Rev. Proc. 72-9

Section 1. Purpose

The purpose of this Revenue Procedure is to set forth an up-to-date list of those areas of the Internal Revenue Code of 1954 in which the Internal Revenue Service will not issue advance rulings or determination letters.

Sec. 2. Background

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

There are, however, certain areas where, 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 two 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. Each section reflects a number of specific questions and problems as well as the general areas.

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 as to the position of the Service. This list should not be considered as all inclusive. Whenever a particular item is added to or deleted from the list, appropriate notice thereof will be published in the Internal Revenue Bulletin.

The authority and general procedures of the National Office of the Internal Revenue Service and of the Offices of the District Directors of Internal Revenue with respect to the issuance of advance rulings and determination letters are outlined in Revenue Procedure 72-3, page 698, this Bulletin.

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

.01 Specific questions and problems.

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

2. 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.

3. 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.

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

5. Section 302.--Redemption of Stock.--Whether section 302(b) of the Code applies where the consideration given in redemption by the 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 him in the future, upon the happening of specified defaults by the corporation.

6. 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 (where under the facts a sale of the property by the corporation would not qualify under section 337 of the Code), in partial liquidation under section 346 of the Code, or in redemption of stock under section 302(a) of the Code, 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, Ct. D. 1636, C.B. 1945, 58.

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

8. 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 where 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 are owned by the same shareholders; or where 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).

9. 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, where 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 are owned by the same persons.

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

11. Section 401.--Qualified Pension, Profit-Sharing, and Stock Bonus Plans.--(a) Amendments to qualified profit-sharing and stock bonus plans merely removing definite contribution formula. See Rev. Proc. 56-22, C.B. 1956-2, 1380.

(b) Amendments to qualified pension and profit-sharing plans designed only to permit such plans to participate in a common pension fund or group trust. See Rev. Proc. 56-42, C.B. 1956-2, 1409.

(c) Profit-sharing plans weighted by units of retirement benefits. See Rev. Rul. 57-77, C.B. 1957-1, 158.

(d) Amendments to qualified pension, profit-sharing, annuity, and bond purchase plans covering self-employed individuals that only conform the plan to the provisions of section 204 of Public Law 89-809 which repealed paragraph (10) of section 404(a) of the Code and provided a new definition of "earned income" from self-employment, effective for taxable years beginning after December 31, 1967. See Rev. Proc. 67-26, C.B. 1967-1, 629.

(e) Pension, profit-sharing, and stock bonus plans that can qualify only by considering contributions or benefits under the Social Security Act, where such plans are not of the excess benefit, stepped-up, or offset type. See Rev. Rul. 70-580, C.B. 1970-2, 90.

(f) Pension, profit-sharing, and stock bonus plans with dual eligibility requirements where the employees in whose favor discrimination is prohibited cannot meet the eligibility requirements for future employees.

(g) Pension, annuity, profit-sharing or stock bonus plans referred to in Rev. Rul. 71-244, C.B. 1971-1, 119, that are designed to be integrated with benefits under a foreign social security system and that do not satisfy the requirements of that Revenue Ruling.

(h) Amendments to qualified money-purchase pension plans, profit-sharing plans, and stock bonus plans, that only conform the plan to section 1.401-3(e) of the Income Tax Regulations, as amended from time to time, by the mere substitution of figures specifying the rate of employer contributions or the integration level or both.

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

13. 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 where there is a possibility that the corpus of the trust or estate may be invaded.

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

15. 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.

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

17. Section 2035.--Transactions in Contemplation of Death.--Whether a transaction is one in contemplation of death.

18. Section 2511.--Renunciation.--Whether the contemplated renunciation of property interests transferred from a decedent will be unequivocal and made within a reasonable time.

.02 General Areas.

1. The results of transactions which 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.

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

.01 Specific questions and problems.

1. Section 163.--Interest.--Whether advances to thin corporations constitute loans or are equity investments.

2. Section 167.--Depreciation.

(a) Useful lives of assets.

(b) Depreciation rates.

(c) Salvage value of assets.

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

4. 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.

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

6. Section 341.--Collapsible Corporations.--Whether a corporation will be considered as a "collapsible corporation" that is, whether it was "formed or availed of" with the view of certain tax consequences.

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

8. Section 401.--Qualified Pension, Profit-Sharing, and Stock Bonus Plans.--Whether a combination cash and trusteed profit-sharing plan qualifies. See Rev. Rul. 56-497, C.B. 1956-2, 284.

9. Section 503(b), (e), and (f).--Prohibited Transactions: Trusts under section 401(a).--Whether a transaction involving the application of section 503(b), (e), or (f) of the Code will be considered a prohibited transaction or will otherwise affect the exempt status of trusts described in section 401(a) of the Code, except as provided in section 8.02 of Revenue Procedure 72-6, page 710, this Bulletin.

10. Section 1221.--Capital Assets.--Whether an individual is a dealer in real estate for the purpose of determining whether property held by him may be classified as a capital asset or as property held for sale to customers.

.02 General Areas.

1. Any matter where the determination requested is primarily one of fact, e.g., market value of property.

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

Sec. 5. Scope of Application

This Revenue Procedure is not to be considered as precluding the submission of requests for technical advice in any of the above areas from the Office of a District Director of Internal Revenue to the National Office.

Sec. 6. Effect on Other Documents

Revenue Procedure 69-6, C.B. 1969-1, 396 and Revenue Procedure 71-31, C.B. 1971-2, 570 are hereby superseded.