Rev. Proc. 80-22

Section 1. Purpose and Nature of Changes

.01 The purpose of this revenue procedure is to supersede Rev. Proc. 79-14, 1979-1 C.B. 496, Rev. Proc. 79-52, 1979-2 C.B. 538, and Rev. Proc. 79-68, 1979-2 C.B. 600, by providing a revised list of those areas of the Internal Revenue Code under the jurisdiction of the Assistant Commissioner (Technical) in which the Internal Revenue Service will not issue advance rulings or determination letters.

.02 Changes.

1 New section 3.011 refers to section 79 of the Code.

2 New section 3.012 refers to section 83 of the Code.

3 New section 3.013 refers to section 105(h) of the Code.

4 New section 3.014 refers to sections 121 and 1034 of the Code.

5 New section 3.0113 refers to section 302 of the Code.

6 New Section 3.0119 refers to section 451 of the Code.

7 New section 3.0120 refers to sections 451 and 457 of the Code.

8 New section 3.0127 refers to section 2031 of the Code.

9 New section 3.0128 refers to section 2512 of the Code.

10 New sections 3.0129 through 3.0131 refer to section 7701 of the Code.

11 New section 3.025 refers to the tax consequences of proposed legislation.

12 New section 3.026 refers to determination of reasonable cause under Subtitle F (Procedure and Administration) of the Code.

13 New section 3.027 refers to the applicability of criminal penalties to proposed transactions.

14 New sections 4.0110 and 4.0111 refer to section 7701 of the Code.

15 Section 4.011 now refers to sections 61 and 163 of the Code.

16 New section 4.013 refers to section 170(c) of the Code.

17 New section 5 lists temporary "no ruling" areas.

18 New section 5.01 refers to sections 61, 72, 79, 83, 101, 162, 264, and 641 of the Code.

19 New section 5.02 refers to section 117 of the Code.

20 New section 5.04 refers to section 1001 of the Code.

21 New section 5.05 refers to section 1372 of the Code.

22 New section 6 lists areas for which the Service cannot rule because of statutory prohibition against doing so.

23 New section 6.01 refers to section 61 of the Code.

24 New section 6.02 refers to section 162 of the Code.

25 New section 6.03 refers to section 170 of the Code.

Sec. 2. Background and Scope of Application

.01 Background.

Whenever appropriate in the interest of sound tax administration, it is the policy of the Service to answer inquiries of individuals and organizations regarding their status for tax purposes and the tax effects of their acts or transactions, prior to the filing of returns or reports that are required by the revenue laws.

There are, however, certain areas in which, because of the inherently factual nature of the problems involved, or for other reasons, the Service will not issue advance rulings or determination letters. These areas are set forth in four sections of this revenue procedure. Section 3 reflects those areas in which advance rulings and determinations will not be issued. Section 4 sets forth those areas in which they will not ordinarily be issued. "Not ordinarily" connotes that unique and compelling reasons must be demonstrated to justify a ruling or determination letter. Those sections reflect a number of specific questions and problems as well as general areas. Section 5 lists specific areas for which the Service is temporarily not issuing advance rulings and determinations because those matters are under extensive study. Section 6 lists areas for which the Service is prohibited by statute from issuing rulings or determination letters.

With respect to the items listed, revenue rulings or revenue procedures may be published in the Internal Revenue Bulletin from time to time to provide general guidelines regarding the position of the Service.

Additions or deletions to this revenue procedure as well as restatement of items listed will be made by modification of this revenue procedure. Changes will be published as they occur throughout the year and will be incorporated annually in a new revenue procedure published in the first quarter of the next calendar year. These lists should not be considered all inclusive. Decisions not to rule on individual cases, as contrasted with those that present significant pattern issues, are not reported in this revenue procedure and will not be added to subsequent revisions.

The authority and general procedures of the Technical Function of the National Office of the Internal Revenue Service of the Offices of the District Directors of the Internal Revenue with respect to the issuance of advance rulings and determination letters with respect to Code sections under the jurisdiction of the Assistant Commissioner (Technical) are outlined in Rev. Proc. 80-20, page 633, this Bulletin.

.02 Scope of Application.

This revenue procedure is not to be considered as precluding the submission of requests for technical advice to the National Office from the Office of a District Director of Internal Revenue or a Chief, Appeals Office.

Sec. 3. Areas in Which Rulings or Determination Letters Will Not Be Issued

.01 Specific questions and problems.

1 Section 79.--Group Term Life Insurance Purchased for Employees.--Whether a group insurance plan for 10 or more employees qualifies as group term insurance if the amount of insurance is not computed under a formula that would meet the requirements of section 1.79-1(c)(2)(ii) if the group consisted of fewer than 10 employees.

2 Section 83.--Property Transferred in Connection with Performance of Services.--Whether a restriction constitutes a substantial risk of forfeiture if the employee is a controlling shareholder.

3 Section 105(h).--Amount Paid to Highly Compensated Individuals under a Discriminatory Self-Insured Medical Expense Reimbursement Plan.--Whether, following a determination that a self-insured medical expense reimbursement plan is discriminatory, that plan had previously made reasonable efforts to comply with tax discrimination rules.

4 Sections 121 and 1034.--One-Time Exclusion of Gain from Sale of Principal Residence by Individual Who Has Attained Age 55; Rollover of Gain on Sale of Principal Residence.--Whether at the time of its sale property qualifies as the taxpayer's principal residence.

5 Section 162.--Trade or Business Expenses.--Whether compensation is reasonable in amount.

6 Section 170.--Charitable Contributions and Gifts.--Whether a taxpayer who advances funds to a charitable organization and receives therefor a promissory note may deduct as contributions, in one taxable year or in each of several years, amounts forgiven by the taxpayer in each of several years by endorsements on the note.

7 Section 264(b). -- Certain Amounts Paid in Connection with Insurance Contracts.--Whether "substantially all" the premiums of a contract of insurance are paid within a period of four years from the date on which the contract is purchased. Also, whether an amount deposited is in payment of a "substantial number" of future premiums on such a contract.

8 Section 264(c)(1).--Certain Indebtedness Incurred or Continued as Part of a Plan in Connection with Insurance Contracts.--Whether section 264(c)(1) of the Code applies.

9 Section 269.--Acquisition Made to Evade or Avoid Income Tax.--Whether an acquisition is within the meaning of section 269 of the Code.

10 Section 302.--Redemption of Stock.--Whether section 302(b) of the Code applies when the consideration given in redemption by a corporation consists entirely or partly of its notes payable, and the shareholder's stock is held in escrow or as security for payment of the notes with the possibility that the stock may or will be returned to the shareholder in the future, upon the happening of specified defaults by the corporation.

11 Section 302.--Redemption of Stock.--Whether section 302(b) of the Code applies when the consideration given in redemption by a corporation in exchange for a shareholder's stock consists entirely or partly of the corporation's promise to pay an amount that is based on, or contingent on, future earnings of the corporation, or when the promise to pay is contingent on working capital being maintained at a certain level, or any other similar contingency.

12 Section 302.--Redemption of Stock.--Whether section 302(b) of the Code applies to a redemption of stock if after the redemption the distributing corporation used property that is owned by the shareholder from whom the stock is redeemed and the payments by the corporation for the use of the property are dependent upon the corporation's future earnings or are subordinate to the claims of the corporation's general creditors. Payments for the use of property will not be considered to be dependent upon future earnings merely because they are based on a fixed percentage of receipts or sales.

13 Section 302.--Distributions in Redemption of Stock.--Whether the acquisition or disposition of stock described in section 302(c)(2)(B) of the Code has, or did not have, as one of its principal purposes the avoidance of federal income taxes within the meaning of that section, unless the facts and circumstances are materially identical to those set forth in Rev. Rul. 56-556, 1956-2 C.B. 177, Rev. Rul. 56-584, 1956-2 C.B. 179, Rev. Rul. 57-387, 1957-2 C.B. 225, Rev. Rul. 77-293, 1977-2 C.B. 91, or Rev. Rul. 79-67, 1979-1 C.B. 128.

14 Sections 311 and 336.--Taxability of Corporation on Distribution; General Rule.--Upon distribution of property in kind by a corporation to its shareholders, in complete liquidation under section 331 of the Code (when under the facts a sale of the property by the corporation would not qualify under section 337), in partial liquidation under section 346, or in redemption of stock under section 302(a), followed by a sale of the property, whether the sale can be deemed to have been made by the corporation under the doctrine of Commissioner v. Court Holding Company, 324 U.S. 331 (1945), Ct. D. 1636, 1945 C.B. 58.

15 Section 312.--Earnings and Profits.--The determination of the amount of earnings and profits of a corporation.

16 Sections 331, 332, and 333.--Effects on Recipients of Distributions in Corporate Liquidations.--The tax effect of the liquidation of a corporation preceded or followed by the reincorporation of all or a part of the business and assets when more than a nominal amount of the stock (that is, more than 20 percent in value) of both the liquidating corporation and the transferee corporation is owned by the same shareholders; or when a liquidation is followed by the sale of the corporate assets by the shareholders to another corporation in which such shareholders own more than a nominal amount of the stock (that is, more than 20 percent in value).

17 Section 337.--Gain or Loss; Certain Liquidations.--The application of this section to a corporation upon the sale of property, in connection with its liquidation, to another corporation, when more than a nominal amount of the stock (that is, more than 20 percent in value) of both the selling corporation and the purchasing corporation is owned by the same persons.

18 Section 346.--Partial Liquidation.--The amount of working capital attributable to a business or portion of a business terminated that may be distributed in partial liquidation.

19 Section 451.--General Rule for Taxable Year of Inclusion.--The tax consequences of a nonqualified unfunded deferred compensation arrangement with respect to a controlling shareholder employee eligible to participate in the arrangement.

20 Sections 451 and 457.--General Rule for Taxable Year of Inclusion; Deferred Compensation Plans With Respect to Service for State and Local Governments.--The tax consequences to unidentified independent contractors in nonqualified unfunded deferred compensation plans. This applies to plans established under section 451 of the Code by employers in the private sector and to eligible state plans under section 457. However, a ruling with respect to a specific independent contractor's participation in such a plan may be issued.

21 Section 453.--Revolving Credit Sales as Installment Sales.--Whether a proposed sampling procedure will be acceptable by the Service for the purpose of determining the portion of revolving credit balances to be treated as installment account balances. See Rev. Proc. 64-4, 1964-1 (Part 1) C.B. 644, and Rev. Proc. 65-5, 1965-1 C.B. 720.

22 Section 642(c).--Deduction for Amounts Paid or Permanently Set Aside for a Charitable Purpose.--Allowance of an unlimited deduction for amounts set aside by a trust or estate for charitable purposes when there is a possibility that the corpus of the trust or estate may be invaded.

23 Section 704(b)(2).--Partner's Distributive Share Determined.--Whether the allocation to a partner under the partnership agreement of income, gain, loss, deduction, or credit (or an item thereof) has substantial economic effect.

24 Section 704(e).--Family Partnerships.--Matters relating to the validity of a family partnership when capital is not a material income producing factor.

25 Section 1221.--Capital Asset Defined.--Whether specialty stock allocated to an investment account by a registered specialist on a national securities exchange is a capital asset.

26 Section 1551.--Disallowance of Surtax Exemption and Accumulated Earnings Credit.--Whether a transfer is within section 1551 of the Code.

27 Section 2031.--Definition of Gross Estate.--Actuarial factors for valuing interests in the prospective gross estate of a living person.

28 Section 2512.--Valuation of Gifts.--Actuarial factors for valuing prospective or hypothetical gifts of a donor.

29 Section 7701.--Definitions.--Whether a foreign arrangement that is a participant in a domestic arrangement classified as a partnership for U.S. tax purposes will itself be classified as a partnership.

30 Section 7701.--Definitions.--Whether a foreign limited liability company will be classified as a partnership if the taxpayer requests classification as a partnership and (1) the taxpayer is a corporation and less than 20 percent of the interests in the limited liability company are held by independent parties or (2) the taxpayer is not a corporation and independent parties hold only a nominal interest in the company.

31 Section 7701.--Definitions.--The classification of arrangements formed as partnerships under local law where the members of such partnerships are professional corporations.

.02 General Areas.

1 The results of transactions that lack bona fide business purpose or have as their principal purpose the reduction of federal taxes.

2 A matter upon which a court decision adverse to the government has been handed down and the question of following the decision or litigating further has not yet been resolved.

3 A matter involving the prospective application of the estate tax to the property or the estate of a living person.

4 A matter involving alternate plans of proposed transactions or involving hypothetical situations.

5 A matter involving the federal tax consequences of any proposed federal, state, local, or municipal legislation. The Service may provide general information in response to an inquiry.

6 Whether reasonable cause exists under Subtitle F (Procedure and Administration) of the Code.

7 Whether a proposed transaction would subject the taxpayer to a criminal penalty.

8 A request that does not comply with the provisions of Rev. Proc. 80-20.

Sec. 4. Areas in Which Rulings or Determination Letters Will Not Ordinarily Be Issued

.01 Specific questions and problems.

1 Sections 61 and 163.--Gross Income Defined; Interest.--Determinations as to who is the true owner of property or the true borrower of money in cases in which the formal ownership of the property or liability for the indebtedness is in another party.

2 Section 167.--Depreciation.

(a) Useful lives of assets.

(b) Depreciation rates.

(c) Salvage value of assets.

3 Section 170(c).--Charitable, etc., Contributions and Gifts.--Whether a taxpayer who transfers property to a charitable organization and thereafter leases back all or a portion of the transferred property, may deduct the fair market value of the property transferred and leased back as a charitable contribution.

4 Section 302.--Redemption of Stock.--The tax effect of the redemption of stock for notes, when the payments on the notes are to be made over a period in excess of 15 years from the date of issuance of such notes.

5 Section 306.--Disposition of Certain Stock.--Whether the distribution or disposition or redemption of "section 306 stock" in a closely held corporation is in pursuance of a plan having as one of its principal purposes the avoidance of federal income taxes within the meaning of section 306(b)(4) of the Code.

6 Section 331.--Gain or Loss to Shareholders in Corporate Liquidations.--The tax effect of the liquidation of a corporation by a series of distributions, when the distributions in liquidation are to be made over a period in excess of three years from the adoption of the plan of liquidation.

7 Section 341.--Collapsible Corporations.--Whether a corporation will be considered to be a "collapsible corporation," that is, whether it was "formed or availed of" with the view of certain tax consequences. However, ruling requests will be considered on this matter when the enterprise (1) has been in existence for at least 20 years, (2) has had substantially the same owners during that period, and (3) has conducted substantially the same trade or business during that period.

8 Section 351.--Transfers to Controlled Corporation.--The tax effect of the transfer when part of the consideration received by the transferors consist of bonds, debentures, or any other evidences of indebtedness of the transferee.

9 Section 992.--Requirements of a Domestic International Sales Corporation.--The tax effects of a Domestic International Sales Corporation's stock being held by individuals who are also shareholders in a related supplier corporation.

10 Section 7701.--Definitions.--Whether what is generally known as a foreign corporation will be classified as a partnership for U.S. tax purposes if the taxpayer requests classification as a partnership.

11 Section 7701.--Definitions.--Whether a foreign partnership will be classified as an association for U.S. tax purposes if the taxpayer requests classification as an association.

.02 General areas.

1 Any matter in which the determination requested is primarily one of fact, e.g., market value of property, or whether an interest in a corporation is to be treated as stock or indebtedness.

2 The tax effect of any transaction to be consummated at some indefinite future time.

3 Any matter dealing with the question of whether property is held primarily for sale to customers in the ordinary course of trade or business.

Sec. 5. Areas Under Extensive Study in Which Rulings or Determination Letters Will Not Be Issued Until the Service Resolves the Issue Through Publication of a Revenue Ruling, Revenue Procedure, Regulations or Otherwise

.01 Section 79.--Group Term Life Insurance Purchased for Employees.--Whether life insurance provided for employees under a "retired lives reserve" plan will be considered group term insurance (also sections 61, 72, 83, 101, 162, 264, and 641).

.02 Section 117.--Scholarships and Fellowships Grants.--Whether an employer-related scholarship or fellowship grant is excludable from the employee's gross income if there is no intermediary private foundation distributing the grants, as there was in Rev. Proc. 76-47, 1976-2 C.B. 670.

.03 Section 368.--Definitions Relating to Corporate Reorganizations. Whether the continuity of business enterprise requirement of section 1.368-1(b) of the regulations is satisfied if the transferee corporation does not continue the historic business (the business conducted most recently) of the transferor corporation or, when such business is not continued, the transferee does not use a significant portion of the assets of the transferor's historic business in the transferee's business.

.04 Section 1001.--Determination of Amount of and Recognition of Gain or Loss.--Determination of amount of, and recognition of, gain or loss in divorce property settlements.

.05 Section 1372.--Election by Small Business Corporation.--Whether trailer or mobile home parks or aircraft rental businesses qualify as electing small business corporations.

Sec. 6. Areas for Which the Service Is Prohibited by Statute from Issuing Rulings or Determination Letters

.01 Section 61.--Gross Income Defined.--Employee fringe benefits. Pub. L. 96-167, page 483, this Bulletin.

.02 Section 162.--Trade or Business Expenses.--Expenses of commuting. Pub. L. 96-167.

.03 Section 170.--Charitable, etc., Contributions and Gifts.--Application of revenue ruling (Rev. Rul. 79-99, 1979-1 C.B. 108) to deny a charitable contribution deduction. Pub. L. 96-74, 1979-2 C.B. 473.

Sec. 7. Effect on Other Documents

Rev. Procs. 79-14, 79-52, and 79-68 are superseded.