Final regulations under sections 6038 and 6038A of the Code clarify the information required to be furnished regarding certain related party transactions of certain foreign corporations and certain foreign-owned domestic corporations. The final regulations also increase the amount of certain penalties, and make certain other changes, to reflect the statutory changes made by the Taxpayer Relief Act of 1997.

Final, temporary, and proposed regulations under section 1397E of the Code set forth guidance for state and local governments that issue qualified zone academy bonds (QZABs) and for banks, insurance companies, and other taxpayers that hold those bonds. The regulations provide guidance on the maximum term, expenditure and use of proceeds, remedial actions, arbitrage, and reporting requirements for QZABs.

Final, temporary, and proposed regulations under section 1397E of the Code set forth guidance for state and local governments that issue qualified zone academy bonds (QZABs) and for banks, insurance companies, and other taxpayers that hold those bonds. The regulations provide guidance on the maximum term, expenditure and use of proceeds, remedial actions, arbitrage, and reporting requirements for QZABs.

Final regulations under section 1502 of the Code that provide guidance with regard to the recalculation of basis and excess loss accounts in subsidiary shares as the result of certain intercompany transactions and on when a subsidiary stock can be treated as worthless under section 165.

Final regulations under section 1502 of the Code amend the consolidated return regulations relating to the tacking rule of the life-nonlife regulations and taxable years of members of a consolidated group. Specifically, the regulations remove one of the five conditions of the tacking rule (the separation condition) and regulations section 1.1502-76(a)(2), which requires a fiscal-year consolidated group with an insurance member to adopt a calendar year.

Section 355. This notice provides transition relief to taxpayers applying regulations section 1.355-3(b)(4)(iii) and sections 355(b)(2)(C) and (D) of the Code to certain transactions described in this notice.

Notice 2003-81, 2003-2 C.B. 1223, identified a tax avoidance transaction involving offsetting foreign currency options and those substantially similar to it as listed transactions. This notice modifies and supplements Notice 2003-81 by correcting a statement in its “Facts” section. Specifically, this notice clarifies that foreign currency options, whether or not the underlying currency is one in which positions are traded through regulated futures contracts, are not foreign currency contracts as defined in section 1256(g)(2). Notice 2003-81 modified and supplemented.