INCOME TAX

Rev. Rul. 2005-68(HTML)
Real Estate Mortgage Investment Conduit (REMIC) net operating losses (NOLs). This ruling illustrates the interaction between the REMIC excess inclusion rules and the net operating loss rules. Section 860E(a)(1) of the Code provides that the taxable income of a holder of a residual interest in a REMIC shall not be less than the holder's “excess inclusion” (generally equivalent to REMIC phantom income) for the taxable year. Effectively this prevents the application of NOLs to offset the excess inclusion income. The statute includes NOL coordinating rules in section 860E(a)(3) with the general effect of creating a separate basket for taxing excess inclusion income, so that the amount calculated as an NOL for a year is not reduced by the excess inclusion income and NOL carryovers are not absorbed by excess inclusion income. The ruling simply illustrates the application of the coordination rules.

Rev. Rul. 2005-69(HTML)
LIFO; price indexes; department stores. The August 2005 Bureau of Labor Statistics price indexes are accepted for use by department stores employing the retail inventory and last-in, first-out inventory methods for valuing inventories for tax years ended on, or with reference to, August 31, 2005.

Announcement 2005-78(HTML)
The October 2005 revision of Publication 1141, General Rules and Specifications for Substitute Forms W-2 and W-3, originally published as Rev. Proc. 2005-65, 2005-38 I.R.B. 564, is now posted to the IRS website. Also, Section 2.06 of Part A of Publication 1141 reflects a minor change from Rev. Proc. 2005-65.

Notice 2005-71(HTML)
Weighted average interest rate update; corporate bond indices; 30-year Treasury securities. The weighted average interest rate for October 2005 and the resulting permissible range of interest rates used to calculate current liability and to determine the required contribution are set forth.

Announcement 2005-78(HTML)
The October 2005 revision of Publication 1141, General Rules and Specifications for Substitute Forms W-2 and W-3, originally published as Rev. Proc. 2005-65, 2005-38 I.R.B. 564, is now posted to the IRS website. Also, Section 2.06 of Part A of Publication 1141 reflects a minor change from Rev. Proc. 2005-65.

TAX CONVENTIONS

Announcement 2005-77(HTML)
U.S.-Republic of Cape Verde reciprocal exemption agreement. The United States and the Republic of Cape Verde have entered into a diplomatic note evidencing an agreement for the reciprocal exemption of income from the international operation of a ship or ships or aircraft for taxable years beginning on or after January 1, 2005.

Rev. Proc. 2005-69(HTML)
General rules and specifications for private printing of substitute forms. This procedure provides requirements for reproducing paper substitutes and for furnishing substitute recipient statements for Forms 1096, 1098, 1099, 5498, W-2G, and 1042-S. It will be reproduced as the next revision of Publication 1179. Rev. Proc. 2004-58 superseded.