Internal Revenue Bulletin 1998-25 (PDF rendition): IRS Revenue Rulings

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INCOME TAX
Rev. Rul. 98–31, page 4.
Low-income housing credit; satisfactory bond; “bond
factor” amounts for the period April through June
1998.This ruling announces the monthly bond factor
amounts to be used by taxpayers who dispose of qualified
low-income buildings or interests therein during the period
April through June 1998.
Rev. Rul. 98–32, page 4.
Interest rates; underpayments and overpayments.The
rate of interest determined under section 6621 of the Code
for the calendar quarter beginning July 1, 1998, will be 7
percent for overpayments, 8 percent for underpayments,
and 10 percent for large corporate underpayments. The rate
of interest paid on the portion of a corporate overpayment
exceeding $10,000 is 5.5 percent.
EMPLOYEE PLANS
Rev. Rul. 98–30, page 8.
Qualified cash or deferred arrangement; participa-
tion.This ruling describes certain criteria that must be met
before an employee’s compensation can be contributed to
an employer’s section 401(k) plan in the absence of an affir-
mative election by the employee.
Notice 98–33, page 10.
Weighted average interest rate update.Guidelines are
set forth for determining for June 1998, the weighted aver-
age interest rate and the resulting permissible range of in-
terest rates used to calculate current liability for purposes of
the full funding limitation of section 412(c)(7) of the Code as
amended by the Omnibus Budget Reconciliation Act of 1987
and by the Uruguay Round Agreements Act (GATT).
EXEMPT ORGANIZATIONS
Announcement 98–54, page 11.
A list is given of organizations now classified as private foun-
dations.
Internal Revenue
bbuulllleettiinn
Bulletin No. 1998–25
June 22, 1998
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
Department of the Treasury
Internal Revenue Service
Finding Lists begin on page 17.
Announcement of the Expedited Suspension of Attorneys, Certified Public Accountants, Enrolled Agents, and Enrolled
Actuaries From Practice Before the Internal Revenue Service begins on page 14.

Mission of the Service
The purpose of the Internal Revenue Service is to collect
the proper amount of tax revenue at the least cost; serve
the public by continually improving the quality of our prod-
ucts and services; and perform in a manner warranting
the highest degree of public confidence in our integrity, effi-
ciency, and fairness.
2
Statement of Principles
of Internal Revenue
Tax Administration
The function of the Internal Revenue Service is to adminis-
ter the Internal Revenue Code. Tax policy for raising revenue
is determined by Congress.
With this in mind, it is the duty of the Service to carry out that
policy by correctly applying the laws enacted by Congress;
to determine the reasonable meaning of various Code provi-
sions in light of the Congressional purpose in enacting them;
and to perform this work in a fair and impartial manner, with
neither a government nor a taxpayer point of view.
At the heart of administration is interpretation of the Code. It
is the responsibility of each person in the Service, charged
with the duty of interpreting the law, to try to find the true
meaning of the statutory provision and not to adopt a
strained construction in the belief that he or she is “protect-
ing the revenue.” The revenue is properly protected only
when we ascertain and apply the true meaning of the statute.
The Service also has the responsibility of applying and
administering the law in a reasonable, practical manner.
Issues should only be raised by examining officers when
they have merit, never arbitrarily or for trading purposes.
At the same time, the examining officer should never hesi-
tate to raise a meritorious issue. It is also important that
care be exercised not to raise an issue or to ask a court to
adopt a position inconsistent with an established Service
position.
Administration should be both reasonable and vigorous. It
should be conducted with as little delay as possible and
with great courtesy and considerateness. It should never
try to overreach, and should be reasonable within the
bounds of law and sound administration. It should, howev-
er, be vigorous in requiring compliance with law and it
should be relentless in its attack on unreal tax devices and
fraud.

The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing offi-
cial rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly and may be obtained
from the Superintendent of Documents on a subscription
basis. Bulletin contents of a permanent nature are consoli-
dated semiannually into Cumulative Bulletins, which are sold
on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of in-
ternal management are not published; however, statements
of internal practices and procedures that affect the rights
and duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service on
the application of the law to the pivotal facts stated in the
revenue ruling. In those based on positions taken in rulings
to taxpayers or technical advice to Service field offices,
identifying details and information of a confidential nature
are deleted to prevent unwarranted invasions of privacy and
to comply with statutory requirements.
Rulings and procedures reported in the Bulletin do not have
the force and effect of Treasury Department Regulations,
but they may be used as precedents. Unpublished rulings
will not be relied on, used, or cited as precedents by Service
personnel in the disposition of other cases. In applying pub-
lished rulings and procedures, the effect of subsequent leg-
islation, regulations, court decisions, rulings, and proce-
dures must be considered, and Service personnel and oth-
ers concerned are cautioned against reaching the same con-
clusions in other cases unless the facts and circumstances
are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions, and Subpart B, Legislation and Related
Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to
these subjects are contained in the other Parts and Sub-
parts. Also included in this part are Bank Secrecy Act Admin-
istrative Rulings. Bank Secrecy Act Administrative Rulings
are issued by the Department of the Treasury’s Office of the
Assistant Secretary (Enforcement).
Part IV.—Items of General Interest.
With the exception of the Notice of Proposed Rulemaking
and the disbarment and suspension list included in this part,
none of these announcements are consolidated in the Cumu-
lative Bulletins.
The first Bulletin for each month includes a cumulative index
for the matters published during the preceding months.
These monthly indexes are cumulated on a semiannual basis
and are published in the first Bulletin of the succeeding semi-
annual period, respectively.
3
Introduction
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402.

June 22, 199841998–25 I.R.B.
Section 42.—Low-Income
Housing Credit
Low-income housing credit; satisfactory
bond; “bond factor” amounts for the period
April through June 1998.This ruling announces
the monthly bond factor amounts to be used by tax-
payers who dispose of qualified low-income build-
ings or interests therein during the period April
through June 1998.
Rev. Rul. 98–31
In Rev. Rul. 90–60, 1990–2 C.B. 3, the
Internal Revenue Service provided guid-
ance to taxpayers concerning the general
methodology used by the Treasury De-
partment in computing the bond factor
amounts used in calculating the amount of
bond considered satisfactory by the Sec-
retary under § 42(j)(6) of the Internal
Revenue Code. It further announced that
the Secretary would publish in the Inter-
nal Revenue Bulletin a table of “bond fac-
tor” amounts for dispositions occurring
during each calendar month.
This revenue ruling provides in Table 1
the bond factor amounts for calculating
the amount of bond considered satisfac-
tory under § 42(j)(6) for dispositions of
qualified low-income buildings or inter-
ests therein during the period April
through June 1998.
Part I. Rulings and Decisions Under the Internal Revenue Code of 1986
For a list of bond factor amounts ap-
plicable to dispositions occurring during
other calendar years, see the following
revenue rulings: Rev. Rul. 95–83,
1995–2 C.B. 8, for dispositions occurring
during calendar year 1995; Rev. Rul. 98-
3, 1998–2 I.R.B. 4, for dispositions occur-
ring during the calendar years 1996 and
1997; and Rev. Rul. 98–13, 1998–11
I.R.B. 4, for dispositions occurring the
period January through March 1998.
DRAFTING INFORMATION
The principal author of this revenue
ruling is Jack Malgeri of the Office of As-
sistant Chief Counsel (Passthroughs and
Special Industries). For further informa-
tion regarding this revenue ruling, contact
Mr. Malgeri at (202) 622-3040 (not a toll-
free call).
Section 6621.— Determination
of Interest Rate
26 CFR 301.6621–1: Interest rate.
Interest rates; underpayments and overpay-
ments. The rate of interest determined under section
6621 of the Code for the calendar quarter beginning
July 1, 1998, will be 7 percent for overpayments, 8
percent for underpayments, and 10 percent for large
corporate underpayments. The rate of interest paid
on the portion of a corporate overpayment exceed-
ing $10,000 is 5.5 percent.
Rev. Rul. 98–32
Section 6621 of the Internal Revenue
Code establishes different rates for inter-
est on tax overpayments and interest on
tax underpayments. Under § 6621(a)(1),
the overpayment rate is the sum of the
federal short-term rate plus 2 percentage
points, except the rate for the portion of a
corporate overpayment of tax exceeding
$10,000 for a taxable period is the sum of
the federal short-term rate plus 0.5 of a
percentage point for interest computations
made after December 31, 1994. Under §
6621(a)(2), the underpayment rate is the
sum of the federal short-term rate plus 3
percentage points.
Section 6621(c) provides that for pur-
poses of interest payable under § 6601 on
any large corporate underpayment, the
underpayment rate under § 6621(a)(2) is
determined by substituting “5 percentage
points” for “3 percentage points.” See
§ 6621(c) and § 301.6621–3 of the Regu-
lations on Procedure and Administration
for the definition of a large corporate un-
derpayment and for the rules for deter-
mining the applicable date. Section
6621(c) and § 301.6621–3 are generally
effective for periods after December 31,
1990.
Section 6621(b)(1) provides that the
Secretary will determine the federal short-
term rate for the first month in each calen-
dar quarter.
Section 6621(b)(2)(A) provides that the
federal short-term rate determined under
§ 6621(b)(1) for any month applies during
the first calendar quarter beginning after
such month.
Section 6621(b)(3) provides that the
federal short-term rate for any month is
the federal short-term rate determined
during such month by the Secretary in ac-
cordance with § 1274(d), rounded to the
nearest full percent (or, if a multiple of
1/2 of 1 percent, the rate is increased to
the next highest full percent).
Table 1
Rev. Rul. 98–31
Monthly Bond Factor Amounts for Dispositions Expressed
As a Percentage of Total Credits
Calendar Year Building Placed in Service
or, if Section 42(f)(1) Election Was Made,
the Succeeding Calendar Year
Month of
Disposition 198719881989199019911992199319941995199619971998
Apr ’9861.0975.2575.9677.8780.1682.7985.4687.9790.4193.0395.6097.21
May ’9861.0975.25 75.7577.6579.9382.5585.2087.6990.1292.7495.3197.21
Jun ’9861.0975.2575.5477.4479.7182.3184.9587.4389.8592.4695.0597.21

Notice 88–59, 1988–1 C.B. 546, an-
nounced that, in determining the quarterly
interest rates to be used for overpayments
and underpayments of tax under § 6621,
the Internal Revenue Service will use the
federal short-term rate based on daily
compounding because that rate is most
consistent with § 6621 which, pursuant to
§ 6622, is subject to daily compounding.
Rounded to the nearest full percent, the
federal short- term rate based on daily
compounding determined during the
month of April 1998 is 5 percent. Ac-
cordingly, an overpayment rate of 7 per-
cent and an underpayment rate of 8 per-
cent are established for the calendar quar-
ter beginning July 1, 1998. The overpay-
ment rate for the portion of a corporate
overpayment exceeding $10,000 for the
calendar quarter beginning July 1, 1998,
is 5.5 percent. The underpayment rate for
large corporate underpayments for the
calendar quarter beginning July 1, 1998,
is 10 percent. These rates apply to
amounts bearing interest during that cal-
endar quarter.
Interest factors for daily compound in-
terest for annual rates of 5.5 percent, 7
percent, 8 percent, and 10 percent are
published in Tables 16, 19, 21, and 25 of
Rev. Proc. 95–17, 1995–1 C.B. 556, 570,
573, 575, and 579.
Annual interest rates to be compounded
daily pursuant to § 6622 that apply for
prior periods are set forth in the tables ac-
companying this revenue ruling.
DRAFTING INFORMATION
The principal author of this revenue
ruling is Raymond Bailey of the Office of
Assistant Chief Counsel (Income Tax and
Accounting). For further information re-
garding this revenue ruling, contact Mr.
Bailey on (202) 622-6226 (not a toll-free
call).
1998–25 I.R.B.5June 22, 1998
TABLE OF INTEREST RATES
PERIODS BEFORE JUL. 1, 1975 — PERIODS ENDING DEC. 31, 1986
OVERPAYMENTS AND UNDERPAYMENTS
DAILY RATE TABLE
PERIODRATEIN 1995–1 C.B.
Before Jul. 1, 19756%Table 2, pg. 557
Jul. 1, 1975—Jan. 31, 19769%Table 4, pg. 559
Feb. 1, 1976—Jan. 31, 19787%Table 3, pg. 558
Feb. 1, 1978—Jan. 31, 19806%Table 2, pg. 557
Feb. 1, 1980—Jan. 31, 198212%Table 5, pg. 560
Feb. 1, 1982—Dec. 31, 198220%Table 6, pg. 560
Jan. 1, 1983—Jun. 30, 198316%Table 37, pg. 591
Jul. 1, 1983—Dec. 31, 198311% Table 27, pg. 581
Jan. 1, 1984—Jun. 30, 198411% Table 75, pg. 629
Jul. 1, 1984—Dec. 31, 198411% Table 75, pg. 629
Jan. 1, 1985—Jun. 30, 198513% Table 31, pg. 585
Jul. 1, 1985—Dec. 31, 198511% Table 27, pg. 581
Jan. 1, 1986—Jun. 30, 198610% Table 25 pg. 579
Jul. 1, 1986—Dec. 31, 19869% Table 23, pg. 577

TABLE OF INTEREST RATES
FROM JAN. 1, 1987 — PRESENT
OVERPAYMENTSUNDERPAYMENTS
RATETABLEPGRATETABLEPG
1995– C.B.1995–1 C.B.
Jan. 1, 1987—Mar. 31, 1987 8% 21 575 9% 23 577
Apr. 1, 1987—Jun. 30, 1987 8%21575 9% 23 577
Jul. 1, 1987—Sep. 30, 1987 8%21575 9% 23 577
Oct. 1, 1987—Dec. 31, 1987 9% 23577 10% 25 579
Jan. 1, 1988—Mar. 31, 1988 10% 73 627 11% 75 629
Apr. 1, 1988—Jun. 30, 1988 9%71 625 10% 73 627
Jul. 1, 1988—Sep. 30, 1988 9%71 625 10% 73 627
Oct. 1, 1988—Dec. 31, 1988 10% 73 627 11% 75 629
Jan. 1, 1989—Mar. 31, 1989 10%25 579 11% 27 581
Apr. 1, 1989—Jun. 30, 1989 11% 27 581 12% 29 583
Jul. 1, 1989—Sep. 30, 1989 11% 27 581 12% 29 583
Oct. 1, 1989—Dec. 31, 1989 10% 25 579 11% 27 581
Jan. 1, 1990—Mar. 31, 1990 10% 25 579 11% 27 581
Apr. 1, 1990—Jun. 30, 1990 10% 25 579 11% 27 581
Jul. 1, 1990—Sep. 30, 1990 10% 25 579 11% 27 581
Oct. 1, 1990—Dec. 31, 1990 10% 25 579 11% 27 581
Jan. 1, 1991—Mar. 31, 1991 10% 25 579 11% 27 581
Apr. 1, 1991—Jun. 30, 1991 9%23 577 10% 25 579
Jul. 1, 1991—Sep. 30, 1991 9%23 577 10% 25 579
Oct. 1, 1991—Dec. 31, 1991 9%23 577 10% 25 579
Jan. 1, 1992—Mar. 31, 1992 8% 69 623 9% 71 625
Apr. 1, 1992—Jun. 30, 1992 7%67 621 8% 69 623
Jul. 1, 1992—Sep. 30, 1992 7% 67 621 8% 69 623
Oct. 1, 1992—Dec. 31, 1992 6%65 619 7% 67 621
Jan. 1, 1993—Mar. 31, 1993 6%17 571 7% 19 573
Apr. 1, 1993—Jun. 30, 1993 6%17 571 7% 19 573
Jul. 1, 1993—Sep. 30, 1993 6%17 571 7% 19 573
Oct. 1, 1993—Dec. 31, 1993 6%17 571 7% 19 573
Jan. 1, 1994—Mar. 31, 1994 6%17 571 7% 19 573
Apr. 1, 1994—Jun. 30, 19946%17 571 7% 19 573
Jul. 1, 1994—Sep. 30, 1994 7%19 573 8% 21 575
Oct. 1, 1994—Dec. 31, 1994 8%21 575 9% 23 577
Jan. 1, 1995—Mar. 31, 1995 8% 21 575 9% 23 577
Apr. 1, 1995—Jun. 30, 1995 9%23 577 10% 25 579
Jul. 1, 1995—Sep. 30, 1995 8%21 575 9% 23 577
Oct. 1, 1995—Dec. 31, 19958%21 575 9% 23 577
Jan. 1, 1996—Mar. 31, 19968%69 623 9% 71 625
Apr. 1, 1996—Jun. 30, 1996 7%67 621 8% 69 623
Jul. 1, 1996—Sep. 30, 1996 8%69 623 9% 71 625
Oct. 1, 1996—Dec. 31, 19968%69 623 9% 71 625
Jan. 1, 1997—Mar. 31, 1997 8%21 575 9% 23 577
Apr. 1, 1997—Jun. 30, 1997 8%21 575 9% 23 577
Jul. 1, 1997—Sep. 30, 1997 8%21 575 9% 23 577
Oct. 1, 1997—Dec. 31, 1997 8%21 575 9% 23 577
Jan. 1, 1998—Mar. 31, 1998 8%21 575 9% 23 577
Apr. 1, 1998—Jun. 30, 1998 7%19 573 8% 21 575
Jul. 1, 1998—Sep. 30, 1998 7%19 573 8% 21 575
June 22, 199861998–25 I.R.B.

1998–25 I.R.B.7June 22, 1998
TABLE OF INTEREST RATES FOR LARGE CORPORATE UNDERPAYMENTS
FROM JANUARY 1, 1991 — PRESENT
RATETABLEPG
1995–1 C.B.
Jan. 1, 1991—Mar. 31, 199113% 31 585
Apr. 1, 1991—Jun. 30, 199112% 29 583
Jul. 1, 1991—Sep. 30, 199112% 29 583
Oct. 1, 1991—Dec. 31, 1991 12% 29 583
Jan. 1, 1992—Mar. 31, 199211% 75 629
Apr. 1, 1992—Jun. 30, 199210% 73 627
Jul. 1, 1992—Sep. 30, 1992 10% 73 627
Oct. 1, 1992—Dec. 31, 19929% 71 625
Jan. 1, 1993—Mar. 31, 19939% 23 577
Apr. 1, 1993—Jun. 30, 19939% 23 577
Jul. 1, 1993—Sep. 30, 1993 9% 23 577
Oct. 1, 1993—Dec. 31, 1993 9% 23 577
Jan. 1, 1994—Mar. 31, 1994 9% 23 577
Apr. 1, 1994—Jun. 30, 19949% 23 577
Jul. 1, 1994—Sep. 30, 1994 10% 25 579
Oct. 1, 1994—Dec. 31, 1994 11% 27 581
Jan. 1, 1995—Mar. 31, 1995 11% 27 581
Apr. 1, 1995—Jun. 30, 1995 12% 29 583
Jul. 1, 1995—Sep. 30, 1995 11% 27 581
Oct. 1, 1995—Dec. 31, 1995 11% 27 581
Jan. 1, 1996—Mar. 31, 1996 11% 75 629
Apr. 1, 1996—Jun. 30, 1996 10% 73 627
Jul. 1, 1996—Sep. 30, 1996 11% 75 629
Oct. 1, 1996—Dec. 31, 1996 11% 75 629
Jan. 1, 1997—Mar. 31, 1997 11% 27 581
Apr. 1, 1997—Jun. 30, 1997 11% 27 581
Jul. 1, 1997—Sep. 30, 1997 11% 27 581
Oct. 1, 1997—Dec. 31, 1997 11% 27 581
Jan. 1, 1998—Mar. 31, 1998 11% 27 581
Apr. 1, 1998—Jun. 30, 1998 10% 25 579
Jul. 1, 1998—Sep. 30, 1998 10% 25 579
TABLE OF INTEREST RATES FOR CORPORATE
OVERPAYMENTS EXCEEDING $10,000
FROM JANUARY 1, 1995 — PRESENT
RATETABLEPG
1995–1 C.B.
Jan. 1, 1995—Mar. 31, 1995 6.5% 18 572
Apr. 1, 1995—Jun. 30, 1995 7.5% 20 574
Jul. 1, 1995—Sep. 30, 1995 6.5% 18 572
Oct. 1, 1995—Dec. 31, 1995 6.5% 18 572
Jan. 1, 1996—Mar. 31, 1996 6.5% 66 620
Apr. 1, 1996—Jun. 30, 1996 5.5% 64 618
Jul. 1, 1996—Sep. 30, 1996 6.5% 66 620
Oct. 1, 1996—Dec. 31, 1996 6.5% 66 620
Jan. 1, 1997—Mar. 31, 1997 6.5% 18 572
Apr. 1, 1997—Jun. 30, 1997 6.5% 18 572
Jul. 1, 1997—Sep. 30, 1997 6.5% 18 572
Oct. 1, 1997—Dec. 31, 1997 6.5% 18 572
Jan. 1, 1998—Mar. 31, 1998 6.5% 18 572
Apr. 1, 1998—Jun. 30, 1998 5.5% 16 570
Jul. 1. 1998—Sep. 30, 1998 5.5% 16 570

Section 401.—Qualified
Pension, Profit-Sharing and
Stock Bonus Plans, etc.
26 CFR 1.401(k)–1: Certain cash or deferred
arrangements.
Qualified cash or deferred arrangement; par-
ticipation.This revenue ruling describes certain cri-
teria that must be met before an employee’s com-
pensation can be contributed to an employer’s
section 401(k) plan in the absence of an affirmative
election by the employee.
Rev. Rul. 98–30
ISSUE
Will employer contributions to a profit-
sharing plan fail to be considered elective
contributions, within the meaning of
§ 1.401(k)–1(g)(3) of the Income Tax
Regulations, made under a qualified cash
or deferred arrangement, within the
meaning of § 401(k) of the Internal Rev-
enue Code, merely because they are made
pursuant to an arrangement under which,
in any case in which an employee does
not affirmatively elect to receive cash, the
employee’s compensation is reduced by a
fixed percentage and that amount is con-
tributed on the employee’s behalf to the
plan?
FACTS
Employer X maintains Plan A, a profit-
sharing plan intended to satisfy the re-
quirements of § 401(a), including
§§ 401(k) and 401(m). Under Plan A, any
employee of Employer X, including an
employee with less than one year of ser-
vice, may elect to have Employer X make
contributions on the employee’s behalf to
Plan A in lieu of receiving that amount as
cash compensation that would otherwise
be payable to the employee. The em-
ployee may designate the amount of these
compensation reduction contributions as a
percentage of the employee’s compensa-
tion, subject to certain limitations set
forth in the plan.
Under Plan A, a newly hired employee
is immediately eligible to participate in
Plan A. If the employee does not affirma-
tively elect to receive cash or have a spec-
ified amount contributed to Plan A, his or
her compensation is automatically re-
duced by 3 percent and this amount is
contributed to Plan A. An election not to
make compensation reduction contribu-
tions or to contribute a different percent-
age of compensation can be made at any
time. The election is effective for the first
pay period and subsequent pay periods
(until superseded by a subsequent elec-
tion) if filed when the employee is hired
or if filed within a reasonable period
thereafter ending before the compensation
for the first pay period is currently avail-
able. Thus, if an employee files an elec-
tion to receive cash in lieu of compensa-
tion reduction contributions and the
election is filed when the employee is
hired or within a reasonable period there-
after ending before the compensation is
currently available (and if the employee
does not later elect to have compensation
reduction contributions made), then no
compensation reduction contributions for
the first pay period are made on the em-
ployee’s behalf to Plan A. Elections filed
at a later date are effective for payroll pe-
riods beginning in the month next follow-
ing the date the election is filed.
At the time an employee is hired, the
employee receives a notice that explains
the automatic compensation reduction
election and the employee’s right to elect
to have no such compensation reduction
contributions made to the plan or to alter
the amount of those contributions, includ-
ing the procedure for exercising that right
and the timing for implementation of any
such election. The employee is subse-
quently notified annually of his or her
compensation reduction percentage and
the employee’s right to change the per-
centage.
Plan A provides that compensation re-
duction contributions are immediately
nonforfeitable and, if the employee has
not attained age 59
1
⁄
2
, cannot be distrib-
uted prior to the employee’s retirement,
death, or separation from service except
in the case of hardship (as defined in the
plan). Plan A also provides that, for each
employee who has at least 1 year of ser-
vice, Employer X will make matching
contributions to Plan A on account of the
employee’s compensation reduction con-
tributions up to a specified percentage of
the employee’s compensation. Plan A
does not permit after-tax employee contri-
butions.
Plan A provides that both matching
contributions and compensation reduction
contributions will be invested in accor-
dance with the participant’s election
among a broad range of investment funds
held by the trustee or, if no investment
election is made by the participant, in the
trust’s balanced fund which includes both
diversified equity and fixed income in-
vestments.
1
LAW AND ANALYSIS
Section 401(k) provides that a profit-
sharing or stock bonus plan, a pre-ERISA
money purchase plan, or a rural coopera-
tive plan can meet the requirements of
§ 401(a) even if it includes a qualified
cash or deferred arrangement. Section
401(k) also sets forth the requirements
that a cash or deferred arrangement must
satisfy in order to be a qualified cash or
deferred arrangement.
Section 1.401(k)–1(a)(2)(i) defines a
cash or deferred arrangement as an
arrangement under which an eligible em-
ployee may make a cash or deferred elec-
tion with respect to contributions to, or
accruals or other benefits under, a plan
that is intended to satisfy the requirements
of § 401(a). Section 1.401(k)–1(a)(2)(ii)
provides that a cash or deferred arrange-
ment does not include an arrangement
under which amounts contributed under a
plan at an employee’s election are desig-
nated or treated at the time of contribution
as after-tax employee contributions.
Section 1.401(k)–1(a)(3)(i) defines a
cash or deferred election as any election
(or modification of an earlier election) by
an employee to have the employer either
provide an amount to the employee in the
form of cash (or some other taxable bene-
fit) that is not currently available or con-
tribute an amount to a trust (or provide an
accrual or other benefit) under a plan de-
ferring the receipt of compensation. Sec-
tion 1.401(k)–1(a)(3)(iv) provides that a
June 22, 199881998–25 I.R.B.
1
The Department of Labor has advised Treasury
and the Service that, under Title I of the Employee
Retirement Income Security Act of 1974 (ERISA),
fiduciaries of a plan must ensure that the plan is ad-
ministered prudently and solely in the interest of
plan participants and beneficiaries. While ERISA §
404(c) may serve to relieve certain fiduciaries from
liability when participants or beneficiaries exercise
control over the assets in their individual accounts,
the Department of Labor has taken the position that
a participant or beneficiary will not be considered to
have exercised control when the participant or bene-
ficiary is merely apprised of investments that will be
made on his or her behalf in the absence of instruc-
tions to the contrary. See 29 CFR § 2550.404c–1
and 57 FR 46924.

cash or deferred election does not include
a one-time irrevocable election, made at
the time an employee commences em-
ployment with the employer or upon the
employee’s first becoming eligible under
any plan of the employer, to have contri-
butions made by the employer on the em-
ployee’s behalf to the plan (or to any other
plan of the employer) equal to a specified
amount or percentage of the employee’s
compensation.
Section 1.401(k)–1(e)(2) provides gen-
erally that a qualified cash or deferred
arrangement must provide that the
amount that each eligible employee may
defer as an elective contribution is avail-
able to the employee in cash.
Section 1.401(k)–1(g)(3) defines elec-
tive contributions as employer contribu-
tions made to a plan that were subject to a
cash or deferred election under a cash or
deferred arrangement. Such contributions
are elective contributions without regard
to whether the cash or deferred arrange-
ment is a qualified cash or deferred
arrangement.
The definition of a cash or deferred
election in § 1.401(k)–1(a)(3)(i) requires
that the employee have an election be-
tween the employer paying cash (or some
other taxable benefit) to the employee or
making a contribution to a trust on behalf
of the employee. The regulation does not
require that the employee receive an
amount in cash in any case in which the
employee does not make an affirmative
election to have that amount contributed
to the trust. Thus, a cash or deferred elec-
tion will not fail to be made under a quali-
fied cash or deferred arrangement merely
because, when an employee fails to make
an affirmative election with respect to an
amount of compensation, that amount is
contributed on the employee’s behalf to a
trust, provided that the employee had an
effective opportunity to elect to receive
that amount in cash. The employee has
an effective opportunity to elect to receive
an amount in cash as required under
§ 1.401(k)–1(a)(3)(i) if the employee re-
ceives notice of the availability of the
election and the employee has a reason-
able period to make the election before
the date on which the cash is currently
available.
If Plan A were to permit after-tax em-
ployee contributions, then the amounts
contributed to the plan would have to be
designated or treated, at the time of the
contribution, as pre-tax compensation re-
duction contributions or after-tax em-
ployee contributions.
Compensation reduction contributions
made by Employer X to Plan A (including
those made if the employee has not filed
an election to the contrary) are amounts
contributed pursuant to a procedure under
which the employee receives a notice ex-
plaining his or her rights to have no com-
pensation reduction contribution and,
after receiving the notice, the employee
has a reasonable period before the cash is
currently available in which to elect to re-
ceive the cash in lieu of having an em-
ployer contribution made to the plan in
that amount. Thus, an eligible employee
has an effective opportunity to elect to re-
ceive cash or have a contribution made to
the plan on the employee’s behalf. In ad-
dition, compensation reduction contribu-
tions made under the plan are not contri-
butions made pursuant to a one-time
irrevocable election because the em-
ployee can change the election in the fu-
ture. Consequently, the compensation re-
duction contributions under Plan A are
made pursuant to a cash or deferred elec-
tion and satisfy the requirement in
§ 1.401(k)–1(a)(3)(i) that the amount that
each eligible employee may defer as an
elective contribution be available to the
employee in cash. The result would be
the same if the plan required a period of
service (permitted under § 401(k)(2)(D))
before an employee became eligible for
elective contributions.
HOLDING
Where, as in this case, an eligible em-
ployee has an effective opportunity to
elect to receive cash or have that amount
contributed by the employer to a profit-
sharing plan, those employer contribu-
tions made on the employee’s behalf to
the plan in lieu of receipt of cash compen-
sation will not fail to be considered elec-
tive contributions within the meaning of
§ 1.401(k)–1(g)(3) made under a quali-
fied cash or deferred arrangement within
the meaning of § 401(k) merely because
they are made pursuant to an arrangement
under which, in any case in which an em-
ployee does not affirmatively elect to re-
ceive cash, the employee’s compensation
is reduced by a fixed percentage and that
amount is contributed on the employee’s
behalf to the plan.
PAPERWORK REDUCTION ACT
The collection of information con-
tained in this revenue ruling has been re-
viewed and approved by the Office of
Management and Budget (OMB) in ac-
cordance with the Paperwork Reduction
Act (44 U.S.C. 3507) under control num-
ber 1545-1605.
An agency may not conduct or sponsor,
and a person is not required to respond to,
a collection of information unless the col-
lection of information displays a valid
OMB control number.
The collection of information in this
revenue ruling is in the sixth paragraph in
the section headed “LAW AND ANALY-
SIS.” This information is required in
order for certain employee elections to
meet the requirements of § 401(k). The
collection of information is required to
obtain a benefit. The likely respondents
are businesses or other for-profit institu-
tions, and not-for-profit institutions.
The estimated total annual reporting
burden is 1,000 hours. The estimated an-
nual burden per respondent is 1 hour. The
estimated number of respondents is 1,000.
Books or records relating to a collec-
tion of information must be retained as
long as their contents may become mater-
ial 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.
DRAFTING INFORMATION
The principal author of this revenue
ruling is Roger Kuehnle of the Employee
Plans Division. For further information
regarding this revenue ruling, call the
Employee Plans Division’s taxpayer as-
sistance telephone service at (202) 622-
6074/6075 (not toll-free numbers) be-
tween 1:30 and 3:30 p.m. Eastern Time,
Monday through Thursday.
1998–25 I.R.B.9June 22, 1998

Weighted Average Interest Rate
Update
Notice 98–33
Notice 88–73 provides guidelines for
determining the weighted average interest
rate and the resulting permissible range of
interest rates used to calculate current lia-
bility for the purpose of the full funding
limitation of § 412(c)(7) of the Internal
Revenue Code as amended by the Om-
nibus Budget Reconciliation Act of 1987
and as further amended by the Uruguay
Round Agreements Act, Pub. L. 103–465
(GATT).
The average yield on the 30-year Trea-
sury Constant Maturities for May 1998 is
5.93 percent.
The following rates were determined
for the plan years beginning in the month
shown below.
June 22, 1998101998–25 I.R.B.
Part III. Administrative, Procedural, and Miscellaneous
90% to 106%90% to 110%
WeightedPermissiblePermissible
MonthYearAverage RangeRange
June19986.595.93 to 6.995.93 to 7.25
Drafting Information
The principal author of this notice is
Donna Prestia of the Employee Plans Di-
vision. For further information regarding
this notice, call (202) 622-6076 between
2:30 and 3:30 p.m. Eastern time (not a
toll-free number). Ms. Prestia’s number
is (202) 622-7473 (also not a toll-free
number).

1998–25 I.R.B.11June 22, 1998
Part IV. Items of General Interest
Foundations Status of Certain
Organizations
Announcement 98–54
The following organizations have
failed to establish or have been unable to
maintain their status as public charities or
as operating foundations. Accordingly,
grantors and contributors may not, after
this date, rely on previous rulings or des-
ignations in the Cumulative List of Orga-
nizations (Publication 78), or on the pre-
sumption arising from the filing of notices
under section 508(b) of the Code. This
listing does notindicate that the organiza-
tions have lost their status as organiza-
tions described in section 501(c)(3), eligi-
ble to receive deductible contributions.
Former Public Charities.The following
organizations (which have been treated as
organizations that are not private founda-
tions described in section 509(a) of the
Code) are now classified as private foun-
dations:
Acosta Garcia Foundation, Arlington, TX
Admiral Richard E. Byrd Monument
Restoration Fund, Midlothian, VA
Advocacy Group Tag, Waterford, MI
Aeromedical Training Institute Limited,
Alexandria, VA
Alliance for Ethics in Nursing, Tulsa,
OK
Arkansas Society for Parenteral and
Enteral Nutrition, Little Rock, AR
Art of Living Wellness Institute,
Houston, TX
Ayehu Brehan Foundation Inc., Fort
Washington, MD
Bijela Foundation, Westfield, NJ
Black Achievers Voices of Cleveland,
Shaker Hts., OH
Bradford House, Harvey, IL
Brick Town Soccer Association Inc.,
Brick, NJ
Bruin Athletic Club Inc., Orem, UT
Campership Fund for Christian Scientists
in Georgia, Atlanta, GA
Caring Corner Inc., Dallas, TX
Center for Academic Excellence, Naples,
NC
Center for Applied Environmental
Technology, Ashburn, VA
Center for Perinatal Research and Family
Support Corporation, Roseland, NJ
Church of New Beginnings in Christ,
Philadelphia, PA
Collegium Aesculapium Foundation, Inc.,
Provo, UT
Computer Recycling Center, Santa Clara,
CA
Crafton Foundation, Pittsburgh, PA
Dave Tiberi Youth Center Inc.,
Wilmington, DE
Donna and Richard Fishel Foundation,
Inc., Dallas, TX
Dr. Martin Luther King Jr. Committee of
Las Vegas Nevada, Las Vegas, NV
Eastwind Community Development
Corporation, Baltimore, MD
Endeavor Project, Houston, TX
Evang Blessed Hope in Christ, Stockton,
CA
Extended Hours Program, Washington,
DC
Extra Mile Ministry Inc., Tavares, FL
Foundation for Real Estate Education of
the Ft. Myers-Association, Ft. Myers,
FL
Good Music Society Inc., Tyler, TX
Good Shepherd Retreat Center Inc.,
Ashtabula, OH
Greenville Steering Non Profit Housing
Corporation, Jersey City, NJ
Gueydan Museum and Cultural Art
Society, Gueydan, LA
Hall of Fame Youth Foundation Inc.,
Augusta, GA
Harbor Foundation Inc., Decatur, GA
Hawk Voice Education Foundation Inc.,
College Park, MD
Heritage Foundation of Tennessee, Inc.,
Memphis, TN
Hispanic Century Fund, Philadelphia,
PA
Homeless Organization, Akron, OH
Humboldt Historic Preservation Alliance
Incorporated, Humboldt, KS
Ilyssa Schwartz Leukemia Foundation,
Inc., Pine Brook, NJ
International Conference of Evangelicals
Alliance, Inc., Roswell, GA
International Creative Marquetry Society,
Denver, CO
International Dante Seminar Inc.,
Princeton, NJ
International Network for Education and
Technology, American Fork, UT
Iowa Shakespeare Project Inc.,
Des Moines, IA
Jack Trowell Scholarship Fund Inc.,
Washington, DC
Jimenez Sanctuary Inc., Arlington, VA
Joseph E. Mertz Memorial Educational
Foundation, Inc., Cleveland, TN
Key Knock Enter Yield Center Inc.,
Jacksonville, FL
Kidney Group, Washington, DC
Kuhiston Foundation, Boulder, CO
Lafayette Public Library Association,
Lafayette, LA
Leadership Project Inc., Athens, OH
Lemonade Opera Company, Alamo, TX
Lite Circle Inc., Baltimore, MD
Masterworks Choir A New Jersey
Nonprofit Corporation, Ocean City,
NJ
Miller Scholarship Foundation LTD.,
Baltimore, MD
Mission Gospel Train, Vernon, TX
Nashville Dance Project, Nashville, TN
National Autism and Communication
Research Institute, Eugene, OR
New American Stage Company Inc.,
Charleston, SC
New Generation Youth Foundation, Los
Angeles, CA
New Way A Helping Hand, Yardley, PA
90th Anniversary Celebration of Korean
Immigration to Hawaii, Honolulu, HI
North Carolina Chapter of the Health
Physics Society, Inc., Graham, NC
Ohio Center for Native American Affairs,
Columbus, OH
Omega Education Foundation
Incorporated, Gary, IN
O’Neil Hadnott Scholarship Fund Inc.,
Santa Monica, CA
Order of St. Markella of Chios Inc., New
Orleans, LA
Orders of Saint Francis of the Anglican
Catholic Church, Inc., Louisville, KY
Pacer Connection Inc., Indianapolis, IN
Parent Organization of Villa Angela-Saint
Joseph High School, Cleveland, OH
Parke County Veterans Council Inc.,
Rockville, IN
Performing Arts Foundation Inc.,
Memphis, TN
Pittsburg Community Foundation,
Pittsburg, KS
Playground, Brookings, SD
Princeton Tiger Lilies Ice Hockey
Association Inc., Princeton, NJ
Recovery Connection Inc., Joliet, IL
Reno Sparks Group Theatre, Sparks, NV
Richmond County Coalition of Substance
Abuse Project Reclaim, Inc.,
Hephzibah, GA

June 22, 1998121998–25 I.R.B.
Sacramento Blues Society, Sacramento,
CA
Scrub Land Trust Inc., Melbourne, FL
Self Help Organization Inc.-Sho,
Baltimore, MD
Spirit for a New Generation Foundation,
Palm Desert, CA
Stacey Ann Boe Memorial Fund Inc.,
Atlanta, GA
Student Theater Arts Group Experience
Inc., Glen Mills, PA
Students for Political Understanding Inc.,
Catonsville, MD
Students for the Prevention of Aids SPA
Inc., Tucson, AZ
Students Taking an Active Role Inc.,
Baltimore, MD
Stunts for Science Students Inc.,
Memphis, TN
Sue Carver Share and Care Group Inc.,
Robinson, IL
Sufficient Grace Foundation, Tulsa, OK
Sugar Land Community Orchestra, Sugar
Land, TX
Suited for Change, Washington, DC
Summer Creek Commons Gardens,
Tigard, OR
Summer Funner Theatre, Colorado
Springs, CO
Summertime Players Inc., Monon, IN
Summit Christian Academy Inc., Dallas,
TX
Sundiata African-American Cultural
Association, Seattle, WA
Sunnyside Neighborhood Center,
Houston, TX
Sunnyside South Corridor Community
Coalition Inc., Houston, TX
Sunrise Childrens Foundation, Long
Beach, CA
Sunshine and Rainbows Inc., Hendrum,
MN
Sunshine Fields Day Care Inc., Cedar
Springs, MI
Supa Inc., Los Angeles, CA
Support Our School Foundation, Attalla,
AL
Sussex Whitetail Hunter Inc., Sussex, WI
Susquehanna Service Dogs, Harrisburg,
PA
Suwanne County Friends of the Library
Inc., Live Oak, FL
Suwanne River Area Health Education
Center Inc., Alachua, FL
Sweet Auburn Area Improvement
Association Inc., Atlanta, GA
Sword of the Spirit-Minneapolis St. Paul,
Minneapolis, MN
Sydia Group Home Inc., Altadena, CA
Szyfra Institute for Artisan Training, Inc.,
Hollywood Beach, FL
TBECC, Ogden, UT
T R S A, Kaufman, TX
Tahoe Truckee Housing Development
Corporation, Truckee, CA
Take A Stand Inc., Lakewood, OH
Talent Artistic Juvenile Inc., Hialeah, FL
Talladega Beautification Association,
Talladega, AL
Tallahatchie Housing Inc., Webb, MS
Tamar Inc., Lincoln, NE
Tampa Bay Total Quality Management
Network Inc., Tampa, FL
Tampa Theatre Inc., Tampa, FL
Tarrant County Emergency Nurses
Association, Granbury, TX
Tarrant County Homes Inc., Fort Worth,
TX
Tarzana Hospital and Community
Foundation, Tarzana, CA
Tass Inc., Glenside, PA
Tate Baseball Booster Inc., Gonzalez, FL
Tautphaus Park Zoological Society Inc.,
Idaho Falls, ID
Taylor Allderdice Hockey Club,
Pittsburgh, PA
Taylor Home of Charlotte Inc., Charlotte,
NC
Team A Inc., South Bend, IN
Team Alpine, Olympia, WA
Team Indiana Inc., Indianapolis, IN
Team Parents Booster Club, Kansas City,
MO
Teamster Retiree Housing, Washington,
DC
Tech-Knowledge Bank LTD, Hunt
Valley, MD
Technologies Users of Broward Tub Inc.,
S. Florida, FL
Technology Institute, Los Alamos, NM
Tee Foundation, Mechanicsburg, PA
Teen Life for Christ, Dallas, TX
Teen Life Inc., Gadsden, AL
Teen Pregnancy Coalition of Oklahoma
County, Inc., Oklahoma City, OK
Telecommunications Information Project,
Salt Lake City, UT
Telemedicine U S A Inc., Ontario Canada
Tell the Truth Ministries Inc., Milwaukee,
WI
Tennessee Ballet Theatre, Johnson City,
TN
Tennessee River Museum, Savannah,
TN
Tennessee Trucking Foundation Inc.,
Nashville, TN
Tennis & College Club Inc.,
Birmingham, AL
Tetelestai Ministries, Bellevue, WA
Texana Arts Council, Francitas, TX
Texas Association of Leather Artists,
Houston, TX
Texas Castles, Austin, TX
Texas Council of Child Welfare Boards,
Bryan, TX
Texas Environmental Consortium,
San Antonio, TX
Texas Federal Child Care Nutritional
Program, Incorporated, Houston, TX
Texas Fire Chiefs Association
Foundation, Inc., Austin, TX
Texas Partners Foundation, Austin, TX
Texas Social Services Inc., Houston, TX
Texas Superstar Foundation, Houston,
TX
Texas Trails Network, Dallas, TX
Texas Veteran Foundation, Austin, TX
Texoma Charity Golf Classic Inc.,
Sherman, TX
Thad E. Saleeby Center Volunteer
Services, Inc., Hartsville, SC
Theatrefaire for Children, Lake Forest,
CA
Thee Way Out, Seattle, WA
Therapeutic Alternative Care Programs,
Columbia, MO
Think Twice Foundation, Southfield,
MI
Third Planet Theatre, Dallas, TX
Third World Foundation Inc., College
Park, MD
This is Colombia, Oak Brook, IL
Thomas Arthur Productions Inc.,
Florence, SC
Thornapple River Watershed Group Inc.,
Caledonia, MI
Those in Need Inc., Moundsville, WV
Three Places Productions Inc., Tucson,
AZ
Thumbs Up Vidor Inc., Vidor, TX
Thunder Road Ensemble, Chicago, IL
Thurman Brisben Homeless Shelter Inc.,
Fredericksburg, VA
Thy Kingdom Come Ministries, Denver,
CO
Tibetan Resettlement Project-New,
Albuquerque, NM
Tidewater Chapter of the Association of
Military Surgeons, Chesapeake, VA
Tidewater Sampler Guilde Inc., Virginia
Beach, VA
Tiffin-Seneca Teen Center, Tiffin, OH
Tiftons Charlie Brown Playhouse, Tifton,
GA

Total Care Living Center Incorporated,
Baltimore, MD
Training Trust Inc. c/o Nak Inc., England
Tri-County Sister Help Inc., Rock Hill,
SC
Tropical Flora and Fauna Preservation
Society, Houston, TX
US Georgia Foundation Inc., Washington,
DC
Vietnamese Nationalist Organization of
Dallas Vicinities, Garland, TX
Vietnamese Volunteer Youth Association,
West Valley City, UT
Welcome House Inc., Crowley, LA
Wild Side Inc., Wayne, PA
Williamstown Area Development
Corporation, Williamstown, WV
If an organization listed above submits
information that warrants the renewal of
its classification as a public charity or as a
private operating foundation, the Internal
Revenue Service will issue a ruling or de-
termination letter with the revised classi-
fication as to foundation status. Grantors
and contributors may thereafter rely upon
such ruling or determination letter as pro-
vided in section 1.509(a)–7 of the Income
Tax Regulations. It is not the practice of
the Service to announce such revised clas-
sification of foundation status in the Inter-
nal Revenue Bulletin.
1998–25 I.R.B.13June 22, 1998

June 22, 1998141998–25 I.R.B.
Announcement of the Expedited Suspension of Attorneys, Certified Public
Accountants, Enrolled Agents, and Enrolled Actuaries From Practice
Before the Internal Revenue Service
Under title 31 of the Code of Federal
Regulations, section 10.76, the Director
of Practice is authorized to immediately
suspend from practice before the Internal
Revenue Service any practitioner who,
within five years from the date the expe-
dited proceeding is instituted, (1) has had
a license to practice as an attorney, certi-
fied public accountant, or actuary sus-
pended or revoked for cause; or (2) has
been convicted of any crime under title 26
of the United States Code or, of a felony
under title 18 of the United States Code
involving dishonesty or breach of trust.
Attorneys, certified public accountants,
enrolled agents, and enrolled actuaries are
prohibited in any Internal Revenue Service
matter from directly or indirectly employ-
ing, accepting assistance from, being em-
ployed by, or sharing fees with, any practi-
tioner disbarred or suspended from practice
before the Internal Revenue Service.
To enable attorneys, certified public ac-
countants, enrolled agents, and enrolled ac-
tuaries to identify practitioners under expe-
dited suspension from practice before the
Internal Revenue Service, the Director of
Practice will announce in the Internal Rev-
enue Bulletin the names and addresses of
practitioners who have been suspended
from such practice, their designation as at-
torney, certified public accountant, en-
rolled agent, or enrolled actuary, and date
or period of suspension. This announce-
ment will appear in the weekly Bulletin at
the earliest practicable date after such ac-
tion and will continue to appear in the
weekly Bulletins for five successive weeks
or for as many weeks as is practicable for
each attorney, certified public accountant,
enrolled agent, or enrolled actuary so sus-
pended and will be consolidated and pub-
lished in the Cumulative Bulletin.
The following individual has been
placed under suspension from practice be-
fore the Internal Revenue Service by virtue
of the expedited proceeding provisions of
the applicable regulations:
NameAddressDesignationDate of Suspension
McDonald, MiltonStone Mountain, GAAttorneyIndefinite from February 24, 1998
Parsons, Gary D.Chattanooga, TNCPAIndefinite from February 24, 1998
Buchanan, StevenPhoenix, AZAttorneyIndefinite from February 24, 1998
Caplan, AlanSan Francisco, CAAttorneyIndefinite from February 24, 1998
Delany, R. EmmetRidgefield, CTAttorneyIndefinite from February 24, 1998
Hirsch, SheldonBrooklyn, NYCPAIndefinite from February 24, 1998
Newman, Peter R.Syossett, NYAttorneyIndefinite from February 24, 1998
Land, GaryFayetteville, AREnrolled AgentIndefinite from February 24, 1998
Hunt, William D.Tulsa, OKAttorneyIndefinite from February 24, 1998
Hamilton, RobertCorpus Christie, TXAttorneyIndefinite from February 24, 1998
Rabinowitz, EmileMinnetonka, MNEnrolled AgentIndefinite from February 24, 1998
McCaffrey, MichaelWheaton, ILCPAIndefinite from February 24, 1998
Eisenstein, JoelSt. Charles, MOAttorneyIndefinite from February 24, 1998
Cannavo Jr., Joseph S.St. Louis, MOAttorneyIndefinite from February 24, 1998
Tilker, Robert M.Fairfax, VACPAIndefinite from February 24, 1998
Toms, James H.Hendersonville, NCAttorneyIndefinite from February 24, 1998
Everett, KennethNew York, NYAttorneyIndefinite from February 24, 1998
Frederick, CharlesElk GroveEnrolled AgentIndefinite from March 13, 1998
Artho, DavidLubbock, TXCPAIndefinite from March 18, 1998
Seale, Forrest I.San Antonio, TXCPAIndefinite from March 18, 1998
Yancey, Quinton E.Stephens City, VACPAIndefinite from March 18, 1998
Hunnicut, BenjaminReseda, CACPAIndefinite from March 18, 1998
Finkel, MerleBeverly Hills, CACPAIndefinite from March 18, 1998
Mullay, Carl P.Swoyersville, PACPAIndefinite from March 18, 1998

1998–25 I.R.B.15June 22, 1998
Cunning, Dennis A.Molalla, ORCPAIndefinite from March 18, 1998
Adamson, Steven A.Nampa, IDAttorneyIndefinite from April 14, 1998
Bowman, David W.Colorado Springs, COAttorneyIndefinite from April 21, 1998
Beezley, Jack L.Dallas, TXAttorneyIndefinite from April 21, 1998
Cunningham, AndrewHatfield, PACPAIndefinite from April 28, 1998
Palmquist, Craig S.Seattle, WAAttorneyIndefinite from April 21, 1998
Ross, Mark J.Columbus, OHAttorneyIndefinite from April 21, 1998
Madoch, LawrenceElgin, ILCPAIndefinite from April 21, 1998
Taylor, George M.Springfield, ILAttorneyIndefinite from April 21, 1998
Casey, Kenneth J.Corte Madera, CACPAIndefinite from April 21, 1998
Akolt III, John P.Denver, COAttorneyIndefinite from April 21, 1998
Dowdy, FrankHuntsville, ALCPAIndefinite from April 28, 1998
Eckert, Bruce G.Cleveland, OHCPAMay 2, 1998 to May 1, 1999
Rozanski, Lawrence J.Pittsburgh, PACPAJune 1, 1998 to May 30, 2000
Mangum, Carl E.Morris Plains, NJCPAJuly 1, 1998 to December 31, 1999
Reeser, Richard M. Thornton, COCPAJuly 1, 1998 to September 30, 1999
Bailey, Thomas O.Dallas, TXCPAJuly 1, 1998 to June 30, 2001
Johnson, Kenneth E.Forest Lake, MNCPAJuly 1, 1998 to November 30, 1999
Deren, JosephLackawanna, NYAttorneyJuly 1, 1998 to June 30, 2001
NameAddressDesignationDate of Suspension

June 22, 1998161998–25 I.R.B.
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:
Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus,
if an earlier ruling held that a principle
applied to A, and the new ruling holds
that the same principle also applies to B,
the earlier ruling is amplified. (Compare
with modified, below).
Clarified is used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously
published ruling and points out an essen-
tial difference between them.
Modified is used where the substance
of a previously published position is
being changed. Thus, if a prior ruling
held that a principle applied to A but not
to B, and the new ruling holds that it ap-
plies to both A and B, the prior ruling is
modified because it corrects a published
position. (Compare with amplified and
clarified, above).
Obsoleted describes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used
in a ruling that lists previously published
rulings that are obsoleted because of
changes in law or regulations. A ruling
may also be obsoleted because the sub-
stance has been included in regulations
subsequently adopted.
Revoked describes situations where the
position in the previously published rul-
ing is not correct and the correct position
is being stated in the new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a pe-
riod of time in separate rulings. If the
new ruling does more than restate the
substance of a prior ruling, a combination
of terms is used. For example, modified
and superseded describes a situation
where the substance of a previously pub-
lished ruling is being changed in part and
is continued without change in part and it
is desired to restate the valid portion of
the previously published ruling in a new
ruling that is self contained. In this case
the previously published ruling is first
modified and then, as modified, is super-
seded.
Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and
that list is expanded by adding further
names in subsequent rulings. After the
original ruling has been supplemented
several times, a new ruling may be pub-
lished that includes the list in the original
ruling and the additions, and supersedes
all prior rulings in the series.
Suspended is used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The following abbreviations in current use and for-
merly used will appear in material published in the
Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C.—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contribution 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 Procedral Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.
Definition of Terms

1998–25 I.R.B.17June 22, 1998
1
See footnote at end of list.
Numerical Finding List
1
Bulletins 1998–1 through 1998–24
Announcements:
98–1, 1998–2 I.R.B. 38
98–2, 1998–2 I.R.B.38
98–3, 1998–2 I.R.B.38
98–4, 1998–4 I.R.B.31
98–5, 1998–5 I.R.B. 25
98–6, 1998–5 I.R.B. 25
98–7, 1998–5 I.R.B. 26
98–8, 1998–6 I.R.B. 96
98–9, 1998–7 I.R.B. 35
98–10, 1998–7 I.R.B. 35
98–11, 1998–8 I.R.B. 42
98–12, 1998–8 I.R.B. 43
98–13, 1998–8 I.R.B. 43
98–14, 1998–8 I.R.B. 44
98–15, 1998–10 I.R.B.36
98–16, 1998–9 I.R.B. 17
98–17, 1998–9 I.R.B. 16
98–18, 1998–10 I.R.B.44
98–19, 1998–10 I.R.B.44
98–20, 1998–11 I.R.B. 25
98–21, 1998–11 I.R.B. 26
98–22, 1998–12 I.R.B. 33
98–23, 1998–12 I.R.B. 34
98–24, 1998–12 I.R.B. 35
98–25, 1998–13 I.R.B.43
98–26, 1998–14 I.R.B. 28
98–27, 1998–15 I.R.B. 30
98–28, 1998–15 I.R.B. 30
98–29, 1998–16 I.R.B. 48
98–30, 1998–17 I.R.B. 38
98–32, 1998–17 I.R.B. 39
98–33, 1998–17 I.R.B. 39
98–34, 1998–17 I.R.B. 39
98–35, 1998–17 I.R.B. 40
98–36, 1998–18 I.R.B. 18
98–37, 1998–19 I.R.B. 24
98–38, 1998–19 I.R.B. 26
98–39, 1998–20 I.R.B.24
98–40, 1998–20 I.R.B. 24
98–41, 1998–20 I.R.B. 25
98–42, 1998–21 I.R.B. 26
98–43, 1998–21 I.R.B. 26
98–44, 1998–22 I.R.B. 24
98–45, 1998–23 I.R.B. 18
98–47, 1998–23 I.R.B. 5
98–48, 1998–24 I.R.B. 6
98–49, 1998–23 I.R.B. 19
98–50, 1998–23 I.R.B. 20
98–51, 1998–24 I.R.B.7
98–52, 1998–24 I.R.B. 37
98–53, 1998–24 I.R.B. 37
Notices:
98–1, 1998–3 I.R.B. 42
98–2, 1998–2 I.R.B. 22
98–3, 1998–3 I.R.B. 48
98–4, 1998–2 I.R.B. 25
98–5, 1998–3 I.B.R.49
98–6, 1998–3 I.R.B. 52
98–7, 1998–3 I.R.B. 54
98–8, 1998–4 I.R.B. 6
98–9, 1998–4 I.R.B. 8
98–10, 1998–6 I.R.B.9
98–11, 1998–6 I.R.B. 18
98–12, 1998–5 I.R.B.12
98–13, 1998–6 I.R.B.19
98–14, 1998–8 I.R.B. 27
Notices—Continued
98–15, 1998–9 I.R.B. 8
98–16, 1998–15 I.R.B. 12
98–17, 1998–11 I.R.B. 6
98–18, 1998–12 I.R.B. 11
98–19, 1998–13 I.R.B.24
98–20, 1998–13 I.R.B.25
98–21, 1998–15 I.R.B. 14
98–22, 1998–17 I.R.B. 5
98–23, 1998–18 I.R.B. 9
98–24, 1998–17 I.R.B. 5
98–25, 1998–18 I.R.B. 11
98–26, 1998–18 I.R.B. 14
98–27, 1998–18 I.R.B. 14
98–28, 1998–19 I.R.B.7
98–29, 1998–22 I.R.B.8
98–30, 1998–22 I.R.B. 9
98–31, 1998–22 I.R.B. 10
98–32, 1998–22 I.R.B. 23
Proposed Regulations:
PS–158–86, 1998–11 I.R.B. 13
REG–100841–97, 1998–8 I.R.B. 30
REG–102144–98, 1998–15 I.R.B.25
REG–102894–97, 1998–3 I.R.B. 59
REG–104062–97, 1998–10 I.R.B. 34
REG–104537–97, 1998–16 I.R.B. 21
REG–104691–97, 1998–11 I.R.B. 13
REG–105163–97, 1998–8 I.R.B. 31
REG–109333–97, 1998–9 I.R.B. 9
REG–109704–97, 1998–3 I.R.B. 60
REG–110965–97, 1998–13 I.R.B. 42
REG–115795–97, 1998–8 I.R.B.33
REG–119449–97, 1998–10 I.R.B. 35
REG–120200–97, 1998–12 I.R.B. 32
REG–120882–97, 1998–14 I.R.B. 25
REG–121268–97, 1998–20 I.R.B. 12
REG–121755–97, 1998–9 I.R.B. 13
REG–208299–90, 1998–16 I.R.B. 26
REG–209276–87, 1998–11 I.R.B. 18
REG–209322–82, 1998–15 I.R.B. 26
REG–209373–81, 1998–14 I.R.B. 26
REG–209463–82, 1998–4 I.R.B. 27
REG–209476–82, 1998–8 I.R.B. 36
REG–209484–87, 1998–8 I.R.B.40
REG–209485–86, 1998–11 I.R.B. 21
REG–209682–94, 1998–17 I.R.B. 20
REG–209807–95, 1998–8 I.R.B. 40
REG–243025–96, 1998–18 I.R.B. 18
REG–251502–96, 1998–9 I.R.B. 14
REG–251698–96, 1998–20 I.R.B. 14
Revenue Procedures:
98–1, 1998–1 I.R.B. 7
98–2, 1998–1 I.R.B. 74
98–3, 1998–1 I.R.B. 100
98–4, 1998–1 I.R.B. 113
98–5, 1998–1 I.R.B. 155
98–6, 1998–1 I.R.B. 183
98–7, 1998–1 I.R.B. 222
98–8, 1998–1 I.R.B. 225
98–9, 1998–3 I.R.B. 56
98–10, 1998–2 I.R.B. 35
98–11, 1998–4 I.R.B.9
98–12, 1998–4 I.R.B. 18
98–13, 1998–4 I.R.B. 21
98–14, 1998–4 I.R.B. 22
98–15, 1998–4 I.R.B. 25
98–16, 1998–5 I.R.B. 19
98–17, 1998–5 I.R.B. 21
Revenue Procedures—Continued
98–18, 1998–6 I.R.B. 20
98–19, 1998–7 I.R.B. 30
98–20, 1998–7 I.R.B. 32
98–21, 1998–8 I.R.B. 27
98–22, 1998–12 I.R.B. 11
98–23, 1998–10 I.R.B. 30
98–24, 1998–10 I.R.B. 31
98–25, 1998–11 I.R.B. 7
98–26, 1998–13 I.R.B.26
98–27, 1998–15 I.R.B.15
98–28, 1998–15 I.R.B.14
98–29, 1998–15 I.R.B. 22
98–30, 1998–17 I.R.B. 6
98–31, 1998–23 I.R.B. 9
98–32, 1998–17 I.R.B. 11
98–33, 1998–19 I.R.B. 7
98–34, 1998–18 I.R.B. 15
98–35, 1998–21 I.R.B. 6
98–36, 1998–23 I.R.B. 10
Revenue Rulings:
98–1, 1998–2 I.R.B. 5
98–2, 1998–2 I.R.B. 15
98–3, 1998–2 I.R.B. 4
98–4, 1998–2 I.R.B. 18
98–5, 1998–2 I.R.B. 20
98–6, 1998–4 I.R.B. 4
98–7, 1998–6 I.R.B.6
98–8, 1998–7 I.R.B. 24
98–9, 1998–6 I.R.B. 5
98–10, 1998–10 I.R.B. 11
98–11, 1998–10 I.R.B. 13
98–12, 1998–10 I.R.B. 5
98–13, 1998–11 I.R.B. 4
98–14, 1998–11 I.R.B. 4
98–15, 1998–12 I.R.B. 6
98–16, 1998–13 I.R.B. 18
98–17, 1998–13 I.R.B. 21
98–18, 1998–14 I.R.B. 22
98–19, 1998–15 I.R.B. 5
98–20, 1998–15 I.R.B. 8
98–21, 1998–18 I.R.B. 7
98–22, 1998–19 I.R.B.5
98–23, 1998–18 I.R.B. 5
98–24, 1998–19 I.R.B. 6
98–25, 1998–19 I.R.B.4
98–26, 1998–21 I.R.B. 4
98–27, 1998–22 I.R.B. 4
98–28, 1998–22 I.R.B. 5
98–29, 1998–24 I.R.B.4
Treasury Decisions:
8740, 1998–3 I.R.B. 4
8741, 1998–3 I.R.B. 6
8742, 1998–5 I.R.B.4
8743, 1998–7 I.R.B. 26
8744, 1998–7 I.R.B. 20
8745, 1998–7 I.R.B. 15
8746, 1998–7 I.R.B. 4
8747, 1998–7 I.R.B. 18
8748, 1998–8 I.R.B. 24
8749, 1998–7 I.R.B. 16
8750, 1998–8 I.R.B. 4
8751, 1998–10 I.R.B. 23
8752, 1998–9 I.R.B. 4
8753, 1998–9 I.R.B. 6
8754, 1998–10 I.R.B. 15
8755, 1998–10 I.R.B. 21
8756, 1998–12 I.R.B.4
8757, 1998–13 I.R.B.4

June 22, 1998181998–25 I.R.B.
Numerical Finding List—Continued
Bulletins 1998–1 through 1998–24
Treasury Decisions—Continued
8758, 1998–13 I.R.B. 15
8759, 1998–13 I.R.B. 19
8760, 1998–14 I.R.B. 4
8761, 1998–14 I.R.B. 13
8762, 1998–14 I.R.B. 15
8763, 1998–15 I.R.B. 5
8764, 1998–15 I.R.B. 9
8765, 1998–16 I.R.B. 11
8766, 1998–16 I.R.B. 17
8767, 1998–16 I.R.B. 4
8768, 1998–20 I.R.B.4
1
A cumulative list of all revenue rulings, revenue
procedures, Treasury decisions, etc., published in
Internal Revenue Bulletins 1997–27 through
1997–52 will be found in Internal Revenue Bulletin
1998–1, dated January 5, 1998.

1998–25 I.R.B.19June 22, 1998
Finding List of Current Actions
on Previously Published Items
1
Bulletins 1998–1 through 1998–24
Revenue Procedures:
91–59
Updated and superseded by
98–25, 1998–11 I.R.B. 7
94–16
Modified and superseded by
98–22, 1998–12 I.R.B. 11
93–62
Modified and superseded by
98–22, 1998–12 I.R.B. 11
95–35
95–35A
Superseded by
98–19, 1998–7 I.R.B. 30
96–29
Modified and superseded by
98–22, 1998–12 I.R.B. 11
97–1
Superseded by
98–1, 1998–1 I.R.B. 7
97–2
Superseded by
98–2, 1998–1 I.R.B. 74
97–3
Superseded by
98–3, 1998–1 I.R.B. 100
97–4
Superseded by
98–4, 1998–1 I.R.B. 113
97–5
Superseded by
98–5, 1998–1 I.R.B. 155
97–6
Superseded by
98–6, 1998–1 I.R.B. 183
97–7
Superseded by
98–7, 1998–1 I.R.B. 222
97–8
Superseded by
98–8, 1998–1 I.R.B. 225
97–21
Superseded by
98–2, 1998–1 I.R.B. 74
97–24
97–24A
Superseded by
98–33, 1998–19 I.R.B. 7
97–26
Obsoleted by
98–28, 1998–15 I.R.B. 14
97–28
Superseded by
98–36, 1998–23 I.R.B. 10
97–34
Superseded by
98–35, 1998–21 I.R.B. 6
Revenue Procedures—Continued
97–53
Superseded by
98–3, 1998–1 I.R.B. 100
Revenue Rulings:
68–352
Obsoleted by
98–24, 1998–19 I.R.B. 6
70–225
Modified by
98–27, 1998–22 I.R.B. 4
73–198
Modified by
98–24, 1998–19 I.R.B. 6
75–17
Supplemented and superseded by
98–5, 1998–2 I.R.B. 20
75–406
Obsoleted by
98–27, 1998–22 I.R.B. 4
92–19
Supplemented in part by
98–2, 1998–2 I.R.B. 15
96–30
Obsoleted by
98–27, 1998–22 I.R.B. 4
1
A cumulative finding list for previously published
items mentioned in Internal Revenue Bulletins
1997–27 through 1997–52 will be found in Internal
Revenue Bulletin 1998–1, dated January 5, 1998.

Notes
June 22, 1998201998–25 I.R.B.

Notes
1998–25 I.R.B.21June 22, 1998

Notes
June 22, 1998221998–25 I.R.B.

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