Final regulations under sections 6038 and 6038A of the Code clarify the information required to be furnished regarding certain related party transactions of certain foreign corporations and certain foreign-owned domestic corporations. The final regulations also increase the amount of certain penalties, and make certain other changes, to reflect the statutory changes made by the Taxpayer Relief Act of 1997.

Final, temporary, and proposed regulations under section 1397E of the Code set forth guidance for state and local governments that issue qualified zone academy bonds (QZABs) and for banks, insurance companies, and other taxpayers that hold those bonds. The regulations provide guidance on the maximum term, expenditure and use of proceeds, remedial actions, arbitrage, and reporting requirements for QZABs.

Final, temporary, and proposed regulations under section 1397E of the Code set forth guidance for state and local governments that issue qualified zone academy bonds (QZABs) and for banks, insurance companies, and other taxpayers that hold those bonds. The regulations provide guidance on the maximum term, expenditure and use of proceeds, remedial actions, arbitrage, and reporting requirements for QZABs.

Final regulations under section 1502 of the Code that provide guidance with regard to the recalculation of basis and excess loss accounts in subsidiary shares as the result of certain intercompany transactions and on when a subsidiary stock can be treated as worthless under section 165.

Final regulations under section 1502 of the Code amend the consolidated return regulations relating to the tacking rule of the life-nonlife regulations and taxable years of members of a consolidated group. Specifically, the regulations remove one of the five conditions of the tacking rule (the separation condition) and regulations section 1.1502-76(a)(2), which requires a fiscal-year consolidated group with an insurance member to adopt a calendar year.

Section 355. This notice provides transition relief to taxpayers applying regulations section 1.355-3(b)(4)(iii) and sections 355(b)(2)(C) and (D) of the Code to certain transactions described in this notice.

Notice 2003-81, 2003-2 C.B. 1223, identified a tax avoidance transaction involving offsetting foreign currency options and those substantially similar to it as listed transactions. This notice modifies and supplements Notice 2003-81 by correcting a statement in its “Facts” section. Specifically, this notice clarifies that foreign currency options, whether or not the underlying currency is one in which positions are traded through regulated futures contracts, are not foreign currency contracts as defined in section 1256(g)(2). Notice 2003-81 modified and supplemented.

Section 906 of Pension Protection Act of 2006; Indian tribal governments; extension of transition relief. This notice extends the transition relief for plans of Indian tribal governments and related entities to comply with the changes made by section 906 of the Pension Protection Act of 2006 (PPA ’06) to the date that is six months after the issuance of additional guidance under section 414(d) of the Code as amended by section 906 of PPA ’06. Notice 2006-89 modified.

Weighted average interest rate update; corporate bond indices; 30-year Treasury securities. The weighted average interest rate for August 2007 and the resulting permissible range of interest rates used to calculate current liability and to determine the required contribution are set forth.

Normal retirement age; temporary relief. This notice provides temporary relief for certain pension plans whose definition of normal retirement age may be required to be changed to comply with the regulations regarding a plan’s normal retirement age that were recently issued under section 401(a) of the Code. Rev. Proc. 2007-4 and Notice 2007-3 modified.

Final regulations under section 3402 of the Code provide guidance for employers and for employees who must submit to their employers a withholding exemption certificate. The regulations provide rules for withholding when the IRS notifies the employer and the employee of the marital status and maximum number of withholding exemptions permitted for calculating the employee’s withholding. The regulations also provide rules for the use of substitute forms and preserve the IRS’s ability to require the submission of certain copies of withholding exemption certificates.

Final regulations under section 6012 of the Code revise the filing requirements for Subchapter T cooperatives, instructing all such cooperatives to file their returns on the newly developed Form 1120-C, U.S. Income Tax Return for Cooperative Associations. Announcements 84-26 and 84-37 obsoleted.

This document contains corrections to proposed regulations (REG-157711-02, 2007-8 I.R.B. 537) which apply to corporations filing consolidated returns and implement aspects of the repeal of the General Utilities doctrine by redetermining members’ bases in subsidiary stock and requiring certain reductions in subsidiary stock basis on a transfer of the stock.