Interest rates; underpayments and overpayments. The rate of interest determined under section 6621 of the Code for the calendar quarter beginning April 1, 2005, will be 6 percent for overpayments (5 percent in the case of a corporation), 6 percent for underpayments, and 8 percent for large corporate underpayments. The rate of interest paid on the portion of a corporate overpayment exceeding $10,000 will be 3.5 percent.

Final regulations under section 263A of the Code except interest expense incurred by a lessor in certain safe harbor leasing transactions from the requirement to capitalize interest.

Final regulations under section 1374 of the Code provide for an adjustment to the amount that may be subject to tax under section 1374 in certain cases in which an S corporation acquires assets from a C corporation in an acquisition to which section 1374(d)(8) applies. The regulations provide guidance to certain S corporations that acquire assets from a C corporation in a carryover basis transaction.

Final regulations under section 368 of the Code provide that a continuity of the business enterprise and a continuity of interest are not required for the transaction to qualify as a reorganization under section 368(a)(1)(E) or (F). Rev. Ruls. 69-516, 77-415, 77-479, and 82-34 obsoleted.

Proposed regulations under section 1502 of the Code provide guidance regarding the manner in which the intercompany items of a liquidating corporation are succeeded to and taken into account in cases where more than one distributee member acquires the assets of the liquidating corporation in a complete liquidation to which section 332 applies. The regulations also provide guidance regarding the manner in which more than one distributee member succeeds to the items (including the items described in section 381(c)) of the liquidating corporation.

Sections 936 and 30A of the Code provide, subject to certain limitations and conditions, special tax credits for taxable income of a domestic corporation derived from the active conduct of a trade or business in a possession of the United States. Pursuant to sections 936(j) and 30A(h), the tax credits provided by sections 936 and 30A will not be allowed for taxable years beginning after December 31, 2005. This notice provides guidance, based on existing provisions of the Code and Treasury regulations, with respect to issues that are likely to arise in connection with the termination of sections 936 and 30A.

This document sets forth a settlement initiative to resolve transactions that are the same as or substantially similar to those described in Notice 2003-47, 2003-2 C.B. 132. These transactions generally involved executives transferring compensatory stock options or restricted stock to a related person in exchange for a long-term, unsecured deferred payment obligation. Taxpayers have until May 23, 2005, to notify the Service of their intent to participate in the settlement initiative.

Final regulations under section 2702 of the Code provide guidance in two specific situations relating to qualified interests. The first situation is where the grantor retains an interest payable to the grantor for a term of years, or to the grantor’s estate if the grantor dies prior to the expiration of the term. The second situation is where the grantor has a power to revoke a qualified interest of the grantor’s spouse.

Final regulations under section 301 (5 USC) of the Code set forth procedures for current and former officers and employees of the IRS and current and former entities that contract with the IRS to follow when they receive certain requests for disclosure of IRS records or information. It also provides procedures for the public to follow when seeking testimony or IRS records in a nontax proceeding.

This notice designates the Indian Ocean tsunamis occurring on December 26, 2004, as a qualified disaster for purposes of section 139 of the Code, and describes the affected areas.