Rev Proc 2003-33

26 CFR 601.201: Rulings and determination
letters.
(Also Part I, §§ 851, 852; 1.851–2.)

Rev. Proc. 2003–32
SECTION 1. PURPOSE
This revenue procedure describes conditions under which a regulated investment company (RIC) that holds a
partnership interest is treated, for purposes
of qualifying as a RIC under § 851(b)(3) of
the Internal Revenue Code of 1986 and for
purposes of eligibility to pay exempt-interest
dividends under § 852(b)(5), as if it directly invested in the assets held by the partnership.

the securities (other than Government securities and the securities of other RICs) of
any one issuer, or of two or more issuers
that the corporation controls and that are determined, under regulations, to be engaged
in the same or similar trades or businesses
or related trades or businesses.
.05 Section 852(b)(5) provides that, if at
least 50 percent of the value (as defined in
§ 851(c)(4)) of a RIC’s total assets at the
close of each calendar quarter consists of
obligations described in § 103(a), the RIC
is eligible to pay exempt-interest dividends,
which are treated by the RIC’s shareholders as interest excludable from gross income under § 103(a).
SECTION 3. SCOPE

SECTION 2. BACKGROUND
.01 Certain RICs seek investments with
a yield that is treated for federal income tax
purposes as interest exempt from tax under § 103 and that reflects current shortterm exempt interest rates. Partnerships
described in Rev. Proc. 2002–68, 2002–43
I.R.B. 753, modifying and superseding Rev.
Proc. 2002–16, 2002–1 C.B. 572, offer these
advantages to some of their partners. The
partnership interests are referred to as synthetic tax-exempt variable-rate bonds. Eligible partnerships described in Rev. Proc.
2002–68 may elect a monthly closing election that permits consenting partners to take
into account their distributive shares of partnership income on a monthly basis.
.02 Partners in eligible partnerships described in Rev. Proc. 2002–68 that are RICs
must qualify as RICs under § 851(b)(3) and
generally also seek to qualify to pay
exempt-interest dividends under § 852(b)(5).
.03 Section 851(b)(3)(A) requires that,
in order for a corporation to qualify as a
RIC, at the close of each quarter of the taxable year, at least 50 percent of the value
of the corporation’s total assets must be represented by cash and cash items (including receivables), Government securities,
securities of other RICs, and other securities generally limited in respect of any one
issuer to an amount not greater in value than
5 percent of the value of the total assets of
the corporation and to not more than 10 percent of the outstanding voting securities of
such issuer.
.04 Section 851(b)(3)(B) provides that,
in order for a corporation to qualify as a
RIC, not more than 25 percent of the corporation’s total assets may be invested in

April 21, 2003

This revenue procedure applies to RICs
that are consenting partners in eligible partnerships described in Rev. Proc. 2002–
68.
SECTION 4. PROCEDURE
For purposes of qualifying as a RIC under § 851(b)(3), and for purposes of eligibility to pay exempt-interest dividends under
§ 852(b)(5), a RIC meeting the requirements of Section 3 of this procedure is
treated as if it directly invested in the assets held by the eligible partnership. For
these purposes, its interest in partnership assets is determined in accordance with its
capital interest in the partnership.
SECTION 5. EFFECTIVE DATE
This revenue procedure is effective for
asset determinations that are made as of
dates that are on or after April 21, 2003.
SECTION 6. TRANSITION RULE
The Service will not challenge a RIC
partner’s tax treatment for purposes of an
asset determination, provided that—
(1) The asset determination is made as
of a date that is in a taxable year beginning before January 1, 2004;
(2) The partnership would be an eligible partnership as defined in Rev. Proc.
2002–68;
(3) The RIC partner’s inclusion of income, gain, loss, deduction, and credits is
consistent with that permitted under that
revenue procedure; and

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(4) The RIC partner’s tax treatment is
consistent with an election under § 761(a)
to be excluded from the provisions of subchapter K.
DRAFTING INFORMATION
The principal author of this revenue procedure is Susan Thompson Baker of the Office of the Associate Chief Counsel
(Financial Institutions & Products). For further information regarding this revenue procedure, contact her at (202) 622–3940 (not
a toll-free call).

26 CFR 601.201: Rulings and determination
letters.
(Also Part I, §§ 338; 1.338–2, 1.338(h)(10)–1,
301.9100–3.)

Rev. Proc. 2003–33
SECTION 1. PURPOSE
.01 This revenue procedure grants certain taxpayers an automatic extension of
time pursuant to § 301.9100–3 of the Procedure and Administration Regulations to
file elections on Form 8023, Elections Under Section 338 for Corporations Making
Qualified Stock Purchases, under § 338 of
the Internal Revenue Code.
.02 A request for an automatic extension of time under this revenue procedure
is the exclusive procedure available for obtaining an extension to file an election under § 338 if all persons required to file Form
8023 can make the representations and submit the affidavits described in section 5 of
this revenue procedure (to the extent applicable). In all other cases, see section 7
of this revenue procedure.
SECTION 2. BACKGROUND
.01 Under § 301.9100–1(c), the Commissioner has discretion to grant a reasonable extension of time to make a regulatory
election, or a statutory election (but no more
than 6 months except in the case of a taxpayer who is abroad), under all subtitles of
the Internal Revenue Code except subtitles E, G, H, and I.
.02 Sections 301.9100–1 through
301.9100–3 provide the standards the Commissioner will use to determine whether to
grant an extension of time to make a regulatory election. Section 301.9100–1(a). Section 301.9100–2 provides automatic

2003–16 I.R.B.

extensions of time for making certain elections. Requests for extensions of time for
regulatory elections under § 301.9100–3 will
be granted when the taxpayer provides evidence to establish that the taxpayer acted
reasonably and in good faith, and that granting relief will not prejudice the interests of
the government. Section 301.9100–3(a).
.03 Section 338 provides for elections if
stock of a target corporation is acquired in
a qualified stock purchase. These elections are made on Form 8023.
SECTION 3. APPLICATION
In accordance with § 301.9100–3, an extension of 12 months from the date of discovery of the failure to file a timely election
under § 338 is hereby granted to any person described in section 4 of this revenue
procedure that complies with the requirements set forth in section 5 to file an election under § 338.
SECTION 4. SCOPE
This revenue procedure applies to any
person required to file Form 8023 to make
a valid election under § 338 (hereafter referred to as a required filer) that has not
filed Form 8023 by its due date. In the case
of a controlled foreign purchasing corporation described in § 1.338–2(e)(3) of the
Income Tax Regulations (which, in certain circumstances, permits the United States
shareholders of the purchasing corporation, in lieu of the purchasing corporation
itself, to file Form 8023), the person that
files Form 8023 will be considered the required filer for purposes of this revenue procedure. If more than one person must file
Form 8023 for a particular election (for example, an election under § 338(h)(10)), each
required filer must comply with this revenue procedure for any required filer to obtain an extension of time to make the
election.
SECTION 5. PROCEDURE TO
OBTAIN AN AUTOMATIC
EXTENSION UNDER § 301.9100–3
To obtain an automatic extension under § 301.9100–3 to file an election under § 338, the required filer or filers must
file Form 8023 no later than 12 months after the discovery of the failure to file the
election. In addition, a single statement, filed
under penalties of perjury by all required

2003–16 I.R.B.

filers, must be attached to the Form 8023.
For example, in the case of an election under § 338(h)(10) in which Corporation X
buys all the stock of Corporation Y, an S
corporation, from its two shareholders, A
and B, in a qualified stock purchase, a
single statement, signed under penalties of
perjury by A, B, and the individual who acts
on behalf of Corporation X regarding tax
matters, must be attached to the Form 8023.
The statement must include the information set forth in sections 5.01 through 5.15
of this revenue procedure, which is subject to verification on examination, as provided by section 6 of this revenue
procedure. In the case of an election for
multiple targets for which only one Form
8023 is required, only a single statement is
required.
.01 The following heading typed or legibly printed at the top of the statement:
“AUTOMATIC EXTENSION OF TIME
TO FILE FORM 8023 FILED PURSUANT TO REV. PROC. 2003–33.”
.02 The name, address, and taxpayer
identification number of each required filer.
.03 The name, address, and taxpayer
identification number, if any, of the target
or targets.
.04 (1) The date that the failure to timely
file the election was discovered and (2) a
representation that Form 8023 is being filed
no later than 12 months after the discovery of the failure to timely file the election.
.05 A representation that no person filed
a United States tax return treating the transaction or transactions constituting the qualified stock purchase in a manner that is
inconsistent with the tax consequences that
would have resulted from the election for
which the extension is sought under this
revenue procedure. If this representation
cannot be made, identify any inconsistent
United States tax returns by the name and
taxpayer identification number of the taxpayer that filed them, and by form number and year, and submit a representation
that all such returns will be amended to
eliminate this inconsistency. Further, submit information explaining why any previous filing that is inconsistent with the
election should not be considered evidence
of hindsight.
.06 In the case of a foreign target, a representation that the target was not a controlled foreign corporation, a passive foreign

804

investment company, or a foreign personal
holding company at any time during the
portion of its taxable year that ends on the
acquisition date (as defined in § 338(h)(2)).
.07 If no person filed a United States tax
return treating the transaction or transactions constituting the qualified stock purchase in a manner that is inconsistent with
the tax consequences that would have resulted from the election for which the extension is sought under this revenue
procedure, a representation that an assessment for deficiency is not prevented, and
will not be prevented, before the date that
is 12 months after the date the statement required by this section 5 is filed, by any law
or rule of law for any taxable year of any
person for which the election may affect
such person’s United States tax liability.
Otherwise, a representation that an assessment for deficiency is not prevented, and
will not be prevented, before the date that
is 18 months after the date the statement required by this section 5 is filed, by any law
or rule of law for any taxable year of any
person for which the election may affect
such person’s United States tax liability.
Note that the relevant returns may include
those of the old and new target, as well as
those of required filers.
.08 One or more of the following
representations:
(1) Each required filer reasonably relied on a qualified tax professional, including a tax professional employed or engaged
by a required filer, who was competent to
render advice on the election and was aware
of all relevant facts, and who failed to make
the election. If one or more (but not all) required filers relied on another required filer,
rather than a qualified tax professional, to
make the election, the above representation should be modified to describe which
required filers relied on a qualified tax professional and which required filers relied on
another required filer;
(2) Each required filer reasonably relied on a qualified tax professional, including a tax professional employed by such
required filer, who was competent to render advice on the election and was aware
of all relevant facts, and who failed to advise such required filer to make the election;
(3) The required filer or filers failed to
make the election because, after exercising reasonable diligence (taking into ac-

April 21, 2003

count the required filer’s or filers’
experience and the complexity of the issue), the required filer or filers were unaware of the necessity for the election; or
(4) The Internal Revenue Service has not
discovered the failure to make the election.
.09 A representation that no required filer
is seeking to alter a return position for
which an accuracy-related penalty has been
or could be imposed under § 6662 at the
time of the filing of Form 8023 (taking into
account any qualified amended return filed
within the meaning of § 1.6664–2(c)(3)).
.10 If each required filer was informed
in all material respects of the required election and related tax consequences, a representation that no required filer chose not
to file the election. If any required filer was
not informed in all material respects of the
required election and related tax consequences, please explain.
.11 A representation that facts have not
changed since the due date for making the
election that make the election advantageous to any required filer and that no required filer is using hindsight in seeking to
file Form 8023.
.12 A representation that the granting of
an extension to file the election will not result in any taxpayer having a lower United
States tax liability in the aggregate for all
taxable years affected by the election than
such taxpayer would have had if the election had been timely made (taking into account the time value of money).
.13 Attached to the statement must be an
affidavit and declaration from each required filer, or, if the required filer is not
an individual, the individual who acts on
behalf of the required filer regarding tax
matters, describing in detail the events that
led to the failure to make a valid election
and to the discovery of the failure. If the
required filer relied on a qualified tax professional for advice, the affidavit must describe the engagement and responsibilities
of the professional as well as the extent to
which the required filer relied on the professional. The affidavit must be accompanied by a dated declaration, signed by the
required filer, or, if the required filer is not
an individual, the individual who acts on
behalf of the required filer, which states:

April 21, 2003

“Under penalties of perjury, I declare that
I have examined the attached statement, including accompanying documents, and, to
the best of my knowledge and belief, the
attached statement and this affidavit contain all the relevant facts, and such facts are
true, correct, and complete.” The individual who signs for a required filer must
have personal knowledge of the facts and
circumstances at issue. If a required filer relied on another required filer or that other
required filer’s tax professional to make the
election, in lieu of describing the events that
led to the failure to make a valid election, the discovery of the failure, and the
qualified tax professional’s engagement and
responsibilities, its affidavit should state that
the required filer relied on the other required filer or the other required filer’s tax
professional to make the election.
.14 Attached to the statement also must
be an affidavit and declaration from the individuals having knowledge or information about the events that led to the failure
to make a valid election and to the discovery of the failure. These individuals must
include the required filer’s return preparer
and/or Form 8023 preparer, any individual
(including an employee of a required filer)
who made a substantial contribution to the
preparation of the return and/or Form 8023,
and any accountant or attorney, knowledgeable in tax matters, who advised the required filer with regard to the election. The
affidavit must describe the engagement and
responsibilities of the individual as well as
the advice that the individual provided to
the required filer. Each affidavit must include the name, current address, and taxpayer identification number of the
individual, and must be accompanied by a
dated declaration, signed by the individual,
which states: “Under penalties of perjury,
I declare that I have examined the attached
statement, including accompanying documents, and, to the best of my knowledge
and belief, the attached statement and this
affidavit contain all the relevant facts, and
such facts are true, correct, and complete.”
.15 A statement regarding whether any
taxpayer’s return(s) for the taxable year in
which the election should have been made
or any taxable years that would have been
affected by the election had it been timely

805

made is being examined by a director, or
is being considered by an appeals office or
a federal court.
SECTION 6. EFFECT OF INCORRECT
OR INCOMPLETE INFORMATION
ON STATEMENT REQUESTING
AUTOMATIC EXTENSION OF TIME
If the Service determines that the information provided pursuant to section 5 of
this revenue procedure was incorrect or incomplete in any material respect at the time
Form 8023 was filed, the Service may revoke the extension of time granted pursuant to this revenue procedure at any time.
SECTION 7. CORPORATIONS THAT
DO NOT QUALIFY FOR THE
AUTOMATIC EXTENSION OF TIME
If a required filer or filers cannot qualify
for the automatic extension of time pursuant to section 3 of this revenue procedure,
an extension of time under § 301.9100–3
may only be obtained through a letter ruling request filed in accordance with Rev.
Proc. 2003–1, 2003–1 I.R.B. 1 (or similar revenue procedure applicable to a later
year). Each required filer must join in the
submission of the letter ruling request. The
letter ruling request must include:
.01 A detailed recitation of the facts,
along with any documentary support, that:
(1) Describes the facts of the transaction or transactions claimed to constitute a
qualified stock purchase, including:
(a) A representation that the acquisition of the target stock qualified as a qualified stock purchase;
(b) Information describing the purchaser
of the stock, the seller(s) of the stock, and
the target, whether the purchaser, the seller,
and/or the target was a member of a consolidated group, and if so, information describing the common parent of the
consolidated group;
(c) Whether the purchasing corporation and/or the target ceased to exist after
the transaction or transactions claimed to
constitute a qualified stock purchase, and
if the purchasing corporation and/or the target ceased to exist after such transactions,
the events that gave rise to such cessation; and

2003–16 I.R.B.

(d) In the case of an acquisition by a
foreign purchasing corporation for which
Form 8023 is to be filed by the United
States shareholders of the foreign purchasing corporation or by the common parent
of the consolidated group of which the
United States shareholder of the foreign purchasing corporation is a member, a representation that the foreign purchasing
corporation is a controlled foreign corporation as defined in § 957 (taking into account § 953(c)) and is not required under
§ 1.6012–2(g) (other than § 1.6012–
2(g)(2)(i)(b)(2)) to file a United States income tax return for its taxable year that
includes the acquisition date.
(2) A description of the required filer’s or filers’ intention, on or before the due
date, without extensions, of Form 8023, to
make an election under § 338, referencing any documentation supporting such intention;
(3) A detailed description of the circumstances that caused the failure to make
a timely election, including the specific person or persons, by name, not merely by
firm, who were responsible for filing the
election, and such person or persons’ qualifications as a tax professional (e.g., attorney or CPA);
(4) A description of the circumstances
under which the failure to file the election was discovered, including the date of
discovery; and
(5) One or more of the following:
(a) A discussion explaining that each required filer reasonably relied on a qualified tax professional, including a tax
professional employed or engaged by a required filer, who was competent to render advice on the election and was aware
of all relevant facts, and who failed to make
the election. If one or more (but not all) required filers relied on another required filer,
rather than a qualified tax professional, to
make the election, please explain;
(b) A discussion explaining that each required filer reasonably relied on a qualified tax professional, including a tax
professional employed by such required

2003–16 I.R.B.

filer, who was competent to render advice on the election and was aware of all
relevant facts, who failed to advise such required filer to make the election;
(c) A discussion explaining that the required filer or filers failed to make the election because, after exercising reasonable
diligence (taking into account the required
filer’s or filers’ experience and the complexity of the issue), the required filer or
filers were unaware of the necessity for the
election; or
(d) A representation that the required
filer or filers are requesting relief under
§ 301.9100–3 to make the election before
the failure to make the election is discovered by the Service.
.02 The information set forth in section 5 of this revenue procedure, including the affidavits described in sections 5.13
and 5.14, and copies of any relevant documents, including stock purchase agreements. To the extent that any representation
set forth in section 5 cannot be made, the
letter ruling request must explain why such
representation cannot be made.
SECTION 8. EFFECTIVE DATE
This revenue procedure is generally effective for elections under § 338 filed after April 2, 2003, other than elections filed
pursuant to the terms of a letter ruling that
was issued prior to April 2, 2003, or that
is issued on or after April 2, 2003, in response to a ruling request filed on or before April 2, 2003. For ruling requests filed
on or before April 2, 2003, in response to
which the Service has not issued a letter ruling prior to April 2, 2003, the Service may
request that the required filer or filers submit information specified in this revenue
procedure.
SECTION 9. PAPERWORK
REDUCTION ACT

agement and Budget (OMB) in accordance
with the Paperwork Reduction Act (44
U.S.C. 3507) under control number 1545–
1820.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless
the collection of information displays a valid
OMB control number.
The collections of information in this
revenue procedure are in section 5 and section 7. This information is required to determine whether a taxpayer qualifies for an
automatic extension of time to file an election under this revenue procedure. The collections of information are required to obtain
a benefit. The likely respondents are purchasers and sellers of stock in taxable transactions.
The estimated total annual reporting burden is 300 hours.
The estimated annual burden per respondent varies from 2 hours to 8 hours,
depending on individual circumstances, with
an estimated average of 5 hours. The estimated number of respondents is 60.
The estimated annual frequency of responses is on occasion.
Books or records relating to a collection of information must be retained as long
as their contents may become material in
the administration of any internal revenue
tax law. Generally tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
SECTION 10. DRAFTING
INFORMATION
The principal author of this revenue procedure is Ken Cohen of the Office of Associate Chief Counsel (Corporate). For
further information regarding this revenue
procedure, contact Mr. Cohen at (202) 622–
7790 (not a toll-free call).

The collections of information contained
in this revenue procedure have been reviewed and approved by the Office of Man-

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April 21, 2003