IRS Tax Law » Revenue Ruling 2003-105

Rev. Rul. 2003-105
Rev. Rul. 2003-105, 2003-40 I.R.B. 696, 2003-2 C.B. 696
                       Internal Revenue Service (I.R.S.)
                                 Revenue Ruling
                     SPLIT-DOLLAR LIFE INSURANCE ARRANGEMENTS
                          Released: September 12, 2003
                           Published: October 6, 2003

Section 83.–Property Transferred in Connection With Performance of Services, 26 CFR 1.83-3: Meaning and use of certain terms. 26 CFR 1.83-6: Deduction by employer.

Certain previously published revenue rulings are obsolete with respect to the taxation of split-dollar life insurance arrangements entered into or materially modified after September 17, 2003.

Section 301.–Distributions of Property, 26 CFR 1.301-1: Rules applicable with respect to distributions of money and other property.

Certain previously published revenue rulings are obsolete with respect to the taxation of split-dollar life insurance arrangements entered into or materially modified after September 17, 2003.

Section 316.–Dividend Defined, 26 CFR 1.316-1: Dividends.

Certain previously published revenue rulings are obsolete with respect to the taxation of split-dollar life insurance arrangements entered into or materially modified after September 17, 2003.

Section 2503.–Taxable Gifts, 26 CFR 25.2503-1: General definitions of “taxable gifts” and of “total amount of gifts.”

Certain previously published revenue rulings are obsolete with respect to the taxation of split-dollar life insurance arrangements entered into or materially modified after September 17, 2003.

Section 2511.–Transfers in General, 26 CFR 25.2511-1: Transfers in general.

Certain previously published revenue rulings are obsolete with respect to the taxation of split-dollar life insurance arrangements entered into or materially modified after September 17, 2003.

Section 2512.–Valuation of Gifts, 26 CFR 25.2512-6: Valuation of certain life insurance and annuity contracts; valuation of shares in an open-end investment company.

Certain previously published revenue rulings are obsolete with respect to the taxation of split-dollar life insurance arrangements entered into or materially modified after September 17, 2003.

Section 6042.–Returns Regarding Payments of Dividends and Corporate Earnings and Profits

The Service expects to revise Rev. Proc. 2003-28 to allow brokers to furnish composite substitute payee statements for Forms 1099-DIV, “Dividends and Distributions,” and Forms 1099-MISC, Miscellaneous Income.

Section 6721.–Failure to File Correct Information Returns

The Service will exercise its authority under section 6724 to waive penalties under section 6721 for information returns for 2003 if a broker makes a good faith effort to satisfy its information reporting obligations consistent with the statutory changes effected by the Jobs and Growth Tax Relief Reconciliation Act of 2003.

Section 6722.–Failure to Furnish Correct Payee Statements

The Service will exercise its authority under section 6724 to waive penalties under section 6722 for information returns for 2003 if a broker makes a good faith effort to satisfy its information reporting obligations consistent with the statutory changes effected by the Jobs and Growth Tax Relief Reconciliation Act of 2003.

Section 6724.–Waiver; Definitions and Special Rules

The Service will exercise its authority under section 6724 to waive penalties under sections 6721 and 6722 for information returns for 2003 if a broker makes a good faith effort to satisfy its information reporting obligations consistent with the statutory changes effected by the Jobs and Growth Tax Relief Reconciliation Act of 2003.

Section 7805.–Rules and Regulations, 26 CFR 301.7805-1: Rules and regulations.

Certain previously published revenue rulings are obsolete with respect to the taxation of split-dollar life insurance arrangements entered into or materially modified after September 17, 2003.

Section 7872.–Treatment of Loans With Below-Market Interest Rates, 26 CFR 1.7872-15: Split-dollar loans.

Certain previously published revenue rulings are obsolete with respect to the taxation of split-dollar life insurance arrangements entered into or materially modified after September 17, 2003.

Section 61.–Gross Income Defined, 26 CFR 1.61-22: Taxation of split-dollar life insurance arrangements.

Split-dollar life insurance arrangements. Certain previously published revenue rulings are obsoleted to the extent described in this ruling. The previously published rulings are obsoleted in light of T.D. 9092, which provides comprehensive final regulations regarding the federal income, gift, and employment taxation of split-dollar life insurance arrangements. Rev. Ruls. 78-420 and 79-50 obsoleted. Rev. Rul. 66-610 partially obsoleted.

Treasury Decision 9092 provides comprehensive final regulations (under ss 1.61-22, 1.83-3(e), 1.83-6(a)(5), 1.301-1(q), and 1.7872-15 of the Income Tax Regulations) regarding the federal income, gift, and employment taxation of split-dollar life insurance arrangements (as defined in s 1.61-22(b)(1) or (2)). These regulations apply to any split-dollar life insurance arrangement that is entered into after September 17, 2003, and to any split-dollar life insurance arrangement entered into on or before September 17, 2003, that is materially modified after September 17, 2003. See s 1.61- 22(j).

The revenue rulings listed below are obsolete to the extent described below.

    Rev. Rul. 79-50, 1979-1 C.B. 139
    Rev. Rul. 78-420, 1978-2 C.B. 67
    Rev. Rul. 66-110, 1966-1 C.B. 12 (except as provided in Section III, Paragraph 3 of Notice 2002-8, 2002-1 C.B. 398, and Notice 2002-59, 2002-36 I.R.B. 481)
    Rev. Rul. 64-328, 1964-2 C.B. 11.

In the case of any split-dollar life insurance arrangement entered into on or before September 17, 2003, taxpayers may continue to rely on these revenue rulings to the extent described in Notice 2002-8, but only if the arrangement is not materially modified after September 17, 2003.

DRAFTING INFORMATION

The principal author of this revenue ruling is Elizabeth K. Kaye of the Office of Associate Chief Counsel (Income Tax and Accounting). For further information regarding this revenue ruling, contact Elizabeth K. Kaye at (202) 622-4920 (not a toll-free call).

Rev. Rul. 2003-105, 2003-40 I.R.B. 696, 2003-2 C.B. 696

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