Deductions of section 277 membership organizations. This ruling illustrates the operation of section 277. Membership organizations subject to section 277 can take allowable deductions attributable to providing goods and services to members only to the extent of member income in computing the organization's taxable income. Excess deductions are not deductible against nonmember income but are allowable as deductions against member income in succeeding years. Other allowable deductions are fully deductible, including deductible against member income, in computing taxable income.

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Temporary and proposed regulations under section 752 of the Code concern the assumption of a partner's liability, by a partnership, that is not taken into account under section 752(a) and (b) (section 1.752-7 liability). The proposed regulations contained in section 1.752-7 require a partner who has a section 1.752-7 liability assumed by a partnership to reduce the partner's outside basis in the partnership interest by the remaining amount of the section 1.752-7 liability (but not below the adjusted value of that interest) where there is a sale of the partnership interest, a liquidation of the partnership interest, or an assumption of the contingent liability by another partner. The proposed and temporary regulations contained in section 1.752-6T apply section 358(h) to partnerships for the period between October 18, 1999, and June 24, 2003. A public hearing on the proposed regulations is scheduled for October 14, 2003.

2003 enhanced oil recovery credit. The enhanced oil recovery credit for taxable years beginning in the 2003 calendar year is determined without regard to the phase-out for crude oil price increases provided in section 43(b) of the Code.

2003 marginal production rates. This notice announces the applicable percentage under section 613A of the Code to be used in determining percentage depletion for marginal properties for the 2003 calendar year.

This procedure provides new procedural rules regarding the election under section 953(d) of the Code, whereby certain foreign insurance companies may elect to be treated as domestic corporations for U.S. tax purposes. These rules reflect changes in the administration of the election and replace the procedural rules contained in Section II of Notice 89-79, 1989-2 C.B. 392. Notice 89-79 modified and superseded.

This announcement advises payers about a reduction in the backup withholding rate authorized by section 3406(a)(1) of the Code. Section 105(a) of the Jobs and Growth Tax Relief Reconciliation Act of 2003 (Public Law 108-27) reduced the rate for backup witholding on reportable payments. This announcement also addresses when tax forms and publications will be revised to reflect the new rates.