Internal Revenue Bulletin 2005-17 (PDF rendition): IRS Announcements

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

Bulletin No. 200
5-17
April 25, 2005
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
SPECIAL ANNOUNCEMENT
Announcement 2005–26, page 969.
The IRS will discontinue its TeleFile program after August 16,
2005. TeleFile allows taxpayers to file Forms 1040EZ, 4868,
and 941 by telephone. Decline in use for most forms, coupled
with increasing costs to maintain the system, led to the deci-
sion.
INCOME TAX
Rev. Rul. 2005–26, page 957.
LIFO; price indexes; department stores.The February
2005 Bureau of Labor Statistics price indexes are accepted
for use by department stores employing the retail inventory and
last-in, first-out inventory methods for valuing inventories for tax
years ended on, or with reference to, February 28, 2005.
Rev. Proc. 2005–26, page 965.
In this procedure, the IRS provides guidance relating to sec-
tion 6501(c)(10) of the Code, which provides for an extended
period of limitations to assess any tax with respect to a listed
transaction that a taxpayer failed to disclose as required under
section 6011. It sets forth procedures that taxpayers and ma-
terial advisors may follow to disclose previously undisclosed
listed transactions for purposes of section 6501(c)(10) and
guidanceonthedateonwhichtheperiod of limitations will ex-
pire if these procedures are followed.
EMPLOYEE PLANS
Notice 2005–34, page 960.
Weighted average interest rate update; corporate bond
indices; 30-year Treasury securities.The weighted aver-
age interest rate for April 2005 and the resulting permissible
range of interest rates used to calculate current liability and to
determine the required contribution are set forth.
Rev. Proc.
2005–25, page 962.
Fair marke
t value; distributions; qualified retirement
plans.Thi
s procedure provides guidance, including examples,
of how fai
r market value may be determined in the instance
of distri
butionsfromqualifiedretirementplansaswellas
under sec
tions 79 and 83 of the Code. Rev. Proc. 2004–16
modified
and superseded.
Announcement 2005–29, page 969.
This document contains corrections to final regulations (T.D.
9130, 2004–26 I.R.B. 1082) under section 401 of the Code
relating to required minimum distributions under section
401(a)(9) for defined benefit plans and annuity contracts
providing benefits under qualified plans, individual retirement
plans, and section 403(b) contracts.
(Continued on the next page)
Finding Lists begin on page ii.
Index for January through April begins on page vi.

ADMINISTRATIVE
T.D. 9195, page 958.
Final regulations under section 7602 of the Code adopt the
rules of the temporary regulations, which confirm that officers
and employees of the Office of Chief Counsel may be included
as persons designated to receive summoned books, papers,
records, or other data and to take summoned testimony under
oath.
Notice 2005–3
3, page 960.
Credit for sal
es of fuel produced from a nonconventional
source, infla
tion adjustment factor, and reference price.
This notice p
ublishes the nonconventional source fuel credit,
the inflatio
n adjustment factor, and the reference price under
section 29 of
the Code for calendar year 2004. This data is
used to deter
mine the credit allowable on sales of fuel pro-
duced from a
nonconventional source.
Announcement 2005–28, page 969.
This document contains a correction to temporary and final reg-
ulations (T.D. 8408, 1992–1 C.B. 155) which were published in
the Federal Register on Friday, April 10, 1992, relating to the
requirement that economic performance occur in order for an
amount to be incurred with respect to any item of a taxpayer
using an accrual method of accounting.
April 25, 20052005–17 I.R.B.

The IRS Mission
Provide America’s taxpayers top quality service by helping
them understand and meet their tax responsibilities and by
applying the tax law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are compiled semiannually into Cumulative Bulletins,
which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement are not published; however, statements of internal
practices and procedures that affect the rights and duties of
taxpayers are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers
or technical advice to Service field offices, identifying details
and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B, Leg-
islation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Sec-
retary (Enforcement).
Part IV
.—Items of General Interest.
This par
t includes notices of proposed rulemakings, disbar-
ment an
d suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The c
ontents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S.Government Printing Office, Washington, DC 20402.
2005–17 I.R.B.April 25, 2005

Part I. Rulings and Decisions Under the Internal Revenue Code
of 1986
Section 79.—Group-Term
Life Insurance Purchased
for Employees
26 CFR 1.79–1: Group-term life insurance – general
rules.
How, for purposes of § 79 of the Code, the fair
market value of a group-term life insurance contract
may be determined. See Rev. Proc. 2005-25, page
962.
Section 83.—Property
Transferred in Connection
With Performance of
Services
26 CFR 1.83–3: Meaning and use of certain terms.
How, for purposes of § 83 of the Code, the fair
market value of a life insurance contract, etc., may be
determined. See Rev. Proc. 2005-25, page 962.
Section 402.—Taxability of
Beneficiary of Employees’
Trust
26 CFR 1.402(a)–1: Taxability of beneficiary under
a trust that meets the requirements of section 401(a).
How, for purposes of § 402 of the Code, the fair
market value of a life insurance contract, retirement
income contract, or endowment contract, etc., may be
determined. See Rev. Proc. 2005-25, page 962.
Section 472.—Last-in,
First-out Inventories
26 CFR 1.472–1: Last-in, first-out inventories.
LIFO; price indexes; department
stores.The February 2005 Bureau of La-
bor Statistics price indexes are accepted
for use by department stores employing
the retail inventory and last-in, first-out
inventory methods for valuing inventories
for tax years ended on, or with reference
to, February 28, 2005.
Rev. Rul. 2005–26
The following Department Store Inven-
tory Price Indexes for February 2005 were
issued by the Bureau of Labor Statistics.
The indexes are accepted by the Inter-
nal Revenue Service, under § 1.472–1(k)
of the Income Tax Regulations and Rev.
Proc. 86–46, 1986–2 C.B. 739, for ap-
propriate application to inventories of
department stores employing the retail
inventory and last-in, first-out inventory
methods for tax years ended on, or with
reference to, February 28, 2005.
The Department Store Inventory Price
Indexes are prepared on a national basis
and include (a) 23 major groups of depart-
ments, (b) three special combinations of
the major groups — soft goods, durable
goods, and miscellaneous goods, and (c) a
store total, which covers all departments,
including some not listed separately, ex-
cept for the following: candy, food, liquor,
tobacco, and contract departments.
BUREAU OF LABOR STATISTICS, DEPARTMENT STORE
INVENTORY PRICE INDEXES BY DEPARTMENT GROUPS
(January 1941 = 100, unless otherwise noted)
GroupsFeb. 2004Feb. 2005
Percent Change
from Feb. 2004
to Feb. 2005
1
1. PieceGoods .............................................469.3479.32.1
2. DomesticsandDraperies..................................536.5533.5-0.6
3. Women’sandChildren’sShoes ............................609.9663.68.8
4. Men’sShoes.............................................850.4852.20.2
5. Infants’Wear ............................................583.8575.5-1.4
6. Women’sUnderwear......................................506.7527.14.0
7. Women’sHosiery ........................................354.3349.2-1.4
8. Women’sandGirls’Accessories ...........................556.6592.06.4
9. Women’sOuterwearandGirls’Wear .......................341.9346.81.4
10. Men’sClothing ..........................................534.0550.93.2
11. Men’sFurnishings........................................572.3574.20.3
12. Boys’ClothingandFurnishings............................436.6423.5-3.0
13. Jewelry..................................................895.7878.8-1.9
14. Notions .................................................793.9780.0-1.8
15. ToiletArticlesandDrugs..................................984.6998.71.4
16. FurnitureandBedding ....................................624.2601.8-3.6
17. FloorCoverings..........................................592.6602.41.7
18. Housewares..............................................715.2713.8-0.2
19. MajorAppliances.........................................206.8203.7-1.5
20. RadioandTelevision......................................43.339.7-8.3
21. Recreation and Education
2
.................................81.679.7-2.3
22. Home Improvements
2
.....................................128.9136.15.6
23. Automotive Accessories
2
..................................112.1113.91.6
2005–17 I.R.B.957April 25, 2005

BUREAU OF LABOR STATISTICS, DEPARTMENT STORE
INVENTORY PRICE INDEXES BY DEPARTMENT GROUPS
(January 1941 = 100, unless otherwise noted)
GroupsFeb. 2004Feb. 2005
Percent Change
from Feb. 2004
to Feb. 2005
1
Groups1–15:SoftGoods .......................................549.5556.71.3
Groups16–20:DurableGoods...................................388.6381.0-2.0
Groups 21–23: Misc. Goods
2
....................................93.993.8-0.1
Store Total
3
..............................................491.9494.30.5
1
Absence of a minus sign before the percentage change in this column signifies a price increase.
2
Indexes on a January 1986 = 100 base.
3
The store t
otal index covers all departments, including some not listed separately, except for the following: candy, food, liquor,
tobacco and
contract departments.
DRAFTING INFORMATION
The princi
pal author of this revenue
ruling is M
ichael Burkom of the Office
of Associa
te Chief Counsel (Income Tax
and Accou
nting). For further informa-
tion rega
rding this revenue ruling, contact
Mr. Burko
m at (202) 622–7924 (not a
toll-fre
e call).
Section 7602.—Examina-
tion of Books and Witnesses
26 CFR 301.7602–1: Examination of books and wit-
nesses.
T.D. 919
5
DEPARTMENT OF
THE TREASURY
Internal Revenue Service
26 CFR Part 301
Designated IRS Officer or
Employee Under Section
7602(a)(2) of the Internal
Revenue Code
AGEN
CY: Internal Revenue Service
(IRS
), Treasury.
ACTION: Final regulations and removal
of temporary regulations.
SUMMARY: This document contains fi-
nal regulations relating to administrative
summonses under section 7602(a) of the
Internal Revenue Code. The regulations
adopt the rules of the temporary regula-
tions, which confirm that officers and em-
ployees of the Office of Chief Counsel may
be included as persons designated to re-
ceive summoned books, papers, records,
or other data and to take summoned testi-
mony under oath.
DATES:Effective Dates: These regula-
tions are effective April 1, 2005.
FOR FURTHER INFORMATION
CONTACT: Elizabeth Rawlins at (202)
622–3630 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains final regula-
tions amending 26 CFR part 301 under
section 7602 of the Internal Revenue Code
of 1986. The final regulations define offi-
cers or employees of the Office of Chief
Counsel as persons who may be desig-
nated to receive summoned books, papers,
records, or other data or to take testimony
under oath. The final regulations also pro-
vide that more than one person may be des-
ignated to receive summoned information
and testimony. Additionally, the final reg-
ulations clarify that a summons need not
show the designation of the specific offi-
cer or employee who is authorized to take
testimony and receive summoned materi-
als.
On September 10, 2002, temporary
regulations (T.D. 9015, 2002–2 C.B. 642
[67 FR 57330]) and a notice of proposed
rulemaking (REG–134026–02, 2002–2
C.B. 684 [67 FR 57354]) containing these
regulatory provisions were published in
theFederal Register. No written com-
ments were received on the temporary and
proposed regulations; no public hearing
was requested, and none was scheduled
or held. Accordingly, the final regulations
adopt the rules of the temporary regula-
tions without change.
Explanation of Provisions
This document contains final regula-
tions amending the Procedure and Admin-
istration Regulations (26 CFR part 301)
under section 7602 of the Internal Rev-
enue Code of 1986. The final regulations
make permanent three changes established
in the temporary regulations regarding the
persons who may be designated to receive
summoned books, papers, records, or other
data or to take testimony under oath. Al-
though IRS examiners will continue to be
responsible for developing and conduct-
ing examinations, these changes will al-
low, among other things, officers and em-
ployees of the Office of Chief Counsel to
participate fully along with an IRS em-
ployee or officer in a summoned interview.
For purposes of identifying persons
who may receive summoned information
or take testimony under oath, the final reg-
ulations define an officer or employee of
the IRS to include all persons who admin-
ister and enforce the internal revenue laws
or any other laws administered by the IRS
and who are appointed or employed by,
or subject to the directions, instructions,
or orders of the Secretary of the Treasury
April 25, 20059582005–17 I.R.B.

or the Secretary’s delegate. This amend-
ment clarifies that officers and employees
of the Office of Chief Counsel may be
designated as persons authorized to take
testimony under oath and to receive sum-
moned books, papers, records, or other
data.
The final regulations also expressly
provide that more than one person may
be designated to receive summoned in-
formation or to take testimony under oath
during a summoned interview. Finally,
the final regulations clarify the existing
regulations by providing that a summons
document need not designate the specific
officer or employee who is authorized to
take testimony under oath and to receive
and examine books, papers, records, or
other data.
Special Analyses
It has been determined that this Trea-
sury decision is not a significant regula-
tory action as defined in Executive Order
12866. Therefore, a regulatory assessment
is not required. It also has been deter-
mined that section 553(b) of the Admin-
istrative Procedure Act (5 U.S.C. chapter
5) does not apply to these regulations, and
because these regulations do not impose a
collection of information on small entities,
the provisions of the Regulatory Flexibil-
ity Act (5 U.S.C. chapter 6) do not apply.
Pursuant to section 7805(f), the preced-
ing temporary regulations were submitted
to the Chief Counsel for Advocacy of the
Small Business Administration for com-
ment on its impact on small business, and
no comments were received.
Drafting Information
The principal author of this regulation is
Elizabeth Rawlins of the Office of the As-
sociate Chief Counsel (Procedure and Ad-
ministration), Collection, Bankruptcy and
Summonses Division.
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 301 is
amended as follows:
PART 301—PROCEDURE AND
ADMINISTRATION
Paragraph 1. The authority citation for
part 301 continues to read in part as fol-
lows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. In §301.7602–1, paragraphs (b)
and (d) revised to read as follows:
§301.7602–1 Examination of books and
witnesses.
*****
(b)Summons—(1)In general.Forthe
purposes described in § 301.7602–1(a), the
Commissioner is authorized to summon
thepersonliablefortaxorrequiredtoper-
form the act, or any officer or employee
of such person or any person having pos-
session, custody, or care of books of ac-
counts containing entries relating to the
business of the person liable for tax or re-
quired to perform the act, or any other per-
son deemed proper, to appear before one
or more officers or employees of the In-
ternal Revenue Service at a time and place
named in the summons and to produce
such books, papers, records, or other data,
and to give such testimony, under oath,
as may be relevant or material to such in-
quiry; and take such testimony of the per-
son concerned, under oath, as may be rel-
evant or material to such inquiry. This
summons power may be used in an inves-
tigation of either civil or criminal tax-re-
lated liability. The Commissioner may
designate one or more officers or employ-
ees of the IRS as the individuals before
whom a person summoned pursuant to sec-
tion 6420(e)(2), 6421(g)(2), 6427(j)(2), or
7602 shall appear. Any such officer or em-
ployee is authorized to take testimony un-
der oath of the person summoned and to re-
ceive and examine books, papers, records,
or other data produced in compliance with
the summons.
(2)Officer or employee of the IRS.For
purposes of this paragraph (b), officer or
employee of the IRS means all officers
and employees of the United States, who
are engaged in the administration and en-
forcement of the internal revenue laws or
any other laws administered by the IRS,
and who are appointed or employed by,
or subject to the directions, instructions,
or orders of the Secretary of the Treasury
or the Secretary’s delegate. An officer or
employee of the IRS, for purposes of this
paragraph (b), shall include an officer or
employee of the Office of Chief Counsel.
*****
(d)Effective dates. Thissectionisap-
plicable after September 3, 1982, except
for paragraph (b), which is applicable on
and after April 1, 2005. For rules under
paragraph (b) that are applicable to sum-
monses issued on or after September 10,
2002, see 26 CFR §301.7602–1T. For rules
applicable on or before September 3, 1982,
see 26 CFR §301.7602–1 (revised as of
April 1, 1984).
§301.7602–1T [Removed]
Par. 3. Section 301.7602–1T is re-
moved.
Mark E. Matthews,
Deputy Commissioner for Services
and Enforcement.
Approved February 15, 2005.
Eric Solomon,
Acting Deputy Assistant Secretary
oftheTreasury(TaxPolicy).
(Filed by the Office of the Federal Register on March 31,
2005, 8:45 a.m., and published in the issue of the Federal
Register for April 1, 2005, 70 F.R. 16711)
2005–17 I.R.B.959April 25, 2005

Part III. Administrative, Procedural, and Miscellaneous
Nonconventional Source Fuel
Credit, Section 29 Inflation
Adjustment Factor, and
Section 29 Reference Price
Notice 2005–33
This notice publishes the nonconven-
tional source fuel credit, inflation adjust-
ment factor, and reference price under § 29
of the Internal Revenue Code for calen-
dar year 2004. These are used to deter-
mine the credit allowable on fuel produced
from a nonconventional source under § 29.
The calendar year 2004inflation-adjusted
credit applies to the sales of barrel-of-oil
equivalent of qualified fuels sold by a tax-
payer to an unrelated person during the
2004 calendar year, the domestic produc-
tion of which is attributable to the taxpayer.
BACKGROUND
Section 29(a) provides for a credit for
producing fuel from a nonconventional
source, measured in barrel-of-oil equiva-
lent of qualified fuels, the production of
which is attributable to the taxpayer and
sold by the taxpayer to an unrelated person
during the tax year. The credit is equal to
the product of $3.00 and the appropriate
inflation adjustment factor.
Section 29(b)(1) and (2) provides for
a phaseout of the credit. The credit al-
lowable under § 29(a) must be reduced by
an amount which bears the same ratio to
the amount of the credit (determined with-
out regard to § 29(b)(1)) as the amount
by which the reference price for the cal-
endar year in which the sale occurs ex-
ceeds $23.50 bears to $6.00. The $3.00 in
§ 29(a) and the $23.50 and $6.00 must each
be adjusted by multiplying these amounts
by the 2004 inflation adjustment factor. In
the case of gas from a tight formation, the
$3.00 amount in § 29(a) must not be ad-
justed.
Section 29(c)(1) defines the term “qual-
ified fuels” to include oil produced from
shale and tar sands; gas produced from
geopressurized brine, Devonian shale, coal
seams, or a tight formation, or biomass;
and liquid, gaseous, or solid synthetic fu-
els produced from coal (including lignite),
including such fuels when used as feed-
stocks.
Section 29(d)(1) provides that the credit
is to be applied only for sale of qualified
fuels the production of which is within
the United States (within the meaning of
§ 638(1)) or a possession of the United
States (within the meaning of § 638(2)).
Section 29(d)(2)(A)requires that the
Secretary, not later than April 1 of each cal-
endar year, determine and publish in the
Federal Register the inflation adjustment
factor and the reference price for the pre-
ceding calendar year.
Section 29(d)(2)(B) defines “inflation
adjustment factor” for a calendar year as
the fraction the numerator of which is the
GNP implicit price deflator for the calen-
dar year and the denominator of which is
the GNP implicit price deflator for calen-
dar year 1979. The term “GNP implicit
price deflator” means the first revision of
the implicit price deflator for the gross na-
tional product as computed and published
by the Department of Commerce.
Section 29(d)(2)(C) defines “reference
price” to mean with respect to a calendar
year the Secretary’s estimate of the annual
average wellhead price per barrel for all
domestic crude oil the price of which is not
subject to regulation by the United States.
Section 29(d)(3) provides that in the
case of a property or facility in which more
than one person has an interest, except
to the extent provided in regulations pre-
scribed by the Secretary, production from
the property or facility (as the case may
be) must be allocated among the persons
in proportion to their respective interests in
the gross sales from the property or facil-
ity.
Section 29(d)(5) provides that the term
“barrel-of-oil equivalent” with respect to
any fuel generally means that amount of
the fuel which has a Btu content of 5.8
million.
INFLATION ADJUSTMENT FACTOR
AND REFERENCE PRICE
The inflation adjustment factor for cal-
endar year 2004 is 2.1853. The reference
price for calendar year 2004 is $36.75.
These amounts will be published in the
Federal Register on April 6, 2005.
PHASEOUT CALCULATION
Because the calendar year 2004 refer-
ence price does not exceed $23.50 mul-
tiplied by the inflation adjustment factor,
the phaseout of the credit provided for in
§ 29(b)(1) does not occur for any qualified
fuel sold in calendar year 2004.
CREDIT AMOUNT
The nonconventional source fuel credit
under § 29(a) is $6.56 per barrel-of-oil
equivalent of qualified fuels ($3.00 x
2.1853). This amount will be published in
the Federal Register on April 6, 2005.
DRAFTING INFORMATION
CONTACT
The principal author of this notice
is Kelly Morrison-Lee of the Office of
Associate Chief Counsel (Passthroughs
and Special Industries). For further in-
formation regarding this notice, contact
Ms. Morrison-Lee at (202) 622–3120 (not
a toll-free call).
Weighted Average Interest
Rates Update
Notice 2005–34
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. In ad-
dition, it provides guidance as to the
interest rate on 30-year Treasury securi-
ties under § 417(e)(3)(A)(ii)(II), and the
weighted average interest rate and permis-
sible ranges of interest rates based on the
30-year Treasury securities rate.
CORPORATE BOND WEIGHTED
AVERAGE INTEREST RATE
Sections412(b)(5)(B)(ii)and
412(l)(7)(C)(i), as amended by the Pen-
sion Funding Equity Act of 2004, provide
that the interest rates used to calculate cur-
rent liability and to determine the required
contribution under § 412(l) for plan years
beginning in 2004 or 2005 must be within
April 25, 20059602005–17 I.R.B.

a permissible range based on the weighted
average of the rates of interest on amounts
invested conservatively in long term in-
vestment grade corporate bonds during the
4-year period ending on the last day before
the beginning of the plan year.
Notice 2004–34, 2004–18 I.R.B. 848,
provides guidelinesfor determining the
corporate bond weighted average interest
rate and the resulting permissible range
of interest rates used to calculate current
liability. That notice establishes that the
corporate bond weighted average is based
on the monthly composite corporate bond
rate derived from designated corporate
bond indices.
The composite corporate bond rate for
March 2005 is 5.62 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
Corporate
Bond90% to 100%
Beginning in:WeightedPermissible
MonthYearAverageRange
April20056.015.41 to 6.01
30-YEAR TREASURY SECURITIES
WEIGHTED AVERAGE INTEREST
RATE
Section 417(e)(3)(A)(ii)(II) defines
the applicable 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
securities 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-
bleinterestrateforamonthistheannual
interest rate on 30-year Treasury securi-
ties as specified by the Commissioner for
that month in revenue rulings, notices or
other guidance published in the Internal
Revenue Bulletin.
Section 404(a)(1) of the Code, as
amended by the Pension Funding Eq-
uity Act of 2004, permits an employer
to elect to disregard subclause (II) of
§ 412(b)(5)(B)(ii) to determine the max-
imum amount of the deduction allowed
under § 404(a)(1).
The rate of interest on 30-year Treasury
securities for March 2005 is 4.78 percent.
Pursuant to Notice 2002–26, 2002–1 C.B.
743, 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 February 2031.
The following 30-year Treasury rates
were determined for the plan years begin-
ning in the month shown below.
For Plan Years
30-Year
Treasury90% to 105%90% to 110%
Beginning in:WeightedPermissiblePermissible
MonthYearAverag
e
RangeRange
April20055.054.54 to 5.304.54 to 5.55
Drafting Information
The principal authors of this notice
are Paul Stern and Tony Montanaro of
the Employee Plans, Tax Exempt and
Government Entities Division. For fur-
ther information regarding this notice,
please contact the Employee Plans’ tax-
payer assistance telephone service at
1–877–829–5500 (a toll-free number),
between the hours of 8:00 a.m. and
6:30 p.m. Eastern time, Monday through
Friday. Mr. Stern may be reached at
1–202–283–9703. Mr. Montanaro may
be reached at 1–202–283–9714. The tele-
phone numbers in thepreceding sentences
are not toll-free.
2005–17 I.R.B.961April 25, 2005

26 CFR 601.201: Rulings and determination letters.
(Also, Part I, §§ 79, 83, 402; §§ 1.79–1, 1.83–3,
1.402(a)–1.)
Rev. Proc. 2005–25
SECTION 1. PURPOSE
This revenue procedure provides guid-
ance on how to determine the fair mar-
ket value of a life insurance contract, re-
tirement income contract, endowment con-
tract, or other contractproviding life insur-
ance protection for purposes of applying
the rules of §§ 79, 83 and 402 of the Inter-
nal Revenue Code. Rev. Proc. 2004–16,
2004–10 I.R.B. 559, is modified and su-
perseded.
SECTION 2. BACKGROUND
.01 Relevance of Fair Market Value.
(1) Distributions from Qualified Plans
Under § 402(a). Section 402(a) provides
generally that any amount actually dis-
tributed to any distributee by any employ-
ees’ trust described in § 401(a) (which is
exempt from tax under § 501(a)) is taxable
to the distributee, in the taxable year of
the distributee in which distributed. Sec-
tion 1.402(a)–1(a)(1)(iii) of the Income
Tax Regulations provides, in general, that
a distribution of property by a qualified
plan is taken into account by the distribu-
tee at its “fair market value.” Section
1.402(a)–1(a)(2) provides, in general, that
upon distribution of a retirement income,
endowment, or other life insurance con-
tract, the “entire cash value” at the time
of distribution must be included in the
distributee’s income. Amendments to the
regulations under § 402 were proposed
on February 13, 2004 (REG–126967–03,
2004–10 I.R.B. 566 [69 FR 7384]) to
clarify that the fair market value stan-
dard controls when such a contract is
distributed. The same valuation standard
applies when such a contract is sold by
the plan to a participant. This fair market
value standard under the proposed regula-
tions would apply to distributions or sales
that occur on or after February 13, 2004.
(2) Permanent Benefits Provided Under
§ 79. Section 79 generally requires that the
cost of group-term life insurance coverage
onthelifeofanemployeethatisinex-
cess of $50,000 of coverage be included in
the income of the employee. Pursuant to
§ 1.79–1(b) of the regulations, under spec-
ified circumstances, group-term life insur-
ance may be combined with other bene-
fits, referred to as permanent benefits. Un-
der § 1.79–1(d), the employee’s income in-
cludes the cost of those permanent bene-
fits, reduced by the amount the employee
paid for the benefits. The cost of the per-
manent benefits is determined under a for-
mula provided in the regulations that is
based in part on the increase in the em-
ployee’s deemed death benefit during the
year. One of the factors used for determin-
ing the deemed death benefit is “the net
level premium reserve at the end of that
policy year for all benefits provided to the
employee by the policy or, if greater, the
cash value of the policy at the end of that
policy year.” Amendments to the regula-
tionsunder§79wereproposedonFeb-
ruary 13, 2004 (69 FR 7384) that would
delete the term “cash value” from the for-
mula for determining the cost of perma-
nent benefits in § 1.79–1(d) and substi-
tute the term “fair market value.” The pro-
posed regulations would apply to perma-
nent benefits provided on or after February
13, 2004.
(3) Transfers Under § 83(a). Section
83(a) provides that, when property is trans-
ferred to any person in connection with
the performance of services, the service
provider must include in gross income (as
compensation income) the excess of the
fair market value of the property, deter-
mined without regard to lapse restrictions
(such as life insurance contract surrender
charges), and determined at the first time
that the transferee’s rights in the prop-
erty are either transferable or not subject
to a substantial risk of forfeiture (i.e.,
when those rights become “substantially
vested”), over the amount (if any) paid
for the property. Section 1.83–3(e) of
the regulations provides that, in the case
of a transfer of a life insurance contract,
retirement income contract, endowment
contract, or other contract providing life
insurance protection, only the cash sur-
render value of the contract is considered
to be property. Amendments to the reg-
ulations under § 83 were proposed on
February 13, 2004 (69 FR 7384) that
would provide that, in the case of a trans-
fer of an insurance contract, retirement
income contract, endowment contract, or
other contract providing life insurance
protection, the policy cash value and all
other rights under the contract (including
any supplemental agreements, whether or
not guaranteed), other than current insur-
ance protection, are treated as property for
purposes of § 83. The proposed regula-
tions would apply to transfers that occur
on or after February 13, 2004 (with an
exception for any contract that was part of
a split-dollar arrangement entered into on
or before September 17, 2003, and which
is not materially modified after that date).
(4) Contributions To and Distributions
From Nonexempt Employees’ Trusts.
Section 402(b)(1) provides that contri-
butions to an employees’ trust made by
an employer during a taxable year of the
employer which ends with or within a
taxable year of the trust for which the trust
is not exempt from tax under § 501(a) are
included in the gross income of the em-
ployee in accordance with § 83 (relating
to property transferred in connection with
the performance of services), except that
the value of the employee’s interest in the
trust is substituted for the fair market value
of the property for purposes of applying
§ 83. Section 1.402(b)–1(a) of the regu-
lations provides that any contributions to
a nonexempt trust by an employer dur-
ing a taxable year of the employer which
ends within or with a taxable year of the
trust shall be included as compensation
in the gross income of the employee for
the employee’s taxable year during which
the contribution is made, but only to the
extent that the employee’s interest in such
contribution is substantially vested (within
the meaning of § 1.83–3(b)) at the time
the contribution is made.
Section 1.402(b)–1(b)(1) of the regu-
lations provides that if rights of an em-
ployee under a trust become substantially
vested during a taxable year of the em-
ployee and a taxable year for which the
trust is not exempt under § 501(a) ends
with or within such year, the value of the
employee’s interest in the trust on the date
of such change (substantially nonvested
to substantially vested) is included in the
employee’s gross income for that taxable
year. Section 1.402(b)–1(b)(2)(i) provides
that the term “the value of the employee’s
interest in a trust” means the amount of the
employee’s beneficial interest in the net
fair market value of all the assets in the
trust as of any date on which some or all
of the employee’s interest in the trust be-
comes substantially vested. The net fair
April 25, 20059622005–17 I.R.B.

market value of all the assets in the trust is
the total amount of the fair market values
(determined without regard to any lapse re-
striction, as defined in § 1.83–3(h)) of all
the assets in the trust, less the amount of all
the liabilities to which such assets are sub-
ject or which the trust has assumed (other
than the rights of any employee in such as-
sets), as of the date on which some or all
of the employee’s interest in the trust be-
comes substantially vested.
Section 402(b)(2) and § 1.402(b)–1(c)
provide that any amount actually dis-
tributed or made available to any distribu-
tee by an employee’s trust in a taxable year
in which it is not exempt under § 501(a) is
taxable under § 72 (relating to annuities) to
the distributee in the taxable year in which
it is so distributed or made available. If,
for example, the distribution consists of an
annuity contract, the amount of the distri-
bution is considered to be the entire value
of the contract at the time of the distribu-
tion. Such value is includible in the gross
income of the distributee to the extent that
such value exceeds the investment in the
contract, determined by applying § 72.
The distributions are included in income
under the rules of § 72 whether or not
the employee’s rights in the contributions
become substantially vested beforehand.
Section 402(b)(4)(A) provides that, if
one of the reasons a trust is not exempt
from tax under § 501(a) is the failure of
the plan of which it is a part to meet the
requirements of § 401(a)(26) or 410(b),
then a highly compensated employee shall,
in lieu of the amount determined under
§ 402(b)(1) or under § 402(b)(2), include
in gross income for the taxable year with
or within which the taxable year of the trust
ends an amount equal to the vested accrued
benefit of such employee (other than the
employee’s investment in the contract) as
of the close of such taxable year of the
trust.
.02 Prior Guidance Regarding Fair Mar-
ket Value.
(1) Rev. Rul. 59–195 — Interpolated
Terminal Reserve. Rev. Rul. 59–195,
1959–1 C.B. 18, addressed the determina-
tion of the fair market value of a policy in
a situation in which an employer sold to
an employee a life insurance contract on
which premiums were still due. The rev-
enue ruling held that, for purposes of com-
puting the employee’s taxable gain in the
year of the purchase, the value of the con-
tract should be determined using the ap-
proach of § 25.2512–6 of the Gift Tax Reg-
ulations. Under that regulation, the value
of a life insurance contract that has been in
force for some time and on which further
premium payments are to be made is not
its cash surrender value, but, rather, the in-
terpolated terminal reserve as of the date
of sale plus the proportionate part of any
employer-paid unearned premiums. Sec-
tion 25.2512–6 also provides that if “be-
cause of the unusual nature of the con-
tract such approximation is not reasonably
close to the full value, this method may not
be used.” Thus, this method is appropriate
only where the reserve reflects the value of
all of the relevant features of the policy.
(2) Notice 89–25 — Tax Reserves.
Q&A–10 of Notice 89–25, 1989–1 C.B.
662, described a distribution from a qual-
ified plan of a life insurance policy with
a value substantially higher than the cash
surrender value stated in the policy. The
notice concluded that the practice of using
cash surrender value as fair market value
is not appropriate where the total policy
reserves, including life insurance reserves
(if any) computed under § 807(d), together
with any reserves for advance premiums,
dividend accumulations, etc., represent a
much more accurate approximation of the
policy’s fair market value.
(3) Rev. Proc. 2004–16 — Safe Harbor
for Determining Fair Market Value. Rev.
Proc. 2004–16, 2004–10 I.R.B. 559, pro-
vided a safe harbor for determining fair
market value of variable and non-variable
contracts for purposes of applying the rules
under the proposed regulations issued un-
der §§ 79, 83, and 402(a). The safe harbor
for non-variable contracts set forth in Rev.
Proc. 2004–16 permitted the use of the
contract’s cash value without reduction for
surrender charges as the fair market value
so long as this cash value is at least equal to
the sum of: (1) the premiums paid, plus (2)
interest, dividends or other credits, minus
(3) reasonable mortality and other reason-
able charges actually charged by the date
of determination (e.g., date of the trans-
fer or distribution) that are expected to be
paid. In those cases where the contract is a
variable contract (as defined in § 817(d)),
cash value without reduction for surrender
charges may be treated as the fair market
value of the contract provided such cash
value is at least equal to the sum of: (1)
the premiums paid, plus (2) all adjustments
made with respect to those premiums dur-
ing that period (whether under the contract
or otherwise) that reflect investment return
and the current market value of segregated
asset accounts, minus (3) reasonable mor-
tality and other reasonable charges actually
charged by the date of determination (e.g.,
date of the transfer or distribution) that are
expected to be paid.
.03 Need For Further Guidance. After
the issuance of Rev. Proc. 2004–16, the
Service received comments concerning the
safe harbors set forth in that revenue pro-
cedure. Commentators asserted that the
formulas did not function well for certain
types of traditional policies. In addition,
commentators were concerned about the
possible double-counting of dividends un-
der the formulas, and the fact that the for-
mulas did not make an explicit adjustment
for surrender charges, withdrawals, or dis-
tributions. The Service has determined
that adjustments to the safe harbors are ap-
propriate.
SECTION 3. GUIDANCE FOR
DETERMINING FAIR MARKET
VALUE
.01 Safe Harbor Formulas for Fair Mar-
ket Value. This revenue procedure pro-
vides two safe harbor formulas that, if used
to determine the value of an insurance con-
tract, retirement income contract, endow-
ment contract, or other contract providing
life insurance protection that is distributed
or otherwise transferred from a qualified
plan, will meet the definition of fair market
value for purposes of § 402(a). These safe
harbor formulas will also meet the defini-
tion of fair market value for purposes of
§§ 79, 83, and 402(b) and, in addition, will
meet the definition of vested accrued ben-
efit for purposes of § 402(b)(4)(A).
.02 Safe Harbor for Non-Variable Con-
tracts. Except as provided in section 3.03
of this revenue procedure (which applies
only to variable contracts), the fair mar-
ket value of an insurance contract, retire-
ment income contract, endowment con-
tract, or other contract providing life in-
surance protection may be measured as the
greater of: A) the sum of the interpolated
terminal reserve and any unearned premi-
umsplusapro rataportion of a reason-
able estimate of dividends expected to be
paid for that policy year based on com-
pany experience, and B) the product of
2005–17 I.R.B.963April 25, 2005

the PERC amount (the amount described
in the following sentence based on pre-
miums, earnings, and reasonable charges)
and the applicable Average Surrender Fac-
tor described in section 3.04 of this rev-
enue procedure. The PERC amount is the
aggregate of: (1) the premiums paid from
the date of issue through the valuation date
without reduction for dividends that off-
set those premiums, plus (2) dividends ap-
plied to purchase paid-up insurance prior
to the valuation date, plus (3) any amounts
credited (or otherwise made available) to
the policyholder with respect to premi-
ums, including interest and similar income
items (whether credited or made available
under the contract or to some other ac-
count), but not including dividends used to
offset premiums and dividends used to pur-
chase paid up insurance, minus (4) explicit
or implicit reasonable mortality charges
and reasonable charges (other than mor-
tality charges), but only if those charges
are actually charged on or before the val-
uation date and those charges are not ex-
pected to be refunded, rebated, or other-
wise reversed at a later date, minus (5)
any distributions (including distributions
of dividends and dividends held on ac-
count), withdrawals, or partial surrenders
taken prior to the valuation date.
.03 Safe Harbor for Variable Contracts.
If the insurance contract, retirement in-
come contract, endowment contract, or
other contract providing life insurance
protection being valued is a variable con-
tract (as defined in § 817(d)), the fair
market value may be measured as the
greater of: A) the sum of the interpo-
lated terminal reserve and any unearned
premiums plus apro rataportion of a
reasonable estimate of dividends expected
to be paid for that policy year based on
company experience, and B) the product
ofthevariablePERCamount(theamount
described in the following sentence based
on premiums, earnings, and reasonable
charges) and the applicable Average Sur-
render Factor described in section 3.04
of this revenue procedure. The variable
PERC amount is the aggregate of: (1)
the premiums paid from the date of is-
sue through the valuation date without
reduction for dividends that offset those
premiums, plus (2) dividends applied to
increase the value of the contract (includ-
ing dividends used to purchase paid-up
insurance) prior to the valuation date, plus
or minus (3) all adjustments (whether
credited or made available under the con-
tract or to some other account) that reflect
the investment return and the market value
of segregated asset accounts, minus (4)
explicit or implicit reasonable mortality
charges and reasonable charges (other
than mortality charges), but only if those
charges are actually charged on or before
the valuation date and those charges are
not expected to be refunded, rebated, or
otherwise reversed at a later date, minus
(5) any distributions (including distribu-
tions of dividends and dividends held on
account), withdrawals, or partial surren-
ders taken prior to the valuation date.
.04 Average Surrender Factor.
(1) Sections 79, 83, and 402(b). The
Average Surrender Factor for purposes of
§§ 79, 83, and 402(b) (for which no ad-
justment for potential surrender charges is
permitted) is 1.00.
(2) Qualified plans. In the case of a dis-
tribution or sale from a qualified plan, if
the contract provides for explicit surrender
charges, the Average Surrender Factor is
the unweighted average of the applicable
surrender factors over the 10 years begin-
ning with the policy year of the distribution
or sale. For this purpose, the applicable
surrender factor for a policy year is equal
to the greater of 0.70 and a fraction, the nu-
merator of which is the projected amount
of cash that would be available if the pol-
icy were surrendered on the first day of the
policy year (or, in the case of the policy
year of the distribution or sale, the amount
of cash that was actually available on the
first day of that policy year) and the de-
nominator of which is the projected (or ac-
tual) PERC amount as of that same date.
The applicable surrender factor for a year
in which there is no surrender charge is
1.00. A surrender charge is permitted to
be taken into account under section 3.04 of
this revenue procedure only if it is contrac-
tually specified at issuance and expressed
in the form of nonincreasing percentages
or amounts.
.05 Application of Safe Harbor Formu-
las. The formulas set forth in sections 3.02
and 3.03 of this revenue procedure must
be interpreted in a reasonable manner, con-
sistent with the purpose of identifying the
fair market value of a contract. Thus, for
example, if income is calculated with re-
spect to premiums paid under the contract,
that amount must be included in item (3)
of the formulas, even if the income can
only be realized through an exchange right
that gives rise to a springing cash value un-
der another policy. Similarly, if a mortal-
ity charge or other amount charged under
a contract can be expected to be directly
or indirectly returned to the contractholder
(whether through the contract, a supple-
mental agreement, or under a verbal under-
standing and regardless of whether there
is a guarantee), the charge is not permit-
ted to be subtracted under item (4) in the
formulas. In addition, a surrender charge
cannot be taken into account in determin-
ing an average surrender factor if it may be
waived or otherwise avoided or was cre-
ated for purposes of thetransfer or distri-
bution. Furthermore, at no time are these
rules to be interpreted in a manner that al-
lows the use of these formulas to under-
state the fair market value of the life insur-
ance contracts and associated distributions
or transfers. For example, if the insurance
contract has not been in force for some
time, the value of the contract is best es-
tablished through the sale of the particular
insurance contract by the insurance com-
pany (i.e., as the premiums paid for that
contract).
.06 Date as of Which Fair Market Value
is Determined. In the case of a distribution
or sale of a contract from a qualified plan,
the date as of which the fair market value
is to be determined is the date of that distri-
bution or sale. The date of determination
in the case of the provision of permanent
benefits subject to § 79 is the date those
benefits are provided. The date of deter-
mination in the case of a transfer of an in-
surance contract subject to § 83 is the date
on which fair market value must be deter-
mined under the rules of § 83. The date of
determination in the case of a non-exempt
employees’ trust under § 402(b) is the date
on which fair market value must be deter-
mined under the rules of § 402(b).
SECTION 4. ADDITIONAL AMOUNTS
THAT MUST BE INCLUDED IN
INCOME
.01 Treatment of Dividends Held on
Deposit. Dividends held on deposit with
respect to an insurance contract are not in-
cluded in the fair market value of the con-
tract. However, such dividends are tax-
able income to the employee or service
provider at the time the rights to those
April 25, 20059642005–17 I.R.B.

dividends are transferred to that individ-
ual. For example, if a qualified plan dis-
tributes a contract to an employee along
with the rights to dividends held on deposit
with respect to that contract, the employee
must take into income both the fair mar-
ket value of the contract and the value of
the dividends held on the deposit. This
is the case regardless of whether the div-
idends on deposit are paid directly to the
employee at the time the contract is dis-
tributed or merely made available for pay-
ment at a later time.
.02 Treatment of Loans. If a loan (in-
cluding a loan secured by the cash value
of a life insurance contract) is made to
an employee or other service provider in
connection with the performance of ser-
vices, to the extent the debt owed by the
employee or other service provider is ter-
minated upon distribution or transfer of
the collateral, the terminated loan or debt
amount constitutes an additional distribu-
tion to the employee or service provider
at that time. For this purpose, it is irrele-
vant whether the loan is described as hav-
ing been forgiven, canceled, satisfied, ex-
tinguished, or otherwise offset, provided
that the loan no longer exists after the
distribution or transfer. For example, if
a life insurance contract with a fair mar-
ket value of $100,000 (without regard to
any debt) is collateral for a policy loan
of $30,000 (borrowed by the employer,
who then lends the $30,000 to the em-
ployee) prior to the distribution or trans-
fer of the contract, and the loan to the
employee no longer exists after the distri-
bution or transfer so that the amount dis-
tributed is $70,000 ($100,000 - $30,000),
the entire $100,000 must be taken into ac-
count by the employee. If a participant re-
ceives a loan from a life insurance contract
held by a qualified plan (or other plan sub-
ject to the rules of § 72(p)) and the con-
tract is subsequently distributed to the par-
ticipant in satisfaction of the participant’s
benefit under the plan, the reduction in the
value of the distribution in order to repay
the participant’s loan from the plan consti-
tutes a plan loan offset amount, which is
treated as a distribution from the plan. See
§ 1.72(p)–1, Q&A–13(b).
SECTION 5. EFFECTIVE DATE
This revenue procedure applies to dis-
tributions, sales, and other transfers made
on or after February 13, 2004, to per-
manent benefits within the meaning of
§ 1.79–0 provided on or after February
13, 2004, and to non-exempt employees’
trusts under § 402(b) for periods on or after
February 13, 2004. However, for periods
before May 1, 2005, taxpayers may rely on
the safe harbors of this revenue procedure
and for periods on or after February 13,
2004, and before May 1, 2005, taxpayers
mayalsorelyonthesafeharborsinRev.
Proc. 2004–16.
SECTION 6. EFFECT ON OTHER
DOCUMENTS
Rev. Proc. 2004–16 is modified and
superseded.
DRAFTING INFORMATION
The principal authors of this rev-
enue procedure are Bruce Perlin and
Linda Marshall, Office of Division Coun-
sel/Associate Chief Counsel (Tax Exempt
and Government Entities) and Larry Isaacs
of the Employee Plans, Tax Exempt and
Government Entities Division. For further
information regarding this revenue pro-
cedure as it pertains to § 402(a), please
contact Bruce Perlin or Linda Marshall at
(202) 622–6090 (not a toll-free number)
or Larry Isaacs at (202) 283–9888 (not a
toll-free number) or contact the Employee
Plans’ taxpayer assistance telephone ser-
vice at (877) 829–5500 (a toll-free num-
ber) between the hours of 8:00 a.m. and
6:30 p.m. Eastern Time, Monday through
Friday. For further information regard-
ing this revenue procedure as it pertains
to § 79, please contact Betty Clary of
the Office of Division Counsel/Associate
Chief Counsel (Tax Exempt and Govern-
ment Entities) at (202) 622–6080 (not a
toll-free number). For further information
regarding this revenue procedure as it per-
tains to §§ 83 and 402(b), please contact
Robert Misner of the Office of Division
Counsel/Associate Chief Counsel (Tax
Exempt and Government Entities) at (202)
622–6030 (not a toll-free number).
26 CFR 601.105: Examination of returns and claims
for refund, credit or abatement; determination of cor-
rect tax liability.
(Also: Part I, §§ 6011, 6501, 6707A, 6111, 6112;
1.6011–4.)
Rev. Proc. 2005–26
SECTION 1. PURPOSE
The purpose of this revenue procedure
is to alert taxpayers to the enactment of
section 6501(c)(10) of the Internal Rev-
enue Code, and to provide guidance for
taxpayers subject to the extended period
of limitations on assessment under section
6501(c)(10).
SECTION 2. BACKGROUND
.01 In general, the limitations period on
assessment of tax is three years after the
later of the due date for filing a tax return
or the date on which the taxpayer files its
return. I.R.C. § 6501(a). Section 6501(c)
provides several exceptions to the general
three-year period of limitations.
.02 Section 814 of the American
Jobs Creation Act of 2004, Pub. L.
No. 108–357, 118 Stat. 1418 (2004)
(the Act), amended section 6501(c) by
adding a new paragraph (10). Section
6501(c)(10) provides that the limitations
period on assessment with respect to a
listed transaction that the taxpayer fails to
disclose, as required under section 6011
(an“undisclosedlistedtransaction”),shall
not expire before one year after the earlier
of (A) the date on which the Secretary is
furnished the information required under
section 6011, or (B) the date that a ma-
terial advisor meets the requirements of
section 6112 with respect to a request by
the Secretary under section 6112 relating
to the undisclosed listed transaction. Sec-
tion 6501(c)(10) is effective for taxable
years with respect to which the limitations
period on assessment did not expire prior
to October 22, 2004, the date of enactment
of the Act. Section 6501(c)(10) does not
revive an assessment limitations period
that expired prior to October 22, 2004.
.03 Section 6707A(c)(2) (added by
section 811 of the Act) defines a “listed
transaction” as a reportable transaction
that is the same as, or substantially sim-
ilar to, a transaction identified by the
2005–17 I.R.B.965April 25, 2005

Secretary as a tax avoidance transaction
for purposes of section 6011.See also
Treas. Reg. § 1.6011–4(b)(2). For a list of
transactions identified by the Secretary as
listed transactions, go to the IRS web page
atwww.irs.gov/businesses/corporations
andclickonAbusiveTaxSheltersand
Transactions.See alsoNotice 2004–67,
2004–41 I.R.B. 600 (October 12, 2004),
and subsequent published guidance.
.04 Taxpayers are required under sec-
tion 6011, and the regulations thereunder,
to disclose certain information regard-
ing each listed transaction in which the
taxpayer has participated, as defined in
section 1.6011–4(c)(3). Generally, if a
taxpayer is required to disclose informa-
tion regarding the transaction, the taxpayer
must complete Form 8886,Reportable
Transaction Disclosure Statement,for
each listed transaction and attach the Form
8886 to the taxpayer’s return for each
year in which the taxpayer participated
in the listed transaction.SeeTreas. Reg.
§ 1.6011–4(e). A copy of the disclosure
statement must also be sent to the Office
of Tax Shelter Analysis (OTSA) at the
same time that any disclosure statement is
first filed by the taxpayer.SeeTreas. Reg.
§ 1.6011–4(d) and (e). The Form 8886
must provide the information requested
and be completed in accordance with the
instructions to the form.SeeTreas. Reg.
§ 1.6011–4(d).
.05 Section 6112 requires material
advisors to maintain lists of investors
and other information with respect to
reportable transactions, including listed
transactions, and to furnish that infor-
mation to the Secretary upon request.
The term “material advisor” is defined
in section 301.6112–1(c)(2).SeeNotice
2004–80, 2004–50 I.R.B. 963 (December
13, 2004), amplified by Notice 2005–17,
2005–8 I.R.B. 606 (February 22, 2005),
clarified and modified by Notice 2005–22,
2005–12 I.R.B. 756 (March 21, 2005), and
section 301.6112–1 for guidance relating
to the preparation, content, maintenance,
retention, and furnishing of lists by mate-
rial advisors.
SECTION 3. SCOPE
This revenue procedure applies to tax-
payers that fail to disclose information re-
garding listed transactions, as required un-
der section 6011 and the regulations there-
under, for taxable years with respect to
which the period for assessing a deficiency
did not expire before October 22, 2004.
This revenue procedure provides proce-
dures that taxpayers and material advisors
may follow to disclose undisclosed listed
transactions.
SECTION 4. APPLICATION TO
TAXPAYERS
.01Disclosure of an undisclosed listed
transaction by a taxpayer that has filed
ataxreturn. Until further guidance is
issued, if a taxpayer filed a tax return
with respect to a taxable year for which
the taxpayer participated in an undis-
closed listed transaction and the IRS has
not previously received from the mate-
rial advisor the information described in
section 301.6112–1(e)(3) in accordance
with section 5 of this revenue procedure,
the limitations period on assessment with
respect to that undisclosed listed transac-
tion will not expire earlier than one year
after the taxpayer discloses the transaction
in accordance with the procedures in this
section 4.
(1)Disclosure on a Form 8886.Atax-
payer must disclose an undisclosed listed
transaction by submitting a Form 8886,
with appropriate cover letter, as described
below, with the Internal Revenue Service
Center at which the taxpayer filed its orig-
inal return. A taxpayer is permitted, but
not required, to file an amended return with
the Form 8886 and cover letter. A copy of
the Form 8886 and cover letter also must
be sent simultaneously to OTSA. The tax-
payer must include on the top of Page 1
of the Form 8886, and each copy of the
form, the following statement: “Section
6501(c)(10) Disclosure”followedbythe
taxable year and tax return to which the
disclosure statement relates. For example,
if the Form 8886 relates to the taxpayer’s
Form 1040 for the 2002 taxable year, the
taxpayer must include the following state-
ment: “Section 6501(c)(10) Disclosure;
2002 Form 1040” on the form. Sepa-
rate Forms 8886 and separate cover letters
must be submitted for each taxable year
for which the taxpayer participated in the
undisclosed listed transaction. A cover let-
ter to which a Form 8886 is to be attached
must identify the return to which the dis-
closure statement relates and include the
following statement signed under penalties
of perjury by the taxpayer and, if appli-
cable, by the paid preparer preparing the
Form 8886 or amended return:
Under penalties of perjury, I declare
that I have examined this reportable
transaction disclosure statement and, to
the best of my knowledge and belief,
this reportable transaction disclosure
statement is true, correct, and com-
plete. Declaration of preparer (other
than taxpayer) is based on all infor-
mation of which the preparer has any
knowledge.
(2)Taxpayers under an examination by
the IRS or under Appeals consideration.A
taxpayer under examination by the IRS or
under Appeals consideration for any tax-
able year for which the taxpayer partici-
pated in an undisclosed listed transaction
also must submit a copy of the Form 8886,
prepared in accordance with the require-
ments of subsection (1) above, to the IRS
examiner or Appeals officer in addition to
the other disclosure requirements of this
section.
.02Disclosure of an undisclosed listed
transaction that is designated as a listed
transaction subsequent to the filing of a
tax return. If the Secretary identifies a
transaction as a listed transaction after the
date on which the taxpayer files a tax re-
turn for a taxable year during which the
taxpayer participated in the listed transac-
tion (a “post-filing listed transaction”), the
taxpayer must disclose the transaction un-
der section 6011 in accordance with the
regulations thereunder.SeeTreas. Reg.
§ 1.6011–4(e)(2)(i). The exception under
section 6501(c)(10) to the general period
of limitations on assessment is applicable
to a post-filing listed transaction unless
the taxpayer discloses the listed transac-
tion in accordance withthe regulations un-
der section 6011, which currently require
that the taxpayer attach the Form 8886 to
its next filed return. If the obligation to
disclose a post-filing listed transaction, as
prescribed by the regulations under sec-
tion 6011, arises after the expiration of the
period of limitations on assessment for a
taxable year in which the taxpayer par-
ticipated in the post-filing listed transac-
tion, section 6501(c)(10) will not operate
to reopen or extend the limitations period.
Conversely, if the limitations period on as-
sessment has not expired, and the taxpayer
fails to disclose the post-filing listed trans-
action as required by the regulations under
April 25, 20059662005–17 I.R.B.

section 6011, the limitations period on as-
sessment with respect to the undisclosed
listed transaction will not expire earlier
than one year after the taxpayer discloses
the transaction in accordance with the pro-
cedures described in section 4.01.
.03Date of disclosure by taxpayers for
purposes of section 6501(c)(10)(A).For
purposes of section 6501(c)(10)(A), the
limitations period on assessment with re-
spect to an undisclosed listed transaction
will not expire earlier than one year after
the date on which the IRS receives the in-
formation described in this section 4. A
taxpayer will not be treated as disclosing
an undisclosed listed transaction until the
date on which the original Form 8886 is re-
ceived by the appropriate Internal Revenue
Service Center and a copy of the disclosure
statement is received by OTSA and, if ap-
plicable, by the IRS examiner or Appeals
officer. If the required disclosures are not
made on the same date, the taxpayer will be
deemed to have disclosed the transaction
on the date that the IRS receives the disclo-
sure that, together with prior disclosures,
satisfies the requirements of this section 4.
For example, if a taxpayer discloses the
information only by submitting the origi-
nal Form 8886 with the appropriate Inter-
nal Revenue Service Center or by sending
a copy of the Form 8886 to OTSA, but
not both, the one-year limitations period on
assessment under section 6501(c)(10)(A)
will not begin until both events have oc-
curred.
SECTION 5. APPLICATION TO
MATERIAL ADVISORS
.01Disclosure of an undisclosed listed
transaction by material advisors.Ingen-
eral, a material advisor must furnish the
Secretary with the information described
in section 6112 if a material advisor re-
ceives a request by the Secretary under
section 6112 relating to a listed transac-
tion.SeeTreas. Reg. § 301.6112–1(g)
and Notice 2004–80, 2004–50 I.R.B. 963
(December 13, 2004), amplified by Notice
2005–17, 2005–8 I.R.B. 606 (February 22,
2005), clarified and modified by Notice
2005–22, 2005–12 I.R.B. 756 (March 21,
2005), or subsequent published guidance,
for instructions on how to comply with
these requirements. Until further guidance
is issued, the limitations period on assess-
ment with respect to an undisclosed listed
transaction that is not otherwise disclosed
by a taxpayer in accordance with section
4 of this revenue procedure will not ex-
pire earlier than one year after the date on
which the IRS receives from the material
advisor the information described in sec-
tion 301.6112–1(e)(3) with respect to that
taxpayer.
.02Date of disclosure by mate-
rial advisors for purposes of section
6501(c)(10)(B). For purposes of section
6501(c)(10)(B) and this section 5, the limi-
tations period on assessment for a taxpayer
with respect to an undisclosed listed trans-
action will not expire earlier than one year
after the date on which the material advi-
sor makes available for inspection by the
IRS the information described in section
5.01, regardless of whether the material
advisor provides the information within
20 days of the IRS’s request as required by
section 301.6112–1(g)(1). Alternatively,
if the material advisor sends the required
information to the IRS, then for purposes
of section 6501(c)(10)(B), the limitations
period on assessment will not expire ear-
lier than one year after the date on which
the IRS receives the information.
SECTION 6. OTHER PERIODS OF
LIMITATIONS FOR ASSESSING ANY
TAX
The exception under section
6501(c)(10) to the period of limita-
tions on assessment does not supplant or
shorten any other applicable period of
limitations on assessment, including a
limitations period that has been extended
by agreement under section 6501(c)(4), or
a limitations period described in section
6501(c)(1) relating to a false or fraudulent
return.
SECTION 7. REQUEST FOR
COMMENTS
The IRS and the Department of Trea-
sury intend to issue regulations imple-
menting the requirements of section
6501(c)(10). The IRS and the Depart-
ment of Treasury continue to consider
how to balance the burden imposed on
taxpayers and their representatives with
the benefits to the government of early
and complete disclosure. The IRS and the
Department of Treasury invite interested
persons to submit comments regarding
these procedures, including the applica-
tion of these procedures to partners and
partnerships. Comments are encouraged
to be submitted by June 7, 2005, to: In-
ternal Revenue Service, CC:PA:LPD:PR
(RP 2005–26), Room 5203, P.O. Box
7604, Ben Franklin Station, Washing-
ton, DC 20044. Submissions also may
be hand delivered Monday through Fri-
day between the hours of 8 a.m. and
4 p.m. to: CC:PA:LPD:PR (RP 2005–26),
Courier’s Desk, Internal Revenue Ser-
vice, 1111 Constitution Avenue, N.W.,
Washington, DC 20224. Alternatively,
taxpayers may submit electronic com-
ments directly to the IRS e-mail address:
notice.comments@irscounsel.treas.gov.
Commentators who provide electronic
comments should include the identifica-
tion number of this revenue procedure in
the body of the comment and in the subject
line of the e-mail.
SECTION 8. EFFECTIVE DATE
This revenue procedure is effective on
April 8, 2005.
SECTION 9. 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 accordance
with the Paperwork Reduction Act of
1995 (44 U.S.C. § 3507) under the control
number 1545–1940.
An agency may not conduct or sponsor,
and a person is not required to respond to, a
collection of information unless it displays
a valid OMB control number. The collec-
tion of information in this revenue proce-
dure is in section 4. This information is
required to provide the Service with the in-
formation necessary to properly determine
the taxpayer’s applicable period of limita-
tions and to provide the information under
penalties of perjury. The collection of in-
formationisrequiredtoobtainabenefit.
The likely respondents are individuals and
businesses or other for-profit institutions.
The estimated total annual reporting
and/or record-keeping burden is 429.50
hours.
The estimated annual burden per re-
spondent/recordkeeper varies from 0.25
hour to 0.75 hour, depending on individual
2005–17 I.R.B.967April 25, 2005

circumstances, with an estimated average
of 0.5 hour. The estimated number of
respondents and/or recordkeepers is 859.
The estimated annual frequency of re-
sponses (used for reporting requirements
only) is 859.
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 10. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Audra M. Dineen of the
Office of Associate Chief Counsel (Pro-
cedure & Administration), Administrative
Provisions and Judicial Practice Division.
For further information regarding this rev-
enue procedure, contact Audra M. Dineen
at (202) 622–4940 (not a toll-free call).
April 25, 20059682005–17 I.R.B.

Part IV. Items of General Interest
IRS to Discontinue TeleFile
Announcement 2005–26
Summary Paragraph:
The IRS will discontinue its TeleFile
program after August 16, 2005. TeleFile
allows taxpayers to file Forms 1040EZ,
4868, and 941 by telephone. Decline in
use for most forms, coupled with increas-
ing costs to maintain the system, led to the
decision.
Announcement:
IRS to Discontinue TeleFile
The IRS will discontinue its TeleFile
program after August 16, 2005. TeleFile
allows taxpayers to file Forms 1040EZ,
4868, and 941 by telephone.
The program’s end date will permit tax-
payers to TeleFile:
•Form 941 second quarter returns
through July 31. Taxpayers who have
electronically paid all taxes due by
July 31 are granted an extension to
TeleFile through Aug. 10 (Aug. 11 in
Hawaii).
•1040EZ through Aug. 15.
TeleFile rolled out nationally in 1997
for single Form 1040EZ filers. TeleFile
was later expanded to allow the filing of
selected Forms 1040EZ, Forms 941, 4868
and individual tax returns for eight states.
Despite its initial success, the program
has since experienced a decline in use for
most forms as other electronic filing alter-
natives have become available. This, cou-
pled with increasing costs to maintain the
TeleFile infrastructure, led the IRS to de-
cide to discontinue the program.
In its place, IRS offers a number of elec-
tronic filing alternatives. More informa-
tion on e-filing options is available by vis-
itingwww.irs.govand clicking on the e-file
logo.
Economic Performance
Requirement; Correction
Announcement 2005–28
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Correcting amendment.
SUMMARY: This document contains a
correction to T.D. 8408, 1992–1 C.B. 155,
which was published in theFederal Reg-
isteron Friday, April 10, 1992 (57 FR
12411) relating to the requirement that
economic performance occur in order for
an amount to be incurred with respect to
any item of a taxpayer using an accrual
method of accounting.
DATES: This correction is effective April
10, 1992.
FOR FURTHER INFORMATION
CONTACT: Robert M. Casey, (202)
622–4950 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
The final regulation (T.D. 8408) that is
the subject of this correction is under sec-
tion 461 of the Internal Revenue Code.
Need for Correction
As published, T.D. 8408, contains an
error that may prove to be misleading and
is in need of clarification.
*****
Correction of Publication
Accordingly, 26 CFR Part 1 is cor-
rected by making the following correcting
amendment:
PART 1 — INCOME TAXES
Paragraph 1.The authority citation for
part 1 continues to read in part as follows:
Authority:26 USC 7805 * * *
§1.461–4 [Corrected]
Par. 2.Section 1.461–4(d)(4)(i) is
amended by revising the first sentence to
read as follows:
§1.461–4 Economic performance.
*****
(d) * * *
(4) * * *(i)In general. Except as
otherwise provided in paragraph (d)(5)
of this section, if the liability of a tax-
payer requires the taxpayer to provide
services or property to another person,
economic performance occurs as the tax-
payer incurs costs (within the meaning of
§1.446–1(c)(1)(ii)) in connection with the
satisfaction of the liability. * * *
*****
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 July 26, 2004,
8:45 a.m., and published in the issue of the Federal Register
for July 27, 2004, 69 F.R. 44596)
Required Distributions From
Retirement Plans; Correction
Announcement 2005–29
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Correcting amendment.
SUMMARY: This document contains cor-
rections to final regulations (T.D. 9130,
2004–26 I.R.B. 1082) which were pub-
lished in theFederal Registeron Tuesday,
June 15, 2004 (69 FR 33288). These fi-
nal regulations relate to the required mini-
mum distributions under section 401(a)(9)
for defined benefit plans and annuity con-
tracts providing benefits under qualified
plans, individual retirement plans, and sec-
tion 403(b) contracts.
DATES: This correction is effective June
15, 2004.
FOR FURTHER INFORMATION
CONTACT: Cathy Vohs at (202)
622–6090 (not a toll-free number).
2005–17 I.R.B.969April 25, 2005

SUPPLEMENTARY INFORMATION:
Background
The final regulations (T.D. 9130) that
are the subject of these corrections are un-
der sections 401 and 403 of the Internal
Revenue Code.
Need for Correction
As published, TD 9130 contains errors
that may prove to be misleading and are in
need of clarification.
*****
Correction of Publication
Accordingly, 26 CFR Part 1 is cor-
rected by making the following correcting
amendments:
PART 1 — INCOME TAXES
Paragraph 1.The authority citation for
part 1 continues to read in part as follows:
Authority:26 USC 7805 * * *
§1.401(a)(9)–6 [Corrected]
1. Section 1.401(a)(9)–6(c)(3) of A–2,
in theExample., fifth sentence, the lan-
guage, “In this case, Z is 30 years older
than Y and is commencing benefit 5 years
before attaining age 70 so the adjusted
employee-beneficiary age difference is 25
years.” is removed and the language “In
this case, Z is 30 years older than Y and is
commencing benefit 4 years before attain-
ing age 70 so the adjusted employee-bene-
ficiary age difference is 26 years.” is added
in its place.
2. Section 1.401(a)(9)–6(c)(3) of A–2,
in theExample., sixth sentence, the lan-
guage, “Under the table in paragraph (c)(2)
of this A–2, the applicable percentage for
a 25-year adjusted employee/beneficiary
age difference is 66 percent.” is removed
and the language “Under the table in the
paragraph (c)(2) of this A–2, the appli-
cable percentage for a 26-year adjusted
employee/beneficiary age difference is 64
percent.” is added in its place.
3. Section 1.401(a)(9)–6(c)(2) of A–12
is amended by removing “A–14” and
adding “A–12” in its place.”
4. Section 1.401(a)(9)–6(d)Example 1.
(vii) of A–13 is amended by removing the
language “under paragraph (c)(1)”.
5. Section 1.401(a)(9)–6(d)Example 3.
(i) of A–13, is amended by adding a new
second sentence “E was born in 1935.”.
6. Section 1.401(a)(9)–6(f)Example 8.
(ii) of A–14, last sentence of the paragraph
theword“be”isremoved.
Cynthia E. 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 November 22,
2004, 8:45 a.m., and published in the issue of the Federal
Register for November 23, 2004, 69 F.R. 68077)
April 25, 20059702005–17 I.R.B.

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the ef-
fect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is be-
ingextendedtoapplytoavariationofthe
fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that the
same principle also applies to B, the earlier
ruling is amplified. (Compare withmodi-
fied,below).
Clarifiedis used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion.
It is not used where a position in a prior
ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
withamplifiedandclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
beingstatedinanewruling.
Supersededdescribes a situation where
the new ruling does nothing more than re-
state the substance and situation of a previ-
ously published ruling (or rulings). Thus,
the term is used to republish under the
1986 Code and regulations the same po-
sition published under the 1939 Code and
regulations. The term is also used when
it is desired to republish in a single rul-
ing a series of situations, names, etc., that
were previously published over a period of
time in separate rulings. If the new rul-
ing does more than restate the substance
of a prior ruling, a combination of terms
is used. For example,modifiedandsu-
persededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is self
contained. In this case, the previously pub-
lished ruling is first modified and then, as
modified, is superseded.
Supplementedis used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names in
subsequent rulings. After the original rul-
ing has been supplemented several times, a
new ruling may be published that includes
the list in the original ruling and the ad-
ditions, and supersedes all prior rulings in
the series.
Suspendedis used in rare situations
to show that the previous published rul-
ings will not be applied pending some
future action such as the issuance of new
or amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
DC—Dummy Corporation.
DE—Donee.
Del. Order
—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
2005–17 I.R.B.iApril 25, 2005

Numerical Finding List
1
Bulletins 2005–1 through 2005–17
Announcements:
2005-1, 2005-1 I.R.B.257
2005-2, 2005-2 I.R.B.319
2005-3, 2005-2 I.R.B.270
2005-4, 2005-2 I.R.B.319
2005-5, 2005-3 I.R.B.353
2005-6, 2005-4 I.R.B.377
2005-7, 2005-4 I.R.B.377
2005-8, 2005-4 I.R.B.380
2005-9, 2005-4 I.R.B.380
2005-10, 2005-5 I.R.B.450
2005-11, 2005-5 I.R.B.451
2005-12, 2005-7 I.R.B.555
2005-13, 2005-8 I.R.B.627
2005-14, 2005-9 I.R.B.653
2005-15, 2005-9 I.R.B.654
2005-16, 2005-10 I.R.B.702
2005-17, 2005-10 I.R.B.673
2005-18, 2005-9 I.R.B.660
2005-19, 2005-11 I.R.B.744
2005-20, 2005-12 I.R.B.772
2005-21, 2005-12 I.R.B.776
2005-22, 2005-14 I.R.B.826
2005-23, 2005-14 I.R.B.845
2005-24, 2005-15 I.R.B.889
2005-25, 2005-15 I.R.B.891
2005-26, 2005-17 I.R.B.969
2005-27, 2005-16 I.R.B.918
2005-28, 2005-17 I.R.B.969
2005-29, 2005-17 I.R.B.969
Court Decisions:
2080, 2005-15 I.R.B.850
Notices:
2005-1, 2005-2 I.R.B.274
2005-2, 2005-3 I.R.B.337
2005-3, 2005-5 I.R.B.447
2005-4, 2005-2 I.R.B.289
2005-5, 2005-3 I.R.B.337
2005-6, 2005-5 I.R.B.448
2005-7, 2005-3 I.R.B.340
2005-8, 2005-4 I.R.B.368
2005-9, 2005-4 I.R.B.369
2005-10, 2005-6 I.R.B.474
2005-11, 2005-7 I.R.B.493
2005-12, 2005-7 I.R.B.494
2005-13, 2005-9 I.R.B.630
2005-14, 2005-7 I.R.B.498
2005-15, 2005-7 I.R.B.527
2005-16, 2005-8 I.R.B.605
2005-17, 2005-8 I.R.B.606
Notices— Continued:
2005-18, 2005-9 I.R.B.634
2005-19, 2005-9 I.R.B.634
2005-20, 2005-9 I.R.B.635
2005-21, 2005-11 I.R.B.727
2005-22, 2005-12 I.R.B.756
2005-23, 2005-11 I.R.B.732
2005-24, 2005-12 I.R.B.757
2005-25, 2005-14 I.R.B.827
2005-26, 2005-12 I.R.B.758
2005-27, 2005-13 I.R.B.795
2005-28, 2005-13 I.R.B.796
2005-29, 2005-13 I.R.B.796
2005-30, 2005-14 I.R.B.827
2005-31, 2005-14 I.R.B.830
2005-32, 2005-16 I.R.B.895
2005-33, 2005-17 I.R.B.960
2005-34, 2005-17 I.R.B.960
Proposed Regulations:
REG-117969-00, 2005-7 I.R.B.533
REG-125443-01, 2005-16 I.R.B.912
REG-125628-01, 2005-7 I.R.B.536
REG-129709-03, 2005-3 I.R.B.351
REG-148701-03, 2005-13 I.R.B.802
REG-148867-03, 2005-9 I.R.B.646
REG-160315-03, 2005-14 I.R.B.833
REG-163314-03, 2005-14 I.R.B.835
REG-122847-04, 2005-13 I.R.B.804
REG-130370-04, 2005-8 I.R.B.608
REG-130671-04, 2005-10 I.R.B.694
REG-131128-04, 2005-11 I.R.B.733
REG-139683-04, 2005-4 I.R.B.371
REG-147195-04, 2005-15 I.R.B.888
REG-152354-04, 2005-13 I.R.B.805
REG-152914-04, 2005-9 I.R.B.650
REG-152945-04, 2005-6 I.R.B.484
REG-159824-04, 2005-4 I.R.B.372
Revenue Procedures:
2005-1, 2005-1 I.R.B.1
2005-2, 2005-1 I.R.B.86
2005-3, 2005-1 I.R.B.118
2005-4, 2005-1 I.R.B.128
2005-5, 2005-1 I.R.B.170
2005-6, 2005-1 I.R.B.200
2005-7, 2005-1 I.R.B.240
2005-8, 2005-1 I.R.B.243
2005-9, 2005-2 I.R.B.303
2005-10, 2005-3 I.R.B.341
2005-11, 2005-2 I.R.B.307
2005-12, 2005-2 I.R.B.311
2005-13, 2005-12 I.R.B.759
2005-14, 2005-7 I.R.B.528
2005-15, 2005-9 I.R.B.638
2005-16, 2005-10 I.R.B.674
Revenue Procedures— Continued:
2005-17, 2005-13 I.R.B.797
2005-18, 2005-13 I.R.B.798
2005-19, 2005-14 I.R.B.832
2005-21, 2005-16 I.R.B.899
2005-22, 2005-15 I.R.B.886
2005-24, 2005-16 I.R.B.909
2005-25, 2005-17 I.R.B.962
2005-26, 2005-17 I.R.B.965
Revenue Rulings:
2005-1, 2005-2 I.R.B.258
2005-2, 2005-2 I.R.B.259
2005-3, 2005-3 I.R.B.334
2005-4, 2005-4 I.R.B.366
2005-5, 2005-5 I.R.B.445
2005-6, 2005-6 I.R.B.471
2005-7, 2005-6 I.R.B.464
2005-8, 2005-6 I.R.B.466
2005-9, 2005-6 I.R.B.470
2005-10, 2005-7 I.R.B.492
2005-11, 2005-14 I.R.B.816
2005-12, 2005-9 I.R.B.628
2005-13, 2005-10 I.R.B.664
2005-14, 2005-12 I.R.B.749
2005-15, 2005-11 I.R.B.720
2005-16, 2005-13 I.R.B.777
2005-17, 2005-14 I.R.B.823
2005-18, 2005-14 I.R.B.817
2005-19, 2005-14 I.R.B.819
2005-20, 2005-14 I.R.B.821
2005-21, 2005-14 I.R.B.822
2005-22, 2005-13 I.R.B.787
2005-23, 2005-15 I.R.B.864
2005-24, 2005-16 I.R.B.892
2005-26, 2005-17 I.R.B.957
Tax Conventions:
2005-3, 2005-2 I.R.B.270
2005-17, 2005-10 I.R.B.673
2005-22, 2005-14 I.R.B.826
Treasury Decisions:
9164, 2005-3 I.R.B.320
9165, 2005-4 I.R.B.357
9166, 2005-8 I.R.B.558
9167, 2005-2 I.R.B.261
9168, 2005-4 I.R.B.354
9169, 2005-5 I.R.B.381
9170, 2005-4 I.R.B.363
9171, 2005-6 I.R.B.452
9172, 2005-6 I.R.B.468
9173, 2005-8 I.R.B.557
9174, 2005-9 I.R.B.629
9175, 2005-10 I.R.B.665
9176, 2005-10 I.R.B.661
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2004–27 through 2004–52 is in Internal Revenue Bulletin
2004–52, dated December 27, 2004.
April 25, 2005ii2005–17 I.R.B.

Treasury Decisions— Continued:
9177, 2005-10 I.R.B.671
9178, 2005-11 I.R.B.708
9179, 2005-11 I.R.B.707
9180, 2005-11 I.R.B.714
9181, 2005-11 I.R.B.717
9182, 2005-11 I.R.B.713
9183, 2005-12 I.R.B.754
9184, 2005-12 I.R.B.753
9185, 2005-12 I.R.B.749
9186, 2005-13 I.R.B.790
9187, 2005-13 I.R.B.778
9188, 2005-15 I.R.B.883
9189, 2005-13 I.R.B.788
9190, 2005-15 I.R.B.855
9191, 2005-15 I.R.B.854
9192, 2005-15 I.R.B.866
9193, 2005-15 I.R.B.862
9195, 2005-17 I.R.B.958
2005–17 I.R.B.iiiApril 25, 2005

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2005–1 through 2005–17
Announcements:
2001-77
Modified by
Rev. Proc. 2005-16, 2005-10 I.R.B.674
Notices:
88-30
Obsoleted by
Notice 2005-4, 2005-2 I.R.B.289
88-132
Obsoleted by
Notice 2005-4, 2005-2 I.R.B.289
89-29
Obsoleted by
Notice 2005-4, 2005-2 I.R.B.289
89-38
Obsoleted by
Notice 2005-4, 2005-2 I.R.B.289
2002-45
Amplified by
Rev. Rul. 2005-24, 2005-16 I.R.B.892
2004-22
Modified and superseded by
Notice 2005-30, 2005-14 I.R.B.827
2004-38
Obsoleted by
T.D. 9186, 2005-13 I.R.B.790
2004-80
Clarified and modified by
Notice 2005-22, 2005-12 I.R.B.756
Updated by
Notice 2005-17, 2005-8 I.R.B.606
2005-4
Modified by
Notice 2005-24, 2005-12 I.R.B.757
2005-17
Clarified and modified by
Notice 2005-22, 2005-12 I.R.B.756
Proposed Regulations:
REG-149519-03
Corrected by
Ann. 2005-11, 2005-5 I.R.B.451
REG-114726-04
Corrected by
Ann. 2005-10, 2005-5 I.R.B.450
Revenue Procedures:
84-58
Superseded by
Rev. Proc. 2005-18, 2005-13 I.R.B.798
98-16
Modified and superseded by
Rev. Proc. 2005-11, 2005-2 I.R.B.307
2000-20
Modified and superseded by
Rev. Proc. 2005-16, 2005-10 I.R.B.674
2001-22
Superseded by
Rev. Proc. 2005-12, 2005-2 I.R.B.311
2002-9
Modified and amplified by
Rev. Proc. 2005-9, 2005-2 I.R.B.303
2004-1
Superseded by
Rev. Proc. 2005-1, 2005-1 I.R.B.1
2004-2
Superseded by
Rev. Proc. 2005-2, 2005-1 I.R.B.86
2004-3
Superseded by
Rev. Proc. 2005-3, 2005-1 I.R.B.118
2004-4
Superseded by
Rev. Proc. 2005-4, 2005-1 I.R.B.128
2004-5
Superseded by
Rev. Proc. 2005-5, 2005-1 I.R.B.170
2004-6
Superseded by
Rev. Proc. 2005-6, 2005-1 I.R.B.200
2004-7
Superseded by
Rev. Proc. 2005-7, 2005-1 I.R.B.240
2004-8
Superseded by
Rev. Proc. 2005-8, 2005-1 I.R.B.243
2004-16
Modified and superseded by
Rev. Proc. 2005-25, 2005-17 I.R.B.962
2004-18
Obsoleted in part by
Rev. Proc. 2005-15, 2005-9 I.R.B.638
2004-24
Obsoleted by
Rev. Proc. 2005-22, 2005-15 I.R.B.886
Revenue Procedures— Continued:
2004-35
Corrected by
Ann. 2005-4, 2005-2 I.R.B.319
2004-60
Superseded by
Rev. Proc. 2005-10, 2005-3 I.R.B.341
2005-6
Modified by
Rev. Proc. 2005-16, 2005-10 I.R.B.674
2005-8
Modified by
Rev. Proc. 2005-16, 2005-10 I.R.B.674
2005-9
Modified by
Rev. Proc. 2005-17, 2005-13 I.R.B.797
Revenue Rulings:
69-516
Obsoleted by
T.D. 9182, 2005-11 I.R.B.713
77-415
Obsoleted by
T.D. 9182, 2005-11 I.R.B.713
77-479
Obsoleted by
T.D. 9182, 2005-11 I.R.B.713
82-34
Obsoleted by
T.D. 9182, 2005-11 I.R.B.713
92-63
Modified and superseded by
Rev. Rul. 2005-3, 2005-3 I.R.B.334
95-63
Modified and superseded by
Rev. Rul. 2005-3, 2005-3 I.R.B.334
2004-43
Revoked by
Rev. Rul. 2005-10, 2005-7 I.R.B.492
2004-103
Superseded by
Rev. Rul. 2005-3, 2005-3 I.R.B.334
Treasury Decisions:
8408
Corrected by
Ann. 2005-28, 2005-17 I.R.B.969
9130
Corrected by
Ann. 2005-29, 2005-17 I.R.B.969
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2004–27 through 2004–52 is in Internal Revenue Bulletin 2004–52, dated December 27,
2004.
April 25, 2005iv2005–17 I.R.B.

Treasury Decisions— Continued:
9170
Corrected by
Ann. 2005-13, 2005-8 I.R.B.627
9187
Corrected by
Ann. 2005-25, 2005-15 I.R.B.891
2005–17 I.R.B.vApril 25, 2005

INDEX
Internal Revenue Bulletins 2005–1 through
2005–17
The abbreviation and number in parenthesis following the index entry
refer to the specific item; numbers in roman and italic type following
the parentheses refer to the Internal Revenue Bulletin in which the item
may be found and the page number on which it appears.
Key to Abbreviations:
AnnAnnouncement
CDCourt Decision
DODelegation Order
EOExecutive Order
PLPublic Law
PTEProhibited Transaction Exemption
RPRevenue Procedure
RRRevenue Ruling
SPRStatement of Procedural Rules
TCTax Convention
TDTreasury Decision
TDOTreasury Department Order
EMPLOYEE PLANS
Corporations, prohibited allocations of securities in an S corpo-
ration (TD 9164) 3,320; (REG–129709–03) 3,351
Determination letters, issuing procedures (RP 6) 1,200
Full funding limitations, weighted average interest rate for:
January 2005 (Notice 9) 4,369
February 2005 (Notice 19) 9,634
March 2005 (Notice 26) 12,758
April 2005 (Notice 34) 17,960
Health Insurance Portability and Accountability Act of 1996
(HIPAA):
Interaction with FMLA (REG–130370–04) 8,608
Portability rules (TD 9166) 8,558
Letter rulings:
And determination letters, areas which will not be issued
from:
Associates Chief Counsel and Division Counsel (TE/GE)
(RP 3) 1,118
Associate Chief Counsel (International ) (RP 7) 1,240
And information letters, procedures (RP 4) 1,128
User fees, request for letter rulings (RP 8) 1,243
Nonqualified deferred compensation, new section 409A (Notice
1) 2,274
Proposed Regulations:
26 CFR 1.401(a)–20, amended; 1.417(a)(3)–1, amended;
disclosure of relative values of optional forms of benefit
(REG–152914–04) 9,650
26 CFR 1.401(k)–0, –2, –6, amended; 1.401(k)–1(f), revised;
1.401(m)–0, –5, amended; 1.401(m)–2, revised; designated
Roth contributions to cash or deferred arrangements under
section 401(k) (REG–152354–04) 13,805
26 CFR 1.409(p)–1, added; prohibited allocations of securi-
ties in an S corporation (REG–129709–03) 3,351
EMPLOYEE PLANS—Cont.
26 CFR 54.9801–1, –2, –4, –5, –6, amended; 54.9801–7,
added; 54.9831–1, amended; health coverage portability,
tolling certain time periods and interaction with the Fam-
ily and Medical Leave Act Under HIPAA Titles I & IV
(REG–130370–04) 8,608
Qualified retirement plans:
Automatic rollover, model language (Notice 5) 3,337
Benefits during phased retirement, REG–114726–04, hearing
(Ann 10) 5,450
Cash or deferred arrangements under section 401(k), match-
ing contributions or employee contributions under section
401(m) (TD 9169) 5,381
Disclosure of relative values of optional forms of benefit
(REG–152914–04) 9,650
Master and prototype plans and volume submitter plans, opin-
ion letters and advisory letters (RP 16) 10,674
Required minimum distributions (TD 9130); correction (Ann
29) 17,969
Roth contributions, special rules (REG–152354–04) 13,805
Special rules regarding optional forms of benefit under de-
fined contribution plans (TD 9176) 10,661
Valuation, section 412(i) plans (RP 25) 17,962
Regulations:
26 CFR 1.401(a)(9)–6, corrected; required distributions from
retirement plans (TD 9130); correction (Ann 29) 17,969
26 CFR 1.401(k)–0, –1, revised; 1.401(k)–2 thru –6, added;
1.401(m)–0 thru –2, revised; 1.401(m)–3 thru –5, added;
1.410(b)–3, revised; 602.101, revised; cash or deferred ar-
rangements under section 401(k) and matching contribu-
tions or employee contributions under section 401(m) reg-
ulations (TD 9169) 5,381
26 CFR 1.409(p)–1T, revised; prohibited allocations of secu-
rities in an S corporation (TD 9164) 3,320
26 CFR 1.411(d)–4, Q&A–2(e), amended; elimination of
forms of distribution in defined contribution plans (TD
9176) 10,661
26 CFR 54.9801–1 thru –6, added; 54.9801–1T thru –6T,
removed; 54.9831–1, added; 54.9831–1T, removed;
54.9833–1, added; 54.9833–1T, removed; 602.101,
amended; health coverage portability for group health
plans and group health insurance issuers under HIPAA
Titles I & IV (TD 9166) 8,558
Technical advice to IRS employees (RP 5) 1,170
EMPLOYMENT TAX
Exemption from levy for certain principal residences in absence
of judicial approval, certain business assets in absence of ad-
ministrative approval or jeopardy (TD 9189) 13,788
Forms:
W-2, 2005, new code Z, Box 12 (Ann 5) 3,353
941 and Schedule B (Form 941), general rules and specifica-
tions for substitutes (RP 21) 16,899
April 25, 2005vi2005–17 I.R.B.

EMPLOYMENT TAX—Cont.
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions (RP
1) 1,1
Partnership’s contributions to partner’s Health Savings Account
(HSA), S corporation’s contributions to HSAs of 2-percent
shareholder-employees (Notice 8) 4,368
Proposed Regulations:
26 CFR 31.3121(a)(2)–1, amended; sickness or accident dis-
ability payments (REG–160315–03) 14,833
26 CFR 31.3401(a)–1, –4, amended; 31.3402(g)–1, (j)–1,
amended; 31.3402(n)–1, revised; flat rate supplemental
wage withholding (REG–152945–04) 6,484
Publication 4436, General Rulesand Specifications for Substi-
tute Form 941 and Schedule B (Form 941) (RP 21) 16,899
Regulations:
26 CFR 31.3121(b)(2)–1, revised; 31.3121(b)(10)–2,
amended; 31.3306(c)(10)–2, amended; student FICA
exception (TD 9167) 2,261
26 CFR 301.6334–1, amended; property exempt from levy
(TD 9189) 13,788
Student FICA exception:
Application under sections 3121(b)(10) and 3306(c)(10)(B)
(TD 9167) 2,261
Treatment of amounts paid by certain institutions of higher
education (RP 11) 2,307
Technical Advice Memoranda (TAMs) and Technical Expedited
Advice Memoranda (TEAMs) (RP 2) 1,86
Withholding, supplemental wages (REG–152945–04) 6,484
Workers’ compensation, treatment of sickness or accident dis-
ability payments (REG–160315–03) 14,833
ESTATE TAX
Exemption from levy for certain principal residences in absence
of judicial approval, certain business assets in absence of ad-
ministrative approval or jeopardy (TD 9189) 13,788
Gross estate, election to value on alternate valuation date (TD
9172) 6,468
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions (RP
1) 1,1
Regulations:
26 CFR 20.2032–1, revised; 301.9100–6T, amended; gross
estate, election to value on alternate valuation date (TD
9172) 6,468
26 CFR 301.6334–1, amended; property exempt from levy
(TD 9189) 13,788
Technical Advice Memoranda (TAMs) and Technical Expedited
Advice Memoranda (TEAMs) (RP 2) 1,86
Waiver of spousal right of election to insure qualification of char-
itable remainder annuity trust (CRAT) or charitable remainder
unitrust (CRUT) (RP 24) 16,909
EXCISE TAX
Alcohol and biodiesel fuels, aviation grade kerosene, sales of
gasoline to state and local governments and nonprofit organi-
zations (Notice 4) 2,289; modification (Notice 24) 12,757
Exemption from levy for certain principal residences in absence
of judicial approval, certain business assets in absence of ad-
ministrative approval or jeopardy (TD 9189) 13,788
Imposition of tax on heavy trucks and trailers sold at retail, body
type classifications (RP 19) 14,832
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions (RP
1) 1,1
Regulations:
26 CFR 301.6334–1, amended; property exempt from levy
(TD 9189) 13,788
Technical Advice Memoranda (TAMs) and Technical Expedited
Advice Memoranda (TEAMs) (RP 2) 1,86
EXEMPT ORGANIZATIONS
Annual notice to donors regarding pending and settled declara-
tory judgment suits (Ann 1) 1,257
Declaratory judgment suits (Ann 9) 4,380
Electronic filing of Forms 1120, 1120S, 990, and 990-PF, manda-
tory (TD 9175) 10,665; (REG–130671–04) 10,694
Fees for copies of publicly available exempt organization mate-
rial (TD 9173) 8,557
Forms 1120, 1120S, 990, and 990-PF, mandatory electronic filing
(TD 9175) 10,665; (REG–130671–04) 10,694
Letter rulings:
And determination letters, areas which will not be issued
from, Associates Chief Counsel and Division Counsel
(TE/GE) (RP 3) 1,118
And information letters, procedures (RP 4) 1,128
User fees, request for letter rulings (RP 8) 1,243
List of organizations classified as private foundations (Ann 7) 4,
377;(Ann16)10,702; (Ann 20) 12,772; (Ann 23) 14,845;
(Ann 24) 15,889
Proposed Regulations:
26 CFR 1.6011–5, added; 1.6033–4, added; 1.6037–2,
added; 301.6011–5, added; 301.6033–4, added;
301.6037–2, added; returns required on magnetic me-
dia (REG–130671–04) 10,694
Regulations:
26 CFR 1.6011–5T, added; 1.6033–4T, added; 1.6037–2T,
added; 301.6011–5T, added; 301.6033–4T, added;
301.6037–2T, added; returns required on magnetic media
(TD 9175) 10,665
26 CFR 301.6104(a), (b), (d), amended; authority to charge
fees for furnishing copies of exempt organizations’ material
open to public inspection (TD 9173) 8,557
Revocations (Ann 8) 4,380;(Ann18)9,660;(Ann21)12,776
Technical advice to IRS employees (RP 5) 1,170
2005–17 I.R.B.viiApril 25, 2005

GIFT TAX
Exemption from levy for certain principal residences in absence
of judicial approval, certain business assets in absence of ad-
ministrative approval or jeopardy (TD 9189) 13,788
Interest, determination of qualified interests (TD 9181) 11,717
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions (RP
1) 1,1
Regulations:
26 CFR 25.2702–0, –2, –3, –7, amended; qualified interests
(TD 9181) 11,717
26 CFR 301.6334–1, amended; property exempt from levy
(TD 9189) 13,788
Technical Advice Memoranda (TAMs) and Technical Expedited
Advice Memoranda (TEAMs) (RP 2) 1,86
Waiver of spousal right of election to insure qualification of char-
itable remainder annuity trust (CRAT) or charitable remainder
unitrust (CRUT) (RP 24) 16,909
INCOME TAX
Accident and health reimbursement plans, amounts received (RR
24) 16,892
Accounting methods:
Change to a method provided in sections 1.263(a)–4,
1.263(a)–5, and 1.167(a)–3(b) (RP 9) 2,303; modification
(RP 17) 13,797
Economic performance requirement (TD 8408); correction
(Ann 28) 17,969
Advance Pricing Agreement (APA) Program for 2004 (Ann 27)
16,918
Amended returns, qualified, John Doe summons (TD 9186) 13,
790; (REG–122847–04) 13,804
Annual notice to donors regarding pending and settled declara-
tory judgment suits (Ann 1) 1,257
Application of section 108 to members of a consolidated group
(TD 9192) 15,866
Archer MSAs, 2004 not a cut-off year (Ann 12) 7,555
Alternative minimum tax (AMT), refinanced mortgage interest
(RR 11) 14,816
Attorney contingent fee, included in litigant’s income (CD 2080)
15,850
Automobile owners and lessees, inflation adjustment for 2005
(RP 13) 12,759
Bankruptcy, definition of “pending” (RR 9) 6,470
Charitable remainder trusts (CRTs), application of ordering rule
(TD 9190) 15,855
Collection, extension of statute of limitations (REG–148701–03)
13,802
Corporations:
Adjustment to net unrealized built-in gain (TD 9180) 11,714
Clarification of section 1374 effective dates, S corpora-
tions (TD 9170) 4,363;correction(Ann13)8,627;
(REG–139683–04) 4,371
Controlled foreign corporations, dividends received deduc-
tion under section 965 (Notice 10) 6,474
INCOME TAX—Cont.
Formations, reorganizations, liquidations, transfer of no net
value (REG–163314–03) 14,835
Guidance related to section 936 termination (Notice 21) 11,
727
Miscellaneous operating rules for successor persons,
succession to items of the liquidating corporation
(REG–131128–04) 11,733
Reorganizations under section 368(a)(1)(E) and section
368(a)(1)(F) (TD 9182) 11,713
S corporation, relief for late shareholders, Rev. Proc.
2004–35, correction (Ann 4) 2,319
Statutory mergers and consolidations pursuant to for-
eign law involving one or more foreign corporations
(REG–125628–01) 7,536
Transfers of assets or stock following a reorganization
(REG–117969–00) 7,533
Credits:
Low-income housing credit:
2005 population figures used for calculation (Notice 16) 8,
605
Satisfactory bond, “bond factor” amounts for the period:
January through March 2005 (RR 1) 2,258
January through June 2005 (RR 16) 13,777
New markets tax credit (TD 9171) 6,452
Nonconventional source fuel credit, inflation adjustment fac-
tor, reference price for CY 2004 (Notice 33) 17,960
Declaratory judgment suits (Ann 9) 4,380
Deposits made to suspend the running of interest on potential
underpayments (RP 18) 13,798
Designation to take summoned testimony and receive summoned
records (TD 9195) 17,958
Disaster relief, qualified disaster, Indian Ocean tsunamis (Notice
23) 11,732
Disciplinary actionsinvolving attorneys,certified public accoun-
tants, enrolled agents and enrolled actuaries (Ann 2) 2,319;
(Ann 15) 9,809
Disclosure of return information:
To the Bureau of the Census (TD 9188) 15,883;
(REG–147195–04) 15,888
Written contracts or agreements, acquisition of property and
services for tax administration (REG–148867–03) 9,646
Disguised sales, section 707, REG–149519–03, correction (Ann
11) 5,451
Disregarded entities, treatment asseparate entities in certain cir-
cumstances (TD 9183) 12,754
Dollar approximate separate transactions method (DASTM),
translation rate to be used fortransfers in determination of
DASTM gain or loss (Notice 27) 13,795
Domestic production activities, income attributable to (Notice
14) 7,498
Electronic filing of Forms 1120, 1120S, 990, and 990-PF, manda-
tory (TD 9175) 10,665; (REG–130671–04) 10,694
Exemption from levy for certain principal residences in absence
of judicial approval, certain business assets in absence of ad-
ministrative approval or jeopardy (TD 9189) 13,788
April 25, 2005viii2005–17 I.R.B.

INCOME TAX—Cont.
Forms:
656, Offer in Compromise, revision, check-the-box (Ann 6)
4,377
941 and Schedule B (Form 941), general rules and specifica-
tions for substitutes (RP 21) 16,899
1120, 1120S, 990, and 990-PF, mandatory electronic filing
(TD 9175) 10,665; (REG–130671–04) 10,694
Frivolous tax returns, tax avoidance:
Altering the jurat (RR 18) 14,817
Argument regarding waiver of social security benefits (RR
17) 14,823
Common frivolous arguments and schemes (Notice 30) 14,
827
Constitutionally based arguments (RR 19) 14,819
Protesting government policies and programs (RR 20) 14,821
Use of “straw man” claim (RR 21) 14,822
Guidance Priority List, recommendations for 2005-2006 (Notice
25) 14,827
Income tax liability, substantial understatement, addition to tax
(TD 9174) 9,629
Information reporting for acquisitions (Notice 7) 3,340
Insurance companies, tentative differential earnings rate (Notice
18) 9,634
Insurance contract defined (RR 6) 6,471
Interest:
Election to treat qualified dividend income as investment in-
come (TD 9191) 15,854
Investment:
Federal short-term, mid-term, and long-term rates for:
January 2005 (RR 2) 2,259
February 2005 (RR 8) 6,466
March 2005 (RR 13) 10,664
April 2005 (RR 23) 15,864
Rates:
Underpayments and overpayments, quarter beginning:
April 1, 2005 (RR 15) 11,720
Refinanced mortgage interest, alternative minimum tax
(AMT) (RR 11) 14,816
Suspension applicability toamended returns (RR 4) 4,366
Interim guidance under new amendments to sections 6111, 6112,
and 6708, extension of time in Notice 2004–80 (Notice 17)
8,606; extension of time in Notices 2004–80 and 2005–17
(Notice 22) 12,756
Inventory:
LIFO, price indexes used by department stores for:
November 2004 (RR 5) 5,445
December 2004 (RR 12) 9,628
January 2005 (RR 22) 13,787
February 2005 (RR 26) 17,957
Leases, tax-exempt use property (Notice 29) 13,796
INCOME TAX—Cont.
Letter rulings:
And determination letters, areas which will not be issued
from:
Associates Chief Counsel and Division Counsel (TE/GE)
(RP 3) 1,118
Associate Chief Counsel (International ) (RP 7) 1,240
And information letters issued byAssociate Offices, determi-
nation letters issued by Operating Divisions (RP 1) 1,1
Like-kind exchange of a principal residence (RP 14) 7,528
Listed transaction situations, extended period of limitations on
assessment (RP 26) 17,965
Mortgage bonds and credit certificates, median income figures–
2005 (RP 22) 15,886
Net operating losses (Notice 20) 9,635
Nonqualified deferred compensation, new section 409A (Notice
1) 2,274
Optional 10-year writeoff, rules governing the time and manner
for making and revoking an election under section 59(e) (TD
9168) 4,354
Partnerships:
Assets-over partnership merger, gain or loss (RR 10) 7,492
Diversification requirements for variable annuity, endow-
ment, and life insurance contracts (TD 9185) 12,749
Installment obligations, treatment of property sold (TD 9193)
15,862
Mandatory basis adjustment under sections 734 and 743,
electing investment partnership (Notice 32) 16,895
Partner’s distributive share, mergers (Notice 15) 7,527
Partnership’s contributionsto partner’s Health Savings Ac-
count (HSA), S corporation’s contributions to HSAs of
2-percent shareholder-employees (Notice 8) 4,368
Return of partnership income (TD 9177) 10,671
Unified partnership audit procedures, applicability to disputes
regarding ownership of residual interests in a Real Estate
Mortgage Investment Conduit (REMIC) (TD 9184) 12,753
Per diem allowances updated, 2005 (RP 10) 3,341
Practice before the Internal Revenue Service:
Best practices (TD 9165) 4,357
State or local bond opinions (REG–159824–04) 4,372
Pre-Filing Agreement (PFA) (RP 12) 2,311
Presidentially declared disasters, like-kind exchanges affected by
(Notice 3) 5,447
Private foundations, organizations now classified as (Ann 7) 4,
377;(Ann16)10,702; (Ann 20) 12,772; (Ann 23) 14,845;
(Ann 24) 15,889
Proposed Regulations:
26 CFR 1.332–2, amended; 1.351–1, amended; 1.368–1, –2,
amended; transactions involving the transfer of no net value
(REG–163314–03) 14,835
26 CFR 1.358–1, –6, amended; 1.367(a)–3, –8, amended;
1.367(b)–1, –3, –4, –6, revised; 1.367(b)–13, added;
1.884–2, amended; 1.884–2T, revised; revision of income
tax regulations under sections 358, 367, and 884 dealing
with statutory mergers or consolidations under section
368(a)(1)(A) involving one or more foreign corporations
(REG–125628–01) 7,536
2005–17 I.R.B.ixApril 25, 2005

INCOME TAX—Cont.
26 CFR 1.368–2(b), amended; statutory mergers and consol-
idations (REG–117969–00) 7,533
26 CFR 1.1374–8, –10, amended; section 1374 effective dates
(REG–139683–04) 4,371
26 CFR 1.1441–1, –3, –6, amended; 1.6049–5, amended;
301.6114–1, amended; revision to regulations relating to
withholding of tax on certain U.S. source income paid to
foreign persons and revisions to information reporting reg-
ulations (REG–125443–01) 16,912
26 CFR 1.1502–13, –80, amended; miscellaneous operating
rules for successor persons, succession to items of the liq-
uidating corporation (REG–131128–04) 11,733
26 CFR 1.6011–5, added; 1.6033–4, added; 1.6037–2,
added; 301.6011–5, added; 301.6033–4, added;
301.6037–2, added; returns required on magnetic me-
dia (REG–130671–04) 10,694
26 CFR 1.6664–1, –2, amended; qualified amended returns
(REG–122847–04) 13,804
26 CFR 301.6103(j)(1)–1, revised; disclosure of return infor-
mation to the Bureau of the Census (REG–147195–04) 15,
888
26 CFR 301.6103(n)–1, revised; disclosure of returns and
return information in connection with written contracts or
agreements for the acquisition of property and services for
tax administration purposes (REG–148867–03) 9,646
26 CFR 301.6502–1, revised; collection after assessment
(REG–148701–03) 13,802
31 CFR 10.35, amended; 10.36, 10.38, revised; 10.39, added;
10.52, revised; regulations governing practice before the
Internal Revenue Service (REG–159824–04) 4,372
Publications:
1220, changes affecting tax year 2004 filing of information
returns (Ann 14) 9,653
4436, General Rules and Specifications for Substitute Form
941 and Schedule B (Form 941) (RP 21) 16,899
Qualified green building and sustainable design projects (Notice
28) 13,796
Qualified mortgage bonds and mortgage credit certificates, aver-
age area and nationwide housing purchase prices for 2005 (RP
15) 9,638
Regulated investment company, application of look-through rule
to ownership of shares by segregated asset accounts (RR 7) 6,
464
Regulations:
26 CFR 1.45D–1, added; 1.45D–1T, removed; 602.101, re-
vised; new markets tax credit (TD 9171) 6,452
26 CFR 1.59–1, added; 602.101, amended; optional 10-year
writeoff of certain tax preferences (TD 9168) 4,354
26 CFR 1.163(d)–1, revised; 1.163–1T, removed; time and
manner of making section 163(d)(4)(B) election to treat
qualified dividend income as investment income (TD 9191)
15,854
26 CFR 1.263A–9, –15, amended; 1.263A–9T, –15T, re-
moved; uniform capitalization of interest expense in safe
harbor sale and leaseback transactions (TD 9179) 11,707
INCOME TAX—Cont.
26 CFR 1.337(d)–2, revised; 1.337(d)–2T, removed;
1.1502–20, –32, –32T, revised; 1.1502–20T(i), removed;
602.101, amended; loss limitation rules (TD 9187) 13,778;
correction (Ann 25) 15,891
26 CFR 1.368–1(b), amended; reorganizations under section
368(a)(1)(E) and section 368(a)(1)(F) (TD 9182) 11,713
26 CFR 1.461–4, amended; economic performance require-
ment (TD 8408); correction (Ann 28) 17,969
26 CFR 1.488–1T, revised; 1.6661–1 thru –6, removed;
602.101, amended; substantial understatement of income
tax liability (TD 9174) 9,629
26 CFR 1.664–1, amended; charitable remainder trusts
(CRTs), application of ordering rule (TD 9190) 15,855
26 CFR 1.704–3, –4, amended; 1.737–2, amended; 1.737–5,
revised; installment obligations and contributed contracts
(TD 9193) 15,862
26 CFR 1.817–5, amended; diversification requirements for
variable annuity, endowment, and life insurance contracts
(TD 9185) 12,749
26 CFR 1.856–9, added; 1.1361–4, amended; 301.7701–2,
amended; modification of check the box (TD 9183) 12,754
26 CFR 1.860F–4, amended; Real Estate Mortgage Invest-
ment Conduits (REMICs) (TD 9184) 12,753
26 CFR 1.1374–3, amended; 1.1374–10, revised; adjustment
to net unrealized built-in gain (TD 9180) 11,714
26 CFR 1.1374–8, –10, amended; 1.1374–8T, –10T, added;
section 1374 effective dates (TD 9170) 4,363; correction
(Ann 13) 8,627
26 CFR 1.1502–11, –13, –19, –21, –21T, –32, –32T, –76,
–80, –80T, amended; 1.1502–28, added; 1.1502–13T, –19T,
–28T, removed; application of section 108 to members of a
consolidated group (TD 9192) 15,866
26 CFR 1.6011–5T, added; 1.6033–4T, added; 1.6037–2T,
added; 301.6011–5T, added; 301.6033–4T, added;
301.6037–2T, added; returns required on magnetic media
(TD 9175) 10,665
26 CFR 1.6031(a)–1, amended; 1.6031(a)–1T, removed; re-
turn of partnership income (TD 9177) 10,671
26 CFR 1.6664–1T, –2T, added; 1.6664–2, amended; quali-
fied amended returns (TD 9186) 13,790
26 CFR 301.6103(j)(1)–1, amended; 301.6103(j)(1)–1T,
added; disclosure of return information to the Bureau of
the Census (TD 9188) 15,883
26 CFR 301.6334–1, amended; property exempt from levy
(TD 9189) 13,788
26 CFR 301.7602–1, revised; 301.7602–1T, removed; desig-
nated IRS officer or employee under section 7602(a)(2) of
the Internal Revenue Code (TD 9195) 17,958
26 CFR 301.9100–1, revised; 301.9100–2 thru –7, added;
602.101, amended; testimony or production of records in
a court or other proceeding (TD 9178) 11,708
31 CFR 10.33, amended; 10.35 thru 10.38, added; 10.52,
amended; regulations governing practice before the Inter-
nal Revenue Service (TD 9165) 4,357
Reportable transaction understatement, penalty, special rule for
amended returns, disqualified tax advisor (Notice 12) 7,494
April 25, 2005x2005–17 I.R.B.

INCOME TAX—Cont.
Revocations, exempt organizations (Ann 8) 4,380; (Ann 18) 9,
660; (Ann 21) 12,776
Safe harbor sale and leaseback transactions, uniform capitaliza-
tion of interest expense (TD 9179) 11,707
Section 901(j)(5) Presidential waiver, section 901(j)(1) no longer
applies to Libya (RR 3) 3,334
Standard Industry Fare Level (SIFL) formula (RR 14) 12,749
State and local general sales tax deduction (Notice 31) 14,830
Stocks:
Exchange of securities of foreign corporation, domestic cor-
poration (Notice 6) 5,448
Loss disallowance on disposition of subsidiary stock by con-
solidated group (TD 9187) 13,778;correction(Ann25)15,
891
Transfers of non-statutory stock options, executives (Ann 19)
11,744
Tax conventions:
U.S.-Austria income tax treaty, taxation of certain scholar-
ships (Ann 22) 14,826
U.S.-New Zealand MAP Agreement regarding treatment of
income derived through certainfiscally transparent entities
(Ann 17) 10,673
U.S.andSwisspensionplansfor tax treaty benefits, agree-
ment (Ann 3) 2,270
Tax-exempt leasing involving defeasance (Notice 13) 9,630
Technical Advice Memoranda (TAMs) and Technical Expedited
Advice Memoranda (TEAMs) (RP 2) 1,86
TeleFile program, termination (Ann 26) 17,969
Testimony or production of records in a court or other proceeding
(TD 9178) 11,708
Tonnage tax regime, election (Notice 2) 3,337
Undisclosed reportable transactions, assertion of penalty (Notice
11) 7,493
Waiver of spousal right of election to insure qualification of char-
itable remainder annuity trust (CRAT) or charitable remainder
unitrust (CRUT) (RP 24) 16,909
Withholding of tax on certain U.S. source income paid to for-
eign persons and information reporting regulations, revisions
(REG–125443–01) 16,912
SELF-EMPLOYMENT TAX
Exemption from levy for certain principal residences in absence
of judicial approval, certain business assets in absence of ad-
ministrative approval or jeopardy (TD 9189) 13,788
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions (RP
1) 1,1
Partnership’s contributions to partner’s Health Savings Account
(HSA), S corporation’s contributions to HSAs of 2-percent
shareholder-employees (Notice 8) 4,368
Regulations:
26 CFR 301.6334–1, amended; property exempt from levy
(TD 9189) 13,788
SELF-EMPLOYMENT TAX—Cont.
Technical Advice Memoranda (TAMs) and Technical Expedited
Advice Memoranda (TEAMs) (RP 2) 1,86
2005–17 I.R.B.xiApril 25, 2005
*U.S.Government PrintingOffice:2005—314–048/20002