SERVICE ANNOUNCES ADDITIONAL AREAS IN WHICH ADVANCE RULINGS WILL NOT BE ISSUED BY ASSOCIATE CHIEF COUNSEL (TECHNICAL).

Rev. Proc. 90-40

SECTION 1. BACKGROUND

Rev. Proc. 90-3, 1990-1 I.R.B. 54, sets forth areas of the Internal Revenue Code under the jurisdiction of the Associate Chief Counsel (Technical) in which the Internal Revenue Service will not issue advance rulings or determination letters. Section 4 of Rev. Proc. 90-3 is entitled "AREAS IN WHICH RULINGS OR DETERMINATION LETTERS WILL NOT ORDINARILY BE ISSUED."

SEC. 2. PROCEDURE

Section 4 of Rev. Proc. 90-3 is amplified by adding to section 4.01 the following new sections:

Section 265(a)(2). -- Interest Expense Relating to Tax-Exempt Income. -- Whether indebtedness is incurred or continued to purchase or carry obligations the interest on which is wholly exempt from the taxes imposed by subtitle A of the Code.

Section 441(i). -- Taxable Year of Personal Service Corporations. -- Whether the principal activity of the taxpayer during the testing period for the taxable year is the performance of personal services within the meaning of section 1.441-4T(d)(1)(ii) of the temporary Income Tax Regulations.

Section 448(d)(2)(A). -- Method of Accounting for Qualified Personal Service Corporations. -- Whether 95 percent or more of the time spent by employees of the corporation, serving in their capacity as such, is devoted to the performance of services within the meaning of section 1.448-1T(e)(4)(i) of the temporary regulations.

SEC. 3. EFFECT ON OTHER REVENUE PROCEDURES

Rev. Proc. 90-3 is amplified.

SEC. 4. EFFECTIVE DATE

This revenue procedure will apply to all ruling requests on hand in the National Office on July 30, 1990, the date of the publication of this revenue procedure in the Internal Revenue Bulletin, as well as to all requests received thereafter.

DRAFTING INFORMATION

The principal authors of this revenue procedure are James A. Orefice and James R. Roy of the Office of Assistant Chief Counsel (Income Tax and Accounting). For further information regarding this revenue procedure as it pertains to section 265 of the Code, contact Mr. Roy on (202) 377-9588 (not a toll-free call). For further information regarding this revenue procedure as it pertains to section 441 or 448 of the Code, contact Mr. Orefice on (202)566-3637 (not a toll-free call).