Internal Revenue Bulletin 2003-24 (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.

HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
INCOME TAX
Rev. Rul. 2003–59, page 1014.
Cost-share payments.The Conservation Reserve Program
(CRP) is a small watershed program administered by the Sec-
retary of Agriculture that is substantially similar to the type of pro-
grams described in sections 126(a)(1) through (8) of the Code
within the meaning of section 126(a)(9). All or a portion of cost-
share payments received under the CRP is eligible for exclu-
sion from gross income to the extent permitted by section 126.
Rental payments and incentive payments are not cost-share pay-
ments and are not excludable from gross income.
Announcement 2003–37, page 1025.
The IRS and Treasury are considering publishing a notice of pro-
posed rulemaking (REG–100818–01) proposing rules regard-
ing the amount of a liability a transferee of property is treated
as assuming in connection with a transfer of property and cer-
tain tax consequences that result from the transferee’s assump-
tion of such a liability. This document describes and explains the
issues that IRS and Treasury are considering addressing in the
proposed regulations and the rules that IRS and Treasury might
propose to address some of these issues. This document also
invites comments regarding these issues and rules.
EMPLOYEE PLANS
REG–157302–02, page 1021.
Proposed regulations under section 408 of the Code provide guid-
ance regarding accounts and annuities added to qualified em-
ployer plans where such accounts and annuities are to be treated
as individual retirement plans.
EXEMPT ORGANIZATIONS
Announcement 2003–39, page 1030.
A list is provided of organizations now classified as private foun-
dations.
ESTATE TAX
Rev. Rul. 2003–61, page 1015.
Taxation of qualified family-owned business interest
(QFOBI).A distribution in redemption of stock that is part of a
QFOBI and that qualifies under section 303 of the Code: (1) does
not affect the initial determination of whether the estate is eli-
gible to make the QFOBI election, and (2) does not constitute a
disposition under section 2057(f)(1)(B); thus under section 2057
no additional estate tax is imposed as a result of this distribu-
tion.
ADMINISTRATIVE
Rev. Proc. 2003–38, page 1017.
Commercial revitalization deduction.This procedure pro-
vides the time and manner for states to make allocations of com-
mercial revitalization expenditures to a new or substantially
rehabilitated building that is placed in service in a renewal com-
munity. This procedure also explains how a taxpayer may elect
to recover the cost of the building using a more accelerated
method than is otherwise allowable for depreciation purposes.
Announcement 2003–38, page 1029.
This document explains that Announcement 2003–21, Dutch
Agreement on Pension Funds, was inadvertently put into Part IV
instead of Part II of Bulletin 2003–17. When the Cumulative Bul-
letin for the first half of 2003, C.B. 2003–1, is printed, Announce-
ment 2003–21 will be listed under Part II, Treaties and Tax
Legislation.
Bulletin No. 2003–24
June 16, 2003
Finding Lists begin on page ii.

The IRS Mission
Provide America’s taxpayers top quality service by helping them
understand and meet their tax responsibilities and by applying
the tax law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of the
Commissioner of Internal Revenue for announcing official rul-
ings and procedures of the Internal Revenue Service and for pub-
lishing Treasury Decisions, Executive Orders, Tax Conventions,
legislation, court decisions, and other items of general inter-
est. It is published weekly and may be obtained from the Super-
intendent 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 pub-
lished rulings apply retroactively unless otherwise indicated. Pro-
cedures relating solely to matters of internal management are
not published; however, statements of internal practices and pro-
cedures that affect the rights and duties of taxpayers are pub-
lished.
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 taxpay-
ers or technical advice to Service field offices, identifying de-
tails 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 re-
lied on, used, or cited as precedents by Service personnel in the
disposition of other cases. In applying published rulings and pro-
cedures, the effect of subsequent legislation, regulations, court
decisions, rulings, and procedures must be considered, and Ser-
vice personnel and others concerned are cautioned against reach-
ing 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.—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, Legisla-
tion and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these sub-
jects are contained in the other Parts and Subparts. Also in-
cluded in this part are Bank Secrecy Act Administrative Rulings.
Bank Secrecy Act Administrative Rulings are issued by the De-
partment of the Treasury’s Office of the Assistant Secretary (En-
forcement).
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 semiannual pe-
riod, respectively.
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.
June 16, 20032003–24 I.R.B.

Part I. Rulings and Decisions Under the Internal Revenue Code of 1986
Section 56.—Adjustments in
Computing Alternative
Minimum Taxable Income
In determining the alternative minimum taxable
income, is there an adjustment under § 56 of the
InternalRevenueCodeforthecommercial
revitalization deduction provided by § 1400I? See
Rev. Proc. 2003–38, page 1017.
Section 126.—Certain
Cost-Sharing Payments
26 CFR 16A.126–1: Certain cost sharing payments
— In general (Temporary).
Cost-share payments.The Conserva-
tion Reserve Program (CRP) is a small wa-
tershed program administered by the
Secretary of Agriculture that is substan-
tially similar to the type of programs de-
scribed in sections 126(a)(1) through (8) of
the Code within the meaning of section
126(a)(9). All or a portion of cost-share pay-
ments received under the CRP is eligible
for exclusion from gross income to the ex-
tent permitted by section 126. Rental pay-
ments and incentive payments are not cost-
share payments and are not excludable from
gross income.
Rev. Rul. 2003–59
ISSUE
Is the Conservation Reserve Program
(CRP) substantially similar to the type of
programs described in § 126(a)(1) through
(8) of the Internal Revenue Code, so that
the CRP is within the scope of § 126(a)(9)
and, thereby, cost-share payments received
under the CRP are eligible for exclusion
from gross income to the extent permit-
ted by § 126?
FACTS
The CRP, authorized under Title XII of
the Food Security Act of 1985, as amended,
Pub. L. No. 99–198, 99 Stat. 1504, and re-
authorized under the Federal Agriculture Im-
provement and Reform Act of 1996, Pub.
L. No. 104–127, 110 Stat. 888, is a vol-
untary program for soil, water, and wild-
life conservation, wetland establishment and
restoration, and reforestation. The Food, Ag-
riculture, Conservation, and Trade Act of
1990, Pub. L. No. 101–624, 104 Stat. 3359,
established the umbrella program “Envi-
ronmental Conservation Acreage Reserve
Program,” which is made up of the CRP
and the Wetland Reserve Program, which
was determined in Rev. Rul. 97–55, 1997–2
C.B. 20, to be within the scope of
§ 126(a)(9).
Landowners who participate in the CRP
enter into one or more 10 to 15 year cost-
share contracts with the Department of Ag-
riculture. Under a cost-share contract, a
farmer or rancher agrees to implement ap-
proved conservation-related practices on the
land in return for cost-share payments equal
to 50 percent of the actual or average cost
of establishing a practice. Typically, cost-
share payments range from $20 to $500 per
acre. There is no maximum cost-share pay-
ment per person, however, the per acre pay-
ment for some practices is limited based on
local land values.
In addition to cost-share payments, all
participants in the CRP also receive an-
nual rental payments for the 10 to 15 year
contract duration. Rental payments range
from $30 to $160 per acre, depending on
soil type and local market rates, plus up to
an additional $9 per acre for cover main-
tenance, with a maximum of $50,000 per
person for any fiscal year. Some partici-
pants also may receive a one-time incen-
tive payment of up to 20 percent of the
annual payment for certain practices.
The Secretary of Agriculture has deter-
mined that the CRP is a small watershed
program and that the cost-share payments
under the CRP are primarily for the pur-
pose of conservation.
LAW AND ANALYSIS
Under § 126(a), gross income does not
include the excludable portion of payments
received under certain conservation pro-
grams set forth in § 126(a)(1) through (8).
Under § 126(a)(9), a program affecting
“small watersheds” that is administered by
the Secretary of Agriculture also is eli-
gible for § 126 treatment if the Commis-
sioner determines that the program is
substantially similar to the type of pro-
grams described in § 126(a)(1) through (8).
See § 16A.126–1(d)(3) of the temporary In-
come Tax Regulations for the definition of
“small watershed.”
Once the Commissioner has determined
that a program is substantially similar to the
type of programs described in § 126(a)(1)
through (8), taxpayers receiving cost-share
payments under that program must deter-
mine what portion of the cost-share
payments is excludable from gross in-
come under § 126. See § 126(b)(1), and
§ 16A.126–1 relating to the partial exclu-
sion for certain cost-share payments to de-
termine what portion of the cost-share
payments is excludable from gross income
under § 126. The rental payments and in-
centive payments received under the CRP
are not cost-share payments and therefore
are not excludable from gross income. See
§ 16A.126–1.
HOLDING
The CRP is a small watershed program
administered by the Secretary of Agricul-
ture that is substantially similar to the type
of programs described in § 126(a)(1)
through (8) within the meaning of
§ 126(a)(9). All or a portion of cost-share
payments received under the CRP is
eligible for exclusion from gross income
to the extent permitted by § 126. See
§ 126(b)(1) and § 16A.126–1 to determine
what portion, if any, of the cost-share pay-
ments is excludable from gross income un-
der § 126. Rental payments and incentive
payments are not cost-share payments and
are not excludable from gross income. See
§ 16A.126–1(b)(2)(iii).
DRAFTING INFORMATION
The principal author of this revenue rul-
ing is Nicole R. Cimino of the Office of As-
sociate Chief Counsel (Passthroughs and
Special Industries). For further informa-
tion regarding this revenue ruling, con-
tact Ms. Cimino at (202) 622–3120 (not a
toll-free call).
2003–24 I.R.B.1014June 16, 2003

Section 168.—Accelerated
Cost Recovery System
In lieu of determining depreciation under§168
of the Internal Revenue Code, how does a taxpayer
make an election under§1400I to recover the cost
of a new or substantially rehabilitated building that
is placed in service in a renewal community? See
Rev. Proc. 2003–38, page 1017.
Section 1400I.—Commercial
Revitalization Deduction
How does a state make an allocation of
commercial revitalization expenditures to a new or
substantially rehabilitated building that is placed in
service in a renewal community and how does a
taxpayer make an election to recover the cost of
this building under§1400I of the Internal Revenue
Code? See Rev. Proc. 2003–38, page 1017.
Section 2057.—Family-Owned
Business Interests
Taxation of qualified family-owned
business interest (QFOBI).A distribu-
tion in redemption of stock that is part of
a QFOBI and that qualifies under section
303 of the Code: (1) does not affect the ini-
tial determination of whether the estate is
eligible to make the QFOBI election, and
(2) does not constitute a disposition un-
der section 2057(f)(1)(B); thus under sec-
tion 2057 no additional estate tax is imposed
as a result of this distribution.
Rev. Rul. 2003–61
ISSUE
Does a distribution in redemption of
stock that is part of a qualified family-
owned business interest (QFOBI) and that
qualifies under§303 of the Internal Rev-
enue Code: (1) affect the initial determi-
nation of whether the estate is eligible to
make the QFOBI election, or (2) consti-
tute a disposition under§2057(f)(1)(B) that
results in the imposition of an additional es-
tate tax?
FACTS
At the time ofD’s death,Downed
shares of stock inXcorporation with an ad-
justed value under§2057(d) of $3 mil-
lion. No gift ofXcorporation stock was
made or deemed made byDduringD’s life.
These shares passed toD’s children pur-
suant to the terms ofD’s will. The value
ofD’s adjusted gross estate under§2057(c)
was $5 million. On the federal estate tax
return filed forD’s estate,D’s executor
elected to treat all ofD’s stock inXcor-
poration as a QFOBI under§2057, filed the
duly executed agreement referred to in
§2057(h), and claimed the maximum al-
lowable deduction of $675,000. In all re-
spects, the election complied with the
provisions of§2057. In order to pay the
federal and state estate taxes imposed by
reason ofD’s death,D’s executor caused
Xcorporation to redeem one-third of theX
corporation stock in a distribution that sat-
isfied the requirements of§303.
LAW AND ANALYSIS
In general, under§303(a), a distribu-
tion of property to a shareholder by a cor-
poration in redemption of part or all of the
stock of the corporation that is included in
determining the decedent’s gross estate for
federal estate tax purposes is treated as a
distribution in full payment in exchange for
the redeemed stock to the extent of the sum
of certain taxes and expenses. These taxes
and expenses are the estate, inheritance,
legacy, and succession taxes (including any
interest collected as a part of such taxes)
imposed because of the decedent’s death,
and the amount of funeral and administra-
tion expenses allowable as deductions for
federal estate tax purposes. In addition to
the other limitations and rules in§303, the
treatment under§303(a) applies only to the
extent that the interest of the shareholder
receiving the distribution is reduced di-
rectly (or through a binding obligation to
contribute) by any payment of these
amounts. Section 303(b)(3).
Section 2057(a)(1) provides that, in the
case of an estate to which§2057 applies,
the value of the taxable estate is deter-
mined by deducting from the value of the
gross estate the adjusted value of the
QFOBI of the decedent. Under§2057(a)(2),
the deduction may not exceed $675,000.
One of the requirements of§2057 is that
the QFOBI either must be acquired by a
qualified heir from the decedent or must
pass to a qualified heir from the dece-
dent. Section 2057(b)(2)(B).
Section 2057(f)(1) provides that addi-
tional estate tax is imposed if certain events
occur within 10 years after the date of the
decedent’s death and before the date of the
qualified heir’s death. One of these events
is the disposition by the qualified heir of
any portion of a QFOBI, other than by a
disposition to a member of the qualified
heir’s family or through a qualified con-
servation contribution under§170(h). Sec-
tion 2057(f)(1)(B).
Section 2057(i)(3)(O) provides that rules
similar to the rule in§6166(g)(1)(B) shall
apply for purposes of§2057.
Section 6166(g)(1)(A) provides that the
privilege of paying the estate tax in install-
ments ceases and the unpaid tax becomes
due upon notice and demand if: (i) any por-
tion of an interest in a closely held busi-
ness that qualifies under§6166(a)(1) is
distributed, sold, exchanged, or otherwise
disposed of, or money and other property
attributable to the interest is withdrawn from
the trade or business, and (ii) the aggre-
gate of the distributions, sales, exchanges,
or other dispositions and withdrawals equals
or exceeds 50 percent of the value of the
interest.
Section 6166(g)(1)(B) provides that in
the case of a distribution in redemption of
stock to which§303 (or so much of§304
as relates to§303) applies: (i) the redemp-
tion of the stock, and the withdrawal of
money and other property distributed in the
redemption, is not treated as a distribu-
tion or withdrawal for purposes of
§6166(g)(1)(A), and (ii) for purposes of
§6166(g)(1)(A), the value of the interest in
the closely held business is considered to
be its value reduced by the value of the re-
deemed stock. Thus, the reduction in
the value of the interest pursuant to
§6166(g)(1)(B)(ii) is applicable in deter-
mining whether subsequent distributions,
sales, exchanges, or other dispositions and
withdrawals equal or exceed 50 percent
of the value of the interest under
§6166(g)(1)(A)(ii) and does not affect the
determination of whether the estate is ini-
tially eligible for the extension of time to
pay under§6166.
In applying rules similar to the rule in
§6166(g)(1)(B) for purposes of§2057, a
distribution in redemption of stock to which
§303 applies is not a disposition that trig-
gers an additional estate tax with respect to
a QFOBI and the redemption does not af-
fect the initial determination of whether the
estate is eligible to make the QFOBI elec-
tion.
After the redemption caused byD’s ex-
ecutor of one-third of theXcorporation
stock in a distribution that satisfied the re-
June 16, 200310152003–24 I.R.B.

quirements of§303, the adjusted value of
the QFOBI ($2 million) no longer exceeds
50 percent ofD’s adjusted gross estate ($5
million). The QFOBI election made forD’s
estate is not affected because the distribu-
tion in redemption of theXcorporation
stock does not affect the initial determina-
tion of whetherD’s estate is eligible to
make the QFOBI election. The distribu-
tion in redemption of theXcorporation
stock is not a disposition of a portion of the
QFOBI that would trigger an additional es-
tate tax.
HOLDING
A distribution in redemption of stock that
is part of a QFOBI and that qualifies un-
der§303: (1) does not affect the initial de-
termination of whether the estate is eligible
to make the QFOBI election, and (2)
does not constitute a disposition under
§2057(f)(1)(B); thus under§2057 no ad-
ditional estate tax is imposed as a result of
this distribution.
DRAFTING INFORMATION
The principal authors of this revenue rul-
ing are Corenna Howard and Lian Mito of
the Office of Associate Chief Counsel
(Passthroughs and Special Industries). For
further information regarding this revenue
ruling, contact Ms. Howard or Ms. Mito at
(202) 622–7830 (not a toll-free call).
2003–24 I.R.B.1016June 16, 2003

Part III. Administrative, Procedural, and Miscellaneous
26 CFR 601.105: Examination of returns and
claims for refund, credit or abatement; determina-
tion of correct tax liability.
(Also Part I,§§56, 168, 1400I.)
Rev. Proc. 2003–38
SECTION 1. PURPOSE
This revenue procedure provides the time
and manner for states to make allocations
under§1400I of the Internal Revenue Code
of commercial revitalization expenditure
amounts to a new or substantially rehabili-
tated building that is placed in service in
a renewal community. This revenue pro-
cedure also explains how a taxpayer may
make an election under§1400I(a) to re-
cover the cost of the building using a more
accelerated method than is otherwise al-
lowable under the depreciation provisions
in§168.
SECTION 2. BACKGROUND
.01 Section 1400I, as added by§101(a)
of the Community Renewal Tax Relief Act
of 2000, Pub. L. No. 106–554, 114 Stat.
2763A–587 (December 21, 2000), allows
a taxpayer to elect to recover the cost of a
qualified revitalization building using a more
accelerated method than is otherwise al-
lowable under§168. Pursuant to§1400I(a),
a taxpayer may elect either (1) to deduct
one-half of any qualified revitalization ex-
penditures chargeable to a capital account
with respect to any qualified revitaliza-
tion building for the taxable year in which
the building is placed in service, or (2) to
amortize all of these expenditures ratably
over the 120-month period beginning with
the month in which the building is placed
in service. If the taxpayer makes a com-
mercial revitalization deduction election as
provided in this revenue procedure, a de-
preciation deduction is not allowable for the
amounts deducted or amortized under
§1400I(a). The commercial revitalization
deduction provided by§1400I(a) is al-
lowed for both regular tax and alternative
minimum tax purposes.
.02 Under§1400I(b)(1), a qualified re-
vitalization building is any building and its
structural components (such terms are de-
fined in§1.48–1(e) of the Income Tax
Regulations) if: (1) the building is placed
in service by the taxpayer in a renewal com-
munity (as defined in§1400E) and the
original use of the building begins with the
taxpayer; or (2) the building is substan-
tially rehabilitated (within the meaning of
§47(c)(1)(C)) by the taxpayer and is placed
in service by the taxpayer after the reha-
bilitation in a renewal community.
.03 The term“qualified revitalization ex-
penditure”is defined in§1400I(b)(2)(A) as,
in general, any amount properly charge-
able to a capital account for property for
which depreciation is allowable under§168
and that is either (1) nonresidential real
property (as defined in§168(e)(2)(B)), or
(2)§1250 property (as defined in§1250(c))
that is functionally related and subordi-
nate to the nonresidential real property.
However, pursuant to§1400I(c), the ag-
gregate amount that may be treated as quali-
fied revitalization expenditures with respect
to any qualified revitalization building can-
not exceed the lesser of (1) $10 million, or
(2) the commercial revitalization expendi-
ture amount allocated to the building un-
der§1400I by the commercial revitalization
agency for the state in which the building
is located. Accordingly, a taxpayer may
make a commercial revitalization deduc-
tion election for a qualified revitalization
building only to the extent that qualified
commercial revitalization expenditure
amounts are allocated to the building. If the
amount of that allocation exceeds the
amount properly chargeable to a capital ac-
count for the building, the qualified revi-
talization expenditures eligible for the
commercial revitalization deduction elec-
tion are limited to the amount properly
chargeable to a capital account for the build-
ing.
.04 Under§1400I(d), the commercial re-
vitalization agency for each state is per-
mitted to allocate up to $12 million of
commercial revitalization expenditure
amounts with respect to each renewal com-
munity located within the state for each cal-
endar year after 2001 and before 2010.
Pursuant to§1400I(e), the allocation must
be made pursuant to a qualified alloca-
tion plan (as defined in§1400I(e)(2)) that
is approved by the governmental unit of
which the commercial revitalization agency
is a part. Further, the commercial revital-
ization agency must notify the chief ex-
ecutive officer (or its equivalent) of the local
jurisdiction in which the qualified revital-
ization building is located of the alloca-
tion and provide that individual a reasonable
opportunity to comment on the alloca-
tion. The term“commercial revitalization
agency”is defined in§1400I(d)(3) as any
agency authorized by a state to carry out
§1400I. Neither the original nor a copy of
the qualified allocation plan is to be sent
to the Internal Revenue Service.
.05 Pursuant to§1400I(d)(4), an allo-
cation under§1400I is made at the same
time and in the same manner as under the
low-income housing credit provisions in
§42(h)(1) and (7). Section 42(h)(1)(B) pro-
vides that, except in the case of an alloca-
tion that meets the requirements of
§42(h)(1)(C), (D), (E), or (F), an alloca-
tion must be made not later than the close
of the calendar year in which the build-
ing is placed in service. Further,§1.42–
1T(d)(8)(i) provides that the allocation may
not be made prior to the calendar year in
which the building is placed in service. Ac-
cordingly, the low-income housing credit al-
location is generally made in the calendar
year in which the building is placed in ser-
vice.
Nevertheless, certain allocations that
meet the requirements of§42(h)(1)(C), (D),
(E), or (F) are not made in the calendar year
in which the building is placed in service.
An allocation meets the requirements of
§42(h)(1)(C) if there is a binding com-
mitment, not later than the close of the cal-
endar year in which the building is placed
in service, by the state agency to allocate
a specified dollar amount to the building be-
ginning in a specified later taxable year. An
allocation with respect to an increase in
qualified basis meets the requirements of
§42(h)(1)(D) only if, among other things,
the allocation is made not later than the
close of the calendar year in which ends the
taxable year to which the allocation will first
apply. Pursuant to§42(h)(1)(E) and (F) and
§1.42–6, a carryover allocation is allowed
with respect to a single-building project or
multi-building project that is placed in ser-
vice not later than the close of the second
calendar year following the calendar year
in which the allocation is made, provided
certain basis requirements set forth therein
are met.
June 16, 200310172003–24 I.R.B.

SECTION 3. GENERAL RULES FOR
AN ALLOCATION OF COMMERCIAL
REVITALIZATION EXPENDITURE
AMOUNTS
.01Types of allocations allowed. A com-
mercial revitalization agency may make the
following types of allocations of the com-
mercial revitalization expenditure amount
(commercial revitalization expenditure
allocation):
(1) An allocation in the calendar year in
which a qualified revitalization building is
placed in service, as described in section 4
of this revenue procedure;
(2) A binding commitment to make an
allocation of a specified dollar amount to
a qualified revitalization building in the cal-
endar year in which the building is placed
in service, as described in section 5 of this
revenue procedure; and
(3) A carryover allocation for a single-
building project or a multi-building project,
as described in section 6 of this revenue
procedure.
.02Allocation must be made for each
building. A separate commercial revital-
ization expenditure allocation must be made
for each qualified revitalization building
whether new or substantially rehabilitated.
.03$12 million ceiling for each renewal
community. Each state is permitted to al-
locate up to $12 million of commercial re-
vitalization expenditure amounts to each
renewal community located within the state
for each calendar year after 2001 and be-
fore 2010 (the commercial revitalization ex-
penditure ceiling). The $12 million of
commercial revitalization expenditure
amounts for any renewal community may
not be allocated, in whole or in part, to an-
other renewal community. However, see
section 8.02 of this revenue procedure for
the special rule for the 2002 ceiling.
.04Carryforward of ceiling is not per-
mitted. If a commercial revitalization agency
does not allocate all of the commercial re-
vitalization expenditure ceiling for a re-
newal community for any given calendar
year, the unused ceiling amount may not be
carried forward to a later year. However, see
section 8.01 of this revenue procedure for
the special rule for any unused 2002 ceil-
ing amount.
SECTION 4. ALLOCATIONS FOR
BUILDINGS PLACED IN SERVICE IN
THE ALLOCATION YEAR
.01Time for making a commercial re-
vitalization expenditure allocation. Ex-
cept as provided in sections 5 and 6 of this
revenue procedure, a commercial revital-
ization expenditure allocation to a quali-
fied revitalization building must be made
in the calendar year in which that build-
ing is placed in service by the taxpayer.
.02Manner for making a commercial re-
vitalization expenditure allocation.
(1)In general. A commercial revital-
ization expenditure allocation is made for
a qualified revitalization building when an
allocation document containing the infor-
mation described in section 4.02(2) of this
revenue procedure is completed, signed, and
dated by an authorized official of the com-
mercial revitalization agency. The agency
must send a copy of the allocation docu-
ment to the taxpayer receiving the alloca-
tion no later than 60 calendar days
following the close of the calendar year in
which the allocation is made. Neither the
original nor a copy of the allocation docu-
ment is to be sent to the Service.
(2)Information required in the alloca-
tion document. The allocation document
must include:
(a) The name, address, and taxpayer
identification number of the commercial re-
vitalization agency making the commer-
cial revitalization expenditure allocation;
(b) The name, address, and taxpayer
identification number of the taxpayer re-
ceiving the allocation;
(c) The address of the qualified revital-
ization building, or if none exists, a spe-
cific description of the location of each
building;
(d) The date of the allocation of the
commercial revitalization expenditure
amount;
(e) The commercial revitalization ex-
penditure amount allocated to the quali-
fied revitalization building on that date; and
(f) A certification under penalties of per-
jury by an authorized official of the com-
mercial revitalization agency that the official
has examined the information in the allo-
cation document, and, to the best of the
official’s knowledge and belief, this infor-
mation is true, correct, and complete.
SECTION 5. BINDING
COMMITMENTS
Before or in the calendar year in which
a qualified revitalization building is placed
in service, a commercial revitalization
agency of a state may enter into a bind-
ing commitment to allocate a specified dol-
lar amount of the commercial revitalization
expenditure ceiling in the calendar year in
which the building is placed in service. This
allocation must be made in accordance with
section 4 of this revenue procedure. A bind-
ing commitment, in and of itself, is not an
allocation.
SECTION 6. CARRYOVER
ALLOCATIONS
.01In general.
(1)Definition of a carryover alloca-
tion. A carryover allocation is an alloca-
tion that is made with respect to a qualified
revitalization building that is placed in ser-
vice by a taxpayer not later than the close
of the second calendar year following the
calendar year in which the allocation is
made, provided the taxpayer’s basis in the
project of which the building is a part (as
of the later of the date that is 6 months af-
ter the date that the allocation is made or
the close of the calendar year in which the
allocation is made) is more than 10 per-
cent of the taxpayer’s reasonably expected
basis in the project as of the close of the
second calendar year following the calen-
dar year in which the allocation is made.
A carryover allocation may be for either a
single-building project (a building-based al-
location) or a multi-building project (a
project-based allocation). A carryover al-
location reduces the commercial revital-
ization expenditure ceiling for the calendar
year in which the allocation is made. If a
carryover allocation is made after June 30,
2002, and before January 1, 2003, see sec-
tion 8.03 of this revenue procedure for the
special rule for the 10 percent basis re-
quirement.
(2)Determination of reasonably ex-
pected basis. The taxpayer’s reasonably ex-
pected basis in a project is the taxpayer’s
reasonably expected adjusted basis in land
and depreciable property, as determined un-
der§§1012 and 1016, that is reasonably ex-
pected to be part of the project, whether or
not these amounts are includible in the ba-
sis of the qualified revitalization build-
ing.
2003–24 I.R.B.1018June 16, 2003

.02Time and manner for making a car-
ryover allocation of commercial revitaliza-
tion expenditure amounts.
(1)In general. A carryover allocation of
commercial revitalization expenditure
amounts is made for a qualified revitaliza-
tion building when a carryover allocation
document containing the information de-
scribed in section 6.02(2) of this revenue
procedure is completed, signed, and dated
by an authorized official of the commer-
cial revitalization agency. The agency must
send a copy of the carryover allocation
document to the taxpayer receiving the car-
ryover allocation no later than 60 calen-
dar days following the close of the calendar
year in which the carryover allocation is
made. Neither the original nor a copy of the
carryover allocation document is to be sent
to the Service.
(2)Information required in the carry-
over allocation document. The carryover al-
location document must include:
(a) The name, address, and taxpayer
identification number of the commercial re-
vitalization agency making the carryover al-
location of the commercial revitalization
expenditure amounts;
(b) The name, address, and taxpayer
identification number of the taxpayer re-
ceiving the carryover allocation;
(c) The address of each qualified revi-
talization building in the project, or if none
exists, a specific description of the loca-
tion of each building;
(d) The date of the carryover alloca-
tion of the commercial revitalization ex-
penditure amount;
(e) The commercial revitalization ex-
penditure amount allocated to the quali-
fied revitalization building in a single-
building project or to the multi-building
project, as applicable, on that date;
(f) The taxpayer’s reasonably expected
basis in the project (land and depreciable
property) as of the close of the second cal-
endar year following the calendar year in
which the allocation is made;
(g) The date that each qualified revital-
ization building in the project is expected
to be placed in service by the taxpayer; and
(h) A certification under penalties of per-
jury by an authorized official of the com-
mercial revitalization agency that the official
has examined the information in the car-
ryover allocation document, and, to the best
of the official’s knowledge and belief, this
information is true, correct, and complete.
SECTION 7. COMMERCIAL
REVITALIZATION DEDUCTION
ELECTION
.01In general. The commercial revital-
ization deduction election provided by
§1400I(a) is made by each person own-
ing the qualified revitalization building (for
example, by the member of a consolidated
group, the partnership, or the S corpora-
tion that owns the building). This elec-
tion must be made for the taxable year in
which the building is placed in service. The
election only applies to the extent that quali-
fied commercial revitalization expendi-
ture amounts are allocated to the building
by the commercial revitalization agency of
the state in which the building is located.
If the amount of that allocation exceeds the
amount properly chargeable to a capital ac-
count for the building, the qualified revi-
talization expenditures eligible for the
commercial revitalization deduction elec-
tion are limited to the amount properly
chargeable to a capital account for the build-
ing.
.02Time and manner for making the
election.
(1)In general. The commercial revital-
ization deduction election must be made by
the due date (including extensions) of the
federal tax return for the taxable year in
which the qualified revitalization build-
ing is placed in service by the taxpayer. The
election must be made in the manner pre-
scribed in the instructions for Form 4562,
Depreciation and Amortization. For 2002,
the taxpayer should refer to the instruc-
tions for line 42 of Form 4562.
(2)Limited relief for late election.
(a)Automatic 6-month extension. Pur-
suant to§301.9100–2(b) of the Proce-
dure and Administration Regulations, an
automatic extension of 6 months from the
due date of the federal tax return (exclud-
ingextensions) for the placed-in-service year
of the qualified revitalization building is
granted to make the commercial revital-
ization deduction election, provided the tax-
payer timely filed the taxpayer’s federal tax
return for the placed-in-service year and the
taxpayer satisfies the requirements in
§301.9100–2(c) and§301.9100–2(d).
(b)Other extensions. A taxpayer that fails
to make the commercial revitalization de-
duction election for the qualified revital-
ization building as provided in section
7.02(1) or 7.02(2)(a) of this revenue pro-
cedure but wants to do so must file a re-
quest for an extension of time to make the
election under the rules in§301.9100–3.
.03Scope of the Election. If a taxpayer
placed in service more than one qualified
revitalization building during a taxable year,
the taxpayer may make the commercial re-
vitalization deduction election for the
placed-in-service year separately for each
building as provided in section 7.02 of this
revenue procedure. For example, a tax-
payer that places in service in 2003 three
qualified revitalization buildings for which
commercial revitalization expenditure
amounts are allocated, may elect to de-
duct one-half of the qualified revitaliza-
tion expenditures for one building and elect
to amortize the qualified revitalization ex-
penditures for the other two buildings rat-
ably over a 120-month period.
.04Revocation. The commercial revi-
talization deduction election is revocable
only with the prior written consent of the
Commissioner of Internal Revenue. To seek
the Commissioner’s consent, the taxpayer
must submit a request for a letter ruling in
accordance with the provisions of Rev. Proc.
2003–1, 2003–1 I.R.B. 1 (or its succes-
sor).
.05Failure to make commercial revi-
talization deduction election. If a taxpayer
does not make the commercial revitaliza-
tion deduction election for a qualified re-
vitalization building within the time and in
the manner prescribed in section 7.02 of this
revenue procedure, the amount of depre-
ciation allowable for that property must be
determined under§168 for the placed-in-
service year and for all subsequent years.
Thus, the commercial revitalization deduc-
tion election cannot be made by the tax-
payer in any manner other than as set forth
in section 7.02 of this revenue procedure
(for example, through a request under
§446(e) to change the taxpayer’s method
of accounting).
SECTION 8. SPECIAL RULES FOR
CEILING, CARRYOVER
ALLOCATION, AND ALLOCATION
DOCUMENT
The following special rules apply to the
2002 or 2003 commercial revitalization ex-
penditure ceiling, to certain carryover al-
June 16, 200310192003–24 I.R.B.

locations made in 2002, and to any
allocation document made in 2002:
.01Unallocated portion of 2002 ceil-
ing. The $12 million commercial revital-
ization expenditure ceiling for 2003 for a
renewal community is increased by any por-
tion of the 2002 commercial revitaliza-
tion expenditure ceiling for that renewal
community that was not allocated in 2002.
For example, if State A has only one re-
newal community, RC, and only $7 mil-
lion of the $12 million commercial
revitalization expenditure ceiling for 2002
for RC was allocated to qualified revital-
ization buildings in RC in 2002, the com-
mercial revitalization expenditure ceiling for
2003 for RC in State A is $17 million.
.02Aggregation of 2002 ceiling. The
2002 commercial revitalization expendi-
ture ceiling for each renewal community
within a state may be aggregated and ap-
portioned to any renewal community within
the state. However, after 2002, no aggre-
gation of the ceiling is permitted, includ-
ing any portion of the 2003 ceiling that is
attributable to the unallocated portion of the
2002 ceiling in accordance with section 8.01
of this revenue procedure (seesection 3.03
of this revenue procedure).
For example, State B has two renewal
communities, RC1 and RC2. For 2002,
State B aggregated the $12 million ceil-
ings for RC1 and RC2 resulting in a total
2002 ceiling of $24 million. Of that amount,
$15 million was apportioned to RC1 and
$9 million was apportioned to RC2 for
2002. This aggregation and apportionment
of the 2002 ceiling for RC1 and RC2 are
permitted pursuant to section 8.02 of this
revenue procedure. In 2002, $12 million of
the $15 million of RC1’s 2002 ceiling was
allocated to qualified revitalization build-
ings in RC1 and $7 million of the $9 mil-
lion of RC2’s 2002 ceiling was allocated
to qualified revitalization buildings in RC2.
Pursuant to sections 3.03 and 8.01 of this
revenue procedure, the commercial revi-
talization expenditure ceiling for 2003 for
RC1 is $15 million ($12 million ceiling for
2003 plus the $3 million not allocated from
the 2002 ceiling) and for RC2 is $14 mil-
lion ($12 million ceiling for 2003 plus the
$2 million not allocated from the 2002 ceil-
ing). In accordance with sections 3.03 and
8.02 of this revenue procedure, the $15 mil-
lion ceiling for 2003 for RC1 and the $14
million ceiling for 2003 for RC2 may not
be aggregated and apportioned.
.03Carryover allocation. If a carry-
over allocation is made after June 30, 2002,
and before January 1, 2003, the taxpayer
must meet the 10 percent basis require-
ment set forth in section 6.01(1) of this rev-
enue procedure by December 31, 2003.
.04Allocation document. Any alloca-
tion document made in 2002 that is not
made in the manner prescribed in section
4.02 or 6.02 of this revenue procedure, as
applicable, will be deemed to meet the re-
quirements of section 4.02 or 6.02 of this
revenue procedure, as applicable, if the
document contains sufficient information to
identify the commercial revitalization
agency, the taxpayer, the qualified revital-
ization building, the date of the alloca-
tion, and the commercial revitalization
expenditure amount allocated to the quali-
fied revitalization building in a single-
building project or to the multi-building
project, as applicable.
SECTION 9. EFFECTIVE DATE
This revenue procedure is effective for
qualified revitalization buildings placed in
service after December 31, 2001.
SECTION 10. PAPERWORK
REDUCTION ACT
The collections of information contained
in this revenue procedure have been re-
viewed and approved by the Office of Man-
agement and Budget in accordance with the
Paperwork Reduction Act (44 U.S.C. 3507)
under control number 1545–1818.
An agency may not conduct or spon-
sor, and a person is not required to re-
spond to, a collection of information unless
the collection of information displays a valid
OMB control number.
The collections of information in this
revenue procedure are in sections 4.02, 5,
and 6.02 of this revenue procedure. This in-
formation is required to obtain an alloca-
tion of commercial revitalization expenditure
amounts for a qualified revitalization build-
ing in a renewal community. This infor-
mation will be used by the Service to verify
that the taxpayer is entitled to the com-
mercial revitalization deduction. The col-
lections of information are required to obtain
a benefit. The likely respondents are state
or local governments and business or other
for-profit institutions.
The estimated total annual reporting bur-
den is 200 hours.
The estimated annual burden per re-
spondent varies from 1 to 4 hours, depend-
ing on individual circumstances, with an
estimated average of 2.5 hours. The esti-
mated number of respondents is 80.
The estimated annual frequency of re-
sponses is on occasion.
Books or records relating to a collec-
tion 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 in-
formation are confidential, as required by
26 U.S.C. 6103.
SECTION 11. REQUEST FOR
COMMENTS
The Service and Treasury Department
welcome comments on this revenue pro-
cedure. Comments should be submitted in
writing by September 15, 2003, to:
Internal Revenue Service
Attn: CC:IT&A:RU
(REV. PROC. 2003–38), Room 5226
P.O. Box 7604
Benjamin Franklin Station
Washington, DC 20044.
Alternatively, comments may be sub-
mitted by e-mail to:Notice.Comments@
IRSCOUNSEL.TREAS.GOV. Please refer to
Rev. Proc. 2003–38 in the e-mail.
SECTION 12. DRAFTING
INFORMATION
The principal author of this revenue pro-
cedure is Emily Kalovidouris of the Of-
fice of Associate Chief Counsel (Pass-
throughs and Special Industries). For further
information regarding this revenue proce-
dure, contact Ms. Kalovidouris at (202)
622–3110 (not a toll-free call).
2003–24 I.R.B.1020June 16, 2003

Part IV. Items of General Interest
Notice of Proposed Rulemak-
ing
Deemed IRAs in Qualified
Retirement Plans
REG–157302–02
AGENCY: Internal Revenue Service (IRS),
Treasury.
ACTION: Notice of proposed rulemak-
ing.
SUMMARY: This document contains pro-
posed regulations that provide guidance re-
garding accounts or annuities added to
qualified employer plans where such ac-
counts or annuities are to be treated as in-
dividual retirement plans. These regulations
reflect changes made to the law by the Eco-
nomic Growth and Tax Relief Reconcilia-
tion Act of 2001 and by the Job Creation
and Worker Assistance Act of 2002. These
regulations will affect administrators of, par-
ticipants in, and beneficiaries of qualified
employer plans.
DATES: Written and electronic comments
and requests for a public hearing must be
received byAugust 18, 2003.
ADDRESSES: Send submissions to:
CC:PA:RU (REG–157302–02), room 5226,
Internal Revenue Service, POB 7604, Ben
Franklin Station, Washington, DC 20044.
Submissions may be hand-delivered Mon-
day through Friday between the hours of
8 a.m. and 4 p.m. to: CC:PA:RU (REG–
157302–02), Courier’s Desk, Internal Rev-
enue Service,1111Constitution Avenue,
NW, Washington, D.C. Alternatively, tax-
payers may submit comments electroni-
cally directly to the IRS Internet site at
www.irs.gov/regs.
FOR FURTHER INFORMATION CON-
TACT: Concerning the regulations, Linda
C. Phillips or Robert M. Walsh at (202)
622–6090; concerning submissions and de-
livery of comments, LaNita Van Dyke (202)
622–7180 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information contained
in this notice of proposed rulemaking has
been submitted to the Office of Manage-
ment and Budget for review in accordance
with the Paperwork Reduction Act of 1995
(44 U.S.C. 3507(d)). Comments on the col-
lection of information should be sent to the
Office of Management and Budget, Attn:
Desk Officer for the Department of the
Treasury, Office of Information and Regu-
latory Affairs, Washington, DC 20503, with
copies to theInternal Revenue Service,
Attn: IRS Reports Clearance Officer,
W:CAR:MP:T:T:SP, Washington, DC
20224. Comments on the collection of in-
formation should be received byJuly 21,
2003. Comments are specifically requested
concerning:
Whether the proposed collection of in-
formation is necessary for the proper per-
formance of the functions of the IRS,
including whether the information will have
practical utility;
The accuracy of the estimated burden as-
sociated with the proposed collection of in-
formation (see below);
How the quality, utility, and clarity of the
information to be collected may be en-
hanced;
How the burden of complying with the
proposed collection of information may be
minimized, including through the applica-
tion of automated collection techniques or
other forms of information technology; and
Estimates of capital or start-up costs and
costs of operation, maintenance, and pur-
chase of services to provide information.
The collection of information in this pro-
posed regulation is in§1.408(q)–1(f)(2).
This collection of information is required
by the IRS to ensure that the separate re-
quirements of qualified employer plans and
individual retirement plans are satisfied. The
collection of information is required to ob-
tain a benefit. Specifically, this informa-
tion is required for a taxpayer who wants
to include individual retirement plans as part
of its qualified employer plan.
Estimated total annual reporting and/or
recordkeeping burden: 40,000 hours
Estimated average annual burden hours
per respondent and/or recordkeeper: 50
hours.
Estimated number of respondents and/or
recordkeepers: 800.
The estimated frequency of responses is
on occasion.
An agency may not conduct or spon-
sor, and a person is not required to re-
spond to, a collection of information unless
it displays a valid control number assigned
by the Office of Management and Bud-
get.
Books or records relating to a collec-
tion of information must be retained as long
as their contents may become material in
the administration of any internal revenue
law. Generally, tax returns and tax return
information are confidential, as required by
26 U.S.C. 6103.
Background
This document contains proposed
amendments to the Income Tax Regula-
tions (26 CFR Part 1) under section 408(q)
of the Internal Revenue Code (Code) re-
lating to the addition of separate accounts
and annuities to qualified employer plans.
Section 408(q) was added to the Code by
section 602 of the Economic Growth and
Tax Relief Reconciliation Act of 2001
(EGTRRA), Public Law 107–16 (115 Stat.
117) and amended by section 411 of the Job
Creation and Worker Assistance Act of 2002
(JCWAA), Public Law 107–147 (116 Stat.
21).
Explanation of Provisions
Section 408(q) provides that, if a quali-
fied employer plan allows employees to
make voluntary employee contributions to
a separate account or annuity established
under the plan and under the terms of the
qualified employer plan such account or an-
nuity meets the applicable requirements of
section 408 or section 408A for an indi-
vidual retirement account or annuity, then
such account or annuity shall be treated for
purposes of the Code in the same manner
as an individual retirement plan rather than
as a qualified employer plan. It further pro-
vides that contributions to such a“deemed
IRA”shall be treated as contributions to the
deemed IRA rather than to the qualified em-
ployer plan. Section 408(q) also expressly
provides that the prohibition of commin-
gling IRA assets with other property ex-
cept in a common trust fund or common
investment fund shall not apply to deemed
IRAs. These proposed regulations define
qualified employer planandvoluntary em-
ployee contributionas they are defined in
section 408(q) of the Code.
June 16, 200310212003–24 I.R.B.

Rules regarding deemed IRAs are also
provided in section 4(c) of the Employee
Retirement Income Security Act of 1974,
Public Law 93–406 (88 Stat. 829) (ERISA),
29 U.S.C. 1003(c), as amended by Public
Law 107–147 (116 Stat. 21). Section 4(c)
provides that if a pension plan allows an
employee to make voluntary employee con-
tributions to a deemed IRA under section
408(q) of the Code, then the deemed IRA
shall not be treated as part of such plan (or
as a separate pension plan) for purposes of
any provision of Title I of ERISA other than
section 403(c), 404, or 405 (relating to ex-
clusive benefit, and fiduciary and co-
fiduciary responsibilities). Section 4(c), as
amended by JCWAA, further provides that
the enforcement and administration rules of
part 5 of subtitle B of Title I of ERISA ap-
ply to deemed IRAs and that the appli-
cable ERISA provisions shall apply to
deemed IRAs in a manner similar to their
application to a simplified employee pen-
sion (SEP) under Code section 408(k). Be-
cause Title I of ERISA is within the
jurisdiction of the Department of Labor,
these regulations do not address the appli-
cation of Title I to deemed IRAs. Also,
these regulations do not address the appli-
cation of Code section 4975 to deemed
IRAs. Section 102 of Reorganization Plan
No. 4 of 1978 provides that the authority
to interpret section 4975 has been trans-
ferred to the Department of Labor.
In general, these proposed regulations
provide that a qualified employer plan and
a deemed IRA are to be treated as sepa-
rate entities under the Code and that each
entity is subject to the rules generally ap-
plicable to that entity for purposes of the
Code. Thus, a qualified employer plan (ex-
cluding the deemed IRA portion of the
plan), whether it is a plan under section
401(a) (including defined benefit plans),
403(a), or 403(b), or a governmental plan
under section 457(b), is subject to the rules
applicable to that type of plan rather than
to the rules applicable to IRAs under sec-
tion 408 or 408A. Similarly, the deemed
IRA portion of the qualified employer plan
is generally subject to the rules applicable
to traditional and Roth IRAs under sec-
tions 408 and 408A, respectively, and not
to the rules applicable to plans under sec-
tion 401(a), 403(a), 403(b), or 457.
Accordingly, these proposed regula-
tions provide that issues regarding eligi-
bility, participation, disclosure, non-
discrimination, contributions, distributions,
investments, and plan administration are
generally to be resolved under the sepa-
rate rules (if any) applicable to each en-
tity. In addition, these regulations
specifically address several issues regard-
ing the separate applicability of plan and
IRA rules. For example, these proposed
regulations provide that the availability of
a deemed IRA is not a benefit, right or fea-
ture of the qualified employer plan under
§1.401(a)(4)–4. Thus, the availability of a
deemed IRA is not subject to§1.401(a)(4)–
1(b)(3) which requires that benefits, rights,
and features be available in a plan in a non-
discriminatory manner.
Similarly, these proposed regulations pro-
vide that the rules applicable to deemed
IRAs with respect to the trusteeship of the
IRA and deductibility of IRA contribu-
tions are the rules applicable to traditional
IRAs and Roth IRAs under the Code. Thus,
for example, taxpayers with compensa-
tion in excess of the limits imposed by sec-
tions 219 and 408A may either not be able
to make contributions to deemed IRAs or
the deductibility of such contributions may
be limited. For deemed IRAs that are tra-
ditional IRAs, as with other traditional
IRAs, the employee must make a determi-
nation as to whether a particular contribu-
tion is deductible and make the proper
entries on his or her tax return. Pursuant to
section 219(f)(3), a contribution made on
account of the preceding taxable year will
be treated as made on the last day of such
taxable year if the contribution is actually
made to the IRA not later than the time pre-
scribed by law for filing the return for such
taxable year (not including extensions).
However, section 219(f)(5), regarding the
taxable year in which amounts paid by an
employer to an individual retirement plan
are includible in the employee’s income, is
not applicable to deemed IRAs. Thus,
amounts withheld from an employee’s com-
pensation and contributed to a deemed IRA,
and which are treated as made on the last
day of the preceding taxable year pursu-
ant to section 219(f)(3), shall be includ-
ible in income in the year in which they are
withheld rather than in the preceding tax-
able year.
The proposed regulations also provide
that the minimum distribution rules of sec-
tion 401(a)(9) of the Code must be met
separately with respect to the qualified em-
ployer plan and the deemed IRA. The de-
termination of whether a qualified employer
plan satisfies the required minimum dis-
tribution rules is made without regard to
whether a participant satisfies the required
minimum distribution rules with respect to
the deemed IRA.
Although section 408(a) provides that an
individual retirement account is a trust, these
regulations do not require that a separate
trust be created for each deemed IRA that
is an individual retirement account. Rather,
the regulations provide that all such deemed
IRAs may be held in a single trust as long
as that trust is separate from the trust that
holds the other assets of the plan. Where
a single trust is created for the deemed
IRAs, the regulations also provide that there
must be separate accounting for each
deemed IRA and each deemed IRA must
satisfy all of the requirements of section
408(a) (except the prohibition of commin-
gling under paragraph (a)(5) of that sec-
tion). These proposed regulations also
provide a comparable rule for deemed IRAs
that are individual retirement annuities.
These regulations provide three excep-
tions to the general rule that the qualified
employer plan and the deemed IRA are
separate entities subject to their separate
rules for purposes of the Code. First, the
regulations state that the qualified em-
ployer plan document must contain the
deemed IRA provisions. In general, the plan
document must provide for a deemed IRA
and a deemed IRA must be in effect at the
time the deemed IRA contributions are ac-
cepted. However, plan sponsors who want
to provide deemed IRAs for plan years be-
ginning in 2003 are not required to have
such provisions in their plan document be-
fore the end of such plan years. See Rev-
enue Procedure 2003–13, 2003–4 I.R.B.
317.
Second, pursuant to section 408(q)(1),
the prohibition of section 408(a)(5) on the
commingling of IRA assets with other prop-
erty except in a common trust fund or a
common investment fund is not applicable
to the assets of a deemed IRA. Thus, the
assets of the deemed IRA may be com-
mingled for investment purposes with the
assets of the other portion of the plan.
Where the assets are commingled, the regu-
lations require that separate accounts be
maintained and that gains and losses must
be allocated to these separate accounts. For
example, if a deemed IRA is established un-
der a defined contribution plan that is quali-
2003–24 I.R.B.1022June 16, 2003

fied under section 401(a) and the assets of
the plan and the deemed IRA are com-
mingled for investment purposes, then any
gains or losses from the investment of the
commingled assets of an employee must be
allocated to the separate accounts of the em-
ployee under the deemed IRA and the plan.
Third, these proposed regulations pro-
vide that the failure of any of the deemed
IRAs maintained by the plan to satisfy the
applicable requirements of section 408 or
408A will cause the plan as a whole to fail
to satisfy the plan’s qualification require-
ments. Section 408(q) states that if a quali-
fied employer plan elects to allow voluntary
employee contributions to a separate ac-
count or annuity and that separate account
or annuity meets the applicable require-
ments of section 408 or section 408A, then
the account or annuity will be treated as an
individual retirement plan rather than as a
qualified employer plan. Section 408(q) ap-
plies only if the deemed IRAs maintained
by the plan meet the requirements of sec-
tion 408 or section 408A. If any of the
deemed IRAs do not meet the applicable
requirements, then section 408(q) does not
apply, and the qualified employer plan will
fail to satisfy its qualification requirements.
These proposed regulations provide a
different rule where the portion of the plan
that is not a deemed IRA fails to satisfy the
qualification requirements of section 401(a).
In that case, the deemed IRA is not a
deemed IRA because section 408(q) does
not apply where the plan is not a quali-
fied employer plan. The regulations pro-
vide, however, that although the account or
annuity that was intended to be a deemed
IRA is not a deemed IRA, it may still be
treated as a traditional or a Roth IRA if it
satisfies the applicable requirements of sec-
tion 408 or 408A (including the prohibi-
tion of commingling under paragraph (a)(5)
of section 408).
If, as discussed above, a qualified em-
ployer plan or a deemed IRA fails to sat-
isfy the applicable qualification require-
ments, it may nevertheless be treated as
satisfying those requirements if the Em-
ployee Plans Compliance Resolution Sys-
tem (EPCRS), Rev. Proc. 2002–47, 2002–29
I.R.B. 133, or other administrative prac-
tice is used to correct the qualification fail-
ures. In this regard, the IRS intends that
when Rev. Proc. 2002–47 is updated, it will
include provisions permitting submissions
for deemed IRAs.
These regulations also provide that a
deemed IRA may be either a traditional IRA
under section 408 or a Roth IRA under sec-
tion 408A. However, because contribu-
tions to deemed IRAs are limited to
employee contributions, while SIMPLE
IRAs under section 408(p) and SEPs un-
der section 408(k) may only receive em-
ployer contributions, the regulations provide
that SIMPLE IRAs and SEPs may not be
used as deemed IRAs.
As noted above, these regulations pro-
vide a general principle that a qualified em-
ployer plan and the deemed IRA feature are
generally treated as separate entities un-
der the Code and each is subject to the rules
applicable to that entity. This principle can
be applied to address a variety of issues
which might arise with respect to deemed
IRAs and, as a result, the regulations do not
contain specific provisions addressing these
issues. For example, as noted in Announce-
ment 99–2, 1999–1 C.B. 305, employers
may permit employees to contribute to tra-
ditional or Roth IRAs by direct deposits
through payroll deduction. In addition, em-
ployees making direct deposits to tradi-
tional IRAs of deductible contributions may
be able to adjust their federal income tax
withholding to receive a more immediate
tax benefit from their contributions. Be-
cause the IRA rules apply to deemed IRAs
as they would to traditional and Roth IRAs,
the provisions of Announcement 99–2 ap-
ply to deemed IRAs.
Similarly, these regulations expressly
provide that the rules applicable to roll-
overs and transfers to and from IRAs also
apply to rollovers and transfers to and from
deemed IRAs, but the regulations do not ad-
dress all of the aspects of such rollovers or
transfers. For example, because section
408(c)(3) permits the surviving spouse of
an IRA owner to treat the IRA as his or her
own, the same rules apply to deemed IRAs
although not expressly stated in these regu-
lations. Thus, in accordance with section
408(c)(3), a qualified employer plan may
permit a surviving spouse to treat a dece-
dent’s deemed IRA as his or her own. How-
ever, the surviving spouse, as a non-
employee, may not make voluntary
employee contributions to that deemed IRA.
Also, because the qualified employer
plan and the deemed IRA are generally
treated as separate entities, the early dis-
tribution rules of section 72(t) are applied
separately to the two entities. Thus, a de-
termination as to whether a distribution is
a part of a series of substantially equal pe-
riodic payments under section 72(t)(2)(iv)
will be determined separately for the quali-
fied employer plan and for the deemed IRA.
Proposed Effective Date
The regulations are proposed to apply
beginning on or after, August 1, 2003. Tax-
payers may rely upon these proposed regu-
lations for guidance pending the issuance
of final regulations. If, and to the extent,
future guidance is more restrictive than the
guidance in these proposed regulations, the
future guidance will be applied without ret-
roactive effect.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a signifi-
cant regulatory action as defined in Ex-
ecutive Order 12866. Therefore, a regulatory
assessment is not required. It has also been
determined that section 553(b) of the Ad-
ministrative Procedure Act (5 U.S.C. chap-
ter 5) does not apply to these regulations.
It is hereby certified that the collection of
information in these regulations will not
have a significant economic impact on a
substantial number of small entities. The
collection of information in the regula-
tions is in§1.408(q)–1(f)(2) and consists of
the requirement that deemed IRAs must be
held in trusts or annuity contracts sepa-
rate from the trust or annuity contract of the
qualified employer plan. This certifica-
tion is based on the fact that the cost of
maintaining these separate trusts and an-
nuity contracts is small, particularly for
small entities. Therefore, a Regulatory Flex-
ibility Analysis under the Regulatory Flex-
ibility Act (5 U.S.C. chapter 6) is not
required. Pursuant to section 7805(f) of the
Code, this notice of proposed rulemaking
will be submitted to the Chief Counsel for
Advocacy of the Small Business Admin-
istration for comment on its impact on small
business.
Drafting Information
The principal authors of these regula-
tions are Robert M. Walsh and Linda C.
Phillips, Office of Division Counsel/
Associate Chief Counsel (Tax Exempt and
Government Entities). However, other per-
sonnel from the IRS and Treasury partici-
pated in the development of these
regulations.
June 16, 200310232003–24 I.R.B.

*****
ProposedAmendmentstothe
Regulations
Accordingly, 26 CFR part 1 is proposed
to be amended as follows:
PA RT 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 is amended by adding an entry in nu-
merical order to read in part as follows:
Authority: 26 U.S.C. 7805***
§1.408(q)–1 also issued under 26 U.S.C.
408(q).***
Par. 2. Section 1.408(q)–1 is added to
read as follows:
§1.408(q)–1 Deemed IRAs in qualified em-
ployer plans.
(a)In general. Under section 408(q) a
qualified employer plan may permit em-
ployees to make voluntary employee con-
tributions to a separate account or annuity
established under the plan. If the require-
ments of section 408(q) and this section are
met, such account or annuity is treated in
the same manner as an individual retire-
ment plan under section 408 or section
408A (and contributions to such an ac-
count or annuity are treated as contribu-
tions to an individual retirement plan and
not to the qualified employer plan). The ac-
count or annuity is referred to as a deemed
IRA.
(b)Types of IRAs. If the account or an-
nuity meets the requirements applicable to
traditional IRAs under section 408, the ac-
count or annuity is deemed to be a tradi-
tional IRA, and if the account or annuity
meets the requirements applicable to Roth
IRAs under section 408A, the account or
annuity is deemed to be a Roth IRA. Sim-
plified employee pensions (SEPs) under sec-
tion 408(k) and SIMPLE IRAs under
section 408(p) may not be used as deemed
IRAs.
(c)Separate entities. Except as pro-
vided in paragraph (d) and (g) of this sec-
tion, the qualified employer plan and the
deemed IRA are treated as separate enti-
ties under the Internal Revenue Code and
are subject to the separate rules applicable
to qualified employer plans and IRAs, re-
spectively. Issues regarding eligibility, par-
ticipation, disclosure, nondiscrimination,
contributions, distributions, investments, and
plan administration are generally to be re-
solved under the separate rules (if any) ap-
plicable to each entity under the Internal
Revenue Code.
(d)Exceptions. The following excep-
tions to treatment of a deemed IRA and the
qualified employer plan as separate enti-
ties apply:
(1) The plan document of the quali-
fied employer plan must contain the deemed
IRA provisions and a deemed IRA must be
in effect at the time the deemed IRA con-
tributions are accepted. Notwithstanding the
preceding sentence, employers that want to
provide for deemed IRAs for plan years be-
ginning before January 1, 2004, (but after
December 31, 2002) are not required to
have such provisions in their plan docu-
ments before the end of such plan years,
and
(2) The requirements of section 408(a)(5)
regarding commingling of assets do not ap-
ply to deemed IRAs. Accordingly, the as-
sets of a deemed IRA may be commingled
for investment purposes with those of the
qualified employer plan. However, the re-
strictions on the commingling of plan and
IRA assets with non-plan assets apply to the
assets of the qualified employer plan and
the deemed IRA.
(e)Application of distribution rules. (1)
Rules applicable to distributions from quali-
fied employer plans under the Internal Rev-
enue Code and regulations do not apply to
distributions from deemed IRAs. Instead,
the rules applicable to distributions from
IRAs apply to distributions from deemed
IRAs. Also, any restrictions that a trustee,
custodian or insurance company is permit-
ted to impose on distributions from tradi-
tional and Roth IRAs may be imposed on
distributions from deemed IRAs (for ex-
ample, early withdrawal penalties on an-
nuities).
(2) The required minimum distribution
rules of section 401(a)(9) must be met sepa-
rately with respect to the qualified em-
ployer plan and the deemed IRA. The
determination of whether a qualified em-
ployer plan satisfies the required mini-
mum distribution rules of section 401(a)(9)
is made without regard to whether a par-
ticipant satisfies the required minimum dis-
tribution requirements with respect to the
deemed IRA that is established under such
plan.
(f)Additional rules. (1)Trustee. The
trustee or custodian of an individual retire-
ment account must be a bank, as required
by section 408(a)(2), or, if the trustee is not
a bank, as defined in section 408(n), the
trustee must be an entity that receives ap-
proval from the Internal Revenue Service
to serve as a nonbank trustee or nonbank
custodian pursuant to§1.408–2(e) of the
regulations.
(2)Separate trusts and annuity con-
tracts. (i) Deemed IRAs that are individual
retirement accounts may be held in a single
trust (rather than in separate, individual
trusts), provided the trust would qualify as
a single plan within the meaning of
§1.414(l)–1(b). See also§1.410(b)–7(a) and
(b). However, any trust holding deemed
IRA assets must be separate from the trust
holding the other assets of the qualified em-
ployer plan. A deemed IRA trust must be
created or organized in the United States for
the exclusive benefit of the participants. In
addition, the written governing instrument
creating the trust must satisfy the require-
ments of paragraphs (1), (2), (3), (4), and
(6) of section 408(a), and there must be
separate accounting for the interest of each
participant.
(ii) Deemed IRAs that are individual re-
tirement annuities may be held under a
single annuity contract or under separate an-
nuity contracts. However, any such con-
tract must be separate from any annuity
contract or contracts for the qualified em-
ployer plan. In addition, such contract must
satisfy the requirements of section 408(b)
and there must be separate accounting for
the interest of each participant.
(3)Deductibility. The deductibility of
voluntary employee contributions to a
deemed traditional IRA is determined in the
same manner as if it were made to any
other traditional IRA. Thus, for example,
taxpayers with compensation that exceeds
the limits imposed by section 219(g) may
not be able to make contributions to deemed
IRAs, or the deductibility of such contri-
butions may be limited in accordance with
sections 408(a) and 219(g). However, sec-
tion 219(f)(5), regarding the taxable year in
which amounts paid by an employer to an
individual retirement plan are includible in
the employee’s income, is not applicable to
deemed IRAs.
(4)Rollovers and transfers. The same
rules apply to rollovers and transfers to and
from deemed IRAs as apply to rollovers and
transfers to and from other IRAs. Thus, for
example, an employee may request and re-
ceive a distribution of his or her deemed
2003–24 I.R.B.1024June 16, 2003

IRA account balance and may roll it over
to an eligible retirement plan in accor-
dance with section 408(d)(3), regardless of
whether that employee may receive a dis-
tribution of any other plan benefits.
(5)Nondiscrimination. The availabil-
ity of a deemed IRA is not a benefit, right
or feature of the qualified employer plan un-
der§1.401(a)(4)–4 of the regulations.
(g)Disqualifying defects. If the quali-
fied employer plan fails to satisfy its quali-
fication requirements, either in form or in
operation, section 408(q) does not apply.
Accordingly, any account or annuity main-
tained under the plan as a deemed IRA is
not a deemed IRA, and its status as an IRA
will be determined by considering whether
the account or annuity satisfies the appli-
cable requirements of section 408 and 408A
(including the prohibition of commingling
under paragraph (a)(5) of section 408). Also,
if any of the deemed IRAs fail to satisfy
the applicable requirements of section 408
or 408A, section 408(q) does not apply and
the plan will fail to satisfy the plan’s quali-
fication requirements.
(h)Definitions. The following defini-
tions apply for purposes of this section:
(1)Qualified employer plan.Aquali-
fied employer planis a plan described in
section 401(a), an annuity plan described
in section 403(a), a section 403(b) plan, or
a governmental plan under section 457(b).
(2)Voluntary employee contribution.A
voluntary employee contributionis any con-
tribution (other than a mandatory contri-
bution within the meaning of section
411(c)(2)(C)) which is made by an indi-
vidual as an employee under a qualified em-
ployer plan that allows employees to elect
to make contributions to deemed IRAs and
with respect to which the individual has
designated the contribution as a contribu-
tion to which section 408(q) applies.
(i)Effective date. These regulations are
applicable beginning on or after August 1,
2003.
David A. Mader,
Assistant Deputy Commissioner
of Internal Revenue.
(Filed by the Office of the Federal Register on May 19, 2003,
8:45 a.m., and published in the issue of the Federal Regis-
ter for May 20, 2003, 68 F.R. 27493)
Liabilities Assumed in Certain
Transactions
Announcement 2003–37
AGENCY: Internal Revenue Service (IRS),
Treasury.
ACTION: Advance notice of proposed rule-
making.
SUMMARY: The IRS and Treasury are
considering publishing a notice of pro-
posed rulemaking (REG–100818–01) pro-
posing rules regarding the amount of a
liability a transferee of property is treated
as assuming in connection with a transfer
of property and certain tax consequences
that result from the transferee’s assump-
tion of such a liability. This document de-
scribes and explains the issues that the IRS
and Treasury are considering addressing in
the notice of proposed rulemaking and the
rules that the IRS and Treasury might pro-
pose to address some of these issues. This
document also invites comments regard-
ing these issues and rules.
DATES: Written or electronic comments
must be received by August 4, 2003.
ADDRESSES: Send submissions to:
CC:PA:RU (REG–100818–01), room 5226,
Internal Revenue Service, POB 7604,
Ben Franklin Station, Washington, DC
20044. Submissions may be hand-delivered
Monday through Friday between the hours
of 8 a.m. and 5 p.m. to CC:PA:RU (REG–
100818–01), Courier’s Desk, Internal Rev-
enue Service,1111Constitution Avenue,
NW, Washington, DC. Alternatively, tax-
payers may submit comments electroni-
cally directly to the IRS Internet site at
www.irs.gov/regs.
FOR FURTHER INFORMATION CON-
TACT: Concerning the proposals, please
contact Douglas Bates, (202) 622–7550 (not
a toll-free number). Concerning submis-
sions, please contact Treena Garrett, (202)
622–7180 (not a toll-free number).
SUPPLEMENTARY INFORMATION
Background
Sections 357(d) and 362(d) of the In-
ternal Revenue Code (Code) were enacted
as part of the Miscellaneous Trade and
Technical Corrections Act of 1999 (Pub-
lic Law 106–36) and are effective for trans-
fers after October 18, 1998. Section 357(d)
provides rules for determining the amount
of liability treated as assumed for pur-
poses of sections 357, 358(d), 358(h),
362(d), 368(a)(1)(C), and 368(a)(2)(B). Sec-
tion 357(d) was enacted to clarify the
amount of liability treated as assumed where
multiple assets secure a single liability and
some, but not all, of those assets are trans-
ferred to a transferee corporation. Section
362(d) was enacted to clarify and limit the
amount of the transferee’s basis in the trans-
ferred property in certain cases. The leg-
islative history of sections 357(d) and 362(d)
indicates that Congress was concerned that
if multiple transferees were treated as as-
suming the same liability, taxpayers might
assert that the basis of multiple assets re-
flects the assumption of the same liabil-
ity, resulting in assets having a basis in
excess of their value and, thus, excessive
depreciation deductions and mismeasure-
ment of income. Section 357(d) was in-
tended to eliminate the uncertainty of the
tax treatment for such liabilities and to pre-
scribe the tax treatment of such liabilities
in a manner that better reflects the under-
lying economics of the transfer. The leg-
islative history of section 357(d) also reflects
that Congress intended to eliminate the dis-
tinction between the assumption of a li-
ability and the acquisition of an asset that
is subject to a liability. See S. Rep. No.
106–2 at 75 (1999).
Section 357(d)(1)(A) provides that, ex-
cept as provided in regulations, a recourse
liability will be treated as assumed if the
transferee has agreed, and is expected, to
satisfy it, regardless of whether the trans-
feror is relieved of the liability. In addi-
tion, section 357(d)(1)(B) provides that a
nonrecourse liability is treated as assumed
by the transferee of any asset subject to such
liability. Section 357(d)(2), however, re-
duces the amount of nonrecourse liability
treated as assumed pursuant to section
357(d)(1)(B) by the lesser of (1) the amount
of such liability that the owner of assets not
transferred to the transferee and also sub-
ject to such liability has agreed, and is ex-
pected, to satisfy or (2) the fair market value
of such other assets (determined without re-
gard to section 7701(g)). Section 357(d)(3)
directs the Secretary to prescribe such regu-
lations as may be necessary to carry out the
purposes of sections 357(d) and 362(d), and
to prescribe regulations providing that the
manner in which a liability is treated as as-
June 16, 200310252003–24 I.R.B.

sumed under section 357(d) is applied,
where appropriate, elsewhere in the Code.
The rules of section 357(d) apply to deter-
mine the amount of liability treated as as-
sumed for purposes of not only those Code
provisions listed in section 357(d), but also
certain other Code provisions, including sec-
tions 584 and 1031.
Section 362(d)(1) provides that in no
event will the basis of any property be in-
creased under section 362(a) or (b) above
the fair market value of such property (de-
termined without regard to section 7701(g))
by reason of any gain recognized to the
transferor as a result of the assumption of
a liability. Section 362(d)(2) provides that,
except as provided in regulations, if gain
is recognized to the transferor as a result
of an assumption of a nonrecourse liabil-
ity by a transferee which is also secured by
assets not transferred to such transferee and
no person is subject to tax under the Code
on such gain, then, for purposes of deter-
mining basis under section 362(a) and (b),
the amount of gain recognized by the trans-
feror as a result of the assumption of the
liability will be determined as if the liabil-
ity assumed by the transferee equaled such
transferee’s ratable portion of such liabil-
ity determined on the basis of the relative
fair market values (determined without re-
gard to section 7701(g)) of all of the as-
sets subject to such liability.
Special Analyses
It has been determined that this advance
notice of proposed rulemaking is not a sig-
nificant regulatory action as defined in Ex-
ecutive Order 12866. Therefore, a regulatory
assessment is not required.
Request for Comments
The IRS and Treasury have been study-
ing these and other rules governing the
amount of a liability a transferee of prop-
erty is treated as assuming in connection
with a transfer of property. The IRS and
Treasury are concerned that some of these
rules do not always produce appropriate re-
sults and that it might be desirable to
modify certain rules by regulation. The fol-
lowing sections describe and explain the is-
sues the IRS and Treasury are studying in
this regard. In addition, they describe and
explain the rules the IRS and Treasury are
considering proposing in a notice of pro-
posed rulemaking.
A.Assumptions of Nonrecourse
Liabilities Generally
Section 357(d) sets forth one set of cri-
teria that is applied to determine whether
a transferee is treated as assuming a re-
course liability and a different set of cri-
teria that is applied to determine whether
a transferee is treated as assuming a non-
recourse liability. The statute’s distinction
between the assumption of recourse and
nonrecourse liabilities appears to be based
on the premise that in the case of recourse
liabilities, the parties’agreement and ex-
pectation regarding the satisfaction of the
liability is a reliable predictor of which party
will bear the burden of the liability. In the
case of nonrecourse liabilities, the statute
presumes that the transferee of assets sub-
ject to the liability assumes the entire li-
ability. That amount, however, is reduced
by the amount that an owner of other as-
sets subject to that liability has agreed, and
is expected, to satisfy, but only up to the
amount of the fair market value of the as-
sets that are subject to such liability that are
owned by such other owner.
Section 357(d)(1)(B) is consistent with
the principles ofCrane v. Commissioner,
331 U.S. 1 (1947), andTufts v. Commis-
sioner, 461 U.S. 300 (1983). Section
357(d)(2) is consistent with the principle
that a party other than the transferee will
be responsible for the satisfaction of a non-
recourse liability only to the extent of the
fair market value of the property that it
owns that is subject to that liability.
The rules that apply to nonrecourse li-
abilities raise a number of issues that the
IRS and Treasury are considering. First, the
IRS and Treasury are considering whether
the presumption that a transferee of as-
sets subject to a nonrecourse liability is
treated as assuming the entire nonrecourse
liability absent an agreement is appropri-
ate. Second, the IRS and Treasury are con-
sidering whether agreements between the
transferor and the transferee regarding the
satisfaction of nonrecourse liabilities, other
than the agreements described in section
357(d)(2), should be respected. Finally, the
IRS and Treasury are considering whether
the rules regarding the amount of a non-
recourse liability treated as assumed by a
transferee should be based solely on the
agreement of the parties and their expec-
tations as to which party will satisfy the
nonrecourse liability. Central to these last
two issues is the question of whether the
rules that apply to assumptions of nonre-
course liabilities should more closely con-
form to those that apply to assumptions of
recourse liabilities. The following sec-
tions describe these issues more fully.
1. Amount of Nonrecourse Liability As-
sumed Absent an Agreement
As described above, pursuant to sec-
tion 357(d)(1)(B), where some (but not all)
of the assets that secure a nonrecourse li-
ability are transferred to a transferee, and
the owner of other assets that are subject
to such liability does not agree, or agrees
but is not expected, to satisfy any of the li-
ability, the transferee is treated as assum-
ing the entire amount of the liability. For
example, suppose P owns Asset A, with a
basis of $0 and a value of $100, and As-
set B, with a basis of $0 and a value of
$400, both of which secure a nonrecourse
liability in the amount of $500. P also owns
Asset C with a basis of $0 and a value of
$500. P transfers Asset A and Asset C to
S, a newly formed corporation, in exchange
for 100 percent of the stock of S in a trans-
fer to which section 351 applies. P and S
have no agreement regarding the satisfac-
tion of the nonrecourse liability to which
Asset A and Asset B are subject. Pursu-
ant to section 357(d)(1)(B), S is treated as
assuming the entire nonrecourse liability. As
a result, P recognizes gain in the amount
of $500 pursuant to section 357(c).
The IRS and Treasury are concerned that
treating S as assuming the entire $500 of
the nonrecourse liability in this case does
not reflect the underlying economics of the
transfer of property. That is, suppose P de-
faults on the nonrecourse liability and the
lender moves to foreclose on Asset A. Ab-
sent compensation from P, S may have no
incentive to satisfy more than $100 of the
nonrecourse liability (either by surrender-
ing Asset A to the lender or by paying the
lender $100 in exchange for the release of
Asset A from the liability). To address these
cases, the IRS and Treasury are consider-
ing adopting a rule that would modify the
rule of section 357(d)(1)(B) such that, in
certain cases where the transferor and the
transferee have no agreement regarding the
satisfaction of a nonrecourse liability, the
transferee will not be treated as assuming
the entire amount of the nonrecourse li-
ability. A proposed rule might provide that
if one or more of the assets that secure a
nonrecourse liability are transferred to a
transferee, then the transferee would be
2003–24 I.R.B.1026June 16, 2003

treated as assuming apro rataamount of
such nonrecourse liability that is a liabil-
ity of the transferor, determined on the ba-
sis of the fair market value of those assets
that secure the liability that are transferred
to the transferee as compared to the total
fair market value of all of the assets that
secure the liability that are owned by the
transferor immediately before the trans-
fer. The IRS and Treasury invite comments
regarding whether the rule of section
357(d)(1)(B) should be modified by regu-
lation and whether the rule described above
should be proposed.
2. Agreements to Satisfy Nonrecourse
Liabilities
a. Agreement by the Transferee Regard-
ing Satisfaction of a Nonrecourse Liabil-
ity in the Absence of a Transfer of Assets
Subject to that Liability
Section 357(d) contemplates that a trans-
feree may be treated as assuming all or a
portion of a nonrecourse liability only if as-
sets that are subject to such nonrecourse li-
ability are transferred to it. For example,
suppose P owns Asset A, with a basis of $0
and a value of $100, and Asset B, with a
basis of $0 and a value of $400. Asset A
is subject to a nonrecourse liability in the
amount of $50. P transfers Asset B to S, a
newly formed corporation, in exchange for
100 percent of the stock of S and S’s agree-
ment with P to satisfy the nonrecourse li-
ability to which Asset A is subject. For
purposes of section 357(d), it appears that
S is not treated as assuming the $50 non-
recourse liability.
The IRS and Treasury are concerned that
there may not be a sufficient distinction be-
tween recourse and nonrecourse liabili-
ties to warrant treating a transferee as
assuming a nonrecourse liability for pur-
poses of section 357(d) only if assets sub-
ject to that liability are transferred to it.
Accordingly, the IRS and Treasury are con-
sidering whether a transferee that agrees,
and is expected, to satisfy all or a portion
of a nonrecourse liability should be treated
as assuming the nonrecourse liability to the
extent of such agreement, even if no as-
sets that are subject to such liability are
transferred to the transferee. The IRS and
Treasury request comments on this mat-
ter.
b. Effect of Agreement by Owner of
Nontransferred Property
As described above, pursuant to sec-
tion 357(d)(2), the amount of the nonre-
course liability that is treated as assumed
pursuant to section 357(d)(1)(B) by a trans-
feree of assets subject to the nonrecourse
liability is reduced by the lesser of (i) the
amount of such liability that the owner of
other assets that are subject to such liabil-
ity but not transferred to the transferee has
agreed, and is expected, to satisfy or (ii) the
fair market value of such other assets (de-
termined without regard to section 7701(g)).
In certain circumstances, the limitation of
section 357(d)(2) effectively permits the
amount of the nonrecourse liability treated
as assumed by the transferee to be reduced
only to the extent of the value of other as-
sets subject to the nonrecourse liability, even
where the owner of such assets agrees, and
is expected, to satisfy an amount of the li-
ability in excess of such value.
For example, suppose P owns Asset A,
with a basis of $0 and a value of $100, and
Asset B, with a basis of $0 and a value of
$400, both of which secure a nonrecourse
liability in the amount of $250. P also has
$600 in cash. P transfers Asset B to S, a
newly formed corporation, in exchange for
100 percent of the stock of S in a trans-
fer to which section 351 applies. P agrees
with S, and is expected, to satisfy the en-
tire $250 nonrecourse liability. Pursuant to
section 357(d)(1)(B), S is treated as as-
suming the entire $250 of the nonrecourse
liability. Pursuant to section 357(d)(2), how-
ever, this amount is reduced by $100, the
lesser of the amount of the liability that P
has agreed, and is expected, to satisfy
($250) and the fair market value of Asset
A ($100). Accordingly, S is treated as as-
suming $150 of the nonrecourse liability
and P recognizes gain in the amount of
$150 pursuant to section 357(c). In this case,
given that P is expected to satisfy the en-
tire $250 of the nonrecourse liability, the
IRS and Treasury are considering whether
it is appropriate to treat S as assuming no
amount of the nonrecourse liability. In par-
ticular, the IRS and Treasury are consid-
ering proposing a rule that modifies the rule
in section 357(d)(2) such that the amount
of the nonrecourse liability a transferee is
treated as assuming is reduced to reflect the
amount another person has agreed, and is
expected, to satisfy, even if such amount is
in excess of the fair market value of the as-
sets subject to such liability that such per-
son owns immediately after the transfer. The
IRS and Treasury, however, are concerned
regarding whether such a rule is appropri-
ate where the nonrecourse liability ex-
ceeds the value of the assets securing it.
B.Subsequent Transfers of Property
Subject to Nonrecourse Liabilities
A transferee of property is treated as as-
suming all or a portion of a recourse li-
ability if it has agreed, and is expected, to
satisfy that liability (or portion). That treat-
ment is not conditioned on any arrange-
ment between the transferee and the original
lender; it can be based entirely on an ar-
rangement between the transferor and trans-
feree of the property. The implicit premise
underlying this treatment is that the trans-
feree’s agreement to be personally liable to
the transferor is equivalent to the transfer-
or’s agreement to be personally liable to the
original lender. This recourse justifies treat-
ing the transferee as having assumed the re-
course liability. (Conversely, the transferee
of property securing a recourse liability will
not be treated as assuming the liability with-
out an agreement.)
As described above, the IRS and Trea-
sury are considering applying standards
similar to those that apply for purposes of
determining whether a transferee of prop-
erty has assumed a recourse liability to de-
termine whether a transferee of property has
assumed a nonrecourse liability where the
transferee agrees to satisfy all or a por-
tion of the liability. Such an agreement
might create the same level of recourse
against the transferee as would an agree-
ment to assume an actual recourse liabil-
ity. In that case, if property securing the debt
is transferred again, the IRS and Treasury
are considering whether the amount treated
as assumed by the subsequent transferee
should be determined with reference to the
rules for nonrecourse liabilities (because the
original lender’s rights continue to be non-
recourse) or for recourse liabilities (be-
cause the first transferee agreed, and was
expected, to satisfy the liability).
For example, suppose P owns Asset A,
with a value of $50, and Asset B, with a
value of $100, both of which secure a non-
recourse liability in the amount of $100. In
Year 1, P transfers Asset A to S1, a newly
formed corporation, in exchange for 100
percent of the stock of S1 in a transfer to
which section 351 applies. S1 agrees with
P, and is expected, to satisfy $20 of the non-
recourse liability. In addition, P agrees to
indemnify S1 to the extent that it has losses
in excess of $20 that are attributable to the
June 16, 200310272003–24 I.R.B.

nonrecourse liability. In Year 2, S1 trans-
fers Asset A to S2, a newly formed corpo-
ration, in exchange for 100 percent of the
stock of S2 in a transfer to which section
351 applies. S1 and S2 have no agree-
ment regarding the satisfaction of the non-
recourse liability to which Asset A is
subject.
The IRS and Treasury are considering
two alternatives for determining the amount
of liability S2 is treated as assuming upon
the subsequent transfer of Asset A follow-
ing S1’s agreement with P regarding the sat-
isfaction of the liability. Under the first
alternative, the $20 of the nonrecourse li-
ability assumed by S1 would be treated as
though it were a recourse liability of S1, and
thus S2 would be treated as assuming no
portion of the liability in accordance with
section 357(d)(1)(A). Under the second al-
ternative, the $20 of the nonrecourse li-
ability assumed by S1 would be treated as
a nonrecourse liability of S1, and thus S2
would be treated as assuming $20 of the li-
ability in accordance with section
357(d)(1)(B). The IRS and Treasury re-
quest comments regarding whether the
amount of liability (if any) assumed by S2
should be determined with reference to the
rules pertaining to assumptions of nonre-
course liabilities or, given S1’s agreement
with P regarding the satisfaction of the li-
ability, with reference to the rules pertain-
ing to assumptions of recourse liabilities.
The IRS and Treasury also request com-
ments regarding the subsequent treatment
of nonrecourse liabilities that are treated as
assumed by a transferee where the trans-
feree has not agreed to assume any por-
tion of the nonrecourse liability but rather
is treated as assuming all or a portion of the
nonrecourse liability pursuant to section
357(d)(1)(B) or a substitute rule that is
adopted by regulation.
C.Identifying the Amount of the
Agreement
1. Transferee at Risk in Excess of
Amount it Agreed to Satisfy
The IRS and Treasury are concerned
that, where the transferee has agreed to sat-
isfy an amount of a nonrecourse liability
that is less than the lesser of (i) the total
amount of the nonrecourse liability that is
a liability of the transferor, or (ii) the fair
market value of the assets that are sub-
ject to the nonrecourse liability that are
owned by such transferee immediately af-
ter the transfer, that agreement may not re-
flect the amount that the transferee is
expected to satisfy, particularly where nei-
ther the transferor nor another person has
agreed to protect the transferee from li-
ability for any amount of the liability in ex-
cess of the amount it has agreed to satisfy.
For example, suppose P owns Asset A, with
a basis of $0 and a value of $100, and As-
set B, with a basis of $0 and a value of
$400, both of which secure a nonrecourse
liability in the amount of $500. P trans-
fers Asset A to S, a newly formed corpo-
ration, in exchange for 100 percent of the
stock of S in a transfer to which section 351
applies. S agrees with P to satisfy $80 of
the nonrecourse liability but S’s agree-
ment with P does not give S the right to
seek indemnification from P in the event
that S is required to satisfy more than $80
of the liability. Accordingly, if the lender
of the nonrecourse liability forecloses on
Asset A immediately after the transfer, S
will satisfy $100 rather than $80 of the non-
recourse liability.
The IRS and Treasury request comments
as to the proper approach to address this
situation. One possible approach might be
to respect the transferee’s agreement to the
extent of $80 and to treat the transferee as
assuming the additional amount of the li-
ability, if any, that it is expected to sat-
isfy based on the facts and circumstances.
Another possible approach is to treat the
transferor and the transferee as having no
agreement regarding the extent to which the
transferee will satisfy the liability.
2. Agreement to Satisfy in Excess of Sat-
isfaction Expectations
The IRS and Treasury recognize that, in
certain cases, a transferee may agree to sat-
isfy an amount of a nonrecourse liability
that is greater than the amount of such li-
ability that it, in fact, is expected to sat-
isfy. For example, a transferor of assets
subject to a nonrecourse liability may re-
quire more than one transferee to agree to
satisfy the same liability so as to ensure that
the transferor ultimately will not incur any
loss resulting from the liability. Nonethe-
less, as described above, the legislative his-
tory of section 357 reflects that Congress
intended that where more than one per-
son agrees to satisfy a liability or portion
thereof, only one would be treated as ex-
pected to satisfy the liability or portion
thereof. The IRS and Treasury are consid-
ering proposing a rule that would provide
that, if the transferee has agreed to sat-
isfy an amount of a liability that is greater
than the amount that it is expected to sat-
isfy, the transferee will be treated as hav-
ing agreed to satisfy the amount of such
liability that it is expected to satisfy, pro-
vided that the transferor, the transferee, and
each person related to the transferor and
transferee within the meaning of sections
267(b) and 707(b) treat the transferee as
having agreed to satisfy the amount of the
liability that it is expected to satisfy. If this
condition were not satisfied, the trans-
feror and the transferee might be treated as
having no agreement regarding the extent
to which the transferee will satisfy the li-
ability.
D.Accounting for Liabilities
In furtherance of the legislative intent
that all or a portion of a liability be treated
as a liability of only one person, the IRS
and Treasury are considering proposing two
rules. The first rule would provide that the
amount of a liability treated as assumed by
a transferee from a transferor will not there-
after be treated as a liability of the trans-
feror. The second rule would provide that
a transferee may not be treated as assum-
ing from a transferor an amount of liabili-
ties greater than the amount of the liabilities
of the transferor. The following example il-
lustrates the operation of these two rules.
Suppose P owns Asset A, with a basis
of $0 and a value of $100, and Asset B,
with a basis of $0 and a value of $400, both
of which secure a nonrecourse liability in
the amount of $400. P also has $600 in
cash. In Year 1, P transfers Asset A to S1,
a newly formed corporation, in exchange
for 100 percent of the stock of S1 in a
transfer to which section 351 applies. P
agrees, and is expected, to satisfy $350 of
the nonrecourse liability and agrees to in-
demnify S1 to the extent that it has losses
in excess of $50 that are attributable to the
nonrecourse liability. In Year 2, P trans-
fers Asset B to S2, a newly formed corpo-
ration, in exchange for 100 percent of the
stock of S2 in a transfer to which section
351 applies. At that time, Asset A and As-
set B are subject to the nonrecourse liabil-
ity and the amount of the nonrecourse
liability remains $400. P and S2 have no
agreement regarding the satisfaction of the
nonrecourse liability. Assume that the pre-
sumption of section 357(d)(1)(B) that the
transferee assumes the entire nonrecourse
2003–24 I.R.B.1028June 16, 2003

liability to which the property received is
subject is not modified by regulation.
Pursuant to section 357(d)(1)(B), S1
would be treated as assuming the entire
$400 of the nonrecourse liability. That
amount, however, would be reduced by
$350 to $50 pursuant to section 357(d)(2).
Pursuant to the first rule described above,
immediately after the Year 1 transfer to S1,
$50 of the nonrecourse liability would no
longer be treated as a liability of P as a re-
sult of S1’s assumption of that amount. Pur-
suant to the second rule described above,
even though Asset B may be subject to the
$400 nonrecourse liability for purposes of
state law, S2 cannot be treated as assum-
ing more than $350 of the nonrecourse li-
ability, the amount of the nonrecourse
liability that is treated as a liability of P at
the time of the Year 2 transfer. In this ex-
ample, because P and S2 had no agree-
ment regarding the satisfaction of the
nonrecourse liability, S2 would be treated
as assuming $350 of the nonrecourse li-
ability.
E.Requirements of an Agreement to
Satisfy a Liability
The IRS and Treasury are considering
whether proposed rules should set forth the
requirements of an agreement between the
transferor and the transferee regarding which
party will satisfy a liability, and how such
an agreement must be evidenced.
F.Acts Constituting Satisfaction of a
Liability
The IRS and Treasury are also consid-
ering whether proposed rules should pro-
vide that, for purposes of determining
whether a person is expected to satisfy a li-
ability, such person’s expected payment (of
money or property, including property se-
curing the liability) to the creditor or to a
person indemnified with respect to the li-
ability will be considered. The IRS and
Treasury request comments regarding
whether an agreement to indemnify a per-
son with respect to a liability, and any other
agreement, should be treated as an agree-
ment to satisfy a liability.
G.Collateral Consequences of
Satisfaction of a Liability
The IRS and Treasury believe that, if a
liability is satisfied by a person other than
the person that the rules of section 357(d)
treat as having assumed the liability, the
consequences of such satisfaction are de-
termined under general federal income tax
principles. For example, the satisfaction may
be treated as a deemed payment that is char-
acterized as a capital contribution or a dis-
tribution. The IRS and Treasury are
considering proposing regulations confirm-
ing this result in the context of section
357(d).
H.Application of Principles of Section
357(d) Regulations in Other Contexts
As described above, section 357(d) was
designed to address the amount of a non-
recourse liability that is treated as assumed
by a transferee of property when multiple
properties secure the liability, but the trans-
feror either retains or transfers to other
transferees some of the property securing
the liability. The regulations under sec-
tion 1001 provide that the amount real-
ized in connection with a sale or other
disposition of property includes the amount
of liabilities from which the transferor is
discharged as a result of the sale or dispo-
sition. Section 1.1001–2(a)(1). The IRS and
Treasury request comments regarding
whether any differences in the amount of
liabilities treated as assumed are appropri-
ate for exchanges under section 1001 as op-
posed to exchanges under sections 351 and
361, or, alternatively, whether the rules
adopted under section 357 should also ap-
ply for purposes of computing amount re-
alized in transactions governed by section
1001.
In addition, section 7701(g) provides
that, for purposes of subtitle A of the Code,
in determining the amount of gain or loss
with respect to any property, the fair mar-
ket value of such property is treated as be-
ing not less than the amount of any
nonrecourse indebtedness to which such
property is subject. Comments are requested
regarding whether the rule of section
7701(g) should be consistent with those of
section 357(d) and the regulations there-
under.
Furthermore, as described above, the
rules of section 357(d) also apply to cer-
tain Code provisions that are not listed in
section 357(d), including section 1031,
which permits the nonrecognition of gain
or loss on certain exchanges of property of
like kind. The IRS and Treasury request
comments concerning whether the rules de-
scribed above should also apply for pur-
poses of these other provisions that
specifically invoke section 357(d) as well
as other provisions that do not specifi-
cally invoke section 357(d).
Finally, certain provisions of the Code,
including sections 304 and 336, continue
to distinguish between a liability assumed
and a liability to which property is sub-
ject. Given that the legislative history of sec-
tion 357 reflects that Congress intended to
eliminate the distinction between the as-
sumption of a liability and the acquisition
of an asset subject to a liability, the IRS and
Treasury are considering whether the pro-
posed rules should provide that, for pur-
poses of sections 304 and 336, and certain
other statutory provisions, property is trans-
ferred subject to a liability if and only if the
liability is assumed under the rules pro-
posed under section 357.
I.The Basis of Property Received in
Exchange for the Assumption of a
Liability
At this time, the IRS and Treasury are
not considering modifying section 362(d)
or displacing general federal income tax
principles that apply for purposes of de-
termining basis under section 1012, includ-
ing those principles set forth inEstate of
Franklin v. Commissioner,544 F.2d 1045
(9
th
Cir. 1976). Nonetheless, the IRS and
Treasury invite comments regarding the ex-
tent to which those rules or principles
should be modified to reflect the proposal
of rules governing the amount of liability
treated as assumed in connection with a
transfer of property.
William D. Alexander,
Associate Chief Counsel (Corporate).
(Filed by the Office of the Federal Register on May 5, 2003,
8:45 a.m., and published in the issue of the Federal Regis-
ter for May 6, 2003, 68 F.R. 23931)
Correction to Tax Convention
in IRB 2003–17
Announcement 2003–38
Announcement 2003–21, Dutch Agree-
ment on Pension Funds, was inadvertently
put into Part IV, Items of General Inter-
est, instead of into Part II, Treaties and Tax
Legislation, in Bulletin 2003–17. This An-
nouncement will be moved to Part II when
Cumulative Bulletin 2003–1 is printed.
June 16, 200310292003–24 I.R.B.

Foundations Status of Certain
Organizations
Announcement 2003–39
The following organizations have failed
to establish or have been unable to main-
tain their status as public charities or as op-
erating foundations. Accordingly, grantors
and contributors may not, after this date,
rely on previous rulings or designations in
the Cumulative List of Organizations (Pub-
lication 78), or on the presumption aris-
ing from the filing of notices under section
508(b) of the Code. This listing doesnot
indicate that the organizations have lost their
status as organizations described in sec-
tion 501(c)(3), eligible to receive deduct-
ible contributions.
Former Public Charities.The follow-
ing organizations (which have been treated
as organizations that are not private foun-
dations described in section 509(a) of the
Code) are now classified as private
foundations:
100 Black Men of Greater Gainesville,
Gainesville, FL
1213 William Street Corporation,
Key West, FL
Adair County Rescue Squad, Inc.,
Columbia, KY
Adult Affordable Health Clinic, Inc.,
Boonville, IN
African American Museum of Virginia,
Portsmouth, VA
After School Reading is Fundamental
Tutorial Program, Inc.,
Columbus, GA
Agape Academy, Inc., Acworth, GA
Alexandria Township Education
Foundation, Incorporated,
Pittstown, NJ
Allegan Education Association
Scholarship Foundation, Inc.,
Allegan, MI
American Coalition for Fathers and
Children, Lake Forest, CA
Amethyst Legacy, Inc., Columbus, OH
Amherst Celebrates Children, Inc.,
Amherst, NH
Amys House, Inc., El Paso, TX
Arizona Free Enterprise Educational
Foundation, Glendale, AZ
Ark of Time, San Diego, CA
Arroway, Inc., Burlington, VT
Artistic Pursuits, Ltd., Ottawa, IL
Association of Care Management,
Urbana, IL
Badger Basketball Boosters, Inc.,
Madison, WI
Bay Talented & Gifted Support, Inc.,
Bay Village, OH
Bayside United Soccer Club,
Barrington, RI
Bel Air Elementary Parent Teacher
Organization, Evans, GA
Belmont High School Hall of Fame,
Inc., Belmont, MA
Better Way Foundation, Inc.,
Chicago, IL
Black Chamber of Commerce of NC,
Inc., Charlotte, NC
Bloomington Friends of Forensic,
Bloomington, MN
Boston Philanthropic Foundation, Inc.,
Boston, MA
Bound Brook Educational Foundation,
Incorporated, Bound Brook, NJ
Brawley Middle School Parent Teacher
Student Organization,
Mooresville, NC
Briana Carey Foundation, Inc.,
Soddy Daisy, TN
Broken Mask Productions, Inc.,
Weehawken, NJ
Brookland Cayce High School Education
Foundation, Cayce, SC
Broward Health Foundation, Inc.,
Fort Lauderdale, FL
Building Air Quality Alliance,
Philadelphia, PA
California Society of Thoracic Surgeons,
Modesto, CA
Cecil B. Moore Avenue Local
Development Corporation,
Philadelphia, PA
Center to Advance Minority Participation
in the Bldg. Trades, Providence, RI
Chaparral High School Parent Task
Force, Temecula, CA
Chapel Development Corporation, Inc.,
Mobile, AL
Charles Apartments Tenants Association,
Marina, CA
Chatham Athletic Club, Inc.,
W. Chatham, MA
Cherry Holmes Street Club,
Cleveland, OH
Chicago Principals & Administrators
Association, Chicago, IL
Childcare By Choice, Graniteville, SC
Children in Crisis, Inc., Milwaukee, WI
Choices for Quality Living,
Harrisburg, PA
Chris Binkley Funeral Foundation,
Lansing, MI
Christian Mission Learning Foundation,
Jackson, MS
Christmas in April Newburyport,
Newburyport, MA
Christmas in April West Contra Costa
County, Richmond, CA
Cincinnati Charities for Children, Inc.,
Cincinnati, OH
Citizens Against Domestic Violence,
Warrenton, NC
Ciudad Mistica, Inc.,
Sabana Grande, PR
Clergy Response Institute, Inc.,
Edmond, OK
Clifdale Elementary School PTO,
Spartanburg, SC
Clinton Laurens Public Access
Communications, Inc., Clinton, SC
Co-Creators With the Earth Foundation,
Mt. Shasta, CA
Coalition of Essential Schools Regional
Center at St. Louis, Florissant, MO
Cobra Soccer Club, Eureka, MO
Coles School of Performing Arts,
Redlands, CA
Comite Accion Social Sida, Inc.,
Mayaguez, PR
Common Purpose Institute, Atlanta, GA
Commonwealth Child Development
Institute, Clifton, VA
Communication Avenue, Apex, NC
Community Accountability Project Cap,
Milaca, MN
Community Awareness, Inc., Lynn, MA
Community Connection, Inc.,
Oelwein, IA
Community Health Connections,
Fitchburg, MA
Community Renaissance Group, Inc.,
Norristown, PA
Community Youth Home Corporation of
Richmond County, Raleigh, NC
Coppin Heights-Franklin Square
Community Works, Baltimore, MD
Corporation for Vocal and Artistic
Excellence, Springfield, MO
Crestmont Parent-Teacher Club,
Roseville, CA
Critical Times, Inc., Charlotte, NC
Crossroad Revival, Parsons, WV
Dallas Urban League Community
Development Corporation,
Dallas, TX
Decaturnet, Inc., Decatur, IL
Delta Visions, Winston Salem, NC
Design Foundation, Incorporated,
Cambridge, MA
2003–24 I.R.B.1030June 16, 2003

District No. 429 Education Foundation,
Pontiac, IL
Dollar Foods, Inc., Dorchester, MA
East Central Iowa Chapter of the
American Institution of Banking,
Swisher, IA
Education Center at Miami Lakes, Inc.,
Miami Lakes, FL
Educational Foundation for a Free
World, Dewitt, MI
Edward S. Curtis Foundation,
Minneapolis, MN
Elizabeth A. Campbell Poodle Research
& Educational Institute, Scurry, TX
Ellington Homes, Inc.,
Olympia Fields, IL
Encore Theatre, Inc., Laurinburg, NC
Endless Forest International, Inc.,
Silver Spring, MD
Environmental League of Massachusetts,
Inc., Boston, MA
Eureka Fire Pals Corporation,
Eureka, CA
Eve For Women, Inc., Ocala, FL
Exodus II, Inc., Sewell, NJ
Ez Capacity Builders, Inc.,
Savannah, GA
Falls Church Chamber Orchestra,
McLean, VA
Family Services Coalition, Inc.,
Jacksonville, FL
Fatherhood Coalition,
Santa Barbara, CA
Federal City Public Service Foundation,
Washington, DC
Females Overall Committed to Unity in
Sports, Seal Beach, CA
Ferdinand Learning Center,
New Orleans, LA
Field Committee, Inc., Cutten, CA
Florence County Historical Society, Inc.,
Florence, SC
Florida Alzheimers Coalition, Inc.,
Melbourne, FL
Florida Pops Orchestra, Inc.,
Orlando, FL
Fluid Measure Performance Company,
Chicago, IL
Forest Hill Park Conservancy,
E. Cleveland, OH
Forever Young Foundation, Inc.,
Longmeadow, MA
Forgotten Victims, Inc., Dayton, OH
Fort McPherson-East Point Partnership,
Inc., Newnan, GA
Foster Foundation for Education in
Aviation, Sherman, CT
Foundation for Electric Vehicle
Education, Phoenix, AZ
Friends of Deridder Elementary, Inc.,
Deridder, LA
Friends of Ida Lee, Leesburg, VA
Friends of Picketts Mill State Park, Inc.,
Dallas, GA
Friends of Sabis International Charter
School Tr., Springfield, MA
Friends of the Ansonia Historical
Commission, Inc., Ansonia, CT
Friends of the Woburn Public Library,
Inc., Woburn, MA
Friends of Trumbull County Family
Court, Warren, OH
Gallatin County Extension Foundation,
Inc., Warsaw, KY
Gateway Disabled Ski Program,
Fenton, MO
Gateway Public Radio, Inc.,
Brewton, AL
Georgetown Elementary Parent Teacher
Organization, Savannah, GA
Goodwill Enterprises, Providence, RI
Grace House Center for Loss &
Separation, Waterloo, IA
Greater Redmond Chamber Foundation,
Redmond, WA
Greenlawn Booster Club Association,
Kenner, LA
Hale Road Elementary Community
Organization, Painesville, OH
Hamilton Central Business Special
Improvement District, Inc.,
Hamilton, OH
Hargis Christian Retreat, Inc.,
Chelsea, AL
Harrison Area Razorback Club, Inc.,
Harrison, AR
Harvest Kitchen of Greater Philadelphia,
Philadelphia, PA
Highland Neighborhood Development
Corporation, Gastonia, NC
Hilltop Humane Society, Inc.,
Randolph, MA
Hollidaysburg Soccer Association,
Hollidaysburg, PA
Holmdel Foundation for Educational
Excellence, Incorporated,
Red Bank, NJ
Home Start, Inc., Mount Holly, NJ
Howard County Sesquicentennial
Committee, Inc., Ellicott City, MD
In Harms Way, Inc., Clayton, MO
Incorporated Words, Inc., Boston, MA
Independence Magazine, Inc.,
Washington, DC
Indian Orchard Community
Development Corporation,
Indian Orchard, MA
Inland Charities, Inc., Riverside, CA
Inspire Foundation, San Pedro, CA
International Coalition of Men and
Women Organization,
Missouri City, TX
International Cord Blood Society,
Hingham, MA
International Society for Apheresis,
Painesville, OH
Irvington Enterprise Zone Development
Corporation, Irvington, NJ
Islamic Heritage Foundation,
Philadelphia, PA
Jefferson Baroque Orchestra, Inc.,
Cave Junction, OR
Jefferson Institute, Inc., Indianapolis, IN
Jobs for Georgia Graduates, Inc.,
Atlanta, GA
Jobs for Ohio Graduates of Lorain
County Schools, Oberlin, OH
Joyce Foundation, Budd Lake, NJ
Jubilee Theatre Productions, Inc.,
Poplarville, MS
Julius R. Pollatschek Foundation,
Cranford, NJ
Kid Konnection, Inc., South Orange, NJ
Kids Chance of Maryland, Inc.,
Baltimore, MD
Kids Voting of Middle Tennessee, Inc.,
Nashville, TN
La Paz Music Boosters,
Mission Viejo, CA
Ladue Early Childhood Parents
Association, Frontenac, MO
Learning Skills Institute, Inc.,
Worcester, MA
Lighthouse Presentations, Inc.,
Myrtle Beach, SC
Los Angeles Community Health Center
Coalition, Arleta, CA
Louisiana Fbla Foundation, Inc.,
Baton Rouge, LA
Louisiana Fins Association, Inc.,
Houma, LA
Lutheran Social Services of Central Ohio
Grovewood II Housing II,
Columbus, OH
Lutheran Social Services of Central Ohio
Little Brook Housing, Inc.,
Columbus, OH
Lutheran Social Services of Central Ohio
Village Housing, Inc., Columbus, OH
Madison PTO, Blaine, MN
Magnet Educational Foundation, Inc.,
New London, CT
June 16, 200310312003–24 I.R.B.

Maine Alliance of Partners in Education,
Kingfield, ME
Marion Education Foundation, Inc.,
Marion, OH
Massachusetts Child, Inc., Boston, MA
Massachusetts Rural Development
Council, Amherst, MA
Massachusetts State Taekwondo
Association, Inc., W. Somerville, MA
Matthew P. Pellegrino II Memorial
Foundation, Delanco, NJ
McKinley III, Chicago, IL
Metropolitan Atlanta Musicians
Association, Inc., East Point, GA
Michael Hobart Brown Memorial
Scholarship Fund,
Shepherdstown, WV
Michigan Horticultural Society,
Oak Park, MI
Michigan Resident Leadership Network,
Lansing, MI
Midtown Collaborative, Little Rock, AR
Minneapolis Initiative Against Racism,
Minneapolis, MN
Minnesota Fund for the Arts,
Minneapolis, MN
Minute Men Task Force,
Newport News, VA
Mobile Community Living, Inc.,
Mobile, AL
Mobile Shared Living, Inc., Mobile, AL
Montgomery County Orchestra Society,
Narberth, PA
Morgan-Madison Credit Counseling,
Ocoee, FL
Mount Carmel Homes, Inc.,
Philadelphia, PA
Music City Singles Square Dance Club,
Nashville, TN
My Brothers Keeper Community
Outreach, Philadelphia, PA
My Fathers House Ministries,
Winston Salem, NC
My Mothers House, Inc.,
Philadelphia, PA
National Association of Weed & Seed
Communities, Brooklyn, NY
National Fibromyalgia Association,
Oroville, CA
National Housing Trust Community
Development Fund, Washington, DC
National Rehabilitation Awareness
Foundation, Scranton, PA
Ned Beatty Hope for Children Classic,
Inc., Louisville, KY
Neighborhood Involvement Association,
San Diego, CA
New Richmond Elementary PTO,
New Richmond, OH
New River Arts & Crafts Association,
Inc., Oakland Park, FL
New School Parents Association,
McLean, VA
Noahs Ark Foundation, Inc.,
St. Paul, MN
North End Family and School
Association, Inc., Cedar Grove, NJ
North Florida Indian Foundation, Inc.,
Panama City, FL
Northeast Texas Childrens Museum,
Commerce, TX
On Our Own of Charles County, Inc.,
White Plains, MD
One Small Step, Pittsburgh, PA
Organizacion Puertorriquenos Unidos,
Inc., Hartford, CT
Osmosis Theaterworks, Inc.,
Baltimore, MD
Our Forgotten People International,
Crestline, OH
Outreach Thrift, Inc., Burlington, NC
Pact Corporation, Le Mars, IA
Paintsville Parent Teacher Organization,
Paintsville, KY
Paraclete Ministries, St. Louis, MO
Park Pantry, Loves Park, IL
Parkway Patrons Foundation, Inc.,
N. Miami Beach, FL
Paterson Rotary Club Foundation, Inc.,
Clifton, NJ
Pegasus Therapeutic Riding, Inc.,
Charlotte, NC
Pennsylvania Preservation Consortium,
Inc., Pittsburgh, PA
Pet Gazette, Inc., Staunton, VA
Peter Dimuro Performance Associates,
Takoma Park, MD
Peter Pan Child Development Center,
Inc., Pompano Beach, FL
Pianosa Group, Philadelphia, PA
Pine Lawn Equality Association,
Pine Lawn, MO
Plainfield Interfaith Neighborhood
Corporation for Housing,
Fort Washington, NY
Plantersville Community Development
Service Project, Georgetown, SC
Playright Performing Arts Center, Inc.,
Redan, GA
Prevent Child Abuse Kane County, Inc.,
Geneva, IL
Progressive Alternative Program, Inc.,
Decatur, GA
Prom Gala, Inc., Monroe, MI
Prospect Indoor Soccer, Inc.,
Prospect, CT
PTSA Michigan Congress of Parents
Teachers and Students, Lansing, MI
Puerto Rican Street Animal Project, Inc.,
Salem, OR
Quality Education Commission, Inc.,
Milwaukee, WI
Raritan Valley Youth Chorale, Inc.,
Martinsville, NJ
Real Life Counseling Ministries, Inc.,
Harrisburg, PA
Recreation Development Foundation,
Inc., Yanceyville, NC
Reuther Central High School Parent
Teacher Student Organization,
Kenosha, WI
River Hill High School Music Boosters,
Inc., Clarksville, MD
River Valley Transitional Living Center,
Inc., Russellville, AR
Rock Hill School Parent Teacher
Organization, Wallingford, CT
Rolette County Alternative Education
Consortium, Dunseith, ND
Royale Gardens Residences,
Chicago, IL
Russian-American Music Association,
Inc., Newton, MA
Samaritan Credit Counselors, Inc.,
Casselberry, FL
San Diego Presidio Foundation,
San Diego, CA
Santee Youth Foundation, Santee, CA
Scama Scholarship Foundation, Inc.,
Orange Park, FL
Scripps Ranch Friends of the Library,
San Diego, CA
Second Chance in Western North
Carolina, Inc., Mars Hill, NC
Second Home for Animals, Inc.,
Boston, MA
Second Step Ministries, Inc.,
Augusta, GA
Self Empowerment Life Foundation,
Hemet, CA
Seminole Club of Hillsboro County, Inc.,
Tampa, FL
Shasta Works, Inc., Redding, CA
Sherwood Educational Volunteers,
Portland, OR
Sister Circle, Chicago, IL
Sister City of Lynchburg Plus,
Forest, VA
Sloan Street Housing Development
Corporation, Inc., Andeson, SC
Sloan Street Housing Development
Corporation II, Anderson, SC
2003–24 I.R.B.1032June 16, 2003

SMF-Haven of Hope, Hampton, VA
South Amboy Urban Renewal
Corporation, South Amboy, NJ
South Side Educational Center for
Youth, Chicago, IL
Southwest Florida Epic Drama, Inc.,
Naples, FL
Special Blessings Opportunity Center,
Ocala, FL
Special Needs Alliance, St. Louis, MO
St. Jude Alumni Association & Friends,
Inc., Sumter, SC
St. Xavier High School Lacrosse Club,
Cincinnati, OH
Stones Network, Inc.,
Laguna Beach, CA
Stop Our Suffering, Inc., Southgate, MI
Sultana High School Cross Country
Booster Club, Hesperia, CA
Sure Foundation, Inc., Baltimore, MD
Survive Until a Cure, Inc., Westport, CT
Temple of Raising Hope,
Philadelphia, PA
Terry Perkins Foundation,
Columbia Heights, MN
Thomaston Area Youth Activities,
Thomaston, CT
Thurgood Marshall Family Resource
Center, Ashtabula, OH
Tomorrows Promise the Original
Company, Maitland, FL
Transforming Lives for Christ,
Richmond, VA
Trauma Recovery Services,
Iowa City, IA
Trees for Beaufort County, Beaufort, SC
Tri County Community Health
Partnership, Inc., Murphy, NC
Troy Youth Hockey Association,
Troy, MI
Two Rivers Family Health Center, Inc.,
Easton, PA
Ukiah Community Arts Center Project,
Redwood Valley, CA
Ukiah High School Alumni Assoc.,
Ukiah, CA
Union Junior High School Boosters,
Benwood, WV
United in Strength, Philadelphia, PA
United States Pastors Association,
Riverside, CA
Vasquez Mustang Booster Club,
Valencia, CA
Victory Village Center for Community
Youth, Detroit, MI
Virginia Alternative School Division,
Inc., Richmond, VA
Virtual Baptist Seminary,
Alexandria, LA
Visiting Volunteers Association,
Columbia, MO
Wall of Liberty Trust Corp.,
Winchester, VA
Walnut Historic Neighborhood Assn.,
Inc., Waterloo, IA
Wanaque Community Education
Foundation, Inc., Wanaque, NJ
Warren United Soccer Club, Inc.,
Gurnee, IL
West Hartford Public Schools
Foundation, Inc., W. Hartford, CT
West High School Fitness Center,
Manchester, NH
Weymouth Educational Foundation, Inc.,
South Weymouth, MA
Wildwood Crest Education Association
Philanthropic Fund, Inc.,
Wildwood Crest, NJ
Williamston Downtown, Inc.,
Williamston, NC
Willie James Jones Foundation,
San Diego, CA
Winters Youth & Family Centre,
Winters, CA
Wisconsin Center for First Amendment
Studies, Milwaukee, WI
Wolfeboro Rotary Club Charities, Inc.,
Wolfeboro, NH
Womens Institute for Research
Education & Development,
San Luis Obispo, CA
Wooster High School Music Parents
Assoc., Wooster, OH
World Percussion Festival-Fort
Lauderdale, Inc., Ft. Lauderdale, FL
World Tekwondo Masters Association,
Inc., Rockville, MD
World Water for All, Inc.,
Rockville, MD
Worldwide Internet Network Service,
Inc., New Bedford, MA
Wright Foundation, Florissant, MO
Yes Foundation, Inc., Plainfield, NJ
Youth for Tomorrow, Inc.,
Cleveland Heights, OH
If an organization listed above submits
information that warrants the renewal of its
classification as a public charity or as a pri-
vate operating foundation, the Internal Rev-
enue Service will issue a ruling or
determination letter with the revised clas-
sification as to foundation status. Grant-
ors and contributors may thereafter rely
upon such ruling or determination letter as
provided in section 1.509(a)–7 of the In-
come Tax Regulations. It is not the prac-
tice of the Service to announce such revised
classification of foundation status in the In-
ternal Revenue Bulletin.
June 16, 200310332003–24 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
effect:
Amplifieddescribes 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
withmodified, below).
Clarifiedis 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.
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 pub-
lished position. (Compare withamplified
andclarified, 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
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.
Revokeddescribes situations where the
position in the previously published rul-
ing is not correct and the correct position
is being stated in the new ruling.
Supersededdescribes 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
period 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
andsupersededdescribes 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.
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
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rul-
ings 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 following abbreviations in current
use and formerly 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.
2003–24 I.R.B.iJune 16, 2003

Numerical Finding List
1
Bulletins 2003–1 through 2003–23
Announcements:
2003–1, 2003–2 I.R.B.281
2003–2, 2003–3 I.R.B.301
2003–3, 2003–4 I.R.B.361
2003–4, 2003–5 I.R.B.396
2003–5, 2003–5 I.R.B.397
2003–6, 2003–6 I.R.B.450
2003–7, 2003–6 I.R.B.450
2003–8, 2003–6 I.R.B.451
2003–9, 2003–7 I.R.B.490
2003–10, 2003–7 I.R.B.490
2003–11, 2003–10 I.R.B.585
2003–12, 2003–10 I.R.B.585
2003–13, 2003–11 I.R.B.603
2003–14, 2003–11 I.R.B.603
2003–15, 2003–11 I.R.B.605
2003–16, 2003–12 I.R.B.641
2003–17, 2003–15 I.R.B.722
2003–18, 2003–13 I.R.B.675
2003–19, 2003–15 I.R.B.723
2003–20, 2003–15 I.R.B.750
2003–21, 2003–17 I.R.B.846
2003–22, 2003–17 I.R.B.846
2003–23, 2003–16 I.R.B.808
2003–24, 2003–16 I.R.B.810
2003–25, 2003–17 I.R.B.846
2003–26, 2003–18 I.R.B.862
2003–27, 2003–18 I.R.B.862
2003–28, 2003–19 I.R.B.899
2003–29, 2003–20 I.R.B.928
2003–30, 2003–20 I.R.B.929
2003–31, 2003–20 I.R.B.930
2003–32, 2003–20 I.R.B.933
2003–33, 2003–21 I.R.B.953
2003–34, 2003–21 I.R.B.953
2003–35, 2003–21 I.R.B.956
Court Decisions:
2077, 2003–19 I.R.B.868
Notices:
2003–1, 2003–2 I.R.B.257
2003–2, 2003–2 I.R.B.257
2003–3, 2003–2 I.R.B.258
2003–4, 2003–3 I.R.B.294
2003–5, 2003–3 I.R.B.294
2003–6, 2003–3 I.R.B.298
2003–7, 2003–4 I.R.B.310
2003–8, 2003–4 I.R.B.310
2003–9, 2003–5 I.R.B.369
2003–10, 2003–5 I.R.B.369
2003–11, 2003–6 I.R.B.422
2003–12, 2003–6 I.R.B.422
2003–13, 2003–8 I.R.B.513
2003–14, 2003–8 I.R.B.515
2003–15, 2003–9 I.R.B.540
2003–16, 2003–10 I.R.B.575
2003–17, 2003–12 I.R.B.633
2003–18, 2003–14 I.R.B.699
2003–19, 2003–14 I.R.B.703
Notices—Continued:
2003–20, 2003–19 I.R.B.894
2003–21, 2003–17 I.R.B.817
2003–22, 2003–18 I.R.B.851
2003–23, 2003–17 I.R.B.821
2003–24, 2003–18 I.R.B.853
2003–25, 2003–18 I.R.B.855
2003–26, 2003–18 I.R.B.855
2003–27, 2003–19 I.R.B.898
2003–28, 2003–22 I.R.B.971
2003–29, 2003–20 I.R.B.917
2003–31, 2003–21 I.R.B.948
2003–32, 2003–21 I.R.B.949
2003–33, 2003–23 I.R.B.990
2003–34, 2003–23 I.R.B.990
2003–35, 2003–23 I.R.B.992
2003–36, 2003–23 I.R.B.992
Proposed Regulations:
REG–209500–86, 2003–2 I.R.B.262
REG–113007–99, 2003–23 I.R.B.1004
REG–104385–01, 2003–12 I.R.B.634
REG–116641–01, 2003–8 I.R.B.518
REG–125638–01, 2003–5 I.R.B.373
REG–126016–01, 2003–7 I.R.B.486
REG–126485–01, 2003–9 I.R.B.542
REG–164754–01, 2003–22 I.R.B.975
REG–103580–02, 2003–9 I.R.B.543
REG–124069–02, 2003–7 I.R.B.488
REG–131478–02, 2003–13 I.R.B.669
REG–138882–02, 2003–8 I.R.B.522
REG–139768–02, 2003–10 I.R.B.583
REG–141097–02, 2003–16 I.R.B.807
REG–141659–02, 2003–20 I.R.B.927
REG–142605–02, 2003–23 I.R.B.1010
REG–151043–02, 2003–3 I.R.B.300
REG–152524–02, 2003–22 I.R.B.979
REG–164464–02, 2003–2 I.R.B.262
Revenue Procedures:
2003–1, 2003–1 I.R.B.1
2003–2, 2003–1 I.R.B.76
2003–3, 2003–1 I.R.B.113
2003–4, 2003–1 I.R.B.123
2003–5, 2003–1 I.R.B.163
2003–6, 2003–1 I.R.B.191
2003–7, 2003–1 I.R.B.233
2003–8, 2003–1 I.R.B.236
2003–9, 2003–8 I.R.B.516
2003–10, 2003–2 I.R.B.259
2003–11, 2003–4 I.R.B.311
2003–12, 2003–4 I.R.B.316
2003–13, 2003–4 I.R.B.317
2003–14, 2003–4 I.R.B.319
2003–15, 2003–4 I.R.B.321
2003–16, 2003–4 I.R.B.359
2003–17, 2003–6 I.R.B.427
2003–18, 2003–6 I.R.B.439
2003–19, 2003–5 I.R.B.371
2003–20, 2003–6 I.R.B.445
2003–21, 2003–6 I.R.B.448
2003–22, 2003–10 I.R.B.577
2003–23, 2003–11 I.R.B.599
2003–24, 2003–11 I.R.B.599
Revenue Procedures—Continued:
2003–25, 2003–11 I.R.B.601
2003–26, 2003–13 I.R.B.666
2003–27, 2003–13 I.R.B.667
2003–28, 2003–16 I.R.B.759
2003–29, 2003–20 I.R.B.917
2003–30, 2003–17 I.R.B.822
2003–31, 2003–17 I.R.B.838
2003–32, 2003–16 I.R.B.803
2003–33, 2003–16 I.R.B.803
2003–34, 2003–18 I.R.B.856
2003–35, 2003–20 I.R.B.919
2003–36, 2003–18 I.R.B.859
2003–37, 2003–21 I.R.B.950
2003–39, 2003–22 I.R.B.971
2003–42, 2003–23 I.R.B.993
2003–43, 2003–23 I.R.B.998
Revenue Rulings:
2003–1, 2003–3 I.R.B.291
2003–2, 2003–2 I.R.B.251
2003–3, 2003–2 I.R.B.252
2003–4, 2003–2 I.R.B.253
2003–5, 2003–2 I.R.B.254
2003–6, 2003–3 I.R.B.286
2003–7, 2003–5 I.R.B.363
2003–8, 2003–3 I.R.B.290
2003–9, 2003–4 I.R.B.303
2003–10, 2003–3 I.R.B.288
2003–11, 2003–3 I.R.B.285
2003–12, 2003–3 I.R.B.283
2003–13, 2003–4 I.R.B.305
2003–14, 2003–4 I.R.B.302
2003–15, 2003–4 I.R.B.302
2003–16, 2003–6 I.R.B.401
2003–17, 2003–6 I.R.B.400
2003–18, 2003–7 I.R.B.467
2003–19, 2003–7 I.R.B.468
2003–20, 2003–7 I.R.B.465
2003–21, 2003–8 I.R.B.509
2003–22, 2003–8 I.R.B.494
2003–23, 2003–8 I.R.B.511
2003–24, 2003–10 I.R.B.557
2003–25, 2003–13 I.R.B.642
2003–26, 2003–10 I.R.B.563
2003–27, 2003–11 I.R.B.597
2003–28, 2003–11 I.R.B.594
2003–29, 2003–11 I.R.B.587
2003–30, 2003–13 I.R.B.659
2003–31, 2003–13 I.R.B.643
2003–32, 2003–14 I.R.B.689
2003–33, 2003–13 I.R.B.642
2003–34, 2003–17 I.R.B.813
2003–35, 2003–14 I.R.B.687
2003–36, 2003–18 I.R.B.849
2003–37, 2003–15 I.R.B.717
2003–38, 2003–17 I.R.B.811
2003–39, 2003–17 I.R.B.811
2003–40, 2003–17 I.R.B.813
2003–41, 2003–17 I.R.B.814
2003–42, 2003–16 I.R.B.754
2003–43, 2003–21 I.R.B.935
2003–44, 2003–18 I.R.B.848
2003–45, 2003–19 I.R.B.876
1
A cumulative list of all revenue rulings, revenue
procedures, Treasury decisions, etc., published in
Internal Revenue Bulletins 2002–26 through 2002–52 is
in Internal Revenue Bulletin 2003–1, dated January 6, 2003.
June 16, 2003ii2003–24 I.R.B.

Revenue Rulings—Continued:
2003–46, 2003–19 I.R.B.878
2003–47, 2003–19 I.R.B.866
2003–48, 2003–19 I.R.B.863
2003–49, 2003–20 I.R.B.903
2003–50, 2003–21 I.R.B.944
2003–51, 2003–21 I.R.B.938
2003–52, 2003–22 I.R.B.960
2003–53, 2003–22 I.R.B.969
2003–54, 2003–23 I.R.B.982
2003–55, 2003–22 I.R.B.961
2003–56, 2003–23 I.R.B.985
2003–57, 2003–22 I.R.B.959
2003–58, 2003–22 I.R.B.959
2003–60, 2003–23 I.R.B.987
Tax Conventions:
Ann. 2003–21, 2003–17 I.R.B.846
Treasury Decisions:
9024, 2003–5 I.R.B.365
9025, 2003–5 I.R.B.362
9026, 2003–5 I.R.B.366
9027, 2003–6 I.R.B.413
9028, 2003–6 I.R.B.415
9029, 2003–6 I.R.B.403
9030, 2003–8 I.R.B.495
9031, 2003–8 I.R.B.504
9032, 2003–7 I.R.B.471
9033, 2003–7 I.R.B.483
9034, 2003–7 I.R.B.453
9035, 2003–9 I.R.B.528
9036, 2003–9 I.R.B.533
9037, 2003–9 I.R.B.535
9038, 2003–9 I.R.B.524
9039, 2003–10 I.R.B.561
9040, 2003–10 I.R.B.568
9041, 2003–8 I.R.B.510
9042, 2003–10 I.R.B.564
9043, 2003–12 I.R.B.611
9044, 2003–14 I.R.B.690
9045, 2003–12 I.R.B.610
9046, 2003–12 I.R.B.614
9047, 2003–14 I.R.B.676
9048, 2003–13 I.R.B.644
9049, 2003–14 I.R.B.685
9050, 2003–14 I.R.B.693
9051, 2003–16 I.R.B.755
9052, 2003–19 I.R.B.879
9053, 2003–20 I.R.B.914
9054, 2003–20 I.R.B.909
9055, 2003–21 I.R.B.945
9056, 2003–21 I.R.B.940
9057, 2003–22 I.R.B.964
9058, 2003–22 I.R.B.962
2003–24 I.R.B.iiiJune 16, 2003

Finding List of Current Actions
on Previously Published Items
2
Bulletins 2003–1 through 2003–23
Notices:
97–19
Modified by
Rev. Proc. 2003–1, 2003–1 I.R.B.1
97–32
Revoked by
T.D. 9058, 2003–22 I.R.B.962
2000–38
Modified by
Notice 2003–20, 2003–19 I.R.B.894
2001–26
Obsoleted by
T.D. 9032, 2003–7 I.R.B.471
2001–46
Modified by
Notice 2003–6, 2003–3 I.R.B.298
2001–69
Modified and superseded by
Notice 2003–1, 2003–2 I.R.B.257
2002–20
Superseded by
Rev. Proc. 2003–36, 2003–18 I.R.B.859
2002–27
Clarified by
Notice 2003–3, 2003–2 I.R.B.258
2002–40
Modified by
Ann. 2003–18, 2003–13 I.R.B.675
2002–46
Modified by
Notice 2003–10, 2003–5 I.R.B.369
Proposed Regulations:
REG–209500–86
Corrected by
Ann. 2003–6, 2003–6 I.R.B.450
REG–103829–99
Corrected by
Ann. 2003–12, 2003–10 I.R.B.585
REG–126485–01
Withdrawn by
REG–126485–01, 2003–9 I.R.B.542
Corrected by
Ann. 2003–25, 2003–17 I.R.B.846
REG–164754–01
Supplemented by
REG–164754–01, 2003–22 I.R.B.975
REG–131478–02
Corrected by
Ann. 2003–24, 2003–16 I.R.B.810
Proposed Regulations—Continued:
REG–143321–02
Corrected by
Ann. 2003–12, 2003–10 I.R.B.585
REG–164464–02
Corrected by
Ann. 2003–6, 2003–6 I.R.B.450
Revenue Procedures:
83–23
Supplemented by
Rev. Proc. 2003–21, 2003–6 I.R.B.448
84–37
Modified by
Rev. Proc. 2003–1, 2003–1 I.R.B.1
93–38
Obsoleted by
Rev. Proc. 2003–15, 2003–4 I.R.B.321
97–31
Modified by
Rev. Proc. 2003–9, 2003–8 I.R.B.516
98–13
Obsoleted by
T.D. 9032, 2003–7 I.R.B.471
98–55
Superseded by
Rev. Proc. 2003–43, 2003–23 I.R.B.998
2002–1
Superseded by
Rev. Proc. 2003–1, 2003–1 I.R.B.1
2002–2
Superseded by
Rev. Proc. 2003–2, 2003–1 I.R.B.76
2002–3
Superseded by
Rev. Proc. 2003–3, 2003–1 I.R.B.113
2002–4
Superseded by
Rev. Proc. 2003–4, 2003–1 I.R.B.123
2002–5
Superseded by
Rev. Proc. 2003–5, 2003–1 I.R.B.163
2002–6
Superseded by
Rev. Proc. 2003–6, 2003–1 I.R.B.191
2002–7
Superseded by
Rev. Proc. 2003–7, 2003–1 I.R.B.233
2002–8
Superseded by
Rev. Proc. 2003–8, 2003–1 I.R.B.236
Revenue Procedures—Continued:
2002–9
Modified and amplified by
Rev. Proc. 2003–20, 2003–6 I.R.B.445
Rev. Rul. 2003–3, 2003–2 I.R.B.252
Rev. Rul. 2003–54, 2003–23 I.R.B.982
Suspended in part by
Notice 2003–36, 2003–23 I.R.B.992
2002–20
Supplemented by
Rev. Proc. 2003–26, 2003–13 I.R.B.666
2002–22
Modified by
Rev. Proc. 2003–3, 2003–1 I.R.B.113
2002–29
Modified by
Rev. Proc. 2003–10, 2003–2 I.R.B.259
2002–37
Modified by
Rev. Proc. 2002–34, 2002–18 I.R.B.856
2002–39
Modified by
Rev. Proc. 2002–34, 2002–18 I.R.B.856
2002–51
Superseded by
Rev. Proc. 2003–31, 2003–17 I.R.B.838
2002–52
Modified by
Rev. Proc. 2003–1, 2003–1 I.R.B.1
2002–53
Superseded by
Rev. Proc. 2003–30, 2003–17 I.R.B.822
2002–57
Superseded by
Rev. Proc. 2003–28, 2003–16 I.R.B.759
2002–67
Supplemented by
Ann. 2003–3, 2003–4 I.R.B.361
2002–75
Superseded by
Rev. Proc. 2003–3, 2003–1 I.R.B.113
2003–3
Amplified by
Rev. Proc. 2003–14, 2003–4 I.R.B.319
2003–7
Corrected by
Ann. 2003–4, 2003–5 I.R.B396
Revenue Rulings:
53–131
Modified by
Rev. Rul. 2003–12, 2003–3 I.R.B.283
57–190
Obsoleted by
Rev. Rul. 2003–18, 2003–7 I.R.B.467
2
A cumulative list of current actions on previously
published items in Internal Revenue Bulletins
2002–26 through 2002–52 is in Internal Revenue
Bulletin 2003–1, dated January 6, 2003.
June 16, 2003iv2003–24 I.R.B.

Revenue Rulings—Continued:
65–190
Revoked by
Rev. Rul. 2003–3, 2003–2 I.R.B.252
66–118
Distinguished by
Rev. Rul. 2003–41, 2003–17 I.R.B.814
68–345
Obsoleted by
Rev. Rul. 2003–54, 2003–23 I.R.B.982
69–372
Revoked by
Rev. Rul. 2003–3, 2003–2 I.R.B.252
70–140
Distinguished by
Rev. Rul. 2003–51, 2003–21 I.R.B.938
70–522
Distinguished by
Rev. Rul. 2003–51, 2003–21 I.R.B.938
79–70
Distinguished by
Rev. Rul. 2003–51, 2003–21 I.R.B.938
79–194
Distinguished by
Rev. Rul. 2003–51, 2003–21 I.R.B.938
86–88
Supplemented by
Rev. Rul. 2003–46, 2003–19 I.R.B.878
88–36
Supplemented by
Rev. Rul. 2003–46, 2003–19 I.R.B.878
92–19
Supplemented in part by
Rev. Rul. 2003–24, 2003–10 I.R.B.557
2000–49
Modified and superseded by
Rev. Rul. 2003–49, 2003–20 I.R.B.903
2002–80
Distinguished by
Rev. Rul. 2003–43, 2003–21 I.R.B.935
2003–2
Revoked by
Rev. Rul. 2003–22, 2003–8 I.R.B.494
Treasury Decisions:
9002
Corrected by
Ann. 2003–8, 2003–6 I.R.B.451
9021
Corrected by
Ann. 2003–16, 2003–12 I.R.B.641
9022
Supplemented by
Ann. 2003–7, 2003–6 I.R.B.450
Corrected by
Ann. 2003–11, 2003–10 I.R.B.585
9048
Corrected by
Ann. 2003–23, 2003–16 I.R.B.808
2003–24 I.R.B.v*U.S. Government Printing Office 2003—496–919/60087June 16, 2003