Taxpayers may receive a tax credit for certain expenses incurred in conducting qualified research. Proposed regulations under section 41 of the Code provide guidance on the proper method for computing and allocating the research credit for members of a controlled group of corporations or a group of trades or businesses under common control. A public hearing is scheduled for November 13, 2003. REG-105606-99 withdrawn.

Proposed regulations under section 446 of the Code set out rules relating to the proper timing and source of income of fees received to induce the acquisition of noneconomic residual interests in REMICs. A public hearing is scheduled for November 18, 2003.

REG-129709-03

Temporary and proposed regulations under section 409(p) of the Code provide guidance concerning the requirements for employee stock ownership plans (ESOPs) holding stock of Subchapter S corporations. A public hearing on the proposed regulations is scheduled for November 20, 2003.

Proposed regulations under sections 401(k) and 401(m) of the Code provide guidance on the requirements for certain retirement plans containing cash or deferred arrangements and providing for matching contributions or employee after-tax contributions. These regulations affect certain plans or contracts providing for elective deferrals under section 401(k), matching contributions or employee after-tax contributions under section 401(m), and participants eligible under these plans or contracts. A public hearing is scheduled for November 12, 2003.

Proposed regulations under section 411 of the Code amend section 1.411(d)-4, of the regulations to reflect the addition of section 411(d)(6)(E) by the Economic Growth and Tax Relief Reconciliation Act of 2001. The proposed regulations retain rules under which a defined contribution plan could be amended, but remove the 90-day notice condition.

Weighted average interest rate update. The weighted average interest rate for August 2003 and the resulting permissible range of interest rates used to calculate current liability for purposes of the full funding limitation of section 412(c)(7) of the Code are set forth.

Uniform capitalization; methods of accounting. This notice modifies Notice 2003-36 to permit certain taxpayers to use the automatic approval procedures of Rev. Proc. 2002-9 to change their method of accounting to the simplified service cost or simplified production method for self-constructed assets for their most recent taxable year ending on or before May 8, 2003. This notice also informs taxpayers that, in the future, the Service and Treasury Department may provide guidance under which the automatic approval procedures will no longer apply to a method of accounting, effective for applications filed after such change is announced. Notice 2003-36 modified.