1. Industry Issue Resolution (IIR) Cheryl P Claybough Director PFTG May 2012 May 2012

2. 2 IIR Program - Rev Proc 2003-36 The program goals are to:  Address frequently disputed or burdensome business tax issues that affect a significant number of taxpayers.  Provide clear guidance to reduce the time and resources associated with resolving issues during tax examinations. The IIR process includes the following:  Issue Submission and Selection,  Planning, Analysis and Development, and  Resolution and Guidance.

3. 3 IIR Submission Taxpayers, associations, and others can submit an issue anytime:  Not required to be in a particular format.  Should include: -Issue statement and description of why the issue is appropriate for the Program, -Explanation of the need for guidance and estimated number of taxpayers affected, and -Name and telephone number of a person to contact if additional information is needed.  May include a recommendation as to how the issue could be resolved.

4. 4 Issues Appropriate for IIR Issue should have two or more of the following attributes:  Uncertain tax treatment of common factual situation,  Uncertainty results in frequent, repetitive exam of the same issue,  Uncertainty results in taxpayer burden,  Significant and impacts a large number of taxpayers, or  Extensive factual development, understanding of industry practices and views would assist the Service in determining the proper tax treatment.

5. 5 Issues Not Appropriate for IIR Generally, issues not appropriate for the IIR program include:  Issues unique to one or a small number of taxpayers.  Issues primarily under the jurisdiction of the Operating Divisions of the Service other than the LB&I and SB/SE Divisions.  Issues that involve transactions that lack a bona fide business purpose, or transactions with a significant purpose of improperly reducing or avoiding federal taxes.  Issues involving transfer pricing or international tax treaties.

6. 6 Recently Completed IIRs IIRs recently submitted and completed include:  Telecom Class Life for Wireless Assets- submitted Aug 2009 for clarification of class life for wireless telecom assets resulted in issuance of Rev. Proc. 2011-22 and Rev. Proc. 2011-28.  Telecom Network Assets- submitted Feb 2010 for clarification of telecom network assets to be capitalized vs. expensed resulted in issuance of Rev. Proc. 2011-27.  Unit of Property – Utility Transmission & Distribution- submitted Apr 2010 for clarification of utility transmission and distribution assets to be capitalized vs. expensed resulted in issuance of Rev. Proc. 2011-42 and Rev. Proc. 2011-43.

7. 7 IIRs in Process  Unit of Property – Electric Power Generation Determination of power generation assets to be capitalized under section 263 vs. expensed under section 162.  Unit of Property – Cable Determination of cable industry network assets to be capitalized under section 263 vs. expensed under section 162.  The Life Insurance Variable Rate Annuities Hedging Application of regulation 1.446-4 to hedging of guarantees under variable products.  Conclusive Presumption of Worthlessness Whether Reg. 1.166-2(d) applies to insurance companies as “other regulated corporations”.  Unit of Property – Natural Gas Determination of distribution pipeline assets to be capitalized under section 263 vs. expensed under section 162.

8. 8 IIR Questions?  All guidance is posted on IRS.gov  Refer to Rev. Proc. 2003-36 for IIR application process  Refer to IIR page on IRS.gov  Melanie Perrin, Senior Program Analyst (202-283-8408)  Maria Dolan, Program Manager (813-367-8475)