REG-156232-03

Temporary and proposed regulations under section 6043 of the Code provide information reporting rules regarding corporations which are acquired, or which experience a recapitalization or other substantial change in capital structure. The proposed regulations also withdraw REG-143321-02. A public hearing on the proposed regulations is scheduled for March 31, 2004.

Final regulations under section 643 of the Code revise the definition of trust accounting income to take into account changes in the definition of trust accounting income under state laws, which allow certain amounts traditionally considered as principal to be treated as income. The regulations also clarify the situations in which capital gains will be included in a trust’s distributable net income. Conforming amendments with regard to the revised definition of trust accounting income are made to regulations affecting various trusts, including pooled income funds, charitable remainder trusts, trusts qualifying for the marital deduction, and trusts exempt from the generation-skipping transfer tax.

Weighted average interest rate update. The weighted average interest rate for January 2004 and the resulting permissible range of interest rates used to calculate current liability and to determine the required contribution are set forth.

Final regulations under section 643 of the Code revise the definition of trust accounting income to take into account changes in the definition of trust accounting income under state laws, which allow certain amounts traditionally considered as principal to be treated as income. The regulations also clarify the situations in which capital gains will be included in a trust’s distributable net income. Conforming amendments with regard to the revised definition of trust accounting income are made to regulations affecting various trusts, including pooled income funds, charitable remainder trusts, trusts qualifying for the marital deduction, and trusts exempt from the generation-skipping transfer tax.

Proposed regulations under section 2032 of the Code concern the election to value a decedent’s gross estate on the alternate valuation date. The regulations reflect a change to the law made by the Deficit Reduction Act of 1984. The regulations, when finalized, will remove temporary regulation 301.9100-6T(b).

Final regulations under section 643 of the Code revise the definition of trust accounting income to take into account changes in the definition of trust accounting income under state laws, which allow certain amounts traditionally considered as principal to be treated as income. The regulations also clarify the situations in which capital gains will be included in a trust’s distributable net income. Conforming amendments with regard to the revised definition of trust accounting income are made to regulations affecting various trusts, including pooled income funds, charitable remainder trusts, trusts qualifying for the marital deduction, and trusts exempt from the generation-skipping transfer tax.

Final regulations under section 7430 of the Code provide guidance to taxpayers on how to make a qualified offer. The regulations explain the circumstances under which qualified offers may be made, the requirements to make a valid qualified offer, and to whom the qualified offer should be made. The regulations also provide examples to aid taxpayer in understanding how qualified offers operate.

Proposed regulations under section 330 of title 31 of the Code set forth best practices for tax advisors providing advice to taxpayers relating to federal tax issues or submissions to the Internal Revenue Service and modify the standards for certain tax shelter opinions. Section 10.33 encourages all tax advisors to provide their clients with the highest quality representation. Section 10.35 prescribes specific requirements for “more likely than not” and “marketed” tax shelter opinions. Section 10.36 provides that the practitioner who has the principal authority and responsibility for overseeing a firm’s practice of providing advice to clients regarding federal tax issues must take reasonable steps to ensure that the firm has adequate procedures in place for purposes of complying with section 10.35. Section 10.37 authorizes the Director of the Office of Professional Responsibility to establish one or more advisory committees to review and make recommendations regarding profe ssional standards or best practices for tax advisors, including whether a practitioner may have violated section 10.35 or 10.36. A public hearing is scheduled for February 18, 2004.