This notice informs taxpayers that § 1.671-5, which provides
reporting rules for widely held fixed investment trusts (WHFITs), will be
amended to provide that the availability of the Qualified NMWHFIT (non-mortgage
widely held fixed investment trust) Exception in § 1.671-5(c)(2)(iv)(E)
is extended by 60 days from the date indicated in Notice 2006-29, 2006-12
I.R.B. 644, issued by the IRS and the Treasury Department on February 23,
On January 24, 2006, the IRS and Treasury Department published final
regulations under § 1.671-5 (Reporting Requirements for Widely Held
Fixed Investment Trusts) in the Federal Register (T.D. 9241, 2006-7 I.R.B.
427 [71 FR 4002]). Following the publication of those final regulations,
the IRS and Treasury Department received a number of comments regarding the
applicability of those regulations to NMWHFITs. The commentators requested
that the IRS and the Treasury Department issue additional guidance to clarify
and simplify the application of the final regulations to NMWHFITs. Commentators
also requested that the availability of the qualified NMWHFIT exception in
§ 1.671-5(c)(2)(iv)(E) be extended while the additional guidance
was being developed. The qualified NMWHFIT exception, if satisfied, excepts
trustees and middlemen from specific reporting requirements in the final regulations
regarding market discount, bond premium, sales and dispositions, redemptions,
and sales of trust interests. In response, the IRS and Treasury Department
issued Notice 2006-29 which, among other things, indicated that the IRS and
Treasury Department intended to amend §1.671-5 to extend the availability
of the qualified NMWHFIT exception to NMWHFITs created on or after February
23, 2006 which was the cut-off date for qualifying for the exception in the
final regulations. Under Notice 2006-29, to satisfy the qualified NMWHFIT
exception, a NMWHFIT’s registration statement must become effective
under the Securities Act of 1933, as amended (15 U.S.C. 77a, et.
seq.) (Securities Act of 1933) and trust interests must be offered
for sale to the public by June 1, 2006 and the NMWHFIT must be fully funded
by August 1, 2006.
The IRS and the Treasury Department expect to issue additional guidance
under § 1.671-5 in the near future that will include minor modifications
to the reporting rules for sales and dispositions in § 1.671-5.
Such guidance, however, will not be issued prior to June 1, 2006. Accordingly,
the IRS and the Treasury Department are extending the availability of the
qualified NMWHFIT exception beyond the date in Notice 2006-29. Specifically,
taking into account the extensions indicated in Notice 2006-29 and the extension
indicated in this notice, § 1.671-5(c)(2)(iv)(E) will be amended
to provide that the qualified NMWHFIT exception is satisfied if the calendar
year for which the trustee is reporting begins before January 1, 2011 and:
(1) the NMWHFIT has a start-up date (as defined in § 1.671-5(b)(19))
before February 23, 2006; (2) the registration statement of the NMWHFIT becomes
effective under the Securities Act of 1933 and trust interests are offered
for sale to the public before February 23, 2006; or (3) the registration statement
of the NMWHFIT becomes effective under the Securities Act of 1933 and trust
interests are offered for sale to the public on or after February 23, 2006
and before July 31, 2006, and the NMWHFIT is fully funded before October 1,
The effective date for amended § 1.671-5(c)(2)(iv)(E) will
be the date of publication of those amendments in the Federal Register. Taxpayers,
however, may apply those amendments as though they were included in § 1.671-5
as published in the Federal Register on January 24, 2006.
The principal author of this notice is Faith P. Colson of the Office
of Associate Chief Counsel (Passthroughs & Special Industries). For further
information regarding this notice, contact Faith P. Colson at (202) 622-3060
(not a toll-free call).
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