This document contains a correction to the dates in the Highlight for the public hearings on the Advance Pricing Agreement (APA) Program for Announcement 2004-98, 2004-50 I.R.B. 983. The correct dates are February 1, 2005 and February 22, 2005. The Highlight for Announcement 2004-98 is corrected.

Interest rates; underpayments and overpayments. The rate of interest determined under section 6621 of the Code for the calendar quarter beginning January 1, 2005, will be 5 percent for overpayments (4 percent in the case of a corporation), 5 percent for underpayments, and 7 percent for large corporate underpayments. The rate of interest paid on the portion of a corporate overpayment exceeding $10,000 will be 2.5 percent.

Proposed regulations define the terms predecessor and successor for purposes of section 355(e) of the Code. These regulations provide guidance in determining whether a corporation is a predecessor or successor of a distributing or controlled corporation, as well as rules to assist taxpayers in determining whether an acquisition of an interest in a corporation would cause a distributing corporation to recognize gain under section 355(e). The regulations affect corporations that distribute the stock of controlled corporations in distributions described in section 355.

Proposed regulations under section 707 of the Code provide guidance relating to the treatment of transactions between a partnership and its partners as disguised sales of partnership interests between partners. The regulations describe circumstances in which a transfer of consideration (including the assumption of a liability) by a purchasing partner to a partnership and a transfer of consideration by the partnership to a selling partner constitute a sale of a partnership interest. In addition, the proposed rules require disclosure of certain transfers and assumptions of liabilities to the Service. A public hearing is scheduled for March 8, 2005.

Weighted average interest rate update; corporate bond indices; 30-year Treasury securities. The weighted average interest rate for December 2004 and the resulting permissible range of interest rates used to calculate current liability and to determine the required contribution are set forth.

Internet activities. In one situation, the Internet activities conducted by a trade association described in section 501(c)(6) of the Code on a special supplementary section of its Internet website do not constitute unrelated trade or business under section 513(a), because such activities meet the exception for qualified convention and trade show activity under section 513(d)(3)(B). However, in a second situation, the Internet activities of another trade association do not meet the section 513(d)(3)(B) exception.

Final regulations under section 6302 of the Code change the accumulated amount of tax liability above which taxpayers must begin depositing federal unemployment taxes. The regulations affect employers that have an accumulated FUTA tax liability of $500 or less.

This notice provides tables that show the amount of an individual's income that is exempt from a notice of levy used to collect delinquent tax in 2005.

This procedure provides guidance concerning when information shown on a return in accordance with the applicable forms and instructions will be adequate disclosure for purposes of reducing an understatement of income tax under sections 6662(d) and 6694(a) of the Code. Rev. Proc. 2003-77 updated.