into, or proposes to enter into, a prohibited transaction, but, except as provided in section 8.02 below, a ruling will not be issued where the determination is primarily one of fact, e.g., market value of property, reasonableness of compensation, etc. Also, no rulings or determination letters will be issued concerning such transactions as sales and leasebacks, gifts and leasebacks, and other rental transactions of real or personal property directly or indirectly with the creator, or a related or controlled interest.

.02 Where the adequacy of the security for a loan is involved, a ruling may be issued, but only if there is a clear indication of value which can be established by reference to recognized sources without requiring physical valuation or appraisal. The following are examples of transactions where the adequacy of security can be established by reference to recognized sources:

1. A surety bond issued by a recognized surety company doing a surety bond business under applicable state law;

2. An assignment of an insurance contract having a cash surrender value sufficient to cover the loan, interest, and possible costs of collection;

3. A first mortgage on real property in an amount not in excess of 50 percent of its assessed value for local tax purposes; or

4. Collateral represented by securities listed on a recognized exchange of an aggregate value equal to twice the amount of the loan.

Such rulings may be issued only on proposed transactions and on completed transactions where the return for the first year for which the transaction is effective has not been filed or the filing date has not passed. This section does not preclude the National Office from ruling as to whether a transaction is within the purview of section 503 (e). (h), or (i) of the Code.

.03 If, upon examination of the return or returns of a trust, or from other sources, a District Director is of the opinion that a trust has entered into a prohibited transaction, the trust will be advised in writing that it is proposed to revoke its exemption, and the reasons for such proposed action. The district office will also advise the trust of its rights to protest the proposed action by submitting a statement of the facts, law, and arguments in support of its continued exemption, and of its rights to a conference in the district office.

.04 If the trust agrees with the proposed action, either before or after the conference, or if no protest is filed, the District Director will advise the organization in writing of the revocation of the exempt status.

.05 If, after considering the information submitted by the trust, both in writing and in conference, the district office is still of the opinion that the exemption should be revoked, and the trust does not agree, the findings of the district office will be forwarded to the National Office for consideration prior to further action. Such reference to the National Office will be considered a request for technical advice and the procedures in Revenue Procedure 67-2 will be followed.

.06 If it is concluded that a prohibited transaction was entered into for the purpose of diverting corpus or income from its exempt purpose and if the transaction involved a substantial part of the corpus or income of the trust, its exemption is revoked, effective as of the beginning

of the taxable year during which the prohibited transaction was commenced. No notification to the trust of the loss of its exemption is required under these circumstances. In all other prohibited transaction cases, however, its exemption is revoked, effective as of the beginning of the first taxable year after the date of the revocation letter. Under these circumstances, a revocation letter is sent by registered or certified mail to the last known address of the organization.

07 The trust will usually be permitted to submit its brief and to be heard in conference before final action is taken. However, the District Director may, in his discretion, issue the revocation letter prior to the receipt of the brief or prior to granting a conference. If it is later determined that the revocation was in error, it will be rescinded as of the date it was issued.

.08 A trust which is denied exemption under section 503 of the Code may file a new claim for exemption in any taxable year following the taxable year in which the notice of denial was issued. But it may not be granted a new exemption before the beginning of the first taxable year following the year in which its new claim is filed. Thus, if a revocation notice is issued in 1966, the trust may not file a new claim for exemption until 1967, and the new exemption may not be granted for a taxable year prior to 1968. If the trust does not file a new claim until 1968, the new exemption may not be granted for a year prior to 1969.

.09 District Directors have the authority to determine that a trust. will not knowingly again engage in a prohibited transaction and that the trust also satisfies all other requirements under section 401 (a) of the Code, and to notify such trust of the reestablishment of its exemption.

SEC. 9. ORAL ADVICE TO TAXPAYER.

.01 In conformity with the general principle announced in section 12 of Revenue Procedure 67-1, district officials will not ordinarily confer with taxpayers or their representatives on matters regarding the formation or qualification of pension or similar plans, or related matters, including amendments or curtailments to approved plans, prior to the submission of a plan, amendment, or curtailment for a determination.

A District Director may grant such a conference upon written request from a taxpayer or his representative, provided the request shows that a substantive plan, amendment, etc., has been developed for submission to the Service, but that special problems or issues are involved, and the District Director concludes that such a conference would be warranted in the interest of facilitating review and determination when the plan, etc., is formally submitted.

03 The furnishing of advice or assistance, whether requested by ersonal appearance, telephone, or correspondence, except as otherwise provided in section 9.02 above, will be limited to general procedures, or will direct the inquirer to source material, such as pertinent Code provisions, regulations, Revenue Procedures, and Revenue Rulings which may aid the inquirer in resolving his question or problem.

SEC. 10. EFFECT ON OTHER DOCUMENTS.

Revenue Procedure 62-31, C.B. 1962-2, 517, is superseded. .02 The general procedures of Revenue Procedure 67-1 are ap plicable to requests for rulings and determination letters, except that where such requests involve the qualification of plans under sections 401(a) and 405 (a) of the Code, the tax-exempt status of related trusts under section 501 (a), and related problems, the procedures of this Revenue Procedure apply.

SEC. 11. EFFECTIVE DATE.

This Revenue Procedure is effective January 3, 1967, the date of its publication in the Internal Revenue Bulletin.

EXHIBIT "A"

Composite Schedule Showing Data Called for Under Items 1, 2, and 6 of Section 4.0

1. Name and address of employer: 3. District in which processed:

5. Nature of investment:

7. Amount of investment:

2. Name of plan:

4. Date of favorable ruling or
determination letter on qualifica-
tion of plan:

6. Year of investment:
8. Annual yield:

9. Restrictions on marketability, if any: 10. Collateral, if any: 11. Total trust assets:

13. Percentage of total assets invested
(including current investment) in
stock or securities of employer (and
controlled corporation, if involved):

12. Total invested in stock or

securities (including promissory notes) of employer (or controlled corporation):

14. Nature of employer's business:

15. Reasons for the investment:

EMPLOYER'S FINANCIAL DATA

(and separately of controlled corporation, if involved)

Procedures are provided for a small business corporation to file a claim for credit of Federal excise tax on gasoline used for nonhighway purposes during a taxable year beginning after June 30, 1965, and ending before December 31, 1966.

SECTION 1. PURPOSE.

The Excise Tax Reduction Act of 1965, Public Law 89-44, C.B. 1965–2, 568, amended sections 6420 and 6421 of the Internal Revenue Code of 1954, to provide that, in lieu of filing claims for payment of gasoline tax under such sections of the Code, persons who use gasoline for nonhighway purposes will claim a credit under section 39 of the Code against their income tax liability for such gasoline tax. The purpose of this Revenue Procedure is to provide an acceptable method for the small business corporation having a taxable year beginning after June 30, 1965, and ending before December 31, 1966, to claim the credit for Federal excise tax on gasoline used during such period for nonhighway purposes.

SEC. 2. MANNER OF CLAIMING CREDIT.

01 A small business corporation claiming a credit for Federal excise tax on gasoline used during a taxable year beginning after June 30, 1965, and ending before December 31, 1966, should attach a statement to its timely filed (including any extensions) Form 1120-S,

Also released as Technical Information Release 869, dated Dec. 12, 1966.

U.S. Small Business Corporation Return of Income, for such year as follows:

.02 The filing of this statement with a timely filed Form 1120-S will constitute a valid claim for this period. Any credit claimed in this manner will be treated as an overpayment of tax which will be paid to the corporation.

.03 If the Form 1120-S has already been timely filed, and the credit was not distributed to the shareholders, then this statement if filed on or before February 15, 1967, will constitute a timely filed claim. This statement will be associated by the District Director with the previously filed Form 1120-S. For this purpose the same name, address, employer identification number, and taxable year should appear on this statement as appeared on the previously filed Form 1120-S.

.04 If the shareholders of the small business corporation have been instructed by the corporation to claim their pro rata share of this credit on their individual returns, then the small business corporation should not file a claim since the credit for the gasoline tax will be take.. by the shareholders. The pro rata distribution to individual shareholders in this situation will constitute an acceptable method of claiming the credit.

.05 For subsequent years this credit for gasoline tax must be claimed on Form 1120-S.

26 CFR 601.201: Rulings and determination letters.

(Also Part I, Section 7805; 301.7805-1.)

Rev. Proc. 67-6

A program for reviewing rulings published in the Internal Revenue Bulletin prior to 1953 has been established. The primary objective of this program is to identify and publish lists of those rulings which, although not specifically revoked or superseded, are not considered determinative with respect to future transactions.

SECTION 1. PURPOSE.

.01 The purpose of this Revenue Procedure is to announce a pro gram for reviewing rulings published in the Internal Revenue Bullet prior to 1953. The immediate objective of this program is to identify