Attorney Forwards Draft Reporting Form

Martin G. Rosenstein of Mayer, Brown & Platt, Chicago, has drafted an information return for use in meeting the reporting requirements of section 110(d). While acknowledging the importance of the reporting standard in section 110(d), Rosenstein says his client has "a strong interest" in minimizing the administrative burden associated with the requirement. He then asks Treasury to review the proposed form and arrange a meeting with him to discuss it.

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October 28, 1998

Ms. Annette Smith

Re: Section 110 of the Internal Revenue Code

Dear Ms. Smith:

[1] As I mentioned in our telephone conversation several weeks ago and as a follow-up to our meeting in October, 1997, we have formulated a draft of a form of information return that may be utilized under Section 110(d) of the Code. As we previously discussed, our client acknowledges the importance of this information reporting standard, but also has a strong interest in minimizing the administrative burden imposed in this connection.

[2] After you and your colleagues have had a chance to review the form, we would very much appreciate the opportunity to meet with you in person to further discuss our thoughts.

[3] Thank you again for your consideration of this matter.

                                   Sincerely,

                                   Martin G. Rosenstein

a. Lessee's name as shown on return     b. Lessee's identification

c. Name of the lessor                   d. Lessor's identification

e. Lessor's address                     f. City, state, and ZIP code

g. Retail space location                h. Property identification

i. City, state, and ZIP code

1 Construction allowance amount         2 Qualified long-term real

1099-Q Qualified Long-Term Real Property Statement 1999

INSTRUCTIONS FOR FORM 1099-Q

BOX a. LESSEE'S NAME AS SHOWN ON RETURN.

[4] List the name of the lessee as shown on the lessee's Federal income tax return. In the case of an affiliated group, list the name of the filing entity.

BOX b. LESSEE'S IDENTIFICATION NUMBER AS SHOWN ON RETURN.

[5] List the taxpayer identification number of the entity listed in box a.

BOX c. NAME OF THE LESSOR (AS SHOWN ON THE LEASE).

[6] List the name of the lessor as shown on the lease to which the construction allowance at issue pertains. A construction allowance is an amount received in cash (or treated as a rent reduction) by a lessee from a lessor under a short-term lease of retail space and for the purpose of such lessee's constructing or improving qualified long-term real property for use in such lessee's trade or business at such retail space.

BOX d. LESSOR'S IDENTIFICATION NUMBER.

[7] List the taxpayer identification number of the lessor listed in box c.

BOX e. LESSOR'S ADDRESS.

[8] List the street address of the lessor listed in box c.

BOX f. CITY, STATE, AND ZIP CODE.

[9] List the city, state and ZIP code of the lessor listed in box c.

BOX g. RETAIL SPACE LOCATION.

[10] List the mall name of the mall, or if not at a mall, the local street address, at which the retail space is located and the store name by which the retail space is identified to customers.

BOX h. PROPERTY IDENTIFICATION NUMBER.

[11] The property identification number is made up of three components: the lessee's taxpayer identification number, the store number, and the year. All stores to which construction allowances pertain and with respect to which Forms 1099-Q are required should be numbered sequentially during the calendar year in which the retail space opens for business. Therefore, the property identification number of the first such store opened in 1998 by a taxpayer with the taxpayer identification number 77-77777 would be 77-77777-1-1998, where 77-77777 is the taxpayer identification number, 1 is the store number, and 1998 is the year. Accordingly, the 44th such store would be numbered 77-77777-44-1998.

BOX i. CITY, STATE, AND ZIP CODE.

[12] List the city, state, and ZIP code of the retail space.

BOX 1. CONSTRUCTION ALLOWANCE AMOUNT.

[13] Include the total construction allowance amount relating to the leased retail space, including all construction allowance amounts received in cash or treated as a rent reduction by the lessee from the lessor.

BOX 2. QUALIFIED LONG-TERM REAL PROPERTY.

[14] Include the total amount of qualified long-term real property constructed or improved at the leased retail space, up to but not exceeding the amount included in box 1. Qualified long-term real property is nonresidential real property which is part of, or otherwise present at, the retail space, and which reverts to the lessor at the termination of the lease.

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a. Lessee's name as shown on return     1 Total construction allowance

b. Lessee's identification number       2 Total qualified long-term

c. Total number of Forms 1099-Q

1096-Q Transmittal of Qualified Long-Term Real Property Statements

INSTRUCTIONS FOR FORM 1096-Q

BOX a. LESSEE'S NAME AS SHOWN ON RETURN.

[15] List the name of the lessee as shown on the lessee's Federal income tax return. In the case of an affiliated group, list the name of the filing entity.

BOX b. LESSEE'S IDENTIFICATION NUMBER AS SHOWN ON RETURN.

[16] List the taxpayer identification number of the entity listed in box a.

BOX c. TOTAL NUMBER OF FORMS 1099-Q.

[17] Show the number of completed individual Forms 1099-Q you are transmitting with this Form 1096-Q.

BOX 1. CONSTRUCTION ALLOWANCE AMOUNT.

[18] Enter the total reported in box 1 on the Forms 1099-Q being transmitted.

BOX 2. QUALIFIED LONG-TERM REAL PROPERTY.

[19] Enter the total reported in box 2 on the Forms 1099-Q being transmitted.