From the IRS.

• Author: Laffie, Lesli S.
• Position: News Notes

IRS Guidance on AJCA Elections The IRS released Notice 2006-47, which provides taxpayers with interim guidance on how to elect certain tax benefits established by the American Jobs Creation Act of 2004 (AJCA). The notice alerts taxpayers to the various elections now available and explains how to revoke certain elections currently in effect.

Prior guidance: The Service stressed that the notice does not cover every election or revocation created or affected by the AJCA. In particular, it does not address elections or revocations for which published guidance was issued prior to the notice, including provisions for the:

* Repeal of the exclusion for extraterritorial income (Rev. Proc. 2001-37).

* Treatment of family members as one shareholder for S corporation purposes (Notice 2005-91).

* Election to use the per-ton rate in determining corporate tax on certain international shipping activities (Notice 2005-2).

* Repatriation of foreign dividends back to the U.S. at a reduced tax rate (Notice 2005-10).

* Deduction of state and local general sales tax in lieu of state and local income taxes (Notice 2005-31).

* Disallowance of certain partnership loss transfers (Notice 2005-32).

* Limits on transfer or importation of built-in losses (Notice 2005-70).

Interim rules: The notice discussed elections for:

* Allowing worldwide affiliated groups to allocate interest expense on a worldwide basis.

* Modifying application of the income-forecast method of depreciation.

* Permitting taxpayers that must translate foreign income payments to use the exchange rate in effect on the date they pay the taxes, provided the foreign taxes are denominated in a nonfunctional currency.

* Allowing taxpayers to treat foreign taxes paid or...