Rev. Proc. 67-16

SECTION 1. PURPOSE.

The purpose of this Revenue Procedure is to provide a procedure whereby taxpayers may elect to apply the amendments made by a section 206 of the Act of November 13, 1966 (Public Law 89-809, 80 Stat. 1578) C.B. 1966-2, 656, to taxable years beginning on or before November 13, 1966, and ending after December 31, 1965, or revoke such an election previously made.

SEC. 2. BACKGROUND.

Under section 543(a) of the Internal Revenue Code of 1954, as amended, the term `personal holding company income' includes the adjusted income from rents (unless the adjusted income from rents from all sources constitutes 50 percent or more of the adjusted ordinary gross income and unless the sum of the dividends paid, the dividends considered as paid, and the consent dividends, during the year equals or exceeds the amount by which the other personal holding company income exceeds 10 percent of the ordinary gross income). Section 543(b)(3) of the Code (as amended by section 206(a) of Public Law 89-809) provides that for purposes of computing `adjusted income from rents', the term `rents' does not include compensation, however designated, for the use of, or the right to use, any tangible personal property manufactured or produced by the taxpayer, if during the taxable year the taxpayer is engaged in substantial manufacturing or production of tangible personal property of the same type. Section 206(b) of the Public Law contain certain technical amendments to section 543(a)(2) and (b)(2). Section 206(c) of the Public Law provides that a taxpayer may elect to have the amendments made by section 206(a) and (b) apply to taxable years beginning on or before November 13, 1966, and ending after December 31, 1965. An election made pursuant to the provisions of section 206(c) applies to all taxable years beginning on or before November 13, 1966, and ending after December 31, 1965.

SEC. 3. ELECTION.

.01 Form and Content . The election authorized by section 206(c) shall be made in a statement signed by an officer of the corporation who is authorized to sign a return of the corporation with respect to income. The statement shall show the taxpayer's name, address, and employer identification number and shall state that the taxpayer elects to apply the amendments made by section 206(a) and (b) of the Act of November 13, 1966 (Public Law 89-809, 80 Stat. 1578) to taxable years beginning on or before November 13, 1966, and ending after December 31, 1965.

.02 Period in which election must be made . An election applicable with respect to only one taxable year may be made at any time before the expiration of the period for making a claim for credit or refund of Federal income tax for such taxable year. An election applicable with respect to more than one taxable year may be made at any time before the expiration of the period for making a claim for credit or refund of Federal income tax for the earliest such taxable year.

.03 Place where statement of election shall be filed . In the case of an election applicable with respect to only one taxable year, the statement of election shall be filed with the office of the Internal Revenue Service where the taxpayer's Federal income tax return for such year was, or will be, filed. In the case of an election applicable with respect to more than one taxable year, the statement of election shall be filed with the office of the Internal Revenue Service where the taxpayer's Federal income tax return for the earliest such taxable year was, or will be, filed except that the statement of election may be attached to the taxpayer's Federal income tax return or a claim for credit or refund with respect to an overpayment of the tax imposed by section 541 shown on a previously filed return. However, in any event, the statement must be filed prior to the expiration of the period referred to in .02 of this section which is applicable with respect to the taxpayer. Where the statement of election has been filed prior to the date the taxpayer files its Federal income tax return for a taxable year for which the election is effective, a copy of such statement (clearly identified as a copy) shall be attached to such return.

SEC. 4. REVOCATION OF ELECTION.

A revocation of an election previously made under the procedure described in section 3 may be made by the taxpayer by filing with the office of the Internal Revenue Service where the statement of election was filed a statement signed in the same manner as a return of a corporation with respect to income. The statement shall show the taxpayer's name, address, and employer identification number and the taxable year or years to which such election was applicable and shall state that the taxpayer revokes the election previously made. In addition, if, at the time the statement of revocation is filed, the statutory period for assessment of a deficiency for a taxable year for which the election was made will expire within one year, then the revocation is not effective unless there is included in or attached to the statement of revocation a written consent that the statutory period for assessment of any deficiency (to the extent that such deficiency is attributable to the revocation of the election) shall not expire before the expiration of one year after the date that the statement of revocation is filed. The revocation must be made prior to the expiration of the period described in section 3.02 of this Procedure in which the taxpayer could make an election. In the case of an election applicable with respect to more than one taxable year, the revocation of such election applies to all taxable years beginning on or before November 13, 1966, and ending after December 31, 1965.

¹ Also released as Technical Information Release 890, dated March 9, 1967.