Source: https://www.irs.gov/irb/2012-27_IRB
Timestamp: 2018-03-17 10:12:46
Document Index: 346546877

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Internal Revenue Bulletin: 2012-27 | Internal Revenue Service
Internal Revenue Bulletin: 2012-27
Rev. Rul. 2012-20
Announcement 2012-26
Announcement 2012-27
Announcement 2012-28
Rev. Rul. 2012-20 Rev. Rul. 2012-20
Federal rates; adjusted federal rates; adjusted federal long-term rate and the long-term exempt rate. For purposes of sections 382, 642, 1274, 1288, and other sections of the Code, tables set forth the rates for July 2012.
REG-134042-07 REG-134042-07
Proposed regulations under section 1366 of the Code relate to basis of indebtedness of S corporations to their shareholders. The proposed regulations provide that S corporation shareholders increase their basis of indebtedness of the S corporation to the shareholder only if the indebtedness is bona fide. The proposed regulations affect shareholders of S corporations. A public hearing is scheduled for October 9, 2012.
Rev. Proc. 2012-28 Rev. Proc. 2012-28
This procedure provides a safe harbor for determining whether a publicly traded partnership’s (PTP’s) income from discharge of indebtedness (COD income) is qualifying income under section 7704(d) of the Code for the purpose of meeting the qualifying income exception in section 7704(c). The safe harbor treats COD income attributable to debt incurred in direct connection with the PTP’s activities that generate qualifying income (qualifying activities) as qualifying income.
Announcement 2012-27 Announcement 2012-27
This announcement withdraws (REG-100276-97) relating to financial asset securitization trusts (FASITs) under sections 860H through 860L of the Code. The FASIT provisions were repealed by PL 108-357, effective January 1, 2005, with limited exception for existing FASITs.
Announcement 2012-26 Announcement 2012-26
The following is a copy of the Competent Authority Agreement (“the Agreement”) entered into on May 21, 2012, by the Competent Authorities of the United States and the Netherlands regarding the eligibility of a besloten fonds voor gemene rekening (limited fund for mutual account) (“LFMA”) and its participants for treaty-reduced rates of withholding on U.S. source dividends and interest under the Convention between the Kingdom of the Netherlands and the United States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital Gains, signed on December 18, 1992, and amended by Protocols signed on October 13, 1993 and March 8, 2004.
This revenue ruling provides various prescribed rates for federal income tax purposes for July 2012 (the current month). Table 1 contains the short-term, mid-term, and long-term applicable federal rates (AFR) for the current month for purposes of section 1274(d) of the Internal Revenue Code. Table 2 contains the short-term, mid-term, and long-term adjusted applicable federal rates (adjusted AFR) for the current month for purposes of section 1288(b). Table 3 sets forth the adjusted federal long-term rate and the long-term tax-exempt rate described in section 382(f). Table 4 contains the appropriate percentages for determining the low-income housing credit described in section 42(b)(1) for buildings placed in service during the current month. However, under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after July 30, 2008, and before December 31, 2013, shall not be less than 9%. Table 5 contains the federal rate for determining the present value of an annuity, an interest for life or for a term of years, or a remainder or a reversionary interest for purposes of section 7520. Finally, Table 6 contains the blended annual rate for 2012 for purposes of section 7872.
REV. RUL. 2012-20 TABLE 1
Applicable Federal Rates (AFR) for July 2012
AFR .24% .24% .24% .24%
110% AFR .26% .26% .26% .26%
120% AFR .29% .29% .29% .29%
130% AFR .31% .31% .31% .31%
AFR .92% .92% .92% .92%
110% AFR 1.01% 1.01% 1.01% 1.01%
120% AFR 1.10% 1.10% 1.10% 1.10%
130% AFR 1.20% 1.20% 1.20% 1.20%
150% AFR 1.38% 1.38% 1.38% 1.38%
175% AFR 1.62% 1.61% 1.61% 1.60%
AFR 2.30% 2.29% 2.28% 2.28%
110% AFR 2.54% 2.52% 2.51% 2.51%
120% AFR 2.77% 2.75% 2.74% 2.73%
130% AFR 3.00% 2.98% 2.97% 2.96%
REV. RUL. 2012-20 TABLE 2
Adjusted AFR for July 2012
Mid-term adjusted AFR 1.05% 1.05% 1.05% 1.05%
Long-term adjusted AFR 3.02% 3.00% 2.99% 2.98%
REV. RUL. 2012-20 TABLE 3
Rates Under Section 382 for July 2012
Adjusted federal long-term rate for the current month 3.02%
REV. RUL. 2012-20 TABLE 4
Appropriate Percentages Under Section 42(b)(1) for July 2012
Appropriate percentage for the 70% present value low-income housing credit 7.37%
REV. RUL. 2012-20 TABLE 5
Rate Under Section 7520 for July 2012
Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years, or a remainder or reversionary interest 1.2%
REV. RUL. 2012-20 TABLE 6
Blended Annual Rate for 2012
Section 7872(e)(2) blended annual rate for 2012 .22%
This revenue procedure provides a safe harbor under which the Internal Revenue Service (IRS) will not challenge a determination by a publicly traded partnership (PTP) that income from discharge of indebtedness (COD income) is qualifying income under section 7704(d) of the Internal Revenue Code.
The principal author of this revenue procedure is Wendy L. Kribell of the Office of Associate Chief Counsel (Passthroughs & Special Industries). For further information regarding this revenue procedure, contact Wendy L. Kribell at (202) 622-3050 (not a toll-free call).
Notice of Proposed Rulemaking and Notice of Public Hearing Basis of Indebtedness of S Corporations to their Shareholders
Written or electronic comments must be received by September 10, 2012. Requests to speak and outlines of topics to be discussed at the public hearing scheduled for October 9, 2012, must be received by September 10, 2010.
Send submissions to: CC:PA:LPD:PR (REG-134042-07), room 5203, Internal Revenue Service, PO Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-134042-07), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC, or sent electronically, via the Federal eRulemaking Portal at www.regulations.gov (IRS REG-134042-07). The public hearing will be held in the auditorium, Internal Revenue Building, 1111 Constitution Avenue, NW, Washington, DC.
This document proposes amendments to §1.1366-2 of the Income Tax Regulations. In addition, this document proposes conforming changes to the effective date rules provided in §1.1366-5.
Under section 1366(d)(1) of the Internal Revenue Code (Code), the aggregate amount of losses and deductions that a shareholder takes into account for any taxable year cannot exceed the sum of that shareholder’s adjusted basis in stock and adjusted basis of any indebtedness of the S corporation to that shareholder. The Senate Report discussing section 1374 (the predecessor statute to section 1366) illustrates Congress’s intent to limit the loss that a shareholder takes into account to that shareholder’s investment in the corporation; that is, to the adjusted basis of the stock in the corporation owned by the shareholder and the adjusted basis of any indebtedness of the corporation to the shareholder. S. Rept. 1983, 85th Cong., 2d Sess. 219-220 (1958) (1958-3 C.B. 922, 1141).
Section 1.1366-2 provides rules relating to limitations on deduction of passthrough items of an S corporation to its shareholder. Under §1.1366-2(a)(1), a shareholder’s aggregate amount of losses and deductions taken into account under §1.1366-1(a)(2), (3), and (4) for any taxable year of the S corporation cannot exceed that shareholder’s adjusted basis in stock in the corporation and adjusted basis of any indebtedness of the corporation to that shareholder. These proposed amendments to the regulations provide that, in order to increase a shareholder’s basis of indebtedness, a loan must represent bona fide indebtedness of the S corporation that runs directly to the shareholder. These proposed regulations also reaffirm that a shareholder acting as guarantor of S corporation indebtedness does not create or increase basis of indebtedness simply by becoming a guarantor.
Section 1366(d)(1) provides that a shareholder can take into account losses and deductions to the extent of the adjusted basis of the shareholder’s stock and the adjusted basis of any indebtedness of the S corporation to the shareholder (basis of indebtedness). The Code does not define basis of indebtedness, but several court cases involving passthrough losses from an S corporation interpret section 1366 to require an investment in the S corporation that constitutes “an actual economic outlay” by the shareholder to create basis of indebtedness. See, for example, Maloof v. Comm’r, 456 F.3d 645, 649-650 (6th Cir. 2006); Spencer v. Comm’r, 110 T.C. 62, 78-79 (1998), aff’d without published opinion, 194 F.3d 1324 (11th Cir. 1999); Hitchins v. Comm’r, 103 T.C. 711, 715 (1994); Perry v. Comm’r, 54 T.C. 1293, 1296 (1970). Often, the cases involve attempts by an S corporation shareholder to obtain basis of indebtedness by borrowing from another person—typically, a related entity—and then lending the proceeds to the S corporation (a back-to-back loan transaction). Alternatively, an S corporation shareholder might seek to restructure an existing loan of the S corporation into a back-to-back loan by assuming the S corporation’s liability on the loan and creating a commensurate obligation from the S corporation to the shareholder. Disputes continue to arise concerning when a back-to-back loan gives rise to an actual economic outlay, in particular whether a shareholder has been made “poorer in a material sense” as a result of the loan. See, for example, Oren v. Comm’r, 357 F.3d 854, 857-859 (8th Cir. 2004); Bergman v. U.S., 174 F.3d 928, 932 (8th Cir. 1999).
The key requirement of these proposed regulations is that purported indebtedness of the S corporation to a shareholder must be bona fide indebtedness to the shareholder. These proposed regulations do not attempt to provide a different standard for purposes of section 1366 as to what constitutes bona fide indebtedness. Rather, general Federal tax principles—many of which have developed outside of section 1366—determine whether indebtedness is bona fide. See, for example, Knetsch v. U.S., 364 U.S. 361 (1960) (disallowing interest deductions for lack of actual indebtedness); Geftman v. Comm’r, 154 F.3d 61, 68-75 (3d Cir. 1998) (based on the objective attributes and the economic realities of the transaction, holding that the transaction at issue was not a bona fide debt); Estate of Mixon v. U.S., 464 F.2d 394, 402 (5th Cir. 1972) (discussion of factors indicative that debt is bona fide); Litton Business Systems, Inc. v. Comm’r, 61 T.C. 367, 376-77 (1973).
By contrast, shareholder guarantees of S corporation debt do not result in basis of indebtedness. An overwhelming majority of courts considering whether shareholders may increase basis of indebtedness from their guarantees of S corporation debt determined that the shareholders’ guarantees did not create basis of indebtedness. Where an S corporation shareholder acts merely as a guarantor of a loan made by another party directly to the S corporation, or acts in a capacity similar to a guarantor (for example, as a surety or accommodation party), then the courts have held that the shareholder adjusts basis of indebtedness only to the extent the shareholder actually performs under the guarantee. See, for example, Estate of Leavitt v. Comm’r, 875 F.2d 420 (4th Cir. 1989); Frankel v. Comm’r, 61 T.C. 343 (1973), aff’d without published opinion, 506 F.2d 1051 (3d Cir. 1974); Raynor v. Comm’r, 50 T.C. 762 (1968); Weisberg v. Comm’r, T.C. Memo. 2010-55; Maloof v. Comm’r, T.C. Memo. 2005-75, aff’d, 456 F.3d 645 (6th Cir. 2006); Wise v. Comm’r, T.C. Memo. 1997-135. But see Selfe v. U.S., 778 F.2d 769 (11th Cir. 1985) (holding that under unique and limited circumstances, a shareholder who guarantees a loan to an S corporation may increase basis of indebtedness where, in substance, that shareholder has borrowed funds and subsequently advanced them to the S corporation). These proposed regulations provide that an S corporation shareholder who merely acts as a guarantor or in a similar capacity has not created basis of indebtedness unless the shareholder actually makes a payment, and then only to the extent of such payment. See also Rev. Rul. 70-50, 1970-1 C.B. 178, (see §601.601(d)(2)).
Additionally, some taxpayers have relied on an “incorporated pocketbook” theory to claim an increase in basis of indebtedness in circumstances that involve a loan directly to the S corporation from an entity related to the S corporation shareholder. In these transactions, an S corporation shareholder claims that a transfer from the related entity directly to the shareholder’s S corporation was made on the shareholder’s behalf and is, in substance, a loan from the related entity to the shareholder, followed by a loan from the shareholder to the S corporation. A limited number of court decisions have allowed shareholders to increase basis of indebtedness as a result of incorporated pocketbook transactions. See Yates v. Comm’r, T.C. Memo. 2001-280; Culnen v. Comm’r, T.C. Memo. 2000-139. Under these proposed regulations, an incorporated pocketbook transaction increases basis of indebtedness only where the transaction creates a bona fide creditor-debtor relationship between the shareholder and the borrowing S corporation.
These proposed regulations only address whether a shareholder has basis of indebtedness for purposes of section 1366(d)(1)(B) and do not address how to determine the basis of the shareholder’s stock in the S corporation for purposes of section 1366(d)(1)(A). Therefore, these proposed regulations leave unchanged the conclusion found in published guidance that a shareholder of an S corporation does not increase basis in stock for purposes of section 1366(d)(1)(A) upon the contribution of the shareholder’s own unsecured demand promissory note to the corporation. Rev. Rul. 81-187, 1981-2 C.B. 167. This conclusion is consistent with published guidance and case law in the partnership context that the contribution of the partner’s own note will not increase such partner’s basis in its partnership interest under section 722. Rev. Rul. 80-235, 1980-2 C.B. 229; Oden v. Comm’r, T.C. Memo. 1981-184, aff’d without published opinion, 679 F.2d 885 (4th Cir. 1982) (because the partner incurred no cost in making the note, the partner’s basis in the note to him was zero). In developing this project, the Treasury Department and the IRS have considered whether the principal holding of Rev. Rul. 81-187, and the holding of Rev. Rul. 80-235 as it relates to a partner’s basis in its partnership interest upon the contribution of the partner’s own note, should be promulgated as regulations. The Treasury Department and the IRS have considered alternatives to the discussion of the applicable law in those revenue rulings. As one model, the Treasury Department and the IRS have, with respect to basis calculations in the S corporation and partnership context, considered adopting a rule similar to the one currently in §1.704-1(b)(2)(iv)(d)(2), which provides that a partner’s capital account is increased with respect to non-readily tradable partner notes only (i) when there is a taxable disposition of such note by the partnership, or (ii) when the partner makes principal payments on such note. The Treasury Department and the IRS request comments concerning the propriety of this model in the S corporation and the partnership context.
A public hearing has been scheduled for October 9, 2012, beginning at 10 a.m. in the auditorium of the Internal Revenue Building, 1111 Constitution Avenue, NW, Washington, DC. Due to building security procedures, visitors must enter at the Constitution Avenue entrance. In addition, all visitors must present photo identification to enter the building. Because of access restrictions, visitors will not be admitted beyond the immediate entrance area more than 15 minutes before the hearing starts. For information about having your name placed on the building access list to attend the hearing, see the “FOR FURTHER INFORMATION CONTACT” section of this preamble.
§1.108-7 [Amended]
1. Removing the language “§1.1366-2(a)(5)” in paragraph (d)(2)(iii) and adding “§1.1366-2(a)(6)” in its place.
(2) * * * The revision to the citation to §1.1366-2(a) in paragraph (d)(2)(iii) of this section is applicable on and after the date these proposed regulations are published as final in the Federal Register.
§1.1366-0 [Amended]
1. Redesignating paragraphs (a)(2), (a)(3), (a)(4), (a)(5), and (a)(6) as paragraphs (a)(3), (a)(4), (a)(5), (a)(6), and (a)(7) in the table of contents for §1.1366-2, respectively, and adding a new paragraph (a)(2).
2. Revising the title of §1.1366-5 in the table of contents.
§1.1366-0 Table of contents.
§1.1366-2 Limitations on deduction of passthrough items of an S corporation to its shareholders.
§1.1366-5 Effective/Applicability date.
§1.1366-2 [Amended]
6. Removing the language “paragraphs (a)(1)(ii) and (2)” in newly redesignated paragraph (a)(4)(ii), and adding the language “paragraphs (a)(1)(ii) and (3)” in its place.
(2) Basis of indebtedness—(i) In general. The term basis of any indebtedness of the S corporation to the shareholder means the shareholder’s adjusted basis (as defined in §1.1011-1 and as specifically provided in section 1367(b)(2)) in any bona fide indebtedness of the S corporation that runs directly to the shareholder. Whether indebtedness is bona fide indebtedness to a shareholder is determined under general Federal tax principles and depends upon all of the facts and circumstances.
Example 1. Shareholder loan transaction. A is the sole shareholder of S, an S corporation. S received a loan from A. Whether the loan from A to S constitutes bona fide indebtedness from S to A is determined under general Federal tax principles and depends upon all of the facts and circumstances. See paragraph (a)(2)(i) of this section. If the loan constitutes bona fide indebtedness from S to A, A’s loan to S increases A’s basis of indebtedness under paragraph (a)(2)(i) of this section. The result is the same if A made the loan to S through an entity that is disregarded as an entity separate from A under §301.7701-3.
Example 2. Guarantee. A is a shareholder of S, an S corporation. In 2013, S received a loan from Bank. Bank required A’s guarantee as a condition of making the loan to S. Beginning in 2014, S could no longer make payments on the loan and A made payments directly to Bank from A’s personal funds until the loan obligation was satisfied. For each payment A made on the note, A obtains basis of indebtedness under paragraph (a)(2)(ii) of this section. Thus, A’s basis of indebtedness is increased during 2014 under paragraph (a)(2)(ii) of this section to the extent of A’s payments to Bank pursuant to the guarantee agreement.
Example 3. Back-to-back loan transaction. A is the sole shareholder of two S corporations, S1 and S2. S1 loaned $200,000 to A. A then loaned $200,000 to S2. Whether the loan from A to S2 constitutes bona fide indebtedness from S2 to A is determined under general Federal tax principles and depends upon all of the facts and circumstances. See paragraph (a)(2)(i) of this section. If A’s loan to S2 constitutes bona fide indebtedness from S2 to A, A’s back-to-back loan increases A’s basis of indebtedness in S2 under paragraph (a)(2)(i) of this section.
§1.1366-5 [Amended]
* * * Upon the publication of the Treasury decision adopting these rules as final regulations in the Federal Register, §1.1366-2(a)(2) will apply to transactions entered into on or after the date these proposed regulations are published as final in the Federal Register. In addition, the revisions to §§1.1366-0, 1.1366-2, and this section are applicable on and after the date these proposed regulations are published as final in the Federal Register.
§1.1367-1 [Amended]
Par. 6. Section 1.1367-1(h) Example 5(iii) is amended by removing the language “§1.1366-2(a)(2)” in the third and fourth sentences and adding the language “§1.1366-2(a)(3)” in its place.
§1.1367-3 [Amended]
§1.1367-3 Effective/Applicability date.
* * * The revisions to citations to §1.1366-2(a) in §1.1367-1(h) Example 5(iii) are applicable on and after the date these proposed regulations are published as final in the Federal Register.
(Filed by the Office of the Federal Register on June 11, 2012, 8:45 a.m., and published in the issue of the Federal Register for June 12, 2012, 77 F.R. 34884)
U.S.-Netherlands Agreement on Dutch Limited Funds for Mutual Account
The Competent Authorities of the Netherlands and the United States enter into the following agreement (the “Agreement”) to clarify the application of the Convention between the Kingdom of the Netherlands and the United States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital Gains, signed on December 18, 1992, and amended by Protocols signed on October 13, 1993 and March 8, 2004 (the “Treaty”) with respect to U.S. source dividends and interest paid to a besloten fonds voor gemene rekening (limited fund for mutual account) (“LFMA”). The Agreement is entered into under Article 29 (Mutual Agreement Procedure) of the Treaty.
A LFMA is a Dutch arrangement whereby participants in the LFMA agree to pool their capital to invest collectively in a variety of assets and to share in the proceeds of the investment. A LFMA is not a legal entity, but is an aggregate of the LFMA’s assets and obligations. Each participant in a LFMA is entitled to a pro rata share, based on the size of the investor’s interest in the LFMA, of the LFMA’s assets and any income generated by the LFMA’s assets. A participant’s interest in a LFMA is based on the amount of participations held by the participant. Participations are recorded in registered form and no certificates are issued. Each participation represents an equal interest in the net asset value of the LFMA.
Under Dutch law, a LFMA is treated as a fiscally transparent entity and the participants in the LFMA, wherever resident, are required to take into account separately, on a current basis, the participant’s respective share of an item of income paid to the LFMA, whether or not distributed to the participant. In addition, the character and source of the item of income in the hands of the participant are determined as if such item of income were realized directly from the source from which realized by the LFMA. Accordingly, participants in a LFMA are subject to tax on their proportionate share of the LFMA’s income in the same manner as if they had received the income or assets directly.
It is understood that a LFMA organized under Dutch law is not a “resident” of the Netherlands within the meaning of Article 4 (Resident) of the Treaty because it is not a person that is liable to tax in the Netherlands. Therefore, a LFMA is not eligible to claim benefits in its own right under the Treaty.
Paragraph 4 of Article 24 (Basis of Taxation) of the Treaty provides that:
Pursuant to Article 24(4), the Competent Authorities agree that U.S. source dividends and interest received by a LFMA will be treated as income derived by a resident of the Netherlands to the extent that such income is subject to tax as the income of a resident of the Netherlands. Thus, a person who is a resident of the Netherlands that derives dividends or interest Income through a LFMA may be entitled to treaty benefits if such person otherwise meets all applicable requirements under the Treaty.
A LFMA may claim treaty benefits on behalf of its participants by filing a Form W-8lMY (Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding), in accordance with all applicable U.S. procedures, as either a withholding foreign partnership or a nonwithholding foreign partnership.
Notwithstanding the previous paragraph, a LFMA whose participants are exclusively Netherlands resident tax-exempt companies referred to in points 1) or 2) of Chapter IV of the mutual agreement entered into on August 6, 2007 with respect to the qualification of certain Netherlands entities for benefits under Article 35 (Exempt Pension Trusts) of the Treaty may continue to follow the procedures set forth in Chapter V of that agreement with respect to claims for benefits under Article 35 of the Treaty.
The Agreement will be published in the Dutch Government Gazette (in Dutch: “Staatscourant”) and in the Internal Revenue Bulletin. The Agreement will enter into force from the date of signing the Agreement by the competent authorities of the United States of America and the Netherlands and shall be subject to regular review.
Washington D.C. The Hague
Date: 21/05/2012 Date: 15/05/2012
Michael Danilack H.G.(Harry) Roodbeen
U.S. Competent Authority Netherlands Competent Authority
Financial Asset Securitization Investment Trusts; Withdrawal
This document withdraws a notice of proposed rulemaking relating to financial asset securitization trusts (FASITs). The FASIT provisions (sections 860H through 860L) of the Internal Revenue Code (Code) were repealed by Public Law 108-357, effective January 1, 2005, with a limited exception for existing FASITs.
Julanne Allen at (202) 622-3920 (not a toll-free number).
Section 1621(a) of the Small Business Job Protection Act of 1996, Public Law 104-188 (110 Stat. 1755 (1996)), amended the Code by adding part V (sections 860H through 860L) (the FASIT provisions) to subchapter M of chapter 1. Part V, which was effective September 1, 1997, authorized a securitization vehicle called a Financial Asset Securitization Investment Trust (FASIT). FASITs were meant to facilitate the securitization of debt instruments, such as credit card receivables, home equity loans, and auto loans.
Proposed regulations providing guidance with respect to the application of the FASIT provisions were published in the Federal Register on February 7, 2000 (65 FR 5807). (Section 1.860E-1(c) of the proposed regulations, governing the transfer of non-economic REMIC residual interests, was finalized on July 18, 2002, in T.D. 9004, 2002-2 C.B. 331.) In general, the proposed regulations pertaining to FASITs are proposed to be applicable on the date final regulations are filed with the Federal Register. The portion of the proposed regulations containing an anti-abuse rule and the portion of the proposed regulations implementing special transition rules for securitization entities in existence on August 31, 1997, were proposed to apply on February 4, 2000.
The FASIT provisions were repealed by section 835(a) of the American Jobs Creation Act of 2004, Public Law 108-357 (118 Stat. 1418 (2004)), effective January 1, 2005. During the period of legislative consideration of the FASIT provisions and subsequently, other structures for loan securitizations were developed. In its discussion of the reasons for the repeal of the FASIT provisions, the Ways and Means Committee stated:
The Committee is aware that FASITs are not being used widely in the manner envisioned by the Congress and, consequently, the FASIT rules have not served the purposes for which they originally were intended. Moreover, the Joint Committee staff’s report [on its investigation of Enron Corporation and related entities] and other information indicate that FASITS are particularly prone to abuse and likely are being used to facilitate tax avoidance transactions.
H. R. Rep. No. 108-548, Pt. 1, at 295 (2004) (footnote omitted).
In light of the repeal of the FASIT provisions and their limited use, the Treasury Department and the IRS have decided to withdraw the proposed regulations.
The principal authors of this withdrawal announcement are Richard LaFalce and Julanne Allen of the Office of the Associate Chief Counsel (Financial Institutions and Products).
Accordingly, under the authority of 26 U.S.C. 7805, the notice of proposed rulemaking (REG-100276-97) published in the Federal Register on February 7, 2000 (65 FR 5807) is withdrawn.
(Filed by the Office of the Federal Register on June 15, 2012, 8:45 a.m., and published in the issue of the Federal Register for June 18, 2012, 77 F.R. 36228)
Auburn Douglas Jr., James B. Attorney Suspended by default decision in expedited proceeding under § 10.82 (attorney disbarment) Indefinite from February 2, 2012
Palo Alto Gonzales, Juanita A. Enrolled Agent Reinstated to practice before the IRS, January 29, 2012
Santa Ana Ortega, Manuel Attorney Suspended by default decision in expedited proceeding under § 10.82 (suspension of attorney license) Indefinite from February 2, 2012
Newport Beach Wolfe, Gerald L. Attorney Suspended by default decision in expedited proceeding under § 10.82 (suspension of attorney license) Indefinite from March 14, 2012
Colorado Springs Anderson, Edwin G. Enrolled Agent Reinstated to practice before the IRS, February 2, 2012
Weston Kingsley, Steven T. CPA Reinstated to practice before the IRS, July 13, 2004
Clearwater Schmautz, Emil N. CPA Suspended by decision in expedited proceeding under § 10.82 (convicted in state court, scheme to defraud) Indefinite from March 6, 2012
Austell Black, Charles C. Attorney Reinstated to practice before the IRS, January 29, 2012
Athens Bonner, Charles B. CPA Reinstated to practice before the IRS, January 29, 2012
Leesburg Mathis, Craig S. Attorney Suspended by default decision in expedited proceeding under § 10.82 (attorney disbarment) Indefinite from March 13, 2012
Fayetteville Pesanto, Wilfredo Attorney Suspended by default decision in expedited proceeding under § 10.82 (suspension of attorney license) Indefinite from February 6, 2012
Osceola Murphy, Richard J. Attorney Suspended by default decision in expedited proceeding under § 10.82 (suspension of attorney license) Indefinite from February 2, 2012
Leawood Poppe, Thomas V. CPA Suspended by decision in expedited proceeding under § 10.82 (conviction under 18 U.S.C. § 1027, false statement on form required by ERISA) Indefinite from April 4, 2012
Crestview Hills Robison, Jean P. CPA Reinstated to practice before the IRS, February 8, 2012
Mandeville Tallon, Melissa H. Attorney Suspended by default decision in expedited proceeding under § 10.82 (suspension of attorney license) Indefinite from February 3, 2012
Harwood Venuti, John J. Attorney Suspended by default decision in expedited proceeding under § 10.82 (conviction under 26 U.S.C. § 7203, failure to file income tax return) Indefinite from April 10, 2012
Livonia Matusz, Mark M. CPA Reinstated to practice before the IRS, February 2, 2012
Las Vegas Salas, Richard J. Attorney Suspended by default decision in expedited proceeding under § 10.82 (attorney disbarment) Indefinite from February 2, 2012
Freehold Davis, Richard B. CPA Reinstated to practice before the IRS, March 16, 2012
West Long Branch Needle, Leonard S. Attorney Suspended by default decision in expedited proceeding under § 10.82 (attorney disbarment) Indefinite from February 6, 2012
Bronx Engram, Jimmie L. Attorney Suspended by default decision in expedited proceeding under § 10.82 (attorney disbarment) Indefinite from February 6, 2012
Airmont Kingoff, Stuart N. Attorney Suspended by default decision in expedited proceeding under § 10.82 (attorney disbarment) Indefinite from February 6, 2012
Pesanto, Wilfredo, See Georgia
Graham Drumwright Jr., Robert G. CPA Suspended by default decision in expedited proceeding under § 10.82 (revocation of CPA license) Indefinite from February 2, 2012
Columbus Merrelli Jr., Joseph J. CPA Reinstated to practice before the IRS, February 2, 2012
Portland Bohn, Morton D. CPA Suspended by default decision in expedited proceeding under § 10.82 (conviction under 18 U.S.C. § 1344, bank fraud and 18 U.S.C. § 1957, money laundering) Indefinite from March 16, 2012
Ambler Breznicky, David M. CPA Reinstated to practice before the IRS, November 30, 2011
San Antonio Burt, Charles E. CPA Suspended by decision in expedited proceeding under § 10.82 (revocation of CPA license) Indefinite from February 8, 2012
Alexandria Hadeed Jr., Michael M. Attorney Suspended by default decision in expedited proceeding under § 10.82 (conviction under 18 U.S.C. § 371, conspiracy to commit immigration fraud and to defraud the U.S. and 18 U.S.C. § 1001, material false statements, aiding and abetting) Indefinite from February 6, 2012
Bulletin 2012-27
2012-26 2012-27 I.R.B. 2012-27
2012-27 2012-27 I.R.B. 2012-27
2012-28 2012-27 I.R.B. 2012-27
134042-07 2012-27 I.R.B. 2012-27
2012-20 2012-27 I.R.B. 2012-27
100276-97 Withdrawn by Ann. 2012-27 2012-27 I.R.B. 2012-27