IRS Audits - Part 4 Examining Process

[ Home ] [ Services ] [ FAQ ] [ Site Map ] [ Contact Us ]

IRS Audits

Chapter 10. Examination of Returns

Section 13. Certain Technical Issues (Cont. 1)

4.10.13  Certain Technical Issues (Cont. 1)

4.10.13.4 
Related Party Transactions (IRC 482)

4.10.13.4.5 
Examination Reports and Processing

4.10.13.4.5.2  (03-30-2005)
Agreed IRC 482 Issues

  1. In order to have an agreed IRC section 482 issue, all related parties must be in full agreement with the IRC 482 issue.

  2. Obtain a signed agreement (Form 870) or payment of the deficiency for the primary adjustment taxpayer.

  3. Make the correlative adjustments and obtain agreements for the overassessment.

  4. The taxpayers will be advised that their cases can be more expeditiously adjusted and closed if the taxpayer scheduled to receive refunds will voluntarily consent in writing to have the refunds applied against the proposed deficiencies.

  5. The taxpayer's written statement can be incorporated in Form 870. The examiner's report in the overassessment cases must include a statement of whether consents as provided for in this paragraph have been furnished and, if not, the reason. The suggested format for the written statement is as follows:

    "The undersigned taxpayer also consents and agrees to the application of so much of the overassessment as represents an overpayment, together with allowable interest thereon, as a credit to the deficiency in tax in the amount of ($amount), together with interest thereon, due from ________________ for the year ________. This is provided that the amount of the overpayment, if any, together with allowable interest, which is in excess of the said deficiency and interest, is otherwise credited or refunded in accordance with section 6402 of the Internal Revenue Code of 1986, or the corresponding provisions of prior revenue laws."

     

  6. The examiner should refer to Rev. Proc. 65-17, as amended, in situations where the taxpayer requests permission to receive payment from the correlative taxpayer to the extent of the IRC section 482 adjustment, without further Federal income tax consequences on that payment.

  7. The examiner will note Form 3198 appropriately.

4.10.13.4.5.3  (03-30-2005)
Unagreed IRC Section 482 Issues

  1. In unagreed IRC section 482 cases where the correlative adjustment is the only adjustment on the related entity, do not write a complete report for the correlative adjustment. Submit the files on related entities with tax computation sheets in each case file. Prior to closing, the examiner will draft a letter inviting the related entities to file a claim.

  2. In unagreed IRC section 482 cases when there are other adjustments on the related entities, take an inconsistent position. Do not make the correlative IRC 482 adjustments, but explain fully the reason for not making the correlative adjustments. This explanation should be made in the taxpayer's portion of the Revenue Agent's Report (RAR).

  3. In all unagreed IRC section 482 issue cases, the correlative taxpayer should be advised of the period of limitations under IRC section 6511 for filing a claim. If the period for filing a claim for refund expires in less than 180 days, the examiner should solicit a Form 843, Claim Refund and Request for Abatement, from the taxpayer. Such claims should be picked up and submitted with the case, if possible.

  4. To ensure that overpayments resulting from the correlative adjustments are not scheduled and refunded to the taxpayer, the examiner will appropriately note Form 3198.

4.10.13.4.5.4  (03-30-2005)
Related Cases Not Managed In the Same Compliance Area

  1. When a return is examined in one office and an issue is the transfer of income or deduction to a related taxpayer under examination in another area office, the office making the initial examination will (except in cases arising out of partnership and/or fiduciary return or S corporations) immediately, upon identification of a potential IRC section 482 adjustment, advise the examiner of the issue(s) and amount involved.

  2. Immediately upon conclusion of the examination, a notice should be issued to the outside office that will contain sufficient information to enable the receiving office to make the correlative adjustment(s) to the related return(s). The initiating office examiner's case files will contain copies of the notification.

  3. Upon receipt of notification, the receiving office will take prompt action to make adjustments for the transfer of income or deduction resulting from the initial examination. In the event the return has been examined and closed, reopening procedures will be considered.

  4. If the corresponding return is not under examination, the examiner should secure the return and prepare the report.

4.10.13.5  (03-30-2005)
Adjustments Between Correlative Taxpayers (a/k/a Whipsaw Issues)

  1. Transactions that effect the income, deductions, or credits of two or more taxpayer's returns should be treated consistently between the taxpayers. If the examiner determines the transaction is not treated consistently on the returns of the taxpayers involved in the transaction, corresponding adjustments must be made to ensure proper treatment. The taxpayers that are effected by this transaction are considered "correlative taxpayers." Also see IRM 4.10.7.4.9 on Whipsaw Issues.

  2. Adjustments made between correlative taxpayers will usually increase the tax liability of one taxpayer and reduce the tax liability of the other.

  3. Service policy (Policy Statement P-4-34) requires that the case of the taxpayer whose tax liability has been reduced will not be closed until the taxpayer whose tax liability was increased agrees to the corresponding adjustment(s) and signs a consent agreeing to the increase in tax or a court establishes the correctness of the adjustment(s). Adjustments of this type occur most frequently in the returns of:

    1. Husband and wife filing separate returns;

    2. Taxpayers claiming duplicate dependency exemptions;

    3. Grantor, trust, and beneficiaries;

    4. Parent and child:

    5. Decedent and decedent's estate;

    6. Taxpayers in which the Commissioner has invoked the provisions of IRC section 482 as described above;

    7. Parent and subsidiary corporations; and

    8. Taxpayers involved in whipsaw issues.

     

  4. If at all possible, correlative taxpayer's cases should be associated and remain together until the taxpayer whose report reflects a deficiency has been assessed, or until the correlative taxpayer's case is placed in suspense. If this is not possible, the procedures in the subsection Related Taxpayers Controlled in More than One Area, below, will be followed.

  5. Procedures for disposition of related cases for flow-through entities will be closed using the procedures in IRM 4.31, Flow-Through Entity Handbook.

4.10.13.5.1  (03-30-2005)
Definition of Terms

  1. Primary Adjustment - The adjustment, which generally increases the tax liability of the initial taxpayer, and generally creates a corresponding decrease in the tax liability of one or more taxpayers involved in the transaction.

  2. Primary Taxpayer - The taxpayer whose tax liability is affected by the primary adjustment.

  3. Correlative Adjustment - The adjustment that generally creates a corresponding decrease in the tax liability of the taxpayer(s) involved in the transaction with the primary taxpayer.

  4. Correlative Taxpayer - The taxpayer who is involved in the transaction with the primary taxpayer whose tax liability is affected by a correlative adjustment.

4.10.13.5.2  (03-30-2005)
Correlative Taxpayers Controlled in One Area

  1. The examiner for the primary taxpayer will request the return(s) of all correlative taxpayer(s) in the Area if a manageable number of correlative taxpayers are involved. The cases will remain associated until the primary and correlative adjustments have been proposed and assessments have been made, or until the correlative taxpayers' cases are placed in suspense pending the resolution of the primary taxpayer's case.

  2. If a large number of correlative returns are involved or if the correlative taxpayers reside in other PODs within the Area, PSP's assistance will be requested in ordering and controlling the related taxpayers.

  3. If the correlative taxpayer resides in another Area, both cases may be controlled by an examiner by requesting a CC ESTABD to obtain the return not on AIMS or through the transfer of the related return(s) if:

    1. the adjustment is of major importance,

    2. it is for convenience of the government, or

    3. it would promote the effective and efficient conduct of the examination.

     

  4. If the above are not applicable, the procedures outlined in the subsection Related Taxpayers Controlled in More Than One Area below should be followed.

  5. If a return must be transferred from one Area to another, the provisions of the subsection Transfers of Returns Prior to the Initial Appointment in IRM 4.10.2 will be followed. If this is not possible, contact the Area PSP in which the correlative taxpayer is controlled.

  6. The correlative taxpayer(s) will be given notice of the examination (using the procedures outline in 4.10.2, Pre-Contact Responsibilities) as soon as it is known that adjustments proposed for the primary taxpayer will affect the tax liability of the correlative taxpayer.

  7. A protective claim, Form 1040X or 1120X, will be solicited from taxpayers with correlative adjustment(s) that reduce the tax liability and the period for filing a claim for refund expires in less than 180 days. This will hold the taxpayer's statute open to receive any refund or credit that is due up to the amount of the claim. Letter 897 will be sent to the taxpayer each year requiring protection. Once a protective claim is received, Form 895, Notice of Statute Expiration, will be attached and the statute will be updated according to IRM 25.6, Statute of Limitations.

4.10.13.5.2.1  (03-30-2005)
Primary and Correlative Taxpayer's Reports

  1. Prepare the correlative taxpayer's report concurrently with the primary taxpayer's report. Solicit the agreement from the primary taxpayer, whose tax liability has been increased, prior to the agreement for the correlative taxpayer, whose tax liability has been reduced.

  2. The primary taxpayer's report will include a statement that " a separate examination report reflects correlative adjustments to the taxable income of the correlative taxpayer(s)."

    Caution:

    Rules regarding the disclosure of information apply to correlative adjustments, despite the relationship between primary and correlative taxpayers. The correlative report should not disclose tax return information of the primary taxpayer except to the extent explaining the correlative adjustment is necessary.

     

  3. If agreements are secured from the primary and correlative taxpayers, note Form 3198 so that overassessments resulting from the correlative adjustments are not refunded to the taxpayer prematurely.

4.10.13.5.2.2  (03-30-2005)
Reports Applying Overassessments Against Deficiencies

  1. The correlative taxpayer(s) must be given the option of applying any overassessment against the deficiencies of the primary taxpayer as follows:

    1. If the correlative taxpayers are agreeable to the adjustments, the examiner will tell the primary and correlative taxpayers that their cases may be closed more expeditiously if the taxpayer's report reflecting an overassessment would agree to apply the overassessment and any interest to the deficiency of the taxpayer(s) reflecting deficiencies.

    2. The agreement form of the taxpayer having the overassessment will be modified to add a consent to apply the overpayment to the related deficiency. This will be accomplished by adding a paragraph, as follows, to the agreement form:

      "The undersigned taxpayer also consents and agrees to the application of the part of the overassessment that represents an overpayment, and interest allowable thereon, as a credit to the deficiency in tax, in the amount of $_________, and interest thereon, due from (related taxpayer) for the Year(s) ___________; provided the amount of any overpayment and interest allowable thereon that is in excess of the deficiency and interest, is otherwise credited or refunded in accordance with section 6402 of the Internal Revenue Code, or corresponding provisions of prior laws."

       

    3. If the taxpayer(s) agree to apply the overassessment to the deficiency, annotate Form 3198, Special Handling Notice, for the taxpayer(s) with the overassessment: "Apply the overassessment and any interest thereon to (name of taxpayer with deficiency, the taxpayer identification number (TIN), and tax period)." An appropriate notation will also be made in the workpapers.

     

4.10.13.5.2.3  (03-30-2005)
Protested Primary Adjustments

  1. If the primary taxpayer whose report reflects a deficiency does not agree to the primary adjustment(s) and submits a protest to the 30-day letter, the correlative taxpayer(s) whose report(s) reflect an overassessment will remain associated.

  2. Correlative adjustment(s) that reduce the correlative taxpayer's tax liability will be advised of the nature of the adjustment(s), the reason the overpayment cannot be refunded at this time and the possible need to protect the statute of limitations from expiring.

  3. Primary and correlative taxpayers will be forwarded together to Appeals for consideration.

  4. Prior to sending the protested case to Appeals the following action must be taken:

    1. If adjustments other than the correlative adjustment(s) exist that result in a deficiency (instead of an overassessment), a partial agreement will be solicited for all non-correlative adjustment. A partially agreed report will be prepared using Form 870, Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment. It must specifically state that the correlative adjustment is not reflected in the computation of the deficiency or overassessment. The case will be sent to Case Processing for a partial assessment if the deficiency is agreed. Form 3198 will be noted "Make partial assessment and return to (group) to be associated with related case(s)."

    2. The correlative taxpayer(s) will be invited to file a claim for refund (protective claim) if the period for filing a claim for refund expires in less than 180 days. Letter 897 (DO) will be sent to solicit a claim for each taxable year needing protection. Once a protective claim is received, Form 895, Notice of Statute Expiration, will be attached and the statute will be updated according to IRM 25.6, Statute of Limitations.

    3. Form 3198 will be noted to ensure that overpayments resulting from the correlative adjustment(s) are not refunded to the taxpayer prematurely.

    4. The statute of limitations will be protected by the office having custody of the case if a deficiency may result from a determination adverse to the Government in the related case.

     

4.10.13.5.2.4  (03-30-2005)
Statutory Notice of Deficiency Issued for Correlative Adjustments

  1. If a statutory notice of deficiency is issued to the taxpayer whose tax liability is increased, due to the primary adjustments, and a timely petition is filed with the Tax Court, the Area will transfer the correlative taxpayer(s) cases (whose tax liability has been reduced) to Appeals to be associated with the case in which the petition has been filed with the Tax Court, if the procedures in item (4) of subsection IRM 4.10.13.4.2.3, above, have been followed.

  2. If a statutory notice of deficiency is to be issued to the taxpayer(s) with correlative adjustment(s) that reduce the tax liability for other adjustments, do not include the correlative adjustments in deficiency computation. The statutory notice of deficiency must contain an explanation of the correlative adjustments so the taxpayer clearly understands the nature of the correlative adjustment(s). If the correlative adjustments completely offset the tax liability, you cannot issue a statutory notice because you have no deficiency.

4.10.13.5.3  (03-30-2005)
Correlative Taxpayers Controlled in More than One Area

  1. If the examiner has not secured the correlative return in another Area according to the procedures described in IRM 4.10.13.4.2 above before the examination of the primary taxpayer has been concluded (agreed, protest received, or forwarded for statutory notice of deficiency) and the correlative adjustment(s) affect the tax liability of a taxpayer in another Area (except cases arising from flow-through entity returns), the correlative taxpayer's Area must be notified of the correlative adjustment(s) and the status of the primary taxpayer.

  2. The primary Area will secure the name, address, and TIN of the correlative taxpayer and notify the correlative Area by:

    1. Completing Form 5346, Examination Information Report,

    2. Attaching an INOLES transcript of the correlative taxpayer to Form 5346, and

    3. Attaching copies of the primary taxpayer's workpapers and to aid the correlative Area in proposing the correlative adjustments.

     

  3. A copy of Form 5346 will remain in the primary taxpayer's case file. The original Form 5346 and attachments will be mailed to the correlative taxpayer's Area, addressed to the Area Director, Attention: Chief, PSP.

  4. Upon receipt of Form 5346 in the correlative taxpayer's Area, PSP will determine if the correlative taxpayer is currently under examination.

    1. If the correlative is not under examination, the return will be ordered, and assigned for examination of the correlative adjustments.

    2. If the return is under examination, Form 5346 will be routed to the examiner conducting the examination for consideration and include of the correlative adjustments with any other adjustments in the examination report.

    3. If the return has been examined and closed, it will be ordered and reopening to make the correlative adjustment(s).

     

4.10.13.5.3.1  (03-30-2005)
Primary Taxpayer Must Close Before the Correlative Taxpayer

  1. The correlative adjustment(s) that reduce the correlative taxpayer's tax liability will be held open until the additional tax for the primary taxpayer has been agreed.

  2. The case(s) of the correlative taxpayer(s) whose adjustment(s) reduce tax liability will be held and placed in IRC section 1254 suspense until the examination of the primary taxpayer whose tax liability was increased has been conducted. It will be held in suspense pending notice from the primary taxpayer's Area that the primary taxpayer's examination, whose tax liability was increased, has been concluded.

4.10.13.5.3.2  (03-30-2005)
Suspense of the Correlative Taxpayer's Returns

  1. The following procedures must be completed before the correlative taxpayer's case can be placed in suspense, maintained and controlled in the Area Office:

    1. The correlative taxpayer will be invited to file a claim for refund (protective claim) if the period for filing a claim for refund expires in less than 180 days. Letter 897 (DO) will be sent to solicit a claim for each taxable year needing protection. Once a protective claim is received, Form 895, Notice of Statute Expiration, will be attached and the statute will be updated according to IRM 25.6, Statute of Limitations.

    2. Form 3198 will be noted to ensure that overpayments resulting from the correlative adjustment(s) are not refunded to the taxpayer prematurely.

    3. All issues except for the correlative adjustments will be completed prior to forwarding the case for suspense. If possible, partial agreements will be secured for all non-suspense issues using Form 870. It must specifically state that the correlative adjustment is not reflected in the computation of the deficiency or overassessment. If a partial agreement was obtained, a partial assessment must be made by Case Processing prior to routing the case for suspense. The examiner will prepare an RAR (Form 4549-A, 4605-A, etc.) as far as the corrected taxable income line for any unagreed non-suspense issue, and Form 886, Explanation of Items, on all cases submitted for suspense. Form 3198, Special Handling Notice, will be noted "Partial Assessment - After partial assessment is made, forward to Technical Services for suspense. "

    4. Inform the taxpayer that the case has been placed into a suspense status by sending Letter 1014, Letter to TP Advising Him of the Reasons for Suspended Action on his Tax Return Examination.

     

4.10.13.5.3.3  (03-30-2005)
Area Notification of Correlative Adjustments That Affect Income Tax Liability

  1. After the correlative taxpayer's Area has received notice from the primary Area on Form 5346 and has contacted the taxpayer concerning the correlative adjustments which result in a deficiency (instead of an overassessment), the correlative Area will notify the primary Area by letter of the correlative taxpayer's:

    1. agreement,

    2. default after issuance of a statutory notice of deficiency, or

    3. filing of a petition with the Tax Court.

     

  2. If the correlative Area also has control of the return of another correlative taxpayer whose correlative adjustments produce an overassessment, the case will be associated with the related case containing a deficiency and the procedures in item (4) of subsection IRM 4.10.13.4.2.3 above will be followed.

  3. When the primary Area receives notification that all correlative cases are agreed or have defaulted after issuance of the statutory notice of deficiency, then they will advise all correlative Areas to the process and close all related taxpayer cases consistent with the information that was previously sent to them.

  4. If the primary Area receives notification that a related taxpayer has filed a petition with the Tax Court, the primary Area will advise all related Areas and will themselves suspense all correlative cases pending the final outcome of the taxpayer that filed a petition with the Tax Court. The instructions in subsection IRM 4.10.13.4.3.2 above will be followed in placing the case into suspense.

  5. Once the case of the taxpayer that filed a petition with the Tax Court has been concluded, the Area will notify the primary Area of the resolution, which will in turn notify the correlative Areas.

  6. If the deficiency of the correlative taxpayer becomes an overassessment:

    1. the correlative Area will notify the primary Area if the correlative taxpayer agrees to the overassessment.

    2. if the agreement is not secured, the primary Area will be notified of the forwarding of the case for processing the overassessment and the basis for closing the case. When the primary Area receives notice, they will close the overassessment case.

    3. The primary Area will then notify all correlative Areas and similar action on overassessment cases will be taken.

     

4.10.13.6  (03-30-2005)
Activities Not Engaged in For Profit - Hobby Loss (IRC Section 183)

  1. IRC section 183(a) provides that no deductions shall be allowed in the case of an activity not engaged in for profit, other than those otherwise allowable under the Code, and supplies some criteria to be used in making the determination as to the profit notice. IRC section 183(d) gives the taxpayer a rebuttable presumption that an activity is a business and not a hobby, if profit results from the activity in three out of five (two out of seven in the case of horse racing, breeding or showing) consecutive years.

  2. Since a full presumption period is not available when the taxpayer first begins the activity, IRC section 183(d) allows him to make an election which will defer the determination until he has had the opportunity to achieve the presumption during the first five (or seven) years of the activity.

  3. Examiners should be aware that failure to make a profit does not in and of itself indicate a lack of a profit motive. This is true regardless of whether the taxpayer has made an election under IRC section 183(e) or not. The question of profit motive is a factual one, and all facts must be considered in making any determination.

4.10.13.6.1  (03-30-2005)
Development of IRC 183(a) Issues

  1. Normally, business expenses must meet the requirements of either "carrying on a trade or business" (IRC section 162) or "for the production of income" (IRC section 212). If it fails to meet either of these sections, the activity is then considered under IRC section 183. In other words, first determine if the activity has a profit motive. The examination should not begin with consideration of IRC section 183.

4.10.13.6.1.1  (03-30-2005)
Factual Development

  1. Examiners should determine whether or not the activity is engaged in for profit from all available facts and circumstances without regard to the presumption under IRC section 183(d) or the possible election under IRC 183(e). This determination should take into consideration the "relevant factors" listed in Treas. Reg. 1.183-2(b) as well as all other pertinent facts. See Exhibit 4.10.13-5.

  2. The IRC section 162 position (i.e., substantiation, personal use, etc.) must be developed before the case can be forwarded to Appeals or placed in suspense. Appeals has indicated concern about cases coming in with inadequate factual development of the issue. Discussion of IRC section 183(d) and (e) with the taxpayer should be postponed until, and if, the activity has been determined to be an activity not engaged in for profit.

4.10.13.6.1.2  (03-30-2005)
Passive Activity Loss Rules

  1. Passive active loss rules of IRC section 469 should be also be considered. Since IRC section 469 adjustments are timing adjustment while IRC 183 adjustments are permanent adjustments, the IRC section 183 issue should generally be treated as the primary position and the IRC section 469 issue should be treated as an alternative position when both issues are present.

4.10.13.6.1.3  (03-30-2005)
Determine If Prior Years Are Being Held In Suspense

  1. If a potential IRC 183(a) issue exists, check with the Technical Services IRC section 1254 suspense coordinator. If the earlier years are not in suspense, and the activity is determined to be engaged in for profit, allow the deductions to the extent they are otherwise allowable by the Code (i.e., IRC section 162). If the activity is not engaged in for profit and IRC section 183(e) is elected, the case must be placed in suspense.

4.10.13.6.1.4  (03-30-2005)
Deductions Under IRC Section 183 Which the Taxpayer May Claim

  1. IRC section 183(b) provides for two types of deductions allowed with regard to activities not engaged in for profit. They are the IRC section 183(b)(1) and section 183(b)(2) deductions.

  2. Deductions under IRC section 183 are allowable only on Schedule A as Itemized Deductions. Deductions under section IRC 183(b)(1) would appear in the proper places on Schedule A (e.g., as mortgage interest or taxes) and any deduction under IRC section 183(b)(2) would be a miscellaneous Itemized Deduction subject to the 2% of AGI. The hobby income limitation is applied before the 2% rule.

4.10.13.6.2  (03-30-2005)
Placing Cases in Suspense

  1. Check with the taxpayer and/or the IRC 183 Suspense Coordinator in Examination Technical Services to determine if there is a prior election on file. See IRM 4.8.2.10.5, IRC § 183(e) Hobby Loss Suspense.

4.10.13.6.2.1  (03-30-2005)
Election on File

  1. Requisition the returns for all open years not in the suspense file. Examine each of the years that have significant audit potential. If the returns for any years subsequent to the year of the initial IRC section 183(a) election do not show significant audit potential, they may be forwarded, unaudited, to suspend along with the year(s) of the initial IRC section 183(a) election.

  2. Secure AMDISA, IMFOLT/R on all open years.

  3. Prepare a report showing the audit results including the IRC 183(a) issue. The cases examined must be completely worked prior to going into suspense.

  4. Form 3198 should indicate that the case is an IRC section 183(a) case and is related to a previously suspended case and should be routed directly to suspense.

  5. Process the case in the normal manner.

  6. If needed, secure a statute extension for any non-hobby loss issue(s) or statutory adjustment(s) from the hobby loss issue(s) not resolved prior to suspense.

4.10.13.6.2.2  (03-30-2005)
Election Not on File

  1. Determine if the taxpayer wants, and is eligible, to elect IRC section 183(e). The election must be made before the statute of limitations of the return reporting the first year of the activity expires. If an election has not been made prior to the expiration of the statute on the initial year, an election cannot be accepted.

  2. Inform the taxpayer of all the legal and procedural implications of the IRC section 183(e) election. If the taxpayer does not wish to make the election, the case and the issue should be processed based on the merits that have already been determined. When possible, a written statement should be obtained from the taxpayer or his representative stating that he does not elect the provisions of IRC section 183(e) with respect to the tax year(s) containing the IRC section 183(a) issue. (If the taxpayer declines to provide such a statement, the examiner should make appropriate comments in the workpapers.) Attach the statement to the return(s).

  3. If the taxpayer wishes to made an IRC section 183(a) election:

    1. Secure fully completed and properly signed Form 5213. See the back of each form for specific instructions.

    2. Requisition all returns beginning with the initial year.

    3. Obtain AMDISA, IMFOLT/R for all tax returns.

    4. Perform audit functions as warranted, paying particular attention to the full development of the IRC section 183(e) issue. The open years that are examined must be completed prior to going into suspense.

    5. Prepare a report on each of the open years disallowing the IRC section 183(e) loss to the extent required by Treas. Reg. 1.183-1(b).

    6. Attach Form 3198, Special Handling Notice, to the outside of the case file and indicate "Suspense Case IRC 183(e) - Forward to Technical Services" . The group should forward the case direct to Technical Services with Form 3210.

    7. Make appropriate comments in th