Revene Ruling 2003-108
Rev. Rul. 2003-108
Rev. Rul. 2003-108, 2003-44 I.R.B. 963, 2003-2 C.B. 963
                      Internal Revenue Service (I.R.S.)
                                Revenue Ruling
                                   TAX LIEN
                          Published: November 3, 2003
 Section 6323(a).–Validity and Priority Against Certain Persons, 26 CFR 301.6323(a)-1: Purchasers, holders of security interests, mechanic’s lienors, and judgment lien creditors.
 Tax lien. This ruling under section 6323(a) of the Code concludes that actual notice or knowledge of the existence of a section 6321 federal tax lien is irrelevant for purposes of section 6323(a) lien priority.
 Tax lien. This ruling under section 6323(a) of the Code concludes that actual notice or knowledge of the existence of a section 6321 federal tax lien is irrelevant for purposes of section 6323(a) lien priority.
ISSUE
 When a notice of federal tax lien has not been filed, does actual knowledge of a statutory tax lien affect the lien priority of a purchaser, holder of a security interest, mechanic’s lienor, or judgment lien creditor?
FACTS
 Prior to becoming a purchaser, security interest holder, mechanic’s lienor, or judgment lien creditor, a third party has actual knowledge of a statutory tax lien, with respect to which no notice of federal tax lien has been filed.
LAW AND ANALYSIS
 Section 6323(a) of the Internal Revenue Code provides that the statutory tax lien imposed by I.R.C. s 6321 shall not be valid as against any purchaser, holder of a security interest, mechanic’s lienor, or judgment lien creditor until notice thereof has been filed. Section 6323(a) is silent as to the effect of actual knowledge of a statutory tax lien upon this priority when a notice of federal tax lien has not been filed.
 In United States v. Beaver Run Coal Co., 99 F.2d 610 (3d Cir. 1938), the issue was whether a mortgage lien had priority over the Government’s statutory tax lien as to particular property in the taxpayer’s possession. The court held that the mortgagee was protected against the statutory tax lien even though the mortgagee had actual knowledge of a possible tax liability because a notice of federal tax lien was not filed.
 In enacting the Federal Tax Lien Act of 1966, Congress had the opportunity to overrule Beaver Run Coal Co., or to otherwise indicate that actual knowledge of a statutory tax lien is relevant for purposes of section 6323(a), but did not do so. See TKB International, Inc. v. United States, 995 F.2d 1460, 1466 n. 4 (9th Cir. 1993) (noting that Congress in 1954 declined to limit the protections of section 6323(a) to parties without notice or knowledge of the statutory tax lien). Cf. I.R.C. s 6323(b) (actual notice or knowledge of existence of statutory tax lien relevant for certain superpriority provisions).
HOLDING
 For purposes of I.R.C. s 6323(a), a purchaser, holder of a security interest, mechanic’s lienor or judgment lien creditor is protected against a statutory tax lien for which a notice of federal tax lien has not been filed notwithstanding actual knowledge of the statutory tax lien.
DRAFTING INFORMATION
 The principal author of this revenue ruling is Robin Ferguson of the Office of the Associate Chief Counsel, Procedure and Administration (Collection, Bankruptcy & Summonses Division). For further information regarding this revenue ruling, contact Branch 1 of the Collection, Bankruptcy & Summonses Division at (202) 622-3610 (not a toll-free call).
 Rev. Rul. 2003-108, 2003-44 I.R.B. 963, 2003-2 C.B. 963
Revenue Ruling 2003-106
Rev. Rul. 2003-106
Rev. Rul. 2003-106, 2003-44 I.R.B. 936, 2003-2 C.B. 936
                      Internal Revenue Service (I.R.S.)
                                Revenue Ruling
                       TRAVEL AND ENTERTAINMENT EXPENSES
                          Released: October 21, 2003
                          Published: November 3, 2003
 Section 62.–Adjusted Gross Income Defined, 26 CFR 1.62-2: Reimbursements and other expense allowance arrangements.
(Also: ss 1.274-5, 1.274-5T, 31.3121(a), 31.3306(b), 31.3401(a).)
(Also: ss 274(d), 3121(a), 3306(b), 3401(a).)
 Travel and entertainment expenses. This ruling specifies when an employer’s use of electronic substantiation and expense reporting, as part of its travel and entertainment expense reimbursement procedures, satisfies the “accountable plan” requirements.
 Travel and entertainment expenses. This ruling specifies when an employer’s use of electronic substantiation and expense reporting, as part of its travel and entertainment expense reimbursement procedures, satisfies the “accountable plan” requirements.
ISSUE
 Whether an employer’s expense reimbursement arrangement for deductible travel and entertainment expenses, which includes new procedures for the use of electronic receipts and expense reports, is an accountable plan under s 62(a)(2)(A) and (c) of the Internal Revenue Code and the regulations thereunder.
FACTS
 An employer currently maintains a reimbursement arrangement, meeting the accountable plan requirements, under which it reimburses business-related travel and entertainment expenses incurred by its employees; paper receipts and expense reports are required. The employer reimburses employees for all properly substantiated business-related travel and entertainment charges submitted timely on an expense report along with any necessary receipts. The employer excludes from employees’ wages reimbursements of all deductible business expenses provided under the arrangement. The employer also reimburses nondeductible business expenses (such as travel not away from home) and treats those reimbursements as wages. The employer does not reimburse employees for personal expenses.
 To facilitate reimbursement of travel and entertainment expenses, the employer arranges to have a credit card company issue a business credit card to each employee the employer determines is likely to incur travel and entertainment expenses for necessary business reasons. Employees who use the business credit card receive monthly billing statements from the credit card company and are personally liable to the credit card company for all charges billed to the card, including late payment fees.
 To reduce the burden associated with submitting receipts and expense reports, the employer implements an electronic reimbursement arrangement for travel and entertainment expenses that eliminates the need for paper receipts and paper expense reports in most instances. Under this new arrangement, the credit card company provides the employer with an electronic receipt for all expenses billed to an employee’s business credit card on a daily basis. An electronic receipt contains the date of the charge, the amount of the charge, the merchant’s name, the merchant’s location, and, if available, an itemization from the merchant of each expense included in the charge. The credit card company generally issues three types of electronic receipts to the employer: 1) a receipt with sufficient information on its face to indicate the nature of the charge (such as a charge from an airline carrier for a passenger ticket); 2) a receipt with an aggregate charge itemizing each expense (such as a final bill from a hotel listing separately the costs for meals, lodging and telephone calls); and 3) a receipt with an aggregate charge without itemizing each expense (such as a final bill from a hotel that does not list each charge separately).
 Under the employer’s new electronic expense reimbursement arrangement, the employer transfers the electronic receipts received from the credit card company to a database. This information cannot be altered once entered. Employees access the database to create an electronic expense report to accompany the electronic receipts associated with their travel and entertainment expenses. For all expenses, the employees must indicate whether the expenses are personal or business-related travel and entertainment. For all business-related travel and entertainment expenses, the employee must provide the following information in the electronic expense reports for each travel and entertainment expense: 1) a description of the expense and the business purpose it served; and 2) for each entertainment expense, the names and business relationship of the persons entertained in addition to the date of, place of, duration of, and participants in any business discussion that occurred directly before or after the entertainment.
 The employer requires employees to submit paper expense reports and receipts for: 1) any expense over $75 where the nature of the expense is not clear on the face of the electronic receipt; 2) all lodging invoices for which the credit card company does not provide the merchant’s electronic itemization of each expense; and 3) any expenses paid for by the employee without using the business credit card. The employer requires that the paper receipts and expense reports contain information sufficient to substantiate the amount, date, time, place, and business purpose of each expense. For example, if the credit card company provides an electronic receipt for an amount billed from a hotel that does not itemize each expense on the bill, the employee must provide paper documentation detailing each expense. Also, if the employee incurs a travel or entertainment expense for necessary business reasons but pays for it without using the business credit card, the employee must submit paper receipts and a paper expense report.
 To receive reimbursements under the reimbursement arrangement, employees must submit expense reports with any necessary receipts to the employer within 30 days after returning from a business trip or incurring a travel or entertainment expense, but no later than 60 days after incurring the expense. Once the employer approves an employee’s travel and entertainment expense report, the employer sends payment directly to the credit card company for the business expenses listed in the report. The employer does not reimburse any charges made to the employee’s business credit card that are not listed in the expense report approved by the employer. The employer treats the reimbursement of any nondeductible business expenses as wages paid to the employee and does not reimburse personal expenses.
 The employer’s use and retention of electronic records meets the requirements of Rev. Proc. 98-25, 1998-1 C.B. 689.
LAW
 Section 62 generally defines “adjusted gross income” as gross income minus certain (”above-the-line”) deductions. Section 62(a)(2)(A) allows an employee an above-the-line deduction for expenses paid or incurred by the employee, in conjunction with services performed as an employee, under a reimbursement or other expense allowance agreement with the employer. Section 62(c) provides that an arrangement will not be treated as a reimbursement or other expense allowance arrangement for purposes of s 62(a)(2)(A) if: 1) the arrangement does not require the employee to substantiate the expenses covered by the arrangement to the person providing the reimbursement; or 2) the arrangement provides the employee with the right to retain any amount in excess of the substantiated expenses covered under the arrangement.
 Under s 1.62-2(c)(1) of the Income Tax Regulations, a reimbursement or other expense allowance arrangement satisfies the requirements of s 62(c) if it meets the requirements set forth in paragraphs (d), (e), and (f) of s 1.62-2 (business connection, substantiation, and return of excess). If an arrangement meets these requirements, all amounts paid under the arrangement are treated as paid under an accountable plan. s 1.62-2(c)(2)(i). Amounts paid under an accountable plan are excluded from the employee’s gross income, are not required to be reported on the employee’s Form W-2, and are exempt from the withholding and payment of employment taxes. ss 31.3121(a)-3, 31.3306(b)-2, 31.3401(a)-4 of the Employment Tax Regulations, and 1.6041-3(h)(1) of the Procedure and Administration Regulations.
 If an arrangement does not satisfy one or more of these requirements, all amounts paid under the arrangement are paid under a “nonaccountable plan.” s 1.62-2(c)(3). Amounts paid under a nonaccountable plan are included in the employee’s gross income for the taxable year, must be reported to the employee on Form W-2, and are subject to withholding and payment of employment taxes. ss 1.62-2(c)(5), 31.3121(a)-3(b)(2), 31.3306(b)-2(b)(2), 31.3401(a)-4(b)(2), and s 1.6041-3(h)(1). Additionally, s 1.62-2(k) provides that if a payor’s reimbursement or other expense allowance arrangement evidences a pattern of abuse of the rules of s 62(c) and the regulations thereunder, all payments made under the arrangement will be treated as made under a nonaccountable plan.
 An arrangement meets the business connection requirement of s 1.62-2(d)(1) if it provides advances, allowances, or reimbursements only for business expenses that are allowable as deductions under part VI (s 161 and following), subchapter B, chapter 1 of the Code, and that are paid or incurred by the employee in connection with the performance of services as an employee. Under s 1.62-2(d)(2), if an arrangement, in addition to reimbursing deductible business expenses, also reimburses nondeductible but otherwise bona fide expenses related to the employer’s business (such as travel not away from home), the payor will be treated as maintaining two arrangements–the deductible business expenses will be treated as satisfying the business connection requirement, and the nondeductible business expenses will be treated as paid under a nonaccountable plan. The payment may be actually received from the employer, its agent, or a third party for whom the employee performs services as an employee of the employer. s 1.62-2(d)(1). Section 1.62- 2(d)(3)(i) provides that the business connection requirement will not be satisfied if the payor arranges to pay an amount to an employee regardless of whether the employee incurs or is reasonably expected to incur bona fide business expenses related to the employer’s business.
 An arrangement for travel and entertainment expenses meets the substantiation requirement of s 1.62-2(e)(1) if the arrangement requires each business expense to be substantiated to the payor in accordance with paragraph (e)(2), within a reasonable period of time. An arrangement for those expenses meets the substantiation requirements if the employee makes an adequate accounting to the payor that satisfies the substantiation requirements of s 274(d) and the regulations thereunder. s 1.62-2(e)(2).
 Section 274(d) disallows a deduction under s 162 for any expense for travel away from home, including meals and lodging, or entertainment unless the taxpayer substantiates by adequate records or by sufficient evidence the requisite elements of each expenditure. For travel expenses, the taxpayer must establish the amount, time, place, and business purpose of the expenditure. s 1.274-5T(b)(2). For business entertainment expenses, the taxpayer must establish the amount, date (and possibly duration of business discussion), place, business purpose, names and business relationship of the persons entertained, all as set forth in more detail in s 1.274-5T(b)(3) and (b)(4). Section 1.274-5T(c)(2)(i) provides that, to substantiate each element by adequate records, the taxpayer must maintain: 1) an account book, diary, log, statement of expense, trip sheets, or similar record; and 2) documentary evidence that, in combination, are sufficient to establish each element of an expenditure. The account book, diary, log, statement of expense, trip sheet, or similar record must be prepared or maintained in such manner that each recording of an element of an expenditure is “made at or near the time of the expenditure.” s 1.274-5T(c)(2)(ii). The phrase “made at or near the time of the expenditure” means the elements of an expenditure are recorded at a time when, in relation to making the expenditure, the taxpayer has full present knowledge of each element of the expenditure, such as the amount, time, place, and business purpose. An expense account statement which is a transcription of an account book, diary, log, or similar record prepared or maintained at or near the time of the expenditure, is considered a record prepared or maintained at or near the time of the expenditure if the expense account statement is submitted by an employee to his employer in the regular course of good business practice. s 1.274-5T(c)(2)(ii)(A). An employee must use adequate records to make an adequate accounting to substantiate expenses to the payor. s 1.274- 5(f)(4)(i).
 Section 1.274-5(c)(2)(iii) requires documentary evidence for any expenditure for lodging while traveling away from home and for any other expenditure of $75 or more, except for transportation charges if the documentary evidence is not readily available. Acceptable documentary evidence includes receipts, paid bills, or similar evidence sufficient to support an expenditure. Ordinarily, documentary evidence will be considered adequate to support an expenditure if it includes sufficient information to establish the amount, date, place, and the essential character of the expenditure. For example, a hotel receipt is sufficient to support expenditures for business travel if it contains the name, location, and date of the expenditures and separate amounts for each charge, such as lodging, meals, and telephone. s 1.274-5(c)(2)(iii)(B).
 Reimbursement of any expenses not substantiated within a reasonable period of time must be treated as made under a nonaccountable plan, and treated as wages. Section 1.62-2(g)(2)(i) provides a fixed date method safe harbor for purposes of satisfying the “reasonable period of time” requirement. Under this safe harbor, an expense substantiated to the payor within 60 days after it is paid or incurred will be treated as substantiated within a reasonable period of time.
 An arrangement meets the return of excess requirement of s 1.62-2(f)(1) if the arrangement requires the employee to return to the payor within a reasonable period of time any amount paid under the arrangement in excess of the substantiated expenses.
 Revenue Procedure 98-25 specifies the basic requirements that the Internal Revenue Service considers to be essential for satisfying the recordkeeping requirements of s 6001 in cases where a taxpayer’s records are maintained by electronic or other non-manual methods. Failure to comply with the revenue procedure may result in imposition of applicable penalties under Subtitle F of the Code.
ANALYSIS
 The employer’s reimbursement arrangement for the employee’s deductible business expenses, which includes the use of electronic receipts and electronic expense reports, satisfies all three of the essential elements for an accountable plan under s 62(a)(2)(A) and (c).
 First, the expenses that are reimbursed through the plan are exclusively business expenses. All expenses must be submitted on either electronic or paper reports and must include specific information. If the electronic information is insufficient to determine whether the expenses are business expenses, paper documentation is required. The employer’s expense reporting procedures give the employer the information it needs to verify that it is reimbursing exclusively for business expenses, and furthermore to distinguish reimbursements for business expenses deductible under part VI (s 161 and following), subchapter B, chapter 1 of the Code, from reimbursements of nondeductible but otherwise bona fide business expenses that must be treated as wages paid under a nonaccountable plan. Moreover, the electronic receipts are generated only for employees with business credit cards, and the business credit cards are provided only to employees who are likely to incur travel and entertainment expenses for business reasons. Consequently, the employer’s travel and entertainment reimbursement arrangement satisfies the business connection requirements of s 1.62-2(d).
 Second, the arrangement meets the substantiation requirement of s 1.62- 2(e)(1). The employees are required to submit expense reports, electronic or otherwise, within 30 days of traveling or incurring an entertainment expense (but no later than 60 days after an expense is paid or incurred), describing each element of the expenditure. This time period is within the fixed date method safe harbor of substantiating to the payor within 60 days after an expense is paid or incurred provided in s 1.62-2(g)(2)(i). Requiring employees to complete an expense report within 30 days after returning from a trip or incurring an entertainment expense, supported by the electronic or paper receipts, also satisfies the requirement under s 1.274-5T(c)(2)(ii) that an individual have full present knowledge of each element of the expenditure, such as the amount, time, place and business purpose of the expenditure.
 The electronic receipts provided to the employer by the credit card company for certain expenses include information sufficient to establish the amount, date, place and essential character of the expenditure and, therefore, qualify as “receipts, paid bills, or similar evidence” for purposes of the documentary evidence requirements of s 1.274-5(c)(2)(iii). Additionally, the employer requires paper receipts and expense reports for any expense over $75 where the nature of the expense is not clear on the face of the electronic receipt, all lodging expenses for which the credit card company does not provide an electronic listing of expenses itemized by the merchant, and any expenses paid for by the employee without using the business credit card. The electronic data and or paper documents submitted to the employer constitute adequate records under s 1.274-5(c)(2) and satisfy the requirement that the employee make an adequate accounting to the employer to substantiate the respective expenses for purposes of s 274(d) and the regulations thereunder. Thus, the employer’s travel and entertainment expense reimbursement procedures satisfy the substantiation requirement of s 1.62-2(e)(2).
 Third, the plan meets the requirement for return of any payments in excess of the employee’s substantiated expenses under s 1.62-2(f) because the employer’s travel and entertainment expense reimbursement procedures reimburse only substantiated expenses. Although the credit card company provides the employer with electronic receipts for all expenses charged to the employee’s business credit card, the employer reimburses only those expenses identified to the employer as business expenses and included in the expense report with appropriate documentation. Therefore, there is no amount in excess of substantiated expenses provided that must be returned within a reasonable period of time.
HOLDING
 An employer’s expense reimbursement arrangement for deductible travel and entertainment expenses, which includes new procedures for the use of electronic receipts and expense reports, is an accountable plan under s 62(a)(2)(A) and (c) and the regulations thereunder.
DRAFTING INFORMATION
 The principal author of this revenue ruling is Joe Spires of the Office of the Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). For further information regarding this revenue ruling, contact Mr. Spires at (202) 622-6040 (not a toll-free call).
 Rev. Rul. 2003-106, 2003-44 I.R.B. 936, 2003-2 C.B. 936
Revenue Ruling 2003-112
Rev. Rul. 2003-112
Rev. Rul. 2003-112, 2003-45 I.R.B. 1007, 2003-2 C.B. 1007
                      Internal Revenue Service (I.R.S.)
                                Revenue Ruling
                      WORK OPPORTUNITY TAX CREDIT (WOTC)
                          Released: October 17, 2003
                         Published: November 10, 2003
 Section 51.–Amount of Credit, 26 CFR 1.51-1: Amount of credit.
 Work Opportunity Tax Credit (WOTC). This ruling concerns the eligibility criteria for the Work Opportunity Tax Credit. The ruling clarifies that an individual whose family receives assistance for the requisite period meets the requirements to be certified as a qualified IV-A recipient under section 51(d)(2)(A) of the Code if the individual is included on the grant (and thus receives assistance) for some portion of the specified period.
 Work Opportunity Tax Credit (WOTC). This ruling concerns the eligibility criteria for the Work Opportunity Tax Credit. The ruling clarifies that an individual whose family receives assistance for the requisite period meets the requirements to be certified as a qualified IV-A recipient under section 51(d)(2)(A) of the Code if the individual is included on the grant (and thus receives assistance) for some portion of the specified period.
ISSUE
 Does an individual whose family receives assistance for the requisite period meet the requirements to be certified as a qualified IV-A recipient under section 51(d)(2)(A) of the Internal Revenue Code (Code) if the individual is included on the grant (and receives assistance) for less than the specified period?
FACTS
 Situation 1. H and W, a married couple, lived together with their children until March 1, 2002, when H moved away and established a new residence for himself. On March 25, 2002, W applied for Temporary Assistance for Needy Families (TANF) payments for herself and her children, and TANF payments began on April 1, 2002. On January 1, 2003, H returned to live with W and their children. H obtained employment on January 10, 2003 (the hiring date). H was not included on the grant at any time prior to the hiring date.
 Situation 2. The facts are the same as in Situation 1, except that H was included on W’s TANF grant effective February 1, 2003, and did not obtain employment until February 10, 2003 (the hiring date).
 Situation 3. H and W, a married couple, lived together with their children. On August 25, 2001, H and W applied for TANF payments for themselves and their children, and TANF payments began on September 1, 2001. In November 2001, H moved away and established a new residence for himself. H was removed from the grant effective December 1, 2001. W and the children continued to receive TANF payments through December 2002. H obtained employment on August 1, 2002 (the hiring date).
 Situation 4. H and W, a married couple, lived together with their children, S and D. On January 10, 2002, H and W applied for TANF payments for themselves, S, and D. TANF payments began on February 1, 2002. S’s 18th birthday was on March 15, 2002. S was removed from the grant effective April 1, 2002. H, W, and D continued to receive TANF payments through December 2002. S obtained employment on December 15, 2002 (the hiring date).
 In each of the situations, the state makes monthly TANF payments prospectively on the first day of the month.
LAW AND ANALYSIS
 Under section 51 of the Code, an employer who hires an individual belonging to one of nine targeted groups may be entitled to a credit equal to 40 percent of qualified first-year wages for the taxable year.
 Section 51(d) of the Code lists the targeted groups and defines each of them. An individual who is a qualified IV-A recipient is a member of a targeted group. Section 51(d)(2)(A) defines a “qualified IV-A recipient” as an individual who is certified by the designated local agency (state employment security agency) as being a member of a family receiving assistance under a IV-A program for any 9 months during the 18-month period ending on the hiring date. Section 51(d)(2)(B) defines a “IV-A program” as any program providing assistance under a state program funded under part A of title IV of the Social Security Act (now Temporary Assistance for Needy Families Block Grants for States; formerly Aid for Families with Dependent Children) and any successor of such program.
 Before the amendment of section 51(d) by the Small Business Job Protection Act of 1996, the corresponding targeted group was limited to individuals who were certified as “being eligible for financial assistance under part A of title IV of the Social Security Act and as having continually received such financial assistance during the 90-day period which immediately precedes the [hiring date]….” Section 51(d)(9) as in effect for workers hired before October 1, 1996.
 In its explanation of the amendment of section 51(d) by the Small Business Job Protection Act of 1996, the Senate Finance Committee described a qualified IV-A recipient as follows:
   An eligible recipient is an individual certified by the designated local employment agency as being a member of a family receiving benefits under AFDC or its successor program for a period of at least nine months part of which is during the nine-month period ending on the hiring date. For these purposes, each member of the family receiving assistance is treated as receiving such assistance and therefore is treated as an eligible recipient.
S. Rep. No. 104-291, 104th Cong., 2d Sess. 33-34 (1996).
 The language above does not reflect the amendment of section 51(d) by the Taxpayer Relief Act of 1997, Pub.L. No. 105-34, s 603(b)(1) (1997). The Taxpayer Relief Act replaced the requirement that the family receive assistance for a period of at least nine months part of which is during the nine-month period ending on the hiring date with the current requirement that the family receive assistance for “any nine months during the 18-month period ending on the hiring date.”
 The 1996 amendment of section 51(d) and the legislative history evidence a clear intent to eliminate the requirement that a IV-A recipient receive assistance for the entire period specified. The corresponding targeted group before the 1996 amendment was explicitly limited to individuals who continually received assistance during a specified period. There is no such limitation in the definition of a qualified IV-A recipient; instead, a qualified IV-A recipient is required only to be a member of a family that receives assistance during the specified period.
 Neither section 51(d) nor the legislative history specifies the persons who are members of the family receiving assistance. In the absence of other guidance, it is appropriate to look to the TANF rules to determine who is a family member. Thus, if an individual receives assistance under TANF as a member of a family, even if only for a day, the individual will be treated as a member of the family for purposes of section 51(d)(2)(A). Conversely, if the individual never receives assistance under TANF as a member of a family, the individual will not be treated as a member of the family for such purposes.
 Accordingly, if the family receives assistance for the required period, and the individual is included on the grant for some portion of the period, the individual is a qualified IV-A recipient.
 In Situation 1, H was not included on the family’s TANF grant for any month and is therefore not a qualified IV-A recipient.
 In Situation 2, the family received assistance for at least 9 months during the 18-month period ending on the hiring date and H was included on the grant for part of the period during which the family received assistance. Accordingly, H is a qualified IV-A recipient.
 In Situation 3, H’s hiring date was August 1, 2002. The 18-month period ending on the hiring date began February 2, 2001. The family received assistance for at least 9 months during the 18-month period ending on the hiring date, and H was included on the grant for part of the period during which the family received assistance. Thus, H is a qualified IV-A recipient.
 In Situation 4, the family received assistance for at least 9 months during the 18-month period ending on the hiring date and S was included on the grant for part of the period during which the family received assistance. Accordingly, S is a qualified IV-A recipient.
HOLDING
 An individual whose family receives assistance for the requisite period meets the requirements to be certified as a qualified IV-A recipient under section 51(d)(2)(A) of the Code if the individual is included on the grant (and thus receives assistance) for some portion of the specified period.
 The principles of this revenue ruling also apply for purposes of determining whether an individual meets the corresponding family membership requirements to be certified as a qualified veteran under section 51(d)(3)(A), a qualified food stamp recipient under section 51(d)(8)(A), or a long-term family assistance recipient under section 51A(c)(1)(A).
DRAFTING INFORMATION
 The principal author of this revenue ruling is Shoshanna Tanner of the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). For further information regarding this revenue ruling, contact Ms. Tanner at (202) 622-6080 (not a toll-free call).
 Rev. Rul. 2003-112, 2003-45 I.R.B. 1007, 2003-2 C.B. 1007
Revenue Ruling 2003-114
Rev. Rul. 2003-114
Rev. Rul. 2003-114, 2003-45 I.R.B. 1012, 2003-2 C.B. 1012
                      Internal Revenue Service (I.R.S.)
                                Revenue Ruling
     FEDERAL RATES; ADJUSTED FEDERAL RATES; ADJUSTED FEDERAL LONG-TERM RATE
                         AND THE LONG-TERM EXEMPT RATE
                          Released: October 17, 2003
                         Published: November 10, 2003
 Section 42.–Low-Income Housing Credit
 The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the month of November 2003.
Section 280G.–Golden Parachute Payments
 Federal short-term, mid-term, and long-term rates are set forth for the month of November 2003.
Section 382.–Limitation on Net Operating Loss Carryforwards and Certain Built-In Losses Following Ownership Change
 The adjusted applicable federal long-term rates is set forth for the month of November 2003.
Section 412.–Minimum Funding Standards
 The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the month of November 2003.
Section 467.–Certain Payments for the Use of Property or Services
 The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the month of November 2003.
Section 468.–Special Rules for Mining and Solid Waste Reclamation and Closing Costs
 The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the month of November 2003.
Section 482.–Allocation of Income and Deductions Among Taxpayers
 Federal short-term, mid-term, and long-term rates are set forth for the month of November 2003.
Section 483.–Interest on Certain Deferred Payments
 The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the month of November 2003.
Section 642.–Special Rules for Credits and Deductions
 Federal short-term, mid-term, and long-term rates are set forth for the month of November 2003.
Section 807.–Rules for Certain Reserves
 The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the month of November 2003.
Section 846.–Discounted Unpaid Losses Defined
 The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the month of November 2003.
Section 1288.–Treatment of Original Issue Discounts on Tax-Exempt Obligations
 The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the month of November 2003.
Section 7520.–Valuation Tables
 The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the month of November 2003.
Section 7872.–Treatment of Loans With Below-Market Interest Rates
 The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the month of November 2003.
Section 1274.–Determination of Issue Price in the Case of Certain Debt Instruments Issued for Property
 Federal rates; adjusted federal rates; adjusted federal long-term rate and the long-term exempt rate. For purposes of sections 382, 1274, 1288, and other sections of the Code, tables set forth the rates for November 2003.
 Federal rates; adjusted federal rates; adjusted federal long-term rate and the long-term exempt rate. For purposes of sections 382, 1274, 1288, and other sections of the Code, tables set forth the rates for November 2003.
 This revenue ruling provides various prescribed rates for federal income tax purposes for November 2003 (the current month). Table 1 contains the short-term, mid-term, and long-term applicable federal rates (AFR) for the current month for purposes of section 1274(d) of the Internal Revenue Code. Table 2 contains the short-term, mid-term, and long-term adjusted applicable federal rates (adjusted AFR) for the current month for purposes of section 1288(b). Table 3 sets forth the adjusted federal long-term rate and the long-term tax-exempt rate described in section 382(f). Table 4 contains the appropriate percentages for determining the low-income housing credit described in section 42(b)(2) for buildings placed in service during the current month. Finally, Table 5 contains the federal rate for determining the present value of annuity, an interest for life or for a term of years, or a remainder or a reversionary interest for purposes of section 7520.
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              REV. RUL. 2003-114 TABLE 1
   Applicable Federal Rates (AFR) for November 2003
                Period for Compounding
           Annual     Semiannual Quarterly Monthly
Short-Term
      AFR 1.50%      1.49%      1.49%     1.49%
 110% AFR 1.65%      1.64%      1.64%     1.63%
 120% AFR 1.80%      1.79%      1.79%      1.78%
 130% AFR 1.95%      1.94%      1.94%     1.93%
 Mid-Term
      AFR 3.32%      3.29%      3.28%     3.27%
 110% AFR 3.65%      3.62%      3.60%     3.59%
 120% AFR 3.99%      3.95%      3.93%     3.92%
 130% AFR 4.33%      4.28%      4.26%     4.24%
 150% AFR 5.00%      4.94%      4.91%     4.89%
 175% AFR 5.84%      5.76%      5.72%     5.69%
 Long-Term
      AFR 4.99%      4.93%      4.90%     4.88%
 110% AFR 5.49%      5.42%      5.38%     5.36%
 120% AFR 6.01%      5.92%      5.88%     5.85%
 130% AFR 6.51%      6.41%      6.36%     6.33%
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                 REV. RUL. 2003-114 TABLE 2
               Adjusted AFR for November 2003
                   Period for Compounding
                        Annual Semiannual Quarterly Monthly
Short-term adjusted AFRÂ 1.28%Â Â 1.28%Â Â Â Â Â Â 1.28%Â Â Â Â Â 1.28%
Mid-term adjusted AFRÂ Â Â 2.63%Â Â 2.61%Â Â Â Â Â Â 2.60%Â Â Â Â Â 2.60%
Long-term adjusted AFRÂ Â 4.56%Â Â 4.51%Â Â Â Â Â Â 4.48%Â Â Â Â Â 4.47%
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                         REV. RUL. 2003-114 TABLE 3
                  Rates Under Section 382 for November 2003
Adjusted federal long-term rate for the current month                    4.56%
Long-term tax-exempt rate for ownership changes during the current month 4.74%
 (the highest of the adjusted federal long-term rates for the current
 month and the prior two months.)
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                         REV. RUL. 2003-114 TABLE 4
      Appropriate Percentages Under Section 42(b)(2) for November 2003
Appropriate percentage for the 70% present value low-income housing      7.96%
  credit
Appropriate percentage for the 30% present value low-income housing      3.41%
 credit
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                         REV. RUL. 2003-114 TABLE 5
                  Rate Under Section 7520 for November 2003
Applicable federal rate for determining the present value of an annuity, Â 4.0%
 an interest for life or a term of years, or a remainder or reversionary
 interest
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 Rev. Rul. 2003-114, 2003-45 I.R.B. 1012, 2003-2 C.B. 1012
