Interest rates; underpayments and overpayments. The rate of interest determined under section 6621 of the Code for the calendar quarter beginning October 1, 2003, will be 4 percent for overpayments (3 percent in the case of a corporation), 4 percent for underpayments, and 6 percent for large corporate underpayments. The rate of interest paid on the portion of a corporate overpayment exceeding $10,000 will be 1.5 percent.

Final regulations under section 1361 of the Code provide guidance regarding a qualified subchapter S trust election for testamentary trusts and the period for which former qualified subpart E trusts and testamentary trusts may be permitted shareholders of an S corporation. In addition, these regulations provide that the definition of a testamentary trust also includes a trust to which S corporation stock is either transferred under the terms of an electing qualified revocable trust during its election period or deemed to be distributed at the close of the last day of the election period.

Investments through multiple CDEs. The Treasury Department and the Service announce that they will amend regulations section 1.45D-1T(d)(1)(iv) to include investments through two additional qualified community development entities (CDEs) described in section 45D(c) of the Code.

This announcement provides information regarding changes to the reporting for certain 2002 forms affected by the decrease in the capital gains tax rates. Partnerships, S corporations, estates, individuals, real estate investment trusts, and mutual funds and other regulated investment companies with a fiscal year beginning in 2002 and ending after May 5, 2003, must reflect the changes required by this announcement in their reporting for the tax year.

Final regulations under section 457 of the Code provide guidance on eligible section 457 deferred compensation plans of state and local governmental employers and tax-exempt entities. The regulations reflect changes made to section 457 by the Tax Reform Act of 1986, The Small Business Job Protection Act of 1996, The Economic Growth and Tax Relief Reconciliation Act of 2001, and other legislation. The regulations also make various technical changes and clarifications to the existing final regulations.

Final regulations under section 2519 of the Code relate to the amount treated as a transfer when there is a right to recover gift tax under section 2207A(b). The regulations also include related gift and estate tax consequences if the right to recover the gift tax is not exercised. These regulations will affect donee spouses who make lifetime dispositions of all or part of a qualifying income interest in qualified terminable interest property.

Final regulations under section 2519 of the Code relate to the amount treated as a transfer when there is a right to recover gift tax under section 2207A(b). The regulations also include related gift and estate tax consequences if the right to recover the gift tax is not exercised. These regulations will affect donee spouses who make lifetime dispositions of all or part of a qualifying income interest in qualified terminable interest property.

Final regulations under section 66 of the Code relate to the treatment of community income for certain married individuals in community property states who do not file joint federal income tax returns.

This notice addresses a number of collection issues arising from the Supreme Court decision in United States v. Craft, 535 U.S. 274 (2002-38 I.R.B. 548), in which the Court held that the federal tax lien attaches to the rights of the delinquent taxpayer in property held as a tenancy by the entirety, even though state law insulates entireties property from the claims of creditors of only one spouse.

Substitute tax forms and schedules. Requirements are set forth for privately designed and printed federal tax forms and conditions under which the IRS will accept computer-prepared and computer-generated tax forms and schedules. Rev. Proc. 2002-60 superseded.