Internal Revenue Bulletin 2008-42 (PDF rendition): IRS Revenue Procedures

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Bulletin No. 200
8-42
October 20, 2008
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
SPECIAL ANNOUNCEMENT
Announcement 2008–94, page 964.
The Twenty-First Annual Institute on Current Issues in Interna-
tional Taxation, jointly sponsored by the Internal Revenue Ser-
vice and the George Washington University Law School, will be
held on December 8 and 9, 2008, at the J.W. Marriott Hotel in
Washington, D.C.
INCOME TAX
T.D. 9422, page 898.
Final regulations under section 1361 of the Code contain guid-
ance on S corporations with respect to the American Jobs Cre-
ation Act of 2004 (AJCA) and the Gulf Opportunity Zone Act of
2005 (GOZA). The regulations clarify certain shareholder rules.
The regulations provide certain S corporation stock disposition
rules for various trusts. The regulations describe information
that needs to be provided in the electing small business trust
(ESBT) election statement if an ESBT has certain powers. The
regulations clarify the definition of a potential current benefi-
ciary of an ESBT in certain situations. The regulations provide
that the Commissioner may provide relief for inadvertent quali-
fied subchapter S subsidiary (QSub) terminations and inadver-
tently invalid QSub elections. The regulations provide for the
treatment of losses when S corporation stock is transferred
between spouses or incident to divorce. Notice 2005–91 ob-
soleted.
REG–143544–04, page 947.
Proposed regulations under section 336(e) of the Code provide
rules that, when finalized, would permit taxpayers to make an
election to treat certain sales, exchanges, and distributions of
another corporation’s stock as taxable sales of that corpora-
tion’s assets.
Notice 2008–83, page 905.
Section 382.This notice concerns the application of section
382(h) of the Code to banks.
Notice 2008–86, page 925.
Extension of replacement period for livestock sold on
account of drought.This notice explains the circumstances
under which the 4-year replacement period under section
1033(e)(2) of the Code is extended for livestock sold on
account of drought. The Appendix to this notice contains a
list of the counties that experienced exceptional, extreme, or
severe drought during the preceding 12-month period ending
August 31, 2008. Taxpayers may use this list to determine if
an extension is available.
Notice 2008–88, page 933.
This notice provides that the Treasury Department and the IRS
will treat a tax-exempt “qualified tender bond” (as defined in No-
tice 2008–41) or “tax-exempt commercial paper” (as defined
in section 2 of this notice) that is purchased by its “govern-
mental issuer” (as defined in Notice 2008–41) on a temporary
basis as continuing in effect without resulting in a reissuance
or retirement of the purchased tax-exempt bond if the govern-
mental issuer holds the bond until not later than December 31,
2009. This notice also extends the final date for the purchase
of bonds pursuant to a qualified tender right, and the final date
on which covered waivers of interest rate caps are disregarded,
to December 31, 2009. Notice 2008–41 amended and sup-
plemented.
(Continued on the next page)
Finding Lists begin on page ii.

Rev. Proc. 2008–61, page 934.
This procedure provides areas affected by section 409A of the
Code in which rulings will not be issued. Rev. Proc. 2008–3
modified and amplified.
Rev. Proc. 2008–63, page 946.
This procedure provides guidance with respect to the applica-
tion of section 1058(a) of the Code to situations in which secu-
rities are originally transferred pursuant to an agreement that
meets the requirements of section 1058(b), the transferee sub-
sequently defaults under the agreement as a direct or indirect
result of its bankruptcy (or the bankruptcy of an affiliate), and
as soon as is commercially practicable (but in no event more
than 30 days following the default), the transferor applies col-
lateral provided pursuant to the agreement to the purchase of
identical securities.
Announcement 2008–95, page 964.
This announcement contains clarification to filing procedures
for Form 1042–S,Foreign Person’s U.S. Source Income Sub-
ject to Withholding, filed electronically. These changes are ef-
fective immediately. Announcement 2008–19 superseded.
EMPLOYEE PLANS
Notice 2008–85, page 905.
This notice provides updated static mortality tables to be used
in applying the minimum funding requirements to single em-
ployer defined benefit pension plans that do not choose to use
generational mortality tables and are not approved to use em-
ployer-specific substitute mortality tables. These mortality ta-
bles are also used for multiemployer plans for purposes of ap-
plying certain funding requirements. These tables apply for pur-
poses of calculating the funding target and other items for valu-
ation dates occurring during the calendar years 2009 through
2013.
Notice 2008–87, page 930.
This notice provides relief for funding deadlines and other re-
quirements for plans in certain counties affected by Hurricane
Ike. Relief is provided pursuant to section 7508A(b) of the Code
for certain plans affected by a Presidentially declared disaster.
Rev. Proc. 2008–61, page 934.
This procedure provides areas affected by section 409A of the
Code in which rulings will not be issued. Rev. Proc. 2008–3
modified and amplified.
Rev. Proc. 2008–62, page 935.
This document sets forth the procedure by which the sponsor
of a defined benefit plan, other than a multiemployer plan, may
request and obtain approval for the use of plan-specific substi-
tute mortality tables in accordance with section 430(h)(3)(C) of
the Code and section 303(h)(3)(C) of the Employee Retirement
Income Security Act of 1974 (ERISA), as amended. Rev. Proc.
2007–37 updated.
ADMINISTRATIVE
Announcement 2008–91, page 963.
This document contains a correction to final and temporary
regulations (T.D. 9417, 2008–37 I.R.B. 693) relating to the
averaging of farm and fishing income in computing income tax
liability.
Announcement 2008–92, page 963.
This document contains a correction to proposed regulations
(REG–161695–04, 2008–37 I.R.B. 699) relating to the averag-
ing of farm and fishing income in computing income tax liability.
Announcement 2008–95, page 964.
This announcement contains clarification to filing procedures
for Form 1042–S,Foreign Person’s U.S. Source Income Sub-
ject to Withholding, filed electronically. These changes are ef-
fective immediately. Announcement 2008–19 superseded.
October 20, 20082008–42 I.R.B.

The IRS Mission
Provide Americ
a’s taxpayers top quality service by helping them
understand an
d meet their tax responsibilities and by applying
the tax law with
integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are compiled semiannually into Cumulative Bulletins,
which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement are not published; however, statements of internal
practices and procedures that affect the rights and duties of
taxpayers are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers
or technical advice to Service field offices, identifying details
and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B, Leg-
islation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Secre-
tary (Enforcement).
Part IV
.—Items of General Interest.
This par
t includes notices of proposed rulemakings, disbar-
ment an
d suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The c
ontents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S.Government Printing Office, Washington, DC 20402.
2008–42 I.R.B.October 20, 2008

October 20, 20082008–42 I.R.B.

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 103.—Interest on
State and Local Bonds
A notice amends and supplements Notice
2008–41, 2008–15 I.R.B. 742 (April 14, 2008), by:
(1) providing that the Treasury Department and the
IRS will treat a tax-exempt “qualified tender bond”
(as defined in Notice 2008–41) or “tax-exempt com-
mercial paper” (as defined in § 2 of this notice)
that is purchased by its “governmental issuer” (as
defined in Notice 2008–41) on a temporary basis as
continuing in effect without resulting in a reissuance
or retirement of the purchased tax-exempt bond if
the governmental issuer holds the bond until not
later than December 31, 2009; and (2) extending the
final date for the purchase of bonds pursuant to a
qualified tender right, and the final date on which
covered waivers of interest rate caps are disregarded,
to December 31, 2009. See Notice 2008-88, page
933.
Section 336.—Gain or Loss
Recognized on Property
Distributed in Complete
Liquidation
26 CFR 1.336–1: General principles, nomenclature,
and definitions for a section 336(e) election.
A proposed rule states that if as a result of the
deemed purchase of a corporation’s assets pursuant
to a section 336(e) election, there would be both a
qualified stock purchase and a qualified stock dis-
position of the stock of a subsidiary of that corpo-
ration, only an election under a section 336(e) elec-
tion may be made with respect to the purchase. See
REG-143544-04, page 947.
Section 338.—Certain
Stock Purchases Treated
as Asset Acquisitions
26 CFR 1.338–1: General principles; status of old
target and new target.
26 CFR 1.338–5: Adjusted grossed-up basis.
A proposed rule states that if as a result of the
deemed purchase of a corporation’s assets pursuant
to a section 336(e) election, there would be both a
qualified stock purchase and a qualified stock dis-
position of the stock of a subsidiary of that corpo-
ration, only an election under a section 336(e) elec-
tion may be made with respect to the purchase. See
REG-143544-04, page 947.
Section 1058.—Transfers
of Securities Under Certain
Agreements
This revenue procedure provides guidance with re-
spect to the application of § 1058(a) of the Internal
Revenue Code to situations in which securities are
originally transferred pursuant to an agreement that
meets the requirements of § 1058(b), the transferee
subsequently defaults under the agreement as a direct
or indirect result of its bankruptcy (or the bankruptcy
of an affiliate), and as soon as is commercially prac-
ticable (but in no event more than 30 days following
the default), the transferor applies collateral provided
pursuant to the agreement to the purchase of identical
securities. See Rev. Proc. 2008-63, page 946.
Section 1361.—S Corpo-
ration Defined
26 CFR 1.1361–1: S corporation defined.
T.D. 9422
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 1 and 602
S Corporation Guidance Under
AJCA of 2004 and GOZA of
2005
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations.
SUMMARY: This document contains
final regulations that provide guidance
regarding certain changes made to the
rules governing S corporations under the
American Jobs Creation Act of 2004 and
the Gulf Opportunity Zone Act of 2005.
The final regulations replace obsolete
references in the current regulations and
allow taxpayers to make proper use of the
provisions that made changes to prior law.
The final regulations include guidance on
the S corporation family shareholder rules,
the definitions of “powers of appoint-
ment” and “potential current beneficia-
ries” (PCBs) with regard to electing small
business trusts (ESBTs), the allowance of
suspended losses to the spouse or former
spouse of an S corporation shareholder,
and relief for inadvertently terminated or
invalid qualified subchapter S subsidiary
(QSub) elections. The final regulations af-
fect S corporations and their shareholders.
DATES:Effective Date:These regulations
are effective on August 14, 2008.
Applicability Dates:For dates of
applicability, see §§1.1361–4(a)(9)(ii),
1.1361–6, 1.1362–4(g) and 1.1366–5.
FOR FURTHER INFORMATION
CONTACT: Charles J. Langley, Jr., (202)
622–3060 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information con-
tained in these final regulations has been
reviewed and approved by the Office of
Management and Budget for review in
accordance with the Paperwork Reduction
Act of 1995 (44 U.S.C. 3507(d)) under
control number 1545–2114.
The collection of information is re-
quired by §1.1361–1(m)(2)(ii)(A) of these
final regulations. This information is re-
quired to enable the IRS to verify whether
the corporation is an eligible S corpora-
tion.
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 control number.
Books or records relating to a collection
of information must be retained as long
as their contents might 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.
Background
This document contains amendments to
the Income Tax Regulations (26 CFR part
1) concerning S corporations under sec-
tions 1361, 1362, and 1366 of the Inter-
nal Revenue Code (Code). These sections
were amended by sections 231, 232, 233,
234, 235, 236, 237, 238, and 239 of the
American Jobs Creation Act of 2004 (Pub-
lic Law 108–357, 118 Stat. 1418) (the
2004 Act) and sections 403 and 413 of the
2008–42 I.R.B.898October 20, 2008

Gulf Opportunity Zone Act of 2005 (Pub-
lic Law 109–135) (the 2005 Act). This
document does not address other amend-
ments made by the 2004 Act or the 2005
Act. In addition, this document contains
additional amendments to the regulations
under Code section 1362 necessary to con-
form the regulations to the changes made
by section 1305(a) of the Small Business
Job Protection Act of 1996 (Public Law
104–188, 110 Stat. 1755) (the 1996 Act).
On September 28, 2007, a notice of
proposed rulemaking and a notice of pub-
lic hearing (REG–143326–05, 2007–43
I.R.B. 873) were published in theFederal
Register(72 FR 55132).
No one requested to speak at the pub-
lic hearing. Accordingly, the public hear-
ing scheduled for January 16, 2008, was
cancelled in a notice published in theFed-
eral Register(73 FR 1131) on January 7,
2008. No one submitted written or elec-
tronic comments, which were due by De-
cember 27, 2007. Thus, the proposed regu-
lations are adopted as revised by this Trea-
sury decision, which make only adminis-
trative or ministerial changes to the pro-
posed regulations.
The proposed regulations conformed
references in the regulations to the spe-
cific numbers of S corporation sharehold-
ers permissible under section 1361. For
purposes of determining the number of
shareholders of an S corporation under
Code section 1361(b)(1)(A), the proposed
regulations provided rules relating to stock
ownedbyfamilymembers.
Pursuant to section 1361(c)(2)(A)(vi),
the proposed regulations provided rules
regarding limited instances in which indi-
vidual retirement accounts (including Roth
IRAs), qualify as eligible shareholders of
banks or depository institution holding
companies.
The proposed regulations provided that
a disposition of the S corporation stock by
a QSST shall be treated as a disposition by
the income beneficiary for purposes of ap-
plying sections 465 and 469 to the income
beneficiary of a QSST.
The proposed regulations described
informationthatisrequiredtobeincluded
in the ESBT election statement if the trust
includes a power of appointment or other
power to make distributions to certain
organizations. The proposed regulations
provided rules under which a person that
may receive a distribution under a power
of appointment will not be treated as
a PCB. Also, the proposed regulations
provided rules under which a class of orga-
nizations described in section 1361(c)(6)
will be treated as one PCB if the fiduciary
has a power (other than a power of ap-
pointment) to make distributions to one
or more members of the class. Also, the
proposed regulations provided rules that
any person who first met the definition
ofaPCBoneyearbeforethedisposition
by an ESBT of all of the stock of the
S corporation will not be treated as a PCB
or a shareholder of the S corporation.
The proposed regulations provided that
the Commissioner may provide relief for
inadvertent invalid elections to be an S cor-
poration or QSub or for inadvertent termi-
nations of valid elections to be an S corpo-
ration or QSub and described the require-
ments to obtain that relief.
Finally, with regard to a transfer of
stock under Code section 1041(a), be-
tween spouses or incident to a divorce,
the proposed regulations provided for the
treatment of losses or deductions with
respect to the transferred shares that are
subject to the basis limitation under Code
section 1366(d)(1).
Summary of Comments and
Explanation of Revisions
No comments were received. All revi-
sions are administrative or ministerial and
substantively conform to the proposed reg-
ulations.
Effect on Other Documents
The following publication is obsoleted
as of August 14, 2008:
Notice 2005–91, 2005–2 C.B. 1164.
Effective Applicability Date
These regulations are effective on Au-
gust 14, 2008.
Special Analyses
It has been determined that this Trea-
sury decision is not a significant regula-
tory action as defined in Executive Order
12866. Therefore, a regulatory assessment
is not required. It has also been determined
that section 553(b) of the Administrative
Procedure Act (5 U.S.C. chapter 5) does
not apply to these regulations. Further, it
has been determined that these regulations
are not subject to the Regulatory Flexibil-
ity Act (5 U.S.C. chapter 6) because the
collection of information required by these
regulations is imposed on electing small
business trusts and such entities are not
“small entities” for purposes of the Reg-
ulatory Flexibility Act (5 U.S.C. chapter
6). Additionally, the information collec-
tion burden imposed on the electing small
business trusts is minimal. Pursuant to sec-
tion 7805(f) of the Internal Revenue Code,
the notice of proposed rulemaking preced-
ingthisregulationwassubmittedtothe
Chief Counsel for Advocacy of the Small
Business Administration for comment on
its impact on small business.
Drafting Information
The principal author of these regula-
tions is Charles J. Langley, Jr. of the Office
of Associate Chief Counsel (Passthroughs
and Special Industries).
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR parts 1 and 602
are amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.1361–0 is amended by
adding a new entry in the table of contents
for §1.1361–1(e)(3) to read as follows:
§1.1361–0 Table of contents.
*****
§1.1361–1 S Corporation defined.
*****
(e) * * *
(3) Special rules relating to stock owned
by members of a family.
Par. 3. Section 1.1361–1 is amended
by:
1. Revising paragraphs (b)(1)(i) and
(e)(1).
2. Adding paragraphs (e)(3), (h)(1)
(vii), and (h)(3)(i)(G).
3. Adding a new sentence to the end of
paragraphs (j)(8) and (k)(2)(i).
4. Revising paragraphs (m)(2)(ii)(A),
(m)(4)(iii), and (m)(4)(vi).
October 20, 20088992008–42 I.R.B.

5. Revising paragraphs (m)(8),Exam-
ple 2andExample 7.
6. Revising the seventh sentence of
paragraph (m)(8),Example 5.
7. Adding paragraphs (m)(8),Example
8andExample 9.
8. Adding a sentence to the end of para-
graph (m)(9).
The revisions and additions read as fol-
lows:
§1.1361–1 S Corporation defined.
*****
(b)***(1)***
(i) More than the number of sharehold-
ers provided in section 1361(b)(1)(A);
*****
(e)Number of shareholders—(1)Gen-
eral rule. A corporation does not qualify as
a small business corporation if it has more
than the number of shareholders provided
in section 1361(b)(1)(A). Ordinarily, the
person who would have to include in gross
income dividends distributed with respect
to the stock of the corporation (if the cor-
poration were a C corporation) is consid-
ered to be the shareholder of the corpora-
tion. For example, if stock (owned other
than by a husband and wife or members of
a family described in section 1361(c)(1)) is
owned by tenants in common or joint ten-
ants, each tenant in common or joint tenant
is generally considered to be a shareholder
of the corporation. (For special rules relat-
ing to stock owned by husband and wife
or members of a family, see paragraphs
(e)(2) and (3) of this section, respectively;
for special rules relating to restricted stock,
see paragraphs (b)(3) and (6) of this sec-
tion.) The person for whom stock of a cor-
poration is held by a nominee, guardian,
custodian, or an agent is considered to be
the shareholder of the corporation for pur-
poses of this paragraph (e) and paragraphs
(f)and(g)ofthissection.Forexample,a
partnership may be a nominee of S corpo-
ration stock for a person who qualifies as
a shareholder of an S corporation. How-
ever, if the partnership is the beneficial
owner of the stock, then the partnership is
the shareholder, and the corporation does
not qualify as a small business corporation.
In addition, in the case of stock held for
a minor under a uniform transfers to mi-
nors act or similar statute, the minor and
not the custodian is the shareholder. Ex-
cept as otherwise provided in paragraphs
(h) and (j) of this section, and for pur-
poses of this paragraph (e) and paragraphs
(f)and(g)ofthissection,ifstockisheld
by a decedent’s estate or a trust described
in section 1361(c)(2)(A)(ii) or (iii), the es-
tate or trust (and not the beneficiaries of
the estate or trust) is considered to be the
shareholder; however, if stock is held by
a subpart E trust (which includes a vot-
ingtrust)oranelectingQSSTdescribed
in section 1361(d)(1), the deemed owner
of the trust is considered to be the share-
holder. If stock is held by an ESBT de-
scribed in section 1361(c)(2)(A)(v), each
potential current beneficiary of the trust
shall be treated as a shareholder, except
that the trust shall be treated as the share-
holder during any period in which there
is no potential current beneficiary of the
trust. If stock is held by a trust described
in section 1361(c)(2)(A)(vi), the individ-
ual for whose benefit the trust was created
shall be treated as the shareholder. See
paragraph (h) of this section for special
rules relating to trusts.
*****
(3)Special rules relating to stock owned
by members of a family—(i)In general.
For purposes of paragraph (e)(1) of this
section, stock owned by members of a fam-
ily is treated as owned by one shareholder.
Members of a family include a common
ancestor, any lineal descendant of the com-
mon ancestor (without any generational
limit), and any spouse (or former spouse)
ofthecommonancestororofanylineal
descendants of the common ancestor. An
individual shall not be considered to be
a common ancestor if, on the applicable
date, the individual is more than six gener-
ations removed from the youngest genera-
tion of shareholders who would be mem-
bers of the family determined by deem-
ing that individual as the common ances-
tor. For purposes of this six-generation
test, a spouse (or former spouse) is treated
as being of the same generation as the indi-
vidual to whom the spouse is or was mar-
ried. This test is applied on the latest of the
date the election under section 1362(a) is
made for the corporation, the earliest date
that a member of the family (determined
by deeming that individual as the common
ancestor) holds stock in the corporation, or
October 22, 2004. For this purpose, the
date the election under section 1362(a) is
made for the corporation is the effective
date of the election, not the date it is signed
or received by any person. The test is only
applied as of the applicable date, and lin-
eal descendants (and spouses) more than
six generations removed from the common
ancestor will be treated as members of the
family even if they acquire stock in the
corporation after that date. The members
of a family are treated as one shareholder
under this paragraph (e)(3) solely for pur-
poses of section 1361(b)(1)(A), and not for
any other purpose, whether under section
1361 or any other provision. Specifically,
each member of the family who owns or
is deemed to own stock must meet the re-
quirements of sections 1361(b)(1)(B) and
(C) (regarding permissible shareholders)
and section 1362(a)(2) (regarding share-
holder consents to an S corporation elec-
tion). Although a person may be a member
of more than one family under this para-
graph (e)(3), each family (not all of whose
members are also members of the other
family) will be treated as one shareholder.
For purposes of this paragraph (e)(3), any
legally adopted child of an individual, any
child who is lawfully placed with an in-
dividual for legal adoption by that indi-
vidual, and any eligible foster child of an
individual (within the meaning of section
152(f)(1)(C)), shall be treated as a child of
such individual by blood.
(ii)Certain entities treated as members
of a family. For purposes of this para-
graph (e)(3), the estate or trust (described
in section 1361(c)(2)(A)(ii) or (iii)) of a
deceased member of the family will be
considered to be a member of the family
during the period in which the estate or
such trust (if the trust is described in sec-
tion 1361(c)(2)(A)(ii)or (iii)), holds stock
in the S corporation. The members of the
family also will include—
(A) In the case of an ESBT, each poten-
tial current beneficiary who is a member of
the family;
(B) In the case of a QSST, the income
beneficiary who makes the QSST election,
if that income beneficiary is a member of
the family;
(C) In the case of a trust created primar-
ily to exercise the voting power of stock
transferred to it, each beneficiary who is a
member of the family;
(D) The individual for whose
benefit a trust described in section
1361(c)(2)(A)(vi) was created, if that in-
dividual is a member of the family;
2008–42 I.R.B.900October 20, 2008

(E) The deemed owner of a trust de-
scribed in section 1361(c)(2)(A)(i) if that
deemed owner is a member of the family;
and
(F)Theownerofanentitydisregarded
as an entity separate from its owner under
§301.7701–3 of this chapter, if that owner
isamemberofthefamily.
*****
(h)* * * (1)* * *
(vii)Individual retirement accounts.In
the case of a corporation which is a bank
(as defined in section 581) or a depository
institution holding company (as defined
in section 3(w)(1) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(w)(1)), a
trust which constitutes an individual retire-
ment account under section 408(a), includ-
ing one designated as a Roth IRA under
section 408A, but only to the extent of the
stockheldbysuchtrustinsuchbankor
company as of October 22, 2004. Indi-
vidual retirement accounts (including Roth
IRAs) are not otherwise eligible S corpora-
tion shareholders.
*****
(3)* * * (i) * * *
(G) If stock in an S corporation bank
or depository institution holding company
is held by an individual retirement account
(including a Roth IRA) described in para-
graph (h)(1)(vii) of this section, the indi-
vidual for whose benefit the trust was cre-
ated shall be treated as the shareholder.
*****
(j)* * *
(8)***However,solelyforpurposes
of applying sections 465 and 469 to the in-
come beneficiary, a disposition of S corpo-
ration stock by a QSST shall be treated as
a disposition by the income beneficiary.
*****
(k)* * *(2) * * *
(i)***Paragraphs(b)(1)(i),(e)(1),
(e)(3), (h)(1)(vii), (h)(3)(i)(G), and the
fifth sentence of paragraph (j)(8) are ef-
fective on August 14, 2008.
*****
(m)* * *(2)* * *
(ii)* * *
(A) The name, address, and taxpayer
identification number of the trust, the po-
tential current beneficiaries, and the S cor-
porations in which the trust currently holds
stock. If the trust includes a power de-
scribed in paragraph (m)(4)(vi)(B) of this
section, then the election statement must
include a statement that such a power is
included in the instrument, but does not
need to include the name, address, or tax-
payer identification number of any particu-
lar charity or any other information regard-
ing the power.
*****
(4)* * *
(iii)Special rule for dispositions of
stock. Notwithstanding the provisions of
paragraph (m)(4)(i) of this section, if a
trust disposes of all of the stock which it
holds in an S corporation, then, with re-
spect to that corporation, any person who
first met the definition of a potential cur-
rent beneficiary during the 1-year period
ending on the date of such disposition is
not a potential current beneficiary and thus
is not a shareholder of that corporation.
*****
(vi)Currently exercisable powers of ap-
pointment and other powers—(A)Powers
of appointment. A person to whom a dis-
tribution may be made during any period
pursuant to a power of appointment (as de-
scribed for transfer tax purposes in section
2041 and §20.2041–1(b) of this chapter
and section 2514 and §25.2514–1(b) of
this chapter) is not a potential current
beneficiary unless the power is exer-
cised in favor of that person during the
period. It is immaterial for purposes
of this paragraph (m)(4)(vi)(A) whether
such power of appointment is a “general
power of appointment” for transfer tax
purposes as described in §§20.2041–1(c)
and 25.2514–1(c) of this chapter. The
mere existence of one or more powers
of appointment during the lifetime of a
power holder that would permit current
distributions from the trust to be made
to more than the number of persons de-
scribed in section 1361(b)(1)(A) or to a
person described in section 1361(b)(1)(B)
or (C) will not cause the S corporation
election to terminate unless one or more of
such powers are exercised, collectively, in
favor of an excessive number of persons
or in favor of a person who is ineligible to
be an S corporation shareholder. For pur-
poses of this paragraph (m)(4)(vi)(A), a
“power of appointment” includes a power,
regardless of by whom held, to add a ben-
eficiary or class of beneficiaries to the
class of potential current beneficiaries, but
generally does not include a power held by
a fiduciary who is not also a beneficiary
of the trust to spray or sprinkle trust dis-
tributions among beneficiaries. Nothing
in this paragraph (m)(4)(vi)(A) alters the
definition of “power of appointment” for
purposes of any provision of the Internal
Revenue Code or the regulations.
(B)Powers to distribute to certain or-
ganizations not pursuant to powers of ap-
pointment. If a trustee or other fiduciary
has a power (that does not constitute a
power of appointment for transfer tax pur-
poses as described in §§20.2041–1(b) and
25.2514–1(b) of this chapter) to make dis-
tributions from the trust to one or more
members of a class of organizations de-
scribed in section 1361(c)(6), such organi-
zations will be counted collectively as only
one potential current beneficiary for pur-
poses of this paragraph (m), except that
each organization receiving a distribution
also will be counted as a potential current
beneficiary. This paragraph (m)(4)(vi)(B)
shall not apply to a power to currently
distribute to one or more particular char-
itable organizations described in section
1361(c)(6). Each of such organizations is
a potential current beneficiary of the trust.
*****
(8)***
Example 2.(i)Invalid potential current benefi-
ciary. Effective January 1, 2005, Trust makes a valid
ESBT election. On January 1, 2006,A, a nonresi-
dent alien, becomes a potential current beneficiary of
Trust. Trust does not dispose of all of its S corpo-
ration stock within one year after January 1, 2006.
As of January 1, 2006,Ais the potential current ben-
eficiary of Trust and therefore is treated as a share-
holder of the S corporation. BecauseAis not an el-
igible shareholder of an S corporation under section
1361(b)(1), the S corporation election of any corpo-
ration in which Trust holds stock terminates effective
January 1, 2006. Relief may be available under sec-
tion 1362(f).
(ii)Invalid potential current beneficiary and dis-
position of S stock. Assume the same facts as inEx-
ample 2(i) except that within one year after January
1, 2006, trustee of Trust disposes of all Trust’s S cor-
poration stock.Ais not considered a potential current
beneficiary of Trust and therefore is not treated as a
shareholder of any S corporation in which Trust pre-
viously held stock.
*****
Example 5.* * *Trust–2 itself will not be
counted toward the shareholder limit of section
1361(b)(1)(A).* * *
*****
Example 7.Potential current beneficiaries
and powers of appointment.Mcreates Trust from
whichAhas a right to all net income and funds it
with S corporation stock.Aalso has a currently
exercisable power to appoint income or principal
October 20, 20089012008–42 I.R.B.

to anyone exceptA,A’s creditors,A’s estate, and
the creditors ofA’s estate. The potential current
beneficiaries of Trust for any period will beAand
each person who receives a distribution from Trust
pursuant toA’s exercise ofA’s power of appointment
during that period.
Example 8.Power to distribute to an unlim-
ited class of charitable organizations not pursuant
to a power of appointment.Mcreates Trust from
whichAhas a right to all net income and funds it
with S corporation stock. In addition, the trustee
of Trust, who is notAor a descendant ofM,has
the power to make discretionary distributions of
principal to the living descendants ofMandtoany
organizations described in section 1361(c)(6). The
potential current beneficiaries of Trust for any period
will beA, each then-living descendant ofM, and each
exempt organization described in section 1361(c)(6)
that receives a distribution during that period. In
addition, the class of exempt organizations will be
counted as one potentialcurrent beneficiary.
Example 9.Power to distribute to a class of
named charitable organizations not pursuant to a
power of appointment.Mcreates Trust from whichA
has a right to all net income and funds it with S cor-
porationstock.Inaddition,thetrusteeofTrust,who
is notAor a descendant ofM, has the power to make
discretionary distributions of principal to the living
descendants ofMand toX,Y,andZ, each of which is
an organization described in section 1361(c)(6). The
potential current beneficiaries of Trust for any period
will beA,X,Y,Z, and each living descendant ofM.
(9)Effective/applicability date. ***
Paragraphs (m)(2)(ii)(A), (m)(4)(iii) and
(vi), and (m)(8),Example 2,Example 5,
Example 7,Example 8,andExample 9of
this section are effective on August 14,
2008.
Par. 4. Section 1.1361–4 is amended by
revising paragraph (a)(1) and adding new
paragraph (a)(9) to read as follows:
§1.1361–4 Effect of QSub election.
(a)Separate existence ignored—(1)In
general.Except as otherwise provided in
paragraphs (a)(3), (a)(6), (a)(7), (a)(8), and
(a)(9) of this section, for Federal tax pur-
poses—
(i) A corporation that is a QSub shall not
be treated as a separate corporation; and
(ii) All assets, liabilities, and items of
income, deduction, and credit of a QSub
shall be treated as assets, liabilities, and
items of income, deduction, and credit of
the S corporation.
*****
(9)Information returns—(i)In general.
Except to the extent provided by the Secre-
tary or Commissioner in guidance (includ-
ing forms or instructions), paragraph (a)(1)
of this section shall not apply to part III of
subchapter A of chapter 61, relating to in-
formation returns.
(ii)Effective/applicability date.This
paragraph (a)(9) is effective on August 14,
2008.
*****
Par. 5. Section 1.1361–6 is amended
by revising the first sentence to read as
follows:
§1.1361–6 Effective date.
Except as provided in §§1.1361–4
(a)(3)(iii), 1.1361–4(a)(5)(i), 1.1361–4
(a)(6)(iii), 1.1361–4(a)(7)(ii), 1.1361–4
(a)(8)(ii), 1.1361–4(a)(9), and 1.1361–5
(c)(2), the provisions of §§1.1361–2
through 1.1361–5 apply to taxable years
beginning on or after January 20, 2000;
however, taxpayers may elect to apply the
regulations in whole, but not in part (aside
from those sections with special dates of
applicability),for taxable years beginning
on or after January 1, 2000, provided all
affected taxpayers apply the regulations in
a consistent manner. * * *
Par. 6. Section 1.1362–0 is amended
by revising the heading of the table of con-
tents for §1.1362–4 and adding a new entry
in the table of contents for §1.1362–4(g) to
read as follows:
§1.1362–0 Table of contents.
*****
§1.1362–4 Inadvertent terminations and
inadvertently invalid elections.
*****
(g)Effective/applicability date.
*****
Par. 7. Section 1.1362–4 is amended
by:
1. Revising the section heading and
paragraphs (a), (b), (c), (d), and (f).
2. Adding paragraph (g).
The addition and revisions read as fol-
lows:
§1.1362–4 Inadvertent terminations and
inadvertently invalid elections
(a)In general. A corporation is treated
as continuing to be an S corporation or a
QSub (or, an invalid election to be either
an S corporation or a QSub is treated as
valid) during the period specified by the
Commissioner if—
(1) The corporation made a valid elec-
tion under section 1362(a) or section
1361(b)(3) and the election terminated or
the corporation made an election under
section 1362(a) or section 1361(b)(3) that
was invalid;
(2) The Commissioner determines that
the termination or invalidity was inadver-
tent;
(3) Within a reasonable period of time
after discovery of the terminating event or
invalid election, steps were taken so that
the corporation for which the election was
made or the termination occurred is a small
business corporation or a QSub, as the case
may be, or to acquire the required share-
holder consents; and
(4) The corporation and shareholders
agree to adjustments that the Commis-
sioner may require for the period.
(b)Inadvertent termination or inadver-
tently invalid election. For purposes of
paragraph (a) of this section, the determi-
nation of whether a termination or invalid
election was inadvertent is made by the
Commissioner. The corporation has the
burden of establishing that under the rel-
evant facts and circumstances the Com-
missioner should determine that the termi-
nation or invalid election was inadvertent.
The fact that the terminating event or in-
validity of the election was not reasonably
within the control of the corporation and,
in the case of a termination, was not part
of a plan to terminate the election, or the
fact that the terminating event or circum-
stance took place without the knowledge
of the corporation, notwithstanding its due
diligence to safeguard itself against such
an event or circumstance, tends to estab-
lish that the termination or invalidity of the
election was inadvertent.
(c)Corporation’s request for determi-
nation of an inadvertent termination or
invalid election. A corporation that be-
lieves that the termination or invalidity of
its election was inadvertent may request a
determination from the Commissioner that
the termination or invalidity of its election
was inadvertent. The request is made in
the form of a ruling request and should
set forth all relevant facts pertaining to the
event or circumstance including, but not
limited to, the facts described in paragraph
(b) of this section, the date of the corpora-
tion’s election (or intended election) under
section 1362(a) or 1361(b)(3), a detailed
explanation of the event or circumstance
2008–42 I.R.B.902October 20, 2008

causing the termination or invalidity, when
and how the event or circumstance was
discovered, and the steps taken under para-
graph (a)(3) of this section.
(d)Adjustments. The Commissioner
may require any adjustments that are ap-
propriate. In general, the adjustments re-
quired should be consistent with the treat-
ment of the corporation as an S corporation
or QSub during the period specified by the
Commissioner. In the case of stock held
by an ineligible shareholder that causes
an inadvertent termination or invalid elec-
tion for an S corporation under section
1362(f), the Commissioner may require
the ineligible shareholder to be treated as
a shareholder of the S corporation during
the period the ineligible shareholder actu-
ally held stock in the corporation. More-
over, the Commissioner may require pro-
tective adjustments that prevent the loss of
any revenue due to the holding of stock by
an ineligible shareholder (for example, a
nonresident alien).
*****
(f)Status of corporation. The status of
the corporation after the terminating event
or invalid election and before the deter-
mination of inadvertence is determined by
the Commissioner. Inadvertent termina-
tion or inadvertent invalid election relief
may be granted retroactively for all years
for which the terminating event or circum-
stance giving rise to invalidity is effective,
in which case the corporation is treated as
if its election was valid or had not termi-
nated. Alternatively, relief may be granted
only for the period in which the corpora-
tion became eligible for subchapter S or
QSub treatment, in which case the corpora-
tion is treated as a C corporation or, in the
case of a QSub with an inadvertently ter-
minated or invalid election, as a separate
C corporation, during the period for which
the corporation was not eligible for its in-
tended status.
(g)Effective/applicability date. Para-
graphs (a), (b), (c), (d), and (f) of this sec-
tion are effective on August 14, 2008.
Par. 8. Section 1.1366–0 is amended
by adding new entries in the table of con-
tents for §1.1366–2(a)(5)(i), (a)(5)(ii) and
(a)(5)(iii) to read as follows:
§1.1366–0 Table of contents.
*****
§1.1366–2 Limitations on deduction of
passthrough items of an S corporation to
its shareholders.
(a) * * *
(5) * * *
(i)In general.
(ii)Exceptions for transfers of stock un-
der section 1041(a).
(iii)Examples.
Par. 9. Section 1.1366–2(a)(5) is
amended by:
1. Redesignating paragraph (a)(5) as
(a)(5)(i).
2. Adding a heading and revising the
first sentence of paragraph (a)(5)(i).
3. Adding paragraphs (a)(5)(ii) and
(a)(5)(iii).
The revisions and additions read as fol-
lows:
§1.1366–2 Limitations on deduction of
passthrough items of an S corporation to
its shareholders.
(a)In general.***
(5)Nontransferability of losses and de-
ductions—(i)In general. Except as pro-
vided in paragraph (a)(5)(ii) of this sec-
tion, any loss or deduction disallowed un-
der paragraph (a)(1) of this section is per-
sonal to the shareholder and cannot in any
manner be transferred to another person.
***
(ii)Exceptions for transfers of stock un-
der section 1041(a). If a shareholder trans-
fers stock of an S corporation after Decem-
ber 31, 2004, in a transfer described in sec-
tion 1041(a), any loss or deduction with re-
spect to the transferred stock that is disal-
lowed to the transferring shareholder un-
der paragraph (a)(1) of this section shall
be treated as incurred by the corporation
in the following taxable year with respect
to the transferee spouse or former spouse.
The amount of any loss or deduction with
respect to the stock transferred shall be de-
termined by prorating any losses or deduc-
tions disallowed under paragraph (a)(1) of
this section for the year of the transfer be-
tween the transferor and the spouse or for-
mer spouse based on the stock ownership
at the beginning of the following taxable
year. If a transferor claims a deduction for
losses in the taxable year of transfer, then
under paragraph (a)(4) of this section, if
the transferor’spro ratashare of the losses
and deductions in the year of transfer ex-
ceeds the transferor’s basis in stock and
the indebtedness of the corporation to the
transferor, then the limitation must be al-
located among the transferor spouse’spro
ratashare of each loss or deduction, in-
cluding disallowed losses and deductions
carried over from the prior year.
(iii)Examples. The following exam-
ples illustrates the provisions of paragraph
(a)(5)(ii) of this section:
Example 1.Aowns all 100 shares inX, a calendar
year S corporation. ForX’s taxable year ending De-
cember 31, 2006,Ahas zero basis in the shares andX
does not have any indebtedness toA. For the 2006 tax-
able year,Xhad $100 in losses thatAcannot use be-
cause of the basis limitation in section 1366(d)(1) and
that are treated as incurred by the corporation with
respect toAin the following taxable year. Halfway
through the 2007 taxable year,Atransfers 50 shares
toB,A’s former spouse in a transfer to which sec-
tion 1041(a) applies. In the 2007 taxable year,Xhas
$80 in losses. OnA’s 2007 individual income tax re-
turn,Amay use the entire $100 carryover loss from
2006, as well asA’s share of the $80 2007 loss deter-
mined under section 1377(a) ($60), assumingAac-
quires sufficient basis in theXstock. OnB’s 2007
individual income tax return,Bmay useB’s share of
the $80 2007 loss determined under section 1377(a)
($20), assumingBhas sufficient basis in theXstock.
If any disallowed 2006 loss is disallowed toAunder
section 1366(d)(1) in 2007, that loss is prorated be-
tweenAandBbased on their stock ownership at the
beginning of 2008. OnB’s 2008 individual income
tax return,Bmay use that loss, assumingBacquires
sufficient basis in theXstock. If neitherAnorBac-
quires any basis during the 2007 taxable year, then
as of the beginning of 2008, the corporation will be
treated as incurring $50 of loss with respect toAand
$50 of loss with respect toBfor the $100 of disal-
lowed 2006 loss, and the corporation will be treated
as incurring $60 of loss with respect toA
and $20 with
respect toBfor the $80 of disallowed 2007 loss.
Example 2. Assume the same facts asExample 1,
except that during the 2007 taxable year,Aacquires
$10 of basis inA’s shares inX. For the 2007 taxable
year,Amay claim a $10 loss deduction, which rep-
resents $6.25 of the disallowed 2006 loss of $100
and $3.75 ofA’s 2007 loss of $60. The disallowed
2006 loss is reduced to $93.75. As of the beginning
of 2008, the corporation will be treated as incurring
half of the remaining $93.75 of loss with respect toA
and half of that loss with respect toBfor the remain-
ing $93.75 of disallowed 2006 loss, and ifBdoes not
acquire any basis during 2007, the corporation will
be treated as incurring $56.25 of loss with respect to
Aand $20 with respect toBfor the remaining disal-
lowed2007loss.
*****
Par. 10. Section 1.1366–5 is amended
by adding a new sentence at the end to read
as follows:
§1.1366–5 Effective/applicability date.
***Sections1.1366–2(a)(5)(i),(ii)
and (iii) are effective on August 14, 2008.
October 20, 20089032008–42 I.R.B.

PART 602—OMB CONTROL
NUMBERS UNDER THE PAPERWORK
REDUCTION ACT
Par. 11. The authority citation for part
602 continues to read as follows:
Authority: 26 U.S.C. 7805.
Par. 12. Section 602.101, paragraph (b)
is amended by adding the entry in numeri-
cal order to the table to read as follows:
§602.101 OMB Control numbers.
*****
(b) * * *
CFR part or section where
identified and described
Current OMB
control No.
*****
1.1361–1...........................................................
1545–2114
*****
Sherri L. Brown,
Acting Deputy Commissioner for
Services and Enforcement.
Approved August 5, 2008.
Eric Solomon,
Assistant Secretary
oftheTreasury(TaxPolicy).
(Filed by the Office of the Federal Register on August 13,
2008, 8:45 a.m., and published in the issue of the Federal
Register for August 14, 2008, 73 F.R. 47526)
Section 1362.—Election;
Revocation; Termination
Final regulations provide guidance regarding cer-
tain changes made to the rules governing S corpora-
tions under the American Jobs Creation Act of 2004
and the Gulf Opportunity Zone Act of 2005. The
regulations replace obsolete references in the current
regulations and allow taxpayers to make proper use
of the provisions that made changes to prior law. See
T.D. 9422, page 898.
Section 1366.—Pass-Thru
of Items to Shareholders
Final regulations provide guidance regarding cer-
tain changes made to the rules governing S corpora-
tions under the American Jobs Creation Act of 2004
and the Gulf Opportunity Zone Act of 2005. The
regulations replace obsolete references in the current
regulations and allow taxpayers to make proper use
of the provisions that made changes to prior law. See
T.D. 9422, page 898.
2008–42 I.R.B.904October 20, 2008

Part III. Administrative, Procedural, and Miscellaneous
Application of Section 382(h)
to Banks
Notice 2008–83
SECTION 1. OVERVIEW
The Internal Revenue Service and Trea-
sury Department are studying the proper
treatment under section 382(h) of the In-
ternal Revenue Code (Code) of certain
items of deduction or loss allowed after
an ownership change to a corporation that
isabank(asdefinedinsection581)both
immediately before and after the change
date (as defined in section 382(j)). As de-
scribed below under the heading Reliance
on Notice, such banks may rely upon this
guidance unless and until there is addi-
tional guidance.
SECTION 2. TREATMENT OF
DEDUCTIONS UNDER SECTION
382(h)
For purposes of section 382(h)
,anyde-
ductionproperlyallowedafte
ranowner-
ship change (as defined in sec
tion 382(g))
to a bank with respect to losse
s on loans
or bad debts (including any de
duction for
a reasonable addition to a res
erve for bad
debts) shall not be treated as
abuilt-inloss
or a deduction that is attrib
utable to peri-
ods before the change date.
SECTION 3. RELIANCE ON NOTICE
Corporations described in section 1 of
this notice may rely on the treatment set
forth in this notice, unless and until there
is additional guidance.
SECTION 4. SCOPE
This notice does not address the appli-
cation of any provision of the Code other
than section 382.
The principal author of this notice is
Mark S. Jennings of the Office of Asso-
ciate Chief Counsel (Corporate). For fur-
ther information regarding this notice, con-
tact Mark S. Jennings at (202) 622–7750
(not a toll-free call).
Updated Static Mortality
Tables for the Years 2009
Through 2013
Notice 2008–85
This notice provides the static mortal-
itytablestobeusedunder§430(h)(3)(A)
of the Internal Revenue Code (Code)
and § 303(h)(3)(A) of the Employee Re-
tirement Income Security Act of 1974
(ERISA). These tables apply for purposes
of calculating the funding target and other
items for valuation dates occurring during
calendar years 2009 through 2013.
This notice also includes a modified
“unisex” version of the mortality tables
for use in determining minimum present
value under § 417(e)(3) of the Code and
§ 205(g)(3) of ERISA for distributions
with annuity starting dates that occur dur-
ing stability periods beginning in calendar
years 2009 through 2013.
BACKGROUND
Section 412 of the Code provides min-
imum funding requirements that generally
apply for defined benefit plans. The Pen-
sion Protection Act of 2006, Public Law
109–280 (PPA), makes extensive changes
to those minimum funding requirements
that generally apply for plan years begin-
ning on or after January 1, 2008. Sec-
tion 430, which was added by PPA, spec-
ifies the minimum funding requirements
that apply to defined benefit plans that are
not multiemployer plans pursuant to § 412.
Section 430(a) defines the minimum re-
quired contribution for a defined benefit
plan that is not a multiemployer plan by
reference to the plan’s funding target for
the plan year.
Section 430(h)(3) provides rules re-
gardingthemortalitytablestobeused
under § 430. Under § 430(h)(3)(A), ex-
cept as provided in § 430(h)(3)(C) or (D),
the Secretary is to prescribe by regulation
mortality tables to be used in determining
any present value or making any compu-
tation under § 430. Those tables are to be
based on the actual experience of pension
plans and projected trends in such experi-
ence.
Section 430(h)(3)(C) provides that,
upon request by a plan sponsor and ap-
proval by the Secretary, substitute mor-
tality tables that meet the applicable re-
quirementsmaybeusedinlieuofthe
standard mortality tables provided under
§ 430(h)(3)(A). Section 430(h)(3)(D) pro-
vides for the use of separate mortality
tables with respect to certain individuals
who are entitled to benefits on account of
disability. These separate mortality tables
are permitted to be used with respect to
disabled individuals in lieu of the gener-
ally applicable mortality tables provided
pursuant to § 430(h)(3)(A) or the substi-
tute mortality tables under § 430(h)(3)(C).
Determination of Minimum Funding
Requirements under § 430
On July 31, 2008, the IRS issued
final regulations under § 430(h)(3), at
73 FR 44632 (T.D. 9419, 2008–40 I.R.B.
790). These regulations provide for
mortalitytables,basedonthetables
contained in the RP–2000 Mortality
Tables Report
1
, adjusted for mortality
improvement usingProjection Scale AA
as recommended in that report. Section
1.430(h)(3)–1 generally requires the use
of separate tables for nonannuitant and
annuitant periods for large plans (those
with over 500 participants as of the
valuation date). Sponsors of small plans
(those with 500 or fewer participants as
of the valuation date) are permitted to use
a combined table that applies the same
mortality rates to both annuitants and
nonannuitants.
Section 1.430(h)(3)–1 of the final reg-
ulations outlines the methodology that the
IRS will use to establish mortality tables as
provided under § 430(h)(3)(A). The mor-
tality tables set forth in § 1.430(h)(3)–1 are
based on expected mortality as of 2000 and
reflect the impact of expected improve-
ments in mortality. The regulations per-
mit plan sponsors to apply the projection
of mortality improvement in either of two
ways: through use of static tables that are
updated annually to reflect expected im-
provements in mortality, or through use of
1
The RP–2000 Mortality Tables Report was releasedby the Society of Actuaries in July, 2000. Society of Actuaries, RP–2000 Mortality Tables Report, athttp://www.soa.org/ccm/
content/research-publications/experience-studies-tools/the-rp–2000-mortality-tables/.
October 20, 20089052008–42 I.R.B.

generational tables. The regulations in-
clude static mortality tables for use in ac-
tuarial valuations as of valuation dates oc-
curring in 2008 and provide that the mor-
tality tables for valuation dates occurring
in future years are to be provided in the In-
ternal Revenue Bulletin.
Application of These Tables for Other
Purposes under the Funding Rules
Section 1.412(l)(7)–1(a), issued Feb-
ruary 2, 2007, provides that for plan
years beginning on or after January 1,
2008, the mortality tables described in
§ 430(h)(3)(A) are to be used to determine
current liability under § 412(l)(7) of the
Code for nondisabled participants. This is
relevant for plans for which the effective
date of § 430 is delayed, pursuant to sec-
tions 104 through 106 of PPA.
Section 1.431(c)(6)–1 of the final reg-
ulations, issued July 31, 2008, provides
that the same mortality assumptions that
apply for purposes of § 430(h)(3)(A) and
§ 1.430(h)(3)–1(a)(2) are used to deter-
mine a multiemployer plan’s current liabil-
ity for purposes of applying the full-fund-
ing rules of § 431(c)(6). For this purpose,
a multiemployer plan is permitted to apply
either the annually-adjusted static mortal-
ity tables or the generational mortality ta-
bles.
Application of Mortality Tables for
Minimum Present Value Requirements
under § 417(e)(3)
Section 417(e)(3) generally provides
that the present value of certain benefits
under a qualified pension plan (includ-
ing single-sum distributions) cannot be
less than the present value of the accrued
benefit using applicable interest rates and
the applicable mortality table. Under
§ 1.417(e)–1(d)(1), these rules must also
be used to compute the present value of
a plan benefit for purposes of determin-
ing whether consent for a distribution is
required under § 411(a)(11)(A).
For plan years beginning on or after
January 1, 2008, § 417(e)(3)(B) defines
the term “applicable mortality table” as the
mortality table specified for the plan year
under § 430(h)(3)(A) (without regard to
§ 430(h)(3)(C) or (D)), modified as appro-
priate by the Secretary.
Rev. Rul. 2007–67, 2007–48 I.R.B.
1047, provides that, except as otherwise
stated in future guidance, the applica-
ble mortality table under § 417(e)(3) for
2008 is based on a fixed blend of 50%
of the static male combined mortality
rates and 50% of the static female com-
bined mortality rates promulgated under
§ 1.430(h)(3)–1(c)(3) of the proposed reg-
ulations (which have since been issued as
final regulations). The applicable mortal-
itytableforpurposesof§417(e)(3)isnot
a generational table. Rev. Rul. 2007–67
also provides that the applicable mortality
table for a given year applies to distribu-
tions with annuity starting dates that occur
during stability periods that begin during
that calendar year. Rev. Rul. 2007–67
further states that the § 417(e)(3) appli-
cable mortality table for each subsequent
year will be published in future guidance
and, except as provided in that future
guidance, will be determined from the
§ 430(h)(3)(A) tables on the same basis
as the applicable mortality table for 2008.
This notice sets forth the § 417(e)(3) appli-
cable mortality table for distributions with
annuity starting dates that occur during
stability periods that begin during calendar
years 2009 through 2013.
STATIC MORTALITY TABLES FOR
YEARS 2009 THROUGH 2013
The static mortality tables that apply
under § 430(h)(3)(A) for valuation dates
occurring in years 2009 through 2013 are
set forth in the appendix to this notice. The
mortality rates in these tables have been
developed from the base rates, projection
factors, and weighting factors set forth in
§ 1.430(h)(3)–1, using the blending tech-
niques described in the preamble to those
regulations.
The static mortality tables that apply
under § 417(e)(3) for distributions with
annuity starting dates occurring during
stability periods beginning in years 2009
through 2013 are set forth in the appen-
dix to this notice in the column labeled
“Unisex.” These tables were derived from
the tables used for § 430(h)(3)(A) follow-
ing the procedures set forth in Rev. Rul.
2007–67.
Drafting Information
The principal author of this notice
is Carolyn E. Zimmerman of the Em-
ployee Plans, Tax Exempt and Gov-
ernment Entities Division. For fur-
ther information regarding this notice,
please contact Ms. Zimmerman at
retirementplanquestions@irs.gov.
2008–42 I.R.B.906October 20, 2008

APPENDIX
Mortality tables for 2009
Valuation dates occurring during 2009
Distributions subject to § 417(e)(3)with annuity starting dates during
stability periods beginning in 2009
MALEMALEMALEFEMALEFEMALEFEMALEUNISEX
Age
2009
Non-
Annuitant
Table
2009
Annuitant
Table
2009
Optional
Combined
Table
for Small
Plans
2009
Non-
Annuitant
Table
2009
Annuitant
Table
2009
Optional
Combined
Table
for Small
Plans
2009
Table for
Distributions
Subject to
§417(e)(3)
10.0003920.0003920.000392
0.0003520.0003520.000352
0.000372
2
0.0002650.0002650.000265
0.0002290.0002290.0002290.000247
30.0002200.0002200.0002200.0001710.0001710.0001710.000196
40.0001710.0001710.0001710.0001280.0001280.000128
0.000150
50.0001570.0001570.000157
0.0001160.0001160.0001160.000137
6
0.0001500.0001500.000150
0.0001080.0001080.0001080.000129
70.0001440.0001440.0001440.0001020.0001020.0001020.000123
80.0001330.0001330.0001330.0000910.0000910.0000910.000112
90.0001290.0001290.0001290.0000860.0000860.0000860.000108
100.0001310.0001310.0001310.0000870.0000870.0000870.000109
11
0.0001350.0001350.000135
0.0000880.0000880.0000880.000112
120.0001400.0001400.0001400.0000910.0000910.0000910.000116
130.0001480.0001480.000148
0.0000950.0000950.000095
0.000122
140.0001600.0001600.000160
0.0001050.0001050.000105
0.000133
15
0.0001700.0001700.000170
0.0001150.0001150.000115
0.000143
160.0001790.0001790.0001790.0001230.0001230.000123
0.000151
170.0001900.0001900.0001900.0001310.0001310.0001310.000161
180.0001990.0001990.0001990.0001340.0001340.0001340.000167
190.0002090.0002090.0002090.0001320.0001320.0001320.000171
200.0002180.0002180.0002180.0001300.0001300.0001300.000174
210.0002310.0002310.0002310.0001270.0001270.0001270.000179
220.0002430.0002430.0002430.0001290.0001290.0001290.000186
230.0002600.0002600.0002600.0001340.0001340.0001340.000197
24
0.0002750.0002750.000275
0.0001400.0001400.0001400.000208
250.0002950.0002950.000295
0.0001480.0001480.0001480.000222
260.0003270.0003270.0003270.0001600.0001600.0001600.000244
270.0003390.0003390.0003390.0001670.0001670.000167
0.000253
280.0003480.0003480.0003480.0001760.0001760.0001760.000262
29
0.0003650.0003650.000365
0.0001860.0001860.0001860.000276
October 20, 20089072008–42 I.R.B.

MALEMALEMALEFEMALEFEMALEFEMALEUNISEX
Age
2009
Non-
Annuitant
Table
2009
Annuitant
Table
2009
Optional
Combined
Table
for Small
Plans
2009
Non-
Annuitant
Table
2009
Annuitant
Table
2009
Optional
Combined
Table
for Small
Plans
2009
Table for
Distributions
Subject to
§417(e)(3)
300.0003940.0003940.0003940.0002070.0002070.0002070.000301
310.0004420.0004420.000442
0.0002530.0002530.000253
0.000348
320.0004980.0004980.0004980.0002890.0002890.0002890.000394
33
0.0005590.0005590.000559
0.0003170.0003170.0003170.000438
340.0006220.0006220.0006220.0003420.0003420.0003420.000482
350.0006850.0006850.000685
0.0003640.0003640.000364
0.000525
360.0007460.0007460.000746
0.0003850.0003850.0003850.000566
370.0008020.0008020.000802
0.0004050.0004050.000405
0.000604
380.0008340.0008340.0008340.0004260.0004260.0004260.000630
390.0008630.0008630.000863
0.0004510.0004510.0004510.000657
400.0008900.0008900.0008900.0004910.0004910.0004910.000691
410.0009190.0009470.000919
0.0005390.0005390.000539
0.000729
42
0.000955
0.001060
0.0009560.0005930.0005930.0005930.000775
430.0009960.0012300.000999
0.0006520.0006520.000652
0.000826
440.001046
0.0014560.001053
0.0007160.0007160.000716
0.000885
45
0.0011020.0017390.0011160.0007630.0007670.0007630.000940
46
0.001152
0.0020780.0011770.0008100.0008690.0008110.000994
470.0012060.0024740.001246
0.000857
0.0010210.000861
0.001054
480.0012630.0029260.0013230.0009270.0012240.0009370.001130
490.001322
0.003435
0.0014080.0010020.0014780.001022
0.001215
50
0.0013830.003998
0.001501
0.0011110.001782
0.001145
0.001323
51
0.0014440.004067
0.001575
0.0012320.0019000.0012710.001423
520.0015070.004085
0.0016840.0014020.002112
0.0014550.001570
53
0.0016140.004142
0.0018550.001598
0.0023860.0016730.001764
54
0.0017320.0041960.0020490.0018240.0027160.0019300.001990
55
0.0019110.0043440.0024140.002083
0.003105
0.0022770.002346
56
0.002138
0.004580
0.002913
0.0023850.003565
0.0027220.002818
57
0.0024040.0048980.0033470.0026690.0040470.0031380.003243
58
0.002714
0.005327
0.0038640.002918
0.0045420.003548
0.003706
59
0.002997
0.005782
0.0043860.003191
0.005105
0.0040260.004206
600.0033120.006332
0.0050130.0034850.0057220.004593
0.004803
61
0.003745
0.007068
0.005851
0.0037990.006386
0.0053010.005576
620.004118
0.007785
0.0067230.0041280.0070960.006086
0.006405
630.0046140.0087390.0078740.004468
0.007853
0.0070140.007444
64
0.005010
0.0096700.0089030.0048140.0086710.0079160.008410
2008–42 I.R.B.908October 20, 2008

MALEMALEMALEFEMALEFEMALEFEMALEUNISEX
Age
2009
Non-
Annuitant
Table
2009
Annuitant
Table
2009
Optional
Combined
Table
for Small
Plans
2009
Non-
Annuitant
Table
2009
Annuitant
Table
2009
Optional
Combined
Table
for Small
Plans
2009
Table for
Distributions
Subject to
§417(e)(3)
650.005399
0.0107090.010089
0.0051610.009565
0.008927
0.009508
66
0.0059160.012059
0.011642
0.0055030.010533
0.0100890.010866
670.006281
0.0133510.0130050.0058370.011574
0.0112110.012108
680.006466
0.014525
0.014234
0.006158
0.0127100.0123970.013316
690.006780
0.0160450.015780
0.006463
0.013985
0.0137040.014742
700.0069030.0174360.017162
0.0067500.0154520.015157
0.016160
710.0077740.0192920.0190220.0073730.016873
0.016583
0.017803
72
0.009516
0.0214210.0211730.0086190.0187680.0184930.019833
730.0121290.0238600.0236460.010487
0.020528
0.0202900.021968
74
0.015613
0.0266180.0264460.012978
0.0227520.0225540.024500
75
0.0199680.0301930.0300600.0160920.024716
0.0245690.027315
76
0.0251940.0336530.033565
0.0198290.0272320.0271310.030348
770.031291
0.038045
0.0379920.0241880.030479
0.030415
0.034204
78
0.038259
0.0429680.0429440.029170
0.0335980.0335680.038256
790.046098
0.0485310.0485250.034775
0.0370940.0370860.042806
80
0.0548070.0548070.054807
0.0410020.0410020.041002
0.047905
810.0623390.0623390.062339
0.0453820.0453820.0453820.053861
820.0707790.0707790.070779
0.0503100.0503100.0503100.060545
830.0788980.0788980.078898
0.0558610.0558610.055861
0.067380
840.0891720.0891720.0891720.0621270.0621270.062127
0.075650
85
0.0989830.0989830.0989830.0703370.0703370.0703370.084660
860.1097430.1097430.1097430.0797190.0797190.0797190.094731
87
0.1235540.1235540.1235540.0903530.0903530.0903530.106954
880.1389840.1389840.1389840.1006380.1006380.1006380.119811
89
0.1535940.1535940.1535940.1135620.1135620.1135620.133578
900.1720160.1720160.172016
0.1255020.1255020.1255020.148759
910.1873600.1873600.1873600.1378170.1378170.137817
0.162589
920.2064390.2064390.206439
0.1502200.1502200.150220
0.178330
93
0.2226950.2226950.2226950.1650600.1650600.165060
0.193878
940.2389270.2389270.2389270.1770360.1770360.1770360.207982
950.2590580.2590580.259058
0.1883770.1883770.1883770.223718
96
0.2749550.2749550.2749550.1989050.1989050.198905
0.236930
970.2903990.2903990.2903990.2118220.2118220.211822
0.251111
980.3102890.3102890.3102890.2203910.2203910.220391
0.265340
990.3249630.3249630.3249630.2277120.2277120.2277120.276338
October 20, 20089092008–42 I.R.B.

MALEMALEMALEFEMALEFEMALEFEMALEUNISEX
Age
2009
Non-
Annuitant
Table
2009
Annuitant
Table
2009
Optional
Combined
Table
for Small
Plans
2009
Non-
Annuitant
Table
2009
Annuitant
Table
2009
Optional
Combined
Table
for Small
Plans
2009
Table for
Distributions
Subject to
§417(e)(3)
1000.3390840.3390840.3390840.2336960.2336960.2336960.286390
101
0.3586280.3586280.358628
0.2448340.2448340.2448340.301731
102
0.3716850.3716850.3716850.2544980.2544980.254498
0.313092
1030.3830400.3830400.3830400.2660440.2660440.266044
0.324542
1040.3920030.3920030.392003
0.2790550.2790550.2790550.335529
105
0.3978860.3978860.3978860.2931160.2931160.293116
0.345501
1060.4000000.4000000.4000000.3078110.3078110.307811
0.353906
1070.4000000.4000000.400000
0.3227250.3227250.322725
0.361363
1080.4000000.4000000.4000000.3374410.3374410.3374410.368721
1090.4000000.4000000.400000
0.3515440.3515440.3515440.375772
1100.4000000.4000000.4000000.3646170.3646170.3646170.382309
1110.4000000.4000000.4000000.3762460.3762460.3762460.388123
1120.4000000.4000000.400000
0.3860150.3860150.386015
0.393008
1130.4000000.4000000.400000
0.3935070.3935070.3935070.396754
1140.4000000.4000000.4000000.3983080.3983080.398308
0.399154
115
0.4000000.4000000.4000000.4000000.4000000.4000000.400000
1160.4000000.4000000.4000000.4000000.4000000.4000000.400000
1170.4000000.4000000.4000000.4000000.4000000.4000000.400000
1180.4000000.4000000.4000000.4000000.4000000.4000000.400000
1190.4000000.4000000.4000000.4000000.4000000.4000000.400000
1201.0000001.0000001.0000001.0000001.0000001.0000001.000000
Mortality tables for 2010
Valuation dates occurring during 2010
Distributions subject to § 417(e)(3)with annuity starting dates during
stability periods beginning in 2010
MALEMALEMALEFEMALEFEMALEFEMALEUNISEX
Age
2010
Non-
Annuitant
Table
2010
Annuitant
Table
2010
Optional
Combined
Table
for Small
Plans
2010
Non-
Annuitant
Table
2010
Annuitant
Table
2010
Optional
Combined
Table
for Small
Plans
2010
Table for
Distributions
Subject to
§417(e)(3)
10.0003840.0003840.000384
0.0003450.0003450.0003450.000365
2
0.0002590.0002590.000259
0.0002240.0002240.0002240.000242
3
0.0002150.0002150.000215
0.0001680.0001680.0001680.000192
2008–42 I.R.B.910October 20, 2008

MALEMALEMALEFEMALEFEMALEFEMALEUNISEX
Age
2010
Non-
Annuitant
Table
2010
Annuitant
Table
2010
Optional
Combined
Table
for Small
Plans
2010
Non-
Annuitant
Table
2010
Annuitant
Table
2010
Optional
Combined
Table
for Small
Plans
2010
Table for
Distributions
Subject to
§417(e)(3)
40.0001680.0001680.0001680.0001260.0001260.0001260.000147
50.0001540.0001540.000154
0.0001130.0001130.0001130.000134
60.0001470.0001470.0001470.0001060.0001060.0001060.000127
70.0001410.0001410.0001410.0001000.0001000.0001000.000121
80.0001300.0001300.0001300.0000890.0000890.0000890.000110
90.0001260.0001260.0001260.0000840.0000840.000084
0.000105
100.0001280.0001280.000128
0.0000850.0000850.000085
0.000107
110.0001320.0001320.0001320.0000860.0000860.0000860.000109
120.0001380.0001380.0001380.0000890.0000890.0000890.000114
13
0.0001450.0001450.000145
0.0000940.0000940.0000940.000120
14
0.0001570.0001570.000157
0.0001030.0001030.0001030.000130
15
0.0001670.0001670.0001670.0001140.0001140.0001140.000141
160.0001760.0001760.0001760.0001210.0001210.0001210.000149
170.0001860.0001860.0001860.0001290.0001290.000129
0.000158
180.0001960.0001960.0001960.0001320.0001320.0001320.000164
19
0.0002050.0002050.000205
0.0001300.0001300.0001300.000168
200.0002140.0002140.0002140.0001280.0001280.0001280.000171
210.0002270.0002270.000227
0.0001250.0001250.000125
0.000176
220.0002380.0002380.0002380.0001260.0001260.0001260.000182
23
0.0002560.0002560.000256
0.0001320.0001320.0001320.000194
240.0002710.0002710.0002710.0001380.0001380.000138
0.000205
25
0.0002920.0002920.0002920.0001460.0001460.0001460.000219
26
0.0003250.0003250.0003250.0001580.0001580.000158
0.000242
270.0003370.0003370.000337
0.0001650.0001650.0001650.000251
280.0003470.0003470.0003470.0001740.0001740.0001740.000261
290.0003630.0003630.0003630.0001830.0001830.0001830.000273
300.0003920.0003920.000392
0.0002050.0002050.000205
0.000299
310.0004400.0004400.000440
0.0002510.0002510.000251
0.000346
320.0004960.0004960.0004960.0002860.0002860.0002860.000391
33
0.0005570.0005570.000557
0.0003140.0003140.0003140.000436
340.0006190.0006190.0006190.0003380.0003380.0003380.000479
35
0.0006820.0006820.0006820.0003600.0003600.000360
0.000521
360.0007420.0007420.0007420.0003800.0003800.000380
0.000561
370.0007980.0007980.0007980.0003990.0003990.000399
0.000599
380.0008290.0008290.0008290.0004200.0004200.000420
0.000625
October 20, 20089112008–42 I.R.B.

MALEMALEMALEFEMALEFEMALEFEMALEUNISEX
Age
2010
Non-
Annuitant
Table
2010
Annuitant
Table
2010
Optional
Combined
Table
for Small
Plans
2010
Non-
Annuitant
Table
2010
Annuitant
Table
2010
Optional
Combined
Table
for Small
Plans
2010
Table for
Distributions
Subject to
§417(e)(3)
39
0.0008570.0008570.000857
0.0004440.0004440.000444
0.000651
400.0008830.0008830.0008830.0004840.0004840.0004840.000684
410.0009110.0009380.000911
0.0005300.0005300.000530
0.000721
42
0.000945
0.0010490.000946
0.0005840.0005840.0005840.000765
43
0.0009850.001215
0.0009880.0006420.0006420.000642
0.000815
440.0010330.0014360.001040
0.0007050.0007050.000705
0.000873
45
0.0010870.0017130.001101
0.0007510.0007550.000751
0.000926
460.001136
0.002045
0.0011610.000797
0.000855
0.0007980.000980
470.0011880.0024320.0012270.0008420.0010040.0008460.001037
480.001243
0.002875
0.0013020.0009110.0012030.0009210.001112
490.0013000.0033730.0013840.000984
0.001452
0.0010040.001194
500.001358
0.0039260.0014740.001092
0.0017510.001125
0.001300
51
0.0014160.003990
0.001544
0.0012120.001869
0.001251
0.001398
52
0.0014770.004003
0.001650
0.0013830.002083
0.0014350.001543
530.0015820.004059
0.001818
0.0015790.0023580.001653
0.001736
54
0.0016970.0041120.002008
0.001805
0.0026890.001910
0.001959
550.001875
0.0042620.0023680.0020660.003080
0.002258
0.002313
56
0.0020990.0044970.0028600.002371
0.003543
0.0027060.002783
57
0.002363
0.004815
0.003290
0.002655
0.0040270.0031220.003206
58
0.002671
0.005241
0.0038020.002903
0.0045190.003530
0.003666
59
0.002949
0.005690
0.004316
0.0031750.0050790.004005
0.004161
60
0.003259
0.0062300.0049330.003468
0.0056940.0045710.004752
610.0036880.006962
0.005763
0.003780
0.0063540.0052740.005519
62
0.004056
0.0076680.0066220.0041080.007061
0.006056
0.006339
63
0.004549
0.0086170.0077640.0044460.0078140.0069790.007372
640.004940
0.009535
0.0087790.0047900.0086280.0078770.008328
650.0053230.010559
0.009947
0.0051350.009517
0.008882
0.009415
66
0.005839
0.0119030.011491
0.005476
0.0104810.0100400.010766
670.0061990.013177
0.0128350.0058080.0115160.0111550.011995
68
0.006375
0.0143210.0140340.0061270.012646
0.0123350.013185
69
0.0066850.0158200.015559
0.006431
0.013915
0.013636
0.014598
700.006800
0.0171750.016905
0.006716
0.0153740.0150800.015993
710.0076630.0190030.0187380.0073340.0167720.0164840.017611
720.0093890.021100
0.0208560.0085700.018655
0.0183820.019619
730.011978
0.023502
0.0232920.0104240.0203840.0201480.021720
2008–42 I.R.B.912October 20, 2008

MALEMALEMALEFEMALEFEMALEFEMALEUNISEX
Age
2010
Non-
Annuitant
Table
2010
Annuitant
Table
2010
Optional
Combined
Table
for Small
Plans
2010
Non-
Annuitant
Table
2010
Annuitant
Table
2010
Optional
Combined
Table
for Small
Plans
2010
Table for
Distributions
Subject to
§417(e)(3)
74
0.015430
0.026219
0.026051
0.012897
0.0225920.022395
0.024223
75
0.0197440.0297710.029641
0.0159880.024519
0.0243740.027008
760.0249210.0331820.0330960.0196970.0270140.026914
0.030005
770.030961
0.0375510.037500
0.0240240.0302660.030202
0.033851
780.037864
0.042452
0.0424280.0289690.0333630.0333330.037881
79
0.045630
0.0479970.047991
0.034532
0.0368340.0368260.042409
80
0.0542590.0542590.0542590.0407150.0407150.040715
0.047487
810.0617780.0617780.061778
0.0450640.0450640.0450640.053421
820.0702130.0702130.070213
0.0499570.0499570.0499570.060085
830.0782670.0782670.078267
0.0554700.0554700.055470
0.066869
84
0.0885480.0885480.088548
0.0616920.0616920.061692
0.075120
85
0.0982900.0982900.098290
0.0699150.0699150.069915
0.084103
86
0.1089750.1089750.108975
0.0793210.0793210.0793210.094148
870.1228130.1228130.1228130.0899920.0899920.0899920.106403
880.1382890.1382890.138289
0.1002350.1002350.100235
0.119262
89
0.1528260.1528260.152826
0.1132210.1132210.1132210.133024
900.1713270.1713270.171327
0.1251250.1251250.125125
0.148226
910.1866110.1866110.1866110.1374040.1374040.1374040.162008
92
0.2058190.2058190.205819
0.1497700.1497700.149770
0.177795
930.2220270.2220270.2220270.1647300.1647300.1647300.193379
940.2382100.2382100.2382100.1766820.1766820.1766820.207446
950.2585400.2585400.258540
0.1880000.1880000.1880000.223270
96
0.2744050.2744050.2744050.1985070.1985070.1985070.236456
970.2898190.2898190.2898190.2116100.2116100.211610
0.250715
980.3099790.3099790.3099790.2201700.2201700.220170
0.265075
990.3246380.3246380.324638
0.2274850.2274850.227485
0.276062
100
0.3387450.3387450.338745
0.2334620.2334620.2334620.286104
101
0.3586280.3586280.358628
0.2448340.2448340.2448340.301731
102
0.3716850.3716850.3716850.2544980.2544980.254498
0.313092
1030.3830400.3830400.3830400.2660440.2660440.266044
0.324542
1040.3920030.3920030.392003
0.2790550.2790550.2790550.335529
105
0.3978860.3978860.3978860.2931160.2931160.293116
0.345501
1060.4000000.4000000.4000000.3078110.3078110.307811
0.353906
1070.4000000.4000000.400000
0.3227250.3227250.322725
0.361363
1080.4000000.4000000.4000000.3374410.3374410.3374410.368721
October 20, 20089132008–42 I.R.B.

MALEMALEMALEFEMALEFEMALEFEMALEUNISEX
Age
2010
Non-
Annuitant
Table
2010
Annuitant
Table
2010
Optional
Combined
Table
for Small
Plans
2010
Non-
Annuitant
Table
2010
Annuitant
Table
2010
Optional
Combined
Table
for Small
Plans
2010
Table for
Distributions
Subject to
§417(e)(3)
1090.4000000.4000000.400000
0.3515440.3515440.3515440.375772
1100.4000000.4000000.4000000.3646170.3646170.3646170.382309
1110.4000000.4000000.4000000.3762460.3762460.3762460.388123
1120.4000000.4000000.400000
0.3860150.3860150.386015
0.393008
1130.4000000.4000000.400000
0.3935070.3935070.3935070.396754
1140.4000000.4000000.4000000.3983080.3983080.398308
0.399154
115
0.4000000.4000000.4000000.4000000.4000000.4000000.400000
1160.4000000.4000000.4000000.4000000.4000000.4000000.400000
1170.4000000.4000000.4000000.4000000.4000000.4000000.400000
1180.4000000.4000000.4000000.4000000.4000000.4000000.400000
1190.4000000.4000000.4000000.4000000.4000000.4000000.400000
1201.0000001.0000001.0000001.0000001.0000001.0000001.000000
Mortality tables for 2011
Valuation dates occurring during 2011
Distributions subject to § 417(e)(3)with annuity starting dates during
stability periods beginning in 2011
MALEMALEMALEFEMALEFEMALEFEMALEUNISEX
Age
2011
Non-
Annuitant
Table
2011
Annuitant
Table
2011
Optional
Combined
Table
for Small
Plans
2011
Non-
Annuitant
Table
2011
Annuitant
Table
2011
Optional
Combined
Table
for Small
Plans
2011
Table for
Distributions
Subject to
§417(e)(3)
10.0003770.0003770.0003770.0003380.0003380.000338
0.000358
2
0.0002540.0002540.000254
0.0002200.0002200.0002200.000237
30.0002110.0002110.0002110.0001640.0001640.0001640.000188
40.0001640.0001640.0001640.0001230.0001230.0001230.000144
50.0001510.0001510.000151
0.0001110.0001110.0001110.000131
60.0001440.0001440.0001440.0001040.0001040.0001040.000124
70.0001380.0001380.0001380.0000980.0000980.0000980.000118
80.0001280.0001280.0001280.0000870.0000870.0000870.000108
90.0001240.0001240.0001240.0000830.0000830.0000830.000104
10
0.0001250.0001250.000125
0.0000830.0000830.0000830.000104
110.0001300.0001300.000130
0.0000850.0000850.000085
0.000108
12
0.0001350.0001350.000135
0.0000880.0000880.0000880.000112
2008–42 I.R.B.914October 20, 2008

MALEMALEMALEFEMALEFEMALEFEMALEUNISEX
Age
2011
Non-
Annuitant
Table
2011
Annuitant
Table
2011
Optional
Combined
Table
for Small
Plans
2011
Non-
Annuitant
Table
2011
Annuitant
Table
2011
Optional
Combined
Table
for Small
Plans
2011
Table for
Distributions
Subject to
§417(e)(3)
130.0001420.0001420.0001420.0000920.0000920.0000920.000117
14
0.0001540.0001540.000154
0.0001010.0001010.0001010.000128
15
0.0001630.0001630.0001630.0001120.0001120.0001120.000138
160.0001720.0001720.0001720.0001190.0001190.0001190.000146
170.0001830.0001830.0001830.0001280.0001280.000128
0.000156
180.0001920.0001920.0001920.0001300.0001300.0001300.000161
190.0002010.0002010.0002010.0001280.0001280.000128
0.000165
200.0002100.0002100.0002100.0001260.0001260.0001260.000168
210.0002230.0002230.0002230.0001230.0001230.0001230.000173
220.0002340.0002340.0002340.0001240.0001240.0001240.000179
23
0.0002520.0002520.000252
0.0001300.0001300.0001300.000191
240.0002680.0002680.0002680.0001360.0001360.0001360.000202
25
0.0002900.0002900.0002900.0001430.0001430.0001430.000217
260.0003230.0003230.000323
0.0001560.0001560.000156
0.000240
27
0.0003350.0003350.000335
0.0001630.0001630.0001630.000249
28
0.0003450.0003450.000345
0.0001720.0001720.000172
0.000259
290.0003620.0003620.0003620.0001810.0001810.0001810.000272
300.0003900.0003900.0003900.0002030.0002030.0002030.000297
310.0004380.0004380.0004380.0002490.0002490.0002490.000344
320.0004930.0004930.0004930.0002840.0002840.0002840.000389
33
0.0005540.0005540.000554
0.0003110.0003110.0003110.000433
340.0006160.0006160.000616
0.0003350.0003350.000335
0.000476
35
0.0006790.0006790.000679
0.0003560.0003560.0003560.000518
360.0007380.0007380.0007380.0003760.0003760.000376
0.000557
370.0007940.0007940.0007940.0003940.0003940.000394
0.000594
380.0008240.0008240.0008240.0004140.0004140.0004140.000619
39
0.0008510.0008510.000851
0.0004370.0004370.0004370.000644
400.0008760.0008760.0008760.0004770.0004770.0004770.000677
410.0009030.0009300.000903
0.0005220.0005220.000522
0.000713
420.0009360.0010380.000937
0.0005750.0005750.0005750.000756
430.0009740.0012010.0009770.0006330.0006330.000633
0.000805
440.0010210.0014180.001028
0.0006950.0006950.000695
0.000862
45
0.0010730.0016890.0010870.0007390.0007440.0007390.000913
460.0011200.0020140.0011440.0007830.0008420.0007840.000964
470.0011710.0023930.0012100.0008270.0009890.0008310.001021
October 20, 20089152008–42 I.R.B.

MALEMALEMALEFEMALEFEMALEFEMALEUNISEX
Age
2011
Non-
Annuitant
Table
2011
Annuitant
Table
2011
Optional
Combined
Table
for Small
Plans
2011
Non-
Annuitant
Table
2011
Annuitant
Table
2011
Optional
Combined
Table
for Small
Plans
2011
Table for
Distributions
Subject to
§417(e)(3)
480.0012230.0028260.0012810.000894
0.001185
0.0009040.001093
490.0012770.0033140.0013600.0009670.0014300.0009860.001173
50
0.001333
0.003856
0.0014470.0010730.0017220.0011060.001277
51
0.0013890.003914
0.001515
0.0011930.0018390.0012310.001373
52
0.0014480.0039230.0016180.001363
0.002054
0.001414
0.001516
530.001550
0.0039780.001781
0.001560
0.0023300.0016330.001707
54
0.0016630.0040300.0019680.0017870.0026620.0018910.001930
55
0.0018390.0041810.002323
0.0020500.003056
0.0022410.002282
56
0.0020620.0044160.002809
0.0023570.003522
0.002690
0.002750
57
0.0023230.0047330.0032340.0026420.0040070.0031070.003171
58
0.002628
0.005158
0.0037410.0028890.004496
0.003512
0.003627
59
0.002902
0.005599
0.004247
0.0031590.0050540.003985
0.004116
600.0032070.006131
0.0048540.0034510.0056650.004548
0.004701
610.003633
0.0068570.005676
0.0037610.006322
0.0052480.005462
62
0.0039950.0075530.006522
0.0040870.0070260.0060260.006274
630.0044860.008496
0.007655
0.004423
0.007775
0.0069440.007300
640.0048710.009401
0.008656
0.004766
0.008584
0.0078370.008247
650.005249
0.0104110.009808
0.005110
0.0094700.0088390.009324
66
0.005763
0.0117480.011342
0.005449
0.0104280.0099890.010666
670.0061180.0130060.012668
0.0057790.011458
0.0110990.011884
680.0062860.0141210.0138380.006096
0.012583
0.012274
0.013056
69
0.0065910.0155990.015341
0.0063980.013846
0.0135680.014455
700.0066980.016917
0.016651
0.006683
0.0152980.0150060.015829
71
0.007553
0.018718
0.018457
0.0072970.0166720.0163860.017422
720.0092630.020783
0.0205430.0085240.018543
0.0182710.019407
730.0118280.0231490.022943
0.010365
0.0202420.0200080.021476
74
0.0152470.0258260.025661
0.0128190.0224340.022239
0.023950
750.0195210.029354
0.029226
0.015887
0.0243230.0241800.026703
76
0.024650
0.0327170.032633
0.019568
0.0267980.0267000.029667
770.0306340.0370630.0370130.023863
0.030054
0.029991
0.033502
780.0374730.0419430.0419200.0287720.0331300.033100
0.037510
79
0.045167
0.0474690.0474630.034294
0.0365760.036568
0.042016
80
0.0537160.0537160.053716
0.0404300.0404300.0404300.047073
810.0612220.0612220.0612220.0447490.0447490.044749
0.052986
82
0.0696510.0696510.069651
0.0496080.0496080.049608
0.059630
2008–42 I.R.B.916October 20, 2008

MALEMALEMALEFEMALEFEMALEFEMALEUNISEX
Age
2011
Non-
Annuitant
Table
2011
Annuitant
Table
2011
Optional
Combined
Table
for Small
Plans
2011
Non-
Annuitant
Table
2011
Annuitant
Table
2011
Optional
Combined
Table
for Small
Plans
2011
Table for
Distributions
Subject to
§417(e)(3)
830.0776410.0776410.077641
0.0550820.0550820.055082
0.066362
840.0879280.0879280.0879280.0612600.0612600.061260
0.074594
85
0.0976020.0976020.097602
0.0694950.0694950.0694950.083549
860.1082120.1082120.1082120.0789240.0789240.078924
0.093568
870.1220760.1220760.1220760.0896320.0896320.089632
0.105854
88
0.1375980.1375980.137598
0.0998340.0998340.0998340.118716
89
0.1520620.1520620.152062
0.1128810.1128810.1128810.132472
900.1706420.1706420.170642
0.1247500.1247500.124750
0.147696
91
0.1858640.1858640.185864
0.1369910.1369910.1369910.161428
92
0.2052020.2052020.205202
0.1493200.1493200.1493200.177261
930.2213610.2213610.2213610.1644010.1644010.1644010.192881
94
0.2374950.2374950.237495
0.1763290.1763290.1763290.206912
950.2580230.2580230.258023
0.1876240.1876240.1876240.222824
96
0.2738560.2738560.273856
0.1981100.1981100.198110
0.235983
970.2892390.2892390.2892390.2113980.2113980.211398
0.250319
980.3096690.3096690.309669
0.2199500.2199500.219950
0.264810
990.3243140.3243140.324314
0.2272570.2272570.2272570.275786
1000.3384060.3384060.3384060.2332290.2332290.233229
0.285818
101
0.3586280.3586280.358628
0.2448340.2448340.2448340.301731
102
0.3716850.3716850.3716850.2544980.2544980.254498
0.313092
1030.3830400.3830400.3830400.2660440.2660440.266044
0.324542
1040.3920030.3920030.392003
0.2790550.2790550.2790550.335529
105
0.3978860.3978860.3978860.2931160.2931160.293116
0.345501
1060.4000000.4000000.4000000.3078110.3078110.307811
0.353906
1070.4000000.4000000.400000
0.3227250.3227250.322725
0.361363
1080.4000000.4000000.4000000.3374410.3374410.3374410.368721
1090.4000000.4000000.400000
0.3515440.3515440.3515440.375772
1100.4000000.4000000.4000000.3646170.3646170.3646170.382309
1110.4000000.4000000.4000000.3762460.3762460.3762460.388123
1120.4000000.4000000.400000
0.3860150.3860150.386015
0.393008
1130.4000000.4000000.400000
0.3935070.3935070.3935070.396754
1140.4000000.4000000.4000000.3983080.3983080.398308
0.399154
115
0.4000000.4000000.4000000.4000000.4000000.4000000.400000
1160.4000000.4000000.4000000.4000000.4000000.4000000.400000
1170.4000000.4000000.4000000.4000000.4000000.4000000.400000
October 20, 20089172008–42 I.R.B.

MALEMALEMALEFEMALEFEMALEFEMALEUNISEX
Age
2011
Non-
Annuitant
Table
2011
Annuitant
Table
2011
Optional
Combined
Table
for Small
Plans
2011
Non-
Annuitant
Table
2011
Annuitant
Table
2011
Optional
Combined
Table
for Small
Plans
2011
Table for
Distributions
Subject to
§417(e)(3)
1180.4000000.4000000.4000000.4000000.4000000.4000000.400000
1190.4000000.4000000.4000000.4000000.4000000.4000000.400000
1201.0000001.0000001.0000001.0000001.0000001.0000001.000000
Mortality tables for 2012
Valuation dates occurring during 2012
Distributions subject to § 417(e)(3)with annuity starting dates during
stability periods beginning in 2012
MALEMALEMALEFEMALEFEMALEFEMALEUNISEX
Age
2012
Non-
Annuitant
Table
2012
Annuitant
Table
2012
Optional
Combined
Table
for Small
Plans
2012
Non-
Annuitant
Table
2012
Annuitant
Table
2012
Optional
Combined
Table
for Small
Plans
2012
Table for
Distributions
Subject to
§417(e)(3)
10.0003690.0003690.0003690.0003310.0003310.000331
0.000350
20.0002490.0002490.0002490.0002160.0002160.0002160.000233
30.0002070.0002070.0002070.0001610.0001610.0001610.000184
40.0001610.0001610.0001610.0001210.0001210.0001210.000141
5
0.0001480.0001480.0001480.0001090.0001090.0001090.000129
60.0001410.0001410.0001410.0001020.0001020.0001020.000122
70.0001360.0001360.0001360.0000960.0000960.0000960.000116
8
0.0001250.0001250.0001250.0000850.0000850.0000850.000105
90.0001210.0001210.0001210.0000810.0000810.0000810.000101
100.0001230.0001230.0001230.0000820.0000820.0000820.000103
110.0001270.0001270.0001270.0000830.0000830.000083
0.000105
120.0001320.0001320.0001320.0000860.0000860.0000860.000109
130.0001390.0001390.0001390.0000900.0000900.000090
0.000115
14
0.0001510.0001510.000151
0.0000990.0000990.000099
0.000125
15
0.0001600.0001600.0001600.0001100.0001100.000110
0.000135
160.0001690.0001690.0001690.0001180.0001180.0001180.000144
170.0001790.0001790.0001790.0001260.0001260.000126
0.000153
180.0001880.0001880.0001880.0001280.0001280.000128
0.000158
190.0001970.0001970.0001970.0001260.0001260.0001260.000162
200.0002060.0002060.0002060.0001240.0001240.000124
0.000165
210.0002190.0002190.0002190.0001210.0001210.0001210.000170
2008–42 I.R.B.918October 20, 2008

MALEMALEMALEFEMALEFEMALEFEMALEUNISEX
Age
2012
Non-
Annuitant
Table
2012
Annuitant
Table
2012
Optional
Combined
Table
for Small
Plans
2012
Non-
Annuitant
Table
2012
Annuitant
Table
2012
Optional
Combined
Table
for Small
Plans
2012
Table for
Distributions
Subject to
§417(e)(3)
220.0002300.0002300.0002300.0001220.0001220.0001220.000176
230.0002480.0002480.0002480.0001270.0001270.0001270.000188
240.0002640.0002640.0002640.0001340.0001340.0001340.000199
25
0.0002870.0002870.0002870.0001410.0001410.0001410.000214
260.0003210.0003210.000321
0.0001540.0001540.000154
0.000238
270.0003340.0003340.0003340.0001610.0001610.0001610.000248
280.0003430.0003430.0003430.0001700.0001700.000170
0.000257
290.0003600.0003600.0003600.0001790.0001790.0001790.000270
300.0003880.0003880.0003880.0002010.0002010.000201
0.000295
310.0004360.0004360.0004360.0002470.0002470.0002470.000342
320.0004910.0004910.0004910.0002820.0002820.0002820.000387
33
0.0005510.0005510.000551
0.0003090.0003090.0003090.000430
340.0006130.0006130.0006130.0003320.0003320.0003320.000473
350.0006750.0006750.0006750.0003520.0003520.0003520.000514
36
0.0007350.0007350.000735
0.0003710.0003710.000371
0.000553
370.0007900.0007900.0007900.0003890.0003890.000389
0.000590
380.0008190.0008190.0008190.0004090.0004090.0004090.000614
39
0.0008450.0008450.000845
0.0004310.0004310.0004310.000638
400.0008690.0008690.0008690.0004690.0004690.0004690.000669
41
0.000895
0.000922
0.0008950.0005150.0005150.0005150.000705
420.0009260.0010280.000927
0.0005670.0005670.000567
0.000747
430.0009640.0011870.0009670.0006230.0006230.000623
0.000795
440.0010080.001399
0.001015
0.0006840.0006840.000684
0.000850
450.001059
0.0016640.0010730.0007270.0007320.0007270.000900
460.0011040.0019820.0011280.0007700.0008280.000771
0.000950
47
0.0011530.002353
0.0011910.0008120.0009720.0008160.001004
480.0012030.0027770.0012600.0008780.0011640.0008880.001074
49
0.0012560.003254
0.0013370.0009490.0014040.000968
0.001153
50
0.0013090.0037860.001421
0.001055
0.0016920.001087
0.001254
51
0.0013630.0038400.0014860.0011740.0018100.0012110.001349
52
0.001419
0.0038450.001585
0.001344
0.0020250.001395
0.001490
530.001519
0.0038980.001746
0.001541
0.0023020.0016130.001680
54
0.0016300.0039490.0019290.001769
0.002635
0.0018720.001901
550.001805
0.0041010.0022790.0020340.0030310.002223
0.002251
56
0.0020240.004337
0.002758
0.002343
0.003501
0.0026740.002716
October 20, 20089192008–42 I.R.B.

MALEMALEMALEFEMALEFEMALEFEMALEUNISEX
Age
2012
Non-
Annuitant
Table
2012
Annuitant
Table
2012
Optional
Combined
Table
for Small
Plans
2012
Non-
Annuitant
Table
2012
Annuitant
Table
2012
Optional
Combined
Table
for Small
Plans
2012
Table for
Distributions
Subject to
§417(e)(3)
57
0.002284
0.004652
0.0031790.0026290.0039870.003091
0.003135
580.0025860.005075
0.0036810.0028740.0044740.003494
0.003588
590.0028560.005509
0.0041790.003143
0.0050290.003965
0.004072
60
0.003156
0.0060330.0047770.003433
0.0056370.0045250.004651
61
0.0035790.0067540.005591
0.0037430.006290
0.0052220.005407
62
0.003935
0.007440
0.006425
0.0040670.006991
0.005996
0.006211
630.0044230.008378
0.007548
0.0044010.0077360.0069090.007229
640.0048030.009270
0.008535
0.004742
0.008542
0.0077980.008167
650.005175
0.0102660.009671
0.005084
0.0094220.0087940.009233
66
0.0056880.011595
0.011194
0.005421
0.0103760.009939
0.010567
670.0060390.012837
0.0125040.005750
0.0114010.0110430.011774
680.0061980.0139230.0136440.006066
0.012520
0.0122120.012928
690.006499
0.0153800.015126
0.0063660.013776
0.013500
0.014313
70
0.006597
0.0166630.0164010.006649
0.015221
0.014930
0.015666
710.0074440.0184370.018180
0.0072580.016572
0.0162880.017234
720.0091380.020471
0.020235
0.0084760.0184320.0181620.019199
730.0116790.0228020.0226000.0103030.0201000.0198680.021234
74
0.0150670.0254380.025276
0.0127390.0222770.0220830.023680
75
0.0193020.0289430.028818
0.015784
0.0241280.0239860.026402
760.024384
0.032259
0.0321770.019438
0.026583
0.0264860.029332
770.030313
0.0365810.036532
0.0237010.0298440.029781
0.033157
780.0370890.0414390.041416
0.028573
0.0328980.0328690.037143
790.0447120.0469470.046941
0.034054
0.0363200.0363120.041627
80
0.0531790.0531790.053179
0.0401470.0401470.0401470.046663
810.0606710.0606710.060671
0.0444350.0444350.0444350.052553
820.0690940.0690940.0690940.0492600.0492600.049260
0.059177
830.0770200.0770200.077020
0.0546960.0546960.0546960.065858
840.0873120.0873120.0873120.0608310.0608310.0608310.074072
85
0.0969190.0969190.0969190.0690780.0690780.0690780.082999
86
0.1074540.1074540.1074540.0785290.0785290.078529
0.092992
870.1213440.1213440.1213440.0892730.0892730.089273
0.105309
880.1369100.1369100.136910
0.0994350.0994350.099435
0.118173
89
0.1513020.1513020.1513020.1125430.1125430.112543
0.131923
900.1699600.1699600.169960
0.1243750.1243750.124375
0.147168
91
0.1851210.1851210.1851210.1365800.1365800.1365800.160851
2008–42 I.R.B.920October 20, 2008

MALEMALEMALEFEMALEFEMALEFEMALEUNISEX
Age
2012
Non-
Annuitant
Table
2012
Annuitant
Table
2012
Optional
Combined
Table
for Small
Plans
2012
Non-
Annuitant
Table
2012
Annuitant
Table
2012
Optional
Combined
Table
for Small
Plans
2012
Table for
Distributions
Subject to
§417(e)(3)
92
0.2045860.2045860.204586
0.1488720.1488720.1488720.176729
930.2206970.2206970.2206970.1640720.1640720.164072
0.192385
940.2367830.2367830.236783
0.1759760.1759760.175976
0.206380
950.2575070.2575070.257507
0.1872490.1872490.1872490.222378
960.2733090.2733090.2733090.1977130.1977130.197713
0.235511
970.2886600.2886600.2886600.2111870.2111870.2111870.249924
98
0.3093590.3093590.309359
0.2197300.2197300.219730
0.264545
990.3239890.3239890.3239890.2270300.2270300.227030
0.275510
1000.3380680.3380680.3380680.2329960.2329960.232996
0.285532
101
0.3586280.3586280.358628
0.2448340.2448340.2448340.301731
102
0.3716850.3716850.3716850.2544980.2544980.254498
0.313092
1030.3830400.3830400.3830400.2660440.2660440.266044
0.324542
1040.3920030.3920030.392003
0.2790550.2790550.2790550.335529
105
0.3978860.3978860.3978860.2931160.2931160.293116
0.345501
1060.4000000.4000000.4000000.3078110.3078110.307811
0.353906
1070.4000000.4000000.400000
0.3227250.3227250.322725
0.361363
1080.4000000.4000000.4000000.3374410.3374410.3374410.368721
1090.4000000.4000000.400000
0.3515440.3515440.3515440.375772
1100.4000000.4000000.4000000.3646170.3646170.3646170.382309
1110.4000000.4000000.4000000.3762460.3762460.3762460.388123
1120.4000000.4000000.400000
0.3860150.3860150.386015
0.393008
1130.4000000.4000000.400000
0.3935070.3935070.3935070.396754
1140.4000000.4000000.4000000.3983080.3983080.398308
0.399154
115
0.4000000.4000000.4000000.4000000.4000000.4000000.400000
1160.4000000.4000000.4000000.4000000.4000000.4000000.400000
1170.4000000.4000000.4000000.4000000.4000000.4000000.400000
1180.4000000.4000000.4000000.4000000.4000000.4000000.400000
1190.4000000.4000000.4000000.4000000.4000000.4000000.400000
1201.0000001.0000001.0000001.0000001.0000001.0000001.000000
October 20, 20089212008–42 I.R.B.

Mortality tables for 2013
Valuation dates occurring during 2013
Distributions subject to § 417(e)(3)with annuity starting dates during
stability periods beginning in 2013
MALEMALEMALEFEMALEFEMALEFEMALEUNISEX
Age
2013
Non-
Annuitant
Table
2013
Annuitant
Table
2013
Optional
Combined
Table
for Small
Plans
2013
Non-
Annuitant
Table
2013
Annuitant
Table
2013
Optional
Combined
Table
for Small
Plans
2013
Table for
Distributions
Subject to
§417(e)(3)
10.0003620.0003620.0003620.0003240.0003240.0003240.000343
20.0002440.0002440.0002440.0002110.0002110.0002110.000228
30.0002030.0002030.000203
0.0001580.0001580.000158
0.000181
4
0.0001580.0001580.000158
0.0001180.0001180.0001180.000138
50.0001450.0001450.000145
0.0001070.0001070.0001070.000126
60.0001390.0001390.0001390.0001000.0001000.0001000.000120
70.0001330.0001330.0001330.0000940.0000940.0000940.000114
80.0001230.0001230.0001230.0000830.0000830.0000830.000103
90.0001190.0001190.0001190.0000800.0000800.0000800.000100
100.0001200.0001200.0001200.0000800.0000800.0000800.000100
110.0001240.0001240.0001240.0000810.0000810.0000810.000103
120.0001290.0001290.0001290.0000840.0000840.0000840.000107
130.0001360.0001360.0001360.0000880.0000880.0000880.000112
140.0001480.0001480.0001480.0000970.0000970.0000970.000123
150.0001570.0001570.000157
0.0001080.0001080.0001080.000133
160.0001660.0001660.0001660.0001160.0001160.0001160.000141
170.0001760.0001760.0001760.0001240.0001240.000124
0.000150
18
0.0001850.0001850.000185
0.0001270.0001270.000127
0.000156
190.0001930.0001930.0001930.0001240.0001240.000124
0.000159
200.0002020.0002020.0002020.0001220.0001220.0001220.000162
21
0.0002150.0002150.000215
0.0001190.0001190.0001190.000167
220.0002260.0002260.0002260.0001200.0001200.0001200.000173
230.0002440.0002440.000244
0.0001250.0001250.0001250.000185
240.0002610.0002610.0002610.0001320.0001320.0001320.000197
25
0.0002840.0002840.0002840.0001390.0001390.0001390.000212
260.0003190.0003190.000319
0.0001530.0001530.000153
0.000236
270.0003320.0003320.000332
0.0001590.0001590.000159
0.000246
280.0003420.0003420.0003420.0001680.0001680.000168
0.000255
29
0.0003580.0003580.000358
0.0001770.0001770.0001770.000268
300.0003860.0003860.0003860.0001990.0001990.0001990.000293
2008–42 I.R.B.922October 20, 2008

MALEMALEMALEFEMALEFEMALEFEMALEUNISEX
Age
2013
Non-
Annuitant
Table
2013
Annuitant
Table
2013
Optional
Combined
Table
for Small
Plans
2013
Non-
Annuitant
Table
2013
Annuitant
Table
2013
Optional
Combined
Table
for Small
Plans
2013
Table for
Distributions
Subject to
§417(e)(3)
310.0004340.0004340.000434
0.0002450.0002450.000245
0.000340
320.0004880.0004880.0004880.0002800.0002800.0002800.000384
33
0.0005480.0005480.000548
0.0003060.0003060.0003060.000427
340.0006100.0006100.0006100.0003280.0003280.0003280.000469
35
0.0006720.0006720.0006720.0003480.0003480.000348
0.000510
360.0007310.0007310.0007310.0003670.0003670.000367
0.000549
370.0007860.0007860.0007860.0003840.0003840.000384
0.000585
38
0.0008150.0008150.000815
0.0004030.0004030.0004030.000609
390.0008390.0008390.0008390.0004240.0004240.0004240.000632
400.0008620.0008620.0008620.0004620.0004620.0004620.000662
410.0008870.0009140.000887
0.0005070.0005070.000507
0.000697
420.0009170.0010180.000918
0.0005580.0005580.000558
0.000738
43
0.000953
0.001174
0.000956
0.0006140.0006140.000614
0.000785
440.0009960.0013820.0010030.0006740.0006740.0006740.000839
450.001045
0.001642
0.001058
0.0007160.0007210.0007160.000887
460.001089
0.001954
0.001113
0.0007570.0008150.000758
0.000936
470.0011360.0023170.0011730.000797
0.000956
0.0008010.000987
480.0011840.0027320.0012400.000862
0.001145
0.000871
0.001056
490.0012340.0031990.0013140.0009320.001381
0.000951
0.001133
50
0.0012860.0037180.0013960.0010370.0016640.0010680.001232
51
0.0013370.003767
0.0014580.001155
0.0017810.001192
0.001325
52
0.0013900.003768
0.0015530.001325
0.001997
0.001375
0.001464
53
0.0014890.0038200.001711
0.001523
0.002274
0.0015940.001653
540.001597
0.0038700.001890
0.001752
0.002609
0.001854
0.001872
55
0.0017700.004023
0.002235
0.0020170.003007
0.002205
0.002220
56
0.001988
0.004259
0.0027090.0023290.003480
0.002658
0.002684
570.0022450.0045730.003125
0.0026160.0039670.0030760.003101
580.002544
0.0049940.0036220.002860
0.004452
0.003477
0.003550
59
0.002810
0.005421
0.0041120.003128
0.005003
0.0039460.004029
60
0.0031050.005936
0.0047000.003416
0.0056090.004502
0.004601
61
0.0035250.0066530.005508
0.003724
0.0062590.0051960.005352
620.0038760.0073290.0063290.004046
0.0069560.005966
0.006148
630.0043610.0082600.0074420.0043790.0076970.006874
0.007158
640.0047360.0091400.0084160.0047180.008499
0.007759
0.008088
650.005103
0.010122
0.0095360.0050590.0093750.008750
0.009143
October 20, 20089232008–42 I.R.B.

MALEMALEMALEFEMALEFEMALEFEMALEUNISEX
Age
2013
Non-
Annuitant
Table
2013
Annuitant
Table
2013
Optional
Combined
Table
for Small
Plans
2013
Non-
Annuitant
Table
2013
Annuitant
Table
2013
Optional
Combined
Table
for Small
Plans
2013
Table for
Distributions
Subject to
§417(e)(3)
66
0.005615
0.0114440.011048
0.005394
0.0103240.0098890.010469
67
0.005960
0.0126700.012341
0.005721
0.0113440.010988
0.011665
680.0061110.013728
0.013453
0.006036
0.0124570.012151
0.012802
690.006408
0.0151650.0149150.006335
0.0137080.0134330.014174
700.0064990.016413
0.016155
0.006616
0.0151450.0148560.015506
710.0073380.0181610.0179080.0072210.0164720.0161900.017049
720.0090160.0201640.0199320.0084300.018322
0.018054
0.018993
73
0.011533
0.0224600.0222610.010244
0.019959
0.019729
0.020995
740.014889
0.025057
0.0248980.0126620.0221210.0219290.023414
75
0.019084
0.0285380.0284150.0156850.0239350.0237950.026105
760.0241180.0318080.0317280.0193120.026371
0.026275
0.029002
770.029991
0.0361050.0360570.0235440.0296350.0295730.032815
780.0367030.0409420.0409200.0283800.0326670.0326380.036779
79
0.044254
0.046431
0.046425
0.0338210.036066
0.036058
0.041242
80
0.0526470.0526470.052647
0.0398660.0398660.039866
0.046257
81
0.0601250.0601250.060125
0.0441240.0441240.044124
0.052125
82
0.0685420.0685420.068542
0.0489160.0489160.048916
0.058729
830.0764030.0764030.076403
0.0543130.0543130.0543130.065358
840.0867010.0867010.086701
0.0604050.0604050.0604050.073553
85
0.0962400.0962400.0962400.0686640.0686640.068664
0.082452
860.1067020.1067020.1067020.0781370.0781370.0781370.092420
870.1206160.1206160.1206160.0889160.0889160.0889160.104766
88
0.1362250.1362250.136225
0.0990370.0990370.0990370.117631
89
0.1505450.1505450.1505450.1122050.1122050.1122050.131375
900.1692800.1692800.1692800.1240020.1240020.1240020.146641
910.1843800.1843800.1843800.1361710.1361710.1361710.160276
920.2039730.2039730.2039730.1484260.1484260.1484260.176200
93
0.2200350.2200350.220035
0.1637440.1637440.1637440.191890
940.2360720.2360720.236072
0.1756240.1756240.1756240.205848
950.2569920.2569920.2569920.1868750.1868750.186875
0.221934
960.2727620.2727620.2727620.1973180.1973180.197318
0.235040
970.2880830.2880830.2880830.2109760.2109760.210976
0.249530
98
0.3090500.3090500.3090500.2195100.2195100.219510
0.264280
99
0.3236650.3236650.323665
0.2268030.2268030.226803
0.275234
1000.3377300.3377300.3377300.2327630.2327630.232763
0.285247
2008–42 I.R.B.924October 20, 2008

MALEMALEMALEFEMALEFEMALEFEMALEUNISEX
Age
2013
Non-
Annuitant
Table
2013
Annuitant
Table
2013
Optional
Combined
Table
for Small
Plans
2013
Non-
Annuitant
Table
2013
Annuitant
Table
2013
Optional
Combined
Table
for Small
Plans
2013
Table for
Distributions
Subject to
§417(e)(3)
101
0.3586280.3586280.358628
0.2448340.2448340.2448340.301731
102
0.3716850.3716850.3716850.2544980.2544980.254498
0.313092
1030.3830400.3830400.3830400.2660440.2660440.266044
0.324542
1040.3920030.3920030.392003
0.2790550.2790550.2790550.335529
105
0.3978860.3978860.3978860.2931160.2931160.293116
0.345501
1060.4000000.4000000.4000000.3078110.3078110.307811
0.353906
1070.4000000.4000000.400000
0.3227250.3227250.322725
0.361363
1080.4000000.4000000.4000000.3374410.3374410.3374410.368721
1090.4000000.4000000.400000
0.3515440.3515440.3515440.375772
1100.4000000.4000000.4000000.3646170.3646170.3646170.382309
1110.4000000.4000000.4000000.3762460.3762460.3762460.388123
1120.4000000.4000000.400000
0.3860150.3860150.386015
0.393008
1130.4000000.4000000.400000
0.3935070.3935070.3935070.396754
1140.4000000.4000000.4000000.3983080.3983080.398308
0.399154
115
0.4000000.4000000.4000000.4000000.4000000.4000000.400000
1160.4000000.4000000.4000000.4000000.4000000.4000000.400000
1170.4000000.4000000.4000000.4000000.4000000.4000000.400000
1180.4000000.4000000.4000000.4000000.4000000.4000000.400000
1190.4000000.4000000.4000000.4000000.4000000.4000000.400000
1201.0000001.0000001.0000001.0000001.0000001.0000001.000000
Extension of Replacement
Period for Livestock Sold
on Account of Drought in
Specified Counties
Notice 2008–86
SECTION 1. PURPOSE
This notice provides guidance regard-
ing an extension of the replacement pe-
riod under § 1033(e) of the Internal Rev-
enue Code for livestock sold on account of
drought in specified counties.
SECTION 2. BACKGROUND
.01Nonrecognition of Gain on Invol-
untary Conversion of Livestock. Section
1033(a) generally provides for nonrecog-
nition of gain when property is involuntar-
ily converted and replaced with property
that is similar or related in service or use.
Section 1033(e)(1) provides that a sale or
exchange of livestock(other than poultry)
held by a taxpayer for draft, breeding, or
dairy purposes in excess of the number
that would be sold following the taxpayer’s
usual business practices is treated as an
involuntary conversion if the livestock is
sold or exchanged solely on account of
drought, flood, or other weather-related
conditions.
.02Replacement Period. Section
1033(a)(2)(A) generally provides that gain
from an involuntary conversion is rec-
ognized only to the extent the amount
realized on the conversion exceeds the
cost of replacement property purchased
during the replacement period. If a sale
or exchange of livestock is treated as an
involuntary conversion under § 1033(e)(1)
and is solely on account of drought, flood,
or other weather-related conditions that re-
sult in the area being designated as eligible
for assistance by the federal government,
§ 1033(e)(2)(A) provides that the replace-
ment period ends four years after the close
of the first taxable year in which any part
of the gain from the conversion is realized.
Section 1033(e)(2)(B) provides that the
Secretary may extend this replacement pe-
riod on a regional basis for such additional
time as the Secretary determines appro-
priate if the weather-related conditions
that resulted in the area being designated
as eligible for assistance by the federal
government continue for more than three
years. Section 1033(e)(2) is effective for
any taxable year withrespect to which the
due date (without regard to extensions) for
October 20, 20089252008–42 I.R.B.

a taxpayer’s return is after December 31,
2002.
SECTION 3. EXTENSION OF
REPLACEMENT PERIOD UNDER
§ 1033(e)(2)(B)
Notice 2006–82, 2006–2 C.B. 529, pro-
vides for extensions of the replacement pe-
riod under § 1033(e)(2)(B). If a sale or ex-
change of livestock is treated as an invol-
untary conversion on account of drought
and the taxpayer’s replacement period is
determined under § 1033(e)(2)(A), the re-
placement period will be extended under
§ 1033(e)(2)(B) and Notice 2006–82 until
the end of the taxpayer’s first taxable year
ending after the first drought-free year for
the applicable region. For this purpose, the
first drought-free year for the applicable
region is the first 12-month period that (1)
ends August 31; (2) ends in or after the last
year of the taxpayer’s 4-year replacement
period determined under § 1033(e)(2)(A);
and (3) does not include any weekly period
for which exceptional, extreme, or severe
drought is reported for any location in the
applicable region. The applicable region
is the county that experienced the drought
conditions on accountof which the live-
stock was sold or exchanged and all coun-
ties that are contiguous to that county.
A taxpayer may determine whether
exceptional, extreme, or severe drought
is reported for any location in the ap-
plicable region by reference to U.S.
Drought Monitor maps that are pro-
duced on a weekly basis by the Na-
tional Drought Mitigation Center. U.S.
Drought Monitor maps are archived at
www.drought.unl.edu/dm/archive.html.
In addition, Notice 2006–82 provides
that the Internal Revenue Service will
publish in September of each year a list
of counties, districts, cities, or parishes
(hereinafter “counties”) for which excep-
tional, extreme, or severe drought was
reported during the preceding 12 months.
Taxpayers may use this list instead of
U.S. Drought Monitor maps to determine
whether exceptional, extreme, or severe
drought has been reported for any location
in the applicable region.
The Appendix to this notice contains
the list of counties for which exceptional,
extreme, or severe drought was reported
during the 12-month period ending Au-
gust 31, 2008. Under Notice 2006–82,
the 12-month period ending on August 31,
2008, is not a drought-free year for an ap-
plicable region thatincludes any county on
this list. Accordingly, for a taxpayer who
qualified for a four-year replacement pe-
riod for livestock sold or exchanged on ac-
count of drought and whose replacement
period is scheduled to expire at the end of
2008 (or, in the case of a fiscal year tax-
payer, at the end of the taxable year that in-
cludes August 31, 2008), the replacement
period will be extended under § 1033(e)(2)
and Notice 2006–82 if the applicable re-
gion includes any county on this list. This
extension will continue until the end of the
taxpayer’s first taxable year ending after a
drought-free year for the applicable region.
SECTION 4. DRAFTING
INFORMATION
The principal author of this notice is
Seoyeon Park of the Office of Associate
Chief Counsel (Income Tax and Account-
ing). For further information regarding
this notice, contact Ms. Park at (202)
622–4960 (not a toll-free call).
APPENDIX
Alabama
Counties of Autauga, Baldwin, Barbour, Bibb, Blount, Bullock, Butler, Calhoun, Chambers, Cherokee, Chilton, Choctaw, Clarke,
Clay, Cleburne, Coffee, Colbert, Conecuh,Coosa, Covington, Crenshaw, Cullman, Dale, Dallas, DeKalb, Elmore, Escambia,
Etowah, Fayette, Franklin, Geneva, Greene, Hale, Henry, Houston, Jackson, Jefferson, Lamar, Lauderdale, Lawrence, Lee,
Limestone, Lowndes, Macon, Madison, Marengo, Marion, Marshall, Monroe, Montgomery, Morgan, Perry, Pickens, Pike,
Randolph, Russell, St. Clair, Shelby, Sumter, Talladega, Tallapoosa, Tuscaloosa, Walker, Washington, Wilcox, Winston.
Arizona
Counties of Apache, Cochise, Coconino, Gila, La Paz, Maricopa, Mohave, Navajo, Pima, Pinal, Yavapai, Yuma.
Arkansas
Counties of Arkansas, Clay, Cleburne, Conway, Craighead, Crittenden, Cross, Faulkner, Greene, Independence, Izard, Jackson,
Lawrence, Lee, Lonoke, Mississippi, Monroe, Perry, Phillips, Poinsett, Prairie, Pulaski, Randolph, St. Francis, Sharp, Stone,
Van Buren, White, Woodruff.
California
Counties of Alameda, Alpine, Amador, Butte, Calaveras, Colusa,Contra Costa, Del Norte, El Dorado, Fresno, Glenn, Humboldt,
Imperial, Inyo, Kern, Kings, Lake, Lassen, Los Angeles, Madera, Marin, Mariposa, Mendocino, Merced, Modoc, Mono,
Monterey, Napa, Nevada, Orange, Placer, Plumas, Riverside, Sacramento, San Benito, San Bernardino, San Diego, San Francisco,
San Joaquin, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Shasta, Sierra, Siskiyou, Solano, Sonoma,
Stanislaus, Sutter, Tehama, Trinity, Tulare, Tuolumne, Ventura, Yolo, Yuba.
Colorado
Counties of Baca, Bent, Cheyenne, Crowley, El Paso, Elbert, Kiowa, Las Animas, Lincoln, Moffat, Otero, Prowers.
2008–42 I.R.B.926October 20, 2008

Delaware
Counties of Kent, Sussex.
The District of Columbia
Florida
Counties of Bay, Broward, Calhoun, Charlotte, Collier, DeSoto, Escambia, Franklin, Gadsden, Glades, Gulf, Hardee, Hendry,
Highlands, Hillsborough, Holmes, Jackson, Jefferson, Lee, Leon, Liberty, Manatee, Martin, Miami-Dade, Monroe, Okaloosa,
Okeechobee, Palm Beach, Polk, St. Lucie, Santa Rosa, Sarasota, Wakulla, Walton, Washington.
Georgia
Counties of Appling, Atkinson, Bacon, Baker, Baldwin, Banks,Barrow, Bartow, Ben Hill, Berrien, Bibb, Bleckley, Brooks,
Bulloch, Burke, Butts, Calhoun, Candler, Carroll, Catoosa, Chattahoochee, Chattooga, Cherokee, Clarke, Clay, Clayton, Clinch,
Cobb, Coffee, Colquitt, Columbia, Cook, Coweta, Crawford, Crisp, Dade, Dawson, Decatur, DeKalb, Dodge, Dooly, Dougherty,
Douglas, Early, Effingham, Elbert, Emanuel, Evans, Fannin, Fayette, Floyd, Forsyth, Franklin, Fulton, Gilmer, Glascock, Gordon,
Grady, Greene, Gwinnett, Habersham, Hall, Hancock, Haralson, Harris, Hart, Heard,Henry, Houston, Irwin, Jackson, Jasper, Jeff
Davis, Jefferson, Jenkins, Johnson, Jones, Lamar, Lanier, Laurens, Lee, Lincoln, Lowndes, Lumpkin, Macon, Madison, Marion,
McDuffie, Meriwether, Miller, Mitchell, Monroe, Montgomery, Morgan, Murray, Muscogee, Newton, Oconee, Oglethorpe,
Paulding, Peach, Pickens, Pike, Polk, Pulaski, Putnam, Quitman, Rabun, Randolph, Richmond, Rockdale, Schley, Screven,
Seminole, Spalding, Stephens, Stewart, Sumter, Talbot, Taliaferro, Tattnall, Taylor, Telfair, Terrell, Thomas, Tift, Toombs,
Towns, Treutlen, Troup, Turner, Twiggs, Union, Upson, Walker, Walton, Ware, Warren, Washington, Webster, Wheeler, White,
Whitfield, Wilcox, Wilkes, Wilkinson, Worth.
Hawaii
Counties of Hawaii, Honolulu, Maui.
Idaho
Counties of Ada, Adams, Bannock, Bear Lake, Benewah, Bingham, Blaine, Boise, Bonner, Bonneville, Boundary, Butte,
Camas, Canyon, Caribou, Cassia, Clark, Clearwater, Custer, Elmore, Franklin, Fremont, Gem, Gooding, Idaho, Jefferson,
Jerome, Kootenai, Latah, Lemhi, Lewis, Lincoln, Madison, Minidoka, Nez Perce, Oneida, Owyhee, Payette, Power, Shoshone,
Teton, Twin Falls, Valley, Washington.
Illinois
Counties of Alexander, Bond, Clark, Clay, Clinton, Crawford, Cumberland, Edwards, Effingham, Fayette, Franklin, Gallatin,
Hamilton, Hardin, Jackson, Jasper, Jefferson, Johnson, Lawrence, Marion, Massac, Monroe, Perry, Pope, Pulaski, Randolph,
Richland, St. Clair, Saline, Union, Wabash, Washington, Wayne, White, Williamson.
Indiana
Counties of Bartholomew, Brown, Clark, Clay, Crawford, Daviess, Dearborn, Decatur, Dubois, Fayette, Floyd, Franklin, Gibson,
Greene, Hancock, Harrison, Hendricks, Henry, Jackson, Jefferson, Jennings, Johnson, Knox, Lawrence, Marion, Martin, Monroe,
Morgan, Ohio, Orange, Owen, Perry, Pike, Posey, Putnam, Ripley, Rush, Scott, Shelby, Spencer, Sullivan, Switzerland, Union,
Vanderburgh, Vigo, Warrick, Washington, Wayne.
Kansas
Counties of Clark, Finney, Grant, Greeley, Hamilton, Haskell, Kearny, Logan, Meade, Morton, Seward, Stanton, Stevens,
Wallace, Wichita.
Kentucky
Counties of Adair, Allen, Anderson, Ballard, Barren, Bath, Bell, Boone, Bourbon, Boyd,Boyle, Bracken, Breathitt, Breckinridge,
Bullitt, Butler, Caldwell, Calloway, Campbell, Carlisle, Carroll, Carter, Casey, Christian, Clark, Clay, Clinton, Crittenden,
Cumberland, Daviess, Edmonson, Elliott, Estill, Fayette, Fleming, Floyd, Franklin, Fulton, Gallatin, Garrard, Grant, Graves,
Grayson, Green, Greenup, Hancock, Hardin,Harlan, Harrison, Hart, Henderson, Henry, Hickman, Hopkins, Jackson, Jefferson,
Jessamine, Johnson, Kenton, Knott, Knox, Larue, Laurel, Lawrence, Lee, Leslie, Letcher, Lewis, Lincoln, Livingston, Logan,
Lyon, Madison, Magoffin, Marion, Marshall, Martin, Mason, McCracken, McCreary, McLean, Meade, Menifee, Mercer,
Metcalfe, Monroe, Montgomery, Morgan, Muhlenberg, Nelson, Nicholas, Ohio, Oldham, Owen, Owsley, Pendleton, Perry, Pike,
Powell, Pulaski, Robertson, Rockcastle, Rowan, Russell, Scott, Shelby, Simpson, Spencer, Taylor, Todd, Trigg, Trimble, Union,
Warren, Washington, Wayne, Webster,Whitley,Wolfe,Woodford.
October 20, 20089272008–42 I.R.B.

Louisiana
Parishes of Avoyelles, Bienville, Bossier, Caddo, Caldwell, Catahoula, Concordia, De Soto, Franklin, Grant, Jackson, La Salle,
Madison, Natchitoches, Ouachita, Rapides, Red River, Richland, Sabine, Tensas, Vernon, Webster, Winn.
Maryland
Baltimore City. Counties of Anne Arundel, Baltimore, Calvert, Caroline, Carroll, Charles, Dorchester, Frederick, Harford,
Howard, Kent, Montgomery, Prince George’s, Queen Anne’s, St.Mary’s, Somerset, Talbot, Washington, Wicomico, Worcester.
Michigan
Counties of Alger, Antrim, Baraga, Benzie, Charlevoix, Cheboygan, Chippewa, Crawford, Delta, Dickinson, Emmet, Gogebic,
Grand Traverse, Houghton, Iron, Kalkaska, Keweenaw, Leelanau, Luce, Mackinac, Manistee, Marquette, Menominee, Missaukee,
Ontonagon, Otsego, Presque Isle, Roscommon, Schoolcraft, Wexford.
Minnesota
Counties of Aitkin, Anoka, Becker, Beltrami, Benton, Big Stone, Carlton, Cass, Chippewa, Chisago, Cook, Crow Wing, Douglas,
Grant, Hennepin, Isanti, Itasca, Kanabec, Kandiyohi, Koochiching, Lac qui Parle, Lake, Lake of the Woods, McLeod, Meeker,
Mille Lacs, Morrison, Otter Tail, Pine, Pope, Renville, Roseau, St. Louis, Sherburne, Stearns, Stevens, Swift, Todd, Wadena,
Washington, Wright, Yellow Medicine.
Mississippi
Counties of Adams, Alcorn, Benton, Chickasaw, Choctaw, Claiborne, Clarke, Clay, Coahoma, DeSoto, Franklin, Itawamba,
Jasper, Jefferson, Kemper, Lafayette, Lauderdale, Lee, Lowndes, Marshall, Monroe, Neshoba, Newton, Noxubee, Oktibbeha,
Panola, Pontotoc, Prentiss, Quitman, Tate, Tippah, Tishomingo, Tunica, Union, Warren, Wayne, Webster, Winston.
Missouri
Counties of Bollinger, Buchanan, Butler, Caldwell, Cape Girardeau, Carter, Clay, Clinton, DeKalb, Dunklin, Franklin, Iron,
Jackson, Jefferson, Lafayette, Madison, Mississippi, New Madrid,Pemiscot, Perry, Platte, Ray, Reynolds, Ripley, St. Francois,
St. Louis, Ste. Genevieve, Scott, Stoddard, Washington, Wayne.
Montana
Counties of Beaverhead, Blaine, Broadwater, Carbon, Carter, Cascade, Chouteau, Custer, Daniels, Dawson, Deer Lodge, Fallon,
Fergus, Flathead, Gallatin, Garfield, Glacier, Golden Valley,Granite, Hill, Jefferson, Judith Basin, Lake, Lewis and Clark,
Liberty, Lincoln, Madison, McCone, Meagher, Mineral, Missoula,Musselshell, Park, Phillips, Pondera, Powder River, Powell,
Prairie, Ravalli, Richland, Roosevelt, Rosebud, Sanders, Sheridan, Silver Bow, Stillwater, SweetGrass, Teton, Toole, Valley,
Wheatland, Wibaux, Yellowstone.
Nebraska
Counties of Box Butte, Dawes, Garden, Morrill, Scotts Bluff, Sheridan, Sioux.
Nevada
Carson City. Counties of Churchill, Clark, Douglas, Elko, Esmeralda, Eureka, Humboldt, Lander, Lincoln, Lyon, Mineral,
Nye, Pershing, Storey, Washoe, White Pine.
New Mexico
Counties of Catron, Chaves, Colfax, DeBaca, Dona Ana, Eddy, Grant, Harding, Hidalgo, Lea,Lincoln, Luna, Otero, Quay,
Roosevelt, Sierra, Socorro, Union.
New York
Counties of Erie, Essex, Franklin, Genesee,Hamilton, Herkimer, Jefferson, Lewis, Livingston, Monroe, Niagara, Ontario,
Orleans, Oswego, St. Lawrence, Wayne, Wyoming.
2008–42 I.R.B.928October 20, 2008

North Carolina
Counties of Alamance, Alexander, Alleghany, Anson, Ashe, Avery, Beaufort, Bertie, Bladen, Brunswick, Buncombe, Burke,
Cabarrus, Caldwell, Camden, Carteret, Caswell, Catawba, Chatham, Cherokee, Chowan, Clay, Cleveland, Columbus, Craven,
Cumberland, Currituck, Dare, Davidson, Davie, Duplin, Durham, Edgecombe, Forsyth, Franklin, Gaston, Gates, Graham,
Granville, Greene, Guilford, Halifax, Harnett, Haywood, Henderson, Hertford, Hoke, Hyde, Iredell, Jackson, Johnston, Jones,
Lee, Lenoir, Lincoln, Macon, Madison, Martin, McDowell, Mecklenburg, Mitchell,Montgomery, Moore, Nash, New Hanover,
Northampton, Onslow, Orange, Pamlico, Pasquotank, Pender, Perquimans, Person, Pitt, Polk, Randolph, Richmond, Robeson,
Rockingham, Rowan, Rutherford, Sampson, Scotland, Stanly, Stokes, Surry, Swain, Transylvania, Tyrrell, Union, Vance, Wake,
Warren, Washington, Watauga, Wayne, Wilkes, Wilson, Yadkin, Yancey.
North Dakota
Counties of Adams, Benson, Billings, Bottineau, Bowman, Burke, Burleigh, Cavalier, Divide, Dunn, Golden Valley, Grant,
Hettinger, McHenry, McKenzie, McLean, Mercer, Morton, Mountrail,Oliver, Pierce, Ramsey, Renville, Rolette, Sheridan, Sioux,
Slope,Stark,Towner,Ward,Wells,Williams.
Ohio
Counties of Adams, Athens, Brown, Butler, Clark, Clermont, Clinton, Darke, Fairfield, Fayette, Gallia, Greene, Hamilton,
Highland, Hocking, Jackson, Lawrence, Madison, Meigs, Miami, Montgomery, Pickaway, Pike, Preble, Ross, Scioto, Vinton,
Warren.
Oklahoma
Counties of Beaver, Cimarron, Ellis, Harper, Texas.
Oregon
Counties of Baker, Deschutes, Grant, Harney, Lake, Malheur, Umatilla, Union, Wallowa.
South Carolina
Counties of Abbeville, Aiken, Allendale, Anderson, Bamberg, Barnwell, Berkeley, Calhoun, Charleston, Cherokee, Chester,
Chesterfield, Clarendon, Colleton, Darlington, Dillon, Dorchester, Edgefield, Fairfield, Florence, Georgetown, Greenville,
Greenwood, Hampton, Horry, Jasper, Kershaw, Lancaster, Laurens, Lee, Lexington, Marion, Marlboro, McCormick, Newberry,
Oconee, Orangeburg, Pickens, Richland, Saluda, Spartanburg, Sumter, Union, Williamsburg, York.
South Dakota
Counties of Butte, Corson, Custer, Fall River, Haakon, Harding, Jackson, Lawrence, Meade, Pennington, Perkins, Shannon,
Ziebach.
Tennessee
Counties of Anderson, Bedford, Benton, Bledsoe, Blount, Bradley, Campbell, Cannon, Carroll, Carter, Cheatham, Chester,
Claiborne, Clay, Cocke, Coffee, Crockett, Cumberland, Davidson,Decatur, DeKalb, Dickson, Dyer, Fayette, Fentress, Franklin,
Gibson, Giles, Grainger, Greene, Grundy, Hamblen, Hamilton, Hancock, Hardeman, Hardin, Hawkins, Haywood, Henderson,
Henry, Hickman, Houston, Humphreys, Jackson, Jefferson, Johnson, Knox, Lake, Lauderdale, Lawrence, Lewis, Lincoln, Loudon,
Macon, Madison, Marion, Marshall, Maury, McMinn, McNairy, Meigs, Monroe, Montgomery, Moore, Morgan, Obion, Overton,
Perry, Pickett, Polk, Putnam, Rhea, Roane,Robertson, Rutherford, Scott, Sequatchie, Sevier, Shelby, Smith, Stewart, Sullivan,
Sumner, Tipton, Trousdale, Unicoi, Union, Van Buren, Warren, Washington, Wayne, Weakley, White, Williamson, Wilson.
October 20, 20089292008–42 I.R.B.

Texas
Counties of Andrews, Aransas, Atascosa, Austin, Bandera, Bastrop, Bee, Bell, Bexar, Blanco, Borden, Bosque, Brazoria, Brazos,
Brewster, Brooks, Brown, Burleson, Burnet, Caldwell, Calhoun,Callahan, Cameron, Chambers, Cochran, Coke, Coleman, Collin,
Colorado, Comal, Comanche, Concho, Coryell, Crane, Crockett, Culberson, Dallam, Dallas, Dawson, Deaf Smith, Denton,
DeWitt, Dimmit, Duval, Eastland, Ector, Edwards, El Paso, Ellis, Erath, Falls, Fayette, Fisher, Fort Bend, Freestone, Frio, Gaines,
Galveston, Gillespie, Glasscock, Goliad, Gonzales, Grimes, Guadalupe, Hamilton, Hansford, Harris, Hartley, Haskell, Hays,
Hidalgo, Hill, Hockley, Hood, Howard, Hudspeth, Hutchinson, Irion, Jack, Jackson, Jeff Davis, Jefferson, Jim Hogg, Jim Wells,
Johnson, Jones, Karnes, Kaufman, Kendall, Kenedy, Kent, Kerr, Kimble, Kinney, Kleberg, La Salle, Lampasas, Lavaca, Lee,
Leon, Limestone, Lipscomb, Live Oak, Llano, Loving, Madison,Martin, Mason, Matagorda, Maverick, McCulloch, McLennan,
McMullen, Medina, Menard, Midland, Milam, Mills, Mitchell, Montgomery, Moore, Nolan, Nueces, Ochiltree, Oldham,
Palo Pinto, Panola, Parker, Pecos, Potter, Presidio, Randall, Reagan, Real, Reeves, Refugio, Robertson, Rockwall, Runnels,
Sabine, San Augustine, San Patricio, San Saba, Schleicher, Scurry, Shackelford, Shelby, Sherman,Somervell, Starr, Stephens,
Sterling, Stonewall, Sutton, Tarrant, Taylor, Terrell, Terry, TomGreen, Travis, Upton, Uvalde, ValVerde, Victoria, Waller, Ward,
Washington, Webb, Wharton, Willacy, Williamson, Wilson, Winkler, Wise, Yoakum, Young, Zapata, Zavala.
Utah
Counties of Beaver, Box Elder, Cache, Carbon, Daggett, Davis, Duchesne, Emery, Garfield, Grand, Iron, Juab, Kane, Millard,
Morgan, Piute, Rich, Salt Lake, San Juan, Sanpete, Sevier, Summit, Tooele, Uintah, Utah, Wasatch, Washington, Wayne, Weber.
Virginia
Cities of Alexandria, Bedford, Bristol, Charlottesville, Chesapeake, Colonial Heights, Danville, Emporia, Fairfax, Falls
Church, Franklin, Fredericksburg, Galax, Hampton, Hopewell, Lynchburg, Manassas, Manassas Park, Martinsville, Newport
News, Norfolk, Norton, Petersburg, Poquoson, Portsmouth, Radford, Richmond, Roanoke, Salem, Suffolk, Virginia Beach,
Williamsburg. Counties of Accomack, Albemarle, Amelia, Amherst, Appomattox, Arlington, Augusta, Bedford, Bland, Botetourt,
Brunswick, Buchanan, Buckingham, Campbell, Caroline, Carroll,Charles City, Charlotte, Chesterfield, Clarke, Craig, Culpeper,
Cumberland, Dickenson, Dinwiddie, Essex, Fairfax, Fauquier, Floyd, Fluvanna, Franklin, Giles, Gloucester, Goochland, Grayson,
Greene, Greensville, Halifax, Hanover, Henrico, Henry, Isle of Wight, James City, King and Queen, King George, King William,
Lancaster, Lee, Loudoun, Louisa, Lunenburg, Madison, Mathews, Mecklenburg, Middlesex, Montgomery, Nelson, New Kent,
Northampton, Northumberland, Nottoway, Orange, Page, Patrick, Pittsylvania, Powhatan, Prince Edward, Prince George, Prince
William, Pulaski, Rappahannock, Richmond, Roanoke, Rockingham, Russell, Scott, Smyth, Southampton, Spotsylvania, Stafford,
Surry, Sussex, Tazewell, Warren, Washington, Westmoreland, Wise, Wythe, York.
Washington
Counties of Asotin, Columbia, Garfield, Pend Oreille, Spokane, Stevens, Whitman.
West Virginia
Counties of Boone, Cabell, Fayette, Jackson, Jefferson, Kanawha, Lincoln, Logan, Mason, McDowell, Mercer, Mingo, Monroe,
Putnam, Raleigh, Roane, Summers, Wayne, Wirt, Wood, Wyoming.
Wisconsin
Counties of Ashland, Barron, Bayfield, Burnett, Door, Douglas, Florence, Forest, Iron, Langlade, Lincoln, Marinette, Oconto,
Oneida, Polk, Price, Rusk, Sawyer, Vilas, Washburn.
Wyoming
Counties of Carbon, Fremont, Goshen, Hot Springs, Lincoln, Natrona, Niobrara, Park, Sublette, Sweetwater, Teton, Uinta,
Washakie.
Hurricane Ike Disaster Relief
Notice 2008–87
I. PURPOSE
The Internal Revenue Service, the De-
partment of Labor’s Employee Benefits
Security Administration (“EBSA”), and
the Pension Benefit Guaranty Corporation
(“PBGC”) are providing relief in connec-
tion with certain employee benefit plans
because of damage caused by Hurricane
Ike (“Ike”). The relief provided by this
notice is in addition to the relief already
provided by the Service, EBSA, and the
PBGC to victims of Ike.
II. BACKGROUND
A.Provisions Relating to Disaster Relief.
Section 7508A(b) of the Code provides
that, in the case of a pension or other
employee benefit plan, or any sponsor,
administrator, participant, beneficiary, or
other person with respect to such plan,
affected by a Presidentially declared dis-
aster or a terroristic or military action, the
Secretary of the Treasury may prescribe a
period of up to 1 year which may be dis-
regarded in determining the date by which
any action is required or permitted to be
2008–42 I.R.B.930October 20, 2008

completed. No plan is to be treated as
failing to be operated in accordance with
its terms solely because the plan disre-
gards any period by reason of such relief.
Sections 518 and 4002(i) of the Employee
Retirement Income Security Act of 1974,
Pub. L. No. 93–406 (“ERISA”) authorize
the provision of parallel relief under Titles
I and IV of ERISA.
B.Pre-Pension Protection Act of 2006.
The following provisions apply to peri-
ods for which relevant changes made by
the Pension Protection Act of 2006, Pub-
lic Law 109–280 (120 Stat. 780) (“PPA”),
do not apply (generally plan years begin-
ning before January 1, 2008).
Section 412(a) of the Code and sec-
tion 302(a) of ERISA provide that, in order
for a plan to meet the minimum funding
standards of the Code and ERISA, the plan
must not have an accumulated funding de-
ficiency as of the end of any plan year.
Section 412(c)(10) of the Code and section
302(c)(10) of ERISA provide that, for pur-
poses of satisfying the minimum funding
requirements of the Code and ERISA, any
contributions for a plan year made by an
employer by the end of the 8
1
/2-month pe-
riod following the end of such plan year are
deemed to have been made on the last day
of the plan year. For a plan with a 2007 cal-
endar-year plan year, this 8
1
/2-month pe-
riod ends on September 15, 2008.
Section 412(d) of the Code and sec-
tion 303 of ERISA provide for waivers
of the minimum funding requirements in
the event of temporary substantial busi-
ness hardship. In order for a plan other
than a multiemployer plan to receive such
a waiver, § 412(d)(4) of the Code and sec-
tion 303(d)(1) of ERISA provide that an
application for such a waiver must be sub-
mitted no later than the 15th day of the 3rd
month beginning after the close of the plan
year for which the waiver is sought. Thus,
for example, in order for a plan to receive
a waiver of the minimum funding require-
ments for a plan year that ended on June
30, 2008, the sponsor of the plan must have
submitted an application by September 15,
2008.
Section 412(m)(1) of the Code and sec-
tion 302(e)(1) of ERISA impose a higher
rate of interest on any unpaid required
quarterly installments for certain plans
with a funded current liability percentage
of less than 100 percent for the preceding
plan year. Section 412(m)(5) of the Code
and section 302(e)(5) of ERISA increase
the required quarterly installments to the
amount needed to prevent a liquidity short-
fall (as defined in those sections). For a
12-month plan year beginning on October
1, 2007, the due dates for the required
installments are January 15, 2008, April
15, 2008, July 15, 2008, and October 15,
2008.
Section 412(n) of the Code and sec-
tion 302(f) of ERISA provide, for certain
plans with a funded current liability per-
centage of less than 100 percent for the
plan year, that a lien arises in favor of
the plan if the required installments or any
other payment required under those sec-
tions are not made to the plan before the
due date for such installment or other pay-
ment and if the aggregate unpaid balance
of such installmentsor other payments ex-
ceeds $1,000,000. The lien may be per-
fected by the PBGC.
Under the PBGC’s premium regula-
tions, contributions may be taken into
account for determining a plan’s unfunded
vested benefits for a premium payment
year or a plan’s entitlement to the full
funding limit exemption from the vari-
able-rate premium for a premium payment
year if the contributions (1) are for a plan
year before the premium payment year
and (2) are made on or before the earlier
of (a) the due date for payment of the
variable-rate premium or (b) the date the
variable-rate premium is paid (29 CFR
§§ 4006.4(b)(2)(iv) and 4006.5(a)(5)).
In addition, there are Title IV reporting
requirements arising from certain late con-
tributions (e.g., 29 CFR § 4043.25).
C.Post-PPA (Single Employer Pension
Plans).The following provisions apply to
periods for which relevant changes made
by PPA apply (generally plan years begin-
ning after December 31, 2007).
Section 412(a) of the Code and section
302(a) of ERISA require that an employer
that sponsors a single employer pension
plan contribute the minimum required con-
tribution determined under § 430 of the
Code and section 303 of ERISA (or, in
the case of a money purchase plan, as re-
quired under the terms of the plan) for the
plan year. Section 430(j)(1) of the Code
and section 303(j)(1) of ERISA provide
that the due date for payment of the mini-
mum required contribution for a plan year
is 8
1
/2-months after the close of the plan
year.
Section 412(c) of the Code and sec-
tion 302(c) of ERISA provide for waivers
of the minimum funding requirements in
the event of temporary substantial busi-
ness hardship. In order for a plan other
than a multiemployer plan to receive such
a waiver, § 412(c)(5) of the Code and sec-
tion 302(c)(5) of ERISA provide that an
application for such a waiver must be sub-
mitted no later than the 15th day of the 3rd
month beginning after the close of the plan
year for which the waiver is sought. Thus,
for example, in order for a plan to receive
a waiver of the minimum funding require-
ments for the plan year beginning January
1, 2008, and ending June 30, 2008, the
sponsor of the plan must have submitted
an application by September 15, 2008.
Section 430(j)(3) of the Code and sec-
tion 303(j)(3) of ERISA impose a higher
rate of interest with respect to late quar-
terly installments for a plan with a funding
shortfall for the prior plan year. Section
430(j)(4) of the Code and section 303(j)(4)
of ERISA increase thequarterly install-
ments to the amount needed to prevent a
liquidity shortfall (as defined in those sec-
tions). For a plan with a calendar-year plan
year, the due dates for the required quar-
terly installments for the 2008 plan year
are April 15, 2008, July 15, 2008, Octo-
ber 15, 2008, and January 15, 2009.
Section 430(k) of the Code and sec-
tion 303(k) of ERISA provide, for certain
plans with a funding target attainment per-
centage of less than 100 percent for the
plan year, that a lien arises in favor of
the plan if the required installments or any
other payment required under those sec-
tions are not made to the plan before the
due date for such installment or other pay-
ment and if the aggregate unpaid balance
of such installments or other payments ex-
ceeds $1,000,000. The lien may be per-
fected by the PBGC.
Section 436 of the Code and section
206(g) of ERISA impose certain benefit
restrictions that are applied based on a
plan’s adjusted funding target attainment
percentage for the plan year. For this pur-
pose, § 436(h)(2) of the Code and sec-
tion 206(g)(7)(B) of ERISA provide that
a plan’s adjusted funding target attainment
percentage for the plan year is conclu-
sively presumed to be less than 60 percent
from the first day of the 10
th
month of the
October 20, 20089312008–42 I.R.B.

plan year through the end of the plan year
if no certification of the adjusted funding
target attainment percentage for the plan
year is made before the first day of the 10
th
month of the plan year. For a plan with
a 2008 calendar-year plan year, the dead-
line for this certification is September 30,
2008. Section 436(h)(3) of the Code and
section 206(g)(7)(C) of ERISA require, in
certain cases in which no certification of
the adjusted funding target attainment per-
centage for a plan year is made before the
first day of the 4
th
month of such year, that
the plan’s adjusted funding target attain-
ment percentage is presumed to be equal
to 10 percentage points less than the ad-
justed funding target attainment percent-
age for the preceding plan year for a period
of time beginning on the first day of the 4
th
month. For a plan year beginning July 1,
2008, the deadline for this certification is
September 30, 2008.
Section 101(j)(1) of ERISA provides
that the plan administrator of a single em-
ployer plan is required to provide written
notice to participants and beneficiaries
within 30 days after the date the plan
has become subject to a benefit restric-
tion under section 206(g)(1) of ERISA
(under which the payment of certain un-
predictable contingent event benefits is
restricted)orsection206(g)(3)ofERISA
(under which the payment of certain accel-
erated benefit distributions is restricted).
Section 101(j)(2) of ERISA provides that,
for a single employer plan under which
benefit accruals are restricted under sec-
tion 206(g)(4) of ERISA because the
plan’s adjusted funding target attainment
percentage is less than 60 percent, the plan
administrator is required to provide writ-
ten notice to participants and beneficiaries
within 30 days after the earlier of the plan’s
valuation date or the date the adjusted
funding target attainment percentage is
presumed to be less than 60 percent for the
plan year pursuant to section 206(g)(7)(B)
of ERISA.
Under the PBGC’s premium regula-
tions, contributions may be taken into
account for determining a plan’s unfunded
vested benefits for a premium payment
year if the contributions (1) are for a plan
year before the premium payment year
and (2) are made on or before the earlier
of (a) the due date for payment of the
variable-rate premium or (b) the date the
variable-rate premium is paid (29 CFR
§ 4006(c)). In addition, there are Title
IV reporting requirements arising from
certain late contributions (e.g.,29CFR
§ 4043.25).
D.Post-PPA (Multiemployer Defined Ben-
efit Plans).The following provisions ap-
ply to periods for which relevant changes
made by PPA apply.
Section 432(b)(3)(A) of the Code and
section 305(b)(3)(A) of ERISA provide
special rules for certain multiemployer
defined benefit plans. For a plan that is
subject to those requirements, the plan ac-
tuary must certify whether or not the plan
is in endangered status for the plan year,
whether or not the plan is or will be in criti-
cal status for the plan year, and, in the case
of a plan which is in a funding improve-
ment or rehabilitation period, whether
or not the plan is making the scheduled
progress in meeting the requirements of
its funding improvement or rehabilitation
plan. The deadline for this certification
for a plan year is the 90th day of the plan
year. Section 432(c)(1) of the Code and
section 305(c)(1) of ERISA require, for
the first plan year that a multiemployer
plan is in endangered status, that the plan
sponsor adopt a funding improvement
plan no later than 240 days following the
required date for the actuarial certification
of endangered status. Section 432(e)(1) of
the Code and section 305(e)(1) of ERISA
require, for the first plan year that a multi-
employer plan is in critical status, that the
plan sponsor adopt a rehabilitation plan no
later than 240 days following the required
date for the actuarial certification of criti-
cal status. For a multiemployer plan that
is in endangered or critical status for its
2008 calendar-year plan year, this date is
November 25, 2008.
III. RELIEF
Pursuant to § 7508A(b) of the Code, the
relief set forth in this Part III applies to
an Affected Plan. A plan is an Affected
Plan only if any of the following were lo-
cated in the counties of Brazoria, Cham-
bers, Galveston, Harris, Jefferson, Liberty,
Montgomery, or Orange in the State of
Texas as of September 7, 2008: the princi-
pal place of business of the employer that
maintains the plan (in the case of a sin-
gle employer plan, determined disregard-
ing the rules of § 414(b) and (c) of the
Code); the principal place of business of
employers that employ more than 50 per-
cent of the active participants covered by
the plan (in the case of a plan covering em-
ployees of more than one employer, deter-
mined disregarding the rules of § 414(b)
and (c)); the office of the plan or the plan
administrator; the office of the primary
record keeper serving the plan; or the of-
fice of the enrolled actuary or other ad-
visor that had been retained by the plan
or the employer to make funding determi-
nations or certifications for which the due
date falls between the period beginning on
September 7, 2008, and ending on Decem-
ber 15, 2008. For purposes of the pre-
ceding sentence, the term “office” includes
only the worksite of those individuals, and
the location of any records, necessary to
determine the plan’s funding requirements
for the relevant period.
A.Pre-PPA.The following relief applies to
periods for which relevant changes made
byPPAdonotapply(generallyplanyears
beginning before January 1, 2008).
For any plan that is an Affected Plan,
if the date described in § 412(c)(10) or
412(m) of the Code and section 302(c)(10)
or 302(e) of ERISA for making a contri-
bution falls within the period beginning
on September 7, 2008, and ending on De-
cember 15, 2008, then the deadline for
that contribution is postponed to Decem-
ber 15, 2008. If the deadline described
in § 412(d)(4) of the Code and section
303(d)(1) of ERISA for applying for a
waiver for an Affected Plan falls within the
period beginning on September 7, 2008,
and ending on December 15, 2008, then
that deadline is postponed to December 15,
2008.
The relief set forth in this paragraph ap-
plies under Title IV of ERISA for purposes
of determining a plan’s unfunded vested
benefits for a premium payment year or en-
titlement to the full funding limit exemp-
tion from the variable-rate premium for a
premium payment year. For any plan for
which this notice extends a date described
in § 412(c)(10) of the Code and section
302(c)(10) of ERISA, a contribution for
any plan year before the premium payment
year may be taken into account if it is made
on or before the earlier of (1) the extended
§ 412(c)(10)/section 302(c)(10) date under
this notice or (2) the date of the plan’s vari-
able-rate premium filing (or, if applicable,
2008–42 I.R.B.932October 20, 2008

the plan’s amended variable-rate premium
filing) for the premium payment year.
B.Post-PPA (Single Employer Pension
Plans).The following relief applies to pe-
riods for which relevant changes made by
PPA apply (generally plan years beginning
after December 31, 2007).
For any plan that is an Affected Plan,
if the date described in § 430(j)(1) or
430(j)(3) of the Code and section 303(j)(1)
or 303(j)(3) of ERISA for making a con-
tribution falls within the period beginning
on September 7, 2008, and ending on De-
cember 15, 2008, then the date for that
contribution is postponed to December 15,
2008. If the date described in § 412(c)(5)
of the Code and section 302(c)(5) of
ERISA for applying for a waiver for an
Affected Plan falls within the period be-
ginning on September 7, 2008, and ending
on December 15, 2008, then that deadline
is postponed to December 15, 2008. If the
date described in § 436(h)(2) or 436(h)(3)
of the Code and section 206(g)(7)(B) or
206(g)(7)(C) of ERISA for certification
of the adjusted funded target attainment
percentage falls within the period begin-
ning on September 7, 2008, and ending
on December 15, 2008, then the date by
which such certification must be made is
postponed to December 15, 2008.
WithrespecttoanyplanthatisanAf-
fected Plan, if the deadline for furnishing a
notice required under section 101(j)(1) or
(2) of ERISA falls within the period begin-
ning on September 7, 2008, and ending on
December 15, 2008, then the date by which
such notice must be furnished is postponed
to December 15, 2008.
The relief set forth in this paragraph
applies under Title IV of ERISA for pur-
poses of determining a plan’s unfunded
vested benefits for a premium payment
year or the variable-rate premium for a
premium payment year. For any plan for
which this notice extends a date described
in § 430(j)(1) of the Code and section
303(j)(1) of ERISA, a contribution for any
plan year before the premium payment
year may be taken into account if it is made
on or before the earlier of (1) the extended
§ 430(j)(1)/section 303(j)(1) contribution
due date under this notice or (2) the date
of the plan’s variable-rate premium filing
(or, if applicable, the plan’s amended vari-
able-rate premium filing) for the premium
payment year.
C.Post-PPA (Multiemployer Defined Ben-
efit Plans).
If the deadline described in § 432(c)(1)
or 432(e)(1) of the Code and section
305(c)(1) or 305(e)(1) of ERISA by which
a plan sponsor of an Affected Plan that is in
endangered or critical status must adopt a
funding improvement plan or a rehabilita-
tion plan falls within the period beginning
on September 7, 2008, and ending on
December 15, 2008, then that deadline is
postponed to December 15, 2008. For any
plan that is an Affected Plan, if the date de-
scribed in § 432(b)(3)(A) of the Code and
section 305(b)(3)(A) of ERISA by which
the plan actuary must certify whether or
not the plan is in endangered status for
the plan year and whether or not the plan
is or will be in critical status for the plan
year falls within the period beginning on
September 7, 2008, and ending on Decem-
ber 15, 2008, then the date by which that
certification must be made is postponed
to December 15, 2008. If the date by
which a certification of an Affected Plan’s
status is postponed in accordance with
the preceding sentence, the date described
in § 432(c)(1) or 432(e)(1) of the Code
andsection305(c)or305(e)ofERISA
by which the plan sponsor of an Affected
Plan that is in critical or endangered status
must adopt a funding improvement plan or
a rehabilitation plan nonetheless continues
to be determined based on the original
deadline for the certification of the plan’s
status.
DRAFTING INFORMATION
The principal authors of this notice
are David Ziegler and Roger Kuehnle
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, between the hours
of 8:00 a.m. and 4:30 p.m. East-
ern Time, Monday through Friday (a
toll-free number). Mr. Ziegler and
Mr. Kuehnle can be contacted via e-mail
atRetirementPlanQuestions@irs.gov.
Expanded Temporary Rule
Allowing Governmental
Issuers to Purchase Their Own
Tax-Exempt Bonds
Notice 2008–88
SECTION 1. Purpose
This notice amends and supplements
Notice 2008–41, 2008–15 I.R.B. 742
(April 14, 2008), regarding reissuance
standards for tax-exempt bonds. (Defined
terms in Notice 2008–41 shall have the
same meanings when used in this notice.)
This notice expands the circumstances and
time periods during which the Treasury
Department and the Internal Revenue Ser-
vice (“IRS”) will treat a tax-exempt bond
that is purchased by its state or local gov-
ernmental issuer as continuing in effect
without resulting in a reissuance or retire-
ment of the purchased tax-exempt bond
solely for purposes of § 103 and §§ 141
through 150 of the Internal Revenue Code,
as amended (“Code”). (Except as noted,
section references in this notice are to the
Code and the Income Tax Regulations.)
This notice is intended to provide flexibil-
ity to assist state and local governments in
efforts to facilitate liquidity and stability
in the short-term sector of the tax-exempt
bond market.
SECTION 2. Background
In response to auction failures and liq-
uidity constraints in the auction rate bond
sector of the tax-exempt bond market, § 4
of Notice 2008–41 provides a special tem-
porary rule which allows governmental is-
suers to purchase their own tax-exempt
auction rate bonds on a temporary basis
without resulting in a reissuance or retire-
ment of the purchased tax-exempt bonds
solely for purposes of § 103 and §§ 141 to
150. To be eligible for that special rule,
a governmental issuer must purchase the
tax-exempt auction rate bonds before Oc-
tober 1, 2008, and hold those bonds for not
more than a 180-day period from the date
of purchase.
Recently, circumstances affecting liq-
uidity and stability in the credit markets
have extended beyond the auction rate
bond sector to affect other sectors of
the short-term tax-exempt bond mar-
ket, including other “qualified tender
October 20, 20089332008–42 I.R.B.

bonds” (as defined in § 3.2 of Notice
2008–41) (e.g., variable rate demand
bonds with seven-day put options) and
tax-exempt commercial paper. In the
case of commercial paper, a special rule
under § 1.150–1(c)(4)(ii) allows cer-
tain short-term tax-exempt bonds issued
pursuant to the same commercial paper
program to be treated as part of the same
issue. For purposes of this notice, refer-
ences to “tax-exempt commercial paper”
means tax-exempt bonds issued pursuant
to the same commercial paper program
that are treated as a single issue under this
special rule in § 1.150–1(c)(4)(ii).
This notice expands the circumstances
and time periods during which govern-
mental issuers may purchase their own tax-
exempt bonds to include the purchase and
holding of all qualified tender bonds and
tax-exempt commercial paper through the
end of 2009. This notice also extends cer-
tain other time deadlines for special rules
in Notice 2008–41.
SECTION 3. Scope and Application
3.1Expanded Temporary Rule Allow-
ing Governmental Issuers to Purchase
Their Own Tax-Exempt Bonds. Solely for
purposes of § 103 and §§ 141 through
150, the Treasury Department and the IRS
will treat a tax-exempt “qualified tender
bond” (as defined in Notice 2008–41) or
“tax-exempt commercial paper” (as de-
finedin§2ofthisnotice)thatispurchased
by its “governmental issuer” (as defined
in Notice 2008–41) on a temporary basis
as continuing in effect without resulting
in a reissuance or retirement of the pur-
chased tax-exempt bond if, irrespective of
when the governmental issuer purchases
the bond (including a purchase of a bond
before October 1, 2008), the governmental
issuer holds the bond until not later than
December 31, 2009. Subsequent to the
end of this period, a governmental issuer
generally may not hold its own bond with-
out causing a reissuance or retirement of
such bond under the general rules in § 3.1
of Notice 2008–41 and other applicable
law.
Thus, recognizing that the purchased
bond is treated as continuing in effect with-
out resulting in a reissuance or retirement
of that bond solely for purposes of § 103
and §§ 141 through 150 during the per-
mitted holding period until not later than
December 31, 2009 (“permitted holding
period”), the governmental issuer may re-
fund the purchased bond with a refunding
bond, tender the purchased bond for pur-
chase in a qualified tender right in its ca-
pacity as a bondholder, or otherwise re-
sell the purchased bond during this permit-
ted holding period. Further, in the case of
the purchase of any particular obligation of
tax-exempt commercial paper, including a
purchase of such a particular obligation at
maturity, a refinancing of that purchased
tax-exempt commercial paper during the
permitted holding period will be treated as
part of the same issue as the issue of which
the purchased tax-exempt commercial pa-
per was a part. After the end of this per-
mitted holding period, however, a govern-
mental issuer generally may not hold its
own bond without causing a reissuance or
retirement of such bond under the general
rules in Notice 2008–41 and other applica-
ble law.
3.2Extension of Certain Other Time
Limits for Special Rules in Notice
2008–41. Section 3.2(3)(b) of Notice
2008–41 regarding operating rules for
qualified tender rights is amended to ex-
tend the final date for purchase of bonds
pursuant to qualified tender rights for
which the special 180-day holding pe-
riod applies (in lieu of the general 90-day
holding period rule for this purpose) from
October 1, 2008 to December 31, 2009.
Section 6.2 of Notice 2008–41 regarding
the treatment of certain waivers of inter-
est rate caps on tax-exempt auction rate
bonds is amended to extend the final date
on which covered waivers of interest rate
caps are disregarded from October 1, 2008
to December 31, 2009.
3.3No Inferences on Law. This notice
provides administrative relief in further-
ance of public policy to promote liquid-
ity and stability in the short-term tax-ex-
empt bond market. Except with respect
to the administrative relief expressly pro-
vided in this notice, no inference should
be drawn from this notice regarding any
other Federal tax issues affecting tax-ex-
empt bonds or any other security. In addi-
tion, this notice is not intended to address
any other Federal tax issue implicated in
the transactions described in this notice al-
lowing governmental issuers to purchase
their own tax-exempt bonds on a tempo-
rary basis in prescribed circumstances.
SECTION 4. Effect on other
Documents
This notice amends and supplements
Notice 2008–41.
SECTION 5. Effective Date
This notice is effective as of March 25,
2008, which is the effective date of No-
tice 2008–41. Issuers of tax-exempt bonds
may apply and rely on this notice to the
same extent and in the same manner as pro-
vided in § 8 of Notice 2008–41.
SECTION 6. Drafting Information
The principal author of this notice is
Timothy L. Jones, of the Office of Asso-
ciate Chief Counsel (Financial Institutions
and Products). However, other personnel
from the IRS and the Treasury Department
participated in its development. For fur-
ther information regarding this notice, con-
tact Mr. Jones at (202) 622–3980 (not a
toll-free call).
26 CFR 601.201: Rulings and determination letters.
(Also: Part I, §§ 409A; 1.409A–1.)
Rev. Proc. 2008–61
SECTION 1. PURPOSE
This revenue procedure modifies and
amplifies Rev. Proc. 2008–3, 2008–1
I.R.B. 110, with respect to areas in which
rulings and determination letters will not
be issued as to the tax consequences of ar-
rangements described in § 409A of the In-
ternal Revenue Code. As described below,
this revenue procedure does not provide
for the Service to issue rulings on the appli-
cation of § 409A to nonqualified deferred
compensation plans, but does provide for
the issuance of rulings in other areas with
respect to compensation plans that may be
coveredby§409A.
SECTION 2. BACKGROUND
.01 Section 5 of Rev. Proc. 2008–3 lists
specific areas for which the Internal Rev-
enue Service (Service) temporarily is not
issuing rulings and determinations because
those matters are under study.
2008–42 I.R.B.934October 20, 2008

.02 Section 3.01 of Rev. Proc. 2008–3
reflects those areas in which rulings or de-
termination letters will not be issued with
respect to specific questions and problems.
.03 Section 5.08 of Rev. Proc. 2008–3
provides that the Service will not rule on
the tax consequences of arrangements de-
scribed in § 409A, including rulings as to
whether an arrangement is an arrangement
described in § 409A.
.04 Section 409A provides certain re-
quirements applicable to nonqualified de-
ferred compensation plans. If a plan does
not meet those requirements, participants
in the plan are required to immediately in-
clude amounts deferred under the plan in
income and pay additional taxes on such
income.
.05 The Treasury Department and the
Service have issued final regulations un-
der § 409A (T.D. 9321, 2007–19 I.R.B.
1123 [72 Fed. Reg. 19234] (April 17,
2007)). The final regulations apply to tax-
able years beginning on or after January
1, 2009. Notice 2007–86, 2007–46 I.R.B.
990. The final regulations define the terms
nonqualified deferred compensation plan
and deferral of compensation for purposes
of § 409A. See § 1.409A–1(a) & (b).
.06 Since publication of the final reg-
ulations, the Treasury Department and
Service have issued Notice 2007–100,
2007–52 I.R.B. 1243, providing transi-
tional relief and guidance on the correction
of certain failures of a nonqualified de-
ferred compensation plan to comply with
§ 409A in operation. Section V of No-
tice 2007–100 requests comments on all
aspects of a potential corrections program
in which taxpayers could correct certain
failures to comply with § 409A(a) in the
operation of a nonqualified deferred com-
pensation plan.
.07 Based on experience with the pri-
vate letter ruling program, the Service has
determined that section 5.08 of Rev. Proc.
2008–3 unnecessarily restricts the ability
of the Service to issue private letter rulings
under Rev. Proc. 2008–1, 2008–1 I.R.B.
1 and Rev. Proc. 2008–4, 2008–1 I.R.B.
121. For example, the existing no-rule pol-
icy prevents the Service from issuing pri-
vate letter rulings with respect to estate
and gift tax consequences of proposedin-
ter vivosor testamentary transfers of rights
under nonqualified deferred compensation
plans, even though such issues do not di-
rectly involve the application of § 409A.
Also, the Service has been unable to is-
sue private letter rulings concerning issues
arising under the Federal Insurance Con-
tributions Act (FICA) with respect to non-
qualified deferred compensation.
.08 In light of the final regulations be-
coming applicable on January 1, 2009, and
the issuance of Notice 2007–100, the Ser-
vice has decided to modify and amplify
Rev. Proc. 2008–3. The Service will con-
tinue not to issue rulings concerning the
income tax consequences of establishing,
operating, or participating in a nonquali-
fied deferred compensation plan described
in § 409A, but the Service generally will
rule on the application of certain other tax
law provisions (such as FICA and estate
and gift taxes) to taxpayers who participate
in those plans. Specifically, rulings will
not be issued with respect to the following:
the income tax (including income tax with-
holding) consequences of establishing, op-
erating, or participating in a nonqualified
deferred compensation plan as defined in
§ 1.409A–1(a); whether a plan is described
in § 1.409A–1(a)(3)(iv) (certain plans sub-
ject to a totalization agreement and sim-
ilar plans) or § 1.409A–1(a)(3)(v) (cer-
tain broad-based foreign retirement plans);
whether a plan is abona fidevacation
leave, sick leave, or compensatory time
plan described in § 1.409A–1(a)(5); and
whether a plan provides for the deferral
of compensation under § 1.409A–1(b) (in-
cluding whether an amount is a short-term
deferral and whether certain stock rights,
foreign plans, and separation pay plans are
subject to § 409A).
SECTION 3. PROCEDURE
Rev. Proc. 2008–3 is modified by
deleting section 5.08. Rev. Proc. 2008–3
isamplifiedbyaddingthefollowingto
section 3.01:
Section 409A.—Inclusion in Gross
Income of Deferred Compensation Un-
der Nonqualified Deferred Compensation
Plans.—The income tax consequences
of establishing, operating, or partici-
pating in a nonqualified deferred com-
pensationplanwithinthemeaningof
§ 1.409A–1(a); whether a plan is de-
scribed in § 1.409A–1(a)(3)(iv) or (v);
whether a plan is abona fidevacation
leave, sick leave, or compensatory time
plan described in § 1.409A–1(a)(5); and
whether a plan provides for the deferral of
compensation under § 1.409A–1(b).
SECTION 4. EFFECT ON OTHER
REVENUE PROCEDURES
Rev. Proc. 2008–3 is modified and
amplified.
SECTION 5. EFFECTIVE DATE
This revenue procedure applies to rul-
ings and determination letters issued after
September 25, 2008.
DRAFTING INFORMATION
The principal author of this revenue
procedure is Bill Schmidt of the Office of
Division Counsel/Associate Chief Coun-
sel (Tax Exempt & Government Entities).
For further information regarding this rev-
enue procedure, contact Mr. Schmidt at
(202) 622–6030 (not a toll-free call).
26 CFR 601.201: Rulings and determination letters.
(Also Part I, § 430.)
Rev. Proc. 2008–62
SECTION 1. PURPOSE AND
CHANGES FROM REV. PROC.
2007–37
.01 The purpose of this revenue pro-
cedure is to set forth the procedure by
which the sponsor of a defined benefit
plan, other than a multiemployer plan,
may request and obtain approval for the
use of plan-specific substitute mortality
tables in accordance with § 430(h)(3)(C)
of the Internal Revenue Code (Code) and
§ 303(h)(3)(C) of the Employee Retire-
ment Income Security Act of 1974, as
amended (ERISA).
.02 This revenue procedure is an up-
date of Rev. Proc. 2007–37, 2007–25
I.R.B. 1433. Rev. Proc. 2007–37 was
based on the proposed regulations issued
under § 430(h)(3)(C) of the Code and
§ 303(h)(3)(C) of ERISA published in
the Federal Register on May 29, 2007, at
72 FR 29456 [REG–143601–06, 2007–24
I.R.B. 1398] (“proposed regulations”).
Final regulations under § 430(h)(3)(C)
were published in § 1.430(h)(3)–2 in the
Federal Register on July 31, 2008, at 73 FR
44632 [T.D. 9419, 2008–40 I.R.B. 790]
October 20, 20089352008–42 I.R.B.

(“regulations” or “final regulations”). This
revenue procedure reflects the provisions
of the final regulations, and includes
the following changes from Rev. Proc.
2007–37:
(1) The requirements in subsection 2.02
were updated to reflect the ability to use
a period of up to 5 years (or such longer
period as the Commissioner may permit in
future guidance) for the Experience Study
Period, and subsection 10.01 was revised
to clarify that the Experience Study Period
used to develop the unadjusted base tables
must coincide with the Experience Study
Period used to demonstrate credible mor-
tality experience.
(2) Subsections 4.01 and 5.06 were up-
dated to reflect the extension of the dead-
line for submitting requests to October 1,
2008, for substitute mortality tables to be
used effective for plan years beginning in
2009.
(3) The definition of the Base
Year in subsection 5.03 was updated
to reflect the revised definition in
§ 1.430(h)(3)–2(c)(2)(iii) of the final reg-
ulations.
(4) A new subsection 7.03 was in-
serted (and the former subsection 7.03 was
renumbered as subsection 7.04) to permit
plans within a Permissive Group to use
different Experience Study Periods (sub-
ject to specified conditions) if the plans
have different plan years.
(5) Subsection 9.01 was re-
vised to reflect the requirement in
§ 1.430(h)(3)–2(d)(1) of the final regula-
tions to increase the length of the period
used to demonstrate lack of credible
mortality experience if the Experience
Study Period is longer than 4 years.
(6) A new subsection 9.06 was inserted
to provide guidance for demonstrating lack
of credible mortality experience when the
Experience Study Period is developed us-
ing the approach in new subsection 7.03.
(7) A new subsection 9.07 was inserted
to permit alternative means of demonstrat-
ing lack of credible mortality experience.
(8) One set of sample annuity values
was eliminated with respect to nonannui-
tant mortality tables and adjustments were
made to the date of birth used for the an-
nuity values reported in subsection 13.03.
(9) References throughout the revenue
procedure to “newly acquired” plans were
changedto“newlyaffiliated”planstocon-
form to the language in the final regula-
tions.
SECTION 2. BACKGROUND
INFORMATION
.01 Section 412 of the Code provides
minimum funding requirements for de-
fined benefit pension plans. Section 430,
whichwasaddedbythePensionProtec-
tion Act of 2006, Pub. L. No. 109–280,
120 Stat. 780 (“PPA ’06”), specifies
the minimum funding requirements for
defined benefit plans other than multi-
employer plans pursuant to § 412 and is
generally effective for plan years begin-
ning on or after January 1, 2008. Section
430(h)(3)(A) sets forth rules regarding
the use of generally applicable mortal-
ity tables for purposes of § 430. Section
430(h)(3)(C) and § 303(h)(3)(C) of ERISA
provide that the Secretary of the Treasury
may approve substitute mortality tables
to be used in determining any present
value or making anycomputation under
those sections for a period not to exceed
ten years. Mortality tables meet the re-
quirements for substitute mortality tables
if the pension plan has a sufficient num-
ber of plan participants and the plan has
been maintained for a sufficient period of
time in order to have credible mortality
experience, and such tables reflect the ac-
tual experience of the plan and projected
trends in general mortality experience of
participants in pension plans. Except as
provided by the Secretary, a plan sponsor
cannot use substitute mortality tables for
any plan unless substitute mortality tables
are established and used for each other
plan subject to § 430 of the Code that is
maintained by the plan sponsor and the
plan sponsor’s controlled group.
.02 Section 1.430(h)(3)–1 of the In-
come Tax Regulations, which sets forth
rules regarding the use of generally ap-
plicable mortalitytables for purposes
of § 430, and § 1.430(h)(3)–2, which
sets forth rules for the use of substitute
mortality tables under § 430(h)(3)(C),
were published in the Federal Regis-
ter in proposed form on May 29, 2007.
Rev. Proc. 2007–37 was issued to pro-
vide procedures under which sponsors
of eligible plans could request and ob-
tain approval for plan-specific mortality
tables in accordance with proposed regu-
lation § 1.430(h)(3)–2. Final regulations
under § 430(h)(3)(C) were published in
§ 1.430(h)(3)–2 in the Federal Register on
July 31, 2008. This Rev. Proc. 2008–62
updates the procedures outlined in Rev.
Proc. 2007–37 to reflect the changes in
the final regulations.
Under both the proposed and final regu-
lations, substitute mortality tables must re-
flect the actual mortality experience of the
pension plan maintained by the plan spon-
sor for which the tables are to be used and
that mortality experience must be credible.
Separate mortality tables must be estab-
lished for each gender under the plan, and a
substitute mortality table is permitted to be
established for a gender only if the plan has
credible mortality experience with respect
to that gender. If the mortality experience
for one gender is credible but the mortal-
ity experience for the other gender is not
credible, then the substitute mortality ta-
bles are used for the gender that has credi-
ble mortality experience, and the mortality
tables under § 1.430(h)(3)–1 are used for
the gender that does not have credible mor-
tality experience. If separate mortality ta-
bles under § 430(h)(3)(D) are used for cer-
tain disabled individuals under a plan, then
those individuals are disregarded for all
purposes with respect to substitute mortal-
ity tables under § 430(h)(3)(C). Thus, if the
mortality tables under § 430(h)(3)(D) are
used for certain disabled individuals under
a plan, mortality experience with respect
to those individuals must be excluded in
determining mortality rates for substitute
mortality tables with respect to a plan.
Under the proposed regulations, a sub-
stitute mortality table would be based on
credible mortality experience for a gender
within a plan if and only if the mortality ex-
perience is based on at least 1,000 deaths
within that gender over the period covered
by the experience study. The experience
study would be based on mortality expe-
rience data over a 2, 3, or 4-consecutive
year period, the last day of which must be
less than 3 years before the first day of the
first plan year for which the substitute mor-
tality tables are to apply. The final regu-
lations retain the above provisions, except
that the maximum period of the experience
study is extended to a 5-consecutive year
period. In addition, the final regulations
provide that the Commissioner may allow
further extensions of the maximum expe-
rience study period in future guidance.
2008–42 I.R.B.936October 20, 2008

Development of a substitute mortality
table under the regulations requires cre-
ation of a base table (Base Table) and iden-
tification of a base year (Base Year), which
are then used to determine generational
substitute mortality tables. The Base Ta-
ble must be developed from a study of
the mortality experience of the plan us-
ing amounts-weighted data. The regu-
lations also set forth rules regarding de-
velopment of amounts-weighted mortality
rates for an age and the determination of
the Base Year. The regulations provide
that amounts-weighted mortality rates may
be derived from amounts-weighted mor-
tality rates for age groups.
The regulations provide that Base Ta-
bles may be constructed either directly
through graduation of amounts-weighted
mortality rates or indirectly by applying
a level percentage to tables prescribed by
§ 430(h)(3)(A), provided that the resulting
tables sufficiently reflect the plan’s mor-
tality experience. The Service may permit
the construction of Base Tables through
application of a level percentage to other
recognized mortality tables, applying sim-
ilar standards to ensure that the resulting
tables are sufficiently reflective of the
plan’s mortality experience.
The final regulations provide that a plan
sponsor cannot use substitute mortality ta-
bles for any plan for a plan year unless sub-
stitute mortality tables are established and
used for each other plan subject to § 430
that is maintained by the plan sponsor and
the plan sponsor’s controlled group for that
plan year (or, for plans with different plan
years, a portion of that plan year). Under
the regulations, the use of substitute mor-
tality tables for one plan would not be pro-
hibited merely because another plan main-
tained by the plan sponsor (or by a mem-
ber of the plan sponsor’s controlled group)
cannot use substitute mortality tables be-
cause neither the males nor the females
under that other plan have credible mor-
tality experience for a plan year. Thus,
if a sponsor’s controlled group maintains
two pension plans subject to § 430, each
of which has credible mortality experience
for at least one gender, then either both
plans must obtain approval from the Ser-
vice to use substitute mortality tables or
neither plan may use substitute mortality
tables. By contrast, if, for one of those
plans, neither males nor females have cred-
ible mortality experience, then the plan
without credible mortality experience will
not interfere with the ability of the plan
with credible mortality experience to use
substitute mortality tables.
SECTION 3. GENERAL
ADMINISTRATIVE PROCEDURES
.01Compliance with Regulations.Re-
quests submitted on or after December
1, 2008, must satisfy the requirements of
final regulation § 1.430(h)(3)–2 and this
Rev. Proc. 2008–62. Requests submitted
before December 1, 2008, may either sat-
isfy those requirements or, alternatively,
may satisfy the requirements of proposed
regulation § 1.430(h)(3)–2 and Rev. Proc.
2007–37.
.02Submission. Requests for the use of
substitute mortality tables must be submit-
ted to:
Internal Revenue Service
Attention: EP Letter Rulings
P.O. Box 27063
McPherson Station
Washington, D.C. 20038
The user fee required by paragraph (10)
of subsection 6.01 of Rev. Proc. 2008–8,
2008–1 I.R.B. 233, orits successors, must
be sent with such requests.
.03Necessary Procedural Documents.
A request will not be considered unless it
complies with paragraphs (1) through (3)
of this subsection 3.03, below.
(1) The request (and any subsequently
provided additional information) must be
signed by the employer maintaining the
plan(s) (the “applicant”) or an authorized
representative of the applicant who must
be identified in (a), (b), (c), (d) or (e)
of paragraph (11) of subsection 9.02 of
Rev. Proc. 2008–4, 2008–1 I.R.B. 121, or
its successors. Where an authorized rep-
resentative signs the request or will ap-
pear before the Service in connection with
the request, a properly signed and dated
Form 2848,Power of Attorney and Decla-
ration of Representative, must be submit-
ted with the request. An individual is not
an authorized representative of the appli-
cant merely on account of being the admin-
istrator or trustee of the plan.
(2) The request also must contain a
declaration in the following form: “Under
penalties of perjury, I declare that I have
examined this request, or this modification
to the request, including accompany-
ing documents, and, to the best of my
knowledge and belief, the request or the
modification contains all the relevant facts
relating to the request, and such facts are
true, correct, and complete.” This dec-
laration must be signed by the applicant
(e.g., an authorized officer of a corpora-
tion). The signature of an individual with
a power of attorney will not suffice for
the declaration. See paragraph (13) of
subsection 9.02 of Rev. Proc. 2008–4.
(3) Because a request for the use of
substitute mortality tables constitutes a re-
quest for a ruling, compliance with § 6110
of the Code is also required. Section
601.201 of the Statement of Procedural
Rules sets forth the requirements applica-
ble to requests for rulings and determina-
tion letters which are subject to § 6110.
Section 601.201(e) furnishes specific in-
structions to applicants.
Theapplicantmustprovidewiththe
request either a statement of proposed
deletions and the statutory basis for each
proposed deletion, or a statement that no
information other than names, addresses,
and taxpayer identifying numbers need be
deleted.
.04Checklist. A checklist has been
provided in Appendix A, which must be
signed and dated by the applicant or au-
thorized representative and placed on top
of the request.
SECTION 4. DEADLINE FOR
REQUESTING THE USE OF
SUBSTITUTE MORTALITY TABLES
.01In General. A request for the use of
substitute mortality tables generally must
be submitted at least 7 months prior to the
first day of the first plan year for which
the substitute mortality tables are to apply.
Thus, for example, if the first plan year to
which substitute mortality tables are to ap-
ply is the plan year that begins January 1,
2010, then the deadline is June 1, 2009.
Notwithstanding the generally applicable
deadline, a request to use substitute mor-
tality tables for a plan year that begins dur-
ing 2009 is timely if it is submitted on or
before October 1, 2008.
.02Incomplete Requests. Generally, an
incomplete request for the use of substitute
mortality tables will be summarily denied
absent mutual agreement of the Service
and the applicant to extend the 180-day pe-
October 20, 20089372008–42 I.R.B.

riod specified under § 430(h)(3)(C)(v)(II).
Except as provided in subsection 5.06
of this revenue procedure, the applicant
should not assume that the Service will
agree to extend the 180-day period for a
request that does not include substantially
all of the applicable information specified
in sections 5 through 13 of this revenue
procedure.
SECTION 5. GENERAL RULES
.01 The Service will deny a request if
the request fails to meet the requirements
of this revenue procedure or if the Service
determines that a substitute mortality table
does not sufficiently reflect the mortality
experience of the applicable plan popula-
tion.
.02 If separate mortality tables are
used for disabled individuals pursuant to
§ 430(h)(3)(D), then those individuals are
disregarded for all purposes under this
revenue procedure.
.03 A separate request must be made
with respect to each plan (the “Plan”), or
group of plans that are permissively aggre-
gated (the “Permissive Group”), for which
the use of a substitute mortality table or
tables is requested. The request must in-
clude a complete copy of the Base Tables
that will form the basis for the substitute
mortality tables that will be used. The re-
quest must state the first day of the first
plan year for which the substitute mortality
tables are to be applicable (the “Requested
Effective Plan Year”) and must state the
term of years (not more than 10) that the
tables are requested to be used.
Each request also must identify the
Base Year of the Base Tables. Under
§ 1.430(h)(3)–2(c)(2)(iii), the base year is
the calendar year that contains the day be-
fore the midpoint of the Experience Study
Period. For example, if an Experience
Study Period consists of the 5-consecu-
tive-year period beginning July 1, 2006,
and ending June 30, 2011, the midpoint of
the Experience Study Period is January 1,
2009, and the Base Year is 2008. If the
Experience Study Period reflects different
plan years for plans within the Permissive
Group as described in subsection 7.03, the
midpoint is determined taking into account
the total number of years and months re-
flected in the Experience Study Period.
.04 The request must include a descrip-
tion of the populations within the Plan (or
the Permissive Group) for which the use of
substitute mortality tables is requested and
a description of the populations, if any, for
which the use of substitute mortality tables
is not requested.
For example, if the use of substitute
mortality tables is requested for nondis-
abled female individuals (but for no other
individuals) where separate mortality ta-
bles are used for disabled individuals pur-
suant to § 430(h)(3)(D), then the popula-
tion for whom the use of substitute mortal-
ity tables is requested would be described
as “Nondisabled Females” and the popu-
lation for whom the use of substitute mor-
tality tables is not requested would be de-
scribed as “Nondisabled Males.”
Similarly, if the use of substitute mor-
tality tables is requested for male annui-
tants (but not male nonannuitants) and for
females on a combined annuitant/nonan-
nuitant basis, in each case including dis-
abled individuals, then the populations for
whom the use of substitute mortality tables
is requested would be described as “Male
Annuitants” and “Females,” and the popu-
lation for whom the use of substitute mor-
tality tables is not requested would be de-
scribed as “Male Nonannuitants.”
.05 The request must include the plan
identification information described in
Section 6, the credible mortality experi-
ence demonstrations described in Section
7, the stability demonstrations described
in Section 8, the lack of credible mortality
experience demonstrations described in
Section 9, the unadjusted mortality expe-
rience described in Section 10, the Base
Table construction methods as set forth in
Section 11 or 12, and the demonstrations
with respect to the Base Tables described
in Section 13.
.06 If there are other plans subject to
§ 430 maintained by the applicant, or
members of the applicant’s controlled
group, that have credible mortality ex-
perience for which the use of substitute
mortality tables will be requested in a
separate request, then the Service will not
summarily deny the request for the use of
substitute mortality tables on the grounds
that all plans with credible mortality expe-
rience maintained by the applicant would
not be using substitute mortality tables,
but only if the applicant requests that the
180-day review period provided under
§ 430(h)(3)(C)(v)(II) not begin for the ini-
tial request and any such separate request
until the date all such separate requests
have been received, and only if those sepa-
rate requests are submitted within 90 days
after the receipt of the initial request (and
no later than the deadline that applies to
each such separate request under section 4
of this revenue procedure). In the absence
of such a request for a delay in the start of
the 180-day review period, or if all such
separate requests are not submitted within
90 days after the receipt of the initial re-
quest, the Service will summarily deny the
request for the use of substitute mortality
tables on the grounds that all plans with
credible mortality experience maintained
by the applicant would not be using sub-
stitute mortality tables.
Example. Employer E maintains Plans A and B,
both of which are calendar year plans that have each
had over 2,500 deaths in each of the last five years.
Employer E submits a request for the use of substi-
tute mortality tables for Plan A for the 2010 plan year
that is received on February 15, 2009 (the “A Re-
quest”). To avoid denial of the A Request on the
grounds that all plans with credible mortality experi-
ence maintained by the applicant would not be using
substitute mortality tables, Employer E requests that
the 180-day review period of the A Request not begin
until the receipt of a separate request for the 2010 plan
year from Employer E for the use of substitute mor-
tality tables by Plan B. The Service agrees to defer
commencement of the 180-day period, but will sum-
marily deny the application unless Employer E sub-
mits a separate request for the use of substitute mor-
tality tables for Plan B no later than May 15, 2009.
.07 If two or more plans are permis-
sively aggregated for the purpose of con-
structing substitute mortality tables, then
such plans are treated as a single plan for
all purposes of this revenue procedure.
Accordingly, if two or more plans are per-
missively aggregated, then all populations
within the plans must be so aggregated.
Example. Employer F maintains Plans C, D, and
E, each of which had 500 male deaths and 100 female
deaths in each of the last five years. Employer F may
request to use one substitute male mortality table and
one substitute female mortality table for the aggrega-
tion of Plans C, D, and E. However, Employer F may
not aggregate Plans C, D, and E and request to use
one substitute female mortality table for Plans C, D,
and E, and three separate substitute male mortality ta-
bles for Plans C, D, and E.
SECTION 6. IDENTIFICATION OF
PLANS
.01 The following plan information
must be provided for the Plan (or for each
plan within the Permissive Group) for
which the use of substitute mortality tables
is requested:
(1) Plan name;
2008–42 I.R.B.938October 20, 2008

(2) Plan number;
(3) Plan year (i.e., calendar, or if fiscal,
the first and last day);
(4) Employer identification number;
(5)Dateofplanestablishment;and
(6) Copies of the actuarial valuation re-
ports for each plan year which begins or
ends during the Experience Study Period
as defined in section 7 of this revenue pro-
cedure.
.02 The following information must
be provided for each plan that is subject
to § 430 maintained by the applicant, or
members of the applicant’s controlled
group, for which the use of substitute mor-
tality tables is not requested:
(1) Plan name;
(2) Plan number;
(3) Plan year (i.e., calendar, or if fiscal,
the first and last day);
(4) Employer identification number;
(5)Dateofplanestablishment;
(6) If the plan is a newly affiliated plan
under § 1.430(h)(3)–2(d)(1)(iii)(B), the
date of the merger, acquisition, or similar
transaction describedin § 1.410(b)–2(f),
and the last day of the plan year described
in § 1.430(h)(3)–2(d)(1)(iii)(A); and
(7) The Lack of Credible Mortality Ex-
perience Demonstration Period, or, if the
plan is not required to identify such a pe-
riod, the applicable exception. (See sec-
tion 9 of this revenue procedure.)
.03 The following additional informa-
tion must be provided with respect to each
plan that is subject to § 430 that is main-
tained by the applicant, or member of the
applicant’s controlled group, that was spun
off from another plan that is maintained by
the applicant within the five-year period
preceding the date of the request:
(1) The plan name and the plan number
of the spun off plan, and the plan name and
number of the plan from which the spinoff
occurred;
(2) The employer identification number
of the employer maintaining the spun off
plan and the employeridentification num-
ber of the employer maintaining the plan
from which the spinoff occurred;
(3) The date of the spinoff;
(4) The approximate number of individ-
uals covered by the spun off plan as of
the date of the spinoff and the approximate
number of individuals covered by the plan
from which the spinoff occurred, prior to
the spinoff; and
(5) The reason for the spinoff.
SECTION 7. DEMONSTRATIONS
OF CREDIBLE MORTALITY
EXPERIENCE
.01 The applicant’s request must iden-
tify the period of time covered by the
mortality experience study (the “Experi-
ence Study Period”) used to develop the
Base Table(s) and must identify the Base
Year. Different Experience Study Periods
for different populations within a plan
are not permitted. Except as provided in
subsections .02 and .03 of this section,
different Experience Study Periods for dif-
ferent plans within the Permissive Group
are not permitted. Thus, a plan that does
not have mortality experience for the en-
tire Experience StudyPeriodmaynotbe
included in the Permissive Group. Simi-
larly, a plan that was acquired subsequent
to the first day of the Experience Study
Period may be included in the Permissive
Group only if the applicant includes mor-
tality experience for the full Experience
Study Period. Thus, in such cases, the
mortality experience study must include
mortality experiencethat occurred before
the date of acquisition.
.02 A plan that came into existence by
reason of a spinoff from the Plan (or from
a plan within the Permissive Group) dur-
ing the Experience Study Period may be
included in the Permissive Group. In such
a case, the period of time covered by the
mortality experience study with respect to
the spun off plan will begin as of the date
of the spinoff. However, the mortality ex-
perience of the individuals covered by the
spun off plan from the first day of the Ex-
perience Study Period to the date of the
spinoff would be included as part of the
experience of the single plan that existed
before the spinoff.
.03 If separate plans within a Permis-
sive Group have different plan years, the
Experience Study Period may consist of a
combination of different periods for ana-
lyzing the experience data for each plan,
provided that the period for each plan:
(1) is based on the plan year for that
plan,
(2) consists of the same number of
years,
(3) ends less than 3 years before the
first day of the first plan year for which
the substitute mortality table is to apply for
any plan in the Permissive Group, and
(4) minimizes the total period of time
covered by the overall Experience Study
Period by overlapping (to the greatest ex-
tent possible) the periods used to analyze
experience data for each plan in the Per-
missive Group.
For example, consider a Permissive
Group consisting of two plans, Plan A with
a calendar-year plan year and Plan B with
a March 1-February 28 plan year, with
experience data gathered by plan years for
each plan. If the plan sponsor submits a
request to use substitute mortality tables
for the Permissive Group effective with
the plan year beginning January 1, 2009,
for Plan A and March 1, 2009, for Plan B,
the plan sponsor may use an Experience
Study Period ending as early as December
31, 2006, based on the first day of the
plan year for Plan A. If the plan sponsor
wishes to use the approach provided in this
subsection .03 and uses a 4-year period
ending on December 31, 2006, to analyze
the experience data for Plan A, the period
used to analyze the experience data for
Plan B must be a 4-year period ending on
February 28, 2007. The Experience Study
Period in this case would be the period
beginning January 1, 2003, and ending
February 28, 2007.
.04 In order to demonstrate credible
mortality experience, the number of deaths
during each year of the Experience Study
Period (and, in total, for the entire Experi-
ence Study Period) within each population
for which the use of substitute mortality
tables is requested must be provided in
tabular form.
SECTION 8. DEMONSTRATION OF
STABILITY
.01Thefollowinginformationmustbe
provided in tabular form for each popula-
tion within the Plan (or plans within the
Permissive Group) for which the use of a
substitute mortality table is requested, ag-
gregating all plans that have the same plan
year:
(1) The average number of individuals
within the population during the Experi-
ence Study Period; and
(2) The number of individuals within
the population as of the last day of the plan
year immediately preceding the plan year
during which the use of substitute mortal-
ity tables is requested.
October 20, 20089392008–42 I.R.B.

A reasonable estimate of the number
of plan individuals, such as the estimated
number of participants and beneficiaries
used for purposes of PBGC Form 1–ES,
may be used to provide the information re-
quested in paragraph (2) of this subsection
8.01.
.02 If the difference between para-
graphs (1) and (2) of subsection 8.01
within any population, for any plan year,
reflects a difference of 20 percent or more,
then an analysis that shows that the mor-
tality experience during the Experience
Study Period is still accurately predictive
of the future mortality of the population
must be submitted.
SECTION 9. DEMONSTRATIONS OF
LACK OF CREDIBLE MORTALITY
EXPERIENCE
.01General Rule. For all plans main-
tained by the applicant, except as described
in subsections .02 and .03 of this section,
the period of time used to demonstrate
a lack of credible mortality experience
must be identified (the “Lack of Credible
Mortality Experience Demonstration Pe-
riod”). This period must consist of at least
4 consecutive years, with the last such
year ending less than 3 years before the
first day of the plan year for which lack
of credible mortality experience is being
demonstrated. However, if the Experience
Study Period used for the substitute mor-
tality tables for the Permissive Group is
longer than 4 years, then the Lack of Cred-
ible Mortality Experience Demonstration
Period must include the same number
of years as the Experience Study Period
and must end less than 3 years before the
first day of the plan year for which lack
of credible mortality experience is being
demonstrated. See subsection .06 of this
section for rules that apply when the Ex-
perience Study Period is a combination of
different periods as described in subsec-
tion 7.03.
.02General Exception. Plans described
in paragraph (1), (2), or (3) of this subsec-
tion 9.02 are not required to identify a Lack
of Credible Mortality Experience Demon-
stration Period.
(1) Plans for which the use of substi-
tute mortality tables is requested for all
populations (other than disabled popula-
tions for whom the tables prescribed under
§ 430(h)(3)(D) are used);
(2) Plans for which the use of substi-
tute mortality tables has previously been
approved by the Service and the term of
years of such approval ends subsequent to
the last day of the Requested Effective Plan
Year; and
(3) Newly affiliated plans for which
the last day of the plan year described in
§ 1.430(h)(3)–2(d)(1)(iii)(A) is a date on
or after the first day of the plan year for
which the use of substitute mortality tables
is requested.
.03Exception for Certain Newly Affili-
ated Plans. Newly affiliated plans (as de-
fined in § 1.430(h)(3)–2(d)(1)(iii)(B)) for
which the last day of the plan year de-
scribedin§1.430(h)(3)–2(d)(1)(iii)(A) is
a date prior to the first day of the plan year
for which the use of substitute mortality
tables is requested, and for which the ap-
plicant has elected notto include mortal-
ity experience prior to the date of the ac-
quisition, may identify a Lack of Credible
Mortality Experience Demonstration Pe-
riod consisting of fewer years than other-
wise required under subsection .01 of this
section. For such plans, the Lack of Cred-
ible Mortality Experience Demonstration
Period must begin no later than the date the
plan became newly affiliated and end not
more than one year and one day before the
first day of the plan year for which the use
of substitute mortality tables is requested.
.04Demonstration of Plan-Wide Lack
of Credible Mortality Experience.Thefol-
lowing information must be provided in
tabular form for each plan that is not within
the Permissive Group and which does not
fall within one of the exceptions provided
in subsection .02 of this section:
(1) The number of male deaths during
the Lack of Credible Mortality Experience
Demonstration Period; and
(2) The number of female deaths during
the Lack of Credible Mortality Experience
Demonstration Period.
.05Demonstration of Lack of Credible
Mortality Experience for Certain Popula-
tions. The number of male and female
deaths during the Lack of Credible Mortal-
ity Experience Demonstration Period must
be provided in tabular form for each rele-
vant population within the Plan (or plans
within the Permissive Group) for which
the use of substitute mortality tables is not
requested.
The relevant populations for this pur-
pose would, for example, be nondisabled
females if the request was to use a substi-
tute mortality table for nondisabled males
(but for no other individuals) where sepa-
rate mortality tables were used for disabled
individuals pursuant to § 430(h)(3)(D).
Similarly, the relevant populations would
be male nonannuitants and females, in
each case including disabled individuals,
if the request was to use a substitute mor-
tality table for male annuitants (but not
for male nonannuitants) where separate
mortality tables were not used for disabled
individuals pursuant to § 430(h)(3)(D).
.06Application when Experience Study
Period is a Combination of Different Peri-
ods as Described in Subsection 7.03.For
plans or populations within a Permissive
Group, if the Experience Study Period cov-
ers a period of more than 4 years because
it consists of a combination of 4-year (or
longer) periods for analyzing the experi-
ence data for individual plans included in
the Permissive Group, the Lack of Cred-
ible Mortality Experience Demonstration
Period must also consist of a combination
of 4-year periods for each plan (or such
longer periods as used for the Experience
Study Period), subject to the same con-
straints as in subsection 7.03.
For example, the Permissive Group il-
lustratedinsubsection7.03usedanExpe-
rience Study Period consisting of 4 years
based on the plan year for Plan A and 4
years based on the plan year of Plan B
(for an overall Experience Study Period of
4 years and 2 months). Therefore, lack
of credible mortality experience must be
demonstrated for any populations within
that Permissive Group for which substi-
tute mortality tables are not requested, on
the basis of a Lack of Credible Mortality
Experience Demonstration Period cover-
ing a 4-year period corresponding to the
plan year for the plan covering the pop-
ulation (for an overall Lack of Credible
Mortality Experience Demonstration Pe-
riod of 4 years and 2 months). Accord-
ingly, for demonstrations applying to plan
years beginning in 2011, the Lack of Cred-
ible Mortality Experience Demonstration
Period could either be based on 4-year pe-
riods ending December 31, 2008, for pop-
ulations covered under Plan A and Febru-
ary 28, 2009, for populations covered un-
der Plan B, or on 4-year periods ending De-
cember 31, 2009, for populations covered
under Plan A and February 28, 2010, for
populations covered under Plan B.
2008–42 I.R.B.940October 20, 2008

However, if the overall Experience
StudyPeriodislessthan4yearsinlength,
or if the population or plan for which lack
of credibility experience is being demon-
strated is not in the Permissive Group,
then the general rule of subsection .01 of
this section is applied based on the num-
ber of years of data used for each plan
in the Permissive Group. For example,
if the periods used to analyze experience
data for Plans A and B were only 2 years
in length, the Lack of Credible Mortality
Experience Demonstration Period for any
plans or populations within the Permissive
Group could either be a period of 4 years
(with both plans using the same period of
time to analyze experience data) or 4 years
and 2 months (using 4-year periods cor-
responding to the plan year for each plan
to analyze the experience data). In either
case, the Lack of Credible Mortality Ex-
perience Demonstration Period must end
less than 3 years before the first day of any
plan year for which lack of credible mor-
tality experience is being demonstrated.
.07Alternative Demonstrations of Lack
of Credible Mortality Experience.Inlieu
of the information described in subsections
.04 through .06 of this section, lack of cred-
ible mortality experience may be demon-
strated by providing alternative informa-
tion if such information demonstrates to
the satisfaction of the Commissioner that
the number of male and/or female deaths
would not exceed 1,000 during the Lack
of Credible Mortality Experience Demon-
stration Period. For example, a year-by-
year reconciliation of the participant pop-
ulation (such as might be shown in an ac-
tuarial valuation report) could be submit-
ted showing that the total number of par-
ticipants leaving the plan during the Lack
of Credible Mortality Experience Demon-
stration Period is less than 1,000, as this
would clearly show that the number of
male and female deaths must also be less
than 1,000 during that period. Similarly,
if the total number of participants in the
plan does not exceed 1,000 for any year
during the Lack of Credible Mortality Ex-
perience Demonstration Period, the year-
by-year number of participants in the plan
during such period could be submitted in
lieu of the information described in sub-
sections .04 through .06 of this section, as
this would indicate that it would be highly
unlikely that the total number of deaths
during that period would exceed 1,000.
SECTION 10. UNADJUSTED
MORTALITY EXPERIENCE
.01In General. The information below
must be provided in tabular form for all in-
dividuals within each population for whom
the use of a separate mortality table is re-
quested, for each year of the Experience
Study Period, and for the Experience Study
Period in its entirety, for all ages between
18 and 100 (except as provided in subsec-
tion .03 of this section). The same Expe-
rienceStudyPeriodmustbeusedtode-
velop the information below as was used to
demonstrate credible mortality experience
in section 7.
(1) The sum of the accrued benefits (or
payable benefits, in the case of individuals
in pay status) of all individuals at that age
at the beginning of the year, other than
individuals who left the population during
the year for reasons other than death;
(2) The sum of the accrued (or payable)
benefits of all individuals at that age at the
beginning of the year who left the popula-
tion during the year for reasons other than
death, adjusted to reflect exposure periods
of less than one year;
(3) The sum of the accrued (or payable)
benefits of all individuals at that age at the
beginning of the year who died during the
year;
(4) The quotient determined by dividing
the sum of the accrued (or payable) bene-
fits of all individuals at that age who died
during the year by the sum of the accrued
(or payable) benefits for all individuals at
that age adjusted for individuals at that age
who left the population for reasons other
than death (i.e., the amount determined in
paragraph (3), divided by the total of the
amounts determined in paragraphs (1) and
(2);
(5) The total number of individuals at
that age at the beginning of the year;
(6) The total number of individuals at
that age at the beginning of the year who
left the population for reasons other than
death;
(7) The total number of individuals at
that age at the beginning of the year who
died during the year; and
(8) The average accrued benefit of all
individuals at that age at the beginning of
the year.
.02Adjustment for Exposure Periods of
Less than One Year. The request must in-
clude a description of the method(s) used
to adjust the accrued benefits of individ-
uals who left for reasons other than death
to reflect exposure periods of less than one
year.
.03Grouping of Ages. The information
requested in subsection .01 of this section
may be presented in five-year age groups.
In such cases, the groups at the extreme
ages may include more than five ages pro-
vided such groups either do not include
ages greater than age 24 or do not include
ages less than age 95. Thus, for exam-
ple, an age group consisting of all ages 24
and lower would be permissible whereas
an age group consisting of all ages 25 and
lower would not be permissible.
.04Unadjusted Base Tables. An Unad-
justed Base Table for each population for
which the use of substitute mortality ta-
bles is requested shall, for all ages or all
groups of ages, consist of the quotients de-
termined in paragraph (4) of subsection .01
of this section for the Experience Study Pe-
riod in its entirety. The request must in-
clude a complete copy of each such Unad-
justed Base Table.
SECTION 11. BASE TABLE
CONSTRUCTION – GENERAL
METHOD
.01In General. Except as otherwise
provided in section 12 of this revenue pro-
cedure, a Base Table for a population must
be created from the Unadjusted Base Ta-
ble for the population through the applica-
tion of a graduation method generally used
by the actuarial profession in the United
States (e.g., Whittaker-Henderson Type B,
Karup-King). Section 12 of this revenue
procedure provides for an alternate method
of constructing a Base Table through the
application of a fixed percentage to the
mortality rates of a Standard Mortality Ta-
ble, projected to the Base Year.
.02Information Regarding Graduation
Methods. The graduation method must
be identified and the parameters of the
graduation method used must be specified
(e.g., for Whittaker-Henderson Type B, the
number of differences and the “h” value
must be specified). If more than one grad-
uation is performed, then the parameters
must be specified for each such graduation.
.03Intermediate Values. If more than
one graduation is performed in the process
of adjusting an Unadjusted Base Table to a
October 20, 20089412008–42 I.R.B.

Base Table, then a copy of each intermedi-
ate table so created must be provided.
.04Rationale. The rationale for the
selection of each particular graduation
method used must be provided along with
the rationale for the selection of the partic-
ular parameters used as part of the method.
.05ExtensiontoExtremeAges.Atex-
treme ages for which insufficient data ex-
ists, the Base Tables must be extended to
blend into the applicable Standard Mortal-
ity Table, provided in subsection .06 of this
section, projected to the Base Year using
Projection Scale AA, as set forth in the reg-
ulations. In such cases, the method (and
the rationale for the method) used for the
extension must be described.
.06Standard Mortality Tables. For pur-
poses of this revenue procedure, the fol-
lowing are the Standard Mortality Tables:
(1) The Male Base Nonannuitant Mor-
tality Table (Year 2000) as set forth in
§ 1.430(h)(3)–1;
(2) The Male Base Annuitant Mor-
tality Table (Year 2000) as set forth in
§ 1.430(h)(3)–1;
(3) The Female Base Nonannuitant
Mortality Table (Year2000) as set forth in
§ 1.430(h)(3)–1;
(4) The Female Base Annuitant Mor-
tality Table (Year 2000) as set forth in
§ 1.430(h)(3)–1;
(5) The Male Base Combined Mortal-
ity Table (Year 2000) determined in accor-
dance with subsection .07 of this section;
and
(6) The Female Base Combined Mortal-
ity Table (Year 2000) determined in accor-
dance with subsection .07 of this section.
.07Gender-Specific Base (Year 2000)
Mortality Combined Tables. For purposes
of this revenue procedure, the Male Base
Combined Mortality Table (Year 2000)
is the table determined through applica-
tion of the male Weighting Factors for
Small Plans (the “Weights”) to the Male
Base Nonannuitant and Annuitant Mor-
tality Tables (Year 2000) as set forth in
§ 1.430(h)(3)–1. Similarly, the Female
Base Combined Mortality Table (Year
2000) is the table determined through
application of the female Weights to the
Female Base Nonannuitant and Annuitant
Mortality Tables (Year 2000) as set forth
in § 1.430(h)(3)–1.
SECTION 12. BASE TABLE
CONSTRUCTION – ALTERNATE
METHOD
.01General Rule. A Base Table for a
population may be created by applying a
fixed percentage (the “Fixed Percentage”)
to the mortality rates in the Projected Ap-
plicable Standard Mortality Table only if
the requirements of subsections .02 and .03
of this section are satisfied and the Ser-
vice determines that the resulting Base Ta-
ble sufficiently reflects the mortality ex-
perience of the applicable plan population.
For this purpose the Projected Applicable
Standard Mortality Table is the applicable
Standard Mortality Table, projected to the
Base Year using Projection Scale AA, as
set forth in § 1.430(h)(3)–1. See subsec-
tion .05 of this section with regard to the
possible use of other mortality tables for
this purpose.
Under this section 12, the Unadjusted
Base Mortality Tables must be constructed
using five-year age groups. For each
Base Table constructed using the alter-
nate method described in this section, the
Fixed Percentage and the mortality table
to which such percentage is to be applied
must be identified. In addition, for each so
constructed Base Table, the ratios of the
mortality rates from the Unadjusted Base
Mortality Table for the population to the
central age mortality rates (i.e.,themortal-
ity rates for the ages that are the midpoints
of the age ranges) from the Projected Ap-
plicable Standard Mortality Table must be
provided, in tabular form, for all five-year
age groups for which mortality experience
is available.
.02Selection of the Fixed Percentage.
(1) If the applicable Standard Mortality
Table for a population is the table provided
in either paragraph (1) or paragraph (3) of
subsection 11.06, then the Fixed Percent-
age must be within two percentage points
of the arithmetic average of the ratios of
the mortality rates from the Unadjusted
Base Mortality Table for the population
to the central age mortality rates from the
Projected Applicable Standard Mortality
Table of each of the five-year age groups
from the 35–39 age group to the 60–64 age
group, inclusive, unless the applicant can
demonstrate that a different set of five-year
age groups (consisting of no less than six
such groups) is more appropriate for this
purpose.
(2) If the applicableStandard Mortality
Table for a population is the table provided
in either paragraph (2) or paragraph (4) of
subsection 11.06, then the Fixed Percent-
age must be within two percentage points
of the arithmetic average of the ratios of
the mortality rates from the Unadjusted
Base Mortality Table for the population
to the central age mortality rates from the
Projected Applicable Standard Mortality
Table of each of the five-year age groups
from the 55–59 age group to the 80–84 age
group, inclusive, unless the applicant can
demonstrate that a different set of five-year
age groups (consisting of no less than six
such groups) is more appropriate for this
purpose.
(3) If the applicableStandard Mortality
Table for a population is the table provided
in either paragraph (5) or paragraph (6) of
subsection 11.06, then the Fixed Percent-
age must be within two percentage points
of the arithmetic average of the ratios of
the mortality rates from the Unadjusted
Base Mortality Table for the population
to the central age mortality rates from the
Projected Applicable Standard Mortality
Table of each of the five-year age groups
from the 45–49 age group to the 80–84 age
group, inclusive, unless the applicant can
demonstrate that a different set of five-year
age groups (consisting of no less than eight
such groups) is more appropriate for this
purpose.
.03Consistency Requirement. The con-
sistency requirement of this subsection .03
is satisfied only if each of the applicable ra-
tios described in subsection .02 of this sec-
tion is within 10 percentage points of the
Fixed Percentage.
.04Terminal Age. Notwithstanding
subsection .01 of this section, the mortality
rate for the terminal age in any Base Table
created by applying a Level Percentage to
a Standard Mortality Table shall be 1.000.
.05Other Mortality Tables.TheSer-
vice will consider requests for the approval
of Base Tables constructed through the
application of a fixed percentage to the
mortality rates of other published gener-
ally accepted mortality tables (e.g.,the
1983 Group Annuity Mortality Table) us-
ing standards similar to those provided in
subsections .01 through .04 of this section.
.06Example. The age group rates from the Male
Unadjusted Base Table (determined in accordance
with section 10 of this revenue procedure), the central
age rates from the Male Base Combined Mortality
2008–42 I.R.B.942October 20, 2008

Table (Year 2000), projected to the Base Year, and
the ratios of such rates are as follows:
A
B
C
Age Group
Mortality Rate from Unadjusted
Base Mortality Table
Base Combined Mortality Table
(Year 2000), Projected to the Base
Year, Age Group Mortality Rate
Ratio of Mortality Rate from
Unadjusted Mortality Table to Base
Mortality Rate (Year 2000)
45 to 49
0.00163
0.00165
98.79%
50 to 54
0.002110.00241
87.55%
55 to 59
0.003760.0043187.24%
60 to 64
0.00765
0.0081294.21%
65 to 690.015690.01506
104.18%
70 to 740.02439
0.02502
97.48%
75 to 79
0.037680.04387
85.89%
80 to 840.079480.07732102.79%
Arithmetic Average Percentage94.77%
In accordance with subsection .02 of this section,
the Fixed Percentage to be applied to the Male Base
Morta
lity Table (Year 2000), projected to the Base
Year, must be between 92.77% and 96.77%. How-
ever, a Fixed Percentage that is less than 94.18%
woul
d fail to satisfy the requirements of subsection
.03 of this section because the ratio for the 65–69
Age Group (i.e., 104.18%) would then not be within
10 pe
rcentage points of a Fixed Percentage less than
94.18%. Similarly, a Fixed Percentage that is greater
than 95.89% would fail the requirements of subsec-
tio
n .03 because the ratio for the 75–79 Age Group
(i.e., 85.89%) would then not be within 10 percent-
age points of a Fixed Percentage greater than 95.89%.
Acc
ordingly, under the facts in this example, if the ap-
plicant were to request the use of a Base Table con-
structed through the application of a percentage to the
Ma
le Base Mortality Table (Year 2000) that is a fixed
integer, the applicant would be limited to a Fixed Per-
centage of 95%.
SECTION 13. DEMONSTRATIONS
WITH RESPECT TO BASE TABLES
The following information must be pro-
vided with respect to each population for
which the use of substitute mortality tables
is requested:
.01Generational Mortality Tables.
Sample generational mortality tables, as
of the Requested Effective Plan Year, for
individuals whose years of birth are 1940,
1950, and 1960, constructed from the Base
Tables using a methodology in accordance
with § 1.430(h)(3)–1 (except that the pro-
jection period used to determine each
particular mortality improvement factor
is the number of years between the Base
Year and the year for which the probability
of death is determined).
.02Funding Target Comparisons.The
liability of the plan(s) for which the use of
substitute mortality tables is requested as
of the valuation date for a plan year ending
no earlier than one year and one day before
the first plan year to which the substitute
mortality tables will apply (the “Compari-
son Year”). The liability is to be measured
using generational mortality tables deter-
mined in accordancewith the methodol-
ogy described in subsection .01 of this sec-
tion. The liability is to be provided sep-
arately for active participants, terminated
vested participants, and retirees and bene-
ficiaries in pay status, and is to be deter-
mined as follows:
(1) For Comparison Years beginning
in 2007, the liability to be reported is the
Current Liability determined in accor-
dance with § 412(l) as it existed prior to
PPA ’06 and, for comparison, what the
Current Liability would have been if the
substitute mortality table(s) had been used
to determine Current Liability, holding all
other assumptions constant.
(2) For Comparison Years beginning af-
ter 2007, the liability to be reported is
the Funding Target, determined without re-
gard to at-risk assumptions under § 430(i),
and, for comparison, what the Funding
Target would have been if the substitute
mortality table(s) had been used to deter-
mine the Funding Target, holding all other
assumptions constant.
.03Annuity Factors. The following an-
nuity factors based on generational mor-
tality tables for individuals whose year of
birth is 20 years before the Base Year, de-
termined using interest and mortality as-
sumptions consistent with those used un-
der subsection .02 of this section.
(1) For all Base Tables with the excep-
tion of annuitant Base Tables, deferred to
age 55 factors at quinquennial ages from
20 to 50.
(2) For all Base Tables with the excep-
tion of nonannuitant Base Tables, imme-
diate annuity factors at quinquennial ages
from 50 to 90.
.04Graphical Displays. A comparison
in the form of graphs with the X-axis rep-
resenting age and the Y-axis representing
the mortality rate, for each of the following
pairs of mortality rates, for each population
for which the use of substitute mortality ta-
bles is requested:
(1) The mortality rates from the Base
Unadjusted Mortality Table and the mor-
tality rates from the proposed Base Table;
and
(2) The mortality rates from the pro-
posed Base Table and from the applica-
ble Standard Mortality Table (as described
in subsection 11.06 of this revenue proce-
dure), projected to the Base Year.
SE
CTION 14. EFFECTIVE DATE
This revenue procedure is effective for
all requests for the use of plan-specific
substitute mortality tables in accordance
with § 430(h)(3)(C) of the Code and
§303(h)(3)(C)ofERISAsubmittedonor
after December 1, 2008. Requests submit-
ted prior to December 1, 2008, may rely
on this revenue procedure or Rev. Proc.
2007–37.
SECTION 15. PAPERWORK
REDUCTION ACT
The collection of information con-
tained in this revenue procedure has been
reviewed and approved by the Office
of Management and Budget in accor-
dance with the Paperwork Reduction Act
October 20, 20089432008–42 I.R.B.

(44 U.S.C. section 3507) under control
number 1545–2073.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
OMB control number.
The collection of information in this
revenue procedure is in sections 3 through
13. This collection of information is re-
quired to evaluate, process and obtain
approval of the request for the use of
substitute mortality tables. This informa-
tion will be used to make determinations
under § 430(h)(3) of the Code. The
likely respondents are businesses or other
for-profit institutions and nonprofit insti-
tutions.
The estimated total annual report-
ing/recordkeeping burden is 25,400 hours.
The estimated annual burden per re-
spondent/recordkeeper varies from 335
to 681 hours, depending on individual
circumstances, with an estimated average
burden of 508 hours. The estimated an-
nual number of respondents/recordkeepers
is 50.
The estimated annual frequency of re-
sponses is once every 10 years.
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. section 6103.
DRAFTING INFORMATION
The principal author of this revenue
procedure is Carolyn E. Zimmerman of
the Employee Plans, Tax Exempt and
Government Entities Division. For further
information regarding this revenue proce-
dure, please contact Ms. Zimmerman at
retirementplanquestions@irs.gov.
Appendix A
REQUEST FOR THE USE OF SUBSTITUTE MORTALITY TABLES CHECKLIST
IS YOUR SUBMISSION COMPLETE?
Instructions
The Service will be able to respond more quickly to your request forthe use of substitute mortality tables if it is carefully prepared
and complete. To ensure your request is in order, use this checklist. Answer each question in thechecklist by indicating Y for
yes, N for no, or N/A for not applicable. Explanations must be provided for N or N/A responses.Sign and date the checklist
(as taxpayer or authorized representative) and place it on top of your request.
You must submit a completed copy of this checklist with your request. If a completed checklist is not submitted with your request
or if explanations are not provided for N and N/A responses, then your submission will be considered incomplete for purposes of
determining the first day of the 180-day period described in § 430(h)(3)(C)(v)(II) of the Code.
1. If you want to designate an authorized representative, have you included a properly executed Form 2848 (Power of Attorney
and Declaration of Representative)?
2. Have you satisfied all the requirements of Rev. Proc. 2008–4 or its successors (especiallyconcerning signatures and
penalties of perjury statement)? (See paragraphs (1) and (2) of subsection 3.03)
3. Have you included a statement of proposed deletions? (See paragraph (3) of subsection 3.03)
4. Have you included the user fee required under Rev. Proc. 2008–8 or its successors? (See subsection 3.02)
5.
Have you included a copy of the Base Tables which will form the basis for the substitute mortality tables whose use is
requested? (See subsection 5.03)
6. Have you identified the first day of the first plan year for which the use of substitute mortality tables is requested? (See
subsection 5.03)
7.
Have you stated the number of years for which the use of substitute mortality tables is requested? (See subsection 5.03)
8.
Have you identified the Base Year of the Base Tables? (See subsection 5.03)
9. Have you included a description of the populations for which the use of substitute mortality tables is requested? (See
subsection 5.04)
10. Have you included a description of the populations for whichthe use of substitute mortality tables is not requested? (See
subsection 5.04)
11. Have you requested that the 180-day review period not begin until a separate request isreceived for another plan(s)
maintained by the applicant is received? (See subsection 5.06)
12. Have you identified all plans subject to § 430 maintained by the applicant, or members of the applicant’s controlled group,
including the additionalinformation required for spun-off plans under subsection 6.03? (See section 6)
2008–42 I.R.B.944October 20, 2008

13. Have you identified the Experience Study Period for each planin the Permissive Group? (See subsections 7.01 through 7.03)
14. Have you included a table showing the number of deaths, foreach applicable population within the Plan (or within the
Permissive Group), for each year (and in total) of the Experience Study Period? (See subsection 7.04)
15.
Have you included a table showing the average number of individuals during the Experience Study Period and the number of
individuals within the population as ofthe last day of the plan year immediately preceding the plan year during which the
use of substitute mortality tables is requested for each population within the Plan (or plans within the Permissive Group)
for which the use of a substitute mortality table is requested? (See section 8)
16. Have you included a table for each plan that is not within the Permissive Group showing the number of male and female
deaths during the plan’s Lack of Credible Mortality Experience Demonstration Period, including identification of the Lack
of Credible Mortality Experience Demonstration Period? (See subsections 9.01, 9.04, and 9.06.) Alternatively, have you
provided other information that demonstrates that the number of deaths during the Lack of Credible Mortality Experience
Demonstration Period would not exceed 1,000?(See subsection 9.07)
17. Have you included a table for each population within the Plan (or plans within the Permissive Group) for which the use of
substitute mortality tables is not requested, showing the number of deaths within the population? (See subsections 9.01, 9.05,
and 9.06) Alternatively, have you provided other information that demonstrates that the number of deaths during the Lack of
Credible Mortality Experience Demonstration Period would not exceed 1,000? (See subsection 9.07)
18. Have you included a table showing the accrued benefits, counts ofindividuals covered under the plan, and other information
for all ages (or groups of ages) for each year (and in total)of the Experience Study Period? (See subsection 10.01)
19. Have you included a description of the method(s) used to adjust the accrued benefits of individuals who left for reasons other
than death? (See subsection 10.02)
20. Have you included complete copies of each Unadjusted Base Table? (See subsection 10.04)
21. Have you identified the graduation method(s) used to create the Base Table(s) from the Unadjusted Base Table(s), along with
any intermediate tables resulting from applying the graduation method(s)? (See subsections 11.02 and 11.03)
22. Have you provided the rationale(s) for use of the particular graduation method(s) selected? (See subsection 11.04)
23.
Have you described the method used to extend the Base Tables to extreme ages? (See subsection 11.05)
24. Have you identified a Fixed Percentage and a mortality table associated with all Base Tables constructed using the alternate
method provided in section 12? (See subsection 12.01)
25.
Have you included a table showing the ratios of the mortality rates from the Unadjusted Base Mortality Table to the central
age mortality rates from the Projected Applicable Standard Mortality Table for each Base Table constructed using the
alternate method of section 12? (See subsection 12.01)
26. Have you included (three) sample generational mortality tables as of the Requested Effective Plan Year? (See subsection
13.01)
27. Have you included a comparison of hypothetical funding targetsdetermined using standard mortality tables and generational
tables developed from the proposed Base Tables? (See subsection 13.02)
28. Have you included annuity factors for each Base Table, based on generational mortality tables for individuals whose year of
birth is 20 years before the applicableBase Year? (See subsection 13.03)
29. Have you included graphical displays of the rates from the Base Unadjusted Mortality Tables, the proposed Base Tables, and
the applicable Standard Mortality Tables? (See subsection 13.04)
October 20, 20089452008–42 I.R.B.

26 CFR 601.601: Rules and regulations.
(AlsoPartI,§1058.)
Rev. Proc. 2008–63
SECTION 1. PURPOSE
This revenue procedure provides guid-
ance with respect to the application of
§ 1058(a) of the Internal Revenue Code
to situations in which securities are origi-
nally transferred pursuant to an agreement
that meets the requirements of § 1058(b),
the transferee subsequently defaults under
the agreement as a direct or indirect result
of its bankruptcy (or the bankruptcy of an
affiliate), and as soon as is commercially
practicable (but in no event more than 30
days following the default), the transferor
uses collateral provided pursuant to the
agreement to purchase identical securities.
SECTION 2. BACKGROUND
.01 Section 1058(a) provides that in the
case of a taxpayer who transfers securities
(as defined in § 1236(c)) pursuant to an
agreement which meets the requirements
of § 1058(b), no gain or loss shall be recog-
nized on the exchange of such securities by
the taxpayer for an obligation under such
agreement, or on the exchange of rights
under such agreement by that taxpayer for
securities identical to the securities trans-
ferred by that taxpayer.
.02 In adding § 1058 to the Code, Con-
gress intended to provide nonrecognition
treatment to securities loans in which “the
contractual obligation [to return identical
securities] does not differ materially either
in kind or in extent from the securities ex-
changed . . . .” S. Rep. No. 762, 95
th
Cong., 2d Sess. 7 (1978); 1978–2 C.B.
357, 361 (“Senate Report”). Congress also
sought to encourage securities holders to
make their securitiesavailable for loans.
Congress explained:
Under present law, uncertainty has de-
veloped as to the correct income tax
treatment of certain securities lending
transactions. As a result, some owners
of securities are reluctant to enter into
such transactions.
Senate Report at 3; 1978–2 C.B. 359.
Because of time delays which a broker
may face in obtaining securities (from
thesellerortransferagent)todeliverto
a purchaser, brokers are frequently re-
quired to borrow securities from orga-
nizations and individuals with invest-
ment portfolios for use in completing
these market transactions. It is gener-
ally thought to be desirable to encour-
age organizations and individuals with
securities holdings to make the securi-
ties available for such loans since the
greater the volume of securities avail-
able for loan the less frequently will
brokers fail to deliver a security to a
purchaser within the time required by
the relevant market rules.
Senate Report at 5; 1978–2 C.B. 360.
.03 Recently, a significant number of
securities loans have terminated as a result
of a default by the borrower of the secu-
rities. These defaults are often the direct
or indirect result of the bankruptcy of the
borrower (or an affiliate of the borrower).
For example, the bankruptcy of the bor-
rower might, by itself, constitute an event
of default under the securities loan agree-
ment. Likewise, the bankruptcy of an affil-
iate of the borrower might indirectly pre-
vent the borrower from returning identi-
cal securities upon notice of termination by
the lender, if, for example, such a bank-
ruptcy affects the borrower’s liquidity and
practical ability to acquire identical secu-
rities in the secondary market. In many of
these situations, the lender thereafter pur-
chases identical securities and applies col-
lateral provided by the borrower pursuant
to the securities loan agreement against the
purchase price (and the borrower’s obliga-
tion to return identical securities is termi-
nated).
SECTION 3. SCOPE
This revenue procedure applies to tax-
payers (“Lenders”) who have transferred
securities to an unrelated person (“Bor-
rower”)inasecuritiesloaninwhich—
.01 The securities loan agreement
(“Agreement”) satisfies the requirements
of § 1058(b);
.02 The Agreement requires that the
Borrower transfer collateral to secure the
Borrower’s obligations under the Agree-
ment;
.03 The Borrower defaults under the
Agreement as a direct or indirect result of
its bankruptcy (or the bankruptcy of an af-
filiate); and
.04Assoonasiscommerciallyprac-
ticable after the default (but in no event
more than 30 days following the default),
the Lender applies collateral provided un-
der the Agreement (or cash generated by
the sale of such collateral) to the purchase
of identical securities.
SECTION 4. APPLICATION
For taxpayers within the scope of this
revenue procedure, the Internal Revenue
Service will treat the purchase described in
section 3.04 of this revenue procedure as
an exchange of rights under the Agreement
for identical securities to which § 1058(a)
applies.
SECTION 5. EFFECTIVE DATE
This revenue procedure is effective for
taxable years ending on or after January 1,
2008.
SECTION6.NOINFERENCE
This revenue procedure provides guid-
ance with respect to certain federal income
tax issues involving securities loans de-
scribed in section 3 of this revenue proce-
dure. No inference should be drawn about
whether similar consequences will obtain
if a securities loan falls outside the scope
of this revenue procedure.
SECTION 7. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Charles W. Culmer of the Of-
fice of Associate Chief Counsel (Financial
Institutions & Products). For further infor-
mation regarding this revenue procedure,
contact Mr. Culmer at (202) 622–3950
(not a toll-free call).
2008–42 I.R.B.946October 20, 2008

Part IV. Items o
fGeneralInterest
Notice of Prop
osed
Rulemaking
Regulations E
nabling Elections
for Certain Tr
ansactions Under
Section 336(
e)
REG–143544–
04
AGENCY: Inte
rnal Revenue Service
(IRS), Treas
ury.
ACTION: Noti
ce of proposed rulemaking.
SUMMARY: Thi
s document contains pro-
posed regul
ations under section 336(e) of
the Interna
l Revenue Code. These pro-
posed regul
ations, when finalized, would
permit taxp
ayers to make an election to
treat certa
in sales, exchanges, and distri-
butions of
another corporation’s stock as
taxable sa
les of that corporation’s assets.
These prop
osed regulations will affect cor-
porations
and their shareholders.
DATES: Wri
tten or electronic comments
and reque
sts for a public hearing must be
received
by November 24, 2008.
ADDRESSE
S: Send submissions to:
CC:PA:LP
D:PR(REG–143544–04),
room 5203
, Internal Revenue Service,
P.O. Box 7
604, Ben Franklin Station,
Washing
ton, DC 20044. Submissions may
be hand-
delivered Monday through Friday
between
the hours of 8 a.m. and 4 p.m.
to CC:PA
:LPD:PR (REG–143544–04),
Courier
’s Desk, Internal Revenue
Servic
e, 1111 Constitution Avenue, NW,
Washin
gton, DC, or sent electronically,
viathe
FederaleRulemaking
Portal
atwww.regulations.gov(IRS
REG–14
3544–04).
FOR FUR
THER INFORMATION
CONTA
CT: Concerning the proposed reg-
ulati
on, Mark J. Weiss, (202) 622–7750;
conce
rning submissions of comments
and th
e hearing, Richard Hurst, (202)
622–7
180 (not toll-free numbers).
SUPPL
EMENTARY INFORMATION:
Paper
work Reduction Act
The co
llection of information contained
in thi
s notice of proposed rulemaking has
been submitte
d to the Office of Manage-
ment and Budge
t for review in accordance
with the Paper
work Reduction Act of 1995
(44 U.S.C. 350
7(d)). Comments on the
collection of
information should be sent
to theOffice
of Management and Bud-
get,Attn: De
sk Officer for the Depart-
ment of Treas
ury, Office of Information
and Regulato
ry Affairs, Washington, DC
20503. Comm
ents on the collection of in-
formation s
hould be received by October
24, 2008.
The collect
ion of information in
this propos
ed regulation is in proposed
§§1.336–2(
h) and 1.336–4(c)(4)). This in-
formation
is required by the IRS to allow
certain pa
rties to make a section 336(e)
election a
nd for certain shareholders to
makeagain
recognition election. The
likely rec
ordkeepers are business or other
for-prof
it institutions.
The estim
ated burden is as follows:
Estimated
total annual reporting and/or
recordke
eping burden: 500 hours.
Estimated
average annual burden per
responde
nt: 2 hours.
Estimate
d number of respondents: 250.
Estimated
annual frequency of re-
sponses:
once.
Comments c
oncerning the accuracy of
this burd
en estimate and suggestions for
reducing
this burden should be directed to
theOffic
e of Management and Budget,
Attn: Des
k Officer for the Department of
Treasur
y, Office of Information and Reg-
ulatory
Affairs, Washington, DC 20503,
with cop
ies to theInternal Revenue Ser-
vice,At
tn: IRS Reports Clearance Offi-
cer, SE:
W:CAR:MP:T:T:SP, Washington,
DC 2022
4. Any such comments should be
submit
ted not later than October 24, 2008.
An agen
cy may not conduct or sponsor,
and a pe
rson is not required to respond
to, a co
llection of information unless the
collec
tion of information displays a valid
contro
l number assigned by the Office of
Manag
ement and Budget.
Books o
r records relating to a collection
of inf
ormation must be retained as long
as the
ir contents may become material in
the ad
ministration of any internal revenue
law. G
enerally, tax returns and tax return
infor
mation are confidential, as required
by 26 U
.S.C. 6103.
Background an
d Explanation of
Provisions
Section 336(e) of the Internal Revenue
Code (Code) authorizes the issuance of
regulations under which a corporation
(seller) that owns stock in another corpo-
ration (target) meeting the requirements of
section 1504(a)(2) and sells, exchanges,
or distributes all of such stock may make
an election to treat the sale, exchange, or
distribution of the target stock as a sale
of all of target’s underlying assets. Sec-
tion 336(e) was enacted as part of the
legislation repealing the General Utilities
rule and, like an election under section
338(h)(10), is meant to provide taxpayers
relief from a potential multiple taxation at
the corporate level of the same economic
gain which can result when a transfer of
appreciated corporate stock is taxed to
a corporation without providing a corre-
sponding step-up in the basis of the assets
of the corporation. See H.R. Conf. Rep.
No. 841, 99
th
Cong., 2d Sess., Vol. II,
198, 204 (1986), 1986–3 C.B., Vol. 4,
198–207.
A.Scope of the Proposed Regulations
Pursuant t
o section 336(e), regulations
may author
ize a section 336(e) election in
abroadset
of circumstances. The IRS
and Treasu
ry Department have limited the
scope of t
hese proposed regulations, how-
ever, in o
rder to provide guidance to a large
number of
taxpayers in the most efficient
manner po
ssible. These proposed regula-
tions, wh
en finalized, will provide the re-
quireme
nts and mechanics for, and conse-
quences
of, treating a stock sale, exchange,
or distr
ibution that would not otherwise
be eligi
ble for a section 338 election as a
deemed a
sset sale.
The IRS a
nd Treasury Department do
not pres
ently intend to authorize the mak-
ing of s
ection 336(e) elections under all the
circum
stances described within the statu-
tory gr
ant of authority. However, the IRS
and Tre
asury Department are interested in
commen
ts regarding transactions beyond
the sc
ope of these proposed regulations for
which
such elections should be allowed
and un
der what terms and conditions. For
examp
le, these proposed regulations do
not ap
ply to transactions between related
October 20, 20089472008–42 I.R.B.

persons. For this purpose, persons are re-
lated if stock in a corporation owned by
one of the persons would be attributed
to the other person under section 318(a),
other than section 318(a)(4). See proposed
§1.336–1(b)(11). The IRS and Treasury
Department continue to study the possi-
bility of making a section 336(e) election
available for such transactions. Accord-
ingly, comments are requested regarding
dispositions to related persons, including
special rules needed to prevent the use of
net operating losses to offset liquidation
gains, manipulation of earnings and prof-
its, and changes of accounting methods.
See H.R. Conf. Rep. No. 841, 99
th
Cong.,
2d Sess., Vol. II at 204 (1986).
Additionally, these proposed regula-
tions do not apply to transactions in which
either the seller or the target is a foreign
corporation. The IRS and Treasury De-
partment request comments regarding
how the rules of the proposed regulations
should be modified to take into account
the policies of international tax provisions
if the proposed regulations were extended
to apply to foreign sellers and/or foreign
targets. For example, comments are re-
quested regarding: (1) how the principles
of section 338(h)(16) should apply; (2)
how the foreign tax allocation rule of
§1.338–9(d) should apply; (3) the char-
acterization of the gain recognized on the
deemed asset disposition for purposes of
section 954(c)(1)(B); (4) whether special
earnings and profits rules are necessary
(see, for example, the rules described in
Prop. Treas. Reg. §1.367(b)–8); and (5)
how the withholding tax provisions of
section 1445 should apply to the deemed
asset disposition (if relevant).
The IRS and Treasury Department con-
tinue to study issues related to elections
made under section 338(g) in the interna-
tional area. Comments are requested on
issues in this area, including the interac-
tion of section 338(h)(16) with sections
902 and 960.
Absent the issuance of further guid-
ance, it is intended that these regulations
would provide the exclusive means of
making elections under section 336(e).
See proposed §1.336–2(a).
B.General Principles
1.General adoption of section 338(h)(10)
principles
The legislative history to section 336(e)
provides that principles similar to those
of section 338(h)(10) should apply in the
case of a section 336(e) election. See H.R.
Conf. Rep. No. 841, 99
th
Cong., 2d Sess.,
Vol. II, at 204 (1986). These proposed reg-
ulations implement such principles. Ac-
cordingly, except to the extent inconsistent
with the purposes of section 336(e) or as
otherwise described, the results of a sec-
tion 336(e) election coincide with those of
a section 338(h)(10)election. Whenever
possible, these proposed regulations rely
upon and use the structure and principles
established under section 338(h)(10) and
the underlying regulations. For example,
these regulations refer to principles un-
der the section 338 regulations regarding
the allocation of consideration, application
of the asset and stock consistency rules,
treatment of minority shareholders, and the
availability of the section 453 installment
method. In other instances, definitions
and concepts from section 338 and the un-
derlying regulations have been modified
to reflect principles applicable to section
336(e). For example, these proposed reg-
ulations generally use the term “disposi-
tion” rather than “acquisition or purchase”
and the term “sale, exchange, or distribu-
tion“ instead of “sale.” Thus, a qualified
stock disposition is defined as any trans-
action or series of transactions in which
stock meeting the requirements of section
1504(a)(2) of a domestic corporation is ei-
ther sold, exchanged, or distributed, or any
combination thereof, by another domes-
tic corporation in a disposition, within the
meaning of proposed §1.336–1(b)(4), dur-
ing the 12-month disposition period. See
proposed §1.336–1(b)(5).
These proposed regulations also pro-
vide that a transaction that satisfies the def-
inition of both a qualified stock disposi-
tion and a qualified stock purchase (as de-
fined in section 338(d)(3)) generally will
be treated only as a qualified stock pur-
chase and thus does not qualify for an elec-
tion under these regulations. See proposed
§1.336–1(b)(5)(ii)).
2.Requirements for a section 336(e)
election
Section 336(e) requires that a seller
own stock in another corporation meeting
the requirements of section 1504(a)(2)
and sell, exchange, or distribute all of
such stock to qualify for a section 336(e)
election. For purposes of these proposed
regulations, a seller is a domestic cor-
poration that makes a qualified stock
disposition and includes a transferor and a
distributor of target stock. See proposed
§1.336–1(b)(1). Generally, all mem-
bers of a seller’s consolidated group are
treated as a single seller. See proposed
§1.336–2(g)(2). Thus, similar to a sec-
tion 338(h)(10) election, a section 336(e)
election is available to a seller that di-
rectly owns stock of target meeting the
requirements of section 1504(a)(2) and
to sellers which are members of a con-
solidated group for the taxable year that
includes the disposition date that in the
aggregate own stock of target meeting
the requirements of section 1504(a)(2).
Because section 336(e) requires a corpo-
rate seller, the election is not available
with respect to the stock of an S cor-
poration. See proposed §1.336–1(b)(5).
Cf. §1.338(h)(10)–1(c)(1).
These proposed regulations interpret
section 336(e) as requiring only that an
amount of stock meeting the requirements
of section 1504(a)(2) be disposed of and
not that every share of stock owned by
the seller be disposed of. Accordingly, the
seller, or a member of seller’s consolidated
group, may retain a portion of its target
stock. See proposed §§1.336–2(b)(1)(v)
and 1.336–2(b)(2)(iv). Furthermore, these
proposed regulations permit amounts of
target stock sold, exchanged, and dis-
tributed to be aggregated for purposes
of determining whether there has been a
qualified stock disposition. For example,
a domestic corporation’s sale of 50 percent
of target’s stock to an unrelated person
and a distribution to its unrelated share-
holders of the remaining 50 percent within
a 12-month period would constitute a
qualified stock disposition. See proposed
§1.336–1(b)(5).
In contrast to section 338, which re-
quires a corporate purchaser, these pro-
posed regulations define a purchaser as
any person or persons who receive stock
of target in a qualified stock disposition.
2008–42 I.R.B.948October 20, 2008

Accordingly, a section 336(e) election is
available for sales, exchanges, or distri-
butions (or a combination thereof) of tar-
get stock to both corporate and non-cor-
porate purchasers, provided that the tar-
get stock is not sold, exchanged, or dis-
tributed to a related person. See proposed
§§1.336–1(b)(2) and 1.336–1(b)(4)(i)(C).
Any stock sold, exchanged, or dis-
tributed to a related party is not con-
sidered to be disposed of for purposes
of determining whether there has been
a qualified stock disposition.See
proposed §§1.336–1(b)(4)(i)(C) and
1.336–1(b)(5)(i). Relatedness generally
is determined immediately after the sale,
exchange, or distribution of target stock
occurs (see proposed §§1.336–1(b)(4)(iii)
and 1.336–1(b)(11), and §1.338–3(b)(3)).
C.Sales or Exchanges of Target Stock
In general, if a seller sells or exchanges
target stock in a qualified stock disposi-
tion, the treatment of old target, seller, and
purchaser are similar to the treatment of
old target (old T), S, and P under sec-
tion 338(h)(10). See §1.338(h)(10)–1. If
an election is made under section 336(e),
the seller disregards the actual sale or ex-
change of target stock. Instead, target (old
target) is treated as selling all of its assets to
an unrelated corporation in a single trans-
action at the close of the disposition date
(the deemed asset disposition). Old tar-
get recognizes the deemed disposition tax
consequences from the deemed asset dis-
position before the close of the disposition
date while it is a subsidiary of seller. Af-
ter the deemed asset disposition, old tar-
get is then treated as liquidating into seller
which in most cases will be treated as a dis-
tribution in complete liquidation to which
section 332 and section 336 or 337 applies.
Additionally, consistent with a section 338
election, the deemedpurchase of the as-
sets of old target by new target constitutes
a deemed purchase of any subsidiary stock
owned by target. Accordingly, a section
336(e) election is available for the deemed
purchase of the stock of a target subsidiary
if it constitutes a qualified stock dispo-
sition. A section 336(e) election gener-
ally does not change the tax consequences
of the acquisition to a purchaser of target
stock.
D.DistributionsofTargetStockNot
DescribedinSection355(d)(2)or(e)(2)
A section 336(e) election can be made
for a distribution of target stock, and the
legislative history to section 336(e) pro-
vides that “[t]he conferees do not intend
this election to affect the manner in which a
corporation’s distribution to its sharehold-
ers will be characterized for purposes of
determining the shareholder level income
tax consequences.” H.R. Conf. Rep. No.
841, 99
th
Cong., 2d Sess., Vol. II, at 204
(1986). Accordingly, additional rules are
required to address distributions and to en-
sure that the income tax consequences to
a distributee are generally the same as if a
section 336(e) election was not made.
Specifically, these proposed regulations
provide that if seller (the distributor) dis-
tributes old target stock in the qualified
stock disposition, seller is deemed to pur-
chase from new target on the disposition
date, immediately after the deemed liqui-
dation of old target, the amount of stock
distributed in the qualified stock disposi-
tion and to have distributed such new tar-
get stock to its shareholders. Seller recog-
nizes no gain or loss on the distribution.
See proposed §1.336–2(b)(1)(iv). The dis-
tributee’s tax consequences generally shall
be the same as if it received the target
stock pursuant to the underlying distribu-
tion. However, the Federal income tax
consequences of the deemed asset dispo-
sition and liquidation of target may af-
fect the distributee’s income tax conse-
quences. For example, if seller distributes
the stock of target to its shareholders in
a qualified stock disposition for which a
section 336(e) election is made, any in-
crease in seller’s earnings and profits as a
result of old target’s deemed asset dispo-
sition and liquidation into seller may al-
ter the amount of the distribution to the
shareholders constituting a dividend un-
der section 301(c)(1) from the amount that
would have resulted if seller recognized
gain on the stock distribution. See pro-
posed §1.336–2(c).
If a seller actually distributed stock of
a subsidiary or assets under section 301, it
generally would be prevented from recog-
nizing any loss. See section 311(a). The
IRS and Treasury Department believe that
it would be inconsistent with the general
treatment of distributions to allow losses
to be recognized on the section 336(e)
deemed asset disposition to the extent the
qualified stock disposition was the result
of a stock distribution. Therefore, under
these proposed regulations, only a portion
of the losses realized on the deemed as-
set disposition may be recognized. The
portion of any realized loss that may be
recognized is based on a fraction equal to
the value of the target stock sold or ex-
changed in the qualified stock disposition
on or before the disposition date over the
total value of target stock disposed of in
the qualified stock disposition on or be-
fore the disposition date. In the case of
a section 336(e) election for a subsidiary
of target, for purposes of determining the
amount of loss that may be recognized by
the subsidiary on the deemed asset dis-
position, only the percentage of the stock
of the target subsidiary deemed sold by
target equal to the percentage of the stock
of target sold or exchanged is considered
to have been sold or exchanged. See pro-
posed §§1.336–2(b)(1)(i)(B)(2)and(3).
Thus, losses realized in the deemed asset
disposition are not recognized to the extent
the qualified stock disposition is attribut-
able to the distribution of target stock.
E.Section 355 Distributions
1.Availability of section 336(e) election
for certain section 355 distributions
The legislative history to section 336(e)
indicates that the election is intended to be
available for taxable transactions. Specif-
ically, the Conference Report provides
that, “principles similar to those of sec-
tion 338(h)(10) may be applied to taxable
sales or distributions of controlled cor-
poration stock.” H.R. Conf. Rep. No.
841, 99
th
Cong., 2d Sess., Vol. II, at 204
(1986). The legislative history to sec-
tion 355(e) provides that although there
is no adjustment to the basis of stock or
assets as a result of the recognition of
gain under section 355(e), “[t]here is no
intention to limit the otherwise applica-
ble Treasury regulatory authority under
section 336(e) of the Code.” H.R. Conf.
Rep. 220, 105
th
Cong., 1
st
Sess., 531–532,
footnote 13 (1997), 1997–4 C.B. Vol 4,
531, 532. Accordingly, these proposed
regulations would allow a corporation
that would otherwise recognize the full
amount of the gain realized with respect
to a qualified stock disposition resulting,
October 20, 20089492008–42 I.R.B.

in whole or in part, from a disposition
described in section 355(d)(2) or (e)(2) to
make a section 336(e) election. Without
a section 336(e) election, such provisions
may create a triple layer of taxation, one
at the controlled corporation level, one
at the distributing corporation level and,
ultimately, one at the shareholder level.
Allowing a section 336(e) election in these
circumstances limits taxation to two lay-
ers, one at the controlled corporation level
and one at the shareholder level when the
controlled corporation stock is disposed
of, and thus is consistent withGeneral
Utilitiesrepeal.
2.Special rules for distributions described
in section 355(d)(2) or 355(e)(2)
Generally, a section 336(e) election,
like a section 338(h)(10) election, results
in a deemed sale of old target’s assets fol-
lowed by a liquidation of old target into
seller, which if made in a transaction to
which section 381 applied, results in old
target’s attributes being transferred to the
seller. Accordingly, consistent with a tax-
able asset acquisition, after the transaction
new target generally has no tax attributes
or earnings and profits, and holds its assets
with a cost basis. In contrast, a section
355 distribution is generally tax-free to
the distributing corporation’s sharehold-
ers, even if the transaction is described in
section 355(d)(2) or 355(e)(2). Further,
following a section 355 distribution, the
controlled corporation generally retains
tax attributes and earnings and profits.
The IRS and Treasury Department believe
that, except as necessary to carry out the
purposes of section 336(e), the section 355
consequences generally should continue to
apply in such a transaction. For example,
if the controlled corporation were treated
as a new corporation, with no earnings and
profits, the controlled corporation may be
able to distribute its assets to its share-
holders without recognizing any dividend
consequences under section 301(c)(1).
Therefore, to preserve the consequences
of section 355 distributions, the proposed
regulations provide special rules.
If a section 336(e) election is made for
a distribution of the controlled corporation
stock in a transaction described in sec-
tion 355(d)(2) or 355(e)(2), the controlled
corporation is treated as if it sold its as-
sets to an unrelated person in the deemed
asset disposition and then it reacquired
those assets (sale-to-self treatment). Fol-
lowing the deemed asset disposition, the
controlled corporation (old target) is not
deemed to liquidate into the distribut-
ing corporation (seller). See proposed
§1.336–2(b)(2)(i)(A). Instead, the con-
trolled corporation (old target) is treated as
acquiring all of its assets from an unrelated
person in a single, separate transaction
at the close of the disposition date, and
then the distributing corporation is treated
as distributing the stock of the controlled
corporation (old target) to its shareholders.
See proposed §1.336–2(b)(2)(ii) and (iii).
Because no liquidation of old target into
seller is deemed to occur, the controlled
corporation (old target) will generally re-
tain the tax attributes it would have had if
the section 336(e) election had not been
made. The proposed regulations further
provide that the controlled corporation
(old target) will take the effects of the
deemed asset disposition into account and
increase or decrease its earnings and prof-
its immediately before allocating earnings
and profits pursuant to §1.312–10. See
proposed §1.336–2(b)(2)(vi). Finally, the
deemed sale and reacquisition of target’s
assets (and, in the case of a parent-sub-
sidiary chain of corporations making sec-
tion 336(e) elections, a target subsidiary’s
assets) pursuant to the deemed asset dis-
position will not cause the transaction to
fail to satisfy the requirements of section
355. See proposed §1.336–2(b)(2)(v).
Similar to a qualified stock disposition
resulting from a distribution not involv-
ing a transaction described in section
355(d)(2) or (e)(2), old target’s losses in
the deemed asset disposition will be rec-
ognized, but only in relation to the amount
of stock sold or exchanged in the qualified
stock disposition on or before the dispo-
sition date. See §§1.336–2(b)(2)(i)(B)(2)
and (3).
Notwithstanding the fact that the
sale-to-self treatment applies to a dis-
tribution of stock described in section
355(d)(2) or (e)(2), if old target has any
subsidiaries for which a section 336(e)
election is made, the general deemed asset
disposition methodology shall apply. Ac-
cordingly, old target subsidiary is treated
as though it sold all its assets to an un-
related person, new target subsidiary is
deemed to purchase all its assets from an
unrelated person, and old target subsidiary
is deemed to liquidate into old target. If the
sale-to-self treatment was applied, target
subsidiary’s attributes would remain with
target subsidiary. The IRS and Treasury
Department do not believe that taxpayers
should have the option of whether the at-
tributes become those of target, by doing
an actual sale of target subsidiary’s assets
followed by a liquidation of target sub-
sidiary, or remain with target subsidiary,
by making a section 336(e) election for
target subsidiary. Accordingly, the regula-
tions apply the general deemed asset dis-
position methodology for section 336(e)
elections for target subsidiaries in a distri-
bution of target stock described in section
355(d)(2) or (e)(2).
3.Intragroup sales, exchanges, or
distributions prior to external sales,
exchanges, or distributions
Generally, if the stock of a target is
transferred within an affiliated group and
then is further transferred outside the af-
filiated group, a section 336(e) election is
not available for the intragroup transfer be-
cause a qualified stock disposition may not
be made between related sellers and pur-
chasers. Thus, stock level gain may be rec-
ognized on the intragroup transfer. While
a section 336(e) election may be avail-
able for the external transfer, this election
would result in the affiliated group recog-
nizing gain both on target’s assets and the
target stock, contrary to the intent of these
proposed regulations. Comments are re-
quested on how to address this concern.
Further, because section 355(f) provides
that section 355 does not apply to an in-
tragroup distribution prior to an external
distribution described in section 355(e)(2),
these comments should address the con-
cerns that section 355(f) is intended to ad-
dress for distributions described therein.
F.Aggregate Deemed Asset Disposition
Price (ADADP) and Adjusted Grossed Up
Basis (AGUB)
These proposed regulations create a
new term, aggregate deemed asset disposi-
tion price (ADADP). These proposed reg-
ulations retain the term adjusted grossed
up basis (AGUB) as used in section 338.
See §1.338–5. In general, these proposed
regulations treat ADADP and AGUB sim-
ilarly to the way aggregate deemed sale
price (ADSP) and AGUB are treated under
2008–42 I.R.B.950October 20, 2008

the section 338 regulations. See proposed
§§1.336–3 and 1.336–4. Old target rec-
ognizes all of the gain realized on the
deemed transfer of its assets in exchange
for the ADADP and allocates the ADADP
among the assets held as of the disposi-
tion date (in the same manner as ADSP is
allocated under §§1.338–6 and 1.338–7).
See proposed §§1.336–2(b)(1)(i) and
1.336–2(b)(2)(i). ADADP is calculated
by adding the grossed-up amount real-
ized on the sale, exchange, or distribution
of recently disposed target stock and the
liabilities of old target. See proposed
§1.336–3(b)(1). These proposed regu-
lations account for the fact that there is
no actual amount realized in a distribu-
tion of stock by treating the grossed-up
amount realized on the sale, exchange,
or distribution as including in the amount
realized the fair market value of recently
disposed target stock distributed in the
qualified stock disposition. See proposed
§1.336–3(c)(1)(i)(B).
These proposed regulations also create
a new term, nonrecently disposed stock.
The term nonrecently disposed stock has
a similar meaning to the term nonrecently
purchased stock in section 338(b)(6)(B). In
a transaction for which a section 338 elec-
tion is made, there is only one purchasing
corporation (or an affiliated group treated
as a purchasing corporation). Accordingly,
in most cases, it should be relatively easy
to determine the purchaser’s basis in non-
recently purchased stock in order to deter-
mine AGUB. However, in a section 336(e)
election, there can be multiple purchasers
or multiple distributees, many of whom
may have acquired small amounts of target
stock prior to the 12-month disposition pe-
riod. Whileamoreprecisedetermination
of AGUB would require the determination
of the basis of all such stockholdings, the
IRS and Treasury Department recognize
that it would often be impractical to require
a seller to determine and track all the pur-
chasers (and distributees) possessing small
amounts of nonrecentlypurchased stock.
Generally, purchasers holding at least 10
percent of the total voting power or value
of the stock of target should be readily
identifiable through mandatory SEC fil-
ings and other sources. Thus, in order to
balance a desire for precision with a practi-
cal application, nonrecently disposed stock
is defined as stock in a target corporation
whichisheldonthedispositiondatebya
purchaser or a person related to a purchaser
who owns, on the disposition date, with the
application of section 318(a), other than
section 318(a)(4), at least 10 percent of the
total voting power or value of the stock of
target, and which is not recently disposed
stock. See proposed §1.336–1(b)(17).
In general, proposed §1.336–4 uses the
same principles as paragraphs (b) through
(g) of §1.338–5 to determine the amount
of AGUB for target and the consequences
of a gain recognition election. Proposed
§1.336–4(b) contains modifications to the
principles of §1.338–5 to reflect the prin-
ciples of section 336(e).
New target is treated as acquiring all
of its assets from an unrelated person in
a single transaction at the close of the
disposition date, but before the deemed
liquidation (or, in the case of a transaction
describedinsection355(d)(2)or(e)(2),
before the distribution) in exchange for an
amount equal to the AGUB as determined
under proposed §1.336–4. New target
allocates the consideration deemed paid
in the same manner as new target would
as described in §§1.338–6 and 1.338–7
in order to determine the basis in each
of the transferred assets. See proposed
§§1.336–2(b)(1)(ii) and 1.336–2(b)(2)(ii).
In the case of a disposition described in
section 355(d)(2) or (e)(2), any reference
to new target is treated as referring to old
target in its capacity as the purchaser of
assets pursuant to the section 336(e) elec-
tion. See proposed §1.336–4(b)(4).
Consistent with the principles of a
section 338(h)(10) election, any stock re-
tained by a seller or a member of seller’s
consolidated group after the 12-month
disposition period is treated as acquired by
the seller on the day after the disposition
date at its fair market value. For this pur-
pose, the fair market value of all the target
stock equals the grossed-up amount real-
ized on the sale, exchange, or distribution
of recently disposed stock. See proposed
§§1.336–2(b)(1)(v) and 1.336–2(b)(2)(iv).
A minority shareholder (that is, a share-
holder that is neither the seller that dis-
poses of 80 percent of the voting power
and value of target stock nor a member of
seller’s consolidated group) is generally
not affected by a section 336(e) election.
Accordingly, such a minority shareholder
that disposes of its target stock will rec-
ognize gain or loss on the stock without
regard to the section 336(e) election, and
a minority shareholder that retains its
target stock retains its basis and holding
period in its target stock. See proposed
§1.336–2(d).
Under proposed §1.336–4(c), a holder
of nonrecently disposed stock may make
a gain recognition election, similar to
the gain recognition election under sec-
tion 338, which treats the nonrecently
disposed stock as being sold as of the
disposition date.The gain recognition
election is mandatory if a purchaser owns
(after the application of the rules of sec-
tion 318(a), other than section 318(a)(4))
80 percent or more of the voting power
or value of target stock. See proposed
§§1.336–1(b)(15) and 1.336–4(c)(2).
Cf. §§1.338(h)(10)–1(d)(1) and 1.338–
5(d). Once made, a gain recognition
election is irrevocable. See proposed
§1.336–4(c)(1). The IRS and Treasury
Department request comments on whether
the rules regarding gain recognition
elections in these proposed regulations
are appropriate, and whether the gain
recognition election rules in regulations
promulgated under section 338 should
continue to apply.Also, see the
“Correction to section 1.338–5” section of
this preamble addressing a correction to
the definition of the termbasis amount,
the amount used in determining the
purchasing corporation’s gain on the
deemed sale of stock pursuant to the gain
recognition election and in determining
AGUB.
G.Making the Section 336(e) Election
These proposed regulations provide
that a section 336(e) election is made by
seller attaching a statement to its timely
filed Federal income tax return for the
taxable year that includes the disposition
date. See proposed §1.336–2(h). If the
seller is a member of a consolidated group,
the statement is filed with the group’s con-
solidated return.
The IRS and Treasury Department be-
lieve that it is appropriate to allow the
seller (or the common parent of the seller’s
consolidated group) to unilaterally make
the section 336(e) election. The IRS and
Treasury Department believe that in a dis-
tribution of target stock, it would be im-
practical to require each distributee, who
generally will hold relatively small per-
centages of the target stock, to join in the
October 20, 20089512008–42 I.R.B.

election. Further, the distributees’ inter-
ests should generally be protected because
of the distributing corporation’s fiduciary
responsibilities to its shareholders. In the
case of a sale or exchange, the purchasers
should be able to protect their interests in
any purchase contract. Comments are re-
quested regarding whether it is appropri-
ate to allow such unilateral section 336(e)
elections in all cases.
The information required on a section
336(e) election statement is similar to that
required on Form 8023,Elections Un-
der Section 338 for Corporations Making
Qualified Stock Purchases. In the case
of a gain recognition election, the section
336(e) election statement must include
information pertaining to the gain recog-
nition election.
When finalized, these proposed regula-
tions will permit taxpayers to make a pro-
tective section 336(e) election if they are
unsure of whether a transaction constitutes
a qualified stock disposition. If such an
election is made, it will not have any ef-
fect if the transaction does not constitute a
qualified stock disposition but will other-
wise be binding and irrevocable. See pro-
posed §1.336–2(j).
H.Correction to §1.338–5
Section 338(b)(3)(A) authorizes regu-
lations under which the purchasing cor-
poration may elect to step up its basis in
nonrecently purchasedstock (gain recog-
nition election) to a “basis amount.” Un-
der section 338(b)(3)(B), the basis amount
is equal to the grossed-up basis of the pur-
chasing corporation’s recently purchased
stock multiplied by a fraction, the numer-
ator of which is the percentage of target
stock attributable to the purchasing corpo-
ration’s nonrecently purchased stock and
the denominator of which is 100 percent
minus the numerator amount.
Section 1.338–5(d) provides for the
above described gain recognition election.
Section 1.338–5(d)(3)(ii) provides that the
basis amount is equal to the amount in
§1.338–5(c)(1) (the purchasing corpora-
tion’s basis in recently purchased target
stock determined without regard to ac-
quisition costs) multiplied by a fraction,
the numerator of which is the percentage
of target stock (by value, determined on
the acquisition date) attributable to the
purchasing corporation’s nonrecently pur-
chased target stock and the denominator of
which is 100 percent minus the numerator
amount. Section 1.338–5(d)(3)(ii) goes
on to state, “[t]hus, if target has a single
class of outstanding stock, the purchasing
corporation’s basis in each share of non-
recently purchased target stock after the
gain recognition election is equal to the
average price per share of the purchasing
corporation’s recently purchased target
stock.”
However, unless the purchasing cor-
poration purchases all of the outstanding
stock of target (other than the purchas-
ing corporation’s nonrecently purchased
stock) within the 12-month acquisition pe-
riod on or before the acquisition date, the
formula in the regulations will not result
in the purchasing corporation’s basis in
each share of nonrecently purchased stock
equaling the average price of the recently
purchased stock. Only if the basis in the
recently purchased stock is grossed-up (as
provided by the Code) will such result
be achieved. In fact, §1.338–5(g),Ex-
ample 1, paragraph (v), in demonstrating
the effect of a gain recognition election,
uses the grossed-up basis in the recently
purchased stock, not the non-grossed-up
basis, consistent with both the Code and
the intent of the regulation. Accordingly,
§1.338–5(d)(3)(ii) is corrected to use the
grossed-up basis of recently purchased
stock in determining the basis amount,
rather than the non-grossed-up basis.
I.Proposed Effective/Applicability Date
These proposed regulations are pro-
posedtoapplytoanyqualifiedstock
disposition for which the disposition date
is on or after the date these regulations
are published as final regulations in the
Federal Register.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a significant
regulatory action as defined in Executive
Order 12866. Therefore, a regulatory
assessment is not required. Further, it
is hereby certified that these proposed
regulations will not have a significant
economic impact on a substantial num-
ber of small entities. This certification is
based on the fact that these regulations
do not have a substantial economic im-
pact because they merely provide for an
election in the context of certain sales,
exchanges, and distributions of stock of
corporations. Moreover, they are ex-
pected to apply predominantly to transac-
tions involving larger businesses because
the election is only applicable for cer-
tain dispositions of stock of an affiliated
subsidiary. Accordingly, a Regulatory
Flexibility Analysisunder the Regulatory
Flexibility Act (5 U.S.C. chapter 6) is
not required. Pursuant to section 7805(f)
of the Code, this notice of proposed
rulemaking has been submitted to the
Chief Counsel for Advocacy of the Small
Business Administration for comment on
its impact on small business.
Comments and Requests for Public
Hearing
Before these proposed regulations are
adopted as final regulations, consideration
will be given to any written comments
(a signed original and eight (8) copies)
or electronic comments that are submit-
tedtimelytotheIRS.Inadditiontothe
specific requests for comments made else-
where in this preamble, the IRS and Trea-
sury Department request comments on the
clarity of the proposed rules and how they
can be made easier to understand. All
comments will be available for public in-
spection and copying. A public hearing
may be scheduled if requested in writing
by any person who timely submits written
comments. If a public hearing is sched-
uled, notice of the date, time, and place of
the hearing will be published in theFed-
eral Register.
Drafting Information
The principal author of these regu-
lationsisMarkJ.WeissoftheOffice
of Associate Chief Counsel (Corporate).
Other personnel from the IRS and Treasury
Department participated in their develop-
ment.
*****
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 1 is proposed
to be amended as follows:
2008–42 I.R.B.952October 20, 2008

PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 is amended by adding entries in nu-
merical order to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.336–1 is also issued under
26 U.S.C. 336. * * *
Section 1.336–2 is also issued under
26 U.S.C. 336. * * *
Section 1.336–3 is also issued under
26 U.S.C. 336. * * *
Section 1.336–4 is also issued under
26 U.S.C. 336. * * *
Section 1.336–5 is also issued under
26 U.S.C. 336. * * *
Par. 2. Sections 1.336–0 through
1.336–5 are added to read as follows:
§1.336–0 Table of Contents.
This section lists captions contained in
§§1.336–1, 1.336–2, 1.336–3, 1.336–4,
and 1.336–5.
§1.336–1 General principles,
nomenclature, and definitions for a
section 336(e) election.
(a) Overview.
(b) Definitions.
(1) Seller.
(2) Purchaser.
(3) Target; target corporation; old tar-
get; new target.
(4) Disposed of; disposition.
(i) In general.
(ii) Exception for disposition of stock in
certain section 355 transactions.
(iii) Transactions with related persons.
(iv) No consideration paid.
(v) Disposed of stock reacquired by cer-
tain persons.
(5) Qualified stock disposition.
(i) In general.
(ii) Overlap with qualified stock pur-
chase.
(A) In general.
(B) Exception.
(6) 12-month disposition period.
(7) Disposition date.
(8) Disposition date assets.
(9) Domestic corporation.
(10) Section 336(e) election.
(11) Related persons.
(12) Liquidation.
(13) Deemed asset disposition.
(14) Deemed disposition tax conse-
quences.
(15) 80-percent purchaser.
(16) Recently disposed stock.
(17) Nonrecently disposed stock.
(c) Nomenclature.
§1.336–2 Availability, mechanics, and
consequences of section 336(e) election.
(a) Availability of election.
(b) Deemed transaction.
(1) Dispositions not described in sec-
tion 355(d)(2) or (e)(2).
(i) Old target—deemed asset disposi-
tion.
(A) In general.
(B) Gains and losses.
(1)Gains.
(2) Losses.
(3)Examples.
(C) Tiered targets.
(ii) New target—deemed purchase.
(iii) Old target and seller-deemed liqui-
dation.
(A) In general.
(B) Tiered targets.
(iv) Seller—distribution of target stock.
(v) Seller—retention of target stock.
(2) Dispositions described in section
355(d)(2) or (e)(2).
(i) Old target—deemed asset disposi-
tion.
(A) In general.
(B) Gains and losses.
(1)Gains.
(2) Losses.
(3)Example.
(C) Tiered targets.
(ii) Old target—deemed purchase.
(A) In general.
(B) Tiered targets.
(iii) Seller-distribution of target stock.
(A) In general.
(B) Tiered targets.
(iv) Seller—retention of target stock.
(v) Qualification under section 355.
(vi) Earnings and profits.
(c) Purchaser.
(d) Minority shareholders.
(1) In general.
(2) Sale, exchange, or distribution of
targetstockbyaminorityshareholder.
(3) Retention of target stock by a minor-
ity shareholder.
(e) Treatment consistent with an actual
asset disposition.
(f) Treatment of target under other pro-
visions of the Internal Revenue Code.
(g) Special rules.
(1) Target as two corporations.
(2) Treatment of members of a consoli-
dated group.
(3) Miscellaneous international provi-
sions.
(i) Source and foreign tax credit.
(ii) Allocation of foreign taxes.
(h) Making the section 336(e) election.
(i) [Reserved].
(j) Protective section 336(e) election.
(k) Examples.
§1.336–3 Aggregate deemed asset
disposition price; various aspects of
taxation of the deemed asset disposition.
(a) Scope.
(b) Determination of ADADP.
(1) General rule.
(2) Time and amount of ADADP.
(i) Original determination.
(ii) Redetermination of ADADP.
(c) Grossed-up amount realized on the
sale, exchange, or distribution of recently
disposed stock of target.
(1) Determination of amount.
(2) Example.
(d) Liabilities of old target.
(1) In general.
(2) Time and amount of liabilities.
(e) Deemed disposition tax conse-
quences.
(f) Other rules apply in determining
ADADP.
§1.336–4 Adjusted grossed-up basis.
(a) Scope.
(b) Modifications to the principles in
§1.338–5.
(1) Purchasing corporation; purchaser.
(2) Acquisition date; disposition date.
(3) Section 338 election; section
338(h)(10) election; section 336(e) elec-
tion.
(4) New target; old target.
(5) Recently purchased stock; recently
disposed stock.
(6) Nonrecently purchased stock; non-
recently disposed stock.
(c) Gain recognition election.
(1) In general.
(2) 80-percent purchaser.
(3) Non-80-percent purchaser.
(4) Gain recognition election statement.
(d) Examples.
October 20, 20089532008–42 I.R.B.

§1.336–5 Effective/applicability Date.
§1.336–1. General principles,
nomenclature, and definitions for a
section 336(e) election.
(a)Overview. Section 336(e) autho-
rizes the promulgation of regulations un-
der which, in certain circumstances, a sale,
exchange, or distribution of the stock of
a subsidiary may be treated as an asset
sale. This section and §§1.336–2 through
1.336–5 provide the rules for and conse-
quences of making such election. This sec-
tion provides the definitions and nomen-
clature. Generally, except to the extent
inconsistent with section 336(e), the re-
sults of a section 336(e) election should co-
incide with those of a section 338(h)(10)
election. Accordingly, to the extent not
otherwise addressed in these regulations
nor inconsistent with section 336(e), the
principles of section 338 and the regu-
lations under section 338 apply for pur-
poses of these regulations. For example,
§1.338–8 (concerning asset and stock con-
sistency) and §1.338(h)(10)–1(d)(8) (con-
cerning the availability of the section 453
installment method) may apply with re-
spect to a section 336(e) election.
(b)Definitions. For purposes of
§§1.336–1 through 1.336–5 (except as
otherwise provided):
(1)Seller.Thetermsellermeans any
domestic corporation that makes a quali-
fied stock disposition of stock of another
corporation. A seller includes both a trans-
feror and a distributor of target stock. Gen-
erally, all members of a consolidated group
that dispose of target stock are treated as a
single seller. See §1.336–2(g)(2).
(2)Purchaser.Thetermpurchaser
means one or more persons that receive the
stock of another corporation in a qualified
stock disposition. A purchaser includes
both a transferee and a distributee of target
stock.
(3)Target; target corporation; old tar-
get; new target.Thetermtargetortar-
get corporationmeans any domestic cor-
poration the stock of which is sold, ex-
changed, or distributed by another domes-
tic corporation in a qualified stock dispo-
sition. In the case of a transaction not de-
scribed in section 355(d)(2) or (e)(2), “old
target” refers to target for periods ending
on or before the close of target’s disposi-
tion date and “new target” refers to target
for subsequent periods. In the case of a
transaction describedin section 355(d)(2)
or (e)(2), “old target” refers to target for
periods ending on or before the disposition
date as well as for subsequent periods.
(4)Disposed of; disposition—(i)In
general.Thetermdisposed ofrefers to a
transfer of stock in a disposition. The term
dispositionmeans any sale, exchange, or
distribution of stock, but only if—
(A) the basis of the stock in the hands of
the purchaser is not determined in whole or
in part by reference to the adjusted basis of
such stock in the hands of the person from
whom acquired or under section 1014(a)
(relating to property acquired from a dece-
dent),
(B) except as provided in paragraph
(b)(4)(ii) of this section, the stock is not
sold, exchanged, or distributed in a trans-
action to which section 351, 354, 355, or
356 applies and is not sold, exchanged, or
distributed in any transaction described in
regulations in which the transferor does
not recognize the entire amount of the gain
or loss realized in the transaction, and
(C) the stock is not sold, exchanged, or
distributedtoarelatedperson.
(ii)Exception for disposition of stock in
certain section 355 transactions. Notwith-
standing paragraph (b)(4)(i)(B) of this sec-
tion, a distribution of stock to a person
who is not a related person in a transac-
tion in which the full amount of stock gain
would be recognized pursuant to section
355(d)(2) or (e)(2) shall be considered a
disposition.
(iii)Transactions with related persons.
In determining whether stock is sold, ex-
changed, or distributed to a related person,
the principles of section 338(h)(3)(C) and
§1.338–3(b)(3) shall apply.
(iv)No consideration paid. Stock in a
target may be considered disposed of if,
under general principles of tax law, the
seller is considered to sell, exchange, or
distribute stock of the target notwithstand-
ing that no amount may be paid for (or al-
located to) the stock.
(v)Disposed of stock reacquired by cer-
tain persons. Stock disposed of to an-
other person under this section which is
reacquired by the seller or a member of
the seller’s consolidated group within the
12-month disposition period shall not be
considered as disposed of.
(5)Qualified stock disposition—(i)In
general.Thetermqualified stock dispo-
sitionmeans any transaction or series of
transactions in which stock meeting the
requirements of section 1504(a)(2) of a
domestic corporation is either sold, ex-
changed, or distributed, or any combina-
tion thereof, by another domestic corpora-
tion in a disposition, within the meaning of
paragraph (b)(4) of this section, during the
12-month disposition period.
(ii)Overlap with qualified stock pur-
chase—(A)In general. Except as pro-
vided in paragraph (b)(5)(ii)(B) of this sec-
tion, a transaction satisfying the definition
of a qualified stock disposition under para-
graph (b)(5)(i) of this section which also
qualifies as a qualified stock purchase (as
defined in section 338(d)(3)) will not be
treated as a qualified stock disposition.
(B)Exception. If, as a result of the
deemed sale of old target’s assets pursuant
to a section 336(e) election, there would
be, but for paragraph (b)(5)(ii)(A) of this
section, a qualified stock disposition of the
stock of a subsidiary of target, then para-
graph (b)(5)(ii)(A) shall not apply.
(6)12-month disposition period.The
term12-month disposition period
means
the 12-month period beginning with the
date of the first sale, exchange, or distribu-
tion of stock included in a qualified stock
disposition.
(7)Disposition date.Thetermdisposi-
tion datemeans, with respect to any cor-
poration, the first day on which there is a
qualified stock disposition with respect to
the stock of such corporation.
(8)Disposition date assets.Disposition
date assetsare the assets of the target held
at the beginning of the day after the dis-
position date (but see §1.338–1(d) (regard-
ing certain transactions on the disposition
date)).
(9)Domestic corporation.Thetermdo-
mestic corporationhas the same meaning
as in §1.338–2(c)(9).
(10)Section 336(e) election. A section
336(e) election is an election to apply sec-
tion 336(e) to target. A section 336(e) elec-
tion is made by making an election for tar-
get under §1.336–2(h).
(11)Related persons.Twopersonsare
related if stock of a corporation owned
by one of the persons would be attributed
under section 318(a), other than section
318(a)(4), to the other.
(12)Liquidation. Any reference to a
liquidation is treated as a reference to the
transfer described in §1.336–2(b)(1)(iii)
2008–42 I.R.B.954October 20, 2008

notwithstanding its ultimate characteriza-
tion for Federal income tax purposes.
(13)Deemed asset disposition.The
deemed sale of old target’s assets is, with-
out regard to its characterization for Fed-
eral income tax purposes, referred to as the
deemed asset disposition.
(14)Deemed disposition tax conse-
quences. Deemed disposition tax conse-
quences refers to, in the aggregate, the
Federal income tax consequences (gener-
ally, the income, gain, deduction, and loss)
of the deemed asset disposition. Deemed
disposition tax consequences also refers
to the Federal income tax consequences
of the transfer of a particular asset in the
deemed asset disposition.
(15)80-percent purchaser.An80-per-
cent purchaser is any purchaser that, after
application of the attribution rules of sec-
tion 318(a), other than section 318(a)(4),
owns 80 percent or more of the voting
power or value of the target corporation
stock.
(16)Recently disposed stock.Theterm
recently disposed stockmeans any stock in
the target corporation which is not held by
a seller or a member of the seller’s consoli-
dated group immediately after the close of
the disposition date and which was sold,
exchanged, or distributed by a seller dur-
ing the 12-month disposition period. If,
within the 12-month disposition period,
stock is sold, exchanged, or distributed,
then reacquired by a seller, and then sold,
exchanged, or distributed again, only the
last sale, exchange, or distribution of the
reacquired stock in the 12-month disposi-
tion period may be recently disposed stock.
(17)Nonrecently disposed stock.The
termnonrecently disposed stockmeans
stock in the target corporation which is
held on the disposition date by a pur-
chaser or a person related (as described
in §1.336–1(b)(11)) to the purchaser who
owns, on the disposition date, with the
application of section 318(a), other than
section 318(a)(4), at least 10 percent of the
total voting power or value of the stock of
target and which is not recently disposed
stock.
(c)Nomenclature. For purposes of
§§1.336–1 through 1.336–5, except as
otherwise provided, Parent, Seller, Target,
Target Subsidiary, and Sub are domestic
corporations and A, B, C, and D are in-
dividuals, none of whom are related to
Parent, Seller, Target, Target Subsidiary,
Sub, or each other.
§1.336–2. Availability, mechanics, and
consequences of section 336(e) election.
(a)Availability of election. A section
336(e) election is available if a seller
makes a disposition of stock of another
corporation (target) in a qualified stock
disposition (as defined in §1.336–1(b)(5)).
A section 336(e) election is irrevocable. A
section 336(e) election is not available for
transactions described in section 336(e)
that do not constitute qualified stock dis-
positions, as defined in §1.336–1(b)(5).
(b)Deemed transaction—(1)Disposi-
tions not described in section 355(d)(2)
or (e)(2)—(i)Old target—deemed asset
disposition—(A)In general. This para-
graph (b)(1) provides the Federal income
tax consequences of a section 336(e) elec-
tion made with respect to a qualified stock
disposition not described, in whole or in
part, in section 355(d)(2) or (e)(2). For the
Federal income tax consequences of a sec-
tion 336(e) election made with respect to
a qualified stock disposition described, in
whole or in part, in section 355(d)(2) or
(e)(2), see paragraph (b)(2) of this section.
In general, if a section 336(e) election is
made, the seller is treated as not having
sold, exchanged, or distributed the stock
disposed of in the qualified stock disposi-
tion. Instead, old target is treated as sell-
ing its assets to an unrelated person in a
single transaction at the close of the dis-
position date (but before the deemed liqui-
dation described in paragraph (b)(1)(iii) of
this section) in exchange for the aggregate
deemed asset disposition price (ADADP)
as determined under §1.336–3. ADADP
is allocated among the disposition date as-
sets in the same manner as ADSP is allo-
cated under §§1.338–6 and 1.338–7 in or-
der to determine the amount realized from
each of the sold assets. Old target realizes
the deemed disposition tax consequences
from the deemed asset disposition before
the close of the disposition date while old
target is owned by seller.
(B)Gains and losses—(1)Gains.Ex-
cept as provided in §1.338(h)(10)–1(d)(8)
(regarding the installment method), old
target shall recognize all of the gain real-
ized on the deemed asset disposition.
(2)Losses. Old target shall recognize
loss, if any, on the deemed sale of each
of its assets with respect to the amount of
stock sold or exchanged in the qualified
stock disposition on or before the dispo-
sition date. Old target shall not recognize
loss on the deemed sale of each of its as-
sets with respect to the amount of stock
distributed in the qualified stock disposi-
tion on or before the disposition date. The
amount of loss recognized by old target
with respect to an asset is the amount of
loss realized on the deemed sale of the as-
set multiplied by a fraction (loss recogni-
tion fraction). The numerator of the loss
recognition fraction is the value of the tar-
get stock, determined on the disposition
date, sold or exchanged in the qualified
stock disposition on or before the dispo-
sition date. The denominator of the loss
recognition fraction is the total value of the
target stock, determined on the disposition
date, disposed of in the qualified stock dis-
position on or before the disposition date.
For purposes of determining the amount
of loss recognized by a subsidiary of old
target for which a section 336(e) election
is made, only the fraction of the old tar-
get subsidiary stock deemed sold in the
deemed asset disposition of old target’s as-
sets that is equal to the loss recognition
fraction is considered to have been sold or
exchanged. In addition, to the extent old
target or a subsidiary of old target other-
wise recognizes losses from the deemed
asset disposition, such losses may be disal-
lowed under other provisions of the Inter-
nal Revenue Code or general principles of
tax law, in the same manner as if such as-
sets were actually sold to an unrelated per-
son.
(3)Examples. The following examples
illustrate this paragraph (b)(1)(i)(B).
Example 1.(i)Facts. Sellerowns98ofthe100
outstanding shares of Target common stock, the only
class of Target stock outstanding. On March 1 of Year
1, Seller sells 30 shares of Target stock to A for cash.
On April 1 of Year 1, Seller sells 10 shares of Target
stocktoR,arelatedindividual. OnJuly1ofYear
1, Seller distributes 50 shares of target stock to its
unrelated shareholders. On December 1 of Year 1,
Seller sells 5 shares of Target stock to B. Seller retains
its remaining 3 shares of Target stock. The value of
the Target stock on July 1 equals $100 per share. A
section 336(e) election is made.
(ii)Consequences. Because at least 80 percent
of the Target stock ((30 + 50 + 5)/100) was disposed
of by Seller within the 12-month disposition period,
a qualified stock disposition has occurred. July 1 of
Year 1, the first date on which there was a qualified
stock disposition with respect to the Target stock, is
the disposition date. Old Target recognizes all of its
gain on the deemed asset disposition. However, only
October 20, 20089552008–42 I.R.B.

30 shares of Target stock were sold or exchanged in
the qualified stock disposition on or before the dispo-
sition date. Therefore, only a portion of the loss, if
any, on the deemed sale of each of Target’s assets is
recognized for Federal income tax purposes. The por-
tion of the loss recognized is equal to a fraction, the
numerator of which is $3,000, the value, determined
on July 1, the disposition date, of the 30 shares sold by
Seller in the qualified stock disposition on or before
the disposition date, and the denominator of which
is $8,000, the value of the Target stock on July 1,
the disposition date, that was disposed of in the qual-
ified stock disposition on or before the disposition
date. Accordingly, only 37.5 percent ($3,000/$8,000)
of Old Target’s loss (if any) with respect to each asset
sold in the deemed asset disposition is recognized.
Example 2.(i)Facts. The facts are the same as in
Example 1with the following additional facts: Tar-
get also owns 80 shares of Target Subsidiary com-
mon stock, the only class of Target Subsidiary stock
outstanding, and Seller owns the remaining 20 shares
of Target Subsidiary stock. Seller, Target, and Tar-
get Subsidiary file a consolidated Federal income tax
return. Also on July 1 of Year 1, Seller distributes
15 shares of Target Subsidiary stock to its unrelated
shareholders and sells 5 shares of Target Subsidiary
stock to C for cash. The Target Subsidiary stock is
worth $10 a share on July 1. A section 336(e) elec-
tion is also made with respect to the Target Subsidiary
stock.
(ii)Consequences. The consequences with re-
spect to the Target stock are the same as described in
Example 1except that no gain or loss is recognized
by Target on the deemed sale of its Target Subsidiary
stock. With respect to Target Subsidiary, because at
least 80 percent of the Target Subsidiary stock ((80 +
15 +5)/100) was disposed of (or deemed disposed of)
by members of Seller’s consolidated group within the
12-month disposition period, a qualified stock dispo-
sition of Target Subsidiary has occurred. Old Target
Subsidiary recognizes all of its gain on the deemed
asset disposition. Notwithstanding that all 80 of Tar-
get’s shares in Target Subsidiary were deemed sold
in the deemed asset disposition of Target, only 37.5
percent of such shares were deemed sold as a result
of a sale or exchange of Target stock. Accordingly,
in determining the amount of loss on each of Target
Subsidiary’s assets that is recognized in the deemed
sale of its assets, only 37.5 percent of the 80 shares of
Target Subsidiary deemed sold by Target, 30 shares,
are considered to have been sold or exchanged by Tar-
get. Therefore, the amount of loss recognized by Tar-
get Subsidiary is equal to a fraction, the numerator of
which is the sum of $300, the value, determined on
July 1, the disposition date, of the 30 shares of Tar-
get Subsidiary deemed sold by Target in the qualified
stock disposition, and $50, the value, determined on
July 1, the disposition date, of the 5 shares of Target
Subsidiary stock sold by Seller on or before the dispo-
sition date, and the denominator of which is $1,000,
the value of the Target Subsidiary stock on July 1, the
disposition date, that was disposed of in the qualified
stock disposition of Target Subsidiary on or before the
disposition date. Accordingly, only 35 percent (($300
+ $50)/($1,000)) of Old Target Subsidiary’s loss (if
any) with respect to each asset sold in the deemed as-
set disposition is recognized.
(C)Tiered targets. In the case of par-
ent-subsidiary chains of corporations mak-
ing section 336(e) elections, the deemed
asset disposition of a higher-tier subsidiary
is considered to precede the deemed asset
disposition of a lower-tier subsidiary.
(ii)New target—deemed purchase.
New target is treated as acquiring all of its
assets from an unrelatedpersoninasingle
transaction at the close of the disposition
date (but before the deemed liquidation)
in exchange for an amount equal to the
adjusted grossed up basis (AGUB) as de-
termined under §1.336–4. New target shall
allocate the consideration deemed paid in
the transaction in the same manner as new
target would under §§1.338–6 and 1.338–7
in order to determine the basis in each
of the purchased assets. Notwithstand-
ing paragraph (b)(1)(iii) of this section
(deemed liquidation of old target), new
target remains liable for the tax liabilities
of old target (including the tax liability for
the deemed disposition tax consequences).
For example, new target remains liable for
the tax liabilities of the members of any
consolidated group that are attributable to
taxable years in which those corporations
and old target joined in the same consoli-
dated return. See §1.1502–6(a).
(iii)Old target and seller—deemed liq-
uidation—(A)In general. Old target and
seller are treated as if, before the close
of the disposition date, after the deemed
asset disposition described in paragraph
(b)(1)(i)(A) of this section, and while
owned by seller, old target transferred all
of its assets to seller and ceased to exist.
The transfer from old target to seller is
characterized for Federal income tax pur-
poses in the same manner as if the parties
had actually engaged in the transactions
deemed to occur because of this section
and taking into account other transactions
that actually occurred or are deemed to
occur. For example, the transfer may be
treated as a distribution in pursuance of
a plan of reorganization, a distribution in
complete cancellation or redemption of all
its stock, one of a series of distributions in
complete cancellation or redemption of all
its stock in accordance with a plan of liq-
uidation, or part of a circular flow of cash.
In most cases, the transfer will be treated
as a distribution in complete liquidation to
which section 332 and section 336 or 337
applies.
(B)Tiered targets. In the case of parent-
subsidiary chains of corporations making
section 336(e) elections, the deemed liqui-
dation of a lower-tier subsidiary corpora-
tion is considered to precede the deemed
liquidation of a higher-tier subsidiary.
(iv)Seller—distribution of target stock.
In the case of a distribution of target stock
in the qualified stock disposition, seller
(the distributor) is deemed to purchase
from new target on the disposition date,
immediately after the deemed liquidation
of old target, the amount of stock dis-
tributed in the qualified stock disposition
and to have distributed such new target
stock to its shareholders. Seller recognizes
no gain or loss on the distribution of stock.
(v)Seller—retention of target stock.If
a seller retains any target stock after the
12-month disposition period, the seller is
treated as purchasing the stock so retained
from new target (new target stock) on the
day after the disposition date for its fair
market value. The holding period for the
retained stock starts on the day after the
disposition date. For purposes of this para-
graph (b)(1)(v), the fair market value of all
of the target stock equals the grossed-up
amount realized on the sale, exchange, or
distribution of recently disposed stock of
target (see §1.336–3(c)).
(2)Dispositions described in sec-
tion 355(d)(2) or (e)(2)—(i)Old tar-
get—deemed asset disposition—(A)In
general. This paragraph (b)(2) provides
the Federal income tax consequences of a
section 336(e) election made with respect
to a qualified stock disposition resulting,
in whole or in part, from a disposition
described in section 355(d)(2) or (e)(2).
Old target is treated as selling its assets
to an unrelated person in a single transac-
tion at the close of the disposition date in
exchange for the ADADP as determined
under §1.336–3. ADADP is allocated
among the disposition date assets in the
same manner as ADSP is allocated un-
der §§1.338–6 and 1.338–7 in order to
determine the amount realized from each
of the sold assets. Old target realizes
the deemed disposition tax consequences
from the deemed asset disposition before
the close of the disposition date while old
target is owned by seller. Unlike a section
338(h)(10) election or a section 336(e)
election made with respect to a qualified
stock disposition not described, in whole
or in part, in section 355(d)(2) or (e)(2),
old target is not deemed to liquidate.
(B)Gains and losses—(1)Gains.Ex-
cept as provided in §1.338(h)(10)–1(d)(8)
2008–42 I.R.B.956October 20, 2008

(regarding the installment method), old
target shall recognize all of the gain real-
ized on the deemed asset disposition.
(2)Losses. Old target shall recognize
loss, if any, on the deemed sale of each
of its assets with respect to the amount of
stock sold or exchanged in the qualified
stock disposition on or before the dispo-
sition date. Old target shall not recognize
loss on the deemed sale of each of its as-
sets with respect to the amount of stock
distributed in the qualified stock disposi-
tion on or before the disposition date. The
amount of loss recognized by old target
with respect to an asset is the amount of
loss realized on the deemed sale of the as-
set multiplied by a fraction (loss recogni-
tion fraction). The numerator of the loss
recognition fraction is the value of the tar-
get stock, determined on the disposition
date, sold or exchanged in the qualified
stock disposition on or before the dispo-
sition date. The denominator of the loss
recognition fraction is the total value of the
target stock, determined on the disposition
date, disposed of in the qualified stock dis-
position on or before the disposition date.
In addition, to the extent old target oth-
erwise recognizes losses from the deemed
asset disposition, such losses may be disal-
lowed under other provisions of the Inter-
nal Revenue Code or general principles of
tax law, in the same manner as if such as-
sets were actually sold to an unrelated per-
son.
(3)Example. The following example
illustrates this paragraph (b)(2)(i)(B).
Example.(i)Facts. Seller owns 95 of the 100
outstanding shares of Target common stock, the only
class of Target stock outstanding. On January 1 of
Year 1, Seller sells 4 shares of Target stock to A for
cash. On February 1 of Year 1, Seller sells 5 shares
of Target stock to R, a related individual. On May 1
of Year 1, Seller distributes 6 shares of Target stock
to its unrelated shareholders in a distribution not de-
scribed in section 355(d)(2) or (e)(2). In an unrelated
transaction, on July 1 of Year 1, Seller distributes
its remaining 80 shares of Target stock to its unre-
lated shareholders in a distribution described in sec-
tion 355(d)(2) or (e)(2). The value of the Target stock
on July 1 equals $100 per share. A section 336(e)
election is made.
(ii)Consequences. Because at least 80 percent
of the Target stock ((4 + 6 + 80)/100) was disposed
of by Seller within the 12-month disposition period,
a qualified stock disposition has occurred. July 1 of
Year 1, the first date on which there was a qualified
stock disposition with respect to the Target stock, is
the disposition date. Old Target recognizes all of its
gain on the deemed asset disposition. However, only
4 shares of Target stock were sold or exchanged in the
qualified stock disposition on or before the disposi-
tion date. Therefore, only a portion of the loss, if any,
on the deemed sale of each of Target’s assets is recog-
nized for Federal income tax purposes. The portion of
the loss recognized is equal to a fraction, the numera-
tor of which is $400, the value, determined on July 1,
the disposition date, of the 4 shares sold by Seller in
the qualified stock disposition on or before the dispo-
sition date, and the denominator of which is $9,000
($400 + $600 + $8,000), the total value of the Target
stock determined as of July 1, that was disposed of
in the qualified stock disposition on or before the dis-
position date. Accordingly, only $400/$9,000 of Old
Target’s loss (if any) with respect to each asset sold
in the deemed asset disposition is recognized.
(C)Tiered targets. In the case of par-
ent-subsidiary chainsof corporations mak-
ing section 336(e) elections, the deemed
asset disposition of a higher-tier subsidiary
is considered to precede the deemed asset
disposition of a lower-tier subsidiary.
(ii)Old target—deemed purchase—(A)
In general. Immediately after the deemed
asset disposition described in paragraph
(b)(2)(i)(A) of this section, old target is
treated as acquiring all of its assets from
an unrelated person in a single, separate
transaction at the close of the disposition
date (but before the distribution described
in paragraph (b)(2)(iii)(A) of this section)
in exchange for an amount equal to the
AGUB as determined under §1.336–4.
Old target shall allocate the considera-
tion deemed paid in the transaction in the
same manner as new target would under
§§1.338–6 and 1.338–7 in order to deter-
mine the basis in each of the purchased
assets.
(B)Tiered targets. In the case of par-
ent-subsidiary chainsof corporations mak-
ing section 336(e) elections with respect
to a qualified stock disposition described,
in whole or in part, in section 355(d)(2)
or (e)(2), old target’s deemed purchase of
all its assets is considered to precede the
deemed asset disposition of a lower-tier
subsidiary.
(iii)Seller-distribution of target
stock—(A)In general. Immediately after
old target’s deemed purchase of its assets
described in paragraph (b)(2)(ii) of this
section, seller is treated as distributing the
stock of old target actually distributed to
its shareholders in the qualified stock dis-
position. No gain or loss is recognized by
seller on the distribution. Additionally, if
stock of target is sold or exchanged as part
of a qualified stock disposition described,
in whole or in part, in section 355(d)(2)
or (e)(2), no gain or loss is recognized by
seller on the sale or exchange.
(B)Tiered targets. In the case of par-
ent-subsidiary chainsof corporations mak-
ing section 336(e) elections with respect
to a qualified stock disposition described,
in whole or in part, in section 355(d)(2)
or (e)(2), the Federal income tax conse-
quences of the section336(e) election for
a subsidiary of target shall be determined
under paragraph (b)(1) of this section. The
deemed liquidation of a lower-tier sub-
sidiary corporation pursuant to paragraph
(b)(1)(iii) of this section is considered
to precede the deemed liquidation of a
higher-tier subsidiary. The deemed liq-
uidation of the highest tier subsidiary of
target is considered to precede the dis-
tribution of old target stock described in
paragraph (b)(2)(iii)(A) of this section.
(iv)Seller—retention of target stock.If
a seller retains any target stock after the
12-month disposition period, the seller is
treated as having disposed of the old target
stock so retained, on the disposition date,
in a transaction in which no gain or loss
is recognized, and then, on the day after
the disposition date, purchasing the stock
so retained from old target for its fair mar-
ket value. The holding period for the re-
tained stock starts on the day after the dis-
position date. For purposes of this para-
graph (b)(2)(iv), the fair market value of
all of the target stock equals the grossed-up
amount realized on the sale, exchange, or
distribution of recently disposed stock of
target (see §1.336–3(c)).
(v)Qualification under section 355.
Old target’s deemed sale of all its assets
to an unrelated person and old target’s
deemed purchase of all its assets from an
unrelated person will not cause the distri-
bution of old target to fail to satisfy the
requirements of section 355. Similarly,
the deemed sale of all of the assets of a
subsidiary of target to an unrelated person
and the new subsidiary’s deemed purchase
of all its assets from an unrelated person
will not cause the distribution of old tar-
get to fail to satisfy the requirements of
section 355. For purposes of applying
section 355(a)(1)(D), seller is treated as
having disposed of any stock disposed of
in the qualified stock disposition on the
date seller actually sold, exchanged, or
distributed such stock. Further, seller’s
deemed disposition of retained old target
stock under paragraph (b)(2)(iv) of this
section is disregarded for purposes of ap-
plying section 355(a)(1)(D).
October 20, 20089572008–42 I.R.B.

(vi)Earnings and profits. The earn-
ings and profits of seller and target shall
be determined pursuant to §1.312–10 and,
if applicable, §1.1502–33(e). For this pur-
pose, target will not be treated as a newly
created controlled corporation and any in-
crease or decrease in target’s earnings and
profits pursuant to the deemed asset dispo-
sition will increase or decrease, as the case
may be, target’s earnings and profits im-
mediately before the allocation described
in §1.312–10.
(c)Purchaser. Generally, the making
of a section 336(e) election will not af-
fect the Federal income tax consequences
to which the purchaser would have been
subject with respect to the acquisition of
the target stock if a section 336(e) elec-
tion was not made. Thus, notwithstanding
§§1.336–2(b)(1)(i)(A), 1.336–2(b)(1)(iv),
and 1.336–2(b)(2)(iii)(A), the purchaser
will still be treated as having purchased,
received in an exchange, or received in a
distribution, the stock of target so acquired
on the date actually acquired. However,
see section 1223(1)(B) with respect to the
holding period for stock acquired pursuant
to a distribution qualifying under section
355 (or so much of section 356 that relates
to section 355). The Federal income tax
consequences of the deemed asset disposi-
tion and liquidation of target may affect the
purchaser’s consequences. For example,
if seller distributes the stock of target to its
shareholders in a qualified stock disposi-
tion for which a section 336(e) election is
made, any increase in seller’s earnings and
profits as a result of old target’s deemed
asset disposition and liquidation into seller
may increase the amount of the distri-
bution to the shareholders constituting a
dividend under section 301(c)(1).
(d)Minority shareholders—(1)In gen-
eral. This paragraph (d) describes the
treatment of shareholders of old target
other than the seller (or a member of
seller’s consolidated group), whether or
not they sell, exchange, or distribute their
stock of target. A shareholder to which
this paragraph (d) applies is referred to as
a minority shareholder.
(2)Sale, exchange, or distribution of
target stock by a minority shareholder.A
minority shareholder recognizes gain or
loss (as permitted under the general prin-
ciples of tax law) on its sale, exchange, or
distribution of target stock.
(3)Retention of target stock by a minor-
ity shareholder. A minority shareholder
who retains its target stock does not recog-
nize gain or loss under this section with re-
spect to its shares of target stock. The mi-
nority shareholder’s basis and holding pe-
riod for that target stock are not affected by
the section 336(e) election. Notwithstand-
ing the treatment to the minority share-
holder, if a section 336(e) election is made,
target will still be treated as disposing of
all of its assets in the deemed asset dispo-
sition.
(e)Treatment consistent with an actual
asset disposition. Except as otherwise pro-
vided, no provision in this section shall
produce a Federal income tax result under
subtitle A of the Internal Revenue Code
that would not occur if the parties had ac-
tually engaged in the transactions deemed
to occur because of this section, taking
into account other transactions that actu-
ally occurred or are deemed to occur. See
§1.338–1(a)(2) regarding the application
of other rules of law.
(f)Treatment of target under other pro-
visions of the Internal Revenue Code.The
provisions §1.338–1(b) apply with respect
to the treatment of new target after a sec-
tion 336(e) election, treating any reference
to section 338 or 338(h)(10) as a reference
to section 336(e).
(g)Special rules—(1)Target as two
corporations. Although the target is a
single corporation under corporate law, if
a section 336(e) election is made, then,
except with respect to a distribution de-
scribed in section 355(d)(2) or (e)(2) and
as provided in §1.338–1(b)(2), two sepa-
rate corporations, old target and new tar-
get, generally are considered to exist for
purposes of subtitle A of the Internal Rev-
enue Code.
(2)Treatment of members of a consol-
idated group. For purposes of §§1.336–1
through 1.336–5, all members of the
seller’s consolidated group are treated as
a single seller, regardless of whether the
member actually disposes of any stock.
Accordingly, any dispositions of stock
made by members of the same consoli-
dated group shall be treated as made by
one corporation, and any stock owned by
members of the same consolidated group
and not disposed of will be treated as stock
retained by the seller.
(3)Miscellaneous international provi-
sions—(i)Source and foreign tax credit.
The principles of section 338(h)(16) apply
to section 336(e) elections for target cor-
porations with foreign operations to ensure
that the source and foreign tax credit limi-
tation are properly determined.
(ii)Allocation of foreign taxes. If a sec-
tion 336(e) election is made for target and
target’s taxable year under foreign law (if
any) does not close at the end of the dispo-
sition date, foreign income taxes attribut-
able to the foreign taxable income earned
by the target during such foreign taxable
year are allocated to old target and new tar-
get under the principles of §1.1502–76(b).
(h)Making the section 336(e) election.
A section 336(e) election is made by the
seller attaching a section 336(e) election
statement to its timely filed (including ex-
tensions) Federal income tax return for the
taxable year which includes the disposition
date entitled “THIS IS AN ELECTION
UNDER SECTION 336(e) TO TREAT
THE DISPOSITION OF THE STOCK OF
[insert name and employer identification
number of target] AS A DEEMED SALE
OF SUCH CORPORATION’S ASSETS.”
If the seller is a member of a consolidated
group, the statement is filed with the Fed-
eral income tax return of the consolidated
group. The seller must provide a copy of
the statement to the target. The relevant
information for each consolidated group
member that disposes of target stock and
each member that retains target stock must
be set forth individually, not in the ag-
gregate. In the case of a section 336(e)
election for lower-tier targets, an addi-
tional statement must be filed for each
lower-tier target. However, in preparing
the statement, the seller of the directly
disposed of target shall be treated as the
seller of the lower-tier target. The section
336(e) election statement must include:
(1) The name, address, employer iden-
tification number (EIN), tax year, and state
of incorporation of the target corporation;
(2) The name, address, EIN, tax year,
and state of incorporation of the seller(s);
(3) The name, address, EIN (or social
security number), tax year, and state of
incorporation (if any) of any 80-percent
purchaser;
(4) The disposition date;
(5) The percentage of target stock that
was disposed of by each seller in the qual-
ified stock disposition;
(6) The percentage of target stock that
was disposed of on the disposition date by
2008–42 I.R.B.958October 20, 2008

each seller in the qualified stock disposi-
tion;
(7) The percentage of target stock that
was sold or exchanged by each seller in the
qualified stock disposition on or before the
disposition date;
(8) The percentage of target stock that
was distributed by each seller in the quali-
fiedstockdispositiononorbeforethedis-
position date;
(9) The percentage of target stock that
was retained by each seller immediately
after the 12-month disposition period;
and
(10) Whether any purchaser made
a gain recognition election pursuant to
§1.336–4(c). A copy of the gain recogni-
tion election statement must be attached to
the section 336(e) election statement.
(i) [Reserved]
(j)Protective section 336(e) election.
Taxpayers may make a protective election
under section 336(e) in connection with a
transaction. Such anelection will have no
effect if the transaction does not constitute
a qualified stock disposition, as defined
in §1.336–1(b)(5), but will otherwise be
binding and irrevocable.
(k)Examples. The following examples
illustrate the provisions of this section.
Example 1.Sale of 100 percent of target stock.
(i)Facts.Parentownsall100sharesofTarget’sonly
class of stock. The stock has a basis of $80 per share.
Target’s only assets are two parcels of land. Parcel
1 has a basis of $5,000 and Parcel 2 has a basis of
$4,000. Target has no liabilities. On July 1 of Year
1, Parent sells all 100 shares of Target stock to A for
$100 per share. Parent incurs no selling costs and A
incurs no acquisition costs. On July 1, the value of
Parcel 1 is $7,000 and the value of Parcel 2 is $3,000.
Parent makes a section 336(e) election.
(ii)Consequences. The sale of Target stock con-
stitutes a qualified stock disposition. July 1 of Year 1
is the disposition date. Accordingly, pursuant to the
section 336(e) election, for Federal income tax pur-
poses, rather than treating Parent as selling the stock
of Target to A, the following events are deemed to
occur. Target is treated as if, on July 1, it sold all
of its assets to an unrelated person in exchange for
the ADADP, $10,000, which is allocated $7,000 to
Parcel 1 and $3,000 to Parcel 2 (see §1.336–3 for the
determination and allocation of ADADP). Target rec-
ognizes gain of $2,000 on Parcel 1 and loss of $1,000
on Parcel 2. New Target is then treated as acquir-
ing all its assets from an unrelated person in a sin-
gle transaction in exchange for the AGUB, $10,000
(see §1.336–4 for the determination of AGUB). Old
Target is treated as liquidating into Parent immedi-
ately thereafter, distributing the $10,000 deemed re-
ceived in exchange for its assets in a transaction qual-
ifying under section 332. Parent recognizes no gain
or loss on the liquidation. A’s basis in New Target
stock equals $100 per share, the amount paid for the
stock.
Example 2.Saleof80percentoftargetstock.(i)
Facts. The facts are the same as inExample 1except
that Parent only sells 80 shares of its Target stock to
A and retains the other 20 shares.
(ii)Consequences. The results are the same as in
Example 1except that Parent also is treated as pur-
chasing from New Target on July 2, the day after the
disposition date, the 20 shares of Target stock (New
Target stock) not actually sold to A, for their fair
market value as determined under §1.336–2(b)(1)(v),
$2,000 ($100 per share).
Example 3.Distribution of 100 percent of target
stock.(i)Facts. The facts are the same as inExample
1except that instead of Parent selling 100 shares of
Target stock to A, Parent distributes 100 shares to its
shareholders, all of whom are unrelated to Parent, in
a transaction that does not qualify under section 355.
(ii)Consequences.Theresultsarethesameas
inExample 1except that Target does not recognize
the $1,000 of loss realized with respect to Parcel 2
(see §1.336–2(b)(1)(i)(B)(2))andonJuly1,immedi-
ately after the deemed liquidation of Target, Parent
is deemed to purchase from New Target 100 shares
of New Target stock and distribute those New Target
shares to its shareholders. Parent recognizes no gain
or loss on the deemed distribution of the shares un-
der §1.336–2(b)(1)(iv). The shareholders receive the
New Target stock as a distribution pursuant to section
301 and their basis in the New Target stock received
is its fair market value pursuant to section 301(d).
Example 4.Distributionof80percentoftarget
stock.(i)Facts. The facts are the same as inExam-
ple 3except that Parent distributes only 80 shares of
Target stock to its shareholders and retains the other
20 shares.
(ii)Consequences. The results are the same as in
Example 3except that Parent is treated as purchasing
on July 1 only 80 shares of New Target stock and as
distributingonly80sharesofNewTargetstocktoits
shareholders and then as purchasing (and retaining),
on July 2, the day after the disposition date, 20 shares
of New Target stock at their fair market value as de-
termined under §1.336–2(b)(1)(v), $2,000 ($100 per
share).
Example 5.Part sale, part distribution.(i)Facts.
Parent owns all 100 shares of Target’s only class of
stock. The stock has a basis of $80 per share. Tar-
get has two assets, both of which are buildings used
in its business. Building 1 has a basis of $6,000 and
Building 2 has a basis of $5,100. Target has no liabil-
ities. On January 1 of Year 1, Parent sells 50 shares
of Target to A for $88 per share. Parent incurred no
selling costs with respect to the sale of Target stock
and A incurred no acquisition costs with respect to the
purchase. On July 1 of Year 1, when the value of the
Target stock is $120 per share, Parent distributes 30
shares of Target to its unrelated shareholders. Parent
retains the remaining 20 shares. On July 1, the value
of Building 1 is $7,800 and the value of Building 2 is
$4,200. A section 336(e) election is made.
(ii)Consequences. Because the sale of the 50
shares and the distribution of the 30 shares occurred
within a 12-month disposition period, the 80 shares
of Target stock sold and distributed were disposed of
in a qualified stock disposition. July 1 of Year 1 is
the disposition date. On July 1, Target is treated as if
it sold its assets to an unrelated person in exchange
for the ADADP, $10,000, which is allocated $6,500
to Building 1 and $3,500 to Building 2 (see §1.336–3
for the determination and allocation of ADADP).
Target realizes and recognizes gain of $500 on the
deemed sale of Building 1 ($6,500 - $6,000). Tar-
get realizes loss of $1,600 on the deemed sale of
Building 2 ($3,500 - $5,100). However, pursuant
to §1.336–2(b)(1)(i)(B)(2), because only a portion
of the stock disposed of in the qualified stock dis-
position was sold or exchanged, only a portion of
the loss on Building 2 is recognized. The amount
of loss recognized on Building 2 is the $1,600 loss
realized multiplied by a fraction, the numerator of
which is $6,000, the value on July 1, of the 50 shares
that were sold in the qualified stock disposition on
or before the disposition date and the denominator
of which is $9,600, the value on July 1, of all of
the Target shares disposed of in the qualified stock
disposition on or before the disposition date. Thus,
only $1,000 ($1,600 x ($6,000/$9,600)) of the loss
on the deemed sale of Building 2 is recognized by
Old Target. New Target is then treated as acquiring
all its assets from an unrelated person in a single
transaction in exchange for the AGUB, $10,000 (see
§1.336–4 for the determination of AGUB). Old Tar-
get is treated as liquidating into Parent immediately
after the deemed asset disposition, distributing the
$10,000 deemed received in exchange for its assets
in a transaction qualifying under section 332. Parent
recognizes no gain or loss on the liquidation. Parent
is then deemed to purchase 30 shares of New Target
stock from New Target on July 1, and distribute those
30 New Target shares to its shareholders. Parent
recognizes no gain or loss on the deemed distribution
of the 30 shares under §1.336–2(b)(1)(iv). Parent
is then deemed to purchase (and retain), on July 2,
the day after the disposition date, 20 shares of New
Target stock at their fair market value as determined
under §1.336–2(b)(1)(v), $2,000 ($100 per share). A
is treated as having purchased the 50 shares of New
Target stock on January 1 of Year 1 at a cost of $88
per share, the same as if no section 336(e) election
had been made. Parent’s shareholders are treated as
receiving the New Target stock on July 1 of Year 1 as
a distribution pursuant to section 301 and their basis
in the New Target stock received is its fair market
value pursuant to section 301(d), the same as if no
section 336(e) election had been made.
Example 6.Sale of Target stock by consolidated
group members.(i)Facts. Parent owns all the stock
of Sub and 50 of the 100 outstanding shares of Target
stock. Sub owns the remaining 50 shares of Target
stock. Parent and Sub each hold their Target stock
with a basis of $80 per share. Target’s assets have an
aggregate basis of $9,000. Target has no liabilities.
Parent, Sub, and Target file a consolidated Federal
income tax return. On February 1 of Year 1, Parent
sells 30 shares of its Target stock to A for $2,400. On
March1ofYear1,Subsellsall50sharesofitsTar-
get stock to B for $5,600. Neither Parent nor Sub in-
curred any selling costs. Neither A nor B incurred any
acquisition costs. A section 336(e) election is made.
Assume that if the sale of the Target stock constitutes
a qualified stock disposition, the value allocated to
each of Target’s assets under §1.336–3 will exceed
the asset’s basis.
(ii)Consequences. Because Parent and Sub are
members of the same consolidated group, their sale
of Target stock is treated as made by one seller (see
October 20, 20089592008–42 I.R.B.

paragraph (g)(2) of this section), and the sales of
Target stock constitute a qualified stock disposi-
tion. March 1 of Year 1 is the disposition date. For
Federal income tax purposes, Parent and Sub are
not treated as selling the stock of Target to A and
B, respectively. Instead, the following events are
deemed to occur. Target is treated as if, on March 1,
it sold all its assets to unrelated person in exchange
for the ADADP, $10,000 (see §1.336–3 for deter-
mination of ADADP), recognizing gain of $1,000.
New Target is then treated as acquiring all its assets
from an unrelated person in a single transaction in
exchange for the AGUB, $10,000 (see §1.336–4 for
the determination of AGUB). Old Target is treated as
liquidating into Parent and Sub immediately there-
after, distributing the $10,000 deemed received in
exchange for its assets in a transaction qualifying
under section 332 (see §1.1502–34). Neither Parent
nor Sub recognize gain or loss on the liquidation.
Parent is then treated as purchasing from New Target
on March 2, the day after the disposition date, the
20 shares of Target stock (New Target stock) not
actually sold, for its fair market value as determined
under §1.336–2(b)(1)(v), $2,000 ($100 per share).
A is treated as having purchased 30 shares of New
Target stock on February 1 of Year 1 at a cost of
$2,400 ($80 per share), the same as if no section
336(e) election had been made. B is treated as having
purchased 50 shares of New Target stock on March
1 of Year 1 at a cost of $5,600 ($112 per share), the
same as if no section 336(e) election had been made.
Example 7.Sale of target stock by non-consol-
idated group members.(i)Facts.The facts are the
same as inExample 6except that Parent, Sub, and
Target do not join in the filing of a consolidated Fed-
eral income tax return. A section 336(e) election is
made.
(ii)Consequences. Because Parent and Sub do
not join in a consolidated Federal income tax return
and no single seller sells, exchanges, or distributes
Target stock meeting the requirements of section
1504(a)(2), the transaction does not constitute a qual-
ified stock disposition. The section 336(e) election
made with respect to the disposition of Target stock
has no effect.
Example 8.Distributionof80percentofTarget
stock in complete redemption of a greater-than-50-
percent shareholder.(i)Facts.AandBown51and
49 shares, respectively, of Seller’s only class of stock.
Seller owns all 100 shares of Target’s only class of
stock. Seller distributes 80 shares of Target stock to
A in complete redemption of A’s 51 shares of Seller in
a transaction that does not qualify under section 355.
A section 336(e) election is made.
(ii)Consequences. Prior to the redemption,
Seller and A would be related persons because, under
section 318(a)(2)(C), any stock of a corporation that
is owned by Seller would be attributed to A because
A owns 50 percent or more of the value of the stock
of Seller. However, for purposes of §§1.336–1
through 1.336–5, the determination of whether Seller
and A are related is made immediately after the
redemption of A’s stock. See §§1.336–1(b)(4)(iii)
and 1.338–3(b)(3)(ii)(A). After the redemption, A
no longer owns any stock of Seller. Accordingly,
A and Seller are not related persons, as defined in
§1.336–1(b)(11), and the distribution of Target stock
constitutes a qualified stock disposition. For Federal
income tax purposes, rather than Seller distributing
the stock of Target to A, the following is deemed
to occur. Target is treated as if it sold its assets to
an unrelated person. New Target is then treated as
acquiring all its assets from an unrelated person in
a single transaction. Immediately thereafter, Old
Target is liquidated into Seller in a transaction qual-
ifying under section 332. Seller recognizes no gain
or loss on the liquidation. Seller is then treated as
purchasing 80 shares of New Target stock from New
Target and then distributing the stock of New Target
to A in exchange for A’s 51 shares of Seller stock.
Seller recognizes no gain or loss on the distribution
of New Target stock pursuant to §1.336–2(b)(1)(iv).
Seller is then treated as purchasing from New Target,
on the day after the disposition date, the 20 shares
of Target stock (New Target stock) not actually
distributed, for its fair market value as determined
under §1.336–2(b)(1)(v). The Federal income tax
consequences to A are the same as if no section
336(e) election had been made.
Example 9.Pro-rata distribution of 80 percent
of target stock.(i)Facts. AandBown60and40
shares, respectively, of Seller’s only class of stock.
Seller owns all 100 shares of Target’s only class of
stock. Seller distributes 48 shares of Target stock to
A and 32 shares of Target stock to B in a transaction
that does not qualify under section 355. A section
336(e) election is made.
(ii)Consequences. Any stock of a corporation
that is owned by Seller would be attributed to A under
section 318(a)(2)(C) because, after the distribution, A
owns 50 percent or more of the value of the stock of
Seller. Therefore, after the distribution, A and Seller
are related persons, as defined in §1.336–1(b)(11),
and the distribution of Target stock to A is not a dis-
position. Because only 32 percent of the Target stock
was sold, exchanged, or distributed to nonrelated per-
sons, there has not been a qualified stock disposition.
Accordingly, the section 336(e) election made with
respect to the distribution of the Target stock has no
effect.
Example 10.Distribution of target stock de-
scribedinsection355(e)(2).(i)Facts. Seller owns
all 100 shares of Target’s only class of stock. Target
owns all 100 shares of Target Subsidiary’s only class
of stock. Seller distributes all 100 shares of Target
stock to its shareholders, all of whom are unrelated
to Seller, in a distribution that qualifies under section
355 (see paragraph (iv) of thisExample 10). As
part of the plan involving the distribution of the
Target stock, the shareholders of Seller sell all of the
stock of Seller, and section 355(e)(2) applies to the
distribution. Section 336(e) elections are made with
respect to Target and Target Subsidiary.
(ii)Consequences—Old Target deemed asset
sale. Because the Target stock was distributed
to persons who are unrelated to Seller, and the
distribution is described in section 355(e)(2), the
distribution constitutes a qualified stock disposition.
See proposed §§1.336–1(b)(4) and 1.336–1(b)(5).
Target’s deemed disposition of the stock of Target
Subsidiary as a result of the section 336(e) election
also constitutes a qualified stock disposition. See
§1.336–1(b)(5)(ii). For Federal income tax purposes,
rather than Seller distributing the stock of Target
to unrelated shareholders, the following is deemed
to occur. Old Target is treated as if it sold all of
its assets to an unrelated person for the ADADP,
determined under §1.336–3. Old Target recognizes
gain, but not loss, on the deemed sale of each of its
assets, other than the stock of Target Subsidiary. See
§1.336–2(b)(2)(i)(B)(2). Old Target is then treated
as acquiring all of its assets from an unrelated person
in a single transaction in exchange for an amount
equal to the AGUB, as determined under §1.336–4.
(iii)Consequences—Old Target Subsidiary
deemed asset sale and liquidation. After Old Tar-
get’s deemed purchase of all of its assets, Old Target
Subsidiary is then treated as if it sold all of its assets
to an unrelated person for the ADADP, determined
under §1.336–3. Old Target Subsidiary recognizes
gain, but not loss, on the deemed sale of each of
its assets. See §1.336–2(b)(1)(i)(B)(2). New Target
Subsidiary is then treated as acquiring all of its assets
from an unrelated person in a single transaction in
exchange for an amount equal to the AGUB, as de-
termined under §1.336–4. Old Target Subsidiary is
then deemed to liquidate into Old Target immediately
thereafter, distributing the amount deemed received
in exchange for its assets, in a transaction qualifying
under section 332. Old Target recognizes no gain or
loss on the liquidation of Old Target Subsidiary.
(iv)Consequences—Seller distribution of Old
Target. After the deemed liquidation of Old Target
Subsidiary, Seller is then treated as distributing the
stock of Old Target to the unrelated shareholders.
Pursuant to paragraph (b)(2)(v) of this section, nei-
ther Old Target’s and Old Target Subsidiary’s deemed
sales of all their assets to unrelated persons nor
Old Target’s and New Target Subsidiary’s deemed
purchases of all their assets from unrelated persons
will cause the distribution of Old Target to fail to
satisfy the requirements of section 355. The dis-
tributee shareholders have the same Federal income
tax consequences with respect to the receipt of the
Target stock as if a section 336(e) election had not
been made.
§1.336–3. Aggregate deemed asset
disposition price; various aspects of
taxation of the deemed asset disposition.
(a)Scope. This section provides rules
under section 336(e) to determine the ag-
gregate deemed asset disposition price
(ADADP) for target. ADADP is the
amount for which old target is deemed to
have sold all of its assets in the deemed
asset disposition. ADADP is allocated
among target’s assets in the same manner
as ADSP is allocated under §1.338–6 to
determine the amount for which each as-
set is deemed to have been sold. When
a subsequent increase or decrease is re-
quired under generalprinciples of tax law
with respect to an element of ADADP,
the redetermined ADADP is allocated
among target’s assets in the same manner
as redetermined ADSP is allocated under
§1.338–7.
(b)Determination of ADADP—(1)
General rule. ADADP is the sum of—
2008–42 I.R.B.960October 20, 2008

(i) The grossed-up amount realized on
the sale, exchange, or distribution of re-
cently disposed stock of target; and
(ii) The liabilities of old target.
(2)Time and amount of ADADP—(i)
Original determination. ADADP is ini-
tially determined at the beginning of the
day after the disposition date of target.
General principles of tax law apply in de-
termining the timing and amount of the el-
ements of ADADP.
(ii)Redetermination of ADADP.
ADADP is redetermined at such time
and in such amount as an increase or de-
crease would be required, under general
principles of tax law, for the elements of
ADADP. For example, ADADP is redeter-
mined because of an increase or decrease
in the amount realized on the sale or ex-
change of recently disposed stock of target
or because liabilities not originally taken
into account in determining ADADP are
subsequently taken into account. Increases
or decreases with respect to the elements
of ADADP result in the reallocation of
ADADP among target’s assets in the same
manner as ADSP under §1.338–7.
(c)Grossed-up amount realized on the
sale, exchange, or distribution of recently
disposed stock of target—(1)Determina-
tion of amount. The grossed-up amount
realized on the sale, exchange, or distribu-
tion of recently disposed stock of target is
an amount equal to—
(i) The sum of (A) the amount real-
ized on the sale or exchange of recently
disposed stock of target, determined as if
the seller(s) were required to use old tar-
get’s accounting methods and characteris-
tics and the installment method were not
available and determined without regard to
the selling costs taken into account under
paragraph (c)(1)(iii) of this section and (B)
the fair market value of recently disposed
stock of target, determined on the date of
each distribution, distributed in the quali-
fied stock disposition;
(ii) Divided by the percentage of target
stock (by value, determined on the dispo-
sition date) attributable to the recently dis-
posed stock;
(iii) Less the selling costs incurred by
the seller in connection with the sale or ex-
change of recently disposed stock that re-
duce its amount realized on the sale or ex-
change of the stock (for example, broker-
age commissions and any similar costs to
sell the stock).
(2)Example. The following example
illustrates this paragraph (c):
Example. Target has two classes of stock out-
standing, voting common stock and preferred stock
described in section 1504(a)(4). Seller owns all 100
shares of each class of stock. On March 1 of Year 1,
Seller sells 10 shares of Target voting common stock
to A for $75. On April 1 of Year 2, Seller distributes
15 shares of voting common stock with a fair mar-
ket value of $120 to B. On May 1 of Year 2, Seller
distributes 10 shares of voting common stock with
a fair market value of $110 to C. On July 1 of Year
2, Seller sells 55 shares of Target voting common
stock to D for $550. On July 1 of Year 2, the fair
market value of all the Target voting common stock
is $1,000 ($10 per share) and the fair market value
of the preferred stock is $600. Seller incurs $20 of
selling costs with respect to the sale to A and $60
of selling costs with respect to the sale to D. The
grossed-up amount realized on the sale, exchange,
or distribution of recently disposed stock of Target
corporation is calculated as follows: The sum of the
amount realized on the sale or exchange of recently
disposed stock sold or exchanged (without regard to
selling costs) and the fair market value of the recently
disposed stock distributed is $780 ($120 + $110 +
$550) (the 10 shares sold to A on March 1 of Year
1 is not recently disposed stock because it was not
disposed of during the 12-month disposition period).
The percentage of Target stock by value on the dis-
position date attributable to recently disposed stock
equals 50% ($800/($1000 + $600). The grossed-up
amount realized equals $1500 (($780/.50) - $60 sell-
ing costs).
(d)Liabilities of old target—(1)In gen-
eral. In general, the liabilities of old tar-
get are measured as of the beginning of the
day after the disposition date. However,
if a target for which a section 336(e) elec-
tion is made engages in a transaction out-
side the ordinary course of business on the
disposition date after the event resulting in
the qualified stock disposition of the target
or a higher-tier corporation, the target and
all persons related thereto (either before or
after the qualified stock disposition) under
section 267(b) or section 707 must treat the
transaction for all Federal income tax pur-
poses as occurring at the beginning of the
day following the transaction and after the
deemed disposition by old target. In order
to be taken into account in ADADP, a li-
ability must be a liability of target that is
properly taken into account in amount re-
alized under general principles of tax law
that would apply if old target had sold its
assets to an unrelated person for consider-
ation that included the discharge of its li-
abilities. See §1.1001–2(a). Such liabili-
ties may include liabilities for the tax con-
sequences resulting from the deemed asset
disposition.
(2)Time and amount of liabilities.The
time for taking intoaccount liabilities of
old target in determining ADADP and the
amount of the liabilities taken into account
is determined as if old target had sold its
assets to an unrelated person for consider-
ation that included the discharge of the li-
abilities by the unrelated person. For ex-
ample, if no amount of a target liability is
properly taken into account in amount real-
ized as of the beginning of the day after the
disposition date, the liability is not initially
taken into account in determining ADADP
(although it may be taken into account at
some later date).
(e)Deemed disposition tax conse-
quences. Gain or loss on each asset in
the deemed asset disposition is computed
by reference to the ADADP allocated to
that asset. ADADP is allocated in the
same manner as is ADSP under §1.338–6.
Although deemed disposition tax conse-
quences may increase or decrease ADADP
by creating or reducing a tax liability, the
amount of the tax liability itself may be
a function of the size of the deemed dis-
position tax consequences. Thus, these
determinations may require trial and error
computations.
(f)Other rules apply in determining
ADADP. ADADP may not be applied in
such a way as to contravene other appli-
cable rules. For example, a capital loss
cannot be applied to reduce ordinary in-
come in calculating the tax liability on the
deemed asset disposition for purposes of
determining ADADP.
§1.336–4. Adjusted grossed-up basis.
(a)Scope. Except as provided in para-
graphs(b)and(c)ofthissectionoras
the context otherwise requires, the prin-
ciples of paragraphs (b) through (g) of
§1.338–5 apply in determining the ad-
justed grossed-up basis (AGUB) for target
and the consequences of a gain recognition
election. AGUB is the amount for which
new target is deemed to have purchased
all of its assets in the deemed purchase
under §1.336–2(b)(1)(ii), or the amount
for which old target is deemed to have
purchased all of its assets in the deemed
purchase under §1.336–2(b)(2)(ii). AGUB
is allocated among target’s assets in ac-
cordance with §1.338–6 to determine the
price at which the assets are deemed to
have been purchased. When a subsequent
October 20, 20089612008–42 I.R.B.

increase or decrease with respect to an
element of AGUB is required under gen-
eral principles of tax law, redetermined
AGUB is allocated among target’s assets
in accordance with §1.338–7.
(b)Modifications to the principles in
§1.338–5. Solely for purposes of applying
§§1.336–1 through 1.336–4, the principles
of §1.338–5 are modified as follows—
(1)Purchasing corporation; purchaser.
Any reference to the “purchasing corpora-
tion” shall be treated as a reference to a
purchaser, as defined in §1.336–1(b)(2).
(2)Acquisition date; disposition date.
Any reference to the “acquisition date”
shall be treated as a reference to the dispo-
sition date, as defined in §1.336–1(b)(7).
(3)Section 338 election; section
338(h)(10) election;section 336(e) elec-
tion. Any reference to a “section 338
election” or a “section 338(h)(10) elec-
tion” shall be treated as a reference to
a section 336(e) election, as defined in
§1.336–1(b)(10).
(4)New target; old target.Inthe
case of a disposition described in section
355(d)(2) or (e)(2), any reference to “new
target” shall be treated as a reference to
“old target” in its capacity as the purchaser
of assets pursuant to the section 336(e)
election.
(5)Recently purchased stock; recently
disposed stock. Any reference torecently
purchased stockshall be treated as a ref-
erence to recently disposed stock, as de-
fined in §1.336–1(b)(16). In the case of a
distribution of stock, for purposes of de-
termining the purchaser’s grossed-up ba-
sis of recently disposed stock, the pur-
chaser’s basis in recently disposed stock
shall be deemed to be such stock’s fair mar-
ket value on the date it was acquired.
(6)Nonrecently purchased stock;
nonrecently disposed stock.Anyref-
erence tononrecently purchased stock
shall be treated as a reference to non-
recently disposed stock, as defined in
§1.336–1(b)(17).
(c)Gain recognition election—(1)In
general. Any holder of nonrecently dis-
posed stock of target may make a gain
recognition election. The gain recogni-
tion election is irrevocable. Each owner
of nonrecently disposed stock determines
its basis amount, and therefore, the gain
recognized pursuant to the gain recogni-
tion election, by applying §§1.338–5(c)
and 1.338–5(d)(3)(ii) by reference to its
own recently disposed stock and nonre-
cently disposed stock, and not by reference
to all recently disposed stock and nonre-
cently disposed stock.
(2)80-percent purchaser. If a sec-
tion 336(e) election is made for target,
any 80-percent purchaser and all persons
related to the 80-percent purchaser are
automatically deemed to have made a gain
recognition election for its nonrecently
disposed target stock.
(3)Non-80-percent purchaser.Again
recognition election is actually made by
a non-80-percent purchaser by providing
to the seller, and seller including with
the section 336(e) election statement, a
gain recognition election statement, as de-
scribed in paragraph (c)(4) of this section.
If a non-80-percent purchaser makes a
gain recognition election, all related per-
sons to the non-80-percent purchaser must
also make a gain recognition election.
Otherwise, the gain recognition election
for the non-80-percent purchaser will have
no effect.
(4)Gain recognition election statement.
A gain recognition election statement must
include the following declarations (or sub-
stantially similar declarations):
(i) [Insert name, address, and taxpayer
identifying number of person for whom
gain recognition election is actually being
made] has elected to recognize gain under
§1.336–4(c) with respect to [his, hers, or
its] nonrecently disposed stock.
(ii) [Insert name of person for whom
gain recognition election is actually being
made] agrees to report any gain under the
gain recognition election on [his, hers, or
its] Federal income tax return (including
an amended return, if necessary) for the
taxable year that includes the disposition
date of [insert name and EIN of target cor-
poration].
(d)Examples. The following examples
illustrate the provisions of this section.
Example 1. On January 1 of Year 1, Seller owns
85 shares of Target stock, A owns 8 shares, B owns 4
shares, and C owns the remaining 3 shares. Each of
A’s 8 shares, B’s 4 shares, and C’s 3 shares have a $5
basis. Assume that Target has no liabilities. On July
1 of Year 2, Seller sells 70 shares of Target stock to A
for $10 per share. On September 1 of Year 2, Seller
sells 5 shares of Target stock to B and 5 shares of Tar-
get stock to C for $14 per share. A incurs $25 of ac-
quisition costs, and B and C each incur $10 of acqui-
sition costs in connection with their respective Year
2 purchases. These costs are capitalized in the basis
of the Target stock. September 1 of Year 2 is the dis-
position date. Because A owns at least 10 percent of
the Target stock on September 1, the disposition date,
and A’s original 8 shares of Target stock owned on
January 1 of Year 1 were not disposed of in the qual-
ified stock disposition, A’s original 8 shares of Tar-
get stock are nonrecently disposed stock. Although
B’s original 4 shares and C’s original 3 shares were
not disposed of in the qualified stock disposition, be-
cause neither B nor C owns, with the application of
section 318(a), other than section 318(a)(4), at least
10 percent of the total voting power or value of Target
stock on the disposition date, their original shares are
not nonrecently disposed stock. The grossed up ba-
sis of recently disposed Target stock is $1011, deter-
mined as follows: The purchasers’ (A, B, and C) ag-
gregate basis in the recently disposed target stock, de-
termined without regard to acquisition costs, is $840
((70 x $10) + (5 x $14) + (5 x $14)). This amount
is multiplied by a fraction, the numerator of which is
100 minus 8, the percentage of the Target stock which
is nonrecently disposed stock, and the denominator of
which is 80, the percentage of Target stock disposed
of in the qualified stock disposition ($840 x 92/80 =
$966). This amount is then increased by the $45 of
acquisition costs incurred by A, B, and C to arrive at
the $1011 grossed up basis of recently disposed Tar-
get stock ($966 + $45 = $1011). New Target’s AGUB
is $1051, the sum of $1011, the grossed up basis of
recently disposed Target stock and $40 (8 x $5), A’s
basis in his nonrecently disposed Target stock.
Example 2. ThefactsarethesameasinExam-
ple 1except that A makes a gain recognition election.
Pursuant to the gain recognition election, A is treated
as if it sold on September 1 of Year 2, the disposition
date, its 8 shares of nonrecently disposed target stock
for the basis amount, and A’s basis in nonrecently dis-
posed target stock immediately after the deemed sale
is the basis amount. A’s basis amount equals his basis
in his recently disposed Target stock without regard
to acquisition costs, $700 (70 x $10), multiplied by a
fraction, the numerator of which is 100 minus 8, the
percentage of the Target stock, by value, determined
on the disposition date, which is A’s nonrecently dis-
posed Target stock, and the denominator of which is
70, the percentage of the Target stock, by value, deter-
mined on the disposition date, disposed of to A in the
qualified stock disposition, which is then multiplied
by a fraction, the numerator of which is 8, the per-
centage of target stock, by value, determined on the
disposition date, attributable to A’s nonrecently dis-
posed Target stock and the denominator of which is
100 minus the numerator amount. Accordingly, A’s
basis amount is $80 ($700 x 92/70 x 8/92). A there-
fore recognizes gain of $40 under the gain recognition
election ($80 basis amount minus A’s $40 basis in his
nonrecently disposed stock prior to the gain recogni-
tion election). New Target’s AGUB is $1091, the sum
of $1011, the grossed up basis of all recently disposed
Target stock and $80, A’s basis in his nonrecently dis-
posed Target stock pursuant to the gain recognition
election.
§1.336–5. Effective/Applicability date.
The provisions of §§1.336–1 through
1.336–4 apply to any qualified stock dis-
position for which the disposition date is
on or after the date of publication of the
2008–42 I.R.B.962October 20, 2008

Treasury decision adopting these rules as
final regulations in theFederal Register.
Par. 3. Section 1.338–0 is amended
by adding entries for §§1.338–1(e) and
1.338–5(h) to read as follows:
§1.338–0. Outline of topics.
*****
§1.338–1 General principles; status of old
target and new target.
*****
(e) Effective/applicability date.
*****
§1.338–5 Adjusted grossed-up basis.
*****
(h) Effective/applicability date.
Par. 4. Section 1.338–1 is amended by
adding two new sentences after the paren-
thetical that follows the third sentence of
paragraph (a)(1), by revising the first sen-
tence in paragraph (c)(1), and adding a new
paragraph (e) to read as follows:
§1.338–1. General principles; status of
old target and new target.
(a) * * *
(1) * * * However, if, as a result of
the deemed purchase of old target’s as-
sets pursuant to a section 336(e) election,
there would be both a qualified stock pur-
chase and a qualified stock disposition of
the stock of a subsidiary of the target, nei-
ther a section 338(g) election nor a section
338(h)(10) election may be made with re-
spect to the qualified stock purchase of the
subsidiary. Instead, a section 336(e) elec-
tion may be made with respect to such pur-
chase. See §1.336–1(b)(5)(ii). * * *
*****
(c) * * *
(1)In general. Therulesofthispara-
graph (c) apply for purposes of applying
the regulations under sections 336(e), 338,
and 1060. * * *
*****
(e)Effective/applicability date. Para-
graphs (a)(1) and (c)(1) of this section are
applicable to any qualified stock disposi-
tion for which the disposition date is on or
after the date of publication of the Treasury
decision adopting these rules as final reg-
ulations in theFederal Register.
Par. 5. Section 1.338–5 is amended
by revising the first sentence in paragraph
(d)(3)(ii) and by adding a new paragraph
(h) to read as follows:
§1.338–5. Adjusted grossed-up basis.
*****
(d) * * *
(3) * * *
(ii)Basis amount. The basis amount is
equal to the amount determined by apply-
ing paragraphs (c)(1) and (2) of this section
(the purchasing corporation’s grossed-up
basis in recently purchased target stock at
the beginning of the day after the acqui-
sition date determined without regard to
the acquisition costs taken into account in
paragraph (c)(3) of this section) multiplied
by a fraction the numerator of which is the
percentage of target stock (by value, de-
termined on the acquisition date) attribut-
able to the purchasing corporation’s non-
recently purchased target stock and the de-
nominator of which is 100 percent minus
the numerator amount. * * *
*****
(h)Effective/applicability date. Para-
graph (d)(3)(ii) of this section is applica-
ble to any qualified stock disposition for
which the disposition date is on or after
the date of publication of the Treasury de-
cision adopting these rules as final regula-
tions in theFederal Register.
Linda E. Stiff,
Deputy Commissioner for
Services and Enforcement.
(Filed by the Office of the Federal Register on August 22,
2008, 8:45 a.m., and published in the issue of the Federal
Register for August 25, 2008, 73 F.R. 49965)
Farmer and Fisherman
Income Averaging; Correction
Announcement 2008–91
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Correction to final and tempo-
rary regulations.
SUMMARY: This document corrects fi-
nal and temporary regulations (T.D. 9417,
2008–37 I.R.B. 693) that were published in
the Federal Register on Tuesday, July 22,
2008 (73 FR 42522) relating to the averag-
ing of farm and fishing income in comput-
ing income tax liability.
FOR FURTHER INFORMATION
CONTACT: Amy Pfalzgraf, (202)
622–4960 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
The final and temporary regulations
(T.D. 9417) that are the subject of this
correction are undersection 1301 of the
Internal Revenue Code.
Need for Correction
As published, T.D. 9417 contains an er-
ror that may prove to be misleading and is
in need of clarification.
Correction of Publication
Accordingly, the publication of the
final and temporary regulations (T.D.
9417), which were the subject of FR. Doc.
E8–16665, is corrected as follows:
On page 42522, column 2, in the pre-
amble, under the caption “For Further In-
formation Contact”, line 2, the language
“Amy Pfalzgraf, (202) 622–4950 (not a”
is corrected to read “Amy Pfalzgraf (202)
622–4960 (not a”.
LaNita Van Dyke,
Chief, Publications and
Regulations Branch,
Legal Processing Division,
Associate Chief Counsel
(Procedure and Administration).
(Filed by the Office of the Federal Register on September
4, 2008, 8:45 a.m., and published in the issue of the Federal
Register for September 5, 2008, 73 F.R. 51719)
Farmer and Fisherman
Income Averaging; Correction
Announcement 2008–92
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Correction to notice of pro-
posedrulemakingbycross-reference to
temporary regulations.
SUMMARY: This document corrects
a notice of proposed rulemaking by
October 20, 20089632008–42 I.R.B.

cross-reference to temporary regulations
(REG–161695–04, 2008–37 I.R.B. 699)
that was published in the Federal Reg-
ister on Tuesday, July 22, 2008 (73 FR
42538) relating to the averaging of farm
and fishing income in computing income
tax liability.
FOR FURTHER INFORMATION
CONTACT: Amy Pfalzgraf, (202)
622–4960 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
The notice of proposed rulemaking by
cross-reference to temporary regulations
(REG–161695–04) that is the subject of
this correction is under section 1301 of the
Internal Revenue Code.
Need for Correction
As published, REG–161695–04 con-
tains an error that may prove to be mis-
leading and is in need of clarification.
Correction of Publication
Accordingly, the publication of the pro-
posedrulemakingbycross-referenceto
temporary regulations (REG–161695–04),
which was the subject of FR Doc.
E8–16664, is corrected as follows:
On page 42538, column 2, in the pre-
amble, under the caption“ForFurtherIn-
formation Contact”, line 2, the language
“Amy Pfalzgraf, (202) 622–4950 (not a”
is corrected to read “Amy Pfalzgraf (202)
622–4960 (not a”.
LaNita Van Dyke,
Chief, Publications and
Regulations Branch,
Legal Processing Division,
Associate Chief Counsel
(Procedure and Administration).
(Filed by the Office of the Federal Register on September
4, 2008, 8:45 a.m., and published in the issue of the Federal
Register for September 5, 2008, 73 F.R. 51747)
IRS and the George
Washington University Law
School to Sponsor Institute on
International Tax Issues
Announcement 2008–94
The Internal Revenue Service an-
nounces the Twenty-First Annual Institute
on Current Issues in International Tax-
ation, jointly sponsored by the Internal
Revenue Service and The George Wash-
ington University Law School, to be held
on December 8 and 9, 2008, at the J.W.
Marriott Hotel in Washington, DC. Reg-
istration is currently underway for the
Institute, which is intended for interna-
tional tax professionals.
The program will present a unique op-
portunity for top IRS and Treasury offi-
cials and tax experts, an OECD represen-
tative, foreign government tax authorities,
and leading private sector specialists, to
address breaking issues and present key
perspectives on new developments. The
first day will feature a discussion by U.S.
and foreign tax authorities of competent
authority current trends and new frontiers.
The first day will also feature sessions
on the following:
•Foreign Audits and the Competent Au-
thority Process
•Transfer Pricing Update-Regulatory
and Administrative Developments
•The Modernization of Subpart F-Ac-
commodating Business Structures
While Preventing Avoidance Transac-
tions
•Foreign Tax Credit Update
•Cross-Border M&A
The second day will focus on the fol-
lowing topics:
•When DoesAndMeanOr?: Current
Issues in Treaty Interpretation
•Full Disclosure: How Taxpayers and
Tax Administrators Are Coping with
the New Transparency
•Inbound/Outbound Developments
On the first day, Douglas H. Shulman,
Commissioner of the Internal Revenue
Service, will deliver the luncheon address.
On the second day, Edward D. Kleinbard,
Chief of Staff of the Joint Committee on
Taxation, will deliver an opening address,
and Michael F. Mundaca, Deputy Assis-
tant Secretary for International Tax Affairs
of the Treasury, will deliver the luncheon
address. The second day will also include
an “Ask the IRS” panel featuring senior
officials from the Service.
Those interested in attending or ob-
taining more information should contact
The George Washington University Law
School, athttp://www.law.gwu.edu/ciit.
Update to Publication 1187,
Specifications for Filing Form
1042–S, Foreign Person’s
U.S. Source Income Subject
to Withholding, Electronically,
Revised August 2008
Announcement 2008–95
This announcement supersedes An-
nouncement 2008–19 and contains cor-
rections and clarifying information to
Publication 1187,Specifications for Fil-
ing Form 1042–S,Foreign Person’s U.S.
Source Income Subject to Withholding,
Electronically, revised August 2008. Con-
tinue to use this Publication along with the
changes listed below for your Tax Year
2008 filing. The following changes are
effective for Tax Year 2008 forms filed in
calendar year 2009.
Part A Changes:
•All communication via telephone to
the Customer Service Section is Toll-
Free 1–866–455–7438. This corrects
a typographical error found in Part A,
Section3.09foundonpage3ofPub-
lication 1187.
•Section 8 .09. Apply the following for-
mula to determine Total Withholding
Credit (field positions 383–394 of the
“Q” Record).
All field positions described below are
in the “Q” Record.
2008–42 I.R.B.964October 20, 2008

IncomeCodes(15–19)
Gross Income Paid (6–17)
- Withholding Allowance (18–29)
= Net Income Amount (30–41)
X Tax Rate (42–45)
= Total Withholding Credit (383–394)
A
llotherIncomeCodes
Gross Income Paid (6–17)
X Tax Rate (42–45)
= Total Withholding Credit (383–394)
Part B Changes:
•Section 4 .03 should read: If you
are considering sending files larger
than 899,999 records, please contact
IRS/ECC-MTB for specifics.
•Section 8 .01 Format Error number
9, should read: The Total Gross In-
come and Total Withholding Credit in
the “Q” Record must equal the Total
Gross Income and Total Withholding
Credit reported in the corresponding
“C” Record.
Part C Changes:
•Recipient “Q” Record positions
359–370: Remove the Note: If the
U.S. tax withheld was either under or
over reported, see field positions 761
of the Q Record.
•Recipient “Q” Record, Total With-
holding Credit, field positions
383–394, add the Note: If the To-
tal Withholding Credit, (aggregate
amounts of U.S. Tax Withheld and
Withholding By Other Agents) was
either under or over reported, see field
position 761 of the Q Record”.
•Recipient “Q” Record, U.S. Tax With-
held Indicator, position 761: Change
note to read: Please refer to Total With-
holding Credit positions 383–394.
•Recipient “Q” Record, Recipient’s
Foreign Tax I.D. Number, field po-
sitions 762–783 enter the number
exactly as the recipient provides on
their documentation. Alpha, numeric
and/or other special characters are ac-
ceptable.
•Section 4 .01 should read: The “C”
record is a summary of the number
of “Q” Records for each Withholding
Agent, Gross Amount Paid, and Total
Withholding Credit.
•In the Reconciliation “C” Record,
Total U.S. Tax Withheld, field po-
sition 31–45, should be titled Total
Withholding Credit. Description and
Remarks should read: Enter the total
aggregate amount of tax withheld by
you and any other withholding agent.
This is the aggregate total amounts
from the fields U.S. Tax Withheld and
Withholding By Other Agents. Enter
the amount in whole dollars (do not
enter cents). Right-justify and zero
fill.
Part D Changes:
•The record length of all records has in-
creased to 820 positions. This corrects
a typographical error found at the end
of Part D, in a graphic record layout
foundonpage49ofPublication1187.
If you have questions concerning the
filing of Form 1042–S,Foreign Per-
son’s U.S. Source Income Subject to
Withholding, please contact the Internal
Revenue Service ECC-MTB toll-free at
866–455–7438.
October 20, 20089652008–42 I.R.B.

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the ef-
fect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is be-
ingextendedtoapplytoavariationofthe
fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that the
same principle also applies to B, the earlier
ruling is amplified. (Compare withmodi-
fied,below).
Clarifiedis used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion.
It is not used where a position in a prior
ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
withamplifiedandclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
beingstatedinanewruling.
Supersededdescribes a situation where
the new ruling does nothing more than re-
state the substance and situation of a previ-
ously published ruling (or rulings). Thus,
the term is used to republish under the
1986 Code and regulations the same po-
sition published under the 1939 Code and
regulations. The term is also used when
it is desired to republish in a single rul-
ing a series of situations, names, etc., that
were previously published over a period of
time in separate rulings. If the new rul-
ing does more than restate the substance
of a prior ruling, a combination of terms
is used. For example,modifiedandsu-
persededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is self
contained. In this case, the previously pub-
lished ruling is first modified and then, as
modified, is superseded.
Supplementedis used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names in
subsequent rulings. After the original rul-
ing has been supplemented several times, a
new ruling may be published that includes
the list in the original ruling and the ad-
ditions, and supersedes all prior rulings in
the series.
Suspendedis used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of cases
in litigation, or the outcome of a Service
study.
Abbreviations
The fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
DC—Dummy Corporation.
DE—Donee.
Del. Order
—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
2008–42 I.R.B.iOctober 20, 2008

Numerical Finding List
1
Bulletins 2008–27 through 2008–42
Announcements:
2008-62, 2008-27 I.R.B.74
2008-63, 2008-28 I.R.B.114
2008-64, 2008-28 I.R.B.114
2008-65, 2008-31 I.R.B.279
2008-66, 2008-29 I.R.B.164
2008-67, 2008-29 I.R.B.164
2008-68, 2008-30 I.R.B.244
2008-69, 2008-32 I.R.B.318
2008-70, 2008-32 I.R.B.318
2008-71, 2008-32 I.R.B.321
2008-72, 2008-32 I.R.B.321
2008-73, 2008-33 I.R.B.391
2008-74, 2008-33 I.R.B.392
2008-75, 2008-33 I.R.B.392
2008-76, 2008-33 I.R.B.393
2008-77, 2008-33 I.R.B.394
2008-78, 2008-34 I.R.B.453
2008-79, 2008-35 I.R.B.568
2008-80, 2008-37 I.R.B.706
2008-81, 2008-37 I.R.B.706
2008-82, 2008-37 I.R.B.708
2008-83, 2008-37 I.R.B.709
2008-84, 2008-38 I.R.B.748
2008-85, 2008-38 I.R.B.749
2008-86, 2008-40 I.R.B.843
2008-87, 2008-40 I.R.B.843
2008-88, 2008-40 I.R.B.843
2008-89, 2008-40 I.R.B.844
2008-90, 2008-41 I.R.B.896
2008-91, 2008-42 I.R.B.963
2008-92, 2008-42 I.R.B.963
2008-93, 2008-41 I.R.B.896
2008-94, 2008-42 I.R.B.964
2008-95, 2008-42 I.R.B.964
Court Decisions:
2087, 2008-41 I.R.B.845
Notices:
2008-55, 2008-27 I.R.B.11
2008-56, 2008-28 I.R.B.79
2008-57, 2008-28 I.R.B.80
2008-58, 2008-28 I.R.B.81
2008-59, 2008-29 I.R.B.123
2008-60, 2008-30 I.R.B.178
2008-61, 2008-30 I.R.B.180
2008-62, 2008-29 I.R.B.130
2008-63, 2008-31 I.R.B.261
2008-64, 2008-31 I.R.B.268
2008-65, 2008-30 I.R.B.182
2008-66, 2008-31 I.R.B.270
Notices— Continued:
2008-67, 2008-32 I.R.B.307
2008-68, 2008-34 I.R.B.418
2008-69, 2008-34 I.R.B.419
2008-70, 2008-36 I.R.B.575
2008-71, 2008-35 I.R.B.462
2008-73, 2008-38 I.R.B.717
2008-74, 2008-38 I.R.B.718
2008-75, 2008-38 I.R.B.719
2008-76, 2008-39 I.R.B.768
2008-77, 2008-40 I.R.B.814
2008-78, 2008-41 I.R.B.851
2008-79, 2008-40 I.R.B.815
2008-80, 2008-40 I.R.B.820
2008-81, 2008-41 I.R.B.852
2008-82, 2008-41 I.R.B.853
2008-83, 2008-42 I.R.B.905
2008-84, 2008-41 I.R.B.855
2008-85, 2008-42 I.R.B.905
2008-86, 2008-42 I.R.B.925
2008-87, 2008-42 I.R.B.930
2008-88, 2008-42 I.R.B.933
Proposed Regulations:
REG-209006-89, 2008-41 I.R.B.867
REG-143544-04, 2008-42 I.R.B.947
REG-161695-04, 2008-37 I.R.B.699
REG-164965-04, 2008-34 I.R.B.450
REG-143453-05, 2008-32 I.R.B.310
REG-146895-05, 2008-37 I.R.B.700
REG-155087-05, 2008-38 I.R.B.726
REG-142680-06, 2008-35 I.R.B.565
REG-120476-07, 2008-36 I.R.B.679
REG-120844-07, 2008-39 I.R.B.770
REG-129243-07, 2008-27 I.R.B.32
REG-138355-07, 2008-32 I.R.B.311
REG-140029-07, 2008-40 I.R.B.828
REG-142040-07, 2008-34 I.R.B.451
REG-149404-07, 2008-40 I.R.B.839
REG-149405-07, 2008-27 I.R.B.73
REG-100464-08, 2008-32 I.R.B.313
REG-101258-08, 2008-28 I.R.B.111
REG-102122-08, 2008-31 I.R.B.278
REG-102822-08, 2008-38 I.R.B.744
REG-103146-08, 2008-37 I.R.B.701
REG-106251-08, 2008-39 I.R.B.774
REG-115457-08, 2008-33 I.R.B.390
REG-121698-08, 2008-29 I.R.B.163
Revenue Procedures:
2008-32, 2008-28 I.R.B.82
2008-33, 2008-28 I.R.B.93
2008-34, 2008-27 I.R.B.13
2008-35, 2008-29 I.R.B.132
2008-36, 2008-33 I.R.B.340
2008-37, 2008-29 I.R.B.137
Revenue Procedures— Continued:
2008-38, 2008-29 I.R.B.139
2008-39, 2008-29 I.R.B.143
2008-40, 2008-29 I.R.B.151
2008-41, 2008-29 I.R.B.155
2008-42, 2008-29 I.R.B.160
2008-43, 2008-30 I.R.B.186
2008-44, 2008-30 I.R.B.187
2008-45, 2008-30 I.R.B.224
2008-46, 2008-30 I.R.B.238
2008-47, 2008-31 I.R.B.272
2008-48, 2008-36 I.R.B.586
2008-49, 2008-34 I.R.B.423
2008-50, 2008-35 I.R.B.464
2008-51, 2008-35 I.R.B.562
2008-52, 2008-36 I.R.B.587
2008-53, 2008-36 I.R.B.678
2008-54, 2008-38 I.R.B.722
2008-55, 2008-39 I.R.B.768
2008-56, 2008-40 I.R.B.826
2008-57, 2008-41 I.R.B.855
2008-58, 2008-41 I.R.B.856
2008-59, 2008-41 I.R.B.857
2008-61, 2008-42 I.R.B.934
2008-62, 2008-42 I.R.B.935
2008-63, 2008-42 I.R.B.946
Revenue Rulings:
2008-32, 2008-27 I.R.B.6
2008-33, 2008-27 I.R.B.8
2008-34, 2008-28 I.R.B.76
2008-35, 2008-29 I.R.B.116
2008-36, 2008-30 I.R.B.165
2008-37, 2008-28 I.R.B.77
2008-38, 2008-31 I.R.B.249
2008-39, 2008-31 I.R.B.252
2008-40, 2008-30 I.R.B.166
2008-41, 2008-30 I.R.B.170
2008-42, 2008-30 I.R.B.175
2008-43, 2008-31 I.R.B.258
2008-44, 2008-32 I.R.B.292
2008-45, 2008-34 I.R.B.403
2008-46, 2008-36 I.R.B.572
2008-47, 2008-39 I.R.B.760
2008-48, 2008-38 I.R.B.713
2008-49, 2008-40 I.R.B.811
Treasury Decisions:
9401, 2008-27 I.R.B.1
9402, 2008-31 I.R.B.254
9403, 2008-32 I.R.B.285
9404, 2008-32 I.R.B.280
9405, 2008-32 I.R.B.293
9406, 2008-32 I.R.B.287
9407, 2008-33 I.R.B.330
9408, 2008-33 I.R.B.323
1
A cumulative list of all revenue rulings, revenueprocedures, Treasury decisions, etc., publishedin Internal Revenue Bulletins 2008–1 through 2008–26 is in Internal Revenue Bulletin
2008–26, dated June 30, 2008.
October 20, 2008ii2008–42 I.R.B.

Treasury Decisions— Continued:
9409, 2008-29 I.R.B.118
9410, 2008-34 I.R.B.414
9411, 2008-34 I.R.B.398
9412, 2008-37 I.R.B.687
9413, 2008-34 I.R.B.404
9414, 2008-35 I.R.B.454
9415, 2008-36 I.R.B.570
9417, 2008-37 I.R.B.693
9418, 2008-38 I.R.B.713
9419, 2008-40 I.R.B.790
9420, 2008-39 I.R.B.750
9421, 2008-39 I.R.B.755
9422, 2008-42 I.R.B.898
2008–42 I.R.B.iiiOctober 20, 2008

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2008–27 through 2008–42
Announcements:
2008-19
Superseded by
Ann. 2008-95, 2008-42 I.R.B.964
2008-64
Corrected by
Ann. 2008-71, 2008-32 I.R.B.321
2008-72
Corrected by
Ann. 2008-78, 2008-34 I.R.B.453
Notices:
88-80
Modified by
Notice 2008-79, 2008-40 I.R.B.815
99-48
Superseded by
Rev. Proc. 2008-40, 2008-29 I.R.B.151
2000-9
Obsoleted by
Rev. Proc. 2008-41, 2008-29 I.R.B.155
2004-2
Amplified by
Notice 2008-59, 2008-29 I.R.B.123
2004-50
Amplified by
Notice 2008-59, 2008-29 I.R.B.123
2005-91
Obsoleted by
T.D. 9422, 2008-42 I.R.B.898
2006-88
Modified and superseded by
Notice 2008-60, 2008-30 I.R.B.178
2007-22
Amplified by
Notice 2008-59, 2008-29 I.R.B.123
2007-36
Clarified, modified, and amplified by
Rev. Proc. 2008-54, 2008-38 I.R.B.722
2008-41
Amended and supplemented by
Notice 2008-88, 2008-42 I.R.B.933
Proposed Regulations:
REG-161695-04
Corrected by
Ann. 2008-92, 2008-42 I.R.B.963
Proposed Regulations— Continued:
REG-129243-07
Corrected by
Ann. 2008-75, 2008-33 I.R.B.392
REG-151135-07
Hearing scheduled by
Ann. 2008-64, 2008-28 I.R.B.114
REG-101258-08
Corrected by
Ann. 2008-73, 2008-33 I.R.B.391
Revenue Procedures:
92-25
Superseded by
Rev. Proc. 2008-41, 2008-29 I.R.B.155
92-83
Obsoleted by
Rev. Proc. 2008-37, 2008-29 I.R.B.137
2001-10
Section 6.02(1)(a) modified and amplified by
Rev. Proc. 2008-52, 2008-36 I.R.B.587
2001-42
Superseded by
Rev. Proc. 2008-39, 2008-29 I.R.B.143
2002-9
Clarified, modified, amplified, and superseded by
Rev. Proc. 2008-52, 2008-36 I.R.B.587
Modified and amplified by
Rev. Proc. 2008-43, 2008-30 I.R.B.186
2002-28
Section 7.02(1)(a) modified and amplified by
Rev. Proc. 2008-52, 2008-36 I.R.B.587
2002-64
Superseded by
Rev. Proc. 2008-55, 2008-39 I.R.B.768
2005-29
Superseded by
Rev. Proc. 2008-49, 2008-34 I.R.B.423
2006-27
Modified and superseded by
Rev. Proc. 2008-50, 2008-35 I.R.B.464
2006-29
Superseded by
Rev. Proc. 2008-34, 2008-27 I.R.B.13
2006-34
Superseded by
Rev. Proc. 2008-44, 2008-30 I.R.B.187
2007-14
Superseded by
Rev. Proc. 2008-52, 2008-36 I.R.B.587
Revenue Procedures— Continued:
2007-19
Superseded by
Rev. Proc. 2008-39, 2008-29 I.R.B.143
2007-37
Updated by
Rev. Proc. 2008-62, 2008-42 I.R.B.935
2007-42
Superseded by
Rev. Proc. 2008-32, 2008-28 I.R.B.82
2007-43
Superseded by
Rev. Proc. 2008-33, 2008-28 I.R.B.93
2007-44
Modified by
Rev. Proc. 2008-56, 2008-40 I.R.B.826
2007-49
Section 3 modified and superseded by
Rev. Proc. 2008-50, 2008-35 I.R.B.464
2007-50
Superseded by
Rev. Proc. 2008-36, 2008-33 I.R.B.340
2007-63
Superseded by
Rev. Proc. 2008-59, 2008-41 I.R.B.857
2007-66
Modified and superseded by
Rev. Proc. 2008-54, 2008-38 I.R.B.722
2007-70
Modified by
Ann. 2008-63, 2008-28 I.R.B.114
2007-72
Amplified and superseded by
Rev. Proc. 2008-47, 2008-31 I.R.B.272
2008-3
Modified and amplified by
Rev. Proc. 2008-61, 2008-42 I.R.B.934
2008-12
Modified and superseded by
Rev. Proc. 2008-35, 2008-29 I.R.B.132
2008-43
Modified by
Rev. Proc. 2008-52, 2008-36 I.R.B.587
2008-52
Modified by
Ann. 2008-84, 2008-38 I.R.B.748
Revenue Rulings:
67-213
Amplified by
Rev. Rul. 2008-40, 2008-30 I.R.B.166
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2008–1 through 2008–26 is in Internal Revenue Bulletin 2008–26, dated June 30, 2008.
October 20, 2008iv2008–42 I.R.B.

Revenue Rulings— Continued:
71-234
Modified by
Rev. Proc. 2008-43, 2008-30 I.R.B.186
76-273
Obsoleted by
T.D. 9414, 2008-35 I.R.B.454
77-480
Modified by
Rev. Proc. 2008-43, 2008-30 I.R.B.186
82-105
Obsoleted by
T.D. 9414, 2008-35 I.R.B.454
91-17
Amplified by
Rev. Proc. 2008-41, 2008-29 I.R.B.155
Rev. Proc. 2008-42, 2008-29 I.R.B.160
Superseded in part by
Rev. Proc. 2008-40, 2008-29 I.R.B.151
2005-6
Amplified by
Rev. Proc. 2008-38, 2008-29 I.R.B.139
2006-57
Modified by
Notice 2008-74, 2008-38 I.R.B.718
2008-12
Amplified by
Rev. Rul. 2008-38, 2008-31 I.R.B.249
Clarified by
Ann. 2008-65, 2008-31 I.R.B.279
Treasury Decisions:
9391
Corrected by
Ann. 2008-74, 2008-33 I.R.B.392
9417
Corrected by
Ann. 2008-91, 2008-42 I.R.B.963
2008–42 I.R.B.vOctober 20, 2008

October 20, 20082008–42 I.R.B.

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