body is such
as to indicate that it represents the personal
or private interests of disqualified persons,
rather than the interests of the community
or the general public.
(ii) Whether a substantial portion of the
organization’s initial funding is to be pro-
vided by the general public, by public char-
ities, or by government grants, rather than
by a limited number of grantors or contrib-
utors who are disqualified persons with re-
spect to the organization. The fact that the
organization plans to limit its activities to
a particular community or region or to a
special field which can be expected to ap-
peal to a limited number of persons will
be taken into consideration in determining
whether those persons providing the initial
support for the organization are represen-
tative of the general public. On the other
hand, the subsequent sources of funding
which the organization can reasonably ex-
pect to receive after it has become estab-
lished and fully operational will also be
taken into account.
(iii) Whether a substantial proportion of
the organization’s initial funds are placed,
or will remain, in an endowment, and
whether the investment of such funds is
unlikely to result in more than one third of
its total support being received from items
describedinsection509(a)(2)(B).
(iv) In the case of an organization that
carries on fundraising activities, whether
the organization has developed a concrete
plan for solicitation of funds from the gen-
eral public on a community or area-wide
basis; whether any steps have been taken
to implement such plan; whether any firm
commitments of financial or other sup-
port have been made to the organization
by civic, religious, charitable, or simi-
lar groups within the community; and
whether the organization has made any
commitments to, or established any work-
ing relationships with, those organizations
or classes of persons intended as the future
recipients of its funds.
(v) In the case of an organization that
carries on community services, such as
combating community deterioration in an
economically depressed area that has suf-
fered a major loss of population and jobs,
whether the organization has a concrete
program to carry out its work in the com-
munity; whether any steps have been taken
to implement that program; whether it will
receive any part of its funds from a public
charity or governmental agency to which
it is in some way held accountable as a
condition of the grant or contribution; and
whether it has enlisted the sponsorship or
support of other civic or community lead-
ers involved in community service pro-
grams similar to those of the organization.
(vi) In the case of an organization that
carries on educational or other exempt
activities for, or on behalf of, members,
whether the solicitation for dues-paying
members is designed to enroll a substan-
tial number of persons in the community,
area, profession, or field of special interest
(depending on the size of the area and
the nature of the organization’s activities);
whether membership dues for individual
(rather than institutional) members have
been fixed at rates designed to make mem-
bership available to a broad cross-section
of the public rather than to restrict mem-
bershiptoalimitednumberofpersons;
and whether the activities of the organi-
zation will be likely to appeal to persons
having some broad common interest or
purpose, such as educational activities
in the case of alumni associations, mu-
sical activities in the case of symphony
societies, or civic affairs in the case of
parent-teacher associations.
(vii) In the case of an organization
that provides goods, services, or facili-
ties, whether the organization is or will
be required to make its services, facili-
ties, performances, or products available
(regardless of whether a fee is charged)
to the general public, public charities, or
governmental units, rather than to a lim-
ited number of persons or organizations;
whether the organization will avoid exe-
cuting contracts to perform services for a
limited number of firms or governmental
agencies or bureaus; and whether the ser-
vice to be provided is one which can be
expected to meet a special or general need
among a substantial portion of the general
public.
(4)Example. The application of this
paragraph (d) may be illustrated by the fol-
lowing example:
Example. (i) Organization X was formed in Jan-
uary 2008 and uses a December 31 taxable year. After
September 9, 2008, and before December 31, 2008,
Organization X filed Form 1023 requesting recogni-
tion of exemption as an organization described in sec-
tion 501(c)(3) and in section 509(a)(2). In its appli-
cation, Organization X established that it can reason-
ably be expected to operate as a public charity un-
der this paragraph (d). Subsequently, Organization
X received a ruling or determination letter that it is
an organization described in sections 501(c)(3) and
509(a)(2) effective as of the date of its formation.
(ii) Organization X is described in section
509(a)(2) for its first 5 taxable years (for the taxable
years ending December 31, 2008, through December
31, 2012).
(iii) Organization X can qualify as a public charity
beginning with the taxableyear ending December 31,
2013, if Organization X can meet the requirements
of §1.170A–9T(f)(4)(i) through (iii) or paragraphs (a)
through (b) of this section for the taxable years end-
ing December 31, 2009, through December 31, 2013,
or for the taxable years ending December 31, 2008,
through December 31, 2012.
(e)Determinations on foundation clas-
sification and reliance. (1) A ruling or de-
termination letter that an organization is
described in section 509(a)(2) may be is-
sued to an organization. Such determina-
tion may be made in conjunction with the
recognition of the organization’s tax-ex-
empt status or at such other time as the or-
ganization believes it is described in sec-
tion 509(a)(2). The ruling or determi-
nation letter that the organization is de-
scribedinsection509(a)(2)maybere-
voked if, upon examination, the organiza-
tion has not met the requirements of this
section. The ruling or determination letter
that the organization is described in section
509(a)(2) also may be revoked if the organ-
ization’s application for a ruling or deter-
mination contained one or more material
misstatements of fact or such application
was part of a scheme or plan to avoid or
evade any provision of the Internal Rev-
enue Code. The revocation of the determi-
nation that an organization is described in
section 509(a)(2) does not preclude revo-
cation of the determination that the organ-
ization is described insection 501(c)(3).
(2)Status of grantors or contribu-
tors.For purposes of sections 170, 507,
545(b)(2), 642(c), 4942, 4945, 2055,
2106(a)(2), and 2522, grantors and con-
tributors may rely upon a determination
letter or ruling that an organization is
described in section 509(a)(2) until the
Internal Revenue Service publishes notice
of a change of status (for example, in the
Internal Revenue Bulletin or Publication
78, “Cumulative List of Organizations De-
scribed in Section 170(c) of the Internal
Revenue Code of 1986,” which can be
searched atwww.irs.gov).For this pur-
pose, grantors or contributors may also
rely on an advance ruling that expires on
2008–43 I.R.B.994October 27, 2008

or after June 9, 2008. However, a grantor
or contributor may not rely on such an
advance ruling or any determination letter
or ruling if the grantor or contributor was
responsible for, or aware of, the act or
failure to act that resulted in the organiza-
tion’s loss of classification under section
509(a)(2) or acquired knowledge that the
Internal Revenue Service had given no-
tice to such organization that it would be
deleted from such classification.
(3)Examples. The provisions of this
paragraph (e) may be illustrated by the fol-
lowing examples:
Example 1. Y, a calendar year organization de-
scribed in section 501(c)(3), is created in February
2008 for the purpose of displaying African art. On
its exemption application Y shows, under penalties
of perjury, that it can reasonably, in accordance with
the requirements of paragraph (d) of this section,
expect to receive support from the public in 2008
through 2012 that will satisfy the one-third support
and not-more-than-one-third support tests described
in section 509(a)(2) for its first 5 taxable years, 2008
through 2012. Y may therefore receive a determina-
tion that it meets the requirements of paragraph (a)
of this section. Pursuant to such determination, Y
will be a public charity for its first five taxable years
(2008, 2009, 2010, 2011, and 2012), regardless of the
public support Y in fact receives during this period.
Example 2. Z, a calendar year organization de-
scribed in section 501(c)(3), is created in July 2008.
On its exemption application Z shows, under penal-
ties of perjury, that it canreasonably, in accordance
with the requirements of paragraph (d) of this sec-
tion, expect to receive support from the public in 2008
through 2012 that will satisfy the one-third support
and not-more-than-one-third support tests described
in section 509(a)(2) for its first 5 taxable years, 2008
through 2012. Z receives a determination that it is
described in section 509(a)(2). However, the support
actually received from the public over Z’s first 5 tax-
able years (2008 through 2012) does not satisfy the
one-third support and not-more-than-one-third sup-
port tests described in section 509(a)(2), nor does the
support Z receives from 2009 through and includ-
ing its sixth taxable year, 2013, meet the one-third
support and not-more-than-one-third support tests de-
scribed in section 509(a)(2). Z is described in section
509(a)(2) during its first five years for all purposes.
But, because Z has not met the requirements of para-
graph (a) of this section either for 2008 through 2012
or 2009 through 2013, Z is not described in section
509(a)(2) for its taxable year 2013. If Z is not de-
scribed in section 509(a)(1), (3), or (4), then Z is a
private foundation as of 2013, and Z will be treated
as a private foundation for all purposes (except as pro-
vided in paragraph (e)(2) of this section with respect
to grantors and contributors).
(f) through (j) [Reserved]. For further
guidance, see §1.509(a)–3(f) through (j).
(k)Method of accounting. For purposes
of section 509(a)(2), an organization’s sup-
port will be determined under the method
of accounting on the basis of which the or-
ganization regularly computes its income
in keeping its books under section 446. For
example, if a grantor makes a grant to an
organization payable over a term of years,
such grant will be includible in the support
fraction of the grantee organization under
the method of accounting on the basis of
which it regularly computes its income in
keeping its books under section 446.
(l) and (m) [Reserved]. For further
guidance, see §1.509(a)–3(l) and (m).
(n)Transition rules. (i) An organization
that received an advance ruling, that ex-
pires on or after June 9, 2008, that it will be
treated as an organization described in sec-
tions 170(b)(1)(A)(vi) and 509(a)(1) or in
section 509(a)(2) will be treated as meet-
ing the requirements of paragraph (d)(1)
of this section for the first five taxable
years of its existence as a section 501(c)(3)
organization unless the Internal Revenue
Service issued to the organization a pro-
posed determination prior to September 9,
2008, that the organization is not described
in sections 170(b)(1)(A)(vi) and 509(a)(1)
or in section 509(a)(2).
(ii) Paragraph (d)(1) of this section
shall not apply to an organization that re-
ceived an advance ruling that expired prior
to June 9, 2008, and that did not timely
file with the Internal Revenue Service the
required information to establish that it
is an organization described in sections
170(b)(1)(A)(vi) and 509(a)(1) or in sec-
tion 509(a)(2).
(iii) An organization that fails to meet a
public support test for its first taxable year
beginning on or after January 1, 2008, un-
der the regulations in this section may use
the prior test set forth in §1.509(a)–3(c)(1)
or §1.170A–9(e)(4)(i) or (ii) as in effect
before September 9, 2008, (as contained
in 26 CFR part 1 revised April 1, 2008)
to determine whether the organization may
be publicly supported for its 2008 taxable
year based on its satisfaction of a public
support test for taxable year 2007, com-
puted over the period 2003 through 2006.
(iv)Examples. The application of this
paragraph (n) may be illustrated by the fol-
lowing examples:
Example 1.(i) Organization M was formed in
January 2004, and uses a June 30 taxable year. Or-
ganization M received an advance ruling letter that
it is recognized as an organization described in sec-
tion 501(c)(3) effective as of the date of its formation
and that it is treated as a public charity under section
509(a)(2) during the five-year advance ruling period
that will end on June 30, 2008. This date is within 90
days before September 9, 2008.
(ii) Under the transition rule, Organization M is
a public charity described in section 509(a)(2) for
the taxable years ending June 30, 2004, through June
30, 2008. Organization M does not need to establish
within 90 days after June 30, 2008, that it met a pub-
lic support test under §1.170A–9(e) or §1.509(a)–3,
as in effect prior to September 9, 2008, (as contained
in 26 CFR part 1 revised April 1, 2008) for its ad-
vance ruling period.
(iii) Organization M can qualify as a public char-
ity beginning with the taxable year ending June 30,
2009, if Organization M can meet the requirements of
§1.170A–9T(f)(4)(i) or (ii) or paragraph (c)(1) of this
section for the taxable years ending June 30, 2005,
through June 30, 2009, or for the taxable years ending
June 30, 2004, through June 30, 2008. In addition, for
its taxable year ending June 30, 2009, Organization
M may qualify as a public charity by availing itself
of the transition rule contained in paragraph (n)(iii)
of this section, which looks to support received by M
in the taxable years ending June 30, 2004, through
June 30, 2007.
Example 2.(i)OrganizationNwasformedinJan-
uary 2000 and uses a December 31 taxable year. Or-
ganization N received a final determination that it was
recognized as tax-exemptunder section 501(c)(3) and
as a public charity prior to September 9, 2008.
(ii) For taxable year 2008, Organization N will
qualify as publicly supported if it meets the require-
ments under either §1.170A–9T(f)(4)(i) or (ii) or
paragraph (c)(1) of this section for the five-year
period January 1, 2004, through December 31,
2008. Organization N will also qualify as publicly
supported for taxable year 2008 if it meets the re-
quirements under either §1.170A–9(e)(4)(i) or (ii) or
§1.509(a)–3(c)(1) as in effect prior to September 9,
2008, (as contained in 26 CFR part 1 revised April
1, 2008) for taxable year 2007, using the four-year
period from January 1, 2003, through December 31,
2006.
(o)Effective/applicability date—(1)Ef-
fective date. These regulations are effec-
tive on September 9, 2008.
(2)Applicability date. The regulations
in paragraphs (a)(2), (a)(3)(i),(c),(d),(e)
and (k) of this section shall apply to tax-
able years beginning on or after January 1,
2008.
(3)Expiration date. The applicability
of this section expires on September 8,
2011.
Par. 8. Section 1.6033–2 is amended by
revising paragraph (k) to read as follows:
§1.6033–2 Returns by exempt
organizations (taxable years beginning
after December 31, 1969) and returns by
certain nonexempt organizations (taxable
years beginning after December 31,
1980).
*****
October 27, 20089952008–43 I.R.B.

(k)Effective/applicability date.The
provisions of this section shall apply with
respect to returns filed for taxable years
beginning after December 31, 1969. The
applicability of paragraphs (a)(2)(ii)(g)
and (a)(2)(ii)(h) of this section shall be
limited to taxable years beginning before
January 1, 2008.
Par. 9. Section 1.6033–2T is added to
read as follows:
§1.6033–2T Returns by exempt
organizations (taxable years beginning
after December 31, 1969) and returns by
certain nonexempt organizations (taxable
years beginning after December 31, 1980)
(temporary).
(a)(1) through (a)(2)(ii)(f)[Reserved].
For further guidance, see §1.6033–2(a)(1)
through (a)(2)(ii)(f).
(g) The names and addresses of all offi-
cers, directors, or trustees (or any person
having responsibilities or powers similar
to those of officers, directors or trustees)
of the organization, and, in the case of
a private foundation, all persons who are
foundation managers, within the meaning
of section 4946(b)(1). Organizations must
also attach a schedule showing the names
and addresses and/or total numbers of key
employees, highly compensated employ-
ees and independent contractors as pre-
scribed by publication, form or instruc-
tions.
(h) A schedule showing the compensa-
tion and other payments made to each per-
sonwhosenameisrequiredtobelistedin
paragraph (a)(2)(ii)(g) of this section dur-
ing the calendar year ending within the or-
ganization’s annual accounting period, or
during such other period as prescribed by
publication, form or instructions
(a)(2)(ii)(i) through (j) [Re-
served]. For further guidance, see
§1.6033–2(a)(2)(ii)(i) through (j).
(k)Effective/applicability date—(1)Ef-
fective date. These regulations are effec-
tive on September 9, 2008.
(2)Applicability date. The regulations
in paragraphs (a)(2)(ii)(g) and (a)(2)(ii)(h)
of this section shall apply to taxable years
beginning on or after January 1, 2008.
(3)Expiration date. The applicability
of this section expires September 8, 2011.
Par. 10. Section 1.6043–3 is amended
as follows:
1. The undesignated text following
paragraph (b)(8) is designated as para-
graph (b)(9).
2. Paragraph (d)(3) is revised.
3. New paragraph (e) is added.
The addition and revision read as fol-
lows:
§1.6043–3 Returns regarding liquidation,
dissolution, termination, or substantial
contraction of organizations exempt from
taxation under section 501(a).
*****
(d)(3) For the definition of the term “in-
tegrated auxiliaries” as used in paragraph
(b)(1) of this section, see §1.6033–2(h).
(e)Effective/applicability date.The
provisions of this section shall apply with
respect to returns filed for taxable years
beginning after December 31, 1969. The
applicability of paragraphs (b)(8) and (d)
of this section shall be limited to returns
filed for taxable years beginning before
January 1, 2008.
Par. 11. Section 1.6043–3T is added to
read as follows:
§1.6043–3T Returns regarding
liquidation, dissolution, termination, or
substantial contraction of organizations
exempt from taxation under section 501(a)
(temporary).
(a) through (b)(7) [Reserved]. For fur-
ther guidance, see §1.6043–3(a) through
(b)(7).
(b)(8) Any organization no longer ex-
empt from taxation under section 501(a)
and that during the period of its exemp-
tion under such section was not an organ-
ization described in section 501(c)(3), a
corporation described in section 501(c)(2)
that held title to property for an organiza-
tion described in section 501(c)(3), or an
organization described in such other sec-
tion as prescribed by publication, form or
instructions.
(b)(9) and (c) [Reserved]. For further
guidance, see §1.6043–3(b)(9) and (c).
(d)Definitions. (1) For the definition of
the term “normally” as used in paragraph
(b)(2) of this section, see §1.6033–2(g)(3).
(2) For the definition of the term “in-
tegrated auxiliaries” as used in paragraph
(b)(1) of this section, see §1.6033–2(h).
(e)Effective/applicability date
—(1)Ef-
fective date. The regulations in this section
are effective on September 9, 2008.
(2)Applicability date. Paragraphs
(b)(8) and (d) of this section shall apply to
returns filed for taxable years beginning
on or after January 1, 2008.
(3)Expiration date. The applicability
of this section expires on September 8,
2011.
PART 602—OMB CONTROL
NUMBER UNDER THE PAPERWORK
REDUCTION ACT
Par. 12. The authority citation for part
602 continues to read as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 13. In §602.101, paragraph (b)
is amended by adding the following entry
in numerical order to the table to read as
follows:
§602.101 OMB Control numbers.
*****
(b) * * *
2008–43 I.R.B.996October 27, 2008

CFR part or section where
identified and described
Current OMB
control No.
*****
1.6033–2T...........................................................
1545–2117
*****
Linda E. Stiff,
Deputy Commissioner for
Services and Enforcement.
Approved August 21, 2008.
Eric Solomon,
Assistant Secretary of
the Treasury (Tax Policy).
(Filed by the Office of the Federal Register on September
8, 2008, 8:45 a.m., and published in the issue of the Federal
Register for Se
ptember 9, 2008, 73 F.R. 52527)
October 27, 20089972008–43 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous
2008 Section 43 Inflation
Adjustment
Notice 2008–72
Section 43(b)(3)(B) of the Internal
Revenue Code requires the Secretary to
publish an inflation adjustment factor.
The enhanced oil recovery credit under
§ 43 for any taxable year is reduced if
the “reference price,” determined under
§ 45K(d)(2)(C), for the calendar year
preceding the calendar year in which the
taxable year begins is greater than $28
multiplied by the inflation adjustment fac-
tor for that year. The credit is phased out
in any taxable year in which the reference
price for the preceding calendar year ex-
ceeds $28 (as adjusted) by at least $6.
The term “inflation adjustment factor”
means, with respect to any calendar year,
a fraction the numerator of which is the
GNP implicit price deflator for the preced-
ing calendar year and the denominator of
which is the GNP implicit price deflator
for 1990.
Because the reference price for the 2007
calendar year ($66.52) exceeds $28 mul-
tiplied by the inflation adjustment factor
for the 2007 calendar year ($41.06) by
$25.45, the enhanced oil recovery credit
for qualified costs paid or incurred in 2008
is phased out completely.
Table 1 contains the GNP implicit price
deflator used for the 2008 calendar year,
as well as the previously published GNP
implicit price deflators used for the 1991
through 2007 calendar years.
Notice 2008–72 TABLE 1
GNP IMPLICIT PRICE DEFLATORS
Calendar YearGNP Implicit Price Deflator
1990112.9 (used for 1991)
1991117.0 (used for 1992)
1992120.9 (used for 1993)
1993124.1 (used for 1994)
1994126.0
(used for 1995)*
1995107.5
(used for 1996)
1996109.7 (used for 1997)**
1997
112.35
(used for 1998)
1998112.64 (used for 1999)***
1999
104.59
(used for 2000)
2000106.89 (used for 2001)
2001109.31 (used for 2002)
2002110.63 (used for 2003)
2003
105.67
(used for 2004)****
2004108.23
(used for 2005)
2005
112.129 (used for 2006)
2006116.036 (used for 2007)
2007
119.656
(used for 2008)
* Beginning in 1995, the GNP implicit pricedeflator was rebased relative to 1992. The 1990 GNP implicit price deflator used to
compute the 1996 § 43 inflation adjustment factor is 93.6.
** Beginning in 1997, two digits follow the decimal point in the GNPimplicit price deflator. The 1990 GNP price deflator used to
compute the 1998 § 43 inflation adjustment factor is 93.63.
*** Beginning in 1999, the GNP implicit price deflator was rebased relative to 1996. The 1990 GNP implicit price deflator used
to compute the 2000 § 43 inflation adjustment factor is 86.53.
**** Beginning in 2003, the GNP implicit price deflator was rebased, and the 1990 GNP implicit price deflator used to compute
the 2004 § 43 inflation adjustment factor is 81.589.
Table 2 contains the inflation adjust-
ment factor and the phase-out amount
for taxable years beginning in the 2008
calendar year as well as the previously
published inflation adjustment factors and
phase-out amounts for taxable years be-
ginning in the 1991 through 2007 calendar
years.
2008–43 I.R.B.998October 27, 2008

Notice 2008–72 TABLE 2
INFLATION ADJUSTMENT FACTORS AND
PHASE-OUT AMOUNTS
Calendar
Year
Inflation Adjustment
Factor
Phase-out
Amount
19911.00000
19921.03630
19931.07080
19941.09920
1995
1.11600
1996
1.1485
0
19971.17200
19981.19990
19991.20300
20001.20870
2001
1.2353
0
20021.26330
2003
1.2785
0
2004
1.2952
0
2005
1.32660
20061.3743100 percent
20071.4222100 percent
20081.4666100 percent
The principal author of this notice is
Julie V. Skeen of the Office of Associate
Chief Counsel (Passthroughs and Special
Industries). For further information re-
garding this notice, contact Ms. Skeen at
(202) 622–3110 (not a toll-free call).
2008 Marginal Production
Rates
Notice 2008–89
This notice announces the applicable
percentage under § 613A of the Internal
Revenue Code to be used in determining
percentage depletion for marginal proper-
ties for the 2008 calendar year.
Section 613A(c)(6)(C) defines the term
“applicable percentage” for purposes of
determining percentage depletion for oil
and gas produced from marginal proper-
ties. The applicable percentage is the per-
centage (not greater than 25 percent) equal
to the sum of 15 percent, plus one per-
centage point for each whole dollar by
which $20 exceeds the reference price (de-
termined under § 45K(d)(2)(C)) for crude
oil for the calendar year preceding the cal-
endar year in which the taxable year be-
gins. The reference price determined un-
der § 45K(d)(2)(C) for the 2007 calendar
year is $66.52.
Table 1 contains the applicable percent-
ages for marginal production for taxable
years beginning in calendar years 1991
through 2008.
October 27, 20089992008–43 I.R.B.

Notice 2008–89 Table 1
APPLICABLE PERCENTAGE FOR MARGINAL PRODUCTION
Calendar YearApplicable Percentage
1991
15 percent
199218 percent
199319 percent
199420 percent
1995
21 percent
199620 percent
199716 percent
199817 percent
199924 percent
200019 percent
2001
15 percent
2002
15 percent
2003
15 percent
2004
15 percent
200515 percent
2006
15 percent
2007
15 percent
2008
15 percent
The principal author of this notice is
Julie V. Skeen of the Office of Associate
Chief Counsel (Passthroughs and Special
Industries). For further information re-
garding this notice, contact Ms. Skeen at
(202) 622–3110 (not a toll-free call).
Charitable Contributions of
Inventory Property Under
§ 170(e)(3)
Notice 2008–90
SECTION 1. OVERVIEW
This notice announces that the Internal
Revenue Service (Service) and the Trea-
sury Department are studying the compu-
tation of the deductible amount and ad-
justment to cost of goods sold for chari-
table contributions of inventory property
that constitute qualified contributions as
defined in § 170(e)(3)(A) of the Internal
Revenue Code.
The Service and the Treasury Depart-
ment are aware that some taxpayers mak-
ing qualified contributions may, because of
the income limitation of § 170(b)(2), pre-
fer to apply the provisions of § 170(e)(1)
and § 1.170A–1(c) of the Income Tax
Regulations rather than the provisions of
§ 170(e)(3) and § 1.170A–4A(c).
SECTION 2. GUIDANCE UNDER
SECTION 170(e)
For a particular qualified contribution
of inventory property under § 170(e)(3)
that otherwise satisfies the requirements
of § 170 and the relevant regulations, the
Service will not challenge a taxpayer’s
computation of the deductible amount
and the required adjustment to cost of
goods sold under either (1) § 170(e)(3)
and § 1.170A–4A(c), or (2) § 170(e)(1)
and § 1.170A–1(c).
SECTION 3. RELIANCE ON NOTICE
Taxpayers may rely on this notice un-
less and until further guidance is issued.
SECTION 4. COMMENTS
REQUESTED
The Service and the Treasury Depart-
ment request comments regarding the
computation of the deductible amount and
the required adjustment to cost of goods
sold for charitable contributions of inven-
tory property under § 170(e)(3) as well
as any other issues related to inventory
contributions that should be addressed in
future guidance.
Comments should be submitted in
writing on or before January 26, 2009,
and should include a reference to No-
tice 2008–90. Send submissions to:
CC:PA:LPD:PR (Notice 2008–90), Room
5203, Internal Revenue Service, P.O. Box
7604, Ben Franklin Station, Washing-
ton, DC 20044. Submissions may be
hand delivered Monday through Friday
between the hours of 8 a.m. and 4 p.m.
to CC:PA:LPD:PR (Notice 2008–90),
Courier’s Desk, Internal Revenue Service,
1111 Constitution Avenue, N.W., Wash-
ington, DC. Alternatively, comments may
be submitted electronically directly to the
Service via the following e-mail address:
Notice.comments@irscounsel.treas.gov.
Please include “Notice 2008–90” in the
subject line of any electronic communi-
cation. All materials submitted will be
available for public inspection and copy-
ing.
SECTION 5. DRAFTING
INFORMATION
The principal author of this notice
is Susan J. Kassell of the Office of
Associate Chief Counsel (Income Tax
& Accounting). For further information
regarding this notice, contact Ms. Kassell
at (202) 622–5020 (not a toll-free call).
2008–43 I.R.B.1000October 27, 2008

Treatment of Certain
Obligations Under Section
956(c)
Notice 2008–91
SECTION 1. OVERVIEW
Section 956(c) defines United States
property generally to include an obligation
of a United States person. On September
16, 1988, the Internal Revenue Service
and the Treasury Department published
Notice 88–108, 1988–2 C.B. 445, which
announced that final regulations issued
under section 956 will exclude from the
definition of the term “obligation” an obli-
gation that would constitute an investment
in United States property if held at the
end of the controlled foreign corporation’s
taxable year, so long as the obligation is
collected within 30 days from the time
it is incurred. This exclusion shall not
apply, however, if the controlled foreign
corporation holds for 60 or more calendar
days during such taxable year obliga-
tions which, without regard to the 30 day
rule described in the preceding sentence,
would constitute an investment in United
States property if held at the end of the
controlled foreign corporation’s taxable
year.SeeS. Rep. No. 103–37, at 178
(1993) (“The bill is not intended to change
the measurement of U.S. property that
may apply, for example, in the case of
short-term obligations, as provided in IRS
Notice 88–108”).
SECTION 2. TREATMENT OF
CERTAIN OBLIGATIONS UNDER
SECTION 956(c)
Recently, circumstances affecting liq-
uidity have made it difficult for taxpay-
ers to fund their operations. To facili-
tate liquidity in the near term, this notice
announces that the Internal Revenue Ser-
vice and the Treasury Department will is-
sue regulations under section 956(e) that,
for purposes of section 956, a controlled
foreign corporation (within the meaning
of section 957(a)) may choose to exclude
from the definition of the term “obliga-
tion” an obligation held by the controlled
foreign corporation that would constitute
an investment in United States property
provided the obligation is collected within
60 days from the time it is incurred. This
exclusion shall not apply, however, if the
controlled foreign corporation holds for
180 or more calendar days during its tax-
able year obligationsthat, without regard
to the 60 day rule described in the preced-
ing sentence, would constitute an invest-
ment in United States property.
This notice does not otherwise affect
the application of Notice 88–108. A con-
trolled foreign corporation may apply this
notice or Notice 88–108, but not both.
SECTION 3. RELIANCE ON NOTICE
This notice shall only apply for the first
two taxable years of aforeign corporation
ending after October 3, 2008. However,
this notice shall not apply to taxable years
of a foreign corporation beginning after
December 31, 2009. Thus, if a foreign
corporation has a calendar tax year, this
notice shall apply for the foreign corpora-
tion’s taxable years ending December 31,
2008, and December 31, 2009.
SECTION 4. DRAFTING
INFORMATION
The principal author of this notice is
Ethan A. Atticks of the Office of Associate
Chief Counsel (International). For further
information regarding this notice, contact
Mr. Atticks at (202) 622–3840 (not a toll-
free call).
Insurance-Dedicated Money
Market Funds — Temporary
Guarantee Program for Money
Market Funds — Government
Not the “Issuer” for Purposes
of Testing Diversification
Notice 2008–92
SECTION 1. PURPOSE
This notice relates to the Temporary
Guarantee Program for Money Market
Funds (the “Program”), which is pro-
vided by the Treasury Department in
response to the credit market instability
to make available certain funds from its
Exchange Stabilization Fund, upon pre-
scribed terms and conditions, to money
market funds that are regulated under the
Security and Exchange Commission’s
Rule 2a–7, 17 C.F.R. 270.2a–7, under
the Investment Company Act of 1940
(“Rule 2a–7”). Some practitioners have
expressed concern that participation in
the Program may raise certain potential
tax issues for money market funds
whose beneficial interests are held
exclusively by one or more segregated
asset accounts of one or more insurance
companies (or other investors permitted
under § 1.817–5(f)(3) of the Income
Tax Regulations) (“Insurance-Dedicated
Money Market Funds”). This notice
provides certainty with respect to those
issues, as described below.
SECTION 2. BACKGROUND
.01The Program. In general, under
the Program, the Treasury Department is
making available its Exchange Stabiliza-
tion Fund on a temporary basis to assist
participating money market funds in re-
paying shareholders upon liquidation of
their shares. The Program is limited to as-
sets in money market funds as of the close
of business on September 19, 2008, and to
investors of record as of that date. The Pro-
gram is available to both Insurance-Ded-
icated Money Market Funds and money
market funds that are available to the gen-
eral public. Participating money market
funds are required to make premium pay-
ments to participate in the Program. Pay-
ments to a money market fund under the
Program are tied to the per share net as-
set value of the money market fund itself.
Payments to a money market fund under
the Program are not tied to the terms or per-
formance of any particular assets held by
the money market fund. The general de-
scription of certain aspects of the Program
herein is subject fully to the specific terms,
conditions, maximum size limitations, and
other limitations set forth in the operative
legal documents for the Program.
.02Diversification requirement for
variable contracts. Section 817(h) of the
Internal Revenue Code provides that a
variable life insurance or annuity contract
that is based on a segregated asset account
is not treated as a life insurance or annuity
contract for any period (and any subse-
quent period) for which the investments of
the account are not adequately diversified.
For purposes of determining whether a
segregated asset account is adequately di-
versified, each United States government
agency or instrumentality is treated as a
October 27, 200810012008–43 I.R.B.

separate issuer. In addition, to the extent
that a segregated asset account with re-
spect to a variable life insurance contract
invests in securities issued by the United
States Treasury, the investments made by
the account are treated as adequately diver-
sified. The rule in the previous sentence
does not apply with respect to a variable
annuity contract. Section 1.817–5(h)(1)
defines “government security” to mean
any security that is issued, guaranteed or
insured by the United States or any instru-
mentality.
.03Investor control. The holder of
a variable contract may be treated as an
owner of the assets of a segregated asset
account funding that contract if (1) the
holder exercises sufficient control over
the assets to be deemed the owner; or (2)
the assets are not available exclusively
through the purchase of a life insurance or
annuity contract.SeeRev. Rul. 2003–92,
2003–2 C.B. 350; Rev. Rul. 2003–91,
2003–2 C.B. 347; Rev. Rul. 81–225,
1981–2 C.B. 13; Rev. Rul. 80–274,
1980–2 C.B. 27; Rev. Rul. 77–85, 1977–1
C.B. 12.
SECTION 3. SCOPE AND
APPLICATION
.01No Violation of Diversification
Requirements; No Assertion of Investor
Control. The Treasury Department and
the Internal Revenue Service (“IRS”) will
not assert that participation in the Program
by an Insurance-Dedicated Money Market
Fund causes a violation of the diversifica-
tion requirements of § 817(h) in the case
of a segregated asset account that invests
in the Insurance-Dedicated Money Market
Fund. In addition, the Treasury Depart-
ment and the IRS will not assert that such a
fund’s participation in the Program causes
the holder of a variable contract supported
by a segregated asset account that invests
in the fund to be treated as an owner of the
fund.
.02No Inferences on Law. This no-
tice provides administrative relief in fur-
therance of public policy to promote stabil-
ity in the market for money market funds.
Except with respect to the administrative
relief expressly provided in this notice, no
inference should be drawn from this notice
regarding any other Federal tax issues af-
fecting variable contracts, money market
funds, or any other security. In addition,
this notice is not intended to address any
other Federal tax issue implicated in the
described transactions under the Program.
DRAFTING INFORMATION
The principal author of this notice is
Sheryl B. Flum of the Office of Asso-
ciate Chief Counsel (Financial Institutions
& Products). For further information re-
garding this notice, contact Ms. Flum at
(202) 622–3970 (not a toll-free call).
Update for Weighted Average
Interest Rates, Yield Curves,
and Segment Rates
Notice 2008–93
This notice provides guidance as to the
corporate bond weighted average interest
rate and the permissible range of interest
rates specified under § 412(b)(5)(B)(ii)(II)
of the Internal Revenue Code as in ef-
fect for plan years beginning before 2008.
It also provides guidance on the corpo-
rate bond monthly yield curve (and the
corresponding spot segment rates), the
24-month average segment rates, and
the funding transitional segment rates
under § 430(h)(2). In addition, this no-
tice provides guidance as to the interest
rate on 30-year Treasury securities un-
der § 417(e)(3)(A)(ii)(II) as in effect for
plan years beginning before 2008, the
30-year Treasury weighted average rate
under § 431(c)(6)(E)(ii)(I), and the min-
imum present value segment rates under
§ 417(e)(3)(D) as in effect for plan years
beginning after 2007.
CORPORATE BOND WEIGHTED
AVERAGE INTEREST RATE
Sections 412(b)(5)(B)(ii) and 412(l)(7)
(C)(i), as amended by the Pension Funding
Equity Act of 2004 and by the Pension
Protection Act of 2006 (PPA), provide that
the interest rates usedto calculate current
liability and to determine the required
contribution under § 412(l) for plan years
beginning in 2004 through 2007 must be
within a permissible range based on the
weighted average of the rates of interest on
amounts invested conservatively in long
term investment grade corporate bonds
during the 4-year period ending on the last
day before the beginning of the plan year.
Notice 2004–34, 2004–1 C.B. 848, pro-
vides guidelines for determining the cor-
porate bond weighted average interest rate
and the resulting permissible range of in-
terest rates used to calculate current liabil-
ity. That notice establishes that the corpo-
rate bond weighted average is based on the
monthly composite corporate bond rate de-
rived from designated corporate bond in-
dices. The methodology for determining
the monthly composite corporate bond rate
as set forth in Notice 2004–34 continues to
apply in determining that rate. See Notice
2006–75, 2006–2 C.B. 366.
The composite corporate bond rate for
September 2008 is 6.98 percent. Pursuant
to Notice 2004–34, the Service has de-
termined this rate as the average of the
monthly yields for the included corporate
bond indices for that month.
The following corporate bond weighted
average interest rate was determined for
plan years beginning in the month shown
below.
For Plan Years
Beginning inPermissible Range
MonthYear
Corporate
Bond Weighted
Average90%to100%
October20086.14
5.52
6.14
2008–43 I.R.B.1002October 27, 2008

YIELD CURVE AND SEGMENT
RATES
Generally for plan years beginning
after 2007 (except for delayed effective
dates for certain plans under sections 104,
105, and 106 of PPA), § 430 of the Code
specifies the minimum funding require-
ments that apply to single employer plans
pursuant to § 412. Section 430(h)(2) spec-
ifies the interest rates that must be used
to determine a plan’s target normal cost
and funding target. Under this provision,
present value is generally determined us-
ing three 24-month average interest rates
(“segment rates”), each of which applies
to cash flows during specified periods.
However, an election may be made under
§ 430(h)(2)(D)(ii) to use the monthly yield
curve in place of the segment rates. For
plan years beginning in 2008 and 2009, a
transitional rule under § 430(h)(2)(G) pro-
vides that the segment rates are blended
with the corporate bond weighted average
as specified above. An election may be
made under § 430(h)(2)(G)(iv) to use the
segment rates without applying the transi-
tional rule.
Notice 2007–81, 2007–44 I.R.B. 899,
provides guidelines for determining the
monthly corporate bond yield curve, the
24-month average corporate bond segment
rates, and the funding transitional segment
rates used to compute the target normal
cost and the funding target. Pursuant to
Notice 2007–81, the monthly corporate
bond yield curve derived from September
2008 data is in Table I at the end of this
notice. The spot first, second, and third
segment rates for the month of Septem-
ber 2008 are, respectively, 5.86, 7.35,
and 6.88. The three 24-month average
corporate bond segment rates applicable
for October 2008 under the election of
§ 430(h)(2)(G)(iv) are as follows:
First
Segment
Second
Segment
Third
Segment
5.09
6.16
6.58
The transitional segment rates under
§ 430(h)(2)(G) applicable for October
2008, taking into account the corporate
bond weighted average of 6.14 stated
above, are as follows:
For Plan Years
Beginning in
First
Segment
Second
Segment
Third
Segment
2008
5.796.15
6.29
2009
5.446.15
6.43
30-YEAR TREASURY SECURITIES
INTEREST RATES
Section 417(e)(3)(A)(ii)(II) (prior to
amendment by PPA) defines the appli-
cable interest rate, which must be used
for purposes of determining the minimum
present value of a participant’s benefit
under § 417(e)(1) and (2), as the annual
rate of interest on 30-year Treasury se-
curities for the month before the date
of distribution or such other time as the
Secretary may by regulations prescribe.
Section 1.417(e)–1(d)(3) of the Income
Tax Regulations provides that the applica-
ble interest rate for a month is the annual
rate of interest on 30-year Treasury secu-
rities as specified by the Commissioner
for that month in revenue rulings, notices
or other guidance published in the Internal
Revenue Bulletin.
The rate of interest on 30-year Treasury
securities for September 2008 is 4.27 per-
cent. The Service has determined this rate
as the monthly average of the daily deter-
mination of yield on the 30-year Treasury
bond maturing in May 2038.
Generally for plan years beginning
after 2007, § 431 specifies the mini-
mum funding requirements that apply to
multiemployer plans pursuant to § 412.
Section 431(c)(6)(B)specifies a minimum
amount for the full-funding limitation
described in section 431(c)(6)(A), based
on the plan’s current liability. Section
431(c)(6)(E)(ii)(I) provides that the inter-
est rate used to calculate current liability
for this purpose must be no more than 5
percent above and no more than 10 percent
below the weighted average of the rates of
interest on 30-year Treasury securities dur-
ing the four-year period ending on the last
day before the beginning of the plan year.
Notice 88–73, 1988–2 C.B. 383, provides
guidelines for determining the weighted
average interest rate. The following rates
were determined for plan years beginning
in the month shown below.
For Plan Y
ears
Beginnin
gin
Permissi
ble Range
MonthYear
30-Year
Treasury
Weighted
Average
90%to
105%
October20084.704.234.93
October 27, 200810032008–43 I.R.B.

MINIMUM PRESENT VALUE
SEGMENT RATES
Generally for plan years beginning
after December 31, 2007, the applicable
interest rates under § 417(e)(3)(D) are
segment rates computed without regard
to a 24-month average. For plan years
beginning in 2008 through 2011, the ap-
plicable interest rate is the monthly spot
segment rate blended with the applica-
ble rate under § 417(e)(3)(A)(ii)(II) as in
effect for plan years beginning in 2007.
Notice 2007–81 provides guidelines for
determining the minimum present value
segment rates. Pursuant to that notice,
the minimum present value transitional
segment rates determined for September
2008, taking into account the September
2008 30-year Treasury rate of 4.27 stated
above, are as follows:
For Plan Years
Beginning in
First
Segment
Second
Segment
Third
Segment
2008
4.59
4.894.79
20094.91
5.505.31
DRAFTING INFORMATION
The principal author of this notice is
Tony Montanaro of the Employee Plans,
Tax Exempt and Government Entities Di-
vision. Mr. Montanaro may be e-mailed at
RetirementPlanQuestions@irs.gov.
2008–43 I.R.B.1004October 27, 2008

Table I
Monthly Yield Curve for September 2008
Maturity YieldMaturity YieldMaturity YieldMaturity YieldMaturity Yield
0.5
4.38
20.5
7.26
40.5
6.83
60.5
6.70
80.5
6.64
1.0
4.90
21.07.2341.06.8361.06.7081.06.64
1.55.3521.57.2141.56.8261.56.7081.56.64
2.0
5.71
22.07.1942.06.8262.06.7082.06.64
2.5
5.99
22.5
7.17
42.5
6.82
62.5
6.70
82.5
6.63
3.06.1823.0
7.15
43.06.8163.0
6.69
83.06.63
3.5
6.34
23.5
7.14
43.5
6.81
63.5
6.69
83.5
6.63
4.06.4624.07.1244.06.8064.0
6.69
84.06.63
4.56.5824.57.1044.56.8064.5
6.69
84.56.63
5.0
6.68
25.0
7.09
45.0
6.79
65.0
6.69
85.0
6.63
5.5
6.78
25.5
7.07
45.5
6.79
65.5
6.68
85.5
6.63
6.06.8826.07.0646.0
6.79
66.06.6886.06.63
6.5
6.97
26.5
7.04
46.5
6.78
66.5
6.68
86.5
6.63
7.07.0627.07.0347.06.7867.06.6887.06.62
7.57.1427.57.0247.56.7867.56.6887.56.62
8.07.2128.07.0148.06.7768.06.6888.06.62
8.5
7.28
28.5
7.00
48.5
6.77
68.5
6.67
88.5
6.62
9.0
7.34
29.06.9949.0
6.77
69.0
6.67
89.0
6.62
9.5
7.39
29.5
6.98
49.56.7669.56.6789.56.62
10.07.4330.0
6.97
50.0
6.7670.06.67
90.0
6.62
10.57.4730.5
6.96
50.56.7670.56.6790.56.62
11.0
7.50
31.06.95
51.06.75
71.06.6791.06.62
11.57.5231.5
6.95
51.56.7571.5
6.6691.56.62
12.0
7.53
32.0
6.94
52.06.75
72.06.66
92.0
6.61
12.57.5432.5
6.93
52.5
6.74
72.5
6.6692.56.61
13.0
7.54
33.0
6.92
53.0
6.7473.06.66
93.0
6.61
13.57.5433.5
6.92
53.56.7473.56.6693.56.61
14.0
7.53
34.06.91
54.0
6.7474.06.6694.06.61
14.57.5234.5
6.90
54.5
6.73
74.56.65
94.56.61
15.07.5035.0
6.90
55.0
6.73
75.06.65
95.06.61
15.5
7.49
35.5
6.89
55.5
6.73
75.56.65
95.56.61
16.07.4736.06.88
56.0
6.7376.0
6.65
96.0
6.61
16.57.4436.56.8856.56.7276.56.6596.56.61
17.07.4237.06.87
57.0
6.7277.0
6.65
97.06.61
17.5
7.40
37.5
6.87
57.5
6.72
77.56.65
97.56.60
18.07.3738.06.86
58.0
6.7278.0
6.65
98.0
6.60
18.57.3538.56.8558.5
6.71
78.5
6.6498.56.60
19.0
7.33
39.0
6.85
59.06.71
79.0
6.64
99.0
6.60
19.57.3039.56.8459.56.7179.56.6499.56.60
20.07.2840.06.8460.06.7180.06.64100.06.60
October 27, 200810052008–43 I.R.B.

26 CFR 601.105: Examination of returns and claims
for refund, credit, or abatement; determination of
correct tax liability.
(Also Part I, § 42.)
Rev. Proc. 2008–60
SECTION 1. PURPOSE
This revenue procedure affects taxpay-
ers who are maintaining a surety bond or a
Treasury Direct Account (TDA) to satisfy
the low-income housing tax credit recap-
ture exception in § 42(j)(6) of the Internal
Revenue Code (the Code), as in effect on
or before July 30, 2008. This revenue pro-
cedure provides the procedures for taxpay-
ers to follow when making the election un-
der section 3004(i)(2)(B)(ii) of the Hous-
ing Assistance Tax Act of 2008 (Pub. L.
110–289) (the Act) to no longer maintain a
surety bond or a TDA to avoid recapture.
SECTION 2. BACKGROUND
.01 Section 42 of the Code allows a
10-year tax credit for investment in qual-
ified low-income buildings placed in ser-
vice after December 31, 1986. If, as of the
close of any taxable year in the compliance
period, the amount of the qualified basis of
any building with respect to the taxpayer
is less than the amount of such basis as
of the close of the preceding taxable year,
§ 42(j)(1) provides that the taxpayer’s tax
for the taxable year shall be increased by
the credit recapture amount.
.02 Prior to the Act, § 42(j)(6) of the
Code provided that in the case of a disposi-
tion of a building or an interest therein the
taxpayer would be discharged from liabil-
ity for any additional tax by reason of such
disposition if (A) the taxpayer furnished to
the Secretary a bond in an amount satisfac-
tory to the Secretary and for the period re-
quired, and (B) it was reasonably expected
that such building would continue to be op-
erated as a qualified low-income building
for the remainder of the building’s compli-
ance period. A building’s compliance pe-
riod is defined in § 42(i)(1).
.03 Form 8693,Low-Income Housing
Credit Disposition Bond, was developed
by the Service for use as a “surety bond”
for taxpayers to use to avoid or defer re-
capture of low-incomehousing tax cred-
its under § 42(j)(6) of the Code follow-
ing a disposition of a building (or interest
therein). Rev. Rul. 90–60, 1990–2 C.B.
3, provides guidance to taxpayers on the
amount of “surety bond” considered satis-
factory by the Secretary and the period of
the bond required by the Secretary under
§ 42(j)(6).
.04 Rev. Proc. 99–11, 1999–1 C.B.
275, establishes a collateral program as
an alternative to providing a surety bond
to avoid or defer recapture of low-income
housing tax credits under § 42(j)(6) of the
Code. Under this program, taxpayers may
establish a TDA and pledge certain United
States Treasury securities to the Internal
Revenue Service as security for the tax-
payer’s recapture liability.
.05 Taxpayers must use Form 8693 in
posting a surety bond and in establishing a
TDA. The Internal Revenue Service must
approve Form 8693 before it will take ef-
fect.
.06 Section 42(j)(6)(A) of the Code, as
amended by section 3004(c) of the Act,
provides that, in general, the increase in
tax under § 42(j)(1) shall not apply solely
by reason of the disposition of a building
(or an interest therein) if it is reasonably
expected that such building will continue
to be operated as a qualified low-income
building for the remainder of the building’s
compliance period.
.07 Section 42(j)(6)(B) of the Code, as
amended by section 3004(c) of the Act,
provides that if a building (or interest
therein) is disposed of during any taxable
year and there is any reduction in the qual-
ified basis of such building which results
in an increase in tax for such taxable or
any subsequent taxable year, then (i) the
statutory period for the assessment of any
deficiency with respect to such increase in
tax shall not expire before the expiration
of 3 years from the date the Secretary is
notified by the taxpayer (in such manner
as the Secretary may prescribe) of such
reduction in qualified basis, and (ii) such
deficiency may be assessed before the
expiration of such 3-year period notwith-
standing the provisions of any other law or
rule of law which would otherwise prevent
such assessment.
.08 Under section 3004(i) of the Act,
the amendments made to § 42(j)(6) of the
Code by section 3004(c) of the Act apply
to interests in buildings disposed of after
July 30, 2008, the date of enactment of
the Act. In addition, the amendments also
apply to interests in buildings disposed of
on or before July 30, 2008, if (i) it is
reasonably expected that such building(s)
will continue to be operated as qualified
low-income building(s) (within the mean-
ing of § 42) for the remainder of the com-
pliance period with respect to such build-
ing(s), and (ii) the taxpayer elects the ap-
plication of these rules to such disposition.
SECTION 3. SCOPE
.01 Except as provided in section 3.02
of this revenue procedure, this revenue
procedure applies to all taxpayers that dis-
posed of a qualified low-income building
(or an interest therein) on or before July
30, 2008, for which the Internal Revenue
Service has approved a Form 8693. Un-
der this revenue procedure, these taxpay-
ers may elect to have section 3004(c) of
the Act apply to the disposition if at the
time of the election the building covered
by a surety bond or TDA is reasonably ex-
pected to continue to be operated as a qual-
ified low-income building for the remain-
der of the building’s compliance period.
.02 This revenue procedure does not ap-
plytoanytaxpayerwhooptedtosatisfythe
bond posting exception to recapture un-
der § 42(j)(6) of the Code by setting up a
TDA, and who received a Form 8693 that
was approved by the Internal Revenue Ser-
vice before January 1, 2008, but who did
not fund the TDA within the period for
funding the TDA prescribed by Rev. Proc.
99–11.
SECTION 4. PROCEDURE FOR
MAKING ELECTION
.01 A taxpayer who seeks to make
the election provided by section
3004(i)(2)(B)(ii) of the Act must submit
a letter to the Internal Revenue Service
containing the following information:
(1) The taxpayer’s name, address, and
taxpayer identification number;
(2) A statement affirming that the tax-
payer reasonably expects that the building
will continue to be operated as a qualified
low-income building (within the meaning
of § 42) for the remainder of the building’s
compliance period;
(3) A declaration stating: “Under penal-
ties of perjury, I declare that I have ex-
amined this letter and the representations
made therein, and to the best of my knowl-
2008–43 I.R.B.1006October 27, 2008

edge and belief, they are true, correct, and
complete.”
.02 The taxpayer must attach to the let-
terrequiredbySection4.01ofthisrevenue
procedure a copy of the Form 8693 that
was approved by the Internal Revenue Ser-
vice for the building, signature page only,
and mail the letter and attached page to:
Internal Revenue Service
Box 331
Attn: LIHC Unit, DP 607 South
Philadelphia Campus
Bensalem, PA 19020
SECTION 5. EFFECT OF ELECTION
If a taxpayer makes the election under
this revenue procedure, section 3004(c) of
the Act applies to a disposition of a build-
ing (or interest therein) on or before July
30, 2008. Thus, the disposition is treated
as if § 42(j)(6) of the Code, as in effect on
or before July 30, 2008, contained no pro-
vision for the posting of a bond to avoid or
defer recapture and the taxpayer is treated
as if no surety bond or TDA had been es-
tablished for that disposition.
SECTION 6. PAPERWORK
REDUCTION ACT
The collection of information con-
tained in this revenue procedure has been
reviewed and approved by the Office
of Management and budget in accor-
dance with the Paperwork Reduction Act
(44 U.S.C. 3507) under control number
1545–2120.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
OMB control number.
The reporting requirement is contained
in section 4 of this revenue procedure. The
information is required so that taxpayers
may elect to terminate surety bonds or
TDA accounts furnished or established un-
der former § 42(j)(6).
The likely respondents are taxpayers
who have currently in effect a surety bond
or TDA to avoid or defer recapture of
low-income housing tax credits arising
from a disposition of a building (or interest
therein) on or before July 30, 2008. The
estimated total annual reporting burden is
7,800 hours. The estimated annual burden
per respondent is 1 hour, depending on the
individual circumstances. The estimated
total number of respondents is 7,800.
Books or records relating to a collection
of information must be retained as long
as their contents may become material in
the administration of any internal revenue
law. Generally tax returns and tax return
information are confidential, as required
by 26 U.S.C. 6103.
SECTION 7. EFFECTIVE DATE
This revenue procedure is effective for
elections under section 3004(i)(2)(B)(ii) of
the Act made on or after October 2, 2008.
An election request submitted by a tax-
payer to the Internal Revenue Service af-
ter July 30, 2008, but prior to October 2,
2008, that does not satisfy all of the proce-
dures required by Section 4 of this revenue
procedure will be deemed valid as of the
date originally submitted if the taxpayer
corrects the election to comply with these
procedures by the close of December 31,
2008.
SECTION 8. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Julie Hanlon Bolton of
the Office of Associate Chief Counsel
(Passthroughs and Special Industries). For
further information regarding this revenue
procedure, contact Ms. Hanlon Bolton at
(202) 622–3040 (not a toll-free call).
October 27, 200810072008–43 I.R.B.

Part IV. Items o
fGeneralInterest
Notice of Prop
osed
Rulemaking by
Cross-Refere
nce to
Temporary Re
gulations
Implementat
ion of Form 990
REG–142333–
07
AGENCY: Inte
rnal Revenue Service
(IRS), Treas
ury.
ACTION: Noti
ce of proposed rulemaking
by cross-re
ference to temporary regula-
tions.
SUMMARY: In
this issue of the Bulletin,
the IRS and t
he Treasury Department are
issuing tem
porary regulations (T.D. 9423)
necessary t
o implement the redesigned
Form 990,“
Return of Organization Ex-
empt From I
ncome Tax.”The temporary
regulatio
ns make revisions to the regula-
tions unde
r section 6033 and section 6043
to allow f
or new threshold amounts for
reportin
g compensation, to require that
compensa
tion be reported on a calendar
year basi
s, and to modify the scope of orga-
nization
s subject to information reporting
require
ments upon a substantial contrac-
tion. Th
e temporary regulations also
elimina
te the advance ruling process for
new orga
nizations, change the public sup-
port com
putation period for organizations
descri
bed in sections 170(b)(1)(A)(vi) and
509(a)
(1) and in section 509(a)(2) to five
years,
consistent with the revised Form
990, an
dclarifythatsupportmustbere-
ported
using the organization’s overall
metho
d of accounting. All tax exempt or-
ganiz
ations required under section 6033 of
the In
ternal Revenue Code (Code) to file
annua
l information returns are affected by
the te
mporary regulations. The text of the
temp
orary regulations also serves as the
text
of these proposed regulations.
DATE
S: Written or electronic comments
and r
equests for a public hearing must be
rece
ived by November 10, 2008.
ADDR
ESSES: Send submissions to:
CC:P
A:LPD:PR (REG–142333–07), room
5203
, Internal Revenue Service, PO Box
760
4, Ben Franklin Station, Washing-
ton
, DC 20044. Submissions may be
hand-deliver
ed Monday through Friday
between the ho
urs of 8 a.m. and 4 p.m.
to: CC:PA:LPD
:PR (REG–142333–07),
Courier’s Des
k, Internal Revenue Ser-
vice, 1111 Con
stitution Avenue, N.W.,
Washington,
DC, or sent electroni-
cally, via th
e Federal eRulemaking Por-
tal athttp:/
/www.regulations.gov(IRS
REG–142333–
07).
FOR FURTHER I
NFORMATION
CONTACT: Co
ncerning the proposed
regulation
s, Terri Harris, at (202)
622–6070; c
oncerning submissions
of comments
or requests for a hear-
ing, Oluwa
funmilayo Taylor, at (202)
622–3401 (
not toll-free numbers).
SUPPLEMEN
TARY INFORMATION:
Paperwork
Reduction Act
The collec
tion of information contained
in this not
ice of proposed rulemaking has
been revie
wed and approved by the Office
of Manage
ment and Budget in accordance
with the P
aperwork Reduction Act of 1995
(44 U.S.C
. 3507(d)) under control num-
ber 1545–
2117. Comments on the collec-
tion of in
formation should be sent to the
Office o
f Management and Budget, Attn:
Desk Off
icer for the Department of the
Treasur
y, Office of Information and Reg-
ulatory
Affairs, Washington, DC 20503,
with cop
ies to the Internal Revenue Ser-
vice, A
ttn: IRS Reports Clearance Officer,
SE:W:C
AR:MP:T:T:SP, Washington, DC
20224.
Comments on the collection of in-
format
ion should be received by Novem-
ber 10,
2008. Comments are specifically
reque
sted concerning:
Whethe
r the proposed collection of in-
forma
tion is necessary for the proper per-
forma
nce of the functions of the Internal
Reven
ue Service, including whether the
infor
mation will have practical utility;
The ac
curacy of the estimated burden
assoc
iated with the proposed collection of
infor
mation;
How th
e quality, utility and clarity of
the in
formation to be collected may be en-
hanc
ed;
How t
he burden of complying with the
prop
osed collection of information may be
mini
mized, including through the appli-
cati
on of automated collection techniques
or other forms
of information technology;
and
Estimates of c
apital or start-up costs
and costs of op
eration, maintenance and
purchase of se
rvice to provide information.
The collectio
n of information in this
proposed regu
lation is in §1.6033–2T. The
information
collected under §1.6033–2T
relates to co
mpensation reporting by tax
exempt organ
izations. The information
that is requi
red to be collected for purposes
of §1.6033–2
Tisrequiredtobesubmit-
tedonForm99
0,“Return of Organization
Exempt From
Income Tax.”The estimated
number of re
cordkeepers that will submit
Form 990 is a
pproximately 105,000.
Estimated t
otal annual reporting bur-
den: one hou
r.
An agency ma
y not conduct or sponsor,
and a person
is not required to respond to, a
collectio
n of information unless it displays
a valid con
trol number assigned by the Of-
fice of Man
agement and Budget.
Books or re
cords relating to a collection
of informa
tion must be retained as long
as their co
ntents may become material in
the admin
istration of any internal revenue
law. Gene
rally, tax returns and tax return
informat
ion are confidential, as required
by 26 U.S.
C. 6103.
Backgrou
nd and Explanation of
Provisio
n
Temporar
y regulations in this issue of
the Bull
etin amend the Income Tax Regu-
lations
(26 CFR part 1) relating to sections
170(b),
507, 509(a), 6033, and 6043. The
amendme
nts to §§1.170A–9, 1.507–2 and
1.509(a
)–3 eliminate the advance ruling
proces
s,clarifythatsupportmustbere-
ported
using the organization’s overall
method
of accounting, eliminate the ex-
ceptio
n for material changes in sources
of supp
ort, and change the public sup-
port co
mputation period for organizations
descr
ibed in sections 170(b)(1)(A)(vi)
and 50
9(a)(1) and in section 509(a)(2)
to fiv
e years, consistent with the re-
vised
Schedule A to the redesigned Form
990,“
Return of Organization Exempt
From
Income Tax.”The amendments to
§§1.
6033–2(a)(2)(ii)(g)and(h)allowfor
new t
hreshold amounts for reporting com-
pens
ation and require that organizations
use a
calendar year basis or a basis that is
2008–43 I.R.B.1008October 27, 2008

prescribed by publication, form or instruc-
tion when reporting listed officer, director,
trustee, key employee and independent
contractor compensation. The amend-
ments to §§1.6043–3(b)(8) and (d) expand
the scope of organizations subject to in-
formation reporting requirements upon a
substantial contraction. The text of those
temporary regulations also serves as the
text of these proposed regulations. The
preamble to the temporary regulations ex-
plains the temporary regulations and these
proposed regulations.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a significant
regulatory action as defined in Executive
Order 12866. Therefore, a regulatory as-
sessment is not required. It has also been
determined that section 553(b) of the Ad-
ministrative Procedure Act (5 U.S.C. chap-
ter 5) does not apply. It is hereby certi-
fied that the collection of information in
this regulation will not have a significant
economic impact on a substantial number
of small entities. Thiscertification is based
on the fact that burden on tax-exempt en-
tities will be reduced by (1) eliminating
the separate advance ruling process and the
additional process for subsequently seek-
ing a definitive ruling, (2) clarifying rules
regarding the method of accounting and
period for reporting certain items, and (3)
providing discretion for the IRS to narrow
or clarify circumstances under which re-
porting is required. Accordingly, a Regu-
latory Flexibility Analysis under the Reg-
ulatory Flexibility Act (5 U.S.C. chapter 6)
is not required. Pursuant to section 7805(f)
of the Code, these regulations have been
submitted to the Chief Counsel for Advo-
cacy of the Small Business Administration
for comment on their impact on small busi-
ness.
Comments and Requests for Public
Hearing
Before these proposed regulations are
adopted as final regulations, consideration
will be given to any written comments
(a signed original and eight (8) copies)
or electronic comments that are submitted
timely to the IRS. Comments are requested
on all aspects of the proposed regulations.
The IRS and the Treasury Department re-
quest comments on the clarity of the pro-
posed rules and how they can be made eas-
ier to understand. All comments will be
available for public inspection and copy-
ing.
A public hearing will be scheduled if
requested in writing by any person that
timely submits written comments. If a
public hearing is scheduled, notice of the
date, time, and place for the public hearing
will be published in theFederal Register.
Drafting Information
The principal author of this regulation
is Terri Harris of the Office of Division
Counsel/Associate Chief Counsel (Tax Ex-
empt and Government Entities). However,
other personnel from the IRS and the Trea-
sury Department participated in their de-
velopment.
*****
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 1 is proposed
to be amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.170A–9 is amended
by revising paragraphs (f) and (k) to read
as follows:
§1.170A–9 Definition of section
170(b)(1)(A) organization.
*****
(f)[Thetextofthisproposedamend-
ment to §1.170A–9(f) is the same as the
text of §1.170A–9T(f) published else-
whereinthisissueoftheBulletin].
*****
(k) [The text of this proposed amend-
ment to §1.170A–9(k) is the same as the
text of §1.170A–9T(k)(1) and (k)(2) pub-
lished elsewhere in this issue of the Bul-
letin].
Par. 3. Section 1.507–2 is revised to
read as follows:
§1.507–2 Special rules; transfer to, or
operation as, public charity.
[The text of this proposed amendment
to §1.507–2 is the same as the text of
§1.507–2T(a) through (f)(2) published
elsewhere in this issue of the Bulletin].
Par. 4. Section 1.509(a)–3 is amended
by revising paragraphs (a)(2), (a)(3)(i), (c),
(d), (e), (k), and (n) and adding paragraph
(o) to read as follows:
§1.509(a)–3 Broadly, publicly supported
organizations.
(a) * * *
(2) [The text of this proposed amend-
ment to §1.509(a)–3(a)(2) is the same as
the text of §1.509(a)–3T(a)(2) published
elsewhere in this issue of the Bulletin].
(3) * * *
(i) [The text of this proposed amend-
ment to §1.509(a)–3(a)(3)(i) is the same as
the text of §1.509(a)–3T(a)(3)(i) published
elsewhere in this issue of the Bulletin].
*****
(c) [The text of this proposed amend-
ment to §1.509(a)–3(c) is the same as the
text of §1.509(a)–3T(c) published else-
whereinthisissueoftheBulletin].
(d) [The text of this proposed amend-
ment to §1.509(a)–3(d) is the same as the
text of §1.509(a)–3T(d) published else-
whereinthisissueoftheBulletin].
(e) [The text of this proposed amend-
ment to §1.509(a)–3(e) is the same as the
text of §1.509(a)–3T(e) published else-
whereinthisissueoftheBulletin].
*****
(k) [The text of this proposed amend-
ment to §1.509(a)–3(k) is the same as the
text of §1.509(a)–3T(k) published else-
whereinthisissueoftheBulletin].
*****
(n) [The text of this proposed amend-
ment to §1.509(a)–3(n) is the same as the
text of §1.509(a)–3T(n) published else-
whereinthisissueoftheBulletin].
(o) [The text of this proposed
§1.509(a)–3(o) is the same as the text of
§1.509(a)–3T(o)(1) and (o)(2) published
elsewhere in this issue of the Bulletin].
Par. 5. Section 1.6033–2 is amended
by revising paragraphs (a)(2)(ii)(g),
(a)(2)(ii)(h) and (k) to read as follows:
§1.6033–2 Returns by exempt
organizations (taxable years beginning
after December 31, 1969) and returns by
certain nonexempt organizations (taxable
October 27, 200810092008–43 I.R.B.

years beginning after December 31,
1980).
(a) * * *
(2) * * *
(ii) * * *
(g) [The text of this proposed amend-
ment to §1.6033–2(a)(2)(ii)(g)isthesame
as the text of §1.6033–2T(a)(2)(ii)(g) pub-
lished elsewhere in this issue of the Bul-
letin].
(h) [The text of this proposed amend-
ment to §1.6033–2(a)(2)(ii)(h)isthesame
as the text of §1.6033–2T(a)(2)(ii)(h) pub-
lished elsewhere in this issue of the Bul-
letin].
*****
(k) [The text of this proposed amend-
ment to §1.6033–2(k) is the same as the
text of §1.6033–2T(k)(1) and (k)(2) pub-
lished elsewhere in this issue of the Bul-
letin].
Par. 6. Section 1.6043–3 is amended
by revising paragraphs (b)(8) and (d) and
adding paragraph (e) to read as follows:
§1.6043–3 Returns regarding liquidation,
dissolution, termination, or substantial
contraction of organizations exempt from
taxation under section 501(a).
*****
(b) * * *
(8) [The text of this proposed amend-
ment to §1.6043–3(b)(8) is the same as the
text of §1.6043–3T(b)(8) published else-
where in this issue of the Bulletin].
*****
(d) [The text of this proposed amend-
ment to §1.6043–3(d) is the same as the
text of §1.6043–3T(d) published else-
where in this issue of the Bulletin].
(e) [The text of this proposed amend-
ment to §1.6043–3(e) is the same as the
text of §1.6043–3T(e)(1) and (e)(2) pub-
lished elsewhere in this issue of the Bul-
letin].
Linda E. Stiff,
Deputy Commissioner
for Services and Enforcement.
(Filed by the Office of the Federal Register on September
8, 2008, 8:45 a.m., and published in the issue of the Federal
Register for September 9, 2008, 73 F.R. 52218)
Capital Costs Incurred to
Comply With EPA Sulfur
Regulations; Hearing
Cancellation
Announcement 2008–96
AGENCY: Internal Revenue Service
(IRS), Treasury
ACTION: Cancellation of notice of public
hearing on proposed rulemaking.
SUMMARY: This document cancels a
public hearing on proposed regulations
(REG–143453–05, 2008–32 I.R.B. 310)
under section 179B of the Internal Rev-
enue Code (Code) relating to the deduction
of qualified capital costs paid or incurred
by a small business refiner to comply
with the highway diesel fuel sulfur control
requirements of the Environmental Pro-
tection Agency.
DATES: The public hearing, originally
scheduled for October 28, 2008 at 10 a.m.
is cancelled.
FOR FURTHER INFORMATION
CONTACT: Funmi Taylor of the Publica-
tions and Regulations Branch, Legal Pro-
cessing Division, Associate Chief Counsel
(Procedure and Administration) at (202)
622–3628 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
A notice of proposed rulemaking by
cross-reference to temporary regulations
and a notice of public hearing that ap-
peared in theFederal Registeron Friday,
June 27, 2008 (73 FR 36475) announced
that a public hearing was scheduled for
October 28, 2008, at 10 a.m. in the IRS
Auditorium, Internal Revenue Building,
1111 Constitution Avenue, NW, Washing-
ton, DC. The subject of the public hearing
is under the section 179B of the Internal
Revenue Code.
The public comment period for these
regulations expired on September 25,
2008. The notice of proposed rulemaking
by cross-reference to temporary regu-
lations and notice of public hearing in-
structed those interested in testifying at
the public hearing to submit a request to
speak and an outline of the topics to be
addressed. As of Tuesday, September
28, 2008, no one has requested to speak.
Therefore, the public hearing scheduled
for October 28, 2008, is cancelled.
Guy Traynor,
Federal Register Liaison,
Publications and Regulations Branch,
Legal Processing Division,
Associate Chief Counsel
(Procedure and Administration).
(Filed by the Office of the Federal Register on October 6,
2008, 8:45 a.m., and published in the issue of the Federal
Register for October 7, 2008, 73 F.R. 58514)
Deletions From Cumulative
List of Organizations
Contributions to Which
are Deductible Under Section
170 of the Code
Announcement 2008–97
The Internal Revenue Service has re-
voked its determination that the organi-
zations listed below qualify as organiza-
tions described in sections 501(c)(3) and
170(c)(2) of the Internal Revenue Code of
1986.
Generally, the Service will not disallow
deductions for contributions made to a
listed organization on or before the date
of announcement in the Internal Revenue
Bulletinthatanorganizationnolonger
qualifies. However, the Service is not
precluded from disallowing a deduction
for any contributions made after an or-
ganization ceases to qualify under section
170(c)(2) if the organization has not timely
filed a suit for declaratory judgment under
section 7428 and if the contributor (1) had
knowledge of the revocation of the ruling
or determination letter, (2) was aware that
such revocation was imminent, or (3) was
in part responsible for or was aware of the
activities or omissions of the organization
that brought about this revocation.
If on the other hand a suit for declara-
tory judgment has been timely filed, con-
tributions from individuals and organiza-
tions described in section 170(c)(2) that
are otherwise allowable will continue to
be deductible. Protection under section
7428(c) would begin on October 27, 2008,
and would end on the date the court first
determines that the organization is not de-
scribed in section 170(c)(2) as more partic-
ularly set forth in section 7428(c)(1). For
2008–43 I.R.B.1010October 27, 2008

individual contributors, the maximum de-
duction protected is $1,000, with a hus-
band and wife treated as one contributor.
This benefit is not extended to any indi-
vidual, in whole or in part, for the acts or
omissions of the organization that were the
basis for revocation.
Northern California Housing
Stockton, CA
1
st
United Charitable Trust
Glendale, AZ
HarrisWelburn Company
Upper Marlboro, MD
Bond Endowment Fund, Inc.
Timonium, MD
Northern Lights Jr. Drum & Bugle Corps
Association
Vancouver, WA
Information Reporting
Requirements Under Internal
Revenue Code Section 6039;
Hearing
Announcement 2008–102
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of public hearing on pro-
posed rulemaking.
SUMMARY: This document provides
notice of public hearing on a notice of
proposed rulemaking (REG–103146–08,
2008–37 I.R.B. 701) relating to the return
and information statement requirements
under section 6039 of the Internal Revenue
Code. These regulations reflect changes
to section 6039 made by section 403 of the
Tax Relief and Health Care Act of 2006.
These proposed regulations affect corpo-
rations that issue statutory stock options
and provide guidance to assist corpora-
tions in complying with the return and
information statement requirements under
section 6039.
DATES: The public hearing is being held
on October 30, 2008, at 10 a.m. The IRS
must receive outlines of the topics to be
discussed at the hearing by October 23,
2008.
ADDRESSES: The public hearing is be-
ing held in room 2116, Internal Revenue
Building, 1111 Constitution Avenue, NW,
Washington, DC. Send submissions to:
CC:PA:LPD:PR (REG–103146–08), room
5203, Internal Revenue Service, P.O. Box
7604, Ben Franklin Station, Washing-
ton, DC 20044. Submissions may be
hand-delivered Monday through Friday
betweenthehoursof8a.m. and4p.m.
to CC:PA:LPD:PR (REG–103146–08),
Courier’s Desk, Internal Revenue Service,
1111 Constitution Avenue, NW, Wash-
ington, DC. Alternatively, taxpayers may
submit electronic outlines of oral com-
ments via the Federal eRulemaking Portal
athttp://www.regulations.gov.
FOR FURTHER INFORMATION
CONTACT: Concerning the regulations,
Thomas Scholz at (202) 622–6030 (not
a toll-free number); concerning submis-
sions of comments, the hearing, and/or
to be placed on the building access list to
attend the hearing, Richard A. Hurst at
Richard.A.Hurst@irscounsel.treas.gov.
SUPPLEMENTARY INFORMATION:
The subject of the public hearing is
the notice of proposed rulemaking
(REG–103146–08) that was published in
theFederal Registeron Thursday, July
17, 2008 (73 FR 40999).
Persons,whowishtopresentoralcom-
ments at the hearing that submitted writ-
ten comments, must submit an outline of
the topics to be discussed and the amount
of time to be devoted to each topic (signed
original and eight (8) copies) by October
23, 2008.
A period of 10 minutes is allotted to
each person for presenting oral comments.
After the deadline for receiving out-
lines has passed, the IRS will prepare an
agenda containing the schedule of speak-
ers. Copies of the agenda will be made
available, free of charge, at the hearing or
in the Freedom of Information Reading
Room (FOIA RR) (Room 1621) which
is located at the 11
th
and Pennsylvania
Avenue, NW, entrance, 1111 Constitution
Avenue, NW, Washington, DC.
Because of access restrictions, the IRS
will not admit visitors beyond the imme-
diateentranceareamorethan30minutes
before the hearing starts. For informa-
tion about having your name placed on the
building access list to attend the hearing,
see the FOR FURTHER INFORMATION
CONTACT section of this document.
Cynthia Grigsby,
Acting Chief,
Publications and Regulations Branch,
Legal Processing Division,
Associate Chief Counsel
(Procedure and Administration).
(Filed by the Office of the Federal Register on October 16,
2008, 8:45 a.m., and published in the issue of the Federal
Register for October 17, 2008, 73 F.R. 61770)
October 27, 200810112008–43 I.R.B.

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the ef-
fect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is be-
ingextendedtoapplytoavariationofthe
fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that the
same principle also applies to B, the earlier
ruling is amplified. (Compare withmodi-
fied,below).
Clarifiedis used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion.
It is not used where a position in a prior
ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
withamplifiedandclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
beingstatedinanewruling.
Supersededdescribes a situation where
the new ruling does nothing more than re-
state the substance and situation of a previ-
ously published ruling (or rulings). Thus,
the term is used to republish under the
1986 Code and regulations the same po-
sition published under the 1939 Code and
regulations. The term is also used when
it is desired to republish in a single rul-
ing a series of situations, names, etc., that
were previously published over a period of
time in separate rulings. If the new rul-
ing does more than restate the substance
of a prior ruling, a combination of terms
is used. For example,modifiedandsu-
persededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is self
contained. In this case, the previously pub-
lished ruling is first modified and then, as
modified, is superseded.
Supplementedis used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names in
subsequent rulings. After the original rul-
ing has been supplemented several times, a
new ruling may be published that includes
the list in the original ruling and the ad-
ditions, and supersedes all prior rulings in
the series.
Suspendedis used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of cases
in litigation, or the outcome of a Service
study.
Abbreviations
The fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
DC—Dummy Corporation.
DE—Donee.
Del. Order
—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
2008–43 I.R.B.iOctober 27, 2008

Numerical Finding List
1
Bulletins 2008–27 through 2008–43
Announcements:
2008-62, 2008-27 I.R.B.74
2008-63, 2008-28 I.R.B.114
2008-64, 2008-28 I.R.B.114
2008-65, 2008-31 I.R.B.279
2008-66, 2008-29 I.R.B.164
2008-67, 2008-29 I.R.B.164
2008-68, 2008-30 I.R.B.244
2008-69, 2008-32 I.R.B.318
2008-70, 2008-32 I.R.B.318
2008-71, 2008-32 I.R.B.321
2008-72, 2008-32 I.R.B.321
2008-73, 2008-33 I.R.B.391
2008-74, 2008-33 I.R.B.392
2008-75, 2008-33 I.R.B.392
2008-76, 2008-33 I.R.B.393
2008-77, 2008-33 I.R.B.394
2008-78, 2008-34 I.R.B.453
2008-79, 2008-35 I.R.B.568
2008-80, 2008-37 I.R.B.706
2008-81, 2008-37 I.R.B.706
2008-82, 2008-37 I.R.B.708
2008-83, 2008-37 I.R.B.709
2008-84, 2008-38 I.R.B.748
2008-85, 2008-38 I.R.B.749
2008-86, 2008-40 I.R.B.843
2008-87, 2008-40 I.R.B.843
2008-88, 2008-40 I.R.B.843
2008-89, 2008-40 I.R.B.844
2008-90, 2008-41 I.R.B.896
2008-91, 2008-42 I.R.B.963
2008-92, 2008-42 I.R.B.963
2008-93, 2008-41 I.R.B.896
2008-94, 2008-42 I.R.B.964
2008-95, 2008-42 I.R.B.964
2008-96, 2008-43 I.R.B.1010
2008-97, 2008-43 I.R.B.1010
2008-102, 2008-43 I.R.B.1011
Court Decisions:
2087, 2008-41 I.R.B.845
Notices:
2008-55, 2008-27 I.R.B.11
2008-56, 2008-28 I.R.B.79
2008-57, 2008-28 I.R.B.80
2008-58, 2008-28 I.R.B.81
2008-59, 2008-29 I.R.B.123
2008-60, 2008-30 I.R.B.178
2008-61, 2008-30 I.R.B.180
2008-62, 2008-29 I.R.B.130
2008-63, 2008-31 I.R.B.261
2008-64, 2008-31 I.R.B.268
Notices— Continued:
2008-65, 2008-30 I.R.B.182
2008-66, 2008-31 I.R.B.270
2008-67, 2008-32 I.R.B.307
2008-68, 2008-34 I.R.B.418
2008-69, 2008-34 I.R.B.419
2008-70, 2008-36 I.R.B.575
2008-71, 2008-35 I.R.B.462
2008-72, 2008-43 I.R.B.998
2008-73, 2008-38 I.R.B.717
2008-74, 2008-38 I.R.B.718
2008-75, 2008-38 I.R.B.719
2008-76, 2008-39 I.R.B.768
2008-77, 2008-40 I.R.B.814
2008-78, 2008-41 I.R.B.851
2008-79, 2008-40 I.R.B.815
2008-80, 2008-40 I.R.B.820
2008-81, 2008-41 I.R.B.852
2008-82, 2008-41 I.R.B.853
2008-83, 2008-42 I.R.B.905
2008-84, 2008-41 I.R.B.855
2008-85, 2008-42 I.R.B.905
2008-86, 2008-42 I.R.B.925
2008-87, 2008-42 I.R.B.930
2008-88, 2008-42 I.R.B.933
2008-89, 2008-43 I.R.B.999
2008-90, 2008-43 I.R.B.1000
2008-91, 2008-43 I.R.B.1001
2008-92, 2008-43 I.R.B.1001
2008-93, 2008-43 I.R.B.1002
Proposed Regulations:
REG-209006-89, 2008-41 I.R.B.867
REG-143544-04, 2008-42 I.R.B.947
REG-161695-04, 2008-37 I.R.B.699
REG-164965-04, 2008-34 I.R.B.450
REG-143453-05, 2008-32 I.R.B.310
REG-146895-05, 2008-37 I.R.B.700
REG-155087-05, 2008-38 I.R.B.726
REG-142680-06, 2008-35 I.R.B.565
REG-120476-07, 2008-36 I.R.B.679
REG-120844-07, 2008-39 I.R.B.770
REG-129243-07, 2008-27 I.R.B.32
REG-138355-07, 2008-32 I.R.B.311
REG-140029-07, 2008-40 I.R.B.828
REG-142040-07, 2008-34 I.R.B.451
REG-142333-07, 2008-43 I.R.B.1008
REG-149404-07, 2008-40 I.R.B.839
REG-149405-07, 2008-27 I.R.B.73
REG-100464-08, 2008-32 I.R.B.313
REG-101258-08, 2008-28 I.R.B.111
REG-102122-08, 2008-31 I.R.B.278
REG-102822-08, 2008-38 I.R.B.744
REG-103146-08, 2008-37 I.R.B.701
REG-106251-08, 2008-39 I.R.B.774
REG-115457-08, 2008-33 I.R.B.390
Proposed Regulations— Continued:
REG-121698-08, 2008-29 I.R.B.163
Revenue Procedures:
2008-32, 2008-28 I.R.B.82
2008-33, 2008-28 I.R.B.93
2008-34, 2008-27 I.R.B.13
2008-35, 2008-29 I.R.B.132
2008-36, 2008-33 I.R.B.340
2008-37, 2008-29 I.R.B.137
2008-38, 2008-29 I.R.B.139
2008-39, 2008-29 I.R.B.143
2008-40, 2008-29 I.R.B.151
2008-41, 2008-29 I.R.B.155
2008-42, 2008-29 I.R.B.160
2008-43, 2008-30 I.R.B.186
2008-44, 2008-30 I.R.B.187
2008-45, 2008-30 I.R.B.224
2008-46, 2008-30 I.R.B.238
2008-47, 2008-31 I.R.B.272
2008-48, 2008-36 I.R.B.586
2008-49, 2008-34 I.R.B.423
2008-50, 2008-35 I.R.B.464
2008-51, 2008-35 I.R.B.562
2008-52, 2008-36 I.R.B.587
2008-53, 2008-36 I.R.B.678
2008-54, 2008-38 I.R.B.722
2008-55, 2008-39 I.R.B.768
2008-56, 2008-40 I.R.B.826
2008-57, 2008-41 I.R.B.855
2008-58, 2008-41 I.R.B.856
2008-59, 2008-41 I.R.B.857
2008-60, 2008-43 I.R.B.1006
2008-61, 2008-42 I.R.B.934
2008-62, 2008-42 I.R.B.935
2008-63, 2008-42 I.R.B.946
Revenue Rulings:
2008-32, 2008-27 I.R.B.6
2008-33, 2008-27 I.R.B.8
2008-34, 2008-28 I.R.B.76
2008-35, 2008-29 I.R.B.116
2008-36, 2008-30 I.R.B.165
2008-37, 2008-28 I.R.B.77
2008-38, 2008-31 I.R.B.249
2008-39, 2008-31 I.R.B.252
2008-40, 2008-30 I.R.B.166
2008-41, 2008-30 I.R.B.170
2008-42, 2008-30 I.R.B.175
2008-43, 2008-31 I.R.B.258
2008-44, 2008-32 I.R.B.292
2008-45, 2008-34 I.R.B.403
2008-46, 2008-36 I.R.B.572
2008-47, 2008-39 I.R.B.760
2008-48, 2008-38 I.R.B.713
2008-49, 2008-40 I.R.B.811
1
A cumulative list of all revenue rulings, revenueprocedures, Treasury decisions, etc., publishedin Internal Revenue Bulletins 2008–1 through 2008–26 is in Internal Revenue Bulletin
2008–26, dated June 30, 2008.
October 27, 2008ii2008–43 I.R.B.

Treasury Decisions:
9401, 2008-27 I.R.B.1
9402, 2008-31 I.R.B.254
9403, 2008-32 I.R.B.285
9404, 2008-32 I.R.B.280
9405, 2008-32 I.R.B.293
9406, 2008-32 I.R.B.287
9407, 2008-33 I.R.B.330
9408, 2008-33 I.R.B.323
9409, 2008-29 I.R.B.118
9410, 2008-34 I.R.B.414
9411, 2008-34 I.R.B.398
9412, 2008-37 I.R.B.687
9413, 2008-34 I.R.B.404
9414, 2008-35 I.R.B.454
9415, 2008-36 I.R.B.570
9417, 2008-37 I.R.B.693
9418, 2008-38 I.R.B.713
9419, 2008-40 I.R.B.790
9420, 2008-39 I.R.B.750
9421, 2008-39 I.R.B.755
9422, 2008-42 I.R.B.898
9423, 2008-43 I.R.B.966
2008–43 I.R.B.iiiOctober 27, 2008

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2008–27 through 2008–43
Announcements:
2008-19
Superseded by
Ann. 2008-95, 2008-42 I.R.B.964
2008-64
Corrected by
Ann. 2008-71, 2008-32 I.R.B.321
2008-72
Corrected by
Ann. 2008-78, 2008-34 I.R.B.453
Notices:
88-80
Modified by
Notice 2008-79, 2008-40 I.R.B.815
99-48
Superseded by
Rev. Proc. 2008-40, 2008-29 I.R.B.151
2000-9
Obsoleted by
Rev. Proc. 2008-41, 2008-29 I.R.B.155
2004-2
Amplified by
Notice 2008-59, 2008-29 I.R.B.123
2004-50
Amplified by
Notice 2008-59, 2008-29 I.R.B.123
2005-91
Obsoleted by
T.D. 9422, 2008-42 I.R.B.898
2006-88
Modified and superseded by
Notice 2008-60, 2008-30 I.R.B.178
2007-22
Amplified by
Notice 2008-59, 2008-29 I.R.B.123
2007-36
Clarified, modified, and amplified by
Rev. Proc. 2008-54, 2008-38 I.R.B.722
2008-41
Amended and supplemented by
Notice 2008-88, 2008-42 I.R.B.933
Proposed Regulations:
REG-161695-04
Corrected by
Ann. 2008-92, 2008-42 I.R.B.963
Proposed Regulations— Continued:
REG-143453-05
Hearing cancelled by
Ann. 2008-96, 2008-43 I.R.B.1010
REG-129243-07
Corrected by
Ann. 2008-75, 2008-33 I.R.B.392
REG-151135-07
Hearing scheduled by
Ann. 2008-64, 2008-28 I.R.B.114
REG-101258-08
Corrected by
Ann. 2008-73, 2008-33 I.R.B.391
REG-103146-08
Hearing scheduled by
Ann. 2008-102, 2008-43 I.R.B.1011
Revenue Procedures:
92-25
Superseded by
Rev. Proc. 2008-41, 2008-29 I.R.B.155
92-83
Obsoleted by
Rev. Proc. 2008-37, 2008-29 I.R.B.137
2001-10
Section 6.02(1)(a) modified and amplified by
Rev. Proc. 2008-52, 2008-36 I.R.B.587
2001-42
Superseded by
Rev. Proc. 2008-39, 2008-29 I.R.B.143
2002-9
Clarified, modified, amplified, and superseded by
Rev. Proc. 2008-52, 2008-36 I.R.B.587
Modified and amplified by
Rev. Proc. 2008-43, 2008-30 I.R.B.186
2002-28
Section 7.02(1)(a) modified and amplified by
Rev. Proc. 2008-52, 2008-36 I.R.B.587
2002-64
Superseded by
Rev. Proc. 2008-55, 2008-39 I.R.B.768
2005-29
Superseded by
Rev. Proc. 2008-49, 2008-34 I.R.B.423
2006-27
Modified and superseded by
Rev. Proc. 2008-50, 2008-35 I.R.B.464
2006-29
Superseded by
Rev. Proc. 2008-34, 2008-27 I.R.B.13
Revenue Procedures— Continued:
2006-34
Superseded by
Rev. Proc. 2008-44, 2008-30 I.R.B.187
2007-14
Superseded by
Rev. Proc. 2008-52, 2008-36 I.R.B.587
2007-19
Superseded by
Rev. Proc. 2008-39, 2008-29 I.R.B.143
2007-37
Updated by
Rev. Proc. 2008-62, 2008-42 I.R.B.935
2007-42
Superseded by
Rev. Proc. 2008-32, 2008-28 I.R.B.82
2007-43
Superseded by
Rev. Proc. 2008-33, 2008-28 I.R.B.93
2007-44
Modified by
Rev. Proc. 2008-56, 2008-40 I.R.B.826
2007-49
Section 3 modified and superseded by
Rev. Proc. 2008-50, 2008-35 I.R.B.464
2007-50
Superseded by
Rev. Proc. 2008-36, 2008-33 I.R.B.340
2007-63
Superseded by
Rev. Proc. 2008-59, 2008-41 I.R.B.857
2007-66
Modified and superseded by
Rev. Proc. 2008-54, 2008-38 I.R.B.722
2007-70
Modified by
Ann. 2008-63, 2008-28 I.R.B.114
2007-72
Amplified and superseded by
Rev. Proc. 2008-47, 2008-31 I.R.B.272
2008-3
Modified and amplified by
Rev. Proc. 2008-61, 2008-42 I.R.B.934
2008-12
Modified and superseded by
Rev. Proc. 2008-35, 2008-29 I.R.B.132
2008-43
Modified by
Rev. Proc. 2008-52, 2008-36 I.R.B.587
2008-52
Modified by
Ann. 2008-84, 2008-38 I.R.B.748
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2008–1 through 2008–26 is in Internal Revenue Bulletin 2008–26, dated June 30, 2008.
October 27, 2008iv2008–43 I.R.B.

Revenue Rulings:
67-213
Amplified by
Rev. Rul. 2008-40, 2008-30 I.R.B.166
71-234
Modified by
Rev. Proc. 2008-43, 2008-30 I.R.B.186
76-273
Obsoleted by
T.D. 9414, 2008-35 I.R.B.454
77-480
Modified by
Rev. Proc. 2008-43, 2008-30 I.R.B.186
82-105
Obsoleted by
T.D. 9414, 2008-35 I.R.B.454
91-17
Amplified by
Rev. Proc. 2008-41, 2008-29 I.R.B.155
Rev. Proc. 2008-42, 2008-29 I.R.B.160
Superseded in part by
Rev. Proc. 2008-40, 2008-29 I.R.B.151
2005-6
Amplified by
Rev. Proc. 2008-38, 2008-29 I.R.B.139
2006-57
Modified by
Notice 2008-74, 2008-38 I.R.B.718
2008-12
Amplified by
Rev. Rul. 2008-38, 2008-31 I.R.B.249
Clarified by
Ann. 2008-65, 2008-31 I.R.B.279
Treasury Decisions:
9391
Corrected by
Ann. 2008-74, 2008-33 I.R.B.392
9417
Corrected by
Ann. 2008-91, 2008-42 I.R.B.963
2008–43 I.R.B.vOctober 27, 2008

INDEX
Internal Revenue Bulletins 2008–27 through
2008–43
The abbreviation and number in parenthesis following the index entry
refer to the specific item; numbers in roman and italic type following
the parenthesis refers to the Internal Revenue Bulletin in which the item
may be found and the page number on which it appears.
Key to Abbreviations:
AnnAnnouncement
CDCourt Decision
DODelegation Order
EOExecutive Order
PLPublic Law
PTEProhibited Transaction Exemption
RPRevenue Procedure
RRRevenue Ruling
SPRStatement of Procedural Rules
TCTax Convention
TDTreasury Decision
TDOTreasury Department Order
EMPLOYEE PLANS
Accrual rule for defined benefit plans under section 411(b)(1)(B),
application (REG–100464–08) 32,313
Application of section 457(f) tocertain arrangements regarding
part-year compensation (Notice 62) 29,130
Closing agreements, Employee Plans Compliance Resolution
System (EPCRS) (RP 50) 35,464
Definition of “outside director” (RR 32) 27,6
Determination letters, staggered remedial amendment period (RP
56) 40,826
Disaster relief, Hurricane Ike (Notice 87) 42,930
Employee stock purchase plans, rules (REG–106251–08) 39,
774
Full funding limitations, weighted average interest rates, seg-
ment rates for:
July 2008 (Notice 65) 30,182
August 2008 (Notice 69) 34,419
September 2008 (Notice 75) 38,719
October 2008 (Notice 93) 43,1002
Individual Retirement Accounts (IRAs), converting amounts to
Roth IRAs (TD 9418) 38,713
Letter rulings, nonqualified deferred compensation, no-rule areas
(RP 61) 42,934
Mortality tables:
Determining present value (TD 9419) 40,790
Procedures for obtaining approval to use plan-specific substi-
tute mortality tables (RP 62) 42,935
Updated static mortality tables for the years 2009 through
2013 (Notice 85) 42,905
Multiemployer plan funding guidance, hearing scheduled for
REG–151135–07 (Ann 64) 28,114;correction(Ann71)32,
321
EMPLOYEE PLANS—Cont.
Proposed Regulations:
26 CFR 1.401(a)(9)–1, –6, amended; 1.403(b)–6,
amended; reasonable good faith interpretation of re-
quired minimum distribution rules by governmental plans
(REG–142040–07) 34,451
26 CFR 1.411(b)–1, amended; accrual rules for defined ben-
efit plans (REG–100464–08) 32,313
26 CFR 1.421–1, amended; 1.422–2, –5, amended; 1.423–1,
–2, revised; employee stock purchase plans under section
423 (REG–106251–08) 39,774
26 CFR 1.432; multiemployer plan funding guidance, hearing
scheduled for REG–151135–07 (Ann 64) 28,114; correc-
tion (Ann 71) 32,321
26 CFR 1.6039–1, revised; 1.6039–2, added; infor-
mation reporting requirements under section 6039
(REG–103146–08) 37,701; hearing scheduled (Ann 102)
43,1011
26 CFR 1.6060–1, amended; 1.6107–1, revised; 1.6109–2,
amended; 1.6694–0, –1, –2, revised; 1.6694–3, –4,
amended; 1.6695–1, revised; 1.6695–2, amended;
1.6696–1, revised; 301.7701–15, amended; tax re-
turn preparer penalties under sections 6694 and 6695
(REG–129243–07) 27,32
Qualified retirement plans, qualification, plan sponsorship (RR
45) 34,403
Reasonable good faith interpretation of required minimum dis-
tribution rules by governmental plans (REG–142040–07) 34,
451
Regulations:
26 CFR 1.408A–4, amended; 1.408–4T, removed; converting
an IRA annuity to a Roth IRA (TD 9418) 38,713
26 CFR 1.430(h)(3)–1, –2, added; 1.431(c)(6)–1, added; mor-
tality tables for determiningpresent value (TD 9419) 40,
790
Stocks, information reporting requirements for statutory stock
options (REG–103146–08) 37,701; hearing scheduled (Ann
102) 43,1011
Tax return preparer penalties under sections 6694 and 6695
(REG–129243–07) 27,32
Transition relief, funding, expanding availability (Notice 73) 38,
717
Trusts, qualification, Puerto Rico (RR 40) 30,166
EMPLOYMENT TAX
Interest-free adjustments and claims for refund of employment
taxes (TD 9405) 32,293
Proposed Regulations:
26 CFR 31.6060–1, added; 31.6107–1, added; 31.6109–2,
added; 31.6694–1 thru –4, added; 31.6695–1, added;
31.6696–1, added; 31.7701–1, added; tax return preparer
penalties under sections 6694 and 6695 (REG–129243–07)
27,32
October 27, 2008vi2008–43 I.R.B.

EMPLOYMENT TAX—Cont.
Publications:
1141, General Rules and Specifications for Substitute Forms
W-2 and W-3, revised (RP 33) 28,93
4436, General Rules and Specifications for Substitute Form
941 and Schedule B (Form 941), revised (RP 32) 28,82
Regulations:
26 CFR 31.6011(a)–1, –4, –5, amended; 31.6205–1,
amended; 31.6302–0, –1, amended; 31.6402(a)–1,
–2, amended; 31.6413(a)–1, –2, amended; 31.6414–1,
amended; 602.101, amended; employment tax adjustments
(TD 9405) 32,293
Substitute forms:
W-2 and W-3, general rules and specifications (RP 33) 28,93
941 and Schedule B (Form 941), general rules and specifica-
tions (RP 32) 28,82
Tax return preparer penalties under sections 6694 and 6695
(REG–129243–07) 27,32
ESTATE TAX
Charitable lead unitrust (CLUT):
Inter vivos, sample forms (RP 45) 30,225
Testamentary, sample form (RP 46) 30,238
Interest rates for 2008, farm real property, special use value (RR
44) 32,292
Proposed Regulations:
26 CFR 20.6060–1, added; 20.6107–1, added; 20.6109–1,
added; 20.6694–1 thru –4, added; 20.6695–1, added;
20.6696–1, added; 20.7701–1, added; tax return preparer
penalties under sections 6694 and 6695 (REG–129243–07)
27,32
Regulations:
26 CFR 20.2036–1, amended; 20.2039–1, amended; grantor
retained interest trusts, application of sections 2036 and
2039 (TD 9414) 35,454
26 CFR 26.2600–1, amended; 26.2642–6, amended;
26.2654–1, amended; severance of a trust for genera-
tion-skipping transfer (GST) tax purposes (TD 9421) 39,
755
Tax return preparer penalties under sections 6694 and 6695
(REG–129243–07) 27,32
Transfer tax valuation of interest in a restricted management ac-
count (RMA) (RR 35) 29,116
Trusts:
Grantor retained interest trusts, application of sections 2036
and 2039 (TD 9414) 35,454
Private trust company (Notice 63) 31,261
Severance of a trust for GST tax purposes (TD 9421) 39,755
EXCISE TAX
Charitable remainder trusts (CRTs), division into two or more
separate and equal CRTs (RR 41) 30,170
Credits, alcohol fuel, biodiesel, alternative fuel
(REG–155087–05) 38,726
EXCISE TAX—Cont.
Health Savings Accounts (HSAs), employer comparable contri-
butions to HSAs under section 4980G and excise tax under sec-
tions 4980B, 4980D, 4980E, and 4980G (REG–120476–07)
36,680
Proposed Regulations:
26 CFR 1.40–1, revised; 1.40–2, added; 1.40A–1,
added; 40.0–1, amended; 40.6302(c)–1, amended;
48.0–1, amended; 48.0–4, added; 48.4041–0, amended;
48.4041–18, –20, removed and reserved; 48.4041–19,
revised; 48.4081–1, –2, –3, amended; 48.4081–6, re-
moved and reserved; 48.4082–4, amended; 48.4101–1,
amended; 48.6426–1 thru –7, added; 48.6427–8, amended;
48.6427–12, added; alcohol fuel and biodiesel, renewable
diesel, alternative fuel, diesel-water fuel emulsion, taxable
fuel definitions, excise tax returns (REG–155087–05) 38,
726
26 CFR 40.6060–1, added; 40.6107–1, added; 40.6109–1,
added; 40.6694–1 thru –4, added; 40.6695–1, added;
40.6696–1, added; 40.7701–1, added; 41.6060–1, added;
41.6107–1, added; 41.6109–2, added; 41.6694–1 thru –4,
added; 41.6695–1, added; 41.6696–1, added; 41.7701–1,
added; 44.6060–1, added; 44.6107–1, added; 44.6109–1,
added; 44.6694–1 thru –4, added; 44.6695–1, added;
44.6696–1, added; 44.7701–1, added; 53.6060–1, added;
53.6107–1, added; 53.6109–1, added; 53.6694–1 thru –4,
added; 53.6695–1, added; 53.6696–1, added; 53.7701–1,
added; 54.6060–1, added; 54.6107–1, added; 54.6109–1,
added; 54.6694–1 thru –4, added; 54.6695–1, added;
54.6696–1, added; 54.7701–1, added; 55.6060–1, added;
55.6107–1, added; 55.6109–1, added; 55.6694–1 thru –4,
added; 55.6695–1, added; 55.6696–1, added; 55.7701–1,
added; 56.6060–1, added; 56.6107–1, added; 56.6109–1,
added; 56.6694–1 thru –4, added; 56.6695–1, added;
56.6696–1, added; 56.7701–1, added; 156.6060–1, added;
156.6107–1, added; 156.6109–1, added; 156.6694–1
thru –4, added; 156.6695–1, added; 156.6696–1, added;
156.7701–1, added; 157.6060–1, added; 157.6107–1,
added; 157.6109–1, added; 157.6694–1 thru –4, added;
157.6695–1, added; 157.6696–1, added; 157.7701–1,
added; 301.7701–15, amended; tax return preparer penal-
ties under sections 6694 and 6695 (REG–129243–07) 27,
32
26 CFR 54.4980B–0, B–2, G–1, G–3, G–4, amended;
54.4980D–1, E–1, G–6, G–7, added; employer com-
parable contributions to health savings accounts under
section 4980G, and requirement of return for filing the
excise tax under section 4980B, 4980D, 4980E or 4980G
(REG–120476–07) 36,680
Tax return preparer penalties under sections 6694 and 6695
(REG–129243–07) 27,32
EXEMPT ORGANIZATIONS
Declaratory judgment suits (Ann 67)29, 164;(Ann72)32,321;
correction (Ann 78) 34,453; (Ann 82) 37,708; (Ann 85) 38,
749; (Ann 89) 40,844;(Ann93)41,896
2008–43 I.R.B.viiOctober 27, 2008

EXEMPT ORGANIZATIONS—Cont.
Form 990, implementation of redesigned form (TD 9423) 43,
966; (REG–142333–07) 43,1008
Indian tribal governments treated as states (RP 55) 39,768
List of organizations classifiedas private foundations (Ann 70)
32,318; (Ann 81) 37,706
Proposed Regulations:
26 CFR 1.170A–9, amended; 1.507–2, revised; 1.509(a)–3,
amended; 1.6033–2, amended; 1.6043–3, amended; imple-
mentation of redesigned Form 990 (REG–142333–07) 43,
1008
26 CFR 1.6060–1, amended; 1.6107–1, revised; 1.6109–2,
amended; 1.6694–0, –1, –2, revised; 1.6694–3, –4,
amended; 1.6695–1, revised; 1.6695–2, amended;
1.6696–1, revised; 301.7701–15, amended; tax re-
turn preparer penalties under sections 6694 and 6695
(REG–129243–07) 27,32
Regulations
26 CFR 1.170A–9, amended; 1.170A–9T, added; 1.507–2,
amended; 1.507–2T, added; 1.509(a)–3, amended;
1.509(a)–3T, added; 1.6033–2, amended; 1.6033–2T,
added; 1.6043–3, amended; 1.6043–3T, added; 602.101,
amended; implementation of redesigned Form 990 (TD
9423) 43,966
26 CFR 1.664–1, amended; 602.101, amended; guidance un-
der section 664 regarding the effect of unrelated business
taxable income on charitable remainder trusts (TD 9403)
32,285
Revocations (Ann 62) 27,74; (Ann 66) 29,164; (Ann 69) 32,
318; (Ann 76) 33,393;(Ann79)35,568;(Ann80)37,706;
(Ann 86) 40,843; (Ann 88) 40,843; (Ann 90) 41,896;(Ann
97) 43,1010
Tax return preparer penalties under sections 6694 and 6695
(REG–129243–07) 27,32
Trusts:
Charitable remainder trusts (CRTs):
Calculation of excise tax on unrelated business taxable in-
come (UBTI) (TD 9403) 32,285
Division into two or more separate and equal CRTs (RR
41) 30,170
GIFT TAX
Charitable lead unitrust (CLUT),inter vivos, sample forms (RP
45) 30,225
Proposed Regulations:
26 CFR 25.6060–1, added; 25.6107–1, added; 25.6109–1,
added; 25.6694–1 thru –4, added; 25.6695–1, added;
25.6696–1, added; 25.7701–1, added; 26.6060–1, added;
26.6107–1, added; 26.6109–1, added; 26.6694–1 thru –4,
added; 26.6695–1, added; 26.6696–1, added; 26.7701–1,
added; tax return preparer penalties under sections 6694
and 6695 (REG–129243–07) 27,32
Tax return preparer penalties under sections 6694 and 6695
(REG–129243–07) 27,32
GIFT TAX—Cont.
Transfer tax valuation of interest in a restricted management ac-
count (RMA) (RR 35) 29,116
Trust, private trust company (Notice 63) 31,261
INCOME TAX
Accounting methods:
Automatic changes in methods of accounting (RP 52) 36,587
Consent procedures, changesin method of accounting (Ann
84) 38,748
Rolling average inventory (RP 43) 30,186
Acquisitions, application of section 382 in the case of certain ac-
quisitions made pursuant to the Housing and Economic Recov-
ery Act of 2008 (Notice 76) 39,768
Bonds:
Election involving repeal of bonding requirement under sec-
tion 42(j)(6) (RP 60) 43,1006
Expanded temporary rule allowing governmental issuers to
purchase their own tax-exempt bonds (Notice 88) 42,933
Procedures for requesting a refund of arbitrage rebate and sim-
ilar payments on tax-exempt bonds (RP 37) 29,137
Solicitation of applications from qualified issuers for alloca-
tion of qualified forestry conservation bonds (QFCBs) lim-
itation and application requirements (Notice 70) 36,575
Tax-exempt bonds:
Federal guarantee, money market funds (Notice 81) 41,
852
Volume cap, mortgage creditcertificates (Notice 79) 40,
815
Bonus depreciation for the Kansas disaster area (Notice 67) 32,
307
Capital costs incurred to comply with EPA sulfur regulations (TD
9404) 32,280; (REG–143453–05) 32,310; hearing cancelled
(Ann 96) 43,1010
Certain financing commitments and applicable high yield dis-
count obligations (RP 51) 35,562
Change to office to which notices of nonjudicial sale and re-
quests for return of wrongfully levied property must be sent
(TD 9410) 34,414
Charitable contributions:
Cash and noncash, substantiation and reporting requirements
under section 170 (REG–140029–07) 40,828
Computation of deduction for inventory contributions (Notice
90) 43,1000
Charitable lead unitrust (CLUT):
Inter vivos, sample forms (RP 45) 30,225
Testamentary, sample form (RP 46) 30,238
Charitable remainder trusts (CRTs), division into two or more
separate and equal CRTs (RR 41) 30,170
Child of parents who are divorced, separated or living apart as
the dependent of both parents (RP 48) 36,586
Corporations:
Accumulated adjustments account (AAA) and key-man life
insurance (RR 42) 30,175
October 27, 2008viii2008–43 I.R.B.

INCOME TAX—Cont.
Enabling elections for certaintransactions under section
336(e) (REG–143544–04) 42,947
S corporation rules, updates (TD 9422) 42,898
Section 108 reduction of tax attributes for S corporations
(REG–102822–08) 38,744
Transfers by domestic corporations to foreign corporations
under section 361(a) or (b) (REG–209006–89) 41,867
Credits:
Alcohol fuel, biodiesel, alternative fuel (REG–155087–05)
38,726
Amendments to new markets tax credit regulations
(REG–149404–07) 40,839
Electricity produced from certain renewable resources, sec-
tion 45 tax credit (Notice 60) 30,178
Enhanced oil recovery credit, 2008 inflation adjustment (No-
tice 72) 43,998
Increasing research activities (TD 9401) 27,1;
(REG–149405–07) 27,73
Low-income housing credit:
Carryovers to qualified states, 2008 National Pool (RP 57)
41,855
Emergency housing relief, Wisconsin severe storms, tor-
nadoes, and flooding (Notice 61) 30,180
Indiana severe storms and flooding (Notice 56) 28,79
Iowa severe storms, tornadoes, and flooding (Notice 58)
28,81
Missouri severe storms and flooding, disaster relief (Notice
66) 31,270
Satisfactory bond, “bond factor” amounts for the period:
January through September 2008 (RR 36) 30,165
Utility allowance, new options for estimating (TD 9420)
39,750
Section 48 tax credit for qualifying fuel cell property and qual-
ifying microturbine property (Notice 68) 34,418
Declaratory judgment suits (Ann 67)29, 164;(Ann72)32,321;
correction (Ann 78) 34,453; (Ann 82) 37,708; (Ann 85) 38,
749; (Ann 89) 40,844; (Ann 93) 41,896
Definition of “outside director” (RR 32) 27,6
Dependent child of divorced or separated parents or parents who
live apart (TD 9408) 33,323
Disaster relief, China earthquake, qualified disaster (Notice 57)
28,80
Disciplinary actions involving attorneys, certified public accoun-
tants, enrolled agents, and enrolled actuaries (Ann 68) 30,245;
(Ann 77) 33,394; (Ann 83) 37,709
Disclosure of taxpayer groupings for purposes of the passive ac-
tivity loss provisions under section 469 (Notice 64) 31,268
Disclosure or use of information by preparers of returns (TD
9409) 29,118; (REG–121698–08) 29,163
Economic Stimulus Act of 2008, bonus depreciation, section 179
expensing (RP 54) 38,722
Election to expense certain refineries (TD 9412) 37,687;
(REG–146895–05) 37,700
Employee stock purchase plans, rules (REG–106251–08) 39,
774
Escrow accounts used in like-kind exchanges (TD 9413) 34,404
INCOME TAX—Cont.
Expenses:
Elections regarding start-up expenditures, corporation orga-
nizational expenditures, and partnership organizational ex-
penses (TD 9411) 34,398; (REG–164965–04) 34,450
Optional standard mileage rates, update (Ann 63) 28,114
Extension of replacement period for livestock sold on account of
drought in specified counties (Notice 86) 42,925
Extension of time for filing returns (TD 9407) 33,330;
(REG–115457–08) 33,390
Farmer and fisherman income averaging (TD 9417) 37,693;cor-
rection(Ann91)42,963; (REG–161695–04) 37,699; correc-
tion (Ann 92) 42,963
Forms:
1042-S, Foreign Person’s U.S. Source Income Subject to
Withholding, specifications for filing electronically (RP
44) 30,187; update of Publication 1187 (Ann 95) 42,964
1096, 1098, 1099, 5498, W-2G, and 1042-S, substitute form
specifications (RP 36) 33,340
8027, Employer’s Annual Information Return of Tip Income
and Allocated Tips, specifications for filing electronically
(RP 34) 27,13
8596, Information Return for Federal Contracts, specifica-
tions for filing electronically (RP 49) 34,423
Guidance to tax return preparers:
Consents to disclose and consents to use tax return in-
formation in the Form 1040 series (TD 9409) 29,118;
(REG–121698–08) 29,163
Consents to disclose and consents to use tax return informa-
tion in the Form 1040 series, update to Rev. Proc. 2008-12
(RP 35) 29,132
Guidance under section 956 for determining the basis of property
acquired in certain nonrecognition transactions (TD 9402) 31,
254; (REG–102122–08) 31,278
Health Flexible Spending Arrangement (FSA), distributions of
unused amounts to reservists called up to active duty (Notice
82) 41,853
Health Savings Accounts (HSAs), additional guidance (Notice
59) 29,123
Institute on Current Issues in International Taxation (Ann 94) 42,
964
Insurance companies:
Effectively connected income (RP 53) 36,678
Life insurance contracts:
Automatic waiver (RP 42) 29,160
Closing agreement (RP 40) 29,151
Modified endowment contracts (MECs), closing agree-
ments (RP 39) 29,143
Qualified additional benefits (QABs), closing agreement
(RP 38) 29,139
Variable contracts, closing agreement (RP 41) 29,155
Segregated asset accounts, diversification (Notice 92) 43,
1001
Interest:
Characterization of management fees paid by an upper tier
investment partnership and lower tier trader partnerships
(RR 39) 31,252
2008–43 I.R.B.ixOctober 27, 2008

INCOME TAX—Cont.
Investment:
Federal short-term, mid-term, and long-term rates for:
July 2008 (RR 33) 27,8
August 2008 (RR 43) 31,258
September 2008 (RR 46) 36,572
October 2008 (RR 49) 40,811
Of earnings in United States property (Notice 91) 43,1001
Rates:
Underpayments and overpayments, quarter beginning:
October 1, 2008 (RR 47) 39,760
Treatment of interest expense attributable to indebtedness al-
locable to property held for investment described in section
163(d)(5)(A)(ii):
Investment interest deduction (RR 38) 31,249
Trader partnership (Ann 65) 31,279
Law school Loan Repayment Assistance Program (LRAP), ex-
clusion from gross income (RR 34) 28,76
Legislative Cumulative Bulletins, discontinuation of publication
(Ann 87) 40,843
Letter rulings, nonqualified deferred compensation, no-rule areas
(RP 61) 42,934
Liens, return of wrongfully levied property and discharge of
liens, special rules (TD 9410) 34,414
Life insurance:
Premiums by S corporation, effect on accumulated adjust-
ments account (AAA) (RR 42) 30,175
Statutory reserves, meaning formulti-state taxpayers (RR 37)
28,77
Marginal production rates, 2008 (Notice 89) 43,999
Partnerships, election that enables partners of tax-exempt bond
partnership to take into account monthly the inclusions re-
quired under sections 702 and 707(c) (Notice 80) 40,820
Per diem allowances (RP 59) 41,857
Presidentially declared disaster or terroristic or military
actions, postponement of certain tax-related deadlines
(REG–142680–06) 35,565
Private foundations, organizations now classified as (Ann 70) 32,
318; (Ann 81) 37,706
Proposed Regulations:
26 CFR 1.40–1, revised; 1.40–2, added; 1.40A–1,
added; 40.0–1, amended; 40.6302(c)–1, amended;
48.0–1, amended; 48.0–4, added; 48.4041–0, amended;
48.4041–18, –20, removed and reserved; 48.4041–19,
revised; 48.4081–1, –2, –3, amended; 48.4081–6, re-
moved and reserved; 48.4082–4, amended; 48.4101–1,
amended; 48.6426–1 thru –7, added; 48.6427–8, amended;
48.6427–12, added; alcohol fuel and biodiesel, renewable
diesel, alternative fuel, diesel-water fuel emulsion, taxable
fuel definitions, excise tax returns (REG–155087–05) 38,
726
26 CFR 1.41–6, –8, amended; 1.41–9, added; alternative sim-
plified credit under section 41(c)(5) (REG–149405–07) 27,
73
26 CFR 1.45D–1, amended; amendments to new markets tax
credit regulations (REG–149404–07) 40,839
INCOME TAX—Cont.
26 CFR 1.108–7, amended; section 108 reduction of tax at-
tributes for S corporations (REG–102822–08) 38,744
26 CFR 1.170–0, –2, removed; 1.170A–13, amended;
1.170A–15 thru –18, added; substantiation and reporting
requirements for cash and noncash charitable contribution
deductions (REG–140029–07) 40,828
26 CFR 1.179B–1, added; capital costs incurred to comply
with EPA sulfur regulations (REG–143453–05) 32,310;
hearing cancelled (Ann 96) 43,1010
26 CFR 1.179C–1, added; election to expense certain refiner-
ies (REG–146895–05) 37,700
26 CFR 1.195–1, revised; 1.248–1, amended; 1.709–1,
amended; elections regarding start-up expenditures, cor-
poration organizational expenditures, and partnership
organizational expenses (REG–164965–04) 34,450
26 CFR 1.336–0 thru –5, added; 1.338–0, –1, –5, amended;
regulations enabling elections for certain transactions under
section 336(e) (REG–143544–04) 42,947
26 CFR 1.358–6, amended; 1.367(a)–1T, (a)–3, (b)–4, (b)–6,
amended; 1.367(a)–7, added; 1.1248–1, –6, –8, amended;
1.1248(f)–1, –2, –3, added; 1.6038B–1, amended; trans-
fers by domestic corporations that are subject to section
367(a)(5), distributions by domestic corporations that are
subject to section 1248(f) (REG–209006–89) 41,867
26 CFR 1.367(a)–2, –4, –5, added; 1.954–2(c), revised;
1.956–2(b), –2(e), revised, modifications to subpart
F treatment of aircraft and vessel leasing income
(REG–138355–07) 32,311
26 CFR 1.401(a)(9)–1, –6, amended; 1.403(b)–6,
amended; reasonable good faith interpretation of re-
quired minimum distribution rules by governmental plans
(REG–142040–07) 34,451
26 CFR 1.421–1, amended; 1.422–2, –5, amended; 1.423–1,
–2, revised; employee stock purchase plans under section
423 (REG–106251–08) 39,774
26 CFR 1.460–3 thru –6, amended; rules for home construc-
tion contracts (REG–120844–07) 39,770
26 CFR 1.642(c)–3, amended; 1.643(a)–5, amended; guid-
ance under sections 642 and 643 (income ordering rules)
(REG–101258–08) 28,111; correction (Ann 73) 33,391
26 CFR 1.956–1, amended; guidance under section 956 for
determining the basis of property acquired in certain non-
recognition transactions (REG–102122–08) 31,278
26 CFR 1.1301–1, amended; farmer and fisherman income
averaging (REG–161695–04) 37,699; correction (Ann 92)
42,963
26 CFR 1.6039–1, revised; 1.6039–2, added; infor-
mation reporting requirements under section 6039
(REG–103146–08) 37,701; hearing scheduled (Ann 102)
43,1011
26 CFR 1.6060–1, amended; 1.6107–1, revised; 1.6109–2,
amended; 1.6694–0, –1, –2, revised; 1.6694–3, –4,
amended; 1.6695–1, revised; 1.6695–2, amended;
1.6696–1, revised; 301.7701–15, amended; tax re-
turn preparer penalties under sections 6694 and 6695
(REG–129243–07) 27,32; corrections (Ann 75) 33,392
October 27, 2008x2008–43 I.R.B.

INCOME TAX—Cont.
26 CFR 1.6081–2, –6, added; 54.6081–1, added; extension of
time for filing returns (REG–115457–08) 33,390
26 CFR 301.7216–3, amended; disclosure or use of informa-
tion by preparers of returns (REG–121698–08) 29,163
26 CFR 301.7508A–1, amended; postponement of certain
tax-related deadlines by reasonof Presidentially declared
disaster or terroristic or military actions (REG–142680–06)
35,565
Publications:
1141, General Rules and Specifications for Substitute Forms
W-2 and W-3, revised (RP 33) 28,93
1179, General Rules and Specifications for Substitute Forms
1096, 1098, 1099, 5498, W-2G, and 1042-S, update (RP
36) 33,340
1187, Specifications for Filing Form 1042-S, Foreign Per-
son’s U.S. Source Income Subject to Withholding, Elec-
tronically, revised (RP 44) 30,187; update (Ann 95) 42,
964
1239, Specifications for Filing Form 8027, Employer’s An-
nual Information Return of Tip Income and Allocated Tips,
Electronically (RP 34) 27,13
1516, Specifications for Filing Form 8596, Information Re-
turn for Federal Contracts,Electronically (RP 49) 34,423
4436, General Rules and Specifications for Substitute Form
941 and Schedule B (Form 941), revised (RP 32) 28,82
Real Estate Mortgage Investment Conduit (REMIC), allocation
of income to foreign persons by certain entites (TD 9415) 36,
570
Reasonable good faith interpretation of required minimum dis-
tribution rules by governmental plans (REG–142040–07) 34,
451
Refund of taxes unlawfully assessed, administrative claim (CD
2087) 41,845
Regulations:
26 CFR 1.41–0, –1, –6, –8, amended; 1.41–0T, –6T, –8T,
–9, –9T added; alternative simplified credit under section
41(c)(5) (TD 9401) 27,1
26 CFR 1.42–10, –12, amended; section 42 utility allowance
regulations update (TD 9420) 39,750
26 CFR 1.152–4, revised; 1.152–4T, removed; dependent
child of divorced or separated parents or parents who live
apart (TD 9408) 33,323
26 CFR 1.179B–1T, added; 602.101, amended; capital costs
incurred to comply with EPA sulfur regulations (TD 9404)
32,280
26 CFR 1.179C–1T, added; 602.101, amended; election to
expense certain refineries (TD 9412) 37,687
26 CFR 1.195–1, revised; 1.195–1T, added; 1.248–1,
amended; 1.248–1T, added; 1.709–1, amended; 1.709–1T,
added; elections regarding start-up expenditures, cor-
poration organizational expenditures, and partnership
organizational expenses (TD 9411) 34,398
26 CFR 1.367(a)–2T, –4T, –5T, amended; 1.954–2, amended;
1.954–2T, added; 1.956–2, –2T, amended; modifications to
subpart F treatment of aircraft and vessel leasing income
(TD 9406) 32,287
INCOME TAX—Cont.
26 CFR 1.468B–0, amended; 1.468B–6, added; 1.1031(k)–1,
amended; 1.7872–5, –16, added; escrow accounts, trusts,
and other funds used during deferred exchanges of like-kind
property (TD 9413) 34,404
26 CFR 1.664–1, amended; 602.101, amended; guidance un-
der section 664 regarding the effect of unrelated business
taxable income on charitable remainder trusts (TD 9403)
32,285
26 CFR 1.860A–0, –1, amended; 1.860A–1T, removed;
1.860G–3, amended; 1.860G–3T, removed; 1.863–0, –1,
amended; 1.863–1T, removed; 1.1441–0, –2, amended;
1.1441–2T, removed; REMIC residual interests–ac-
counting for REMIC net income (including any excess
inclusions) (foreign holders) (TD 9415) 36,570
26 CFR 1.881–5T, removed; correction to TD 9391 (Ann 74)
33,392
26 CFR 1.911–7, amended; 1.6081–1, –3, –5, amended;
1.6081–2T, –6T, revised; 1.6081–3T, –4T, –5T, –7T,
–10T, –11T, removed; 1.6081–4, –7, –10, –11, added;
25.6081–1, added; 25.6081–1T, removed; 26.6081–1,
added; 26.6081–1T, removed; 53.6081–1, added;
53.6081–1T, removed; 55.6081–1, added; 55.6081–1T,
removed; 156.6081–1, added; 156.6081–1T, removed;
157.6081–1, added; 157.6081–1T, removed; 301.6081–2,
added; 301.6081–2T, removed; extension of time for filing
returns (TD 9407) 33,330
26 CFR 1.956–1, –1T, amended; guidance under section 956
for determining the basis ofproperty acquired in certain
nonrecognition transactions (TD 9402) 31,254
26 CFR 1.1301–1, amended; 1.1301–1T, added; farmer and
fisherman income averaging (TD 9417) 37,693; correction
(Ann 91) 42,963
26 CFR 1.1361–0, –1, –4, –6, amended; 1.1362–0, –4,
amended; 1.1366–0, –2, –5, amended; 602.101, amended;
S corporation guidance under AJCA of 2004 and GOZA of
2005 (TD 9422) 42,898
26 CFR 301.6343–2, amended; 301.6343–2T, removed;
301.7425–3, amended; 301.7425–3T, removed; change to
office to which notices of nonjudicial sale and requests
for return of wrongfully levied property must be sent (TD
9410) 34,414
26 CFR 301.7216–3, amended; 301.7216–3T, added; disclo-
sure or use of information by preparers of returns (TD 9409)
29,118
Revocations, exempt organizations (Ann 62) 27,74; (Ann 66)
29,164;(Ann69)32,318; (Ann 76) 33,393;(Ann79)35,
568;(Ann80)37,706; (Ann 86) 40,843; (Ann 88) 40,843;
(Ann 90) 41,896;(Ann97)43,1010
Rules for certain long-term construction contracts
(REG–120844–07) 39,770
Section 382 limitation:
Application of section 382(h) to banks, ownership changes,
pre-change losses (Notice 83) 42,905
Capital contributions, ownership changes, pre-change losses
(Notice 78) 41,851
Ownership changes, pre-change losses (Notice 84) 41,855
2008–43 I.R.B.xiOctober 27, 2008

INCOME TAX—Cont.
Securities loans and bankruptcy of borrower (RP 63) 42,946
Settlement offers, auction rate securities (RP 58) 41,856
Smartcards, debit cards, etc., used to provide qualified trans-
portation fringes under section 132(f), delayed effective date
of Rev. Rul. 2006–57 (Notice 74) 38,718
Standard Industry Fare Level (SIFL) formula (RR 48) 38,713
Stocks:
Auction rate preferred stock, regulated investment companies
RICs), debt instruments (Notice 55) 27,11
Information reporting requirements for statutory stock options
(REG–103146–08) 37,701; hearing scheduled (Ann 102)
43,1011
Subprime mortgage loans, modifications held by certain securi-
tization vehicles (RP 47) 31,272
Substitute forms:
W-2 and W-3, general rules and specifications (RP 33) 28,93
941 and Schedule B (Form 941), general rules and specifica-
tions (RP 32) 28,82
1096, 1098, 1099, 5498, W-2G, and 1042-S, rules and speci-
fications (RP 36) 33,340
Tax return preparer penalties under sections 6694 and 6695
(REG–129243–07) 27,32; corrections (Ann 75) 33,392
Treatment of aircraft and vessel leasing income (TD 9406) 32,
287; (REG–138355–07) 32,311
Trusts:
Charitable remainder trust, calculation of excise tax on unre-
lated business taxable income (UBTI) (TD 9403) 32,285
Guidance regarding reportingfor widely held fixed invest-
ment trusts (WHFITs) (Notice 77) 40,814
Ordering of distributions from charitable lead trusts
(REG–101258–08) 28,111; correction (Ann 73) 33,391
Private trust company (Notice 63) 31,261
U.S. territories, American Samoa, Guam, The Northern Mariana
Islands, Puerto Rico, U.S. Virgin Islands, source of income,
filing requirements; correction to TD 9391 (Ann 74) 33,392
Valuation safe harbor under section 475 (Notice 71) 35,462
October 27, 2008xii2008–43 I.R.B.

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