Rev. Proc. 62-32

SECTION 1. PURPOSE.

The purpose of this Revenue Procedure is to supersede Revenue Procedure 60-6, C.B. 1960-1, 880, and to set forth an up-to-date, section-by-section 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 here listed, however, Revenue Rulings or Revenue Procedures may be published in the Internal Revenue Bulletin from time to time in order to provide general guidelines as to the position of the Service.

This list should not be considered as all inclusive since the Service may decline to rule in advance on other questions whenever warranted by the facts or circumstances. Whenever a particular item is added to or deleted from this list, however, 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 62-28, page 496, this Bulletin.

SEC. 3. AREAS IN WHICH RULINGS WILL NOT BE ISSUED.

.01 Specific questions and problems.

1. Section 61.--Gross Income.--(a) Whether an amount paid by an employer to an employee under specific factual circumstances is a gift or compensation for services rendered.

(b) Whether stockholders who waive their rights to future dividends for a specified period of time will be in receipt of income should the corporation subsequently declare and pay a dividend during the waiver period.

2. Section 106.--Contributions by Employer to Accident and Health Plans.--Whether an employee-stockholder of a corporation may exclude from his gross income, under the provisions of section 106, amounts paid by the corporation to provide accident or health benefits to the employee-stockholder.

3. Section 119.--Meals or Lodgings Furnished by an Employer.--Whether meals and lodging furnished to an employee are for the convenience of the employer. Also, whether cash allowances for meals constitute compensation.

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

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

6. 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.

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

8. Section 302.--Redemption of Stock.--(a) Whether a distributee ceases to have an interest in the corporation after the redemption of stock, within the meaning of section 302(c)(2)(A)(i), where the spouse of the distributee is the sole or principal stockholder after the redemption.

(b) Whether a distributee ceases to have an interest in the corporation, within the meaning of section 302(c)(2)(A)(i), after the redemption of his stock, where business properties are distributed in kind and the distributee forms a joint venture with the distributing corporation to operate both the properties distributed to him and the properties retained by the corporation.

(c) Whether section 302(b) 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.

(d) The tax effect of a redemption of stock to be consummated at some indefinite future time.

9. Sections 311 and 336.--Taxability of Corporation on Distribution; General Rule.--Upon the distribution of property in kind by a corporation to its shareholders, in complete liquidation under section 331 (where 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, Ct.D. 1636, C.B. 1945, 58.

10. Sections 312 and 316.--Earnings Available for Dividends.--The determination of earnings and profits of a corporation available for the distribution of dividends to its shareholders.

11. Section 331.--Gain or Loss to Shareholders 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 the shareholders of the liquidating corporation own more than a nominal amount of the stock of the new transferee corporation; 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.

12. Section 337.--Gain or Loss; Certain Liquidations.--(a) The application of this section to gains realized by a corporation upon the sale of property, in connection with its liquidation, to another corporation, where more than a nominal amount of the stock of both the selling corporation and the purchasing corporation are owned by the same persons.

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

14. Section 351.--Transfer to Controlled Corporation.--(a) What will constitute stock or securities where part of the consideration received by the transferors consists of bonds, debentures or long-term notes of the transferee in an amount, which when compared to the capital stock of the corporation, gives rise to the question of a "thin corporation."

(b) Whether the transfer of appreciated stocks or securities to a newly organized investment company in exchange for shares of the stock of such investment company, as a result of solicitation by promoters, brokers or investment houses, will constitute nontaxable exchanges within the meaning of this section.

(c) Whether the transfer of appreciated real estate, or interests therein, to a newly organized real estate investment trust, within the meaning of section 856(a) of the Code, in exchange for shares or interests in such trust, as a result of solicitation by promoters, brokers, or investment houses, will constitute nontaxable exchanges within the meaning of this section.

15. Section 368.--Definitions Relating to Reorganizations.--(a) The tax effect of a merger or other transaction meeting the literal statutory requirements of section 368(a)(1) involving a loss corporation, where the sole or principal purpose appears to be to offset the loss carryover of such corporation against the income of another corporation.

(b) Whether this section is applicable to the acquisition by an investment company of the stock or assets of another investment company where, as a result of such acquisition, the shareholders of either company, or both companies, thereby achieve a substantially wider diversification of the investment assets underlying their stock holdings.

16. 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. (These do not affect qualification; advance determination letters are unnecessary. 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. (These do not affect qualification; advance determination letters are unnecessary. 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) Qualification of pension or annuity plans which provide for disability benefits integrated with disability benefits under the Social Security Act unless (1) the plan provides that its "integrated" disability benefits will be payable only to employees entitled to disability benefits under the Act, or (2) the plan is of the offset type and provides for payment of the full disability benefits (without offset) when disability benefits are not payable under the Social Security Act. See Rev. Rul. 62-152, page 126.

(e) Qualification of pension or annuity plans which provide disability benefits designed to integrate under the provisions relating to early retirement benefits, but which uses a disabled life mortality table for the purpose of determining the amount of such "disability" benefits. See Rev. Rul. 62-152, page 126.

17. Section 451.--General Rule for Taxable Year of Inclusion.--Year of taxability of amounts realized pursuant to arrangements designed to defer the time of receipt to a date later than that upon which the right to the amount becomes vested.

18. Section 503 (h) and (i).--Prohibited Transactions; Section 401(a) Trusts.--Whether a transaction involving the application of section 503(h) or section 503(i) of the Code will be considered a prohibited transaction or will otherwise affect the exempt status of a trust described in section 401(a) (as distinguished from whether or not the transaction comes within the purview of section 503(h) or section 503(i)).

19. Section 532.--Corporations Subject to Accumulated Earnings Tax.--Whether retention of earnings and profits by a corporation is for the purpose of avoiding surtax on its shareholders.

20. 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 estate or trust may be invaded.

21. Section 704(e).--Family Partnerships.--Matters relating to the validity of a family partnership.

22. Section 911(a)(1).--Foreign Residence.--Whether an individual citizen of the United States is or has been a bona fide resident of a foreign country or countries.

23. Section 921.--Western Hemisphere Trade Corporations.--Whether a corporation qualifies as a Western Hemisphere Trade Corporation.

24. Section 931.--Income From Sources Within Possessions of the United States.--Whether a domestic corporation is entitled to the benefits of this section.

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

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

.02 General areas.

1. The results of transactions which lack bona fide business purpose and 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. Transactions such as sales and leasebacks, gifts and leasebacks, and other rental transactions of real or personal property directly or indirectly with the creator or a related or controlled interest. See Rev. Proc. 62-30, page 512, this Bulletin.

SEC. 4. AREAS IN WHICH RULINGS WILL NOT ORDINARILY BE ISSUED.

.01 Specific questions and problems.

1. Section 167.--Depreciation.

(a) Useful lives of assets.

(b) Depreciation rates.

2. Section 302.--Redemption of Stock.--The tax effect of the redemption of stock for notes, or the liquidation of a corporation by a series of distributions, where the distributions in liquidation or the payments on the notes are to be made over an excessively long future period.

3. Section 306.--Disposition of Certain Stock.--Whether the distribution and/or disposition or redemption of "section 306 stock" 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).

4. 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.

5. Section 351.--Transfer 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.

6. 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.

7. Section 501 (c) and (d).--List of Exempt Organizations; Religious and Apostolic Organizations.--Exempt status of an organization with less than 12 months of operation, unless such organization is of the community or public type is organized for purposes within the purview of the exemption statute and the details submitted in connection with its proposed activities indicate that it will engage in activities clearly within the contemplation of the statute, or is a state chartered credit union. See Revenue Procedure 62-30, page 512, this Bulletin.

8. Section 503(c).--Prohibited Transactions.--Whether an organization described in section 401(a) or section 501(c)(3) and exempt under section 501(a) of the Code proposes to enter into a prohibited transaction within the purview of section 503(c) of the Code where the determination is primarily one of fact. See Revenue Procedures 62-30, page 512, this Bulletin and 62-31, page 517, this Bulletin.

9. Section 521.--Exemption of Farmers' Cooperatives From Tax.--Exempt status of an organization with less than 12 months of operation. See Rev. Proc. 62-30, page 512, 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 other matter where the determination requested is primarily one of fact, e.g., market value of property.

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 60-6, C.B. 1960-1, 880, is hereby superseded.