Cost-share payments. The Forest Land Enhancement Program (FLEP) is a small watershed program administered by the Secretary of Agriculture that is substantially similar to the type of programs described in section 126(a)(1) through (8) of the Code within the meaning of section 126(a)(9). All or a portion of cost-share payments received under the FLEP is eligible for exclusion from gross income to the extent permitted by section 126. Rental payments and incentive payments are not cost-share payments and are not excludable from gross income.

REITs; parking facilities. This ruling identifies circumstances in which a real estate investment trust’s (REIT’s) income from providing parking facilities at its rental real properties qualifies as rents from real property under section 856(d) of the Code.

This procedure provides guidance to individuals who fail to meet the eligibility requirements of section 911(d)(1) of the Code because adverse conditions in a foreign country preclude the individual from meeting those requirements. A current list of countries and the dates those countries are subject to the section 911(d)(4) waiver is provided. Rev. Proc. 2003-26 supplemented.

Section 412(i) plans; deductibility; listed transactions. This ruling gives an example where a qualified pension plan cannot be a section 412(i) plan if the plan holds life insurance contracts and annuity contracts for the benefit of a participant that provide for benefits at normal retirement age in excess of the participant’s benefits at normal retirement age under the terms of the plan. The ruling also addresses when certain employer contributions to purchase life insurance coverage for a participant in a defined benefit plan are deductible and whether those transactions are “listed transactions.” Rev. Rul. 55-748 modified and superseded.

Nondiscrimination; section 412(i) plan. This ruling provides an example where a plan that is funded, in whole or in part, with life insurance contracts may not satisfy the requirements of Code section 401(a)(4) prohibiting discrimination in favor of highly compensated employees.

COBRA and Medicare entitlement. The COBRA continuation coverage period can be expanded from 18 to 36 months if a second qualifying event occurs. Medicare entitlement of a covered employee is one of the listed events that can be a second qualifying event. This ruling holds that Medicare entitlement is not a second qualifying event unless (ignoring the first qualifying event) it would result in a loss of coverage under the group health plan.

Proposed regulations under section 402 of the Code provide rules regarding the amount includible in a participant's income when a life insurance contract is distributed from a qualified plan, and provide rules under sections 79 and 83 imposing similar valuation requirements for those other employer-provided life insurance arrangements. A public hearing is scheduled for June 9, 2004.

Fair market value; distributions; qualified retirement plans. This procedure provides interim guidance on how fair market value may be determined in the instance of distributions from a qualified retirement plan.

Proposed regulations under sections 3121(b)(10) and 3306(c)(10)(B) of the Code provide guidance on the Federal Insurance Contributions Act (FICA) and Federal Unemployment Tax Act (FUTA) exceptions for student services. The proposed regulations provide guidance on whether an employer is considered a “school, college, or university,” and whether an employee is considered a “student” under these provisions. A public hearing is scheduled for June 16, 2004.

This notice contains a proposed revenue procedure that sets forth generally applicable standards for determining whether service in the employ of certain public or private nonprofit schools, colleges, universities, or affiliated organizations described in section 509(a)(3) of the Code performed by a student qualifies for the exception from Federal Insurance Contributions Act (FICA) tax provided under section 3121(b)(10). Rev. Proc. 98-16 suspended.

This procedure provides an elective safe harbor that the owner of an oil and gas property may use in determining the property’s recoverable reserves for purposes of computing cost depletion under section 611 of the Code.

This announcement provides information regarding changes to the reporting for certain 2002 forms by certain fiscal year pass-through entities affected by pending technical corrections to the qualified dividend rules. Partnerships, S corporations, and estates (including revocable trusts treated as part of an estate) with a fiscal year beginning in 2002 that received qualified dividends in 2003 must reflect the changes required by this announcement in their reporting for the tax year. Announcement 2003-56 modified.

This document announces the cancellation of a public hearing on proposed regulations (REG-110896-98, 2003-51 I.R.B. 1226) under section 664(b) of the Code concerning the characterization of distributions from charitable remainder trusts.