¹ Notice 2005-1, IRB 2005-2, 274. Proposed regulations were issued as we went to press; see REG-158080-04 (9/29/05).

² The transfer of property will not result in immediate taxation if the amount remains substantially nonvested for Sec. 83 purposes. Thus, if the transferred assets remain subject to a substantial risk of forfeiture and are nontransferable (as defined in Regs. Sec. 1.83-3), the amounts set aside will not be taxed until the individual vests in such amounts.

³ H 3376, 109th Cong., 1st Sess. (2005); and S 1447, 109th Cong., 1st Sess. (2005).

⁴ For this purpose, amounts are “deferred” when there is a legally binding right to the compensation, without regard to whether (1) the amounts are earned and vested and (2) a plan in existence on Oct. 3, 2004 has been materially modified; see Notice 2005-1, note 1 supra, Q&A-28. Thus, some amounts not considered grandfathered for Sec. 409A purposes are nevertheless not required to be reported, because they are deemed pre-2005 deferrals for reporting purposes. There are two exceptions to the reporting obligation; see Q&A-26. First, although these requirements apply to both account-balance plans and non-account-balance plans, amounts deferred under the latter are not required to be reported until they are readily ascertainable (within the meaning of Sec. 3121(v)). Second, there is a de minimis exception for deferred compensation that applies if the aggregate amount of deferrals under all deferred compensation plans for an individual employee does not exceed $600; see Q&A-27. Sec. 6041 provides a general de minimis exception; payments of less than $600 need not be reported on Form 1099.

⁵ See Karlinsky and Orbach, “The AJCA’s Domestic Business Provisions,” 36 The Tax Adviser 148 (March 2005).

⁶ Notice 2005-45, IRB 2005-24, 1228; for a discussion, see Ebner, Tax Clinic, “Maximizing the Deduction for Personal Use of an Aircraft,” 36 The Tax Adviser 522 (September 2005).

⁷ See REG-142686-01 (11/14/01).

⁸ TD 9144 (8/3/04).

⁹ REG-122917-02 (6/9/03).

¹⁰ Public companies with June, July or August fiscal year-ends must have adopted SFAS 123(R) with interim financial statements for the quarter beginning July 1, 2005. Similarly, public companies with September, October or November fiscal year-ends must have adopted SFAS 123(R) with interim financial statements for the quarter beginning Oct. 1, 2005.

¹¹ Rev. Rul. 2004-87, IRB 2004-32, 154.

¹² Rev. Rul. 2005-39, IRB 2005-27, 1.

¹³ Ronald H. Yocum, Fed. Cl., No. 03-84T, 7/1/05.

¹⁴ REG-209114-90 (2/20/02).

¹⁵ TD 9083 (10/14/03).

¹⁶ The IRS only recently released guidance rejecting the overlapping shareholder approach to determining changes in ownership under the 1989 proposed regulations; see IRS Letter Ruling (TAM) 200415003 (4/9/04).

¹⁷ TD 9212 (7/13/05).

¹⁸ REG-208254-90 and REG-136481-04 (both dated 8/6/04).

¹⁹ REG-208254-90 (1/21/00).

²⁰ See 2005 OECD Model Tax Convention on Income and on Capital, Commentaries, Art. 15, par. 12–12.15.

²¹ Rev. Rul. 2004-109, IRB 2004-50, 958.

²² Rev. Rul. 2004-110, IRB 2004-50, 960.

²³ Rev. Ruls. 58-145, 1958-1 CB 360 and 74-108, 1974-1 CB 248.

²⁴ Rev. Ruls. 55-520, 1955-2 CB 393 and 58-301, 1958-1 CB 23.

²⁵ REG-105346-03 (5/24/05); for a discussion, see Cantrell, Personal Financial Planning, “Partnership Interest for Services Regs. Offer Estate Planners a ‘Bona Fide’ Solution,” 36 The Tax Adviser 636 (October 2005).

²⁶ Notice 2005-43, IRB 2005-24, 1221.

²⁷ A capital interest in a partnership gives the holder rights to a share of the proceeds from the partnership assets in a hypothetical wind-up of the partnership. A profits interest has been defined by the IRS as an interest that is not a capital interest in a partnership. Usually, a profits interest gives the holder a right to some portion of income of the partnership earned after the interest has been transferred.

²⁸ Rev. Proc. 93-27, 1993-2 CB 343.

²⁹ Rev. Proc. 2001-43, 2001-2 CB 191.

³⁰ Rev. Rul. 2004-98, IRB 2004-42, 664.

³¹ Rev. Rul. 2002-3, 2002-1 CB 316.

³² Notice 2005-42, IRB 2005-23, 1204.