IRS OFFERS GUIDANCE ON ARSWashington, D.C. - The Internal Revenue Service issued a revenue procedure that provides guidance on the treatment of taxpayers who accept certain types of settlements of potential legal claims relating to auction rate securities.

In February, auctions of ARS began to fail. Taxpayers may assert legal claims against another person or corporation for its conduct as it relates to ARS. In order to settle these claims, the corporation may make a settlement offer to the affected taxpayers, saying that if the taxpayer releases various claims, the taxpayer will have the right during a specified "window period" to cause the corporation to buy the taxpayer's ARS for the par amount.

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