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 May 2004.

Final, temporary, and proposed regulations under section 861 of the Code provide an alternative method for valuing assets for purposes of apportioning interest expense under the tax book value method contained in temporary regulations section 1.861-9T(g). For that limited purpose, the alternative method allows taxpayers to determine the adjusted basis of all tangible property under the alternative depreciation system of section 168(g). The regulations also provide guidance on electing the alternative method. The alternative method provides taxpayers with the option of determining the adjusted bases of both foreign and domestic assets under one consistent depreciation regime for temporary regulations section 1.861-9T(g) apportionment purposes and helps reduce the basis disparity between foreign and domestic assets which can occur under the current regulations. A public hearing on the proposed regulations is scheduled for July 19, 2004.

Final, temporary, and proposed regulations under section 861 of the Code provide an alternative method for valuing assets for purposes of apportioning interest expense under the tax book value method contained in temporary regulations section 1.861-9T(g). For that limited purpose, the alternative method allows taxpayers to determine the adjusted basis of all tangible property under the alternative depreciation system of section 168(g). The regulations also provide guidance on electing the alternative method. The alternative method provides taxpayers with the option of determining the adjusted bases of both foreign and domestic assets under one consistent depreciation regime for temporary regulations section 1.861-9T(g) apportionment purposes and helps reduce the basis disparity between foreign and domestic assets which can occur under the current regulations. A public hearing on the proposed regulations is scheduled for July 19, 2004.

Final regulations under section 1502 of the Code relate to the determination of the basis of the stock of the common parent of a consolidated group when such stock is acquired in a transaction that qualifies as a group structure change. These regulations amend current regulations section 1.1502-31 modifying the application of the net asset basis rule in group structure changes.

Net investment income of private foundation. This notice announces that the Treasury Department and the Service intend to propose regulations modifying regulations section 53.4940-1(d)(2) to provide that a private foundation’s net investment income for purposes of section 4940 of the Code does not include distributions from trusts and estates and that until further guidance is promulgated, income distributions from trusts and estates will not retain their character in the hands of a distributee private foundation for purposes of determining the foundation’s net investment income under section 4940(c). This notice also provides instructions on how a private foundation should fill out its applicable returns and how to claim refunds.

Distributable amount of a private foundation. This notice states that the Treasury Department and the Service intend to propose regulations modifying regulations under section 4942 of the Code in a manner consistent with the holding of the Tax Court and the Ninth Circuit in Ann Jackson Family Foundation. It also states that until further guidance is promulgated, private foundations should compute the distributable amount under section 4942(d) without regard to regulations section 53.4942(a)-2(b)(2). Accordingly, income distributions received from section 4947(a)(2) trusts are not included in a private foundation’s distributable amount for purposes of section 4942. The notice also includes instructions for filling out the private foundation’s applicable information and excise tax returns and how to claim a refund pursuant to this notice.

A list is provided of organizations now classified as private foundations.

This procedure provides guidance for representatives of certain military or civilian employees of the United States who die as a result of injuries incurred in a terrorist or military action. It provides guidance for having tax forgiven or for claiming refunds of tax under section 692(c) of the Code, as amended by the Victims of Terrorism Tax Relief Act of 2001, Pub. L. No. 107-134. It also provides procedures by which the Secretary will determine whether a terrorist or military action has occurred. Rev. Proc. 85-35 obsoleted.