Internal Revenue Bulletins  
February 07, 2005

Internal Revenue Bulletin No. 2005-06

Links to Official IRS Bulletin Documents listed below are in the Adobe Acrobat PDF Format, and require the appropriate Acrobat Reader to view and/or print.

INCOME TAX

Notice 2005-10(PDF, 131K)
This document provides guidance under new section 965 of the Code enacted by the American Jobs Creation Act of 2004. In general, and subject to limitations and conditions, section 965(a) provides that a corporation that is a U.S. shareholder of a controlled foreign corporation (CFC) may elect, for one taxable year, an 85 percent dividends received deduction (DRD) with respect to certain cash dividends it receives from its CFCs. Section 965(f) provides that taxpayers may elect the application of section 965 for either the taxpayer’s last taxable year which begins before October 22, 2004, or the taxpayer’s first taxable year which begins during the one-year period beginning on October 22, 2004.

Rev. Rul. 2005-6(PDF, 62K)
Life insurance contracts. For purposes of determining whether a contract qualifies as a life insurance contract under section 7702 of the Code, and as a modified endowment contract under section 7702A, charges for qualified additional benefits (QABs) are to be taken into account under the expense charge rule of section 7702(c)(3)(B)(ii) rather than under the mortality charge rule of section 7702(c)(3)(B)(i). Issuers whose compliance systems do not currently account for QABs under the expense charge rule of section 7702(c)(3)(B)(ii) are provided alternatives to correct their compliance systems.

Rev. Rul. 2005-7(PDF, 55K)
Segregated asset account. For purposes of determining whether a segregated asset account held by an insurance company is adequately diversified pursuant to section 817(h) of the Code, a segregated asset account that invests in a regulated investment company which in turn, holds an interest in another regulated investment company, may look through to the individual assets of both regulated investment companies.

Rev. Rul. 2005-8(PDF, 57K)
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 February 2005.

Rev. Rul. 2005-9(PDF, 41K)
Bankruptcy cases; definition of "pending". This ruling discusses the definition of "pending" regarding bankruptcy cases for purposes of the relief from the imposition of certain penalties provided under section 6658 of the Code.

T.D. 9171(PDF, 179K)
Final regulations involve the new markets tax credit under section 45D of the Code. A taxpayer making a qualified equity investment in a qualified community development entity that has received a new markets tax credit allocation may claim a 5-percent tax credit with respect to the qualified equity investment on each of the first 3 credit allowance dates and a 6-percent tax credit with respect to the qualified equity investment on each of the remaining 4 credit allowance dates.

ESTATE TAX

T.D. 9172(PDF, 65K)
Final regulations under section 2032 of the Code concern the election to value a decedent’s gross estate on the alternate valuation date. The final regulations reflect a change to the law made by the Deficit Reduction Act of 1984. As a result of the final regulations, section 301.9100-6T(b) of the regulations will be removed. Please note: the preamble of the final regulations describes a change in the IRS’s position on the availability of relief to make the section 2032 election or protective election, and the section 2056A(d) election under sections 301.9100-1 and 301.9100-3 of the regulations.

EMPLOYMENT TAX

REG-152945-04(PDF, 109K)
Proposed regulations under section 3402 of the Code set forth rules for withholding income tax on supplemental wages paid by an employer to an employee that, together with all previous supplemental wages paid during the calendar year to the employee by the employer, exceed one million dollars. The proposed regulations also update the rules that apply in determining liability for income tax withholding with respect to other supplemental wage payments.

ADMINISTRATIVE

Rev. Rul. 2005-9(PDF, 41K)
Bankruptcy cases; definition of "pending". This ruling discusses the definition of "pending" regarding bankruptcy cases for purposes of the relief from the imposition of certain penalties provided under section 6658 of the Code.

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