Final regulations under section 1291 of the Code provide certain elections for taxpayers that continue to be subject to the passive foreign investment company (PFIC) excess distribution regime even though the foreign corporation in which they own stock is no longer treated as a PFIC under section 1297(a) or (e).

Proposed regulations under sections 1361, 1362, and 1366 of the Code provide guidance regarding changes to the rules governing S corporations under the American Jobs Creation Act of 2004 (AJCA) and the Gulf Opportunity Zone Act of 2005 (GOZA). The regulations provide guidance on the family shareholder rules, the treatment of electing small business trusts, the allowance of suspended losses to spouses and former spouses of S corporation shareholders, and relief for inadvertently terminated or invalid qualified subchapter S subsidiary elections. The regulations also remove or update various obsolete references in the current regulations. A public hearing is scheduled for January 16, 2008.

Proposed regulations under section 148 of the Code provide arbitrage guidance for tax-exempt bonds. A public hearing is scheduled for January 30, 2008.

Proposed regulations under section 6011 of the Code add the patented transactions category of reportable transaction to regulations section 1.6011-4. A patented transaction is a transaction for which a taxpayer pays (directly or indirectly) a fee in any amount to a patent holder or the patent holder’s agent for the legal right to use a tax planning method that is the subject of the patent. A patented transaction is also a transaction for which a taxpayer (the patent holder or the patent holder’s agent) has the right to payment for another person’s use of a tax planning method that is the subject of the patent.

Extension of replacement period for livestock sold on account of drought. This notice explains the circumstances under which the 4-year replacement period under section 1033(e)(2) of the Code is extended for livestock sold on account of drought. The Appendix to this notice contains a list of the counties that experienced exceptional, extreme, or severe drought during the preceding 12-month period ending August 31, 2007. Taxpayers may use this list to determine if an extension is available.

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

This document contains corrections to proposed regulations (REG-128224-06, 2007-36 I.R.B. 551) providing guidance on which costs incurred by estates or non-grantor trusts are subject to the 2-percent floor for miscellaneous itemized deductions under section 67(a) of the Code.

This document contains corrections to proposed regulations (REG-116215-07, 2007-38 I.R.B. 659) that amend existing regulations issued under sections 6104 and 6110 of the Code and clarify rules relating to information that is made available by the IRS for public inspection under section 6104(a) and materials that are made publicly available under section 6110.

This document contains corrections to proposed regulations (REG-148393-06, 2007-39 I.R.B. 714) regarding the tax treatment of payments by qualified plans for medical or accident insurance.

This document cancels a public hearing on proposed regulations (REG-138707-06, 2007-32 I.R.B. 342) relating to income derived by foreign corporations from the international operation of ships or aircraft.