SEC. 3. REQUESTS FOR RULINGS.

Based upon the Reveune Rulings described above, the Service will consider a request for a ruling on a proposed waiver of dividends transaction under the following conditions:

.01 A bonafide business reason must exist for the proposed waiver of dividends.

.02 The relatives of the stockholder proposing to waive his right to future dividends must not be in a position to receive more than 20 percent of the total dividends distributed to the nonwaiving shareholders. For this purpose the relatives of a waiving stockholder include his brother and sister (whether by the whole or half blood), spouse, ancestors, and lineal descendants, the spouses of his brothers and sisters (whether by the whole or half blood) and the spouses of his lineal descendants.

.03 A ruling issued on a proposed waiver of dividends transaction will clearly indicate that the ruling will no longer be applicable if any change in the stock ownership during the waiver period enables nonwaiving relatives to receive more than 20 percent of a dividend, unless the change occurs because of death.

04 A ruling issued on a proposed waiver of dividends transaction will not be effective for a period longer than three years from the date of the ruling.

.05 A request for a ruling on a proposed waiver of dividends transaction must be submitted to the National Office in accordance with Revenue Procedure 67-1, page 544, this Bulletin.

(Also Part I, Section 6323.)

Rev. Proc. 67-151

In Cook County, II., there are two offices designated for filing notices of Federal tax lien in the case of real property. Because this requirement does not meet the provisions of section 6323(f) (1) (A) (i) of the Internal Revenue Code of 1954, as added by the Federal Tax Lien Act of 1966, the Internal Revenue Service will file notices of Federal tax lien with respect to such real property with the clerk of the U.S. District Court, Northern Judicial District, Eastern Division, Illinois.

It has been brought to the attention of the Internal Revenue Service that the provisions of section 66 of chapter 82 of the Illinois Revised Statutes (1965) provide that notices of Federal tax lien with respect to real property are to be filed in the office of the recorder of deeds of the county in which the real property is located. However, if the real property is registered under the Torrens system of title registration, the notice of Federal tax lien is to be filed with the registrar of titles rather than the recorder of deeds. Accordingly, where the Torrens system is adopted by a county in Illinois, there are two offices designated for filing notices of Federal tax lien in the case of real property because one office is designated for Torrens real property and another office is designated for non-Torrens real property.

Cook County is the only county in Illinois to adopt the Torrens system of title registration.

1 Based on Technical Information Release 881, dated Jan. 30, 1967.

Section 6323 (f)(1)(A)(i) of the Internal Revenue Code of 1954, as added by the Federal Tax Lien Act of 1966, Public Law 89-719, C.B. 1966-2, 623, provides that in the case of real property, the Service shall file a notice of Federal tax lien in one office within the State (or the county, or other governmental subdivision), as designated by the laws of such State, in which the property subject to the lien is situated.

Because the requirements of section 6323 (f) (1) (A) (i) of the Code have not been met with respect to real property located in Cook County, Ill., the Service will file notices of Federal tax lien with respect to such real property with the clerk of the U.S. District Court, Northern Judicial District, Eastern Division, Illinois, in accordance with section 6323 (f) (1) (B) of the Code. The Service considers the filing with the U.S. District Court in this case as the correct place for filing for determining the rights of the United States with respect to purchasers and applicable secured creditors. However, solely as a matter of convenience, and not as a matter of legal effectiveness, for those who may have occasion to search for notices of Federal tax lien, the Service will also attempt to file notices of Federal tax lien with the Recorder of Deeds, Cook County, Ill. Inasmuch as the U.S. District Court is the proper place for filing these tax liens, the records of the Recorder of Deeds for Cook County should not be relied upon as constituting the records of Federal tax liens against real property in Cook County.

The Service will continue to file notices of Federal tax lien with respect to the personal property of taxpayers residing in Cook County, Ill., with the Recorder of Deeds, Cook County, Ill.

(Also Part I, Section 543.)

Rev. Proc. 67–16 1

Procedure for electing to apply the amendments made by subsections (a) and (b) of section 206 of the Act of November 13, 1966 (Public Law 89-809, 80 Stat. 1578), relating to treatment of certain rents derived from manufactured property for personal holding company tax purposes, to taxable years beginning on or before November 13, 1966, and ending after December 31, 1965.

SECTION 1. PURPOSE.

1

The purpose of this Revenue Procedure is to provide a procedure whereby taxpayers may elect to apply the amendments made by a section 206 of the Act of November 13, 1966 (Public Law 89-809, 80 Stat. 1578) C.B. 1966–2, 656, to taxable years beginning on or before November 13, 1966, and ending after December 31, 1965, or revoke such an election previously made.

SEC. 2. BACKGROUND.

Under section 543(a) of the Internal Revenue Code of 1954, as amended, the term "personal holding company income" includes the adjusted income from rents (unless the adjusted income from rents from all sources constitutes 50 percent or more of the adjusted ordinary gross income and unless the sum of the dividends paid, the dividends considered as paid, and the consent dividends, during the year equals

1 Also released as Technical Information Release 890, dated March 9, 1967.

or exceeds the amount by which the other personal holding company income exceeds 10 percent of the ordinary gross income). Section 543 (b) (3) of the Code (as amended by section 206 (a) of Public Law 89-809) provides that for purposes of computing "adjusted income from rents", the term "rents" does not include compensation, however designated, for the use of, or the right to use, any tangible personal property manufactured or produced by the taxpayer, if during the taxable year the taxpayer is engaged in substantial manufacturing or production of tangible personal property of the same type. Section 206(b) of the Public Law contain certain technical amendments to section 543 (a)(2) and (b)(2). Section 206 (c) of the Public Law provides that a taxpayer may elect to have the amendments made by section 206 (a) and (b) apply to taxable years beginning on or before November 13, 1966, and ending after December 31, 1965. An election made pursuant to the provisions of section 206 (c) applies to all taxable years beginning on or before November 13, 1966, and ending after December 31, 1965.

SEC. 3. ELECTION.

.01 Form and Content. The election authorized by section 206 (c) shall be made in a statement signed by an officer of the corporation who is authorized to sign a return of the corporation with respect to income. The statement shall show the taxpayer's name, address, and employer identification number and shall state that the taxpayer elects to apply the amendments made by section 206 (a) and (b) of the Act of November 13, 1966 (Public Law 89-809, 80 Stat. 1578) to taxable years beginning on or before November 13, 1966, and ending after December 31, 1965.

.02 Period in which election must be made. An election applicable with respect to only one taxable year may be made at any time before the expiration of the period for making a claim for credit or refund of Federal income tax for such taxable year. An election applicable with respect to more than one taxable year may be made at any time before the expiration of the period for making a claim for credit or refund of Federal income tax for the earliest such taxable year.

.03 Place where statement of election shall be filed. In the case of an election applicable with respect to only one taxable year, the statement of election shall be filed with the office of the Internal Rerenue Service where the taxpayer's Federal income tax return for such year was, or will be, filed. In the case of an election applicable with respect to more than one taxable year, the statement of election shall be filed with the office of the Internal Revenue Service where the taxpayer's Federal income tax return for the earliest such taxable year was, or will be, filed except that the statement of election may be attached to the taxpayer's Federal income tax return or a claim for credit or refund with respect to an overpayment of the tax imposed by section 541 shown on a previously filed return. However, in any event, the statement must be filed prior to the expiration of the period referred to in .02 of this section which is applicable with respect to the taxpayer. Where the statement of election has been filed prior to the date the taxpayer files its Federal income tax return for a taxable year for which the election is effective, a copy of such statement (clearly identified as a copy) shall be attached to such return.

SEC. 4. REVOCATION OF ELECTION.

A revocation of an election previously made under the procedure described in section 3 may be made by the taxpayer by filing with the office of the Internal Revenue Service where the statement of election was filed a statement signed in the same manner as a return of a corporation with respect to income. The statement shall show the taxpayer's name, address, and employer identification number and the taxable year or years to which such election was applicable and shall state that the taxpayer revokes the election previously made. In addition, if, at the time the statement of revocation is filed, the statutory period for assessment of a deficiency for a taxable year for which the election was made will expire within one year, then the revocation is not effective unless there is included in or attached to the statement of revocation a written consent that the statutory period for assessment of any deficiency (to the extent that such deficiency is attributable to the revocation of the election) shall not expire before the expiration of one year after the date that the statement of revocation is filed. The revocation must be made prior to the expiration of the period described in section 3.02 of this Procedure in which the taxpayer could make an election. In the case of an election applicable with respect to more than one taxable year, the revocation of such election applies to all taxable years beginning on or before November 13, 1966, and ending after December 31, 1965.

(Also Part IV, T.D. 6898, C.B. 1966–2, 567; 26 CFR 507.21.)

(Also Part I, Section 1441; 1.1441-2.)

Rev. Proc. 67-171

Procedures for withholding of tax from income subject to the United States-United Kingdom Income Tax Convention, as amended by the Protocol of March 17, 1966.

SECTION 1. PURPOSE.

The purpose of this Revenue Procedure is to prescribe procedures to be followed by United States withholding agents for the withholding of tax from income subject to the United States-United Kingdom Income Tax Convention, as amended by the Protocol of March 17, 1966 (hereinafter referred to as the convention) C.B. 1966-2, 582. The procedures prescribed herein supplement the withholding regulations under the convention (26 CFR 507.21-507.33) as published in T.D. 6898, C.B. 1966–2, 567.

SEC. 2. ADDITIONAL WITHHOLDING OF UNITED KINGDOM TAX.

Article II of the convention provides, in effect, that any reduction in the rate of, or exemption from, United Kingdom withholding tax provided by the convention is available only to a resident of the United States. Article XIXA provides, in effect, that the United States will endeavor to collect on behalf of the United Kingdom such amounts as may be necessary to insure that the relief granted by the convention will not enure to the benefit of persons not entitled to such relief.

1 Also released as Technical Information Release 891, dated Mar. 15, 1967.

In accordance with article XIXA of the convention, section 507.23 (b) of the new withholding regulations imposes certain responsibilities on any United States withholding agent (including a nominee, representative, fiduciary, or partnership) receiving income from sources within the United Kingdom on behalf of a person who is not a resident of the United States (whether or not such person is a citizen of the United States). If, on or after April 6, 1966, such income has been subject to a reduced rate of, or exempt from, withholding of United Kingdom tax, the U.S. withholding agent is required to withhold an additional amount of United Kingdom tax sufficient, when added to any tax withheld in the United Kingdom, to equal the tax which would have been withheld had the convention not been in effect (41.25 percent as of the date of publication of T.D. 6898). These amounts of additional United Kingdom tax may be:

(1) Deposited in United States dollars with the Director, Office of International Operations, Internal Revenue Service, Washington, D.C. 20225, on or before March 15 of the year following the year in which the withholding occurs, accompanied by such forms as the Commissioner of Internal Revenue may prescribe, or

(2) Pursuant to an agreement between the United States withholding agent and the United Kingdom Department of Inland Revenue such amounts may be remitted directly to the United Kingdom on a quarterly basis.

In the event that direct remittance to the United Kingdom is selected. a statement setting forth the fact that an agreement exists and the amount of tax remitted to the Inland Revenue must be filed with the Office of International Operations, Internal Revenue Service, Washington, D.C. 20225, for each quarter in which a remittance is made. Form 4198-UK has been designed for the use of U.S. withholding agents remitting the additional tax to the Director of International Operations.

In cases in which additional United Kingdom tax has been erroneously withheld, the excess amounts, if still in the possession of the withholding agent, may be released to the taxpayer upon presentation of evidence of U.S. residence. In the event the tax has been remitted to the Office of International Operations or the United Kingdom Department of Inland Revenue, the taxpayer should file his claim for refund with the Department of Inland Revenue.

SEC. 3. WITHHOLDING OF UNITED STATES TAX.

(a) Exemptions from United States tax of interest or royalties. This paragraph pertains to payment of interest or royalties (other than natural resources royalties) made to a resident of the United Kingdom in a taxable year of the recipient beginning after December 31, 1965.

(1) Coupon bond interest.

(i) Payments made on or before April 1, 1967.

Form 1001-UK-2 or Form 1001-UK may be used to secure exemp tion from withholding.

(ii) Payments made after April 1, 1967.

Exemption may be secured only by filing Form 1001-UK-2.

(2) Interest (other than coupon bond interest) or royalties (other than natural resources royalties).