Rev. Proc. 2003-39.Sup

SUPPORTING STATEMENT

Revenue Procedure 2003-39

1. CIRCUMSTANCES NECESSITATING COLLECTION OF INFORMATION

Treasury and the Service have determined that it is in the best interest of sound tax administration to provide taxpayers with guidance regarding the qualification of LKE Programs under §1031. Accordingly, this revenue procedure provides safe harbors that clarify the application of §1031 and the regulations thereunder to LKE Programs. If a taxpayer meets all of the requirements for these safe harbors, the Internal Revenue Service will not challenge: (a) whether a particular exchange of relinquished property and replacement property qualifies under §1031 of the Internal Revenue Code and the regulations thereunder merely because another exchange pursuant to the LKE program fails to so qualify; (b) whether a taxpayer is in actual or constructive receipt of money or other property in the context of an LKE program; or (c) whether an intermediary is a disqualified person in the context of an LKE Program.

2. USE OF DATA

This information is required by the Service to provide safe harbors under §1031 to taxpayers participating in LKE Programs for federal income tax purposes.

3. USE OF IMPROVED INFORMATION TECHNOLOGY TO REDUCE BURDEN

There are no plans to provide electronic filing because electronic filing is not appropriate for the collection of information in this submission.

4. EFFORTS TO IDENTIFY DUPLICATION

We have attempted to eliminate duplication within the agency wherever possible.

5. METHODS TO MINIMIZE BURDEN ON SMALL BUSINESSES OR OTHER SMALL ENTITIES

Not applicable.

6. CONSEQUENCES OF LESS FREQUENT COLLECTION ON FEDERAL PROGRAMS OR POLICY ACTIVITIES

Not applicable.

7. SPECIAL CIRCUMSTANCES REQUIRING DATA COLLECTION TO BE INCONSISTENT WITH GUIDELINES IN 5 CFR 1320.5(d)(2)

Not applicable

8. CONSULTATION WITH INDIVIDUALS OUTSIDE OF THE AGENCY ON AVAILABILITY OF DATA, FREQUENCY OF COLLECTION, CLARITY OF INSTRUCTIONS AND FORMS, AND DATA ELEMENTS

Revenue Procedure 2003-39 was published in the Internal Revenue Bulletin on June 2, 2003 (2003-22 IRB 971).

In response to the Federal Register notice dated July 13, 2009 (74 F. R. 33515), we received no comments during the comment period regarding Rev. Proc. 2003-39.

9. EXPLANATION OF DECISION TO PROVIDE ANY PAYMENT OR GIFT TO RESPONDENTS

Not applicable.

10. ASSURANCE OF CONFIDENTIALITY OF RESPONSES

Generally, tax returns and return information are confidential as required by 26 USC 6103.

11. JUSTIFICATION OF SENSITIVE QUESTIONS

Not applicable.

12. ESTIMATED BURDEN OF INFORMATION COLLECTION

We estimate that approximately 8,600 finance companies; subsidiaries of manufacturers; or banks that purchases retail leases and retail installment sale contracts from dealers of automobiles or other types of equipment participate in LKE Programs for federal income tax purposes. These taxpayers must enter into a written agreement with an intermediary in order to satisfy the requirements of section 1031. The average response time per taxpayer is estimated to be 1 hour. The total estimated burden is 8,600 hours.

Estimates of the annualized cost to respondents for the hour burdens shown

are not available at this time.

13. ESTIMATED TOTAL ANNUAL COST BURDEN TO RESPONDENTS

As suggested by OMB, our Federal Register notice dated July 13, 2009,

requested public comments on estimates of cost burden that are not captured in the estimates of burden hours, i.e., estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information. However, we did not receive any response from taxpayers on this subject. As a result, estimates of the cost burdens are not available at this time.

14. ESTIMATED ANNUALIZED COST TO THE FEDERAL GOVERNMENT

Not applicable.

15. REASONS FOR CHANGE IN BURDEN

There is no change in the paperwork burden previously approved by OMB. We are making this submission to renew the OMB approval.

16. PLANS FOR TABULATION, STATISTICAL ANALYSIS AND PUBLICATION

Not applicable.

17. REASONS WHY DISPLAYING THE OMB EXPIRATION DATE IS INAPPROPRIATE

We believe that displaying the OMB expiration date is inappropriate because it could cause confusion by leading taxpayers to believe that the revenue procedure sunsets as of the expiration date. Taxpayers are not likely to be aware that the Service intends to request renewal of the OMB approval and obtain a new expiration date before the old one expires.

18. EXCEPTIONS TO THE CERTIFICATION STATEMENT ON OMB 83-I

Not applicable.

Note: The following paragraph applies to all of the collections of information in this submission:

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.