Internal Revenue Bulletin 2001-46 (PDF rendition): IRS Revenue Rulings

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

INCOME TAX
Rev. Rul. 2001–53, page 489.
Low-income housing credit; satisfactory bond; “bond
factor” amounts for the period October through
December 2001. This ruling announces the monthly bond
factor amounts to be used by taxpayers who dispose of qual-
ified low-income buildings or interests therein during the peri-
od October through December 2001. This ruling also pro-
vides a summary of the bond factor amounts for dispositions
occurring during the period January through September
2001.
Rev. Rul. 2001–54, page 490.
LIFO; price indexes; department stores. The September
2001 Bureau of Labor Statistics price indexes are accepted
for use by department stores employing the retail inventory
and last-in, first-out inventory methods for valuing inventories
for tax years ended on, or with reference to, September 30,
2001.
Rev. Rul. 2001–57, page 488.
Gross income; sale of principal residence. If an individ-
ual elects under section 311(e) of the Tax Reform Act of
1997 to treat the individual’s principal residence as being
both sold and reacquired on January 1, 2001, for an amount
equal to its fair market value on that date, the individual can-
not exclude from gross income under section 121 of the
Code any of the gain from the deemed sale.
Rev. Proc. 2001–52, page 491.
Penalties; substantial understatement. Guidance is pro-
vided concerning when information shown on a return in
accordance with the applicable forms and instructions will be
adequate disclosure for purposes of reducing an under-
statement of income tax under section 6662(d) of the Code.
EXEMPT ORGANIZATIONS
Announcement 2001–113, page 494.
A list is provided of organizations now classified as private
foundations.
ADMINISTRATIVE
Notice 2001–69, page 491.
Leave-based donation programs. This notice provides
interim guidance on the application of federal income and
employment taxes to, and the proper reporting of, payments
by employers under certain leave-based donation programs
established in the aftermath of the September 11, 2001, ter-
rorist attacks.
Announcement 2001–112, page 494.
This announcement clarifies that, as a result of economic
disruptions from the September 11, 2001, terrorist attacks,
the Service will permit the redesignation of estimated
income tax payments as tax deposits to satisfy obligations
to deposit employment taxes and withheld income taxes.
Internal Revenue
bbuulllleettiinn
Bulletin No. 2001–46
November 13, 2001
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
Department of the Treasury
Internal Revenue Service
Finding Lists begin on page ii.

November 13, 20012001–46 I.R.B.
The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing offi-
cial rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly and may be obtained
from the Superintendent of Documents on a subscription
basis. Bulletin contents are consolidated semiannually into
Cumulative Bulletins, which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of in-
ternal management are not published; however, statements
of internal practices and procedures that affect the rights
and duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service on
the application of the law to the pivotal facts stated in the
revenue ruling. In those based on positions taken in rulings
to taxpayers or technical advice to Service field offices,
identifying details and information of a confidential nature
are deleted to prevent unwarranted invasions of privacy and
to comply with statutory requirements.
Rulings and procedures reported in the Bulletin do not have
the force and effect of Treasury Department Regulations,
but they may be used as precedents. Unpublished rulings
will not be relied on, used, or cited as precedents by Service
personnel in the disposition of other cases. In applying pub-
lished rulings and procedures, the effect of subsequent leg-
islation, regulations, court decisions, rulings, and proce-
dures must be considered, and Service personnel and oth-
ers concerned are cautioned against reaching the same con-
clusions in other cases unless the facts and circumstances
are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B,
Legislation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to
these subjects are contained in the other Parts and Sub-
parts. Also included in this part are Bank Secrecy Act Admin-
istrative Rulings. Bank Secrecy Act Administrative Rulings
are issued by the Department of the Treasury’s Office of the
Assistant Secretary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.
The first Bulletin for each month includes a cumulative index
for the matters published during the preceding months.
These monthly indexes are cumulated on a semiannual basis,
and are published in the first Bulletin of the succeeding semi-
annual period, respectively.
The IRS Mission
Provide America’s taxpayers top quality service by help-
ing them understand and meet their tax responsibilities
and by applying the tax law with integrity and fairness to
all.
Introduction
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402.

November 13, 20014882001–46 I.R.B.
Section 1(h).—Maximum Capital
Gains Rate
(Also: § 121)
Gross income; sale of principal resi-
dence.If an individual elects under sec-
tion 311(e) of the Tax Reform Act of 1997
to treat the individual’s principal resi-
dence as being both sold and reacquired
on January 1, 2001, for an amount equal
to its fair market value on that date, the
individual cannot exclude from gross in-
come under section 121 of the Code any
of the gain from the deemed sale.
Rev. Rul. 2001–57
ISSUE
If an individual elects under § 311(e) of
the Taxpayer Relief Act of 1997 (“TRA
97”), 1997–4 (Vol. 1) C.B. 1, 49-50, to
treat the individual’s principal residence
as being both sold and reacquired on Jan-
uary 1, 2001, for an amount equal to its
fair market value on that date (Ҥ 311(e)
election”), can the individual exclude
from gross income under § 121 of the In-
ternal Revenue Code any of the gain re-
sulting from the deemed sale?
FACTS
Amakes a § 311(e) election with re-
spect to A’s principal residence on A’s
federal income tax return for the year in-
cluding January 1, 2001. On January 1,
2001, the residence had a fair market
value that was $250,000 greater than A’s
basis. If, on that date, Ahad actually sold
the residence for its fair market value,
§ 121 would have entitled Ato exclude
from gross income the full $250,000 of
gain realized on the sale.
LAW AND ANALYSIS
Under § 121, a taxpayer may exclude
from gross income up to $250,000
($500,000 in the case of certain jointly
filed returns) of gain realized on the sale
or exchange of property, if that property
was owned and used as the taxpayer’s
principal residence for an aggregate pe-
riod of two years or more during the 5-
year period ending on the date of the sale
or exchange. The full exclusion is avail-
able only once every two years.
Under § 1(h)(1), gain resulting from
the sale or exchange of most capital assets
is taxed at a capital gains rate of 20 per-
cent (10 percent for gain otherwise taxed
at an ordinary rate of 15 percent or less).
Section 1(h)(2) provides reduced capi-
tal gains rates for qualified 5-year gain,
generally defined in § 1(h)(9) as “the ag-
gregate long-term capital gain from prop-
erty held for more than 5 years.” Section
1(h)(2)(B) provides that the 20-percent
capital gains rate is reduced to 18 percent
for qualified 5-year gain resulting from
the sale or exchange of property with a
holding period beginning after December
31, 2000.
Section 311(e) of TRA 97 allows a non-
corporate taxpayer holding a capital asset
on January 1, 2001, to elect to treat that
asset as having been both sold and reac-
quired on that date for an amount equal to
its fair market value. Thus, if the election is
made, the holding period for the asset be-
gins after December 31, 2000, making the
asset eligible for the 18-percent rate if it is
later sold when the taxpayer has a holding
period of more than five years in the asset.
Section 311(e)(2)(A) of TRA 97 provides,
“Any gain resulting from [a § 311(e) elec-
tion] shall be treated as received or accrued
on the date the asset is treated as sold . . .
and shall be recognized notwithstanding
any provision of the . . . Code.”
Pursuant to A’s § 311(e) election, Ais
deemed to have both sold and reacquired
A’s principal residence for an amount
equal to its fair market value on January
1, 2001. As stated above, § 121 would
entitle Ato exclude from gross income
gain from an actual sale. Thus, the ques-
tion presented is how to reconcile the re-
quirement that the gain from the deemed
sale be “recognized notwithstanding any
other provision” of the Code and the man-
date in § 121 that “[g]ross income shall
not include gain” from a qualifying sale
or exchange of a principal residence.
In interpreting an internal revenue
statute, it is necessary to infer legislative
intent from all of the facts and circum-
stances. These factors include the role that
the provision at issue plays in the structure
of the internal revenue law, the statutory
language, and all relevant legislative his-
tory. See U.S. v. Amer. Trucking Ass’ns,
310 U.S. 534, 542–45 (1940); U.S. v. Dick-
erson, 310 U.S. 554, 561–62 (1940).
A § 311(e) election confers tax benefits
on the electing taxpayer (a holding period
that begins after December 31, 2000, and a
step-up in basis), but it imposes a tax cost
as well (current recognition of gain result-
ing from any existing appreciation in the
asset). Exclusion of the gain from the
deemed sale would frustrate this balancing
of benefits and burdens. For this reason,
the statutory requirement that gain be rec-
ognized “notwithstanding any other provi-
sion” of the Code necessarily precludes ap-
plication of the exclusion from gross
income under § 121, or else the intended
consequences of the mandated recognition
(taxation of the gain) would be prevented.
The legislative history of the § 311(e) elec-
tion is consistent with this conclusion. “If
the election is made, any gain is recog-
nized (and any loss disallowed).” H.R.
Conf. Rep. No. 220, 105th Cong., 1st
Sess. 383 (1997)
HOLDING
If an individual elects under § 311(e) of
TRA 97 to treat the individual’s principal
residence as being both sold and reac-
quired on January 1, 2001, for an amount
equal to its fair market value on that date,
the individual cannot exclude from gross
income under § 121 any of the gain result-
ing from the deemed sale.
DRAFTING INFORMATION
The principal author of this revenue
ruling is Amy Pfalzgraf of the Office of
the Associate Chief Counsel (Income Tax
and Accounting). For further information
regarding this revenue ruling, contact Ms.
Pfalzgraf at (202) 622-7900 (not a toll-
free call).
Section 42.—Low-Income
Housing Credit
Low-income housing credit; satisfac-
tory bond; “bond factor” amounts for
the period October through December
2001. This ruling announces the monthly
bond factor amounts to be used by tax-
payers who dispose of qualified low-in-
come buildings or interests therein during
the period October through December
Part I. Rulings and Decisions Under the Internal Revenue Code of 1986

2001–46 I.R.B.489November 13, 2001
2001. This ruling also provides a sum-
mary of the bond factor amounts for dis-
positions occurring during the period Jan-
uary through September 2001.
Rev. Rul. 2001–53
In Rev. Rul. 90–60 (1990–2 C.B. 4),
the Internal Revenue Service provided
guidance to taxpayers concerning the
general methodology used by the Trea-
sury Department in computing the bond
factor amounts used in calculating the
amount of bond considered satisfactory
by the Secretary under § 42(j)(6) of the
Internal Revenue Code. It further an-
nounced that the Secretary would pub-
lish in the Internal Revenue Bulletin a
table of “bond factor” amounts for dis-
positions occurring during each calendar
month.
Rev. Proc. 99–11 (1999–1 C.B. 275)
established a collateral program as an al-
ternative to providing a surety bond for
taxpayers to avoid or defer recapture of
the low-income housing tax credits under
§ 42(j)(6). Under this program, taxpayers
may establish a Treasury Direct Account
and pledge certain United States Treasury
securities to the Internal Revenue Service
as security.
This revenue ruling provides in Table 1
the bond factor amounts for calculating
the amount of bond considered satisfac-
tory under § 42(j)(6) or the amount of
United States Treasury securities to
pledge in a Treasury Direct Account
under Rev. Proc. 99–11 for dispositions of
qualified low-income buildings or inter-
ests therein during the period October
through December 2001. Table 1 also
provides a summary of the bond factor
amounts for dispositions occurring during
the period January through September
2001.
Table 1
Rev. Rul. 2001–53
Monthly Bond Factor Amounts for Dispositions
Expressed As a Percentage of Total Credits
Calendar Year Building Placed in Service or, if Section 42(f)(1)
Election Was Made, the Succeeding Calendar Year
Month of198719881989199019911992199319941995199619971998199920002001
Disposition
Jan ’0121.53 39.5654.6867.4678.2881.2984.6287.9291.31 94.9998.92 103.25 107.67 111.85 112.52
Feb ’0121.53 39.5654.6867.4678.2881.0584.3687.6591.02 94.6898.57 102.87 107.22 111.28 112.52
Mar ’0121.53 39.5654.6867.4678.2880.8184.1187.3890.73 94.3798.24 102.50 106.80 110.79 112.52
Apr ’0120.36 37.4151.7163.8074.0375.4677.7679.9882.22 84.6787.2790.1593.0195.6097.21
May ’0120.36 37.4151.7163.8074.0375.2577.5479.7581.98 84.4287.0189.8792.7195.3197.21
Jun ’0120.36 37.4151.7163.8074.0375.0577.3279.5281.75 84.1886.7689.6192.4495.0597.21
Jul ’0119.30 35.4749.0260.4870.1870.2771.6872.9974.30 75.7577.3079.0780.8082.3683.98
Aug ’0119.30 35.4749.0260.4870.1870.0971.4972.8074.10 75.5577.1078.8680.6082.1983.98
Sep ’0119.30 35.4749.0260.4870.1869.9171.3172.6173.91 75.3676.9178.6780.4182.0583.98
Oct ’01 19.30 35.4749.0260.4870.1869.7371.1272.4273.72 75.1776.7278.4880.2481.9183.98
Nov ’0119.30 35.4749.0260.4870.1869.5570.9472.2473.54 74.9976.5478.3180.0781.7983.98
Dec ’0119.30 35.4749.0260.4870.1869.3870.7772.0673.36 74.8176.3778.1479.9281.6883.98
For a list of bond factor amounts ap-
plicable to dispositions occurring during
other calendar years, see: Rev. Rul. 98–3
(1998–1 C.B. 248), and Rev. Rul. 2001–2
(2001–2 I.R.B. 255).
DRAFTING INFORMATION
The principal author of this revenue
ruling is Gregory N. Doran of the Office
of Associate Chief Counsel (Passthroughs
and Special Industries). For further infor-
mation regarding this revenue ruling, con-
tact Mr. Doran at (202) 622-3040 (not a
toll-free call).
Section 162.—Trade or Business
Expenses
26 CFR 1.162–1: Business expenses.
How do federal income and employment taxes
apply to payments by employers under certain
leave-based donation programs established in the af-
termath of the September 11, 2001, terrorist attacks.
See Notice 2001–69, page 491.
Section 170.—Charitable, etc.,
Contributions and Gifts
26 CFR 1.170A–1: Charitable, etc., contributions
and gifts; allowance of deduction.
Interim guidance is provided on the application
of the rules on charitable deductions in connection
with payments by employers under certain leave-
based donation programs established in the after-
math of the September 11, 2001, terrorist attacks.
See Notice 2001–69, page 491.
Section 472.—Last-in, First-out
Inventories
26 CFR 1.472–1: Last-in, first-out inventories.
LIFO; price indexes; department
stores.The September 2001 Bureau of
Labor Statistics price indexes are ac-
cepted for use by department stores em-

November 13, 20014902001–46 I.R.B.
ploying the retail inventory and last-in,
first-out inventory methods for valuing
inventories for tax years ended on, or with
reference to, September 30, 2001.
Rev. Rul. 2001–54
The following Department Store Inven-
tory Price Indexes for September 2001
were issued by the Bureau of Labor Sta-
tistics. The indexes are accepted by the
Internal Revenue Service, under
§ 1.472–1(k) of the Income Tax Regula-
tions and Rev. Proc. 86–46 (1986–2 C.B.
739), for appropriate application to inven-
tories of department stores employing the
retail inventory and last-in, first-out in-
ventory methods for tax years ended on,
or with reference to, September 30, 2001.
The Department Store Inventory Price
Indexes are prepared on a national basis
and include (a) 23 major groups of de-
partments, (b) three special combina-
tions of the major groups - soft goods,
durable goods, and miscellaneous goods,
and (c) a store total, which covers all de-
partments, including some not listed sep-
arately, except for the following: candy,
food, liquor, tobacco, and contract de-
partments.
BUREAU OF LABOR STATISTICS, DEPARTMENT STORE
INVENTORY PRICE INDEXES BY DEPARTMENT GROUPS
(January 1941 = 100, unless otherwise noted)
Percent Change
GroupsSep. Sep.from Sep. 2000
20002001to Sep. 2001
1
1. Piece Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .496.1509.92.8
2. Domestics and Draperies . . . . . . . . . . . . . . . . . . . . . . . .609.3589.1-3.3
3. Women’s and Children’s Shoes . . . . . . . . . . . . . . . . . . .660.6668.91.3
4. Men’s Shoes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .913.6854.7-6.4
5. Infants’ Wear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .633.7625.4-1.3
6. Women’s Underwear . . . . . . . . . . . . . . . . . . . . . . . . . . .584.9571.0 -2.4
7. Women’s Hosiery . . . . . . . . . . . . . . . . . . . . . . . . . . . . .342.9356.74.0
8. Women’s and Girls’ Accessories . . . . . . . . . . . . . . . . . .540.0557.93.3
9. Women’s Outerwear and Girls’ Wear . . . . . . . . . . . . . . .400.2392.0-2.0
10. Men’s Clothing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .606.3578.4-4.6
11. Men’s Furnishings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .624.8603.1-3.5
12. Boys’ Clothing and Furnishings . . . . . . . . . . . . . . . . . . .481.7477.1 -1.0
13. Jewelry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .933.7899.0-3.7
14. Notions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .788.0795.00.9
15. Toilet Articles and Drugs . . . . . . . . . . . . . . . . . . . . . . . .969.9979.91.0
16. Furniture and Bedding . . . . . . . . . . . . . . . . . . . . . . . . . .707.2632.8-10.5
17. Floor Coverings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .614.8622.91.3
18. Housewares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .777.5767.5-1.3
19. Major Appliances . . . . . . . . . . . . . . . . . . . . . . . . . . . . .230.6227.0-1.6
20. Radio and Television . . . . . . . . . . . . . . . . . . . . . . . . . . .58.352.9 -9.3
21. Recreation and Education
2
. . . . . . . . . . . . . . . . . . . . . . .92.389.3-3.3
22. Home Improvements
2
. . . . . . . . . . . . . . . . . . . . . . . . . .128.3125.6-2.1
23. Auto Accessories
2
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .106.5110.13.4
Groups 1 - 15: Soft Goods . . . . . . . . . . . . . . . . . . . . . . . . . .600.3588.6-1.9
Groups 16 - 20: Durable Goods . . . . . . . . . . . . . . . . . . . . . . .438.9421.2-4.0
Groups 21 - 23: Misc. Goods
2
. . . . . . . . . . . . . . . . . . . . . . . .99.898.3-1.5
Store Total
3
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .539.4526.8 -2.3
1
Absence of a minus sign before the percentage change in this column signifies a price increase.
2
Indexes on a January 1986=100 base.
3
The store total index covers all departments, including some not listed separately, except for the following: candy, food, liquor,
tobacco, and contract departments.
DRAFTING INFORMATION
The principal author of this revenue rul-
ing is Michael Burkom of the Office of As-
sociate Chief Counsel (Income Tax and Ac-
counting). For further information regard-
ing this revenue ruling, contact Mr. Burkom
at (202) 622-4930 (not a toll-free call).

Treatment of Certain Amounts
Paid to Section 170(c)
Organizations Under Employer
Leave-Based Donation Programs
Notice 2001–69
PURPOSE AND OVERVIEW
In the aftermath of the September 11,
2001, terrorist attacks, a number of em-
ployers have adopted or are considering
adopting leave-based donation programs,
under which employees forgo vacation,
sick, or personal leave in exchange for
employer contributions of amounts to or-
ganizations described in § 170(c) of the
Internal Revenue Code. This notice pro-
vides interim guidance on the application
of income and employment taxes to, and
the proper reporting of, payments by em-
ployers under these programs. During
the period covered by this interim guid-
ance, the Internal Revenue Service and
the Treasury Department intend to study
whether it may be appropriate to modify
the regulations under § 61 to address cer-
tain leave-based donation programs.
BACKGROUND
Under general assignment-of-income
tax principles, where, pursuant to an
agreement or understanding, services are
rendered to a person for the benefit of an
organization described in § 170(c) and an
amount for such services is paid to such
organization by the person to whom ser-
vices are rendered, the amount so paid
constitutes income to the person perform-
ing the services. Section 1.61–2(c) of the
Income Tax Regulations. See also Lucas
v. Earl, 281 U.S. 111 (1930); Rev. Rul.
58–495 (1958–2 C.B. 27). Under general
constructive receipt principles, when in-
come is made available so that the tax-
payer may draw upon it at any time, the
income is constructively received by the
taxpayer unless the taxpayer’s control of
its receipt is subject to substantial limita-
tions or restrictions. Section 1.451–2(a).
However, application of assignment-of-
income and constructive receipt princi-
ples depends on the facts and circum-
stances of each case. See, e.g.,
Commissioner v. Giannini, 129 F.2d 638
(9th Cir. 1942).
INTERIM GUIDANCE
The Service will not assert that pay-
ments made by an employer to an orga-
nization described in § 170(c), in ex-
change for vacation, sick, or personal
leave that the employee elects to forgo,
constitute gross income or wages of an
employee, providedthat the payments
are made to such organizations before
January 1, 2003. Similarly, the Service
will not assert that the opportunity to
make such an election results in con-
structive receipt of gross income or
wages for employees.
Amounts to which this interim guid-
ance applies need not be included in
Box 1, 3 (if applicable), or 5 of the Form
W-2.
Participating employees may not
claim a charitable contribution deduc-
tion under § 170 with respect to the
value of forgone leave excluded from
compensation and wages. In the case of
an employer, the Service will not assert
that payments made under such pro-
grams before January 1, 2003, are de-
ductible under § 170, rather than under
§ 162.
REQUEST FOR COMMENTS
The Service and the Treasury Depart-
ment invite comments on the taxation of
leave-based donation programs, includ-
ing comments on whether § 1.61–2(c)
should be modified to except certain
leave-based donation programs from the
assignment-of-income doctrine, and on
appropriate limitations to any such ex-
ception. Comments are also requested
on the application of constructive receipt
principles in connection with those pro-
grams. Finally, comments are requested
on what types of leave-based donation
programs employers currently offer.
Comments may be submitted on or be-
fore February 1, 2002, to Internal Rev-
enue Service, P.O. Box 7604, Ben
Franklin Station, Washington, DC
20224, Attn: CC:ITA:RU (Notice
2001–69), Room 5226. Submissions
may also be sent electronically via the
Internet to the following e-mail address:
notice.comments@m1.irscounsel.treas.gov.
All materials submitted will be available
for public inspection and copying.
FURTHER INFORMATION
For further information, please contact
Mr. Sheldon A. Iskow at (202) 622-4920
(not a toll-free call).
26 CFR 601.105: Examination of returns and
claims for refund, credit or abatement;
determination of correct tax liability.
(Also Part I, § 6662.)
Rev. Proc. 2001–52
SECTION 1. PURPOSE
.01 This revenue procedure updates
Rev. Proc. 2001–11 (2001–2 I.R.B. 275),
and identifies circumstances under which
the disclosure on a taxpayer’s return of a
position with respect to an item is ade-
quate for the purpose of reducing the un-
derstatement of income tax under
§ 6662(d) of the Internal Revenue Code
(relating to the substantial understatement
aspect of the accuracy-related penalty),
and for the purpose of avoiding the pre-
parer penalty under § 6694(a) (relating to
understatements due to unrealistic posi-
tions). This revenue procedure does not
apply with respect to any other penalty
provision (including the negligence or
disregard provisions of the § 6662 accu-
racy-related penalty).
.02 This revenue procedure applies to
any return filed on 2001 tax forms for a
taxable year beginning in 2001, and to
any return filed on 2001 tax forms in 2002
for short taxable years beginning in 2002.
SEC. 2. CHANGES FROM REV.
PROC. 2001–11
Editorial changes only have been made
in updating Rev. Proc. 2001–11.
SEC. 3. BACKGROUND
.01 If § 6662 applies to any portion of
an underpayment of tax required to be
shown on a return, an amount equal to 20
percent of the portion of the underpay-
ment to which the section applies is added
to the tax. (The penalty rate is 40 percent
in the case of certain gross valuation mis-
statements.) Under § 6662(b)(2), § 6662
applies to the portion of an underpayment
that is attributable to a substantial under-
statement of income tax.
2001–46 I.R.B.491November 13, 2001
Part III. Administrative, Procedural, and Miscellaneous

.02 Section 6662(d)(1) provides that
there is a substantial understatement of in-
come tax if the amount of the understate-
ment exceeds the greater of 10 percent of
the amount of tax required to be shown on
the return for the taxable year or $5,000
($10,000 in the case of a corporation
other than an S corporation or a personal
holding company). Section 6662(d)(2)
defines an understatement as the excess of
the amount of tax required to be shown on
the return for the taxable year over the
amount of the tax that is shown on the re-
turn reduced by any rebate (within the
meaning of § 6211(b)(2)).
.03 In the case of an item not attribut-
able to a tax shelter, § 6662(d)(2)(B)(ii)
provides that the amount of the under-
statement is reduced by the portion of
the understatement attributable to any
item with respect to which the relevant
facts affecting the item’s tax treatment
are adequately disclosed on the return or
on a statement attached to the return,
and there is a reasonable basis for the
tax treatment of such item by the tax-
payer.
.04 In general, this revenue procedure
provides guidance in determining when
disclosure is adequate for purposes of
§ 6662(d). For purposes of this revenue
procedure, the taxpayer must furnish all
required information in accordance with
the applicable forms and instructions, and
the money amounts entered on these
forms must be verifiable. Guidance under
§ 6662(d) for returns filed for 2000, 1999,
and 1998 is provided in Rev. Proc.
2001–11; Rev. Proc. 99–41 (1999–2 C.B.
566); and Rev. Proc. 98–62 (1998–2 C.B.
816), respectively.
SEC. 4. PROCEDURE
.01 Additional disclosure of facts rele-
vant to, or positions taken with respect to,
issues involving any of the items set forth
below is unnecessary for purposes of re-
ducing any understatement of income tax
under § 6662(d), provided that the forms
and attachments are completed in a clear
manner and in accordance with their in-
structions. The money amounts entered
on the forms must be verifiable, and the
information on the return must be dis-
closed in the manner described below.
For purposes of this revenue procedure, a
number is verifiable if, on audit, the tax-
payer can demonstrate the origin of the
number (even if that number is not ulti-
mately accepted by the Internal Revenue
Service) and the taxpayer can show good
faith in entering that number on the ap-
plicable form.
(1) Form 1040, Schedule A, Itemized
Deductions:
(a) Medical and Dental Expenses:
Complete lines 1 through 4, supplying all
required information.
(b) Taxes: Complete lines 5 through
9, supplying all required information.
Line 8 must list each type of tax and the
amount paid.
(c) Interest Expense: Complete
lines 10 through 14, supplying all re-
quired information. This section
4.01(1)(c) does not apply to (i) amounts
disallowed under § 163(d) unless Form
4952, Investment Interest Expense Deduc-
tion, is completed, or (ii) amounts disal-
lowed under § 265.
(d) Contributions: Complete lines
15 through 18, supplying all required in-
formation. Merely entering the amount of
the donation on Schedule A, however,
will not constitute adequate disclosure if
the taxpayer receives a substantial benefit
from the donation shown. If a contribu-
tion of property other than cash is made
and the amount claimed as a deduction
exceeds $500, a properly completed Form
8283, Noncash Charitable Contributions,
must be attached to the return. This sec-
tion 4.01(1)(d) will not apply to any con-
tribution of $250 or more unless the con-
temporaneous written acknowledgment
requirement of § 170(f)(8) is satisfied.
(e) Casualty and Theft Losses:
Complete Form 4684, Casualties and
Thefts, and attach to the return. Each
item or article for which a casualty or
theft loss is claimed must be listed on
Form 4684.
(2) Certain Trade or Business Expenses
(including, for purposes of this section
4.01(2), the following six expenses as
they relate to the rental of property):
(a) Casualty and Theft Losses: The
procedure outlined in section 4.01(1)(e)
above must be followed.
(b) Legal Expenses: The amount
claimed must be stated. This section
4.01(2)(b) does not apply, however, to
amounts properly characterized as capital
expenditures, personal expenses, or non-
deductible lobbying or political expendi-
tures, including amounts that are required
to be (or that are) amortized over a period
of years.
(c) Specific Bad Debt Charge-off:
The amount written off must be stated.
(d) Reasonableness of Officers’
Compensation: Form 1120, Schedule E,
Compensation of Officers, must be com-
pleted when required by its instructions.
The time devoted to business must be ex-
pressed as a percentage as opposed to
“part” or “as needed.” This section
4.01(2)(d) does not apply to “golden para-
chute” payments, as defined under
§ 280G. This section 4.01(2)(d) will not
apply to the extent that remuneration paid
or incurred exceeds the $1 million-em-
ployee-remuneration limitation, if applic-
able.
(e) Repair Expenses: The amount
claimed must be stated. This section
4.01(2)(e) does not apply, however, to
any repair expenses properly character-
ized as capital expenditures or personal
expenses.
(f) Taxes (other than foreign taxes):
The amount claimed must be stated.
(3) Form 1120, Schedule M-1, Recon-
ciliation of Income (Loss) per Books With
Income per Return, provided:
(a) The amount of the deviation
from the financial books and records is
not the result of a computation that in-
cludes the netting of items; and
(b) The information provided rea-
sonably may be expected to apprise the
Internal Revenue Service of the nature of
the potential controversy concerning the
tax treatment of the item.
(4) Foreign Tax Items:
(a) International Boycott Transac-
tions: Transactions disclosed on Form
5713, International Boycott Report.
(b) Treaty-Based Return Position:
Transactions and amounts under § 6114
or § 7701(b) as disclosed on Form 8833,
Treaty-Based Return Position Disclosure.
(5) Other:
(a) Moving Expenses: Complete
Form 3903, Moving Expenses, and attach
to the return.
(b) Employee Business Expenses:
Complete Form 2106, Employee Business
Expenses, or Form 2106-EZ, Unreim-
bursed Employee Business Expenses, and
attach to the return. This section
4.01(5)(b) does not apply to club dues, or
to travel expenses for any non-employee
accompanying the taxpayer on the trip.
November 13, 20014922001–46 I.R.B.

(c) Fuels Credit: Complete Form
4136, Credit for Federal Tax Paid on
Fuels, and attach to the return.
(d) Investment Credit: Complete
Form 3468, Investment Credit, and attach
to the return.
SEC. 5. EFFECTIVE DATE
This revenue procedure applies to any
return filed on 2001 tax forms for a tax-
able year beginning in 2001, and to any
return filed on 2001 tax forms in 2002 for
short taxable years beginning in 2002.
SEC. 6. DRAFTING INFORMATION
The principal author of this revenue
procedure is Willie Armstrong, Jr. of the
Office of Associate Chief Counsel, Proce-
dure & Administration (Administrative
Provisions & Judicial Practice Division).
For further information regarding this
revenue procedure, contact Branch 2 of
the Administrative Provisions & Judicial
Practice Division at (202) 622-4940 (not a
toll-free call).
2001–46 I.R.B.493November 13, 2001

November 13, 20014942001–46 I.R.B.
Redesignation of Estimated
Income Tax Payments
Announcement 2001–112
Many taxpayers have informed the In-
ternal Revenue Service (IRS) that their in-
come for the current year will be substan-
tially less than previously expected
because of economic disruptions resulting
from the September 11, 2001, terrorist at-
tacks. Some taxpayers who made esti-
mated income tax payments now believe
their tax liability for their current taxable
year will be lower than the sum of the es-
timated tax payments they have already
made. Several of these taxpayers have
asked whether the IRS will permit them to
redesignate their estimated income tax
payments, in whole or in part, as deposits
to satisfy their obligations to deposit em-
ployment and withheld income taxes.
This announcement clarifies that the
IRS will permit the redesignation of esti-
mated income tax payments as tax de-
posits to satisfy obligations to deposit em-
ployment taxes imposed by chapters 21,
22, and 23 of the Internal Revenue Code,
and income taxes withheld under chapter
24. To make this redesignation, a tax-
payer should contact the IRS through its
Disaster Relief toll-free telephone number
1-866-562-5227.
Taxpayers who wish to redesignate
their estimated tax payments should keep
in mind their estimated income tax oblig-
ations. If, as a result of the redesignation,
the amount of estimated tax payments is
reduced below the amount required to sat-
isfy the taxpayer’s estimated income tax
obligation, the taxpayer may be liable for
additions to tax under section 6654 or
6655.
Foundations Status of Certain
Organizations
Announcement 2001–113
The following organizations have
failed to establish or have been unable to
maintain their status as public charities
or as operating foundations. Accord-
ingly, grantors and contributors may not,
after this date, rely on previous rulings
or designations in the Cumulative List
of Organizations (Publication 78), or on
the presumption arising from the filing
of notices under section 508(b) of the
Code. This listing does notindicate that
the organizations have lost their status
as organizations described in section
501(c)(3), eligible to receive deductible
contributions.
Former Public Charities.The follow-
ing organizations (which have been
treated as organizations that are not pri-
vate foundations described in section
509(a) of the Code) are now classified as
private foundations:
Aaron Kritz Music Foundation,
Chicago, IL
Abundant Grace, Inc., Longmont, CO
Aid for the Homeless and Children, Inc.,
Littleton, CO
Alice G Reynolds Memorial Fund,
Denver, CO
Alliance for Donor Insemination
Families, Inc., Englewood, CO
American Coordination Center of the
Sovereign Military Order of Malta,
Inc., Coral Gables, FL
American Institute of Technology,
Littleton, CO
Antonia and Vladimer Kulaev Cultural
Heritage Fund, Inc., Los Angeles, CA
Appropriate Technology, Incorporated,
Ogallala, NE
Area 76 Alcoholics Anonymous,
Casper, WY
Arklight Ministries, Woodland Hills, CA
Arrowhead Housing Development Fund
Company, Inc., Dunkirk, NY
Arvada Youth Foundation, Inc.,
Arvada, CO
Bainbridge-Guilford PTO, Inc.,
Bainbridge, NY
Balanced Transportation Education,
Denver, CO
Blue Angels Cheerleaders, Denver, CO
Bolder Options, Boulder, CO
Branyon Workshop, Ltd,
Amagansett, NY
Buffalo Girls Productions, Inc.,
Moscow, ID
Cain Family Day Care, Inc.,
South Bay, FL
Camden County Education Foundation,
Inc., Camden SC
Casper World War II Commemorative
Association, Casper, WY
Catskill Mountain Wolf Center,
Athens, NY
Centennial Rural Development Project,
Alpine, TX
Changeology Learning Centre,
Colorado Springs, CO
Cheyenne Gospel Mission,
Cheyenne, WY
Children’s Rights Project, Inc.,
Baltimore, MD
Childrens Village Management, Inc., An
Idaho Non Profit Corporation,
Coeur Dalene, ID
Christian Outreach for Pastors,
Anaheim Hills, CA
Club Zion Ministries, Hanford, CA
Colorado Capitol Preservation Fund,
Golden, CO
Colorado Herpetological Society,
Denver, CO
Colorado Knights Templar Foundation,
Denver, CO
Colorado Longball Youth Softball, Inc.,
Englewood, CO
Colorado Meeting Place, Denver, CO
Colorado Solar Racers, Inc.,
Denver, CO
Commercial Fisherman Memorial, Inc.,
Port Washington, WI
Conejos Parks Education & Heritage
Foundation, Romeo, CO
Conifer Basketball Association,
Conifer, CO
Consumer Advisory Services,
Snoqualmie, WA
Crawford Creative Alliance,
Crawford, CO
Creek Court Club, Englewood, CO
Crosslink International Ministries,
Silver Creek, CO
Crossroads Lodestar, Corporation,
Falcon, CO
Crusades for Kids, Inc., Boise, ID
Currier International Foundation, Inc.,
Pasadena, CA
Dear Old Cu Fund, Inc., Littleton, CO
Denver Metro Association of
Evangelicals, Thornton, CO
Denver Million Man March Coalition,
Denver, CO
Designing Brighter Tomorrows, Inc.,
Denver, CO
Diannes Day Care & Christian Schools,
Gardena, CA
DML & Associates Foundation A
Housing Corporation, Tarzana, CA
Part IV. Items of General Interest

2001–46 I.R.B.495November 13, 2001
Dolphin Human Research, Inc.,
Miami, FL
Drug Free Events, Inc.,
Colorado Springs, CO
Ebenezer Enhancement, Corp.,
Augusta, GA
Education Project of Maya Children in
Guatemala, Denver, CO
Erie Senior Citizens Fund, Erie, CO
Esa Indah, Redlands, CA
Essence of Enhancement, Inc.,
Denver, CO
Everybody Wins, Federal Way, WA
Facing our Childrens Urban Situation
Foundation, Inc., Franklin Lakes, NJ
Family Empowerment Center, Inc.,
Grand Junction, CO
Family Learning Tree, Inc., Decatur, GA
Family Life Foundation, Englewood, CO
Feyda, Inc., Aurora, CO
Film the Bible Ministries, Inc.,
Tamarac, FL
Finding Hope, Incorporated,
Colorado Springs, CO
Fire Safety Educators of Colorado, Inc.,
Denver, CO
Firebrand Ministries, Inc., Ft. Worth, TX
Foresight Affordable Housing, Inc.,
Rockville, MD
Foresight Affordable Housing-
Ridgewood Park, Inc., Rockville, MD
Foundation for Justice and Democracy in
Latin America, Washington, DC
Foundation of the Florida Chapter of the
American College of Cardiology,
Tampa, FL
Foxview Preservation Corporation,
Chicago, IL
Friends of Hospice Fremont County,
Canon City, CO
Friends of the South Routt Library
District, Yampa, CO
Front Range Dolphins Swim Club,
Thornton, CO
Frontier Mission Foundation,
Mount Lake Terrace, WA
Frontier Pathways Scenic Byway, Inc.,
Westcliffe, CO
Gods Way Ministry, Houston, TX
Good Samaritan Childrens Mission, Inc.,
Sugarland, TX
Grant Street Development Corporation,
Homestead, PA
Greater Erie County Marketing Group
Community Urban Redevelopment
Corp., Sandusky, OH
Greater Reading Development
Corporation, Reading, PA
Hands on Childrens Museum, Inc.,
Ridgewood, NJ
Haymarket Historical Foundation,
Haymarket, VA
Healing Images Artfest Association,
Colorado Springs, CO
Heritage Lacrosse Club, Inc.,
Littleton, CO
Higgins Diggins Lions Trust,
Auburn, CA
Home for the Future Hope,
Washington, DC
House of Joy, Inc., Indian Springs, AL
Hudsons River Project Corp,
New York, NY
Hugh A Martin Memorial Scholarship
Fund, Colorado Springs, CO
Human Rights Interactive Network,
Antelope, CA
Idaho Dance Classic, Meridian, ID
Imagination Station, Marina Del Rey, CA
Imani House, Inc., Houston, TX
Inkatha Foundation for the Arts,
Las Vegas, NV
Institute for Trauma of Colorado, Inc.,
Colorado Springs, CO
Integral Health Foundation, Inc.,
Rockville, MD
Irish Arts Foundation of Kentucky, Inc.,
Louisville, KY
Jairus, Inc., Hilo, HI
Jami Breedlove Ministries, Loveland, CO
Janrus, Incorporated, Harvey, LA
J H Machina, Inc., Boulder, CO
Jim McQueen Ministries, Inc.,
Ridgway, CO
J Morris Center for Children with Special
Needs LTD, St Louis, MO
Jobscomp Educational Services
Corporation, Columbia, MD
K & A Sports Alliance, Inc.,
W Jordan, UT
Kids One, Inc., Larkspur, CA
Kuumba Project, Inc., Milwaukee, WI
La Comunidad, Westminster, CO
La Puente Enterprises, Inc., Alamosa, CO
Larry G. Huss Scholarship Memorial,
Inc., Appleton, WI
Legacy for Learning, Denver, CO
Lida Project, Denver, CO
Life Light Drug Free International, Inc.,
Lumberton, NC
Lillian Leppe & Augusto Mauro
Memorial Foundation, Inc.,
New York, NY
Lytton Research and Analysis,
Sandpoint, ID
Mainstreet Roswell, Inc., Roswell, NM
Max Dream, Springfield, VT
Medicine Wheel Story Tellers Institute of
the Arts, Douglas, WY
Mel Berg Ministries, Inc.,
Westminster, CO
Metropolitan Community Resource
Center, Pasadena, CA
Mezzo Consortium, Inc., Boise, ID
Ministry Resources International,
Englewood, CO
Morey Organization Scholarship Trust
Fund, Wildwood, NJ
Moscow Parents Womens Fastpitch
Softball Association, Moscow, ID
Mountain International Exchange, Inc.,
Denver, CO
Musicmedicine Institute, Chicago, IL
National Association of Shooting Sports
Athletes, Colorado Springs, CO
Native American Prisoners Support
Group, Inc., Buena Vista, CO
NBC-USA Housing, Inc., Thirty,
Newark, OH
North Metro Gang Task Force, Inc.,
Westminster, CO
Nourishment Education Foundation,
Boulder, CO
Oasis World Mission, West Monroe, LA
Oklahoma Investment Forum
Educational Foundation, Tulsa, OK
Open Arms International, Arlington, VA
Orenda, Santa Fe, NM
Panini Foundation, Westerville, OH
Peers, Denver, CO
Pentecostal Assembly Commitment to
Empowerment, Restoration and
Service, Inc., Jackson, TN
Pets are Wonderful Support for People
with Aids-Arc, Denver, CO
Plattee County Science Education &
Research Foundation, Wheatland, WY
Policemen-Firemen Killed in Action,
Inc., Carmen, ID
Promised Land Ministries, Denver, CO
Promised Land’s Development and
Redevelopment Corporation,
Cincinnati, OH
Pueblo Flyers, Inc., Pueblo, CO
PWA Center, Corp., Honolulu, HI
Reclaiming Easter International USA,
Inc., Andover, MA
Righteousness & Praise Ministries, Inc.,
Peyton, CO
Rita Leahy Manning Charitable Trust,
Southwick, MA
Robert Victor Sager & Beatrice Mintz
Sager Charitable Foundation,
Rolla, MO

November 13, 20014962001–46 I.R.B.
Safe Haven Animal Sanctuary, Inc.,
Boca Raton, FL
San Pedro Charity Foundation,
Houston, TX
Save a Child, Incorporated,
Denver, CO
Senior Resource Council, Inc.,
Colorado Springs, CO
Shakespeare Marionette Company,
Chicago, IL
Shekhina House, Boulder, CO
Shining Mountains Center for
Cooperation, Durango, CO
Shoshone County Substance Abuse
Council, Inc., Wallace, ID
Sillca Syndrome Reach Corporation,
Idaho Falls, ID
Simone Institute for Women, Denver, CO
Sisters Organizational Services,
Gardena, CA
Soli Deo Gloria, Ltd., Eau Claire, WI
Southeast Colorado Crime Stoppers,
Lamar, CO
Southside Nondenominational
Fellowship, Inc., Fort Wayne, IN
Story Gleaner, Evergreen, CO
Street Project, Inc., New York, NY
Strykers Field Charitable Foundation,
Wichita, KS
Students Hope, Inc., Denver, CO
Superior Image Economic Development
Corporation, Rialto, CA
Survivors of Violence, Westminster, CO
Tanner Daily Memorial Scholarship
Fund, Aspen, CO
Technology Transfer Solutions,
Greenwood Village, CO
Thirteenth-Irving Development
Corporation, Washington, DC
Thomas Foundation, Inc., Albany, GA
Tibetan Childrens Education Foundation,
Morgantown, WV
Tolo Mammoth Replica Group, Inc.,
Grangeville, ID
Tony Gaines Memorial Fund,
Denver, CO
Touch International Missions, Inc.,
Denteon, TX
Trinidad Access to Informational
Resources, Trinidad, CO
United Ethiopian Services, Inc.,
Cambridge, MA
United Karate Federation of America,
Inc., Seattle, WA
United States Council on Veterans
Affairs, Inc., Las Vegas, NV
Usoc Employee Hardship and Relief
Foundation, Colorado Springs, CO
Valley Voices, Inc., Modesto, CA
Warriors of Light, Boulder, CO
Weiser Soccer Association, Inc.,
Weiser, ID
Wendell P Carnefix Memorial
Scholarship Trust, Fruitland, ID
Wiconi Waste, Lakewood, CO
Windows to the Future, Brighton, CO
Wings of Light Foundation,
Lakewood, CO
Win-Win Resource Network,
Evergreen, CO
Womens Home Improvement,
Incorporated, Aurora, CO
World Baseball Card, Corp., Neenah, WI
Wyoming Buffalo Soldiers Association,
Fe Warren AFB, WY
Your Life Can Change, Gary, IN
Youth Pops America Foundation,
Denver, CO
Youth Social Development Center,
Denver, CO
If an organization listed above sub-
mits information that warrants the re-
newal of its classification as a public
charity or as a private operating founda-
tion, the Internal Revenue Service will
issue a ruling or determination letter
with the revised classification as to
foundation status. Grantors and contrib-
utors may thereafter rely upon such rul-
ing or determination letter as provided
in section 1.509(a)–7 of the Income Tax
Regulations. It is not the practice of the
Service to announce such revised classi-
fication of foundation status in the Inter-
nal Revenue Bulletin.

2001–46 I.R.B.iNovember 13, 2001
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”)
that have an effect on previous rulings
use the following defined terms to de-
scribe the effect:
Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus,
if an earlier ruling held that a principle
applied to A, and the new ruling holds
that the same principle also applies to B,
the earlier ruling is amplified. (Compare
with modified, below).
Clarified is used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously
published ruling and points out an essen-
tial difference between them.
Modified is used where the substance
of a previously published position is
being changed. Thus, if a prior ruling
held that a principle applied to A but not
to B, and the new ruling holds that it ap-
plies to both A and B, the prior ruling is
modified because it corrects a published
position. (Compare with amplified and
clarified, above).
Obsoleted describes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used
in a ruling that lists previously published
rulings that are obsoleted because of
changes in law or regulations. A ruling
may also be obsoleted because the sub-
stance has been included in regulations
subsequently adopted.
Revoked describes situations where the
position in the previously published rul-
ing is not correct and the correct position
is being stated in the new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a pe-
riod of time in separate rulings. If the
new ruling does more than restate the
substance of a prior ruling, a combination
of terms is used. For example, modified
and superseded describes a situation
where the substance of a previously pub-
lished ruling is being changed in part and
is continued without change in part and it
is desired to restate the valid portion of
the previously published ruling in a new
ruling that is self contained. In this case
the previously published ruling is first
modified and then, as modified, is super-
seded.
Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and
that list is expanded by adding further
names in subsequent rulings. After the
original ruling has been supplemented
several times, a new ruling may be pub-
lished that includes the list in the original
ruling and the additions, and supersedes
all prior rulings in the series.
Suspended is used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The following abbreviations in current use and for-
merly used will appear in material published in the
Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security
Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign Corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statements of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.
Definition of Terms

November 13, 2001ii2001–46 I.R.B.
Numerical Finding List
1
Bulletins 2001–27 through 2001–45
Announcements:
2001–69, 2001–27 I.R.B. 23
2001–70, 2001–27 I.R.B. 23
2001–71, 2001–27 I.R.B. 26
2001–72, 2001–28 I.R.B. 39
2001–73, 2001–28 I.R.B. 40
2001–74, 2001–28 I.R.B. 40
2001–75, 2001–28 I.R.B. 42
2001–76, 2001–29 I.R.B. 67
2001–77, 2001–30 I.R.B. 83
2001–78, 2001–30 I.R.B. 87
2001–79, 2001–31 I.R.B. 97
2001–80, 2001–31 I.R.B. 98
2001–81, 2001–33 I.R.B. 175
2001–82, 2001–32 I.R.B. 123
2001–83, 2001–35 I.R.B. 205
2001–84, 2001–35 I.R.B. 206
2001–85, 2001–36 I.R.B. 219
2001–86, 2001–35 I.R.B. 207
2001–87, 2001–35 I.R.B. 208
2001–88, 2001–36 I.R.B. 220
2001–89, 2001–38 I.R.B. 291
2001–90, 2001–35 I.R.B. 208
2001–91, 2001–36 I.R.B. 221
2001–92, 2001–39 I.R.B. 301
2001–93, 2001–44 I.R.B. 416
2001–94, 2001–39 I.R.B. 303
2001–95, 2001–39 I.R.B. 303
2001–96, 2001–41 I.R.B. 317
2001–97, 2001–40 I.R.B. 310
2001–98, 2001–41 I.R.B. 317
2001–99, 2001–42 I.R.B. 340
2001–100, 2001–41 I.R.B. 317
2001–101, 2001–43 I.R.B. 374
2001–102, 2001–42 I.R.B. 340
2001–103, 2001–43 I.R.B. 375
2001–104, 2001–43 I.R.B. 376
2001–105, 2001–43 I.R.B. 376
2001–106, 2001–44 I.R.B. 416
2001–107, 2001–44 I.R.B. 419
2001–108, 2001–44 I.R.B. 419
2001–109, 2001–45 I.R.B. 485
2001–110, 2001–45 I.R.B. 486
2001–111, 2001–45 I.R.B. 486
Court Decisions:
2070, 2001–31 I.R.B. 90
2071, 2001–44 I.R.B. 385
2072, 2001–44 I.R.B. 379
Notices:
2001–39, 2001–27 I.R.B. 3
2001–41, 2001–27 I.R.B. 2
2001–42, 2001–30 I.R.B. 70
2001–43, 2001–30 I.R.B. 72
2001–44, 2001–30 I.R.B. 77
2001–45, 2001–33 I.R.B. 129
Notices—Continued:
2001–46, 2001–32 I.R.B. 122
2001–47, 2001–36 I.R.B. 212
2001–48, 2001–33 I.R.B. 130
2001–49, 2001–34 I.R.B. 188
2001–50, 2001–34 I.R.B. 189
2001–51, 2001–34 I.R.B. 190
2001–52, 2001–35 I.R.B. 203
2001–53, 2001–37 I.R.B. 225
2001–54, 2001–37 I.R.B. 225
2001–55, 2001–39 I.R.B. 299
2001–56, 2001–38 I.R.B. 277
2001–57, 2001–38 I.R.B. 279
2001–58, 2001–39 I.R.B. 299
2001–59, 2001–41 I.R.B. 315
2001–60, 2001–40 I.R.B. 304
2001–61, 2001–40 I.R.B. 305
2001–62, 2001–40 I.R.B. 307
2001–63, 2001–40 I.R.B. 308
2001–64, 2001–41 I.R.B. 316
2001–65, 2001–43 I.R.B. 369
2001–66, 2001–44 I.R.B. 396
2001–70, 2001–45 I.R.B. 437
Proposed Regulations:
REG–110311–98, 2001–35 I.R.B. 204
REG–106917–99, 2001–27 I.R.B. 4
REG–103735–00, 2001–35 I.R.B. 204
REG–103736–00, 2001–35 I.R.B. 204
REG–107151–00, 2001–43 I.R.B. 370
REG–100548–01, 2001–29 I.R.B. 67
REG–106431–01, 2001–37 I.R.B. 272
REG–142499–01, 2001–45 I.R.B. 476
Railroad Retirement Quarterly Rates:
2001–27, I.R.B. 1
2001–41, I.R.B. 314
Revenue Procedures:
2001–39, 2001–28 I.R.B. 38
2001–40, 2001–33 I.R.B. 130
2001–41, 2001–33 I.R.B. 173
2001–42, 2001–36 I.R.B. 212
2001–43, 2001–34 I.R.B. 191
2001–44, 2001–35 I.R.B. 203
2001–45, 2001–37 I.R.B. 227
2001–46, 2001–37 I.R.B. 263
2001–47, 2001–42 I.R.B. 332
2001–48, 2001–40 I.R.B. 308
2001–49, 2001–39 I.R.B. 300
2001–50, 2001–45 I.R.B. 437
2001–51, 2001–43 I.R.B. 369
Revenue Rulings:
2001–30, 2001–29 I.R.B. 46
2001–33, 2001–32 I.R.B. 118
2001–34, 2001–28 I.R.B. 31
2001–35, 2001–29 I.R.B. 59
2001–36, 2001–32 I.R.B. 119
2001–37, 2001–32 I.R.B. 100
2001–38, 2001–33 I.R.B. 124
Revenue Rulings—Continued:
2001–39, 2001–33 I.R.B. 125
2001–40, 2001–38 I.R.B. 276
2001–41, 2001–35 I.R.B. 193
2001–42, 2001–37 I.R.B. 223
2001–43, 2001–36 I.R.B. 209
2001–44, 2001–37 I.R.B. 223
2001–45, 2001–42 I.R.B. 323
2001–46, 2001–42 I.R.B. 321
2001–47, 2001–39 I.R.B. 293
2001–48, 2001–42 I.R.B. 324
2001–49, 2001–41 I.R.B. 312
2001–50, 2001–43 I.R.B. 343
2001–51, 2001–45 I.R.B. 427
2001–52, 2001–45 I.R.B. 434
Treasury Decisions:
8947, 2001–28 I.R.B. 36
8948, 2001–28 I.R.B. 27
8949, 2001–28 I.R.B. 33
8950, 2001–28 I.R.B. 34
8951, 2001–29 I.R.B. 63
8952, 2001–29 I.R.B. 60
8953, 2001–29 I.R.B. 44
8954, 2001–29 I.R.B. 47
8955, 2001–32 I.R.B. 101
8956, 2001–32 I.R.B. 112
8957, 2001–33 I.R.B. 125
8958, 2001–34 I.R.B. 183
8959, 2001–34 I.R.B. 185
8960, 2001–34 I.R.B. 176
8961, 2001–35 I.R.B. 194
8962, 2001–35 I.R.B. 201
8963, 2001–35 I.R.B. 197
8964, 2001–42 I.R.B. 320
8965, 2001–43 I.R.B. 344
8966, 2001–45 I.R.B. 422
1
A cumulative list of all revenue rulings, revenue
procedures, Treasury decisions, etc., published in
Internal Revenue Bulletins 2001–1 through 2001–26
is in Internal Revenue Bulletin 2001–27, dated July
2, 2001.

2001–46 I.R.B.iiiNovember 13, 2001
Finding List of Current Actions on
Previously Published Items
1
Bulletins 2001–27 through 2001–45
Announcements:
2000–48
Modified by
Notice 2001–43, 2001–30 I.R.B. 72
Notices:
98–52
Modified by
Notice 2001–56, 2001–38 I.R.B. 277
99–41
Modified and superseded by
Notice 2001–62, 2001–40 I.R.B. 307
2001–4
Modified by
Notice 2001–43, 2001–30 I.R.B. 72
2001–9
Modified by
Notice 2001–46, 2001–32 I.R.B. 122
2001–15
Supplemented by
Notice 2001–51, 2001–34 I.R.B. 190
2001–42
Modified by
Notice 2001–57, 2001–38 I.R.B. 279
Proposed Regulations:
LR–97–79
Withdrawn by
REG–100548–01, 2001–29 I.R.B. 67
LR–107–84
Withdrawn by
REG–100548–01, 2001–29 I.R.B. 67
REG–110311–98
Supplemented by
T.D. 8961, 2001–35 I.R.B. 194
REG–106917–99
Corrected by
Ann. 2001–86, 2001–35 I.R.B. 207
REG–103735–00
Supplemented by
T.D. 8961, 2001–35 I.R.B. 194
REG–103736–00
Supplemented by
T.D. 8961, 2001–35 I.R.B. 194
REG–107186–00
Corrected by
Ann. 2001–71, 2001–27 I.R.B. 26
REG–130477–00
Supplemented by
Ann. 2001–82, 2001–32 I.R.B. 123
REG–130481–00
Supplemented by
Ann. 2001–82, 2001–32 I.R.B. 123
Revenue Procedures:
83–74
Revoked by
Rev. Proc. 2001–49, 2001–39 I.R.B. 300
Revenue Procedures—Continued:
84–84
Revoked by
Rev. Proc. 2001–49, 2001–39 I.R.B. 300
93–27
Clarified by
Rev. Proc. 2001–43, 2001–34 I.R.B. 191
97–13
Modified by
Rev. Proc. 2001–39, 2001–28 I.R.B. 38
97–19
Modified by
Notice 2001–62, 2001–40 I.R.B. 307
98–44
Superseded by
Rev. Proc. 2001–40, 2001–33 I.R.B. 130
99–27
Superseded by
Rev. Proc. 2001–42, 2001–36 I.R.B. 212
99–49
Modified and amplified by
Rev. Proc. 2001–46, 2001–37 I.R.B. 263
2000–20
Modified by
Notice 2001–42, 2001–30 I.R.B. 70
2000–28
Superseded by
Rev. Proc. 2001–50, 2001–45 I.R.B. 437
2000–39
Corrected by
Ann. 2001–73, 2001–28 I.R.B. 40
Superseded by
Rev. Proc. 2001–47, 2001–42 I.R.B. 332
2001–2
Modified by
Rev. Proc. 2001–41, 2001–33 I.R.B. 173
2001–3
Modified by
Rev. Proc. 2001–51, 2001–43 I.R.B. 369
2001–6
Modified by
Notice 2001–42, 2001–30 I.R.B. 70
2001–50
Superseded by
Rev. Proc. 2000–28 superseded
Revenue Rulings:
57–589
Obsoleted by
REG–106917–99, 2001–27 I.R.B. 4
65–316
Obsoleted by
REG–106917–99, 2001–27 I.R.B. 4
67–274
Amplified by
Rev. Rul. 2001–46, 2001–42 I.R.B. 321
68–125
Obsoleted by
REG–106917–99, 2001–27 I.R.B. 4
69–563
Obsoleted by
REG–106917–99, 2001–27 I.R.B. 4
Revenue Rulings—Continued:
70–379
Obsoleted by
Rev. Rul. 2001–39, 2001–33 I.R.B. 125
74–326
Obsoleted by
REG–106917–99, 2001–27 I.R.B. 4
78–127
Modified by
Rev. Rul. 2001–40, 2001–38 I.R.B. 276
78–179
Obsoleted by
REG–106917–99, 2001–27 I.R.B. 4
89–42
Modified and superseded by
Rev. Rul. 2001–48, 2001–42 I.R.B. 324
90–95
Distinguished by
Rev. Rul. 2001–42, 2001–42 I.R.B. 321
92–19
Supplemented by
Rev. Rul. 2001–38, 2001–33 I.R.B. 124
97–31
Modified and superseded by
Rev. Rul. 2001–48, 2001–42 I.R.B. 324
98–1
Modified by
Rev. Rul. 2001–51, 2001–45 I.R.B. 427
Treasury Decisions:
8948
Corrected by
Ann. 2001–90, 2001–35 I.R.B. 208
1
A cumulative list of current actions on previously
published items in Internal Revenue Bulletins
2001–1 through 2001–26 is in Internal Revenue
Bulletin 2001–27, dated July 2, 2001.

INTERNAL REVENUE BULLETIN
The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue
Bulletin is sold on a yearly subscription basis by the Superintendent of Documents. Current subscribers are notified by the
Superintendent of Documents when their subscriptions must be renewed.
CUMULATIVE BULLETINS
The contents of this weekly Bulletin are consolidated semiannually into a permanent, indexed, Cumulative Bulletin. These are sold
on a single copy basis and are not included as part of the subscription to the Internal Revenue Bulletin. Subscribers to the weekly
Bulletin are notified when copies of the Cumulative Bulletin are available. Certain issues of Cumulative Bulletins are out of print
and are not available. Persons desiring available Cumulative Bulletins, which are listed on the reverse, may purchase them from the
Superintendent of Documents.
ACCESS THE INTERNAL REVENUE BULLETIN ON THE INTERNET
You may view the Internal Revenue Bulletin on the Internet at www.irs.gov. Select Tax Info for Business at the bottom of the page.
Then select Internal Revenue Bulletins.
INTERNAL REVENUE BULLETINS ON CD–ROM
Internal Revenue Bulletins are available annually as part of Publication 1796 (Tax Products CD–ROM). The CD–ROM can be
purchased from National Technical Information Service (NTIS) on the Internet at www.irs.gov/cdorders(discount for online orders)
or by calling 1-877-233-6767. The first release is available in mid-December and the final release is available in late January.
HOW TO ORDER
Check the publications and/or subscription(s) desired on the reverse, complete the order blank, enclose the proper remittance,
detach entire page, and mail to the Superintendent of Documents, P.O. Box 371954, Pittsburgh, PA 15250–7954. Please allow two
to six weeks, plus mailing time, for delivery.
WE WELCOME COMMENTS ABOUT THE
INTERNAL REVENUE BULLETIN
If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it, we
would be pleased to hear from you. You can e-mail us your suggestions or comments through the IRS Internet Home Page
(www.irs.gov) or write to the IRS Bulletin Unit, W:CAR:MP:FP, Washington, DC 20224.
Internal Revenue Service
Washington, DC 20224
Official Business
Penalty for Private Use, $300