IRB 2017-41 (Rev. October 10, 2017) - Internal Revenue Service · Chapter 3 regulations reﬂecting the notice. Rev. Proc. 2017–52, page 283. This revenue procedure: (1) introduces

HIGHLIGHTSOF THIS ISSUEThese synopses are intended only as aids to the reader inidentifying the subject matter covered. They may not berelied upon as authoritative interpretations.

INCOME TAX

Rev. Rul. 2017–20, page 273.Federal rates; adjusted federal rates; adjusted federal long-term rate and the long-term exempt rate. For purposes ofsections 382, 1274, 1288, and other sections of the Code,tables set forth the rates for October 2017.

Notice 2017–46, page 275.Notice 2017–46 provides guidance for certain foreign financialinstitutions (FFIs) required to report U.S. taxpayer identificationnumbers (U.S. TINs) for certain accounts under a Model 1Intergovernmental Agreement (IGA). If such FFIs comply withthe procedures described in this Notice, then the IRS will notconsider there is significant noncompliance with the obligationsunder a Model 1 IGA solely as a result of a failure to report U.S.TINs associated with the FFI’s U.S. reportable accounts main-tained as of the determination date specified in the applicableModel 1 IGA. Notice 2017–46 also announces that the Depart-ment of the Treasury and the IRS intend to amend certainprovisions of the temporary regulations under Chapter 3. Theamendments would provide limitations on, and a phase-in of,the requirement for certain withholding agents to obtain andreport the taxpayer identification number issued by an accountholder’s jurisdiction of tax residence (Foreign TIN) and, for anaccount holder that is an individual, the account holder’s dateof birth. Taxpayers may rely on the provisions of this noticeprior to the issuance of the amendments to the temporaryChapter 3 regulations reflecting the notice.

Rev. Proc. 2017–52, page 283.This revenue procedure: (1) introduces an 18-month pilot pro-gram expanding the scope of private letter rulings availablefrom the Internal Revenue Service to include rulings on the taxconsequences of a distribution of stock, or stock and securi-ties, of a controlled corporation under § 355 of the InternalRevenue Code, (2) provides procedures for taxpayers request-ing these letter rulings, and (3) clarifies procedures for taxpay-

ers requesting letter rulings on significant issues relating tothese transactions.

REG–105004–16, page 295.The proposed regulation allows the truncation of taxpayeridentification numbers on copies of Forms W–2, Wage and TaxStatement, that are furnished to employees. The proposedregulation would amend the existing regulations to specificallyallow for truncation on those copies, consistent with the rulesregarding truncation in Treas. Reg. section 301.6109–4.

REG–125374–16, page 300.Several provisions of the Code condition tax benefits andimpose sanctions on issuers and holders of registration-required obligations that are not issued in registered form. Thisproject defines a registration-required obligation and describeswhen an obligation is in registered form for purposes of theseprovisions. The proposed rules update longstanding regula-tions to account for changes in the operation of debt marketsand to account for the repeal of a statutory exception to thedefinition of registration-required obligation.

EMPLOYEE PLANS

Notice 2017–50, page 280.This notice sets forth updates on the corporate bond monthlyyield curve, the corresponding spot segment rates for Septem-ber 2017 used under § 417(e)(3)(D), the 24-month averagesegment rates applicable for September 2017, and the 30-year Treasury rates. These rates reflect the application of§ 430(h)(2)(C)(iv), which was added by the Moving Ahead forProgress in the 21st Century Act, Public Law 112–141 (MAP-21) and amended by section 2003 of the Highway and Trans-portation Funding Act of 2014 (HATFA).

Finding Lists begin on page ii.

Bulletin No. 2017–41October 10, 2017

EMPLOYMENT TAX

REG–105004–16, page 295.The proposed regulation allows the truncation of taxpayeridentification numbers on copies of Forms W–2, Wage and TaxStatement, that are furnished to employees. The proposedregulation would amend the existing regulations to specificallyallow for truncation on those copies, consistent with the rulesregarding truncation in Treas. Reg. section 301.6109–4.

The IRS MissionProvide America’s taxpayers top-quality service by helpingthem understand and meet their tax responsibilities and en-force the law with integrity and fairness to all.

IntroductionThe Internal Revenue Bulletin is the authoritative instrument ofthe Commissioner of Internal Revenue for announcing officialrulings and procedures of the Internal Revenue Service and forpublishing Treasury Decisions, Executive Orders, Tax Conven-tions, legislation, court decisions, and other items of generalinterest. It is published weekly.

It is the policy of the Service to publish in the Bulletin allsubstantive rulings necessary to promote a uniform applicationof the tax laws, including all rulings that supersede, revoke,modify, or amend any of those previously published in theBulletin. All published rulings apply retroactively unless other-wise indicated. Procedures relating solely to matters of internalmanagement are not published; however, statements of inter-nal practices and procedures that affect the rights and dutiesof taxpayers are published.

Revenue rulings represent the conclusions of the Service onthe application of the law to the pivotal facts stated in therevenue ruling. In those based on positions taken in rulings totaxpayers or technical advice to Service field offices, identify-ing details and information of a confidential nature are deletedto prevent unwarranted invasions of privacy and to comply withstatutory requirements.

Rulings and procedures reported in the Bulletin do not have theforce and effect of Treasury Department Regulations, but theymay be used as precedents. Unpublished rulings will not berelied on, used, or cited as precedents by Service personnel inthe disposition of other cases. In applying published rulings andprocedures, the effect of subsequent legislation, regulations,court decisions, rulings, and procedures must be considered,and Service personnel and others concerned are cautioned

against reaching the same conclusions in other cases unlessthe facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.This part includes rulings and decisions based on provisions ofthe Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation.This part is divided into two subparts as follows: Subpart A, TaxConventions and Other Related Items, and Subpart B, Legisla-tion and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.To the extent practicable, pertinent cross references to thesesubjects are contained in the other Parts and Subparts. Alsoincluded in this part are Bank Secrecy Act Administrative Rul-ings. Bank Secrecy Act Administrative Rulings are issued bythe Department of the Treasury’s Office of the Assistant Sec-retary (Enforcement).

Part IV.—Items of General Interest.This part includes notices of proposed rulemakings, disbar-ment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative index forthe matters published during the preceding months. Thesemonthly indexes are cumulated on a semiannual basis, and arepublished in the last Bulletin of each semiannual period.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

October 10, 2017 Bulletin No. 2017–41

Part I. Rulings and Decisions Under the Internal Revenue Codeof 1986Section 1274.—Determina-tion of Issue Price in theCase of Certain DebtInstruments Issued forProperty

(Also Sections 42, 280G, 382, 467, 468, 482, 483,1288, 7520.)

Rev. Rul. 2017–20

This revenue ruling provides variousprescribed rates for federal income tax

purposes for October 2017 (the currentmonth). Table 1 contains the short-term,mid-term, and long-term applicable fed-eral rates (AFR) for the current monthfor purposes of section 1274(d) of theInternal Revenue Code. Table 2 containsthe short-term, mid-term, and long-termadjusted applicable federal rates (ad-justed AFR) for the current month forpurposes of section 1288(b). Table 3sets forth the adjusted federal long-termrate and the long-term tax-exempt ratedescribed in section 382(f). Table 4 con-tains the appropriate percentages for de-

termining the low-income housingcredit described in section 42(b)(1) forbuildings placed in service during thecurrent month. However, under section42(b)(2), the applicable percentage fornon-federally subsidized new buildingsplaced in service after July 30, 2008,shall not be less than 9%. Finally, Table5 contains the federal rate for determin-ing the present value of an annuity, aninterest for life or for a term of years, ora remainder or a reversionary interestfor purposes of section 7520.

REV. RUL. 2017–20 TABLE 1Applicable Federal Rates (AFR) for October 2017

Period for Compounding

Annual Semiannual Quarterly Monthly

Short-term

AFR 1.27% 1.27% 1.27% 1.27%

110% AFR 1.40% 1.40% 1.40% 1.40%

120% AFR 1.53% 1.52% 1.52% 1.52%

130% AFR 1.66% 1.65% 1.65% 1.64%

Mid-term

AFR 1.85% 1.84% 1.84% 1.83%

110% AFR 2.03% 2.02% 2.01% 2.01%

120% AFR 2.22% 2.21% 2.20% 2.20%

130% AFR 2.40% 2.39% 2.38% 2.38%

150% AFR 2.78% 2.76% 2.75% 2.74%

175% AFR 3.25% 3.22% 3.21% 3.20%

Long-term

AFR 2.50% 2.48% 2.47% 2.47%

110% AFR 2.75% 2.73% 2.72% 2.71%

120% AFR 3.00% 2.98% 2.97% 2.96%

130% AFR 3.25% 3.22% 3.21% 3.20%

REV. RUL. 2017–20 TABLE 2Adjusted AFR for October 2017

Period for Compounding

Annual Semiannual Quarterly Monthly

Short-term adjusted AFR .94% .94% .94% .94%

Mid-term adjusted AFR 1.37% 1.37% 1.37% 1.37%

Long-term adjusted AFR 1.85% 1.84% 1.84% 1.83%

REV. RUL. 2017–20 TABLE 3

Rates Under Section 382 for October 2017

Adjusted federal long-term rate for the current month 1.85%

Bulletin No. 2017–41 October 10, 2017273


Long-term tax-exempt rate for ownership changes during the current month (the highest of theadjusted federal long-term rates for the current month and the prior two months)

1.93%


Appropriate Percentages Under Section 42(b)(1) for October 2017

Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildingsplaced in service after July 30, 2008, shall not be less than 9%.

Appropriate percentage for the 70% present value low-income housing credit 7.50%

Appropriate percentage for the 30% present value low-income housing credit 3.21%


Rate Under Section 7520 for October 2017

Applicable federal rate for determining the present value of an annuity, an interest for life or a termof years, or a remainder or reversionary interest

2.2%

Section 42.—Low-IncomeHousing Credit

The applicable federal short-term, mid-term, andlong-term rates are set forth for the month of October2017. See Rev. Rul. 2017–20, page 273.

Section 280G.—GoldenParachute Payments


Section 382.—Limitationon Net Operating LossCarryforwards and CertainBuilt-In Losses FollowingOwnership Change

The adjusted applicable federal long-term rate isset forth for the month of October 2017. See Rev.Rul. 2017–20, page 273.

Section 467.—CertainPayments for the Use ofProperty or Services


Section 468.—SpecialRules for Mining and SolidWaste Reclamation andClosing Costs


Section 482.—Allocation ofIncome and DeductionsAmong Taxpayers


Section 483.—Interest onCertain Deferred Payments


Section 1288.—Treatmentof Original Issue Discounton Tax-Exempt Obligations

The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the monthof October 2017. See Rev. Rul. 2017–20, page 273.

Section 7520.—ValuationTables



Part III. Administrative, Procedural, and MiscellaneousRevised Guidance Relatedto Obtaining and ReportingTaxpayer IdentificationNumbers and Dates ofBirth by FinancialInstitutionsNotice 2017–46

I. PURPOSE

This Notice provides procedures forcertain foreign financial institutions (FFIs)required to report U.S. taxpayer identifi-cation numbers (U.S. TINs) for certainaccounts under a Model 1 intergovern-mental agreement (IGA). If such FFIscomply with the procedures described inthis Notice, then the Internal Revenue Ser-vice (IRS) will not determine that there issignificant non-compliance with the obli-gations under a Model 1 IGA solely as aresult of a failure to report U.S. TINsassociated with the FFI’s U.S. reportableaccounts maintained as of the determina-tion date specified in the applicable Model1 IGA.

This Notice also announces that theDepartment of the Treasury (Treasury De-partment) and the IRS intend to amendcertain provisions of the temporary regu-lations under chapter 3 of the InternalRevenue Code (Code). The amendmentswould provide limitations on, and aphase-in of, the requirement for certainwithholding agents to obtain and reportthe taxpayer identification number issuedby an account holder’s jurisdiction of taxresidence (Foreign TIN) and, for an ac-count holder that is an individual, the ac-count holder’s date of birth. The changesdescribed in this Notice are intended tofacilitate an orderly implementation of theobligation to obtain and report taxpayeridentification numbers.

II. BACKGROUND

On March 18, 2010, the Hiring Incen-tives to Restore Employment Act of 2010,Pub. L. No. 111–147, 124 Stat. 71 (2010)(HIRE Act), added chapter 4 of Subtitle A(chapter 4), comprised of sections 1471through 1474, to the Code. Chapter 4(commonly known as the Foreign Ac-

count Tax Compliance Act, or FATCA)addresses non-compliance by U.S. tax-payers holding foreign financial accountsor assets. FATCA requires certain FFIs toreport to the IRS information about finan-cial accounts held by U.S. taxpayers orforeign entities in which U.S. taxpayershold certain ownership interests. In orderto facilitate the exchange of informationon financial accounts held by U.S. taxpay-ers, the Treasury Department collaboratedwith foreign governments to develop twoalternative model IGAs (Model 1 IGA andModel 2 IGA) that are intended to providean effective and efficient means for com-plying with FATCA while reducing theburden FATCA compliance imposes onfinancial institutions. The Model 1 IGAprovides that a reporting Model 1 FFI willreport certain information on U.S. report-able accounts maintained by the FFI to thepartner jurisdiction tax authority, which willautomatically exchange such informationwith the U.S. Competent Authority.

On January 17, 2013, the Treasury De-partment and the IRS published final reg-ulations under chapter 4 (T.D. 9610, 78F.R. 5873) (2013 final chapter 4 regula-tions). On March 6, 2014, the TreasuryDepartment and the IRS published tempo-rary regulations under chapter 4 (T.D.9657, 79 F.R. 12812) (2014 temporarychapter 4 regulations). On March 6, 2014,the Treasury Department and the IRS alsopublished temporary regulations underchapters 3 and 61 and section 3406 (T.D.9658, 79 F.R. 12726) (temporary coordi-nation regulations) to coordinate the reg-ulations under those provisions with the2013 final chapter 4 regulations and the2014 temporary chapter 4 regulations. OnJanuary 6, 2017, the Treasury Departmentand the IRS published final regulationsunder chapter 3 (T.D. 9808, 82 F.R. 2046)(final chapter 3 regulations) and chapter 4(T.D. 9809, 82 F.R. 2124) (final chapter 4regulations), which generally incorpo-rated the 2014 temporary chapter 4 regu-lations and the temporary coordinationregulations. At the same time, the Trea-sury Department and the IRS publishedtemporary regulations under chapter 3(temporary chapter 3 regulations) andchapter 4 to supplement certain provisions

of the final chapter 3 regulations and thefinal chapter 4 regulations.

III. REQUIREMENT FOR REPORTINGMODEL 1 FFIS TO REPORT U.S. TINS

A. Background

Each Model 1 IGA provides that a re-porting Model 1 FFI shall be treated ascomplying with, and not subject to with-holding under, section 1471 of the Code ifthe partner jurisdiction complies with itsobligations under the IGA with respect tosuch financial institution and such finan-cial institution complies with its reportingand registration obligations in accordancewith the IGA. Each Model 1 IGA alsoprovides that the United States shall notrequire a reporting Model 1 FFI to with-hold tax under section 1471 or 1472 of theCode with respect to an account held by arecalcitrant account holder (as defined insection 1471(d)(6) of the Code) or to closesuch account if the U.S. Competent Au-thority receives certain information spec-ified in the Model 1 IGA with respect tosuch account.

The information required to be re-ported by a reporting Model 1 FFI in-cludes the U.S. TIN of each specified U.S.person that is an account holder and, in thecase of a non-U.S. entity with one or morespecified U.S. persons who are controllingpersons, the U.S. TIN of each controllingperson (required U.S. TINs). Notwith-standing this reporting requirement, be-fore 2017, a reporting Model 1 FFI wasnot required to report a required U.S. TINfor an account maintained as of the deter-mination date specified in the applicableModel 1 IGA (preexisting account) that isa U.S. reportable account if the U.S. TINwas not in the reporting Model 1 FFI’srecords. Similarly, a reporting Model 1FFI was required to report the date of birthonly if the date of birth was in the report-ing Model 1 FFI’s records. Partner juris-dictions have committed to establish rulesfor 2017 and subsequent years requiringreporting Model 1 FFIs to obtain and re-port the required U.S. TINs for suchaccounts.

Each Model 1 IGA requires that thepartner jurisdiction obtain and exchangethe information specified in the Model 1


IGA (including each required U.S. TIN)with respect to each U.S. reportable ac-count. The suspension of withholding un-der sections 1471 and 1472 of the Codepursuant to each Model 1 IGA is condi-tioned on adequate reporting and ex-change of information. If a reportingModel 1 FFI fails to report required U.S.TINs for U.S. reportable accounts, theU.S. Competent Authority may notify thepartner jurisdiction competent authoritythat there is significant non-compliancewith respect to the reporting Model 1 FFI,in accordance with the Model 1 IGA. Ifthe reporting Model 1 FFI remains non-compliant for 18 months after such noti-fication, under the relevant Model 1 IGA,the United States may treat the reportingModel 1 FFI as a nonparticipating finan-cial institution that is subject to withhold-ing under section 1471 of the Code.

B. U.S. TIN Reporting by ReportingModel 1 FFIs

The Treasury Department and the IRSunderstand that some reporting Model 1FFIs need additional time to implementpractices and procedures to obtain andreport required U.S. TINs for preexistingaccounts that are U.S. reportable accounts.Accordingly, with respect to reporting onpreexisting accounts that are U.S. report-able accounts, for calendar years 2017,2018, and 2019, the U.S. Competent Au-thority will not determine that there issignificant non-compliance with the obli-gations under an applicable Model 1 IGAwith respect to a reporting Model 1 FFIsolely because of a failure to obtain andreport each required U.S. TIN, providedthat the reporting Model 1 FFI: (1) obtainsand reports the date of birth of each ac-count holder and controlling personwhose U.S. TIN is not reported; (2) re-quests annually from each account holderany missing required U.S. TIN; and (3)before reporting information that relatesto calendar year 2017 to the partner juris-diction, searches electronically searchabledata maintained by the reporting Model 1FFI for any missing required U.S. TINs.The IRS expects to provide further in-structions regarding appropriate reportingfor the TIN data element for preexistingaccounts that are U.S. reportable accountswith missing required U.S. TINs.

Reporting Model 1 FFIs should imple-ment practices and procedures promptlyto ensure that financial accounts are doc-umented in accordance with the applica-ble Model 1 IGA and that U.S. reportableaccounts are adequately and timely re-ported in future years. Nothing in thisNotice affects a reporting Model 1 FFI’sobligations under chapter 3 or 61 withrespect to a reportable amount or report-able payment.

IV. REQUIREMENT TO OBTAINAND REPORT FOREIGN TINS ANDDATES OF BIRTH

A. Background

Before the temporary chapter 3 regula-tions were published, the instructions forForms W–8BEN and W–8BEN–E andthe Instructions for the Requester ofForms W–8BEN, W–8BEN–E, W–8ECI,W–8EXP, and W–8IMY outlined cir-cumstances under which the person pro-viding the form was required to provide aForeign TIN and, for an individual, a dateof birth. The instructions for Form1042–S, “Foreign Person’s U.S. SourceIncome Subject to Withholding,” for cal-endar years 2014, 2015, and 2016 de-scribed circumstances under which certainwithholding agents were required to re-port these additional items of informationon Form 1042–S.

The temporary chapter 3 regulationsprovide additional changes to the tempo-rary coordination regulations that modi-fied the due diligence and reportingobligations of withholding agents. In par-ticular, the temporary chapter 3 regula-tions generally incorporate the require-ment from the aforementioned forminstructions for certain withholding agentsto obtain and report the Foreign TINs oftheir account holders and, in the case of anindividual account holder, a date of birth.These revisions were made to ensure, inpart, that the IRS would have adequateinformation about foreign account holdersto facilitate the exchange of foreign ac-count holder information pursuant to anagreement authorizing or requiring theexchange of such information. Section1.1441–1T(e)(2)(ii)(B) provides that,beginning January 1, 2017, a beneficialowner withholding certificate providedto document an account maintained at a

U.S. branch or office of a withholdingagent that is a financial institution isrequired to contain the account holder’sForeign TIN and, in the case of an indi-vidual account holder, the account hold-er’s date of birth in order for the with-holding agent to treat the withholdingcertificate as valid. For withholding cer-tificates associated with payments madeon or after January 1, 2018, an accountholder that does not provide a ForeignTIN must provide a reasonable explana-tion for its absence in order for the with-holding certificate not to be consideredinvalid under § 1.1441–1T(e)(2)(ii)(B).The temporary chapter 3 regulationsalso provide that if the withholding cer-tificate does not contain the accountholder’s date of birth and the withhold-ing agent has the date of birth in its files,the withholding certificate will not beconsidered invalid.

For calendar year 2017, the instruc-tions for Form 1042–S provide that awithholding agent that is a U.S. office orbranch of a financial institution is requiredto report on Form 1042–S a recipient’sForeign TIN when the recipient has fur-nished documentation that provides a For-eign TIN. The instructions provide that,beginning for the 2017 calendar year, thewithholding agent is also required to re-port on Form 1042–S an individual recip-ient’s date of birth when the recipient hasfurnished documentation that provides adate of birth or the recipient’s date of birthis identified in any of the withholdingagent’s files.

B. Revised Scope and Phased-InTimeline of Requirements for CertainWithholding Agents to Obtain andReport the Foreign TIN and Date ofBirth of Account Holders

After the publication of the temporarychapter 3 regulations, the Treasury De-partment and the IRS received commentsfrom withholding agents regarding thedifficulty in obtaining and reporting For-eign TINs and dates of birth from accountholders in the time provided. In responseto these comments, the Treasury Depart-ment and the IRS intend to amend thetemporary chapter 3 regulations to narrowthe circumstances in which a Foreign TINand date of birth are required, as describedin sections IV.B.1 and IV.B.2 of this


Notice; to provide exceptions from theForeign TIN requirement for certain ac-count holders, as described in sectionIV.B.3 of this Notice; and to provide aphase-in of the rules for obtaining a For-eign TIN, as described in section IV.B.4of this Notice. In addition, the TreasuryDepartment and the IRS intend to amendthe temporary chapter 3 regulations toprovide relief from obtaining a date of birthwith respect to certain withholding certifi-cates signed before January 1, 2018, as de-scribed in section IV.B.5 of this Notice.

For purposes of this section IV, theterm “withholding certificate” meansForms W–8BEN, W–8BEN–E, W–8ECI,W–8EXP and, with respect to a qualifiedintermediary acting as a qualified deriva-tives dealer (QDD) claiming treaty bene-fits for dividends, Form W–8IMY. Theterm “withholding agent” when used inthis section IV refers to a withholdingagent that is a U.S. branch or office of afinancial institution (as defined in sectionIV.B.1 of this Notice).

1. Accounts and Financial Institutionsto Which § 1.1441–1T(e)(2)(ii)(B) Ap-plies

The Treasury Department and the IRSintend to amend § 1.1441–1T(e)(2)(ii)(B)to clarify that the term “account holder”has the meaning described in § 1.1471–5(a)(3) and that the term “account” meansa financial account, as defined in § 1.1471–5(b) (substituting “U.S. office or branch of afinancial institution” for “FFI”). In addition,the Treasury Department and the IRS intendto amend § 1.1441–1T(e)(2)(ii)(B) to clarifythat the term “financial institution” meansan entity that is a depository institution, cus-todial institution, investment entity, or aspecified insurance company, each as de-fined in § 1.1471–5(e).

2. Payments to Which § 1.1441–1T(e)(2)(ii)(B) Applies

Section 1.1441–1T(e)(2)(ii)(B) pro-vides that a Foreign TIN (or a reasonableexplanation for why the account holderhas not been issued a Foreign TIN) and adate of birth (for an individual) are re-quired for withholding certificates associ-ated with “payments,” which includes anypayments under sections 1441 through1446, chapter 4, and chapter 61 (due toreferences in those sections and chaptersto beneficial owner withholding certifi-cates used to establish foreign status). The

Treasury Department and the IRS believethat it is not necessary for a withholdingagent to obtain a Foreign TIN (or a rea-sonable explanation for why the accountholder has not been issued a Foreign TIN)or (for an individual) a date of birth on awithholding certificate that the withhold-ing agent obtains solely to avoid Form1099 reporting and backup withholding orin other cases where a payment associatedwith a withholding certificate is not oth-erwise subject to reporting on Form1042–S. Therefore, the Treasury Depart-ment and the IRS intend to amend§ 1.1441–1T(e)(2)(ii)(B) to limit its scopefor this purpose such that a withholdingcertificate is required to be treated as in-valid under § 1.1441–1T(e)(2)(ii)(B) onlyfor payments of U.S. source income re-portable on Form 1042–S (before the ap-plication of § 1.1441–1T(e)(2)(ii)(B)).Due to this limitation, a withholding agentwill not, for example, be required to with-hold under section 3406 on gross proceedspaid to an individual account holder as aresult of the application of the section1441 presumption rules when the accountholder provides a withholding certificatethat is valid but for the absence of a For-eign TIN and the account holder’s date ofbirth.

3. Exceptions from Foreign TIN Re-quirement for Certain Accounts

i. Accounts Held by Residents in Ju-risdictions With Which the UnitedStates Does Not Have an Agree-ment Relating to the Exchange ofTax Information in Force

The Treasury Department and the IRSintend to amend the temporary chapter 3regulations to provide that a withholdingagent is not required to obtain a ForeignTIN (or a reasonable explanation for whyan account holder has not been issued aForeign TIN) for an account held by aresident in a jurisdiction that does nothave in effect with the United States anincome tax or other convention or bilat-eral agreement relating to the exchange oftax information within the meaning ofsection 6103(k)(4) of the Code pursuant towhich the United States agrees to provide,as well as receive, tax information. Thislimitation is consistent with the limitationon the information reporting requirementin § 1.6049–8(a) on U.S. source depositinterest paid to nonresident alien individ-

uals. A list of jurisdictions that a with-holding agent is required to reference forpurposes of the limitation on reportingunder §§ 1.6049–8(a) and 1.1441–1T(e)(2)(ii)(B) (as revised in accordancewith this Notice) is published in section 3of Revenue Procedure 2014–64, 2014–53I.R.B. 1022, as supplemented by RevenueProcedure 2016–56, 2016–52 I.R.B. 920,and which may be further updated in fu-ture published guidance. If the TreasuryDepartment and the IRS further supple-ment the list of jurisdictions in section 3of Revenue Procedure 2014–64, subjectto the limitations described in this Notice,a withholding agent must obtain the For-eign TIN (or a reasonable explanation forwhy an account holder has not been issueda Foreign TIN) of each account holderresident in any such jurisdiction before thetime for filing Form 1042–S (with anyapplicable extension) for the calendar yearfollowing the calendar year in which thejurisdiction is added to the list.

ii. Accounts Held by Residents in Ju-risdictions That Do Not Issue For-eign TINs

The Treasury Department and the IRSintend to amend § 1.1441–1T(e)(2)(ii)(B)to provide that a withholding agent is notrequired to obtain a Foreign TIN (or areasonable explanation for why an ac-count holder has not been issued a ForeignTIN) for an account held by a resident ofa jurisdiction that has been identified bythe IRS on a list of jurisdictions that donot issue Foreign TINs to their residents. Alist of such jurisdictions (when made avail-able) may be viewed at www.irs.gov/FATCA.As of the date of this Notice, the followingjurisdictions have been identified asones that do not issue Foreign TINs toresidents and that will be included onthe list:

BermudaBritish Virgin IslandsCayman IslandsTaxpayers may rely on the jurisdic-

tions identified above for purposes of thisNotice. The IRS intends to update this listto add jurisdictions that do not issue For-eign TINs (after consultation with thecompetent authority of any such addi-tional jurisdiction), including in responseto taxpayer comments that identify addi-tional jurisdictions that do not issue For-eign TINs. The list maintained by the IRS


of jurisdictions that do not issue ForeignTINs to residents will also be updated if ajurisdiction included on the list begins toissue Foreign TINs to its residents.

iii. Accounts Held by a Government,International Organization, ForeignCentral Bank of Issue, or Residentof a U.S. Territory

The Treasury Department and the IRSintend to amend § 1.1441–1T(e)(2)(ii)(B)to provide that a withholding agent is notrequired to obtain an account holder’sForeign TIN (or a reasonable explanationfor why the account holder has not beenissued a Foreign TIN) if the withholdingagent has obtained an otherwise validwithholding certificate on which it canrely under the section 1441 regulations totreat the account holder as a government,an international organization, a foreigncentral bank of issue, or a resident of aU.S. territory.

4. Phase-In of Requirement to Obtaina Foreign TIN Under § 1.1441–1T(e)(2)(ii)(B)

The Treasury Department and the IRSintend to amend the temporary chapter 3regulations to provide additional time fora withholding agent to comply with therequirement to obtain a Foreign TIN. Asdescribed in more detail below, this sec-tion IV.B.4 describes how the requirementto obtain a Foreign TIN under the tempo-rary chapter 3 regulations will be phasedin over a period ending on December 31,2019.

Section IV.B.4.i of this Notice pro-vides rules that will apply to withholdingcertificates signed on or after January 1,2018, including rules for determiningwhether a withholding agent may rely ona Foreign TIN provided on a withholdingcertificate. Sections IV.B.4.ii, iii, and iv ofthis Notice generally provide rules for de-termining the validity of a withholdingcertificate without a Foreign TIN (or areasonable explanation for why the ac-count holder was not issued a ForeignTIN) signed before January 1, 2018, dur-ing the phase-in period. Section IV.B.4.vof this Notice provides an alternative pro-cedure for obtaining a Foreign TIN (or areasonable explanation for why the ac-count holder was not issued a ForeignTIN) for a withholding certificate signedbefore January 1, 2018. If a withholdingagent obtains the account holder’s Foreign

TIN (or a reasonable explanation for whythe account holder was not issued a For-eign TIN) in accordance with the alterna-tive procedure (rather than obtaining anew withholding certificate), an otherwisevalid withholding certificate will remainvalid after the end of the phase-in perioduntil the earlier of when its validity periodends or it otherwise becomes invalid.

i. Withholding Certificates Signed Onor After January 1, 2018

The Treasury Department and the IRSintend to amend the temporary chapter 3regulations to provide that a withholdingcertificate signed on or after January 1,2018, by an account holder (other than anaccount holder excepted under sectionIV.B.3 of this Notice) to document anaccount maintained at a U.S. branch oroffice of a withholding agent must containa Foreign TIN (or a reasonable explana-tion for why the account holder was notissued a Foreign TIN).

The Treasury Department and the IRSalso intend to amend the temporary chap-ter 3 regulations to provide that a with-holding agent may rely on the accountholder’s Foreign TIN unless the withhold-ing agent has actual knowledge or reasonto know (as described in § 1.1441–7(b)(2)) that the Foreign TIN is incorrect.Therefore, a withholding agent will not berequired to validate the format or otherspecifications of the Foreign TIN againstthe applicable jurisdiction’s TIN system.For purposes of § 1.1441–1(e)(4)(ii)(D)(prescribing the requirements for a changein circumstances), a withholding agent’sreason to know that a Foreign TIN isincorrect will include a notification fromthe account holder of a new residenceaddress outside the jurisdiction providedon the withholding certificate.

The temporary chapter 3 regulationsprovide that if an account holder does nothave a Foreign TIN, the account holder isrequired to provide a reasonable explana-tion for its absence (for example, that thejurisdiction of residence does not issueTINs). This requirement will be clarifiedin the regulations to specify that the rea-sonable explanation must address why theaccount holder was not issued a ForeignTIN to the extent provided in the instruc-tions for, as applicable, Forms W–8BEN,W–8BEN–E, W–8ECI, W–8EXP, and,for a QDD claiming treaty benefits for

dividends, Form W–8IMY. Those in-structions have each been amended (withrevision dates of June or July 2017) toprovide that a reasonable explanation forwhy an account holder was not issued aForeign TIN is a statement that the ac-count holder is not legally required toobtain a Foreign TIN. If an account holderprovides an explanation other than the onedescribed in those instructions, the with-holding agent must determine whether theexplanation is reasonable. A withholdingagent will be permitted to rely on a rea-sonable explanation unless it has actualknowledge that the account holder has aForeign TIN.

In addition, if a withholding agentmaintains an account on December 31,2017, that is documented with a validwithholding certificate as of that date, thewithholding agent’s reason to know that aForeign TIN is incorrect, or actual knowl-edge that an account holder has a ForeignTIN despite providing an explanation, islimited to electronically searchable infor-mation (as defined in § 1.1471–1(b)(38))that is in the withholding agent’s files.

ii. Withholding Certificates for PaymentsMade Before January 1, 2018

The Treasury Department and the IRSintend to amend the temporary chapter 3regulations to provide that an otherwisevalid withholding certificate will not betreated as invalid for payments made tothe account holder before January 1, 2018,solely because the withholding certificatedoes not include the account holder’s For-eign TIN (or a reasonable explanation forwhy the account holder was not issued aForeign TIN).

iii. Withholding Certificates Signed Be-fore January 1, 2018, That Have aThree-Year Validity Period

The Treasury Department and the IRSintend to amend the temporary chapter 3regulations to provide that an otherwisevalid withholding certificate signed beforeJanuary 1, 2018, that has a three-year valid-ity period under §§ 1.1441–1(e)(4)(ii)(A)and 1.1471–3(c)(6)(ii)(A) will not be treatedas invalid for payments made on or afterJanuary 1, 2018, solely because the with-holding certificate does not include the ac-count holder’s Foreign TIN (or a reasonableexplanation for why the account holder wasnot issued a Foreign TIN), until the timeprovided in this section IV.B.4.iii. Such a


withholding certificate will be treated as in-valid for purposes of this section IV.B.4.iiifor payments made after the earlier of (1)December 31, 2019; (2) the expiration dateof the validity period of the withholdingcertificate; or (3) if applicable, the datewhen a change in circumstances requiring arevised withholding certificate occurs. How-ever, for payments made after December 31,2019, a withholding agent may rely on thealternative procedure described in sectionIV.B.4.v of this Notice to obtain a ForeignTIN (or reasonable explanation).

iv. Withholding Certificates Signed Be-fore January 1, 2018, That Have anIndefinite Validity Period

The Treasury Department and the IRSintend to amend the temporary chapter 3regulations to provide that an otherwisevalid withholding certificate signed beforeJanuary 1, 2018, that is indefinitely validunder §§ 1.1441–1(e)(4)(ii)(B) and 1.1471–3(c)(6)(ii)(B) will not be treated as invalidfor payments made on or after January 1,2018, solely because the withholding certif-icate does not include the account holder’sForeign TIN (or a reasonable explanationfor why the account holder was not issued aForeign TIN), until the time provided in thissection IV.B.4.iv. Such a withholding cer-tificate will be treated as invalid for pur-poses of this section IV.B.4.iv for paymentsmade after the earlier of (1) December 31,2019, or (2) if applicable, the date when achange in circumstances requiring a revisedwithholding certificate occurs. However, forpayments made after December 31, 2019, awithholding agent may rely on the alterna-tive procedure described in section IV.B.4.vof this Notice to obtain a Foreign TIN (orreasonable explanation).

v. Alternative Procedure for Obtainingand Associating Foreign TINs withWithholding Certificates Signed Be-fore January 1, 2018

An otherwise valid withholding certif-icate that does not include the accountholder’s Foreign TIN (or a reasonable ex-planation for why the account holder wasnot issued a Foreign TIN) signed beforeJanuary 1, 2018, will continue to remainvalid for payments made after December31, 2019, if the withholding agent (1) ob-tains from the account holder its ForeignTIN (or a reasonable explanation for whythe account holder was not issued a For-eign TIN) on a written statement (includ-

ing a written statement transmitted byemail) that the withholding agent associ-ates with the account holder’s withholdingcertificate; or (2) otherwise has the ac-count holder’s Foreign TIN in the with-holding agent’s files and the withholdingagent associates the account holder’s For-eign TIN with the account holder’s with-holding certificate. Notwithstanding thepreceding sentence, an otherwise validwithholding certificate signed before Jan-uary 1, 2018, that does not include theaccount holder’s Foreign TIN (or reason-able explanation) ceases to be valid forpayments made after the earlier of theexpiration date of the validity period ofsuch withholding certificate (in the case ofa withholding certificate with a three-yearvalidity period) or the date when a with-holding agent determines that a revisedwithholding certificate is otherwise re-quired (if applicable), and the withholdingagent must obtain on a new withholdingcertificate the account holder’s ForeignTIN (or reasonable explanation). A with-holding agent’s reliance on a Foreign TIN(or a reasonable explanation for why theaccount holder was not issued a ForeignTIN) obtained pursuant to the alternativeprocedure is subject to the standards ofknowledge described in section IV.B.4.iof this Notice for a withholding certificate.

5. Requirement to Obtain Date of BirthThe temporary chapter 3 regulations

provide that an otherwise valid withhold-ing certificate that does not contain theaccount holder’s date of birth will not beconsidered invalid if the withholdingagent has the account holder’s date ofbirth in its files. The Treasury Departmentand the IRS intend to amend the tempo-rary chapter 3 regulations to provide anexception to this requirement such that anotherwise valid withholding certificatesigned before January 1, 2018, will not betreated as invalid for payments made be-fore January 1, 2019, to an account holderthat is an individual, solely because thewithholding certificate does not includethe account holder’s date of birth and thedate of birth is not in the withholdingagent’s files. This allowance is providedto give withholding agents additional timeto comply with the date of birth require-ment for withholding certificates signedbefore January 1, 2018. In addition, theTreasury Department and the IRS intend

to amend the temporary chapter 3 regula-tions to clarify that a withholding agentwill be considered to have the accountholder’s date of birth in its files if it ob-tains the date of birth on a written state-ment (including a written statement trans-mitted by email) from the account holder.

C. Form 1042–S Reporting

The IRS intends to revise the instruc-tions for Form 1042–S to provide that,beginning with reporting for calendar year2018, a withholding agent must report oneach Form 1042–S required to be filedwith respect to a financial account main-tained at a U.S. branch or office of thewithholding agent the account holder’sForeign TIN in any of the following cases:(1) the account holder has furnished to thewithholding agent a withholding certifi-cate that includes its Foreign TIN; (2) thewithholding agent has obtained the For-eign TIN under the alternative proceduredescribed in section IV.B.4.v of this No-tice; or (3) the withholding agent has iden-tified the account holder’s Foreign TIN inany of the withholding agent’s electroni-cally searchable information (as defined in§ 1.1471–1(b)(38)).

The instructions for Form 1042–S forcalendar year 2017 will be revised withrespect to withholding certificates fur-nished on or after January 1, 2017, torequire the reporting of an individual ac-count holder’s date of birth if the date ofbirth is on the withholding certificate or isavailable in the withholding agent’s elec-tronically searchable information (as de-fined in § 1.1471–1(b)(38)). Furthermore,beginning with reporting for calendar year2018, the instructions for Form 1042–S willrequire the reporting of an individual ac-count holder’s date of birth if the date ofbirth is on the withholding certificate or isidentified in any of the withholding agent’sfiles.

Penalties for failure to comply withreporting obligations may apply to a fail-ure to report an account holder’s ForeignTIN or an individual account holder’s dateof birth on Form 1042–S to the extent theinstructions for Form 1042–S require suchinformation to be reported.


V. TAXPAYER RELIANCE

Before the issuance of the amendmentsto the temporary chapter 3 regulations de-scribed in section IV of this Notice, tax-payers may rely on the provisions of thisNotice regarding the content of theamendments.

VI. DRAFTING INFORMATION

The principal author of this Notice isKamela Nelan of the Office of AssociateChief Counsel (International). For furtherinformation regarding this Notice, contactMs. Nelan at (202) 317-6942 (not a toll-free number).

Update for WeightedAverage Interest Rates,Yield Curves, andSegment Rates

Notice 2017–50

This notice provides guidance on thecorporate bond monthly yield curve, thecorresponding spot segment rates used un-der § 417(e)(3), and the 24-month averagesegment rates under § 430(h)(2) of theInternal Revenue Code. In addition, thisnotice provides guidance as to the interestrate on 30-year Treasury securities under§ 417(e)(3)(A)(ii)(II) as in effect forplan years beginning before 2008 and

the 30-year Treasury weighted averagerate under § 431(c)(6)(E)(ii)(I).

YIELD CURVE AND SEGMENTRATES

Generally, except for certain plans un-der sections 104 and 105 of the PensionProtection Act of 2006 and CSEC plansunder § 414(y), § 430 of the Code speci-fies the minimum funding requirementsthat apply to single-employer plans pursu-ant to § 412. Section 430(h)(2) specifiesthe interest rates that must be used todetermine a plan’s target normal cost andfunding target. Under this provision, pres-ent value is generally determined usingthree 24-month average interest rates(“segment rates”), each of which appliesto cash flows during specified periods. Tothe extent provided under § 430(h)(2)(C)(iv), these segment rates are adjustedby the applicable percentage of the 25-year average segment rates for the periodending September 30 of the year preced-ing the calendar year in which the planyear begins.1 However, an election maybe made under § 430(h)(2)(D)(ii) to usethe monthly yield curve in place of thesegment rates.

Notice 2007–81, 2007–44 I.R.B. 899,provides guidelines for determining themonthly corporate bond yield curve, andthe 24-month average corporate bond seg-ment rates used to compute the target nor-mal cost and the funding target. Consis-tent with the methodology specified in

Notice 2007–81, the monthly corporatebond yield curve derived from August2017 data is in Table I at the end of thisnotice. The spot first, second, and thirdsegment rates for the month of August2017 are, respectively, 1.93, 3.57, and4.36.

The 24-month average segment rates de-termined under § 430(h)(2)(C)(i) through(iii) must be adjusted pursuant to § 430(h)(2)(C)(iv) to be within the applicable mini-mum and maximum percentages of the cor-responding 25-year average segment rates.For plan years beginning before 2021, theapplicable minimum percentage is 90% andthe applicable maximum percentage is110%. The 25-year average segment ratesfor plan years beginning in 2016 and 2017were published in Notice 2015–61,2015–39 I.R.B. 408 and Notice 2016–54,2016–40 I.R.B. 429, respectively. For planyears beginning in 2018, based on the seg-ment rates applicable for October 1992 toSeptember 2017, the 25-year averages forthe period ending September 30, 2017, ofthe first, second, and third segment rates are4.35, 6.13, and 6.99 percent, respectively.

24-MONTH AVERAGECORPORATE BOND SEGMENTRATES

The three 24-month average corporatebond segment rates applicable for Sep-tember 2017 without adjustment for the25-year average segment rate limits are asfollows:

Applicable Month First Segment Second Segment Third Segment

September 2017 1.75 3.76 4.66

Based on § 430(h)(2)(C)(iv), the 24-month averages applicable for September

2017 adjusted to be within the applicableminimum and maximum percentages of

the corresponding 25-year average seg-ment rates, are as follows:

For Plan YearsBeginning In

Adjusted 24-Month Average Segment RatesApplicable Month First Segment Second Segment Third Segment

2016 September 2017 4.43 5.91 6.65

2017 September 2017 4.16 5.72 6.48

2018 September 2017 3.92 5.52 6.29

1Pursuant to § 433(h)(3)(A), the 3rd segment rate determined under § 430(h)(2)(C) is used to determine the current liability of a CSEC plan (which is used to calculate the minimum amountof the full funding limitation under § 433(c)(7)(C)).


30-YEAR TREASURY SECURITIESINTEREST RATES

Generally for plan years beginning af-ter 2007, § 431 specifies the minimumfunding requirements that apply to mul-tiemployer plans pursuant to § 412. Sec-tion 431(c)(6)(B) specifies a minimumamount for the full-funding limitation de-scribed in § 431(c)(6)(A), based on theplan’s current liability. Section 431(c)(6)(E)(ii)(I) provides that the interest rate

used to calculate current liability for thispurpose must be no more than 5 percentabove and no more than 10 percent belowthe weighted average of the rates of inter-est on 30-year Treasury securities duringthe four-year period ending on the last daybefore the beginning of the plan year.Notice 88–73, 1988–2 C.B. 383, providesguidelines for determining the weightedaverage interest rate. The rate of intereston 30-year Treasury securities for August2017 is 2.80 percent. The Service deter-

mined this rate as the average of the dailydeterminations of yield on the 30-yearTreasury bond maturing in May 2047 de-termined each day through August 9, 2017and the yield on the 30-year Treasurybond maturing in August 2047 determinedeach day for the balance of the month. Forplan years beginning in the month shownbelow, the weighted average of the ratesof interest on 30-year Treasury securitiesand the permissible range of rates used tocalculate current liability are as follows:

For Plan YearsBeginning in 30-Year Treasury

Weighted Average

Permissible Range

Month Year 90% to 105%

September 2017 2.88 2.59 3.03

MINIMUM PRESENT VALUESEGMENT RATES

In general, the applicable interest ratesunder § 417(e)(3)(D) are segment rates

computed without regard to a 24-monthaverage. Notice 2007–81 provides guide-lines for determining the minimum pres-ent value segment rates. Pursuant to thatnotice, the minimum present value seg-

ment rates determined for August 2017are as follows:

First Segment Second Segment Third Segment

1.93 3.57 4.36

DRAFTING INFORMATION

The principal author of this notice isTom Morgan of the Office of the Associ-

ate Chief Counsel (Tax Exempt and Gov-ernment Entities). However, other person-nel from the IRS participated in thedevelopment of this guidance. For further

information regarding this notice, contactMr. Morgan at 202-317-6700 or TonyMontanaro at 202-317-8698 (not toll-freenumbers).


Table IMonthly Yield Curve for August 2017

Derived from August 2017 Data

Maturity Yield Maturity Yield Maturity Yield Maturity Yield Maturity Yield

0.5 1.44 20.5 4.11 40.5 4.39 60.5 4.49 80.5 4.53

1.0 1.56 21.0 4.13 41.0 4.39 61.0 4.49 81.0 4.54

1.5 1.67 21.5 4.14 41.5 4.40 61.5 4.49 81.5 4.54

2.0 1.78 22.0 4.15 42.0 4.40 62.0 4.49 82.0 4.54

2.5 1.88 22.5 4.16 42.5 4.40 62.5 4.49 82.5 4.54

3.0 1.98 23.0 4.17 43.0 4.41 63.0 4.49 83.0 4.54

3.5 2.09 23.5 4.18 43.5 4.41 63.5 4.50 83.5 4.54

4.0 2.19 24.0 4.19 44.0 4.41 64.0 4.50 84.0 4.54

4.5 2.29 24.5 4.20 44.5 4.42 64.5 4.50 84.5 4.54

5.0 2.40 25.0 4.21 45.0 4.42 65.0 4.50 85.0 4.54

5.5 2.51 25.5 4.22 45.5 4.42 65.5 4.50 85.5 4.54

6.0 2.62 26.0 4.23 46.0 4.42 66.0 4.50 86.0 4.54

6.5 2.73 26.5 4.24 46.5 4.43 66.5 4.50 86.5 4.54

7.0 2.83 27.0 4.24 47.0 4.43 67.0 4.50 87.0 4.55

7.5 2.94 27.5 4.25 47.5 4.43 67.5 4.51 87.5 4.55

8.0 3.04 28.0 4.26 48.0 4.44 68.0 4.51 88.0 4.55

8.5 3.13 28.5 4.27 48.5 4.44 68.5 4.51 88.5 4.55

9.0 3.22 29.0 4.27 49.0 4.44 69.0 4.51 89.0 4.55

9.5 3.31 29.5 4.28 49.5 4.44 69.5 4.51 89.5 4.55

10.0 3.39 30.0 4.29 50.0 4.44 70.0 4.51 90.0 4.55

10.5 3.46 30.5 4.29 50.5 4.45 70.5 4.51 90.5 4.55

11.0 3.53 31.0 4.30 51.0 4.45 71.0 4.51 91.0 4.55

11.5 3.59 31.5 4.31 51.5 4.45 71.5 4.52 91.5 4.55

12.0 3.65 32.0 4.31 52.0 4.45 72.0 4.52 92.0 4.55

12.5 3.70 32.5 4.32 52.5 4.46 72.5 4.52 92.5 4.55

13.0 3.74 33.0 4.32 53.0 4.46 73.0 4.52 93.0 4.55

13.5 3.79 33.5 4.33 53.5 4.46 73.5 4.52 93.5 4.55

14.0 3.83 34.0 4.33 54.0 4.46 74.0 4.52 94.0 4.56

14.5 3.86 34.5 4.34 54.5 4.46 74.5 4.52 94.5 4.56

15.0 3.89 35.0 4.34 55.0 4.47 75.0 4.52 95.0 4.56

15.5 3.92 35.5 4.35 55.5 4.47 75.5 4.52 95.5 4.56

16.0 3.95 36.0 4.35 56.0 4.47 76.0 4.53 96.0 4.56

16.5 3.97 36.5 4.36 56.5 4.47 76.5 4.53 96.5 4.56

17.0 4.00 37.0 4.36 57.0 4.47 77.0 4.53 97.0 4.56

17.5 4.02 37.5 4.37 57.5 4.48 77.5 4.53 97.5 4.56

18.0 4.04 38.0 4.37 58.0 4.48 78.0 4.53 98.0 4.56

18.5 4.05 38.5 4.37 58.5 4.48 78.5 4.53 98.5 4.56

19.0 4.07 39.0 4.38 59.0 4.48 79.0 4.53 99.0 4.56

19.5 4.09 39.5 4.38 59.5 4.48 79.5 4.53 99.5 4.56

20.0 4.10 40.0 4.39 60.0 4.48 80.0 4.53 100.0 4.56


26 CFR 1.601.201: Rulings and determination let-ters (Also Part I, §§ 355, 1.355–1.)

Rev. Proc. 2017–52SECTION 1. PURPOSE

This revenue procedure (1) introducesa pilot program expanding the scope ofletter rulings available from the InternalRevenue Service (Service) to include for aperiod of time (see section 6 of this reve-nue procedure) rulings on the tax conse-quences of a distribution of stock, or stockand securities, of a controlled corporationunder § 355 of the Internal Revenue Code(Code), (2) provides procedures for tax-payers requesting these rulings, and (3)clarifies procedures for taxpayers request-ing rulings on significant issues relating tothese transactions.

SECTION 2. BACKGROUND

.01 Law.

Section 355(a)(1) provides that, if cer-tain requirements are met, a corporation(Distributing) may distribute stock, orstock and securities, of a controlled cor-poration (Controlled) to its shareholdersor to its shareholders and security holders(Distributees), without recognition of gainor loss to, or inclusion of any amount inthe income of, the Distributees.

Section 355(c)(1) provides that no gainor loss is recognized to Distributing upona distribution of Controlled stock, or stockand securities, to which § 355 (or so muchof § 356 as relates to § 355) applies andwhich is not in pursuance of a plan ofreorganization.

Section 368(a)(1)(D) provides, in part,that a reorganization includes a transfer byDistributing of part of its assets to Con-trolled if, immediately after the transfer,Distributing or one or more of the share-holders of Distributing (including personswho were shareholders immediately be-fore the transfer) are in control of Con-trolled; but only if, in pursuance of theplan, stock or securities of Controlled aredistributed in a transaction which qualifiesunder §§ 355 or 356.

.02 Ruling Policy Prior to PilotProgram.

In Rev. Proc. 2013–32, 2013–28 I.R.B.55, the Service announced that it would no

longer rule on the tax consequences ofvarious corporate transactions, includingdistributions intended to qualify under§ 355, but that, instead, it would rule onlyon significant issues raised in these trans-actions (Significant Issue Ruling). Thispolicy was set forth in section 3.01(51) ofRev. Proc. 2017–3, 2017–1 I.R.B. 130,134, prior to its modification by section5.06 of this revenue procedure. Prior to itsmodification by section 5.05 of this reve-nue procedure, Appendix G of Rev. Proc.2017–1, 2017–1 I.R.B. 1, 96, providedthat the information and representationsdescribed in Rev. Proc. 96–30, 1996–1C.B. 696, as modified and amplified byRev. Proc. 2003–48, 2003–2 C.B. 86,should be included in a ruling requestaddressing significant issues presented ina transaction described in § 355, but onlyto the extent related to the significant is-sues involved in the request. Rev. Proc.96–30 describes information and repre-sentations that a taxpayer was required tosubmit in a request for a ruling under§ 355 prior to the Service only issuingSignificant Issue Rulings in accordancewith the ruling policy announced in Rev.Proc. 2013–32.

The Service has reviewed its rulingprogram and determined that it should beexpanded in a pilot program under theterms and conditions prescribed in thisrevenue procedure.

.03 Ruling Policy Under PilotProgram.

(1) Definitions. In this revenue proce-dure—

(a) Covered Transaction means (i) atransaction intended to qualify under§§ 368(a)(1)(D) and 355 or (ii) a distribu-tion that is intended to qualify under§§ 355(a) and 355(c).

(b) Significant Issue Ruling is definedin section 2.02 of this revenue procedure.

(c) Transactional Ruling means a letterruling that addresses the general federalincome tax consequences of a CoveredTransaction.

(2) Ruling policy. Under this revenueprocedure, a taxpayer may request aTransactional Ruling for a Covered Trans-action. If a plan includes multiple CoveredTransactions, and the taxpayer requests aTransactional Ruling with respect to oneor more of the Covered Transactions, the

taxpayer may request a Transactional Rul-ing, a Significant Issue Ruling, or no rul-ing with respect to each of the other Cov-ered Transactions effected pursuant to theplan.

This revenue procedure does not alterthe Service’s policy that limits rulings onthe device prohibition under § 355(a)(1)(B) and § 1.355–2(d), the business pur-pose requirement under § 1.355–2(b), andwhether a distribution is pursuant to a planunder § 355(e). See section 3.01(54) ofRev. Proc. 2017–3, as modified by section5.07 of this revenue procedure, and sec-tions 3.03(6), 3.03(7), and 3.03(16) of thisrevenue procedure. More generally, seeRev. Proc. 2017–3 for other no-rule areasunder § 355.

A Transactional Ruling may includethe tax consequences of a Covered Trans-action under §§ 312, 355, 357, 358, 361,362(b), 362(e), 368(a)(1)(D), 368(b),1032(a), 1223(1) and 1223(2), and rele-vant consolidated return regulations. TheService may decline to rule on tax conse-quences under any provision of the Codeor the regulations or may include rulingsunder provisions other than those listedabove.

(3) International rulings. This revenueprocedure does not have an effect on Rev.Proc. 2017–7, 2017–1 I.R.B. 269, whichprovides the current list of those areas ofthe Internal Revenue Code under the ju-risdiction of the Associate Chief Counsel(International) relating to matters onwhich the Internal Revenue Service willnot issue letter rulings or determinationletters. Therefore, routine or comfort rul-ings will not ordinarily be issued underthe international provisions of the Codesuch as § 367. See also section 4 of Rev.Proc. 2017–7, 2017–1 I.R.B. 269.

SECTION 3. PROCEDURES FORTRANSACTIONAL RULINGREQUESTS

.01 In general.

A taxpayer requesting a TransactionalRuling must follow the procedures in Rev.Proc. 2017–1 for requesting a letter ruling.In addition, the taxpayer must submit thedocumentation described in section 3.02of this revenue procedure, the factual in-formation and legal analysis describedsection 3.03 of this revenue procedure,


and a statement regarding representationsdescribed in section 3.04 of this revenueprocedure. Section 3.05 of this revenueprocedure addresses supplemental rulingrequests.

If the ruling request lacks essential in-formation or sufficient legal analysis, thebranch representative will request such in-formation or legal analysis. If the taxpayerdoes not provide the requested informa-tion or legal analysis within 21 calendardays of the date of the Service’s request,the ruling request will be closed unless anextension of time is granted before theexpiration of the 21-day period. See sec-tion 8.05 of Rev. Proc. 2017-1.

If there is a need for a letter ruling to beissued by a particular date, the taxpayermay request that the Service issue a letterruling by that date. In such a case, therequest for the letter ruling must includethe request for issuance by a particulardate and a description of the reason theletter ruling is needed by that date and theconsequences of not receiving the letterruling by that date. The Service will at-tempt to accommodate reasonable re-quests made in a timely manner. How-ever, the Service cannot guarantee that aletter ruling will be issued by a requesteddate.

Taxpayers are encouraged to considerthe scope of ruling requests, especiallyrequests for Transactional Rulings. Forexample, if a plan includes both stockdistributions within a consolidated groupthat raise no significant legal issues and adistribution of stock outside the group, arequest for Transactional Rulings on theintragroup stock distributions may delayissuance of the letter ruling.

.02 Documentation for TransactionalRulings.

Notwithstanding the general rule insection 7.01(2)(a) of Rev. Proc. 2017–1,as modified by section 5.04 of this reve-nue procedure, a taxpayer requesting aTransactional Ruling should submit onlythe documents that may be relevant indetermining whether to issue the re-quested rulings. If only a portion of adocument is relevant to resolving an issue,the taxpayer must indicate the relevantportion or portions of the document, gen-erally by highlighting or underscoring. Ineither instance, the taxpayer must summa-

rize the relevant portion or portions andexplain their relevance in the body of itsrequest.

.03 Description of CoveredTransactions, Related Transactions,and Legal Issues.

(1) In general. A request for a Trans-actional Ruling with respect to a CoveredTransaction must include a description ofeach Covered Transaction and each othertransaction that is part of the same plan orseries of related transactions. The requestmust also include a description and anal-ysis of all legal issues that may affect therequested rulings (even if arising in aCovered Transaction for which a Signifi-cant Issue Ruling or no ruling is re-quested). The descriptions must includesufficient factual information and legalanalysis to allow the Service to determinewhether to issue the requested rulings. Seesections 7.01(8) and (9) of Rev. Proc.2017–1. The information and legal analy-sis described in this section 3.03 must beincluded in the body of the request.

A request for a Transactional Rulingmust be accompanied by a statement de-scribing the federal income tax conse-quences of all other material transactionsrelated to the request.

For purposes of section 11.05(1) ofRev. Proc. 2017–1 (conditions underwhich a letter ruling may be revoked), adetermination whether there has been amisstatement or omission of controllingfacts is made solely on the basis of theinformation in the body of the request andwithout regard to any documents or otherattachments, including those providedpursuant to section 3.02 of this revenueprocedure.

If the Service finds that informationrelevant to the requested rulings is notincluded in the body of the request(whether or not it is included in a docu-ment attached to the request), the Servicewill bring the matter to the attention of thetaxpayer’s representative, request a sup-plemental submission correcting the omis-sion, and take any other appropriate ac-tion.

The information required pursuant tothis section 3.03 must include, as applica-ble, the information and legal analysis de-scribed in paragraphs (2) through (20) ofthis section 3.03.

(2) Control. The taxpayer must de-scribe how Distributing will have controlof Controlled immediately before the dis-tribution under § 355(a)(1)(A) and howDistributing will meet the requirementthat it distribute: (a) all of the Controlledstock and securities that it holds immedi-ately before the distribution, or (b) anamount of Controlled stock constitutingcontrol (within the meaning of § 368(c))under § 355(a)(1)(D). If Distributing re-tains any Controlled stock or options afterthe distribution, the taxpayer must de-scribe how Distributing meets the require-ments of § 355(a)(1)(D)(ii).

(3) Active conduct of a trade or busi-ness. The taxpayer must provide a com-plete description of each business (ActiveBusiness) on which each of Distributingand Controlled relies to satisfy the re-quirements of § 355(b) and § 1.355–3(b)(Active Business Requirement). If Dis-tributing or Controlled meets the ActiveBusiness Requirement by relying on§ 355(b)(3), the taxpayer must so state andmust describe the separate affiliated groupand its relevant activities. If Distributingor Controlled relies on activities of a part-nership to meet the Active Business Re-quirement, the taxpayer must so state anddescribe the facts and circumstances relat-ing to the partnership. For each of Distrib-uting and Controlled—

(a) The taxpayer must describe howeach of the requirements of § 1.355–3(b)is met with respect to each Active Busi-ness. The information should establishthat each Active Business engages in thecollection of income and the payment ofexpenses.

(b) The taxpayer must submit a tableshowing the amounts of gross incomeearned and salaries and wages paid toemployees during each of the past fiveyears for each Active Business. The tax-payer should not submit financial state-ments to satisfy this requirement unlessrequested by the Service. But see para-graph (4) of this section 3.03.

(c) The taxpayer must demonstrate theperformance of active and substantialmanagerial and operational functions foreach Active Business during each of thepast five years and immediately after thedistribution. To make this demonstration,the taxpayer must provide information onthe duties and actions of employees in


sufficient detail but should not providemore detail than necessary regarding theduties or actions of specific employees orgroups of employees.

(d) If the Active Business or any ma-terial portion of the Active Business wasacquired within the past five years, thetaxpayer must describe the acquisition.Specifically, the taxpayer must describewhether: (1) the acquisition occurred in atransaction in which gain or loss was rec-ognized in whole or in part; (2) any stockof Controlled was acquired in a taxabletransaction; and (3) the acquisition consti-tuted an expansion of an existing business(see, for example, § 1.355–3(b)(3)(ii)).

(4) Balance sheets. The taxpayer mustprovide the most recent available quar-terly or annual (book) consolidated bal-ance sheet. The taxpayer must also in-clude the following schedules from itsmost recent Form 1120, U.S. CorporationIncome Tax Return, or similar Form: L,M–1, M–2, or M–3, as applicable. In ad-dition, the taxpayer must provide a proforma balance sheet for each of the sepa-rate affiliated groups of which either Dis-tributing or Controlled is the common par-ent (as defined in § 355(b)(3)(B)), as ofimmediately after the final distributionthat is part of a plan or series of relatedtransactions.

(5) Section 355(a)(3)(B). If Distribut-ing acquired any stock in Controlledwithin the past five years, the taxpayermust describe the acquisition.

(6) Device prohibition. The taxpayermust describe the facts relevant to deter-mine whether the distribution constitutes adevice for the distribution of earnings andprofits, within the meaning of § 355(a)(1)(B). The description must include adiscussion of the applicability or nonap-plicability of the device and nondevicefactors set forth in § 1.355–2(d). A Trans-actional Ruling may contain a ruling on asignificant legal issue pertaining to thedevice prohibition, but the general issue ofwhether the distribution constitutes a de-vice will not be addressed. See section3.01(54) of Rev. Proc. 2017–3, as modi-fied by section 5.07 of this revenue pro-cedure.

(7) Business purpose. The taxpayermust describe the facts relevant to deter-mine whether the distribution satisfies thecorporate business purpose requirement

under § 1.355–2(b). A Transactional Rul-ing may contain a ruling on a significantlegal issue pertaining to the business pur-pose requirement, but the general issue ofwhether the distribution satisfies the busi-ness purpose requirement will not be ad-dressed. See section 3.01(54) of Rev.Proc. 2017–3, as modified by section 5.07of this revenue procedure.

(8) Continuity of interest. The tax-payer must provide a description of thefacts relevant to determine whether thecontinuity-of-interest requirement under§ 1.355–2(c) will be satisfied.

(9) Transactions between Distributingand Controlled. The taxpayer must submita description of all transfers of propertyand all performance of services betweenDistributing (or its affiliates) and Con-trolled (or its affiliates) undertaken in pur-suance of the plan of reorganization, inconnection with the reorganization or oth-erwise related to the distribution.

(10) Loss recognized. The taxpayermust submit a description of any loss thatwill be recognized in Covered Transac-tions or in a related transaction.

(11) Continuity of business enterprise.For a distribution that is also part of areorganization qualifying under § 368(a)(1)(D), the taxpayer must explain how thetaxpayer will meet the continuity of busi-ness enterprise (COBE) requirement un-der § 1.368–1(d).

(12) Indebtedness. The taxpayer mustdescribe any issuance of indebtedness byDistributing (or any of its affiliates), theproceeds of which will be used to satisfyany pre-existing indebtedness of Distrib-uting. See §§ 361(b)(3) and 361(c)(3), andRev. Rul. 79–258, 1979–2 C.B. 143.

(13) Matching of income and deduc-tions. The taxpayer must state the currentmethod of accounting for each of the par-ties to the transaction. If one or moreparties use the cash method of accounting,the taxpayer must explain the extent towhich any actions have been or will betaken that are not in the ordinary course ofbusiness and that might affect the timingor the amount of any income or deductionto be recognized by a cash basis party tothe transaction. See, for example, Rev.Rul. 80–198, 1980–2 C.B. 113. In addi-tion, the taxpayer must submit a statementas to whether any income item, such as anaccount receivable, or any item resulting

from a sale, exchange or disposition thatwould have resulted in income to Distrib-uting, or any item of expense, will betransferred to Controlled. The taxpayermust submit a complete list with explana-tions if any of these items are being trans-ferred.

(14) Transfer of property to Controlledand related matters. The taxpayer mustdescribe (a) any transfer of property byDistributing (or any of its affiliates) toControlled (or any of its affiliates) in pur-suance of the plan of reorganization orotherwise related to the distribution (in-cluding any transfer intended to qualifyunder § 351(a)), (b) any Controlled stockor securities or other consideration re-ceived therefor (actual or deemed), and (c)any distribution or other transfer of anysuch consideration to shareholders orcreditors of Distributing in pursuance ofthe plan or reorganization, in connectionwith the reorganization, or otherwise re-lated to the distribution.

(15) Disqualified distribution. The tax-payer must explain why the distributionwill not be a disqualified distribution un-der § 355(d)(2).

(16) Planned 50-percent acquisitions.The taxpayer must state whether the trans-action will be part of a plan or series ofrelated transactions pursuant to which oneor more persons acquire, directly or indi-rectly, stock representing a 50-percent orgreater interest in the stock of Distributingor Controlled, and describe any relevantfacts. See § 355(e) and §§ 1.355–7 and1.355–8T (or successor regulations). Ex-cept as provided in section 3.01(54) ofRev. Proc. 2017–3, as modified by section5.07 of this revenue procedure, the issueof whether a distribution is part of such aplan will not be addressed in a Transac-tional Ruling.

(17) Certain intragroup transactions.The taxpayer must state whether § 355(f),including by operation of § 1.355–8T (orsuccessor regulations), precludes the ap-plication of § 355(a) to any distribution orexchange between members of an affili-ated group, and describe any relevantfacts.

(18) Disqualified investment corpora-tion. The taxpayer must explain why, im-mediately after the distribution, neitherDistributing nor Controlled will be a dis-


qualified investment corporation (withinthe meaning of § 355(g)(2)).

(19) Real estate investment trust. If ei-ther Distributing or Controlled is a realestate investment trust, the taxpayer mustso state and explain why § 355(a) (andso much of § 356 as relates to § 355)otherwise applies to the transaction. See§ 355(h).

(20) Post-distribution transactions andrelationships. The ruling request must in-clude a description of any transactionsexpected to occur and continuing relation-ships expected to exist between Distribut-ing and Controlled, and their respectiveaffiliates or shareholders, and an explana-tion of the reasons why these transactionsand relationships should not affect the re-quested rulings.

.04 Representations Required forTransactional Rulings.

(1) In general. A request for a Trans-actional Ruling must include a statementthat, except as otherwise set forth in thesubmission, the taxpayer makes all therepresentations in section 3 of the Appen-dix to this revenue procedure in the formset forth therein. The taxpayer should notstate the representations separately.

If a taxpayer requests a TransactionalRuling and also requests, with respect toany material transaction related to the re-quest, either a Significant Issue Ruling orno ruling, the taxpayer must provide arepresentation as to the qualification of thematerial transaction under the relevantprovision, e.g., whether the material trans-action qualifies as an exchange under§ 351, as a reorganization under § 368(a)(1) [insert appropriate subparagraph] and/or under § 355. The taxpayer should notmake the representations in the Appendixto this revenue procedure with respect tosuch material transaction.

If any of the representations in section3 of the Appendix does not apply to theTransactional Ruling request (for exam-ple, representations regarding consoli-dated return matters if the taxpayers arenot members of a consolidated group), thetaxpayer should so state and explain whythe representation does not apply.

If a representation in section 3 of theAppendix applies, but the taxpayer cannotmake the representation in the form setforth in the Appendix, the taxpayer must

explain its inability to make the represen-tation in that form. If appropriate, the tax-payer should make a modified representa-tion that addresses the same issue(s) andexplain why the modification is necessaryand should not prevent the Service fromruling as requested. In addition, if the tax-payer cannot make any of the followingthree representations in section 3 of theAppendix, it must provide the discussionset forth below:

(a) If the taxpayer cannot make repre-sentation 42, it must discuss the applica-tion of §§ 897 and 1445 to the distributionand any related transaction.

(b) If the taxpayer cannot make repre-sentation 43, it must discuss the applica-tion of §§ 367 and 1248 to the distributionand any related transaction.

(c) If the taxpayer cannot make repre-sentation 44, it must discuss the applica-tion of § 7874 to the acquisition.

Furthermore, if Distributing cannotmake representation 25, it must enter intoa closing agreement with the Service as acondition to receiving a letter ruling.

(2) Alternative representations. Repre-sentations 3, 8, 11, 15, 22, 31, and 41 ofsection 3 of the Appendix permit the tax-payer to make any of two or more alter-native representations. As to each of theseitems, the taxpayer should indicate whichof the alternative representations it makes.

(3) Revisions to representations. Devi-ations from the required representationsmay delay the processing of a request.Taxpayers are encouraged to revise repre-sentations only if the revision makes therepresentations materially more accurate.

Furthermore, inconsequential changesto the representations should be avoided.For example, if Distributing or Controlledis a limited liability company with “mem-bership interests” rather than “stock,” andis classified as a corporation for federalincome tax purposes, it would be appro-priate to include a description of the eq-uity interests in the explanation of thefacts and make representations referringto “stock”.

.05 Supplemental Ruling Requests.If a taxpayer receives a Transactional

Ruling, the taxpayer may request a sup-plemental ruling if the facts at the time ofsubmission of the supplemental ruling re-quest are materially different from the

controlling facts on which the Transac-tional Ruling was based.

SECTION 4. PROCEDURES FORSIGNIFICANT ISSUE RULINGREQUESTS

A taxpayer may request a SignificantIssue Ruling, pursuant to section 3.01(51)of Rev. Proc. 2017–3, as modified by sec-tion 5.06 of this revenue procedure, evenif the Covered Transaction would qualifyfor a Transactional Ruling. The Servicemay, however, decline to issue a Signifi-cant Issue Ruling if it concludes that issu-ing a ruling on only part of an integratedtransaction would not be in the best inter-ests of tax administration.

In submitting a request for a Signifi-cant Issue Ruling, a taxpayer must submitthe material described in section 6.03(2)of Rev. Proc. 2017–1, as modified by sec-tion 5.02 of this revenue procedure, andcomply with the documentation require-ments set forth in section 3.02 of thisrevenue procedure.

SECTION 5. EFFECT ON OTHERDOCUMENTS

.01 Rev. Proc. 2017–1 is modified byadding the following subheadings undersection 6.03 in the Table of Contents:

(1) General rule(2) Significant issue ruling

(a) No rule areas(b) Section 355 distributions and re-

lated transactions(3) Submission requirements.02 Section 6.03 of Rev. Proc. 2017–1

is modified by deleting the text and addingthe following text in its place:

(1) General rule. An Associate officeordinarily will not issue a letter ruling ononly part of an integrated transaction. If apart of a transaction falls under a no-rulearea, a letter ruling on other parts of thetransaction may be issued. Before prepar-ing the letter ruling request, a taxpayershould call a branch having jurisdictionfor the matters on which the taxpayer isseeking a letter ruling to discuss whetherthe Associate office will issue a letter rul-ing on part of the transaction.

(2) Significant issue ruling.(a) No rule areas. The Service will not

rule on the qualification of any transactionunder § 332, § 351, or § 1036, or (except


as provided in paragraph (b) of this sec-tion 6.03(2)) on whether a transactionconstitutes a reorganization within themeaning of § 368 (other than under§§ 368(a)(1)(D) and 355), regardless ofwhether such transaction is part of an in-tegrated transaction (see section 3.01(51)of Rev. Proc. 2017–3, 2017–1 I.R.B 130,134). Instead, the Associate Chief Coun-sel (Corporate) will only issue a letterruling on significant issues (within themeaning of section 3.01(51) of Rev. Proc.2017–3) presented in a transaction de-scribed in § 332, § 351, § 368 (other thanunder §§ 368(a)(1)(D) and 355), or§ 1036. For example, the Service may ruleon significant issues under § 1.368–1(d)(continuity of business enterprise) and§ 1.368–1(e) (continuity of interest). Let-ter rulings requested under this section6.03(2)(a) are subject to the no-rule poli-cies of Rev. Proc. 2017–3, 2017–1 I.R.B.130.

(b) Section 355 distributions and re-lated transactions. Pursuant to section 4of Rev. Proc. 2017–52, 2017–41 I.R.B.283, in lieu of requesting a TransactionalRuling regarding a Covered Transaction, ataxpayer may request a Significant IssueRuling. Letter rulings requested under thissection 6.03(2)(b) are subject to the poli-cies of Rev. Proc. 2017–3, 2017–1 I.R.B.130.

(3) Submission requirements. Beforepreparing a letter ruling request under sec-tion 6.03(2) of this revenue procedure in-volving significant issues presented in atransaction described in § 332, § 351,§ 355, § 368, or § 1036, the taxpayer isencouraged to call the Office of AssociateChief Counsel (Corporate) at the tele-phone number provided in section10.07(1)(a) of this revenue procedure todiscuss whether the Service will entertaina letter ruling request under section6.03(2). The Service reserves the right torule on any other aspect of the transaction(including ruling adversely) to the extentthe Service believes it is in the best inter-ests of tax administration. Cf. section 2.01of Rev. Proc. 2017–3, 2017–1 I.R.B. 130.

The taxpayer may request rulings onone or more significant issues in a singleletter ruling request. Letter ruling requestsunder section 6.03(2) must include thefollowing for each significant issue:

(a) A narrative description of the trans-action that puts the issue in context;

(b) A statement identifying the issue;(c) An analysis of the relevant law,

which should set forth the authorities mostclosely related to the issue and explainwhy these authorities do not resolve theissue, and an explanation concerning whythe issue is significant within the meaningof section 3.01(51) of Rev. Proc. 2017–3,2017–1 I.R.B. 130; and

(d) The precise ruling(s) requested.The taxpayer should consult other pub-

lished authorities (see, for example, Ap-pendix G of this revenue procedure, whichidentifies certain checklist and guidelinerevenue procedures including Rev. Proc.2017–52) to identify information or rep-resentations but only to the extent thatthey relate to the issue.

If the Service issues a letter ruling on asignificant issue under section 6.03(2),then the letter ruling will state that noopinion is expressed as to any issue orstep not specifically addressed by the let-ter. In addition, letter rulings issued undersection 6.03(2) will contain the following(or similar) language:

This letter is issued pursuant to sec-tion 6.03(2) of Rev. Proc. 2017–1,2017–1 I.R.B. 1, regarding one or moresignificant issues under § 332, § 351,§ 355, § 368, or § 1036. The ruling[s]contained in this letter only address[es]one or more significant issues involvedin the transaction. This Office expressesno opinion as to the overall tax conse-quences of the transactions described inthis letter or as to any issue not specif-ically addressed by the ruling[s] below.

.03 Section 6.11 of Rev. Proc. 2017–1is modified by deleting the text and addingthe following text in its place:

Except with respect to a CoveredTransaction within the meaning of Rev.Proc. 2017–52, a letter ruling will not beissued with respect to an issue that isclearly and adequately addressed by stat-ute, regulations, decision of a court, rev-enue rulings, revenue procedures, notices,or other authority published in the InternalRevenue Bulletin (Comfort Ruling).However, except with respect to issuesunder § 332, § 351, § 368, or § 1036 andthe tax consequences resulting from theapplication of such Code sections (seegenerally section 6.03(2) of this revenue

procedure), the Associate office may, inits discretion, decide to issue a ComfortRuling if the Associate office is otherwiseissuing a letter ruling to the taxpayer onanother issue arising in the same transac-tion.

.04 Section 7.01(2)(a) of Rev. Proc.2017–1 is modified by deleting the textand adding the following text in its place:

(a) Documents. True copies of all con-tracts, wills, deeds, agreements, instru-ments, trust documents, proposed dis-claimers, and other documents pertinent tothe transactions must be submitted withthe request. But see section 3.02 and sec-tion 4 of Rev. Proc. 2017–52 for require-ments relating to ruling requests under§ 355.

If the request concerns a corporate dis-tribution, reorganization, or similar trans-action, the corporate balance sheet andprofit and loss statement should also besubmitted. If the request relates to a pro-spective transaction, the most recent bal-ance sheet and profit and loss statementshould be submitted. But see section 3.02and section 4 of Rev. Proc. 2017–52 forrequirements relating to ruling requestsunder § 355.

If any document, including any balancesheet and profit and loss statement, is in alanguage other than English, the taxpayermust also submit a certified English trans-lation of the document, along with a truecopy of the document. For guidelines onthe acceptability of such documents, seeparagraph (c) of this section 7.01(2).

Each document other than the requestshould be labeled and attached to the re-quest in alphabetical sequence. Originaldocuments such as contracts, wills, etc.,should not be submitted because they be-come part of the Service’s file and will notbe returned.

.05 Section .01 of Appendix G to Rev.Proc. 2017–1 is modified as follows:

(1) In the column titled REVENUEPROCEDURE AND NOTICE, in the textcorresponding to “Subchapter C—Corpo-rate Distributions, Adjustments, Trans-fers, and Reorganizations” found in thecolumn CODE OR REGULATIONSECTION, deleting the text and addingthe following text in its place:

Rev. Proc. 77–37, 1977–2 C.B. 568, asmodified by Rev. Proc. 89–30, 1989–1C.B. 895, and as amplified by Rev. Proc.


77–41, 1977–2 C.B. 574, Rev. Proc. 83–81, 1983–2 C.B. 598 (see also Rev. Proc.2017–3, 2017–1 I.R.B. 130), Rev. Proc.84–42, 1984–1 C.B. 521 (superseded, inpart, as to no-rule areas by Rev. Proc.2017–3, 2017–1 I.R.B. 130), Rev. Proc.86–42, 1986–2 C.B. 722, Rev. Proc. 89–50, 1989–2 C.B. 631, and Rev. Proc.2017–52 (relating to Transactional Rul-ings for Covered Transactions). But seesection 3.01(51) of Rev. Proc. 2017–3,which states that the Service will not issuea letter ruling as to whether a transactionconstitutes a reorganization within themeaning of § 368 (except as provided insection 6.03(2)(b) of this revenue proce-dure). However, the Service will issue aletter ruling addressing significant issues(within the meaning of section 3.01(51) ofRev. Proc. 2017–3) presented in a reorga-nization within the meaning of § 368. Theinformation and representations describedin these revenue procedures should be in-cluded in a letter ruling request only to theextent that they relate to the significantissues with respect to which the letter rul-ing is requested. See section 6.03(2).

(2) In the column titled REVENUEPROCEDURE AND NOTICE, in the textcorresponding to “355 Checklist question-naire” found in the column CODE ORREGULATION SECTION, deleting thetext and adding the following text in itsplace:

Rev. Proc. 2017–52. See also section6.03(2) of this revenue procedure.

.06 Section 3.01(51) of Rev. Proc.2017–3 is modified by:

(1) deleting the language “Distributionof Stock and Securities of a ControlledCorporation;” from the heading,

(2) deleting the language “355,” eachplace it appears,

(3) adding the language “except atransaction intended to qualify under§§ 368(a)(1)(D) and 355,” after the phrase“within the meaning of § 368,” and

(4) replacing the reference to “6.03”with “6.03(2),” each place it appears.

.07 Section 3.01(54) of Rev. Proc.2017–3 is modified by deleting the textand adding the following text in its place:

(54) Section 355.—Distribution ofStock and Securities of a Controlled Cor-poration.—Whether the distribution of thestock of a controlled corporation is beingcarried out for one or more corporate busi-

ness purposes, whether the transaction isused principally as a device, and whetherthe distribution and an acquisition are partof a plan under § 355(e). Notwithstandingthe preceding sentence, the Service: (1)will issue a letter ruling with respect to asignificant issue under § 1.355–2(b) per-taining to the corporate business purposerequirement, provided that the issue is alegal issue and is not inherently factual innature, (2) will issue a letter ruling withrespect to a significant issue under§ 355(a)(1)(B) and § 1.355–2(d) pertain-ing to device, provided that the issue is alegal issue and is not inherently factual innature, and (3) may issue a ruling regard-ing the effect of redemptions under§ 355(e) pending the issuance of tempo-rary or final regulations regarding re-demptions under § 355(e) if an adverseruling on such question would result inthere being a direct or indirect acquisitionby one or more persons of stock represent-ing a 50-percent or greater interest in thedistributing corporation or the controlledcorporation that is part of a plan under§ 355(e).

.08 Section 4.02(2) of Rev. Proc.2017–3 is modified by replacing the ref-erence to “6.03” with “6.03(2).”

.09 Section 4.02(9) of Rev. Proc.2017–3 is modified by deleting the textand adding the following text in its place:

Except with respect to a CoveredTransaction within the meaning of section2.03(1)(a) of Rev. Proc. 2017–52, a letterruling will not be issued with respect to anissue that is clearly and adequately ad-dressed by statute, regulations, decision ofa court, revenue rulings, revenue proce-dures, notices, or other authority pub-lished in the Internal Revenue Bulletin(Comfort Ruling). However, except withrespect to issues under §§ 332, 351, 368,and 1036 and the tax consequences result-ing from the application of such Codesections (see generally section 6.03(2) ofRev. Proc. 2017–1, 2017–1 I.R.B. 1), anAssociate office may in its discretion issuea Comfort Ruling if the Associate office isotherwise ruling on another issue arisingin the same transaction.

.10 Rev. Proc. 96–30, 1996–1 C.B.696, is superseded.

.11 Rev. Proc. 2003–48, 2003–2 C.B.86, is superseded.

.12 Rev. Proc. 2009–25, 2009–24I.R.B. 1088, is superseded.

.13 Rev. Proc. 2013–32, 2013–28I.R.B. 55, is superseded.

SECTION 6. EFFECTIVE DATEAND ENDING DATE

.01 Effective Date.

(1) In general. This revenue procedurewill apply to all ruling requests post-marked or, if not mailed, received by theService after September 21, 2017.

(2) Application of this Revenue Proce-dure to Pending Ruling Requests. If ataxpayer has a request for a SignificantIssue Ruling that is postmarked or, if notmailed, received by the Service on or be-fore September 21, 2017 (a pending rulingrequest), the taxpayer may convert thatpending ruling request to a request for aTransactional Ruling by submitting theinformation and documentation requiredunder this revenue procedure. All requeststo convert pending ruling requests must besubmitted on or before November 20,2017 and no extensions to submit a con-version request will be granted.

.02 Ending Date.

(1) In general. This pilot program willexpire on March 21, 2019. At that time,the Service will evaluate the effectivenessand sustainability of the program and con-sider whether the program should be ex-tended.

(2) Application of this Revenue Proce-dure to submitted ruling requests. Thisrevenue procedure will continue to applyto all ruling requests postmarked or, if notmailed, received by the Service on or be-fore March 21, 2019 (a submitted rulingrequest) if the submitted ruling request isa complete and thorough submission. Seesection 7.01 of Rev. Proc. 2017–1.

SECTION 7. PAPERWORKREDUCTION ACT

The collections of information in thisrevenue procedure have been reviewedand approved by the Office of Manage-ment and Budget (OMB) in accordancewith the Paperwork Reduction Act (44U.S.C. 3507) under control number 1545-1522.


An agency may not conduct or spon-sor, and a person is not required to re-spond to, a collection of information un-less the collection of information displaysa valid OMB control number.

The collections of information in thisrevenue procedure are in sections 3 and 4,and the Appendix. This information is re-quired to determine whether a taxpayerwould qualify for a Transactional Rulingor a Significant Issue Ruling under thisrevenue procedure. The collections of in-formation are required to obtain a benefit.The likely respondents are corporationsthat control another corporation, as well asthe management of the corporation thestock of which is being distributed or thatcontrols the corporation the stock ofwhich is being distributed.

The estimated total annual reportingburden for Rev. Proc. 2017–1 is 320,436hours.

The estimated annual burden per re-spondent for Rev. Proc. 2017–1 variesfrom 1 to 200 hours, depending on indi-vidual circumstances, with an estimatedaverage of 80 hours. The estimated num-ber of respondents is 3,956.

The estimated total annual reportingburden for this revenue procedure adds6,000 hours to Rev. Proc. 2017–1.

The estimated annual burden per re-spondent for this revenue procedure variesfrom 150 to 250 hours, depending on in-dividual circumstances, with an estimatedaverage of 200 hours. The estimated num-ber of additional respondents added toRev. Proc. 2017–1 by this revenue proce-dure is 30, increasing the estimated num-ber of respondents to Rev. Proc. 2017–1to 3,986.

The estimated average burden for Rev.Proc. 2017–1, as increased by this revenueprocedure, is 81 hours.

The estimated annual frequency of re-sponses is on occasion.

Books or records relating to a collec-tion of information must be retained aslong as their contents may become mate-rial in the administration of any internalrevenue tax law. Generally tax returns andtax return information are confidential, asrequired by 26 U.S.C. 6103.

SECTION 8. REQUEST FORCOMMENTS

The Service requests comments on allaspects of this revenue procedure. In partic-ular, the Service requests comments con-cerning the reasonableness of the require-ments and conditions set forth in thisrevenue procedure and recommendationsfor increasing efficiencies. The Service alsorequests comments regarding the requiredrepresentations set forth in section 3 of theAppendix of this revenue procedure, includ-ing any additions, deletions, and modifica-tions. In addition, the Service requests com-ments regarding whether TransactionalRulings, as described in section 2.03(1)(c)of this revenue procedure, should be madeavailable for other transactions.

SECTION 9. WHERE TO SENDAND DATE BY WHICH TOSUBMIT COMMENTS

Written comments, identified by Rev.Proc. 2017–52, may be submitted usingone of the following methods:

• By Mail:Internal Revenue ServiceAttn: CC:PA:LPD:PR (Rev. Proc.2017–52)Room 5203P.O. Box 7604Ben Franklin StationWashington, D.C. 20044

• By Hand or Courier Delivery: Sub-missions may be hand-deliveredMonday through Friday between thehours of 8 a.m. and 4 p.m. to:Courier’s DeskInternal Revenue ServiceAttn: CC:PA:LPD:PR(Rev. Proc. 2017–52)1111 Constitution Avenue, N.W.Washington, D.C. 20224

• Electronic: Alternatively, persons maysubmit comments electronically [email protected] include “Rev. Proc. 2017–52” inthe subject line of any electronic com-munications.

Comments should be submitted nolater than December 31, 2017.

SECTION 10. DRAFTINGINFORMATION

The principal authors of this revenueprocedure are Grid R. Glyer and RichardM. Heinecke of the Office of AssociateChief Counsel (Corporate). For further in-formation regarding this revenue proce-dure, contact Grid R. Glyer at (202) 317-6847 or Richard M. Heinecke at (202)317-5363 (not toll-free numbers).


APPENDIX

SECTION 1. INTRODUCTION

This Appendix sets forth the representations the taxpayer must make pursuant to section 3.04 of this revenue procedure.

SECTION 2. DEFINITIONS

For purposes of this Appendix, the following definitions apply:.01 Control is as defined in § 368(c)..02 Distributing and Controlled mean, respectively, the distributing corporation and the controlled corporation, as described in

§ 355(a)(1)(A). In the case of a Split-Up (defined in section 2.11 of this Appendix), a reference to Distributing means, whereapplicable, a reference to the resulting Controlled corporations.

.03 Distribution means either a distribution of stock or securities of Controlled with respect to Distributing stock (i.e., a Spin-Off(defined in section 2.09 of this Appendix)), an exchange of Distributing stock or securities for Controlled stock or securities (i.e.,a Split-Off (defined in section 2.10 of this Appendix) or a Split-Up (as defined in section 2.11 of this Appendix)), or a combinationthereof.

.04 Expanded Affiliated Group refers to all members of an affiliated group, as defined in § 1504(a) without regard to § 1504(b).

.05 Liability means any liability or other obligation without regard to whether it has been taken into account for Federal incometax purposes.

.06 Other Property means property other than stock and securities of Controlled.

.07 Property is as defined in § 317(a).

.08 SAG, DSAG, CSAG. SAG means a separate affiliated group as defined in 355(b)(3)(B). DSAG means the SAG of whichDistributing is the common parent immediately after the distribution. CSAG means the SAG of which Controlled is the commonparent immediately after the distribution.

.09 Spin-Off means a pro rata Distribution to the shareholders of Distributing of the stock of Controlled.

.10 Split-Off means a Distribution of the stock of Controlled to some (but not all) of the shareholders of Distributing in redemptionof some or all of their stock of Distributing.

.11 Split-Up means a liquidating Distribution in which Distributing distributes to its shareholders the stock of more than oneControlled, either pro rata or non-pro rata.

SECTION 3. REPRESENTATIONS

Control RequirementsSections 355(a)(1)(A), 355(a)(1)(D)(i) and 368(c)

See section 3.03(2) of this revenue procedure1 Distributing will have Control of Controlled immediately before the Distribution.

2 In the Distribution, Distributing will distribute on the same day all the stock and securities of Controlled that it holdsimmediately before the Distribution.

3 Alternative representations (see section 3.04(2) of this revenue procedure):(a) Distributing will not engage in a transaction, in anticipation of the Distribution, in which either (i) Distributingobtains Control of Controlled (including a recapitalization into Control but excluding a transaction that includes theformation of Controlled), or (ii) a corporation of which Distributing is not in Control becomes a member of theCSAG.(b) If Distributing engages in a transaction described in paragraph (a), Controlled will comply with one of the safeharbors set forth in Rev. Proc. 2016–40, 2016–32 I.R.B. 228.

4 No indebtedness owed by Controlled to Distributing after the Distribution will constitute stock or securities ofControlled or any other entity.

Shareholders Participating in a Spin-OffSections 355(a)(1) and 356(a)(1)

5 None of the Controlled stock, Controlled securities, or Other Property to be distributed in the Distribution will bereceived in any capacity other than that of a shareholder of Distributing.

6 No shareholder of Distributing will surrender Distributing stock in the Distribution.


Shareholders Participating in a Split-Up or Split-OffSections 355(a)(1) and 356(a)(1)

7 The fair market value of Controlled stock, Controlled securities, or Other Property to be received by eachshareholder of Distributing that surrenders Distributing stock will be approximately equal to the fair market value ofDistributing stock surrendered by the shareholder in the transaction.

Distributing Securities8 Alternative representations (see section 3.04(2) of this revenue procedure):

(a) Distributing will have no securities outstanding.(b) Distributing has securities outstanding, but it will not distribute Controlled stock, Controlled securities or OtherProperty to any holder of such securities in the Distribution, in satisfaction thereof.

Active Trade or Business RequirementSection 355(b)

See section 3.03(3) of this revenue procedure9 The business relied on by each of Distributing or the DSAG and Controlled or the CSAG to meet the active trade or

business requirement of § 355(b) is not the holding of Property for investment purposes.

10 With respect to the business relied on by each of Distributing or the DSAG and Controlled or the CSAG to meet theactive trade or business requirement of § 355(b), there have been no substantial operational changes since the end ofthe taxpayer’s most recent taxable year.

11 Alternative representations (see section 3.04(2) of this revenue procedure):(a) Following the Distribution, Distributing or the DSAG and Controlled or the CSAG each will continue,independently and with its separate employees, the active conduct of the business on which it relies to meet theactive trade or business requirement of § 355(b).(b) Following the Distribution, Distributing or the DSAG and Controlled or the CSAG each will continue,independently and with its separate employees, the active conduct of its share of all the integrated activities of thebusiness on which it relies to meet the active trade or business requirement of § 355(b), as conducted by Distributingor the DSAG prior to consummation of the transaction.Note: Distributing or the DSAG and Controlled or the CSAG may share employees after the Distribution as long asthe parties enter into agreements with respect to those employees based on arm’s-length terms for a limited period oftime consistent with Rev. Rul. 2003–75, 2003–75, I.R.B. 79.

12 Immediately after the Distribution, the fair market value of the gross assets of the trade(s) or business(es) in whicheach of Distributing or the DSAG and Controlled or the CSAG will rely to satisfy the active trade or businessrequirement of § 355(b) will be, in each case, at least 5 percent of the total fair market value of the gross assets ofthat corporation or SAG. See section 4.01(30) of Rev. Proc. 2017–3.

Hot stockSection 355(a)(3)(B)

See section 3.03(5) of this revenue procedure13 Distributing will not have acquired any Controlled stock in a transaction in which gain or loss was recognized

during the five-year period immediately preceding the Distribution.

DeviceSection 1.355–2(d)

See section 3.03(6) of this revenue procedure14 The transaction will not be used principally as a device for the distribution of the earnings and profits of Distributing

or Controlled or both. See § 355(a)(1)(B).

15 Alternative representations (see section 3.04(2) of this revenue procedure):(a) Immediately after the Distribution, the fair market value of the gross investment assets of each of Distributingand Controlled will be less than two-thirds of the fair market value of its total gross assets. See section 5.01(3) ofRev. Proc. 2017–3.(b) Immediately after the Distribution, the fair market value of the gross assets of the trade(s) or business(es) onwhich each of Distributing and Controlled relies to satisfy the active trade or business requirement of § 355(b) willbe 10 percent or more of the fair market value of its gross investment assets. See section 5.01(3) of Rev. Proc.2017–3.(c) Immediately after the Distribution, the ratio of the fair market value of the gross investment assets to the fairmarket value of the gross assets other than the gross investment assets of Distributing or Controlled will not be threetimes or more of such ratio for the other corporation. See section 5.01(3) of Rev. Proc. 2017–3.


Business PurposeSection 1.355–2(b)

See section 3.03(7) of this revenue procedure16 The Distribution is motivated, in whole or substantial part, by one or more of the corporate business purposes

described in this request for ruling.

Section 357(b)17 Any Liabilities assumed (within the meaning of § 357(d)) by Controlled were incurred in the ordinary course of

business and are associated with any assets transferred.

Sections 357(c) and 361(b)(3)18 The total adjusted basis and the fair market value of assets transferred by Distributing to Controlled will each equal

or exceed the sum of:(a) The total amount of the Liabilities assumed (within the meaning of § 357(d)) by Controlled, and(b) The total amount of any money and the fair market value of other property, if any, received by Distributing andtransferred to its shareholders and its creditors.

Sections 361(b)(3) and (c)(3)See section 3.03(12) of this revenue procedure

19 Any Other Property issued or transferred by Controlled to Distributing in pursuance of the plan of reorganizationwill be transferred by Distributing to its shareholders in pursuance of the plan of reorganization or to its creditors inconnection with the reorganization.

Controlled Securities20 Any securities issued by Controlled to Distributing in pursuance of the plan of reorganization will be transferred by

Distributing to its shareholders in pursuance of the plan of reorganization or to its creditors in connection with thereorganization.

Solvency of Distributing and Controlled21 Immediately after the transaction, the fair market value of the assets of each of Distributing and Controlled will

exceed the amount of its Liabilities.

Investment Tax Credit Recapture22 Alternative representations (see section 3.04(2) of this revenue procedure):

(a) No Property will be transferred by Distributing to Controlled as part of the Distribution for which an investmentcredit determined under § 46 has been (or will be) claimed.(b) With respect to Property being transferred by Distributing to Controlled as part of the Distribution for which aninvestment credit determined under § 46 has been (or will be) claimed, the income tax obligation for the taxableyear in which the Property is transferred will be adjusted pursuant to § 50(a)(1) or (a)(2) to reflect an earlydisposition of the Property.

Matching of income and deductionsSee sections 3.03(13) and 3.04(1) of this revenue procedure

23 The transaction does not involve and will not result in a situation in which one party recognizes income but anotherparty recognizes the deductions associated with such income or a situation in which one party owns Property butanother party recognizes the income associated with such Property.

24 If one or more parties use the cash method of accounting, Distributing will neither accumulate its receivables normake extraordinary payment of its payables in anticipation of the transaction.

25 If Distributing uses the cash method of accounting or a similar method and Controlled uses the accrual method or asimilar method, then:(a) No income item, including an account receivable, nor any item resulting from a sale, exchange or disposition ofProperty that would have resulted in income to Distributing, will be transferred to Controlled if Distributing hasearned the right to receive the income under the accrual or similar method of accounting, and(b) No item of expense will be transferred to Controlled if Distributing could claim a deduction for the expenseunder the accrual or similar method of accounting.

Investment CompaniesSection 368(a)(2)(F)

26 No two parties to the transaction are investment companies as defined in § 368(a)(2)(F)(iii) and (iv).


Section 355(d)Section 1.355–6

See section 3.03(15) of this revenue procedure27 Immediately after the Distribution, no person will hold stock possessing 50 percent or more of the total combined

voting power of all classes of the Distributing stock entitled to vote, or 50 percent or more of the total value ofshares of all classes of the Distributing stock, that was acquired by purchase during the five-year period ending onthe date of the Distribution.The term person is determined applying the aggregation rules of § 355(d)(7); the term purchase is used as defined in§ 355(d)(5) and (8); and the term five-year period is determined applying § 355(d)(6).

28 Immediately after the Distribution, no person will hold stock possessing 50 percent or more of the total combinedvoting power of all classes of the Controlled stock entitled to vote, or 50 percent or more of the total value of sharesof all classes of the Controlled stock, that was acquired by purchase during the five-year period ending on the dateof the Distribution.The term person is determined applying the aggregation rules of § 355(d)(7); the term purchase is used as defined in§ 355(d)(5) and (8); and the term five-year period is determined applying § 355(d)(6).

Section 355(e)Sections 1.355–7 and 1.355–8T (or successor regulations)

See section 3.03(16) of this revenue procedure29 Stock representing a 50-percent or greater interest (within the meaning of § 355(d)(4)) in Distributing or Controlled

(including a predecessor or successor within the meaning of § 1.355–8T (or successor regulations)) will not beacquired by any person or persons in a plan or series of related transactions (within the meaning of § 1.355–7) thatincludes the Distribution.

Section 355(g)See section 3.03(18) of this revenue procedure

30 Immediately after the Distribution, neither Distributing nor Controlled will be a disqualified investment corporationwithin the meaning of § 355(g)(2).

Section 355(h)See section 3.03(19) of this revenue procedure

31 Alternative representations (see section 3.04(2) of this revenue procedure):(a) Neither Distributing nor Controlled will be a real estate investment trust (within the meaning of § 856) (a“REIT”) at the time of the Distribution.(b) Immediately after the Distribution, Distributing and Controlled will both be REITs.(c)(i) Distributing has been a REIT at all times during the 3-year period ending on the date of the Distribution; (ii)Controlled has been a taxable REIT subsidiary (as defined in § 856(l)) of Distributing at all times during suchperiod; and (iii) Distributing had control (as defined in § 368(c) applied by taking into account stock owned directlyor indirectly, including through one or more corporations or partnerships, by Distributing) of Controlled at all timesduring such period.Controlled will be treated as meeting the requirements of (c)(ii) and (c)(iii) if the stock of Controlled was distributedby a taxable REIT subsidiary in a transaction to which § 355 (or so much of § 356 as relates to § 355) applies, andthe assets of Controlled consist solely of the stock or assets held by one or more taxable REIT subsidiaries ofDistributing meeting the requirements of (c)(ii) and (c)(iii). For purposes of (c)(iii), control of a partnership meansownership of 80 percent of the profits interest and 80 percent of the capital interests.

Related Transactions32 No intercorporate debt will exist between Distributing and Controlled at the time of, or subsequent to, the

Distribution of Controlled stock.

33 Payments made in connection with all continuing transactions, if any, between Distributing and Controlled after theDistribution will be for fair market value based on arm’s-length terms.

34 Distributing and Controlled each will pay its own expenses, if any, incurred in connection with the Distribution.

35 The payment of cash in lieu of fractional shares of Controlled is solely for the purpose of avoiding the expense andinconvenience of issuing fractional shares and does not represent separately bargained-for consideration. Thefractional share interests of each Distributing shareholder will be aggregated and no Distributing shareholder ofrecord will receive cash in an amount equal to or greater than the value of one full share of Controlled.


Consolidated Return MattersIntercompany Transactions

Sections 1.1502–13 and 1.1502–1436 Immediately before the Distribution, items of income, gain, loss, deduction, and credit will be taken into account as

required by the applicable intercompany transaction regulations (See §§ 1.1502–13 and 1.1502–14 as in effect beforethe publication of § 1.1502–13 in T.D. 8597, 1995–2 C.B. 147, and as currently in effect).

37 There is no loss subject to § 1.1502–13 that will be taken into account as a result of a transaction related to theDistribution.

Excess Loss AccountsSection 1.1502–19

38 Any excess loss account in the stock of Controlled or in the stock of any lower-tier Controlled subsidiary will betaken into account as required by § 1.1502–19.

Intercompany ObligationSection 1.1502–13(g)

39 Pursuant to § 1.1502–13(g)(3)(ii), no deemed satisfaction and reissuance will occur with respect to securities or otherobligations of Controlled distributed by Distributing to its shareholders or creditors in pursuance of the plan ofreorganization or in connection with the reorganization.

Affiliated Group and Section 358(g)40 With respect to any Distribution of stock from one member of an Expanded Affiliated Group to another member of

the Expanded Affiliated Group, the § 358 allocation will not result in the stock of Controlled having a higher basisthan it had immediately prior to the Distribution.

S Corporation Matters41 Alternative representations (see section 3.04(2) of this revenue procedure):

(a) Distributing is not an S corporation (within the meaning of § 1361(a)) and will not be an S corporation at thetime of the Distribution, and there is no plan or intention by Distributing or Controlled to make an S corporationelection pursuant to § 1362(a).(b) If Distributing is an S corporation within the meaning of § 1361(a), Controlled will elect to be an S corporationpursuant to § 1362(a) on the first available date after the Distribution, and there is no plan or intention to revoke orotherwise terminate the S corporation election of either Distributing or Controlled.

International IssuesSee section 3.04(1) of this revenue procedure

FIRPTA42 Neither Distributing nor Controlled will have been a U.S. real property holding corporation (as defined in

§ 897(c)(2)) at any time during the five-year period preceding the Distribution, and neither will be a U.S. realproperty holding corporation immediately after the Distribution.

CFC Status43 Neither Distributing nor Controlled will be a controlled foreign corporation (within the meaning of § 957(a))

immediately before or after the Distribution.

Inversions44 The Distribution is not part of a plan (or series of related transactions) resulting in an acquisition described in

§ 7874(a)(2)(B)(i).

Miscellaneous45 Distributing will not dispose of any Controlled stock in anticipation of the Distribution.

46 Controlled will not issue stock or securities to a person other than Distributing in anticipation of the Distribution.


Part IV. Items of General InterestUse of Truncated TaxpayerIdentification Numbers onForms W–2, Wage and TaxStatement, Furnished toEmployees

REG–105004–16

AGENCY: Internal Revenue Service(IRS), Treasury.

ACTION: Notice of proposed rulemaking.

SUMMARY: This document containsproposed amendments to the regulationsunder sections 6051 and 6052 of the In-ternal Revenue Code (Code). To aid em-ployers’ efforts to protect employees fromidentity theft, these proposed regulationswould amend existing regulations to per-mit employers to voluntarily truncate em-ployees’ social security numbers (SSNs)on copies of Forms W–2, Wage and TaxStatement, that are furnished to employeesso that the truncated SSNs appear in theform of IRS truncated taxpayer identifica-tion numbers (TTINs). These proposedregulations also would amend the regula-tions under section 6109 to clarify theapplication of the truncation rules toForms W–2 and to add an example illus-trating the application of these rules. Ad-ditionally, these proposed amendmentswould delete obsolete provisions and up-date cross references in the regulationsunder sections 6051 and 6052. These pro-posed regulations affect employers whoare required to furnish Forms W–2 andemployees who receive Forms W–2.

DATES: Written or electronic commentsand requests for a public hearing must bereceived by December 18, 2017.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG–105004–16), room5203, Internal Revenue Service, P.O. Box7604, Ben Franklin Station, Washington,DC 20044. Submissions may be hand-delivered between the hours of 8 a.m. and4 p.m. to CC:PA:LPD:PR (REG–105004–16), Courier’s Desk, InternalRevenue Service, 1111 Constitution Ave-nue, N.W., Washington, DC, or sent via

the Federal eRulemaking Portal at www.regulations.gov (REG–105004–16).

FOR FURTHER INFORMATION CON-TACT: Concerning these proposed regu-lations, Eliezer Mishory, (202) 317-6844;concerning submissions of commentsand/or requests for a hearing, ReginaJohnson (202) 317-6901 (not toll-freenumbers).

SUPPLEMENTARY INFORMATION:

Background:

This document contains proposedamendments to the Income Tax Regula-tions (26 CFR part 1), the EmploymentTaxes and Collection of Income Tax atSource Regulations (26 CFR part 31), andthe Procedure and Administration Regu-lations (26 CFR part 301) regarding state-ments that are required to be furnished toemployees by employers or other personsunder sections 6051 and 6052 of the Code.Section 6051(a) generally requires that anemployer provide to each employee on orbefore January 31st of the succeeding yeara written statement that shows the em-ployee’s total amount of wages and thetotal amount deducted and withheld as taxfrom those wages, along with other infor-mation, for each calendar year. Employersmust use Form W-2 (or a substitute state-ment that complies with applicable reve-nue procedures relating to such state-ments) to provide the informationrequired by section 6051(a) to employees.See § 31.6051–1(a)(1)(i); Rev. Proc.2016–54, 2016–45 I.R.B. 685, also pub-lished as Publication 1141, “GeneralRules and Specifications for SubstituteForms W–2 and W–3,” or any successorguidance. Section 6051(d) provides that,when required to do so by regulations,employers must file with the Secretaryduplicates of the forms required to be fur-nished to employees under section 6051.Section 31.6051–2(a) generally requiresemployers to file Social Security Admin-istration copies of Forms W–2 with theSocial Security Administration. A personmaking a payment of third-party sick payto an employee of another employer(payee) is required under section 6051(f)(1) to furnish a written statement to the

employer for whom services are normallyrendered containing certain information,including the payee’s SSN. Under certainconditions, the employer for whom ser-vices are normally rendered is requiredunder section 6051(f)(2) to furnish a FormW–2 to the payee. This situation mayarise, for example, when an insurancecompany is making payments to an em-ployee of another employer because theemployee is temporarily absent fromwork due to injury, sickness or disabil-ity, and the insurance company has sat-isfied the necessary requirements under§ 32.1(e) of the Temporary EmploymentTax Regulations under the Act of De-cember 29, 1981 (Pub. L. 97–123) totransfer the obligation to do Form W–2reporting to the employer. Employersalso must use Form W–2 to file andfurnish information regarding paymentof wages in the form of group-term lifeinsurance under section 6052.

Section 6109(a) authorizes the Secre-tary to prescribe regulations with respectto the inclusion in returns, statements, orother documents of an identifying numberas may be prescribed for securing properidentification of a person. On July 15,2014, the Treasury Department and theIRS published in the Federal Register(79 FR 41127–02) final regulations (TD9675) authorizing the use of TTINs oncertain payee statements and certain otherdocuments. These final regulations werein response to concerns about the risks ofidentity theft, including its effect on taxadministration.

Section 301.6109–4(b) generally pro-vides that a TTIN may be used to identifyany person on any statement or other doc-ument that the internal revenue laws re-quire to be furnished to another person.Under § 301.6109–4(a), a TTIN is anindividual’s SSN, IRS individual taxpayeridentification number (ITIN), IRS adop-tion taxpayer identification number(ATIN), or IRS employer identificationnumber (EIN) in which the first fivedigits of the nine-digit number are re-placed with Xs or asterisks. For exam-ple, a TTIN replacing an SSN appears inthe form XXX–XX–1234 or ***–**–1234. Section 301.6109 – 4(b)(2)(ii) pro-hibits using TTINs if, among other


things, a statute, regulation, other guid-ance published in the Internal RevenueBulletin, form, or instructions specifi-cally requires the use of an SSN. Addi-tionally, § 301.6109 – 4(b)(2)(iii) pro-hibits the use of TTINs on any return,statement, or other document that is re-quired to be filed with or furnished tothe IRS.

Prior to being amended by the Protect-ing Americans from Tax Hikes (PATH)Act of 2015, Public Law No. 114–113,div. Q, title IV, 129 Stat. 2242, section6051(a)(2) specifically required employ-ers to include their employees’ SSNs oncopies of Forms W–2 that are furnished toemployees. In addition, current regula-tions under § 31.6051–1, as well as formsand instructions, require employers to in-clude their employees’ SSNs on copies ofForms W–2 that are furnished to employ-ees. Section 409 of the PATH Actamended section 6051(a)(2) by striking“his social security account number” fromthe list of information required on FormW–2 and inserting “an identifying numberfor the employee” instead. This statutoryamendment is effective for statements is-sued after December 18, 2015, the datethat the PATH Act was signed into law.Because an SSN is no longer required bysection 6051, the Treasury Departmentand the IRS propose amending the regu-lations to permit employers to truncateemployees’ SSNs to appear in the form ofTTINs on copies of Forms W–2 that arefurnished to employees. If the proposedregulations are finalized without change,the IRS intends to incorporate the revisedregulations into forms and instructions,permitting employers to use a TTIN onthe employee copy of the Form W–2. See§ 301.6109–4(b)(2)(i) and (ii).

Explanation of Provisions

Truncated SSN permitted on employee’scopies of Form W–2

These proposed regulations amend§ 31.6051–1 to permit employers to trun-cate employees’ SSNs to appear in theform of a TTIN on copies of Forms W–2that are furnished to employees under sec-tion 6051. Consistent with the rule in§ 301.6109–4(b)(2)(iii), prohibiting theuse of TTINs on any return, statement, orother document that is required to be filed

with or furnished to the IRS, these pro-posed regulations amend § 31.6051–2 toclarify that employers may not truncate anemployee’s SSN to appear in the form ofa TTIN on a copy of a Form W–2 that isfiled with the Social Security Administra-tion. This result is appropriate becauseboth the IRS and the SSA need to utilizeForms W–2 to properly identify individu-als to be able to carry out their respectiveduties.

Consistent with the rule in § 301.6109–4(b)(2)(ii) that prohibits using TTINs if,among other things, a statute specificallyrequires the use of an SSN, the proposedregulations also amend § 31.6051–3 to clar-ify that a payee’s SSN may not be truncatedto appear in the form of a TTIN on a state-ment furnished to the employer of the payeewho received sick pay from a third partybecause section 6051(f)(1)(A)(i) specificallyrequires such a statement to contain the em-ployee’s SSN. Nonetheless, these proposedregulations permit employers to truncatepayees’ SSNs to appear in the form ofTTINs on copies of Forms W–2 that arefurnished under section 6051(f)(2) to payeesthat report such third-party sick pay, in ac-cordance with the general rule governing thereporting of wages to employees on FormsW–2 under section 6051(a), because section6051(f)(2) does not specifically require theuse of an SSN.

Further, these proposed regulationsamend § 1.6052–2 to permit employers totruncate employees’ SSNs to appear in theform of TTINs on copies of Forms W–2that are furnished to employees under sec-tion 6052(b) regarding payment of wagesin the form of group-term life insurance.

These proposed regulations amend§ 301.6109–4 to clarify that truncation isnot allowed on any return, statement, orother document that is required to be filedwith or furnished to the Social SecurityAdministration under the internal revenuelaws. These proposed regulations alsoclarify the rule prohibiting truncation if astatute, regulation, other guidance pub-lished in the Internal Revenue Bulletin,form, or instructions, specifically requiresuse of a SSN, ITIN, ATIN, or EIN. Theproposed regulations provide that trunca-tion is allowed if a statute or IRS guidance(e.g., regulations, forms, instructions),that specifically requires use of a SSN,ITIN, ATIN, or EIN, also specifically

states that the taxpayer identifying num-ber may be truncated. These proposed reg-ulations also add an example illustratingthe application of these rules to FormsW–2. These proposed regulations alsoamend the existing example for clarity.

Miscellaneous updates to regulationsunder sections 6051 and 6052

In addition to the amendments relatingto the truncation of employees’ SSNs toappear in the form of TTINs in specificcircumstances, these proposed regulationseliminate obsolete provisions and updatecross references in the regulations undersections 6051 and 6052, as explained be-low.

First, these proposed regulations amend§ 31.6051–1 to remove obsolete provisionsregarding compensation, as defined in theRailroad Retirement Tax Act, paid during1968, 1969, 1970, and 1971 and reported onthe now obsolete Form W–2 (RR); the spe-cial rule for statements with respect to therefundable earned income credit for FormW–2 for 1987 and 1988; and references tothe annual contribution base (repealed in1993) for wages subject to the Hospital In-surance tax (commonly known as Medicaretax).

Second, these proposed regulationsamend § 31.6051–1 to remove obsoletecross references, including a cross refer-ence to former § 301.6676–1 relating tothe penalty for failure to report an identi-fication number or an account number,and a cross reference to section 6723(prior to its amendment in 1989) that wasrelevant for Forms W–2 that were duefrom the beginning of 1987 through theend of 1989.

Third, these proposed regulationsamend § 31.6051–2 to update now inac-curate cross references resulting from stat-utory and regulatory changes regardingpenalties for failures to file, and to removea cross reference to section 6723 (prior toits amendment in 1989) that was relevantfor Forms W–2 that were due from thebeginning of 1987 through the end of1989. These proposed regulations alsochange the title of § 31.6051–2 from “In-formation returns on Form W–3 and In-ternal Revenue Service copies of FormsW–2” to “Information returns on FormW–3 and Social Security Administration


copies of Forms W–2,” to conform withthe text of the regulation that refers to theSocial Security Administration copies ofForm W–2. In addition, these proposedregulations remove obsolete references in§ 31.6051–2 to the requirements to submitinformation on magnetic tape and insert areference to the requirements to submitinformation on magnetic media.

Fourth, these proposed regulationsamend § 31.6051–3 to remove the obso-lete transition rule for third-party sick paythat was paid to a payee after December31, 1980, and before May 1, 1981.

Fifth, these proposed regulationsamend § 1.6052–2 to remove an obso-lete rule that allowed employers to use astatement other than a Form W–2 tosatisfy the requirement to furnish astatement to an employee with respect towages paid in the form of group-termlife insurance. This rule was relevant foryears prior to 1973, before § 1.6052–1was amended to require employers toreport wages in the form of group-termlife insurance on Form W–2. At thesame time, to conform to this new re-quirement, § 1.6052–2 was amended toprovide that the requirement to furnish astatement to an employee with respect towages paid in the form of group-termlife insurance may be satisfied by fur-nishing to the employee the employee’scopy of Form W–2 that was filed pursu-ant to § 1.6052–1. Because the transi-tion period to require employers to fileForm W–2 has long since passed andbecause the Treasury Department andthe IRS understand that copies of FormsW–2 are used to satisfy the requirementto furnish statements to employees un-der § 1.6052–2, these proposed regula-tions require employers to furnish to em-ployees the employees’ copies of FormsW–2 that were filed pursuant to§ 1.6052–1, and these proposed regula-tions make conforming changes through-out that section.

Finally, these proposed regulations up-date the now inaccurate cross referenceresulting from statutory changes regardingpenalties for failures to furnish statementsunder section 6052 and remove thedeemed compliance rule, which appliedonly to years before 1972.

Proposed effective/applicability date

These proposed regulations will be effec-tive on the date of the publication of theTreasury Decision adopting these rules asfinal in the Federal Register. These pro-posed regulations amend the effective/appli-cability date provisions in § 31.6051–1,§ 31.6051–3, and § 301.6109–4, and addapplicability date provisions to § 1.6052–2and § 31.6051–2. Several state tax adminis-trators have requested additional time todevelop systems to process the copies ofForms W–2 filed with state income taxreturns that may contain truncatedSSNs. In light of this request, these pro-posed regulations will not apply toForms W–2 required to be furnished be-fore January 1, 2019. Accordingly, theseproposed regulations provide that theseregulations, as amended, will be appli-cable for statements required to be filedand furnished under sections 6051 and6052 after December 31, 2018.

Statement of Availability of IRSDocuments

IRS Revenue Procedures, RevenueRulings notices, and other guidance citedin this preamble are published in the In-ternal Revenue Bulletin (or CumulativeBulletin) and are available from the Su-perintendent of Documents, U.S. Govern-ment Printing Office, Washington, DC20402, or by visiting the IRS website atwww.irs.gov.

Special Analyses

Certain IRS regulations, includingthis one, are exempt from the require-ments of Executive Order 12866, as sup-plemented and reaffirmed by ExecutiveOrder 13563. Therefore, a regulatory as-sessment is not required. Because theseproposed regulations do not impose acollection of information on small enti-ties, the Regulatory Flexibility Act (5U.S.C. chapter 6) does not apply. Pur-suant to section 7805(f) of the Code, thisnotice of proposed rulemaking has beensubmitted to the Chief Counsel for Ad-vocacy of the Small Business Adminis-tration for comment on its impact onsmall business.

Comments and Requests for PublicHearing

Before these proposed regulations areadopted as final regulations, considerationwill be given to any comments that aresubmitted timely to the IRS as prescribedin the preamble under the ADDRESSESsection. The Treasury Department and theIRS request comments on all aspects ofthese proposed regulations. All commentssubmitted will be made available at www.regulations.gov or upon request. A publichearing may be scheduled if requested inwriting by any person that timely submitswritten comments. If a public hearing isscheduled, notice of the date, time, andplace for the hearing will be published inthe Federal Register.

Drafting Information

The principal author of these proposedregulations is Eliezer Mishory of the Of-fice of the Associate Chief Counsel (Pro-cedure and Administration).

* * * * *

Proposed Amendments to theRegulations

Accordingly, 26 CFR parts 1, 31 and301 are proposed to be amended as fol-lows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation forpart 1continues to read in part as follows:

Authority: 26 U.S.C. 7805, unless oth-erwise noted.

* * * * *Par. 2. Section 1.6052–2 is amended

by:1. Revising paragraph (a).2. Removing paragraph (b).3. Redesignating paragraph (e) as new

paragraph (b).4. Revising paragraphs (c) and (d).5. Removing paragraphs (f) and (g).

The revisions read as follows:

§ 1.6052–2 Statements to be furnishedemployees with respect to wages paid inthe form of group-term life insurance.

(a) Requirement. Every employer filinga return under section 6052(a) and§ 1.6052–1, with respect to group-term


life insurance on the life of an employee,shall furnish to the employee whose nameis set forth in such return the tax returncopy and the employee’s copy of FormW–2. Each copy of Form W–2 must showthe information required to be shown onthe Form W–2 filed under § 1.6052–1. Anemployer may truncate an employee’ssocial security number to appear in theform of an IRS truncated taxpayer iden-tification number (TTIN) on copies ofForm W–2 furnished to the employee.For provisions relating to the use ofTTINs, see § 301.6109 – 4 of this chap-ter (Procedure and Administration Reg-ulations). The rules in § 31.6051–1 ofthis chapter (Employment Taxes andCollection of Income Tax at SourceRegulations) shall apply with respect tothe means and time (including exten-sions thereof) for furnishing the em-ployee’s copy of Form W–2 required bythis section to the employee and makingcorrections to such form.* * * * *

(c) Penalty. For provisions relating tothe penalty provided for failure to furnisha statement under this section, see section6722 and the regulations thereunder.

(d) Applicability date. This section isapplicable for statements required to befurnished under section 6052 after De-cember 31, 2018.

PART 31—EMPLOYMENT TAXESAND COLLECTION OF INCOMETAX AT SOURCE

Par. 3. The authority citation for part31 is amended by adding an entry in nu-merical order to read in part as follows:

Authority: 26 U.S.C. 7805 * * *Section 31.6051–3 also issued under

26 U.S.C. 6051.* * * * *Par. 4. Section 31.6051–1 is amended

by:1. Revising paragraphs (a)(1)(i)(b) and

(b)(1)(ii).2. Removing paragraph (d)(1)(ii)(C).3. Revising paragraphs (f), (h)(2), and

(i).4. Removing paragraph (j)(8).5. Adding paragraph (k).

The revisions and addition read as fol-lows:

§ 31.6051–1 Statements for employees.

(a) * * *(1) * * *(i) * * *(b) The name, address, and social se-

curity number of the employee, whichmay be truncated to appear in the form ofan IRS truncated taxpayer identificationnumber (TTIN) on copies of Forms W–2that are furnished to the employee (forprovisions relating to the use of TTINs,see § 301.6109–4 of this chapter (Proce-dure and Administration Regulations)), ifwages as defined in section 3121(a) havebeen paid or if the Form W–2 is requiredto be furnished to the employee,* * * * *

(b) * * *(1) * * *(ii) The name, address, and social se-

curity number of the employee, whichmay be truncated to appear in the form ofan IRS truncated taxpayer identificationnumber (TTIN) on copies of Forms W–2that are furnished to the employee (forprovisions relating to the use of TTINs,see § 301.6109–4 of this chapter (Proce-dure and Administration Regulations)),* * * * *

(f) Statements with respect to compen-sation, as defined in the Railroad Retire-ment Tax Act—(1) Notification of possiblecredit or refund. With respect to compen-sation (as defined in section 3231(e)), ev-ery employer (as defined in section3231(a)) who is required to deduct andwithhold from an employee (as defined insection 3231(b)) a tax under section 3201,shall include on or with the statement re-quired to be furnished to such employeeunder section 6051(a), a notice concerningthe provisions of this title with respect tothe allowance of a credit or refund of thetax on wages imposed by section 3101(b)and the tax on compensation imposed bysection 3201 or 3211 which is treated as atax on wages imposed by section 3101(b).

(2) Information to be supplied to em-ployees upon request. With respect tocompensation (as defined in section 3231(e)), every employer (as defined in section3231(a)) who is required to deduct andwithhold tax under section 3201 from anemployee (as defined in section 3231(b))who has also received wages during suchyear subject to the tax imposed by section

3101(b), shall upon request of such em-ployee furnish to him or her a writtenstatement showing—

(i) The total amount of compensationwith respect to which the tax imposed bysection 3101(b) was deducted;

(ii) The total amount of employee taxunder section 3201 deducted and withheld(increased by any adjustment in the cal-endar year for overcollection, or de-creased by any adjustment in such year forundercollection, of such tax during anyprior year); and

(iii) The proportion thereof (expressedeither as a dollar amount, or a percentageof the total amount of compensation asdefined in section 3231(e), or as a percent-age of the total amount of employee taxunder section 3201) withheld as tax undersection 3201 for financing the cost of hos-pital insurance benefits.

(h) * * *(2) Time for furnishing statement. The

statement required by this paragraph (h)for a calendar year shall be furnished—

(i) In the case of an employee who isrequired to be furnished a Form W–2,Wage and Tax Statement, for the calendaryear, within one week of (before or after)the date that the employee is furnished atimely Form W–2 for the calendar year(or, if a Form W–2 is not so furnished, onor before the date by which it is requiredto be furnished); and

(ii) In the case of an employee who isnot required to be furnished a Form W–2for the calendar year, on or before Febru-ary 7 of the year succeeding the calendaryear.* * * * *

(i) Cross references. For provisions re-lating to the penalties provided for thewillful furnishing of a false or fraudulentstatement, or for the willful failure to fur-nish a statement, see § 31.6674–1 andsection 7204. For additional provisionsrelating to the inclusion of identificationnumbers and account numbers in state-ments on Form W–2, see §§ 31.6109–1and 31.6109–4. For the penalties applica-ble to information returns and payee state-ments, see sections 6721–6724 and theregulations thereunder.* * * * *

(k) Applicability date. This section isapplicable for statements required to be


furnished under section 6051 after De-cember 31, 2018.

Par. 5. Section 31.6051–2 is amendedby revising paragraphs (a) and (c) andadding paragraph (d) to read as follows:

§ 31.6051–2 Information returns onForm W–3 and Social SecurityAdministration copies of Forms W–2.

(a) In general. Every employer who isrequired to make a return of tax under§ 31.6011(a)–1 (relating to returns underthe Federal Insurance Contributions Act),§ 31.6011(a)–4 (relating to returns of in-come tax withheld from wages), or§ 31.6011(a)–5 (relating to monthly re-turns) for a calendar year or any periodtherein, shall file the Social Security Ad-ministration copy of each Form W–2 re-quired under § 31.6051–1 to be furnishedby the employer with respect to wagespaid during the calendar year. An em-ployer may not truncate an employee’ssocial security number to appear in theform of an IRS truncated taxpayer identi-fication number (TTIN) on copies of FormW–2 filed with the Social Security Ad-ministration. Each Form W–2 and thetransmittal Form W–3 shall together con-stitute an information return to be filedwith the Social Security Administration asindicated on the instructions to such forms.For the requirement to submit the informa-tion on Form W–2 on magnetic media, seesection 6011(e) and § 301.6011–2 of thischapter (Procedure and Administration Reg-ulations).* * * * *

(c) Cross references. For provisions re-lating to the time for filing the informationreturns required by this section and toextensions of the time for filing, see sec-tions 6071 and 6081 and the regulationsthereunder. For the penalties applicable toinformation returns and payee statements,see sections 6721 through 6724 and theregulations thereunder.

(d) Applicability date. This section isapplicable for statements required to befiled under section 6051 after December31, 2018.

Par. 6. Section 31.6051–3 is amendedby revising paragraphs (a)(1)(i), (b)(1),(e)(3), and (f) and removing paragraph (g)to read as follows:

§ 31.6051–3 Statements required in caseof sick pay paid by third parties.

(a) * * *(1) * * *(i) The name and, if there is withhold-

ing from sick pay under section 3402(o)and the regulations thereunder, the socialsecurity account number of the payee (thepayee’s social security number may not betruncated to appear in the form of an IRStruncated taxpayer identification number(TTIN)),

(b) * * *(1) All of the information required to be

furnished under paragraph (a) of this sec-tion, but the employer may truncate the pay-ee’s social security number to appear in theform of an IRS truncated taxpayer identifi-cation number (TTIN) on copies of FormsW–2 that are furnished to the payee (forprovisions relating to the use of TTINs, see§ 301.6109–4 of this chapter (Procedureand Administration Regulations)),* * * * *

(e) * * *(3) The provisions of section 6109 (re-

lating to identifying numbers) and the reg-ulations thereunder shall be applicable toForm W–2 and to any payee of sick pay towhom a statement on Form W–2 is re-quired by this section to be furnished. Theemployer must include the social securitynumber of the payee on all copies ofForms W–2. The employer may truncatethe payee’s social security number to ap-pear in the form of an IRS truncated tax-payer identification number (TTIN) oncopies of Forms W–2 that are furnished tothe payee. For provisions relating to theuse of truncated taxpayer identificationnumbers (TTINs), see § 301.6109–4 ofthis chapter (Procedure and Administra-tion Regulations).

(f) Applicability date. This section isapplicable for statements required to befurnished under section 6051 after De-cember 31, 2018.

PART 301 - PROCEDURE ANDADMINISTRATION

Par. 7. The authority citation for part301 continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * *Par. 8. Section 301.6109–4 is amended

by revising paragraphs (b)(2)(ii) and (iii),(b)(3), and (c) to read as follows:

§ 301.6109–4 IRS truncated taxpayeridentification numbers.

* * * * *(b) * * *(2) * * *(ii) A TTIN may not be used on a state-

ment or document if a statute, regulation,other guidance published in the InternalRevenue Bulletin, form, or instructions, spe-cifically requires use of a SSN, ITIN, ATIN,or EIN and does not specifically state thatthe taxpayer identifying number may betruncated. For example, a TTIN may not beused on a Form W–8ECI or FormW–8IMY because the forms and/or forminstructions specifically prescribe use of anSSN, EIN, or ITIN for the U.S. taxpayeridentification number.

(iii) A TTIN may not be used on anyreturn, statement, or other document thatis required to be filed with or furnished tothe Internal Revenue Service or the SocialSecurity Administration in the case offorms required to be filed with the SocialSecurity Administration under the internalrevenue laws.* * * * *

(3) Examples. The provisions of thisparagraph (b) are illustrated by the follow-ing examples:

(i) Example 1. Pursuant to section 6051(d) and§ 31.6051–2(a) of this chapter, Employer files theSocial Security Administration copy of Employee’sForm W–2, Wage and Tax Statement, with the So-cial Security Administration. Employer may nottruncate any identifying number on the Social Secu-rity Administration copy. Pursuant to section6051(a) and § 31.6051–1(a)(1)(i) of this chapter,Employer furnishes copies of Form W–2 to Em-ployee. There are no applicable statutes, regula-tions, other published guidance, forms, or instruc-tions that prohibit use of a TTIN on Form W–2,and § 31.6051–1(a)(1)(i) specifically permits trun-cating employees’ SSNs. Accordingly, Employermay truncate Employee’s SSN to appear in theform of a TTIN on copies of Form W–2 furnishedto Employee. Employer may not truncate its ownEIN on copies of Form W–2 furnished to Em-ployee.

(ii) Example 2. On April 5, year 1, Donor con-tributes a used car with a blue book value of $1100to Charitable Organization. On April 20, year 1,Charitable Organization sends Donor copies B and Cof the Form 1098–C as a contemporaneous writtenacknowledgement of the $1100 contribution as re-quired by section 170(f)(12). In late-February, year2, Charitable Organization prepares and files copy Aof Form 1098–C with the IRS, reporting Donor’sdonation of a qualified vehicle in year 1. CharitableOrganization may truncate Donor’s SSN to appear inthe form of a TTIN in the Donor’s Identification


Number box on copies B and C of the Form 1098–Cbecause copies B and C of the Form 1098–C aredocuments required by the Internal Revenue Codeand regulations to be furnished to another person;there are no applicable statutes, regulations, otherpublished guidance, forms or instructions that pro-hibit the use of a TTIN on those copies; and there areno applicable statutes, regulations, other publishedguidance, forms, or instructions that specifically re-quire use of an SSN or other identifying number onthose copies. Charitable Organization may not trun-cate its own EIN on copies B and C of the Form1098–C because a person cannot truncate its owntaxpayer identifying number on any statement orother document the person furnishes to another per-son. Charitable Organization may not truncate anyidentifying number on copy A of the Form 1098–Cbecause copy A is required to be filed with the IRS.

(c) Applicability date. This section isapplicable to returns, statements and otherdocuments required to be filed or fur-nished after December 31, 2018.

Kirsten Wielobob,Deputy Commissioner for Services

and Enforcement.

(Filed by the Office of the Federal Register on September18, 2017, 11:15 a.m., and published in the issue of theFederal Register for September 20, 2017, 82 F.R. 43920)

REG–125374–16

Guidance on the Definition ofRegistered Form

AGENCY: Internal Revenue Service(IRS), Treasury.

ACTION: Partial withdrawal of notice ofproposed rulemaking and notice of pro-posed rulemaking.

SUMMARY: This document contains pro-posed regulations that provide guidance onthe definitions of registration-required obli-gation and registered form, includingguidance on the issuance of pass-throughcertificates and participation interests in reg-istered form. This document also withdrawsa portion of previously proposed regulationsregarding the definition of a registration-required obligation. The proposed regula-tions generally are necessary to addresschanges in market practices as well as issuesraised by the statutory repeal of the foreign-targeted bearer obligation exception to theregistered form requirement. The proposedregulations will affect issuers and holders ofobligations in registered form as well as

issuers and holders of registration-requiredobligations that are not issued in registeredform.

DATES: Comments and requests for apublic hearing must be received by De-cember 18, 2017.

ADDRESSES: Send submissions to CC:PA:LPD:PR (REG–125374–16), Room5203, Internal Revenue Service, P.O. Box7604, Ben Franklin Station, Washington,DC 20044. Submissions may be hand-delivered Monday through Friday be-tween the hours of 8 a.m. and 4 p.m.to CC:PA:LPD:PR (REG–125374–16),Courier’s Desk, Internal Revenue Service,1111 Constitution Avenue NW., Wash-ington, DC 20224, or sent electronicallyvia the Federal eRulemaking Portal atwww.regulations.gov (IRS REG–125374–16).

FOR FURTHER INFORMATION CON-TACT: Concerning the proposed regula-tions, Spence Hanemann at (202) 317-6980; concerning submissions ofcomments and requesting a hearing, Re-gina Johnson at (202) 317-6901 (nottoll-free numbers).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The collection of information con-tained in this notice of proposed rulemak-ing has been submitted to the Office ofManagement and Budget for review undercontrol number 1545-0945 in accordancewith the Paperwork Reduction Act of1995 (44 U.S.C. 3507(d)). The collectionof information in this proposed regulationis in § 1.163–5(b), which permits issuersof registration-required obligations to sat-isfy the requirement for those obligationsto be in registered form by maintaining abook entry system. Sections 163(f) and149(a) require that certain obligations bein registered form and expressly permitissuers to satisfy that requirement througha book entry system. Accordingly, theproposed regulations permit issuers to sat-isfy the registration requirement through abook entry system and detail certain ar-rangements that qualify as book entry sys-tems. The collection of information inproposed § 1.163–5(b) is an increase inthe total annual burden under control

number 1545-0945. The respondents arebusinesses and other for-profit organiza-tions, non-profit organizations, and state,local and tribal governments.

Estimated total annual recordkeepingburden: 95,105 hours.

Estimated average annual burden hoursper respondent: 0.5 hours.

Estimated number of respondents:190,210.

Estimated annual frequency of re-sponses: 190,210.

Comments on the collection of infor-mation should be sent to the Office ofManagement and Budget, Attn: Desk Of-ficer for the Department of the Treasury,Office of Information and Regulatory Af-fairs, Washington, DC 20503, with copiesto the Internal Revenue Service, Attn: IRSReports Clearance Officer, SE:CAR:MP:T:T:SP, Washington, DC 20224. Com-ments on the collection of informationshould be received by November 20,2017.

Comments are specifically requestedconcerning:

Whether the proposed collection of in-formation is necessary for the proper per-formance of the Internal Revenue Service,including whether the information willhave practical utility;

The accuracy of the estimated burdenassociated with the proposed collection ofinformation;

How the quality, utility, and clarity ofthe information to be collected may beenhanced;

How the burden of complying with theproposed collection of information maybe minimized, including through the ap-plication of automated collection tech-niques or other forms of information tech-nology; and

Estimates of capital or start-up costsand costs of operation, maintenance, andpurchase of service to provide informa-tion.

An agency may not conduct or spon-sor, and a person is not required to re-spond to, a collection of information un-less it displays a valid control numberassigned by the Office of Managementand Budget.

Books or records relating to a collec-tion of information must be retained aslong as their contents may become mate-rial in the administration of any internal


revenue law. Generally tax returns and taxreturn information are confidential, as re-quired by section 26 U.S.C. 6103.

Background

This document contains proposedamendments to 26 CFR parts 1, 5f, and 46under sections 103, 149, 163, 165, 860D,871, 881, 1287, 4701, 6045, and 6049 ofthe Internal Revenue Code (Code).

1. In General

The classification of an obligation as inbearer or registered form has significanttax implications because a number ofCode provisions impose sanctions on is-suers and holders of registration-requiredobligations that are not issued in regis-tered form. An obligation not issued inregistered form is a bearer form obliga-tion. Most of the Code provisions thatpertain to registration-required obligationswere enacted as part of the Tax Equity andFiscal Responsibility Act of 1982(TEFRA), Public Law 97–248, 96 Stat.324, § 310. Among these provisions, sec-tion 163(f) denies an issuer an interestdeduction for interest on a registration-required obligation that is not in registeredform. Section 4701 imposes an excise taxon the issuer of a registration-required ob-ligation that is not in registered form. Theexcise tax is equal to 1 percent of theprincipal amount of the obligation multi-plied by the number of calendar years (orportions thereof) between the issue date ofthe obligation and the date of maturity.Section 149(a) provides that interest on aregistration-required bond is not exemptfrom tax under section 103(a) unless thebond is in registered form. In addition,section 871(h) and section 881(c) exemptfrom federal income tax portfolio interestfrom sources within the U.S. received by anonresident alien or foreign corporation(portfolio interest exception) only if theobligation with respect to which the inter-est was paid is in registered form. Similarrestrictions are found in sections 165(j)(generally denying the holder a deductionfor a loss sustained on a registration-required obligation not in registered form),312(m) (generally providing that the issu-er’s earnings and profits cannot be de-creased by interest paid on a registration-required obligation not in registered form),

and 1287 (generally treating the holder’sgain on sale of a registration-required obli-gation not in registered form as ordinaryincome).

Historically, the Code provisions refer-enced in the preceding paragraph gener-ally did not apply to obligations that com-plied with the foreign-targeting rules ofprior section 163(f)(2)(B) and § 1.163–5(c) (foreign-targeted bearer obligations).Under the foreign-targeting rules, an is-suer could issue foreign-targeted bearerobligations without penalty provided theobligations were issued under arrange-ments reasonably designed to ensure thatthe obligations were sold only to non-U.S.persons. The portfolio interest exceptionalso applied to interest paid on foreign-targeted bearer obligations issued undersuch reasonably designed arrangements.

The Hiring Incentives to Restore Em-ployment Act (the HIRE Act), Public Law111-147, 124 Stat. 71, section 502, re-pealed section 163(f)(2)(B) and generallyeliminated the special treatment of foreign-targeted bearer obligations. Foreign-targetedbearer obligations issued after March 18,2012, are subject to the sanctions on bearerform obligations under sections 149(a),163(f), 165(j), 312(m), and 1287. The HIREAct also revoked the portfolio interest ex-ception for foreign-targeted bearer obliga-tions, thus requiring that obligations issuedafter March 18, 2012, be in registeredform to qualify for that exception. TheHIRE Act did not, however, repeal theforeign-targeted bearer obligation ex-ception to the excise tax under section4701. See section 4701(b)(1)(B)(i).

2. Registration-Required Obligations

A. In General

Under section 163(f)(2)(A), as amendedby the HIRE Act, the term registration-required obligation means any obligationother than an obligation that: (1) Is issued bya natural person; (2) is not of a type offeredto the public; or (3) has a maturity at issue ofnot more than 1 year. For purposes of sec-tions 165(j), 312(m), and 1287, registration-required obligation has the same meaning aswhen used in section 163(f). See also sec-tion 149(a) (providing a similar definitionexcept for the exclusion for instruments is-sued by a natural person). For purposes of

section 4701, that term also has the samemeaning as when used in section 163(f),except that tax-exempt bonds and foreign-targeted bearer obligations are excluded.

Section 5f.163-1(b)(2) provides thatthe determination as to whether an obli-gation is of a type offered to the public isbased on whether similar obligations arein fact publicly offered or traded. On Jan-uary 21, 1993, the Department of theTreasury (Treasury) and the IRS pub-lished in the Federal Register (58 FR5316) a notice of proposed rulemaking(INTL–0115–90) containing proposedregulations that elaborated upon themeaning of “of a type offered to the pub-lic” for purposes of section 163(f)(2)(A)(the 1993 proposed regulations). SeeProp. Treas. Reg. § 5f.163–1(b)(2). Thepreamble to the 1993 proposed regula-tions cited the report of the Senate Fi-nance Committee on TEFRA for the con-clusion that an obligation that represents a“readily negotiable substitute for cash”should be a registration-required obliga-tion. 58 FR 5316 (citing S. Rep. No. 97–494, at 242 (1982)). Treasury and the IRSreasoned in the preamble to the 1993 pro-posed regulations that, because the stan-dards for determining if an obligation is“readily tradable in an established securi-ties market” under section 453(f)(4)(B)and § 15a.453–1(e)(4) address an analo-gous concern with negotiability, similarstandards should apply for determiningwhether an obligation is “of a type offeredto the public” under section 163(f)(2)(A).

B. Pass-Through Certificates

Section 1.163–5T provides rules to ad-dress whether pass-through certificates areregistration-required obligations. In theirmost common form, pass-through certifi-cates are issued by an investment entity(typically a trust) that holds a pool ofobligations, such as mortgage loans. Eachpass-through certificate represents an in-terest in the investment entity.

To accommodate these securitizationtransactions, § 1.163–5T(d)(1) generallyprovides that a pass-through certificate ev-idencing an interest in a pool of mortgageloans that is treated as a trust of which thegrantor is the owner is considered to be aregistration-required obligation if, standingalone, the pass-through certificate meets the


definition of a registration-required obliga-tion. Section 1.163–5T(d)(1) also applies to“similar evidence of interest in a similarpooled fund or pooled trust treated as agrantor trust,” although commenters havenoted the ambiguity of the reference. Simi-larly, § 1.871–14(d)(1) provides that interestreceived on a pass-through certificate qual-ifies for the portfolio interest exception if,standing alone, the pass-through certificateis in registered form.

Commenters have asked that Treasuryand the IRS describe the types of arrange-ments that qualify as pass-through certif-icates. Specifically, commenters have re-quested that Treasury and the IRS amendthe definition of a pass-through certificateto clarify that the issuer of a pass-throughcertificate may be either a grantor trust oranother type of entity, such as a partner-ship or a disregarded entity, so long as theobligations in the pool are held through anarrangement that meets the requirementsto be in registered form. Commentershave also requested that Treasury and theIRS amend § 1.871–14(d)(1) so that thedefinition of pass-through certificate forpurposes of the portfolio interest excep-tion is identical to the definition of pass-through certificate under § 1.163–5T(d)(1).

3. Definition of Registered Form

A. In General

For purposes of determining whetheran obligation is in registered form undersection 163(f),1 the principles of section149(a)(3) apply. See section 163(f)(3).Section 149(a)(3)(A) provides that a bondis treated as being in registered form if theright to the principal of, and stated intereston, the bond may be transferred onlythrough a book entry consistent with reg-ulations prescribed by the Secretary. Sec-tion 149(a)(3)(B) authorizes the Secretaryto prescribe regulations to carry out therequirement that a bond be issued in reg-istered form when there is one or morenominee. For purposes of section 149(a),the conditions for an obligation to be con-sidered in registered form are described in

§ 5f.103–1(c).2 The regulations underboth section 163(f) and section 871(h),specifically §§ 5f.163–1(a) and 1.871–14(c), refer to § 5f.103–1(c) for a defini-tion of registered form. Obligations thatdo not meet the conditions described in§ 5f.103–1(c) are treated as issued inbearer form.

Generally, under § 5f.103–1(c), an ob-ligation is in registered form if: (1) Theobligation is registered as to both princi-pal and any stated interest with the issuer(or its agent) and any transfer of the obli-gation may be effected only by surrenderof the old obligation and reissuance to thenew holder; (2) the right to principal andstated interest with respect to the obliga-tion may be transferred only through abook entry system maintained by the is-suer or its agent; or (3) the obligation isregistered as to both principal and statedinterest with the issuer or its agent andmay be transferred both by surrender andreissuance and through a book entry sys-tem. An obligation is considered transfer-able through a book entry system if own-ership of an interest in the obligation isrequired to be reflected in a book entry,whether or not physical securities are is-sued. An obligation that would otherwisebe considered to be in registered form isnot considered to be in registered form ifthe obligation may be converted at anytime in the future into an obligation that isnot in registered form. See § 5f.103–1(e).

B. Dematerialized Book Entry Systems

Since the publication of § 5f.103–1,market practices have changed with re-spect to how interests in obligations arerecorded and transferred. For example,many obligations trade in fully demateri-alized form. An obligation that is fullydematerialized is not represented by aphysical (paper) certificate, and a clearingorganization that is the registered holderof the obligation operates an electronicbook entry system that identifies the clear-ing organization’s member or membersholding the obligation (or interests in theobligation). The clearing organization fa-cilitates and records transfers of the obli-

gation (or interests in the obligation)among the clearing organization’s mem-bers. The members (typically, banks orbroker-dealers), in turn, record their cli-ents’ ownership of the obligation (or in-terests in the obligation) in their bookentry systems. Alternatively, an obligationmay be represented by a physical globalcertificate that is nominally in bearer formbut that is immobilized in a clearing or-ganization, which handles the obligationthereafter exactly as it does an obligationthat was fully dematerialized when issued.Commenters have requested additionalguidance on how the registered form rulesin § 5f.103–1 apply to these arrangements.

Treasury and the IRS provided guid-ance on how to apply the registered formrules to certain of these arrangements inNotice 2006–99, 2006–2 CB 907. Notice2006–99 addresses an arrangement inwhich no physical certificates are issuedand under which ownership interests inbonds are required to be represented onlyby book entries in a dematerialized bookentry system maintained by a clearing or-ganization. Notice 2006–99 provides thatan obligation issued under such an ar-rangement is treated as in registered formnotwithstanding the ability of holders toobtain physical certificates in bearer formupon the termination of the business of theclearing organization without a successor.

The HIRE Act also addressed demate-rialized book entry systems. For obliga-tions issued after March 18, 2012, section163(f)(3), as amended by the HIRE Act,provides that, for purposes of section163(f), a dematerialized book entry sys-tem or other book entry system specifiedby the Secretary will be treated as a bookentry system described in section 149(a)(3). The Joint Committee on Taxation’stechnical explanation of the HIRE Actfurther explained that an obligation “thatis formally in bearer form is treated, forthe purposes of section 163(f), as held in abook entry system as long as the debt obli-gation may be transferred only through adematerialized book entry system or otherbook entry system specified by the Secre-tary.” J. Comm. on Tax’n, Technical Expla-nation of the Revenue Provisions Contained

1For purposes of sections 165(j), 312(m), 871(h)(7), 881(c)(7), 1287, and 4701, the term registered form has the same meaning as when used in section 163(f).

2Section 5f.103–1 was originally published under section 103(j) of the Internal Revenue Code of 1954, which was enacted as part of TEFRA and provided that obligations must be inregistered form to be tax-exempt. Section 103(j) was recodified as section 149(a) by section 1301 of the Tax Reform Act of 1986, Public Law 99–514, 100 Stat. 2085.


in Senate Amendment 3310, the “HiringIncentives to Restore Employment Act,”Under Consideration by the Senate (JCX–4–10), Feb. 23, 2010, at 53.

C. Notice 2012–20

Commenters expressed concern thatthe explicit reference to a “dematerializedbook entry system” in section 163(f)(3),as amended by the HIRE Act, would cre-ate uncertainty about obligations issued ina manner not specifically described in No-tice 2006–99. In particular, commentersrequested guidance to address the treat-ment of obligations represented by a phys-ical global certificate that is nominally inbearer form, but that is immobilized in aclearing system. In addition, commentersrequested guidance regarding whether anobligation will be considered to be in regis-tered form if holders may obtain physicalcertificates in bearer form under circum-stances not described in Notice 2006–99.

In response to these comments, Trea-sury and the IRS published Notice 2012–20, 2012–13 IRB 574, on March 26, 2012.Notice 2012–20 provides additional guid-ance on the definition of registered formand further states that Treasury and theIRS intend to publish regulations consis-tent with the guidance described in thenotice. Under Notice 2012–20, an obliga-tion is considered to be in registered formif it is issued either through a dematerial-ized book entry system in which benefi-cial interests are transferable only througha book entry system maintained by aclearing organization (or by an agent ofthe clearing organization) or through aclearing system in which the obligation iseffectively immobilized. Notice 2012–20provides that an obligation is consideredto be effectively immobilized if: (1) Theobligation is represented by one or moreglobal securities in physical form that areissued to and held by a clearing organiza-tion (or by a custodian or depository act-ing as an agent of the clearing organiza-tion) for the benefit of purchasers ofinterests in the obligation under arrange-ments that prohibit the transfer of theglobal securities except to a successorclearing organization subject to the sameterms; and (2) beneficial interests in theunderlying obligation are transferableonly through a book entry system main-

tained by the clearing organization (or anagent of the clearing organization). Notice2012–20 further states that an interest inan obligation is considered to be transfer-able only through a book entry system ifthe interest would be considered transfer-able through a book entry system under§ 5f.103–1(c)(2), except that holders mayobtain physical certificates in bearer formin certain limited circumstances stated inthe notice. Finally, Notice 2012–20 statesthat, for purposes of determining when anobligation is a registration-required obli-gation under section 4701, rules identicalto the foreign-targeting rules under sec-tion 163(f)(2)(B), prior to its amendmentby the HIRE Act, and § 1.163–5(c) willapply to obligations issued after March18, 2012.

Explanation of Provisions

1. In General

Consistent with Notice 2012–20, theseproposed regulations amend the definitionof registered form to take into accountcurrent market practices and changesmade by the HIRE Act, including the re-peal of the foreign-targeting rules in sec-tion 163(f)(2)(B). In addition, these pro-posed regulations amend the definition ofa registration-required obligation in twoways. First, the proposed regulationsspecify the types of obligations that aretreated as “of a type offered to the public”and withdraw the 1993 proposed regula-tions. Second, the proposed regulationstake into account comments requestingclarification on the types of arrangementsthat qualify as pass-through certificates.

Though the definitions of the termsregistered form and registration-requiredobligation are generally consistent acrossthe various provisions in which they areused, the rules are set forth in a number ofexisting regulations, including severalpromulgated under section 163(f). To theextent possible, these proposed regulationssimplify the definitions of registered formand registration-required obligation by cen-tralizing the rules in § 1.163–5. Thus, theapplicable rules have been relocated from§§ 5f.103–1 (definition of registered form),1.163–5T (pass-through certificates and reg-ular interests in REMICs), and 5f.163–1(definition of registration-required obliga-tion) to paragraphs (a) and (b) of proposed

§ 1.163–5. Appropriate cross-references to§ 1.163–5 are proposed to be added toregulations that rely on one or both defini-tions, including §§ 1.149(a)–1, 1.165–12,1.860D–1(b)(5)(i)(A), 1.871–14, 1.1287–1,and 46.4701–1.

2. Registration-Required Obligations

A. Obligation of a Type Offered to thePublic

Consistent with the 1993 proposed reg-ulations, Treasury and the IRS continue tobelieve that it is appropriate to determinewhether an obligation is of a type offeredto the public by reference to whether theobligation is “traded on an establishedmarket.” Although a number of Code andregulation sections refer to and define thatphrase (for example, sections 453, 1092,1273, and 7704, as well as the regulationspromulgated under those Code sections),Treasury and the IRS have concluded thatthe definition provided in § 1.1273–2(f) ismost appropriate for purposes of defininga registration-required obligation. Thus,the proposed regulations generally treat anobligation as of a type offered to thepublic if the obligation is traded on anestablished market as determined under§ 1.1273–2(f). For this purpose, however,the proposed regulations do not take intoaccount the exception for small debt is-sues in § 1.1273–2(f)(6).

B. Pass-Through Certificates andParticipation Interests

Commenters indicated that an entitythat issues pass-through certificates mayhold a pool of debt instruments that iseither fixed or that changes over time. Forexample, the issuing entity may have theright to acquire additional assets after for-mation, or the right to dispose of assets atany time. In those situations, the entity gen-erally will not be classified as a grantor trustfor federal tax purposes, but that does notpreclude it from issuing pass-through certif-icates. To address these situations, the pro-posed regulations amend the definition of apass-through certificate to provide that apass-through certificate may be issued bya grantor trust or a similar fund, and specifythat a similar fund includes entities that arepartnerships or disregarded for federal taxpurposes and funds that have the power to


vary the assets they hold or the sequence ofpayments to holders. A similar fund, how-ever, does not include a business entity clas-sified as a corporation.

In addition, Treasury and the IRS haveconcluded that an arrangement that satis-fies the definition of a registration-required obligation and the registeredform rules should be treated the same as apass-through certificate even if the ar-rangement is with respect to only one un-derlying obligation or if the arrangementis treated as co-ownership of one or moreobligations (rather than, for purposes ofTEFRA or otherwise, ownership of anentity that holds the underlying obliga-tions). The proposed regulations eliminatethe requirement that the fund hold a poolof loans and replace it with a requirementthat the fund primarily hold debt instru-ments. Thus, a fund can hold one or moredebt instruments, so long as the fund pri-marily holds debt instruments.

In addition, the proposed regulationstreat an interest that evidences co-ownership of one or more obligations (in-cluding a participation interest) as aregistration-required obligation if, stand-ing alone, the interest satisfies the defini-tion of a registration-required obligation.The proposed regulations also propose toamend § 1.871–14(d)(1) to include across-reference to the rules for pass-through certificates and participation in-terests in proposed § 1.163–5(a)(3)(i) and(ii) such that similar rules apply for pur-poses of the portfolio interest exception.

3. Definition of Registered Form

The proposed regulations amend thedefinition of registered form in a numberof ways. First, the proposed regulationsprovide that an obligation is considered tobe in registered form if it is transferablethrough a book entry system, including adematerialized book entry system, main-tained by the issuer of the obligation, anagent of the issuer, or a clearing organi-zation. A clearing organization includesan entity that holds obligations for itsmembers or maintains a system that re-flects the ownership interests of membersand transfers of obligations among mem-bers’ accounts without the necessity ofphysical delivery of the obligation.

Second, the proposed regulations pro-vide that an obligation represented by aphysical certificate in bearer form will beconsidered to be in registered form if thephysical certificate is effectively immobi-lized. To be effectively immobilized, thephysical certificate evidencing an obliga-tion must be issued to and held by a clear-ing organization for the benefit of pur-chasers of interests in the obligation underarrangements that prohibit the transfer ofthe physical certificate except to a succes-sor clearing organization and permit trans-fers of ownership interests in the underly-ing obligation only through a book entrysystem maintained by the clearing organi-zation (or a successor clearing organiza-tion). As suggested in comments, the pro-posed regulations change the requirementin Notice 2012–20 that a successor clear-ing organization hold the physical certifi-cate subject to the same terms as the pre-decessor; Treasury and the IRS concludedthat it is sufficient if the successor clearingorganization has rules that effectively im-mobilize the physical certificate.

Third, the proposed regulations permitholders of obligations (or interests in ob-ligations) to have a right to obtain physi-cal certificates evidencing the obligation(or interests in the obligation) in bearerform without causing the obligation to betreated as not in registered form in twocircumstances: (1) A termination of theclearing organization’s business without asuccessor; or (2) the issuance of physicalsecurities at the issuer’s request upon achange in tax law that would be adverse tothe issuer but for the issuance of physicalsecurities in bearer form. This exceptionfrom bearer form treatment is consistentwith the guidance provided in Notice2012–20, except that the proposed regula-tions do not permit a holder to have a rightto obtain a physical bearer certificate ifthere is an issuer event of default (defaultexception). Treasury and the IRS under-stand that in certain situations holdersmay be required to obtain physical certif-icates to pursue claims against the issuer,but in such instances it would be appro-priate to expect those physical certificatesto be issued in registered form. Taxpayersmay rely on the default exception in No-tice 2012–20 for obligations issued priorto publication of a Treasury decision

adopting these rules as final regulations inthe Federal Register.

After the occurrence of one of the twoevents described in the first sentence ofthe preceding paragraph, an obligationwill no longer be in registered form if aholder, or a group of holders acting col-lectively, has a right to obtain a physicalcertificate in bearer form, regardless ofwhether any option to obtain a physicalcertificate in bearer form has actually beenexercised.

4. Section 881

Commenters requested that examples10 and 19 set forth in § 1.881–3(e) beremoved or revised to take into accountthe repeal of the foreign-targeted bearerobligation exception. Consistent withthese comments, the proposed regulationspropose to remove those examples.

5. Section 4701

Commenters requested clarificationon whether the foreign-targeting rulesunder § 1.163–5(c) would apply to obli-gations issued after March 18, 2012, forpurposes of section 4701. Consistent withNotice 2012–20, proposed § 46.4701–1 pro-vides that, for purposes of determiningwhether an obligation is a foreign-targetedbearer obligation, the rules of § 1.163–5(c)apply.

6. Applicability Dates

Notice 2012–20 stated that regulationsincorporating the guidance described inthat notice will be effective for obligationsissued after March 18, 2012. Accordingly,the proposed regulations will generallyapply to obligations issued after March18, 2012. However, taxpayers may applythe rules in section 3 of Notice 2012–20,including the default exception, for obli-gations issued prior to publication of aTreasury decision adopting these rules asfinal regulations in the Federal Register.The rules related to pass-through certifi-cates, participation interests, and regularinterests in REMICs and the rules relatedto obligations not of a type offered to thepublic are not described in Notice2012–20 and, therefore, will apply only toobligations issued after the publication of


a Treasury decision adopting these rulesas final regulations in the Federal Regis-ter, except as otherwise provided in thenext sentence. The existing regulationsunder § 5f.103–1 will continue to apply totax-exempt bonds issued prior to the date90 days after publication of a Treasurydecision adopting these rules as final reg-ulations in the Federal Register.

Special Analyses

Certain IRS regulations, includingthese, are exempt from the requirementsof Executive Order 12866, as supple-mented and reaffirmed by Executive Or-der 13563. Therefore, a regulatory impactassessment is not required. It is herebycertified that these regulations will nothave a significant economic impact on asubstantial number of small entities. Sec-tions 163(f) and 149(a) require that certainobligations be in registered form which issatisfied if the obligations are transferableonly through a book entry system. Theexisting regulations under these sectionstherefore permit issuers to satisfy the reg-istration requirement through a book entrysystem and describe the arrangements thatare necessary for a system to qualify as abook entry system. Certain systems thatare now common, however, may not qual-ify as book entry systems under the exist-ing regulations. Because the proposed reg-ulations merely clarify that these systemsare book entry systems, the proposed reg-ulations would not impose a significanteconomic impact. Accordingly, a regula-tory flexibility analysis is not required.Pursuant to section 7805(f) of the Code,this notice of proposed rulemaking will besubmitted to the Chief Counsel for Advo-cacy of the Small Business Administra-tion for comment on its impact on smallentities.

Comments and Requests for PublicHearing

Before these proposed regulations areadopted as final regulations, considerationwill be given to any comments that aresubmitted timely to the IRS as prescribedin this preamble under the ADDRESSESheading. Treasury and the IRS request com-ments on all aspects of the proposed rules.All comments will be available at www.regulations.gov or upon request. A public

hearing will be scheduled if requested inwriting by any person that timely submitswritten comments. If a public hearing isscheduled, notice of the date, time, andplace for the hearing will be published in theFederal Register.

Drafting Information

The principal authors of these regula-tions are Spence Hanemann and DianaImholtz, Office of Associate Chief Coun-sel (Financial Institutions and Products),IRS. However, other personnel from Trea-sury and the IRS participated in their de-velopment.

Availability of IRS Documents

The IRS notices cited in this preambleare published in the Internal Revenue Bul-letin (or Cumulative Bulletin) and areavailable from the Superintendent of Doc-uments, U.S. Government Publishing Of-fice, Washington, DC 20402, or by visit-ing the IRS Web site at www.irs.gov.

* * * * *

Partial Withdrawal of Notice ofProposed Rulemaking

Accordingly, under the authority of 26U.S.C. 7805, § 5f.163–1(b)(2) of the no-tice of proposed rulemaking (INTL–0115–90, subsequently converted toREG–208245–90) that was published inthe Federal Register (58 FR 5316) onJanuary 21, 1993, is withdrawn.

Proposed Amendments to theRegulations

Accordingly, 26 CFR parts 1, 5f, and46 are proposed to be amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation forpart 1 is amended by adding entries innumerical order to read in part as follows:

Authority: 26 U.S.C. 7805 * * *Section 1.149(a)–1 also issued under

26 U.S.C. 149(a)(3).* * * * *Section 1.163–5 also issued under 26

U.S.C. 163(f)(3).* * * * *Par. 2. Section 1.149(a)–1 is added to

read as follows:

§ 1.149(a)–1 Obligations required tobe in registered form.

(a) General rule. Interest on aregistration-required bond shall not be ex-empt from tax notwithstanding section103(a) or any other provision of law, exclu-sive of any treaty obligation of the UnitedStates, unless the bond is issued in regis-tered form (as defined in § 1.163–5(b)). Forthis purpose, registration-required bond hasthe same meaning as registration-requiredobligation in § 1.163–5(a)(2).

(b) Applicability date. This section ap-plies to bonds issued on or after the date90 days after the publication of the Trea-sury decision adopting these rules as finalregulations in the Federal Register. Forbonds issued before the date 90 days afterthe publication of the Treasury decisionadopting these rules as final regulations inthe Federal Register, see § 5f.103–1 ofthis chapter.

Par. 3. Section 1.163–5 is amended byrevising the section heading and addingparagraphs (a), (b), and (c)(3)(iii) to readas follows:

§ 1.163–5 Denial of interest deductionon certain obligations unless issued inregistered form.

(a) Denial of deduction—(1) In gen-eral. No deduction shall be allowed a tax-payer under section 163 for interest paidor accrued on a registration-required obli-gation (as defined in section 163(f) andparagraph (a)(2) of this section) unlesssuch obligation is issued in registeredform (as defined in paragraph (b) of thissection). An obligation that is not in reg-istered form under paragraph (b) of thissection is an obligation in bearer form.

(2) Registration-required obligation—(i) In general. The term registration-required obligation means any obligation(including a pass-through certificate orparticipation interest described in para-graph (a)(3) of this section and a regularinterest in a REMIC described in para-graph (a)(4) of this section) other than—

(A) An obligation issued by a naturalperson;

(B) An obligation not of a type offeredto the public (as described in paragraph(a)(2)(ii) of this section); or


(C) An obligation that has a maturity atthe date of issue of not more than 1 year.

(ii) Obligation not of a type offered tothe public. For purposes of section163(f)(2)(A)(ii) and paragraph (a)(2)(i)(B) of this section, an obligation is not ofa type offered to the public unless theobligation is traded on an established mar-ket as determined under § 1.1273–2(f)without regard to § 1.1273–2(f)(6).

(3) Pass-through certificates and par-ticipation interests—(i) Pass-through cer-tificate—(A) In general. A pass-throughcertificate is considered to be a registration-required obligation if the pass-through cer-tificate is described in paragraph (a)(2)(i) ofthis section without regard to whether anyobligation held by the entity to which thepass-through certificate relates is describedin paragraph (a)(2)(i) of this section.

(B) Definition of pass-through certifi-cate. For purposes of paragraph (a) of thissection, a pass-through certificate is aninstrument evidencing an interest in agrantor trust under Subpart E of Part I ofSubchapter J of the Code, or a similarfund, that principally holds debt instru-ments. For purposes of this paragraph(a)(3)(i)(B), a similar fund includes anentity that, under §§ 301.7701–1 through301.7701–3 of this chapter, is disregardedas an entity separate from its owner orclassified as a partnership for federal taxpurposes, without regard to whether thefund has the power to vary the assets inthe fund or the sequence of paymentsmade to holders. In addition, for purposesof this paragraph (a)(3)(i)(B), a similarfund does not include a business entitythat is classified as a corporation under§ 301.7701–2 of this chapter.

(ii) Participation interest. A participa-tion interest that evidences ownership ofsome or all of one or more obligations andthat is treated as conveying ownership of aspecified portion of the obligation or ob-ligations (and not ownership of an entitytreated as created under § 301.7701–1(a)(2) of this chapter) is considered to bea registration-required obligation if theparticipation interest is described in para-graph (a)(2)(i) of this section without re-gard to whether any obligation to whichthe participation interest relates is de-scribed in paragraph (a)(2)(i) of this sec-tion.

(iii) Treatment of obligation held by atrust or fund. An obligation held by a trustor a fund in which ownership interests arerepresented by pass-through certificates isconsidered to be in registered form or tobe a registration-required obligation if theobligation held by the trust or fund is inregistered form (as defined in paragraph(b) of this section) or is a registration-required obligation described in paragraph(a)(2)(i) of this section, without regard towhether the pass-through certificates areso considered.

(iv) Examples. The application of para-graph (a)(3) of this section may be illus-trated by the following examples:

Example 1. Fund, a partnership under the laws ofthe state in which it is organized, acquires a pool ofstudent loans. The student loans are issued by naturalpersons and, therefore, are not registration-requiredobligations as described in paragraph (a)(2)(i) of thissection. Fund contributes the student loans to Trust,a business trust under the laws of the state in whichTrust is organized. Trust has the power to vary theinvestments in Trust, and is not treated as a trust ofwhich the grantor is the owner under Subpart E ofPart I of Subchapter J of the Code. Trust issuescertificates evidencing an interest in Trust. The cer-tificates issued by Trust are offered to the public. Thecertificates issued by Trust are pass-through certifi-cates (as described in paragraph (a)(3)(i)(B) of thissection) and are described in paragraph (a)(2)(i) ofthis section, and thus, are registration-required obli-gations described in paragraph (a)(2)(i) of this sec-tion, even though the student loans held by Trust arenot registration-required obligations.

Example 2. Partnership U purchases a buildingfrom Partnership V. Partnership U makes a cashdown payment and issues a note secured by a mort-gage in the building to Partnership V for the remain-ing purchase price of the building. The note is not aregistration-required obligation described in para-graph (a)(2)(i) of this section because it is not anobligation of a type offered to the public. PartnershipV offers participations in the underlying note to thepublic. Under the terms of the participation, eachparticipant will own an interest in the note that willentitle the participant to a specified portion of theinterest and principal generated by the note. Theparticipation is a participation interest described inparagraph (a)(3)(ii) of this section and is described inparagraph (a)(2)(i) of this section, and, thus, is aregistration-required obligation described in para-graph (a)(2)(i) of this section, even though the un-derlying note is not a registration-required obliga-tion.

(4) REMICs—(i) Regular interest in aREMIC. A regular interest in a REMIC, asdefined in sections 860D and 860G andthe regulations thereunder, is consideredto be a registration-required obligation ifthe regular interest is described in para-graph (a)(2)(i) of this section, without re-gard to whether one or more of the obli-

gations held by the REMIC to which theregular interest relates is described inparagraph (a)(2)(i) of this section.

(ii) Treatment of obligation held by aREMIC. An obligation described in para-graph (a)(2)(i) of this section and held bya REMIC is treated as a registration-required obligation regardless of whetherthe regular interests in the REMIC are sotreated.

(5) Applicability date—(i) In general.Except as otherwise provided in para-graphs (a)(5)(ii) and (iii) of this section,paragraph (a) of this section applies toobligations issued after March 18, 2012.For obligations issued on or before March18, 2012, see § 5f.163–1 of this chapter.

(ii) Obligations not of a type offered tothe public. Paragraph (a)(2)(ii) of this sec-tion applies to obligations issued after thedate of publication of a Treasury decisionadopting these rules as final regulations inthe Federal Register.

(iii) Pass-through certificates, partici-pation interests, and regular interests inREMICs. Paragraph (a) of this section ap-plies to pass-through certificates, partici-pation interests, and regular interests inREMICs issued after the date of publica-tion of a Treasury decision adopting theserules as final regulations in the FederalRegister. For pass-through certificates orregular interests in REMICs issued on orbefore the date of publication of a Trea-sury decision adopting these rules as finalregulations in the Federal Register, see§ 1.163–5T.

(b) Registered form—(1) General rule.Except as provided in paragraph (b)(4) ofthis section, an obligation is in registeredform if a transfer of the right to receiveboth principal and any stated interest onthe obligation may be effected only—

(i) By surrender of the old obligationand either the reissuance of the old obli-gation to the new holder or the issuance ofa new obligation to the new holder;

(ii) Through a book entry system (asdescribed in paragraph (b)(2) of this sec-tion) maintained by the issuer of the obli-gation (or its agent) or by a clearing or-ganization (as defined in paragraph (b)(3)of this section); or

(iii) Through both of the methods de-scribed in paragraphs (b)(1)(i) and (ii) ofthis section.


(2) Book entry system—(i) In general.An obligation will be considered transfer-able through a book entry system, includ-ing a dematerialized book entry system, ifownership of the obligation or an interest inthe obligation is required to be recorded inan electronic or physical register maintainedby the issuer of the obligation (or its agent)or by a clearing organization (as defined inparagraph (b)(3) of this section).

(ii) Book entry system maintained byclearing organization that effectively im-mobilizes a bearer form obligation. Anobligation represented by one or morephysical certificates in bearer form will beconsidered to be in registered form if thephysical certificates are effectively immo-bilized. A physical certificate is effec-tively immobilized only if—

(A) The physical certificate is issued toand held by a clearing organization (asdefined in paragraph (b)(3) of this section)for the benefit of purchasers of interests inthe obligation under arrangements thatprohibit the transfer of the physical certif-icate except to a successor clearing orga-nization subject to terms that effectivelyimmobilize the physical certificate, as pro-vided in paragraph (b)(2)(ii) of this sec-tion, in the hands of the successor clearingorganization; and

(B) Ownership of the obligation or aninterest in the obligation is transferableonly through a book entry system (as de-scribed in paragraph (b)(2)(i) of this sec-tion) maintained by the clearing organiza-tion (as defined in paragraph (b)(3) of thissection).

(3) Definition of clearing organization.For purposes of paragraph (b) of this sec-tion, clearing organization means an en-tity that is in the business of holding ob-ligations for or reflecting the ownershipinterests of member organizations andtransferring obligations among such mem-ber organizations by credit or debit to theaccount of a member organization withoutthe necessity of physical delivery of theobligation.

(4) Temporal limitations on registeredform—(i) In general. Except as providedin paragraphs (b)(4)(ii) and (iii) of thissection, an obligation is not considered tobe in registered form as of a particulartime if the obligation may be transferredat that time or at a time or times on orbefore the maturity of the obligation by

any means not described in paragraph(b)(1) of this section.

(ii) Events that permit issuance ofphysical certificates in bearer form—(A)In general. An obligation transferrablethrough a dematerialized book entry sys-tem is not in bearer form pursuant to para-graph (b)(4)(i) of this section solely be-cause a holder of the obligation (or aninterest therein) has a right to obtain aphysical certificate in bearer form uponthe occurrence of one or both of the fol-lowing events—

(1) A termination of business without asuccessor by the clearing organization thatmaintains the book entry system; or

(2) The issuance of physical securitiesat the issuer’s request upon a change intax law that would be adverse to the issuerbut for the issuance of physical securitiesin bearer form.

(B) Treatment upon issuance of physi-cal certificate in bearer form. Upon theoccurrence of one or both of the eventsdescribed in paragraph (b)(4)(ii)(A) ofthis section, any obligation with respect towhich a holder, or a group of holdersacting collectively, may obtain a physicalcertificate in bearer form will no longer bein registered form, regardless of whether aphysical certificate in bearer form has ac-tually been issued.

(iii) Obligations in registered form un-til maturity. An obligation that as of aparticular time is not considered to be inregistered form because the obligationmay be transferred at a time or timesbefore the maturity of the obligation by ameans not described in paragraph (b)(1)of this section and that during the periodbeginning at a later time and ending atmaturity may be transferred only by ameans described in paragraph (b)(1) ofthis section is considered to be in regis-tered form during the period beginning atthat later time.

(5) Examples. The application of para-graph (b) of this section may be illustratedby the following examples:

Example 1. X issues an obligation that is aregistration-required obligation as described in para-graph (a)(2)(i) of this section. At issuance, X issuesthe obligation in the purchaser’s name evidencingthe purchaser’s ownership of the principal and inter-est under the obligation. The purchaser may transferthe obligation only by surrendering the obligation toX and by X issuing a new instrument to the newholder. X’s obligation is issued in registered formunder paragraph (b)(1) of this section.

Example 2. Corporation A issues US$500 millionof debt (the Note) evidenced by a physical certificatethat is registered in the name of ABC, a clearing orga-nization (as defined in paragraph (b)(3) of this section).Under the terms of the Note, Corporation A mustmaintain an electronic register identifying the ownersof interests in the Note, and a transfer of the right toreceive either principal or any stated interest on suchownership interests may be effected only through achange to the electronic register. Pursuant to an agree-ment with Corporation A, ABC takes custody of thephysical certificate evidencing the Note and receives allprincipal and interest on the Note from Corporation A.Independently of its agreement with Corporation A,ABC maintains electronic records of its members’ownership interests in the Note and distributes principaland interest to members’ accounts in accordance withthose interests. ABC’s members, in turn, maintain elec-tronic records of their customers’ ownership interestsin the Note and similarly distribute principal and inter-est to their customers’ accounts. Corporation A’s elec-tronic register identifies ABC as the sole owner of theNote. Corporation A does not record transfers of own-ership interests in the Note to or among ABC’s mem-bers, and ABC does not record transfers of ownershipinterests in the Note to or among its members’ custom-ers. Corporation A’s electronic register is a book entrysystem as described in paragraph (b)(2)(i) of this sec-tion, and the Note is in registered form under paragraph(b)(1) of this section.

Example 3. The facts are the same as in Example2 of paragraph (b)(5) of this section, except that,instead of maintaining an electronic register, Corpo-ration A issues a global bearer certificate (Certifi-cate) to ABC pursuant to an agreement that prohibitsthe transfer of Certificate except to a successor clear-ing organization subject to terms that effectivelyimmobilize Certificate, as provided in paragraph(b)(2)(ii) of this section, in the hands of the successorclearing organization. Further, holders of interests inCertificate may only obtain physical bearer certifi-cates upon cessation of ABC’s operations without asuccessor or, at Corporation A’s request, upon achange in tax law that would be adverse to Corpo-ration A but for the issuance of physical bearercertificates. Because ownership of interests in Cer-tificate may be transferred only through a demateri-alized book entry system maintained by ABC, andbecause the circumstances under which definitivebearer certificates may be issued to holders of inter-ests in Certificate are limited to the circumstancesdescribed in paragraph (b)(4)(ii)(A) of this section,Certificate is an immobilized bearer form obligationdescribed in paragraph (b)(2)(ii) of this section andis accordingly in registered form under paragraph(b)(2)(ii) of this section.

Example 4. The facts are the same as in Example3 of paragraph (b)(5) of this section, except thatpurchasers of interests in Certificate have the right toobtain definitive bearer certificates upon request atany time until maturity of Certificate. Because thecircumstances under which definitive bearer obliga-tions may be issued to holders of interests in Certif-icate are not limited to the circumstances describedin paragraph (b)(4)(ii)(A) of this section, Certificateis not considered to be issued in registered formunder paragraph (b)(4)(i) of this section.


Example 5. Bank makes a loan to borrower se-cured by real property (Loan). Participations in Loanare traded on an established market. The participa-tions are participation interests described in para-graph (a)(3)(ii) of this section and are accordinglyregistration-required obligations described in para-graph (a)(2)(i) of this section. Bank remains theregistered owner of Loan and maintains an electronicbook entry system that identifies participants. Partic-ipation interests may be transferred only by surren-der of the old participation interest and reissuance ofthe participation interest in the name of the newparticipant, or by transfer of the participation interestfrom the name of the old participant to the name ofthe new participant in the book entry system ofBank. Bank’s book entry system is described inparagraph (b)(2)(i) of this section, and, accordingly,under paragraph (b)(1)(iii) of this section, the par-ticipation interests are in registered form.

(6) Applicability date. Paragraph (b) ofthis section applies to obligations issuedafter March 18, 2012. Taxpayers may ap-ply the rules in section 3 of Notice 2012–20, 2012–13 IRB 574, for obligations is-sued prior to the date of publication of theTreasury decision adopting these rules asfinal regulations in the Federal Register.For obligations issued on or before March18, 2012, see § 5f.103–1 of this chapter.

(c) * * *(3) * * *(iii) Applicability to obligations issued

after March 18, 2012. For purposes ofsection 163(f), paragraph (c) of this sec-tion does not apply to obligations issuedafter March 18, 2012. However, for pur-poses of determining whether an obliga-tion is described in section 4701(b)(1)(B)or whether the exception in section 6049from information reporting of interest ororiginal discount with respect to obliga-tions that have an original term of 183days or less applies, paragraph (c) of thissection continues to apply to obligationsissued after March 18, 2012. See§§ 1.4701–1(b)(3) and 1.6049–5(b)(10).

Par. 4. Section 1.163–5T is amendedby adding paragraph (f) to read as follows:

§ 1.163–5T Denial of interestdeduction on certain obligations issuedafter December 31, 1982, unless issuedin registered form (temporary).

* * * * *(f) Applicability date. This section ap-

plies to obligations to which § 5f.163–1 ofthis chapter applies. See § 5f.163–1(d) ofthis chapter.

Par. 5. Section 1.165–12 is amended by:1. Revising paragraph (a).

2. Redesignating paragraphs (b)(1) and(2) as (b)(2) and (3), respectively.

3. Adding a new paragraph (b)(1).4. Revising the paragraph heading and

first sentence of newly redesignated para-graph (b)(2).

5. Redesignating paragraph (d) as para-graph (d)(1).

6. Revising the paragraph heading andthe first sentence of newly redesignatedparagraph (d)(1).

7. Adding a new paragraph heading forparagraph (d).

8. Adding paragraph (d)(2).The revisions and additions read as fol-

lows:

§ 1.165–12 Denial of deduction forlosses on registration-requiredobligations not in registered form.

(a) In general. Except as provided inparagraph (c) of this section, nothing insection 165(a) and the regulations there-under, or in any other provision of law,shall be construed to provide a deductionfor any loss sustained on any registration-required obligation held after December31, 1982, unless the obligation is in reg-istered form or the issuance of the obliga-tion was subject to tax under section 4701.The term registration-required obligationhas the meaning given to that term insection 163(f)(2) and § 1.163–5(a)(2)(i).For purposes of this section, the termholder means the person that would bedenied a loss deduction under section165(j)(1) or denied capital gain treatmentunder section 1287(a). For purposes ofthis section, the term United States meansthe United States and its possessionswithin the meaning of § 1.163–5(c)(2)(iv).

(b) Registered form—(1) Obligationsissued after March 18, 2012. With respectto obligations issued after March 18,2012, the term registered form has themeaning given that term in § 1.163–5(b).

(2) Obligations issued after September21, 1984 and on or before March 18,2012. With respect to any obligation origi-nally issued after September 21, 1984, andon or before March 18, 2012, the term reg-istered form has the meaning given thatterm in § 5f.103–1 of this chapter. * * ** * * * *

(d) Applicability date—(1) In general.Except as provided in paragraph (d)(2) of

this section, these regulations apply gen-erally to obligations issued after January20, 1987. * * *

(2) Obligations issued after March 18,2012. Paragraph (a) of this section appliesto obligations issued after March 18,2012. For the rules that apply to obliga-tions issued on or before March 18, 2012,see § 1.165–12 as contained in 26 CFRpart 1, revised as of the date of the mostrecent annual revision.

§ 1.860D–1 [Amended]

Par. 6. Section 1.860D–1(b)(5)(i)(A) isamended by removing the language“§ 5f.103–1(c)” and adding in its place thelanguage “§ 1.163–5(b).”

Par. 7. Section 1.871–14 is amendedby:

1. Revising the heading for paragraph(c).

2. Revising paragraph (c)(1)(i).3. Revising the heading for paragraph

(d).4. Revising paragraphs (d)(1) and (2).5. Adding paragraphs (j)(4) and (5).The revisions and additions read as fol-

lows:

§ 1.871–14 Rules relating to repeal oftax on interest of nonresident alienindividuals and foreign corporationsreceived from certain portfolio debtinvestments.

* * * * *(c) Obligations in registered form—(1)

In general—(i) Registered form. For pur-poses of this section, the rules of § 1.163–5(b) apply to determine when an obliga-tion is in registered form.* * * * *

(d) Application of repeal of 30-percentwithholding to pass-through certificatesor participation interests—(1) In gener-al—(i) Pass-through certificates. Interestreceived on a pass-through certificate (asdefined in § 1.163–5(a)(3)(i)(B)) qualifiesas portfolio interest under section871(h)(2) or 881(c)(2) if the interest sat-isfies the conditions described in para-graph (c)(1)(ii) of this section or the con-ditions described in paragraph (e) of thissection, without regard to whether anyobligation held by the grantor trust, orsimilar fund, to which the pass-throughcertificate relates is described in para-


graph (c)(1)(ii) or (e) of this section. Forpurposes of this paragraph (d)(1)(i), a sim-ilar fund includes an entity that, under§§ 301.7701–1 through 301.7701–3 ofthis chapter, is disregarded as an entityseparate from its owner or classified as apartnership for federal tax purposes, with-out regard to the fund has the power tovary the assets in the fund or the sequenceof payments made to holders. In addition,for purposes of this paragraph (d)(1)(i), asimilar fund does not include a businessentity that is classified as a corporationunder § 301.7701–2 of this chapter.

(ii) Participation interests. Interest re-ceived on a participation interest de-scribed in § 1.163–5(a)(3)(ii) qualifies asportfolio interest under section 871(h)(2)or 881(c)(2) if the interest satisfiesthe conditions described in paragraph(c)(1)(ii) of this section or the conditionsdescribed in paragraph (e) of this section,without regard to whether the obligationto which the participation interest relatesis described in paragraph (c)(1)(ii) or (e)of this section.

(2) Interest in REMICs. Interest re-ceived on a regular or residual interest ina REMIC, as defined in sections 860D and860G and the regulations thereunder,qualifies as portfolio interest under section871(h)(2) or 881(c)(2) if the interest sat-isfies the conditions described in para-graph (c)(1)(ii) of this section or the con-ditions described in paragraph (e) of thissection. For purposes of paragraphs(c)(1)(ii) and (e) of this section, interest ona regular interest in a REMIC is not con-sidered interest on any mortgage obliga-tions held by the REMIC. The rule in thepreceding sentence, however, applies onlyto payments made to the holder of theregular interest in the REMIC from theREMIC and does not apply to paymentsmade to the REMIC. For purposes ofparagraphs (c)(1)(ii) and (e) of this sec-tion, interest on a residual interest in aREMIC is considered to be interest on orwith respect to the obligations held by theREMIC, and not on or with respect to theresidual interest.* * * * *

(j) * * *(4) Registered form. Paragraph (c)(1)(i)

of this section applies to obligations issuedafter March 18, 2012. For the rules thatapply to obligations issued on or before

March 18, 2012, see § 1.871–14 as con-tained in 26 CFR part 1, revised as of thedate of the most recent annual revision.

(5) Pass-through certificates, partici-pation interests, and interests in REMICs.Paragraph (d) of this section applies topass-through certificates, participation in-terests, or interests in REMICs issued af-ter the date of publication of a Treasurydecision adopting these rules as final reg-ulations in the Federal Register.

§ 1.881–3 [Amended]

Par. 8. Section 1.881–3(e) is amendedby:

1. Removing Examples 10 and 19.2. Redesignating Examples 11 through

18 as Examples 10 through 17 and Exam-ples 20 through 26 as Examples 18through 24.


1. Revising paragraph (a).2. Redesignating paragraphs (b)(1) and

(2) as (b)(2) and (3), respectively.3. Adding a new paragraph (b)(1).4. Revising the paragraph heading and

first sentence of newly redesignated para-graph (b)(2).

5. Redesignating paragraph (d) as para-graph (d)(1).

6. Revising the paragraph heading andthe first sentence of newly redesignatedparagraph (d)(1).

7. Adding a new paragraph heading forparagraph (d).

8. Adding paragraph (d)(2).The revisions and additions read as fol-

lows:

§ 1.1287–1 Denial of capital gainstreatment for gains on registration-required obligations not in registeredform.

(a) In general. Except as provided inparagraph (c) of this section, any gain onthe sale or other disposition of aregistration-required obligation held afterDecember 31, 1982, that is not in regis-tered form shall be treated as ordinaryincome unless the issuance of the obliga-tion was subject to tax under section 4701.The term registration-required obligationhas the meaning given to that term insection 163(f)(2) and § 1.163–5(a)(2)(i).

The term holder means the person thatwould be denied a loss deduction undersection 165(j)(1) or denied capital gaintreatment under section 1287(a).

(b) Registered form—(1) Obligationsissued after March 18, 2012. With respectto obligations issued after March 18,2012, the term registered form has themeaning given that term in § 1.163–5(b).

(2) Obligations issued after September21, 1984 and on or before March 18,2012. With respect to any obligation origi-nally issued after September 21, 1984, andon or before March 18, 2012, the term reg-istered form has the meaning given thatterm in § 5f.103–1 of this chapter. * * ** * * * *

(d) Applicability date—(1) In general.Except as provided in paragraph (d)(2) ofthis section, these regulations apply gen-erally to obligations issued after January20, 1987. * * *

(2) Obligations issued after March 18,2012. Paragraph (a) of this section appliesto obligations issued after March 18,2012.

§ 1.6045–1 [Amended]

Par. 10. Section 1.6045–1(n)(2)(ii)(J)is amended by removing the language“§ 1.1471–1(b)(18)” and adding in itsplace the language “§ 1.1471–1(b)(21)”.

§ 1.6049–5 [Amended]


1. Removing “§ 5f.103–1(c)),” andadding in its place “§ 1.163–5(b));” inparagraph (a)(1)(i).

2. Removing the language “§ 5f.163–1”and adding in its place the language“§ 1.163–5(a)(2)” in paragraph (a)(1)(ii).

PART 5f—TEMPORARY INCOMETAX REGULATIONS UNDER THETAX EQUITY AND FISCALRESPONSIBILITY ACT OF 1982

Par. 12. The authority citation for part5f continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * *Par. 13. Section 5f.103–1(d) is amended

by revising the paragraph heading and add-ing two sentences at the end of the para-graph to read as follows:


§ 5f.103–1 Obligations issued afterDecember 31, 1982, required to be inregistered form.

* * * * *(d) Applicability date. * * * For the

purpose of determining whether bondssatisfy the requirements of section 149(a),this section applies to bonds issued priorto the date 90 days after the publication ofthe Treasury decision adopting these rulesas final regulations in the Federal Regis-ter, and § 1.149(a)–1 of this chapter ap-plies to bonds issued on or after the date90 days after the publication of the Trea-sury decision adopting these rules as finalregulations in the Federal Register. Forall other purposes, see § 1.163–5(a)(2)and (b) of this chapter for obligations is-sued after March 18, 2012.* * * * *

Par. 14. Section 5f.163–1(d) isamended by revising the paragraph head-ing and adding a sentence at the end of theparagraph to read as follows:

§ 5f.163–1 Denial of interest deductionon certain obligations issued afterDecember 31, 1982, unless issued inregistered form.

* * * * *(d) Applicability date. * * * For obli-

gations issued after March 18, 2012, see§ 1.163–5 of this chapter.* * * * *

PART 46—EXCISE TAX ONPOLICIES ISSUED BY FOREIGNINSURERS AND OBLIGATIONS NOTIN REGISTERED FORM

Par. 15. The authority citation for part46 continues to read as follows:

Authority: 26 U.S.C. 7805.Par. 16. Section 46.4701–1 is amended

by:1. Revising paragraphs (b)(3), (4), and

(5).2. Redesignating paragraph (e) as para-

graph (e)(1).3. Revising the paragraph heading of

newly redesignated paragraph (e)(1).4. Adding a new paragraph heading for

paragraph (e).5. Adding paragraph (e)(2).The revisions and additions read as fol-

lows:

§ 46.4701–1 Tax on issuer ofregistration-required obligation not inregistered form.

* * * * *(b) * * *(3) Registration-required obligation.

The term registration-required obligationhas the same meaning as in section 163(f)and § 1.163–5(a)(2)(i) of this chapter, ex-cept that the term does not include anobligation described in section 4701(b)(1)(B) or any obligation that is required tobe registered under section 149(a), such asbonds that are tax-exempt under section103. For purposes of determining whetheran obligation is described in section4701(b)(1)(B), the rules of § 1.163–5(c)of this chapter apply.

(4) Registered form. The term regis-tered form has the same meaning as in§ 1.163–5(b) of this chapter.

(5) Issuer—(i) In general. Except asprovided in paragraph (b)(5)(ii) of thissection, the term issuer is the person whoseinterest deduction would be disallowedsolely by reason of section 163(f)(1).

(ii) Sponsor treated as issuer. A pass-through certificate (as defined in § 1.163–5(a)(3)(i)(B) of this chapter), a participa-tion interest described in § 1.163–5(a)(3)(ii) of this chapter, or a regularinterest in a REMIC, as defined in sections860D and 860G and the regulations there-under, is considered to be issued solely bythe recipient of the proceeds from the is-suance of the certificate or interest (thesponsor). The sponsor is therefore liablefor any excise tax under section 4701 thatmay be imposed with reference to theprincipal amount of the pass-through cer-tificate, participation interest, or regularinterest.

* * * * *(e) Applicability date—(1) In general.

* * *(2) Exception. Notwithstanding para-

graph (e)(1) of this section, paragraphs(b)(3), (4), and (5) of this section apply toobligations issued after March 18, 2012.For the rules that apply to obligations is-sued on or before March 18, 2012, see§ 46.4701–1 as contained in 26 CFR part46, revised as of the date of the mostrecent annual revision.

Kirsten Wielobob,Deputy Commissioner for Services and

Enforcement.

(Filed by the Office of the Federal Register on September15, 2017, 4:15 p.m., and published in the issue of the FederalRegister for September 19, 2017, 82 F.R. 43720)


Definition of TermsRevenue rulings and revenue procedures(hereinafter referred to as “rulings”) thathave an effect on previous rulings use thefollowing defined terms to describe theeffect:

Amplified describes a situation whereno change is being made in a prior pub-lished position, but the prior position isbeing extended to apply to a variation ofthe fact situation set forth therein. Thus, ifan earlier ruling held that a principle ap-plied to A, and the new ruling holds thatthe same principle also applies to B, theearlier ruling is amplified. (Compare withmodified, below).

Clarified is used in those instanceswhere the language in a prior ruling isbeing made clear because the languagehas caused, or may cause, some confu-sion. It is not used where a position in aprior ruling is being changed.

Distinguished describes a situationwhere a ruling mentions a previously pub-lished ruling and points out an essentialdifference between them.

Modified is used where the substanceof a previously published position is beingchanged. Thus, if a prior ruling held that aprinciple applied to A but not to B, and thenew ruling holds that it applies to both A

and B, the prior ruling is modified becauseit corrects a published position. (Comparewith amplified and clarified, above).

Obsoleted describes a previously pub-lished ruling that is not considered deter-minative with respect to future transac-tions. This term is most commonly used ina ruling that lists previously published rul-ings that are obsoleted because of changesin laws or regulations. A ruling may alsobe obsoleted because the substance hasbeen included in regulations subsequentlyadopted.

Revoked describes situations where theposition in the previously published rulingis not correct and the correct position isbeing stated in a new ruling.

Superseded describes a situation wherethe new ruling does nothing more thanrestate the substance and situation of apreviously published ruling (or rulings).Thus, the term is used to republish underthe 1986 Code and regulations the sameposition published under the 1939 Codeand regulations. The term is also usedwhen it is desired to republish in a singleruling a series of situations, names, etc.,that were previously published over a pe-riod of time in separate rulings. If the newruling does more than restate the sub-

stance of a prior ruling, a combination ofterms is used. For example, modified andsuperseded describes a situation where thesubstance of a previously published rulingis being changed in part and is continuedwithout change in part and it is desired torestate the valid portion of the previouslypublished ruling in a new ruling that isself contained. In this case, the previouslypublished ruling is first modified and then,as modified, is superseded.

Supplemented is used in situations inwhich a list, such as a list of the names ofcountries, is published in a ruling and thatlist is expanded by adding further namesin subsequent rulings. After the originalruling has been supplemented severaltimes, a new ruling may be published thatincludes the list in the original ruling andthe additions, and supersedes all prior rul-ings in the series.

Suspended is used in rare situations toshow that the previous published rulingswill not be applied pending some futureaction such as the issuance of new oramended regulations, the outcome ofcases in litigation, or the outcome of aService study.

AbbreviationsThe following abbreviations in currentuse and formerly used will appear in ma-terial published in the Bulletin.

A—Individual.Acq.—Acquiescence.B—Individual.BE—Beneficiary.BK—Bank.B.T.A.—Board of Tax Appeals.C—Individual.C.B.—Cumulative Bulletin.CFR—Code of Federal Regulations.CI—City.COOP—Cooperative.Ct.D.—Court Decision.CY—County.D—Decedent.DC—Dummy Corporation.DE—Donee.Del. Order—Delegation Order.DISC—Domestic International Sales Corporation.DR—Donor.E—Estate.EE—Employee.E.O.—Executive Order.ER—Employer.

ERISA—Employee Retirement Income Security Act.EX—Executor.F—Fiduciary.FC—Foreign Country.FICA—Federal Insurance Contributions Act.FISC—Foreign International Sales Company.FPH—Foreign Personal Holding Company.F.R.—Federal Register.FUTA—Federal Unemployment Tax Act.FX—Foreign corporation.G.C.M.—Chief Counsel’s Memorandum.GE—Grantee.GP—General Partner.GR—Grantor.IC—Insurance Company.I.R.B.—Internal Revenue Bulletin.LE—Lessee.LP—Limited Partner.LR—Lessor.M—Minor.Nonacq.—Nonacquiescence.O—Organization.P—Parent Corporation.PHC—Personal Holding Company.PO—Possession of the U.S.PR—Partner.PRS—Partnership.

PTE—Prohibited Transaction Exemption.Pub. L.—Public Law.REIT—Real Estate Investment Trust.Rev. Proc.—Revenue Procedure.Rev. Rul.—Revenue Ruling.S—Subsidiary.S.P.R.—Statement of Procedural Rules.Stat.—Statutes at Large.T—Target Corporation.T.C.—Tax Court.T.D.—Treasury Decision.TFE—Transferee.TFR—Transferor.T.I.R.—Technical Information Release.TP—Taxpayer.TR—Trust.TT—Trustee.U.S.C.—United States Code.X—Corporation.Y—Corporation.Z—Corporation.

Bulletin No. 2017–41 October 10, 2017i

Numerical Finding List1

Bulletin 2017–27 through 2017–41

Action on Decision:

2017-5, 2017-27 I.R.B. 12017-6, 2017-33 I.R.B. 194

Announcements:

2017-05, 2017-27 I.R.B. 52017-08, 2017-28 I.R.B. 92017-09, 2017-35 I.R.B. 2192017-10, 2017-33 I.R.B. 2102017-11, 2017-39 I.R.B. 2552017-12, 2017-38 I.R.B. 2382017-13, 2017-40 I.R.B. 271

Notices:

2017-36, 2017-33 I.R.B. 2082017-37, 2017-29 I.R.B. 892017-38, 2017-30 I.R.B. 1472017-39, 2017-31 I.R.B. 1502017-40, 2017-32 I.R.B. 1902017-41, 2017-34 I.R.B. 2112017-42, 2017-34 I.R.B. 2122017-43, 2017-36 I.R.B. 2242017-44, 2017-36 I.R.B. 2262017-45, 2017-38 I.R.B. 2322017-46, 2017-41 I.R.B. 2752017-47, 2017-38 I.R.B. 2322017-48, 2017-39 I.R.B. 2542017-49, 2017-40 I.R.B. 2582017-50, 2017-41 I.R.B. 2802017-51, 2017-40 I.R.B. 2602017-52, 2017-40 I.R.B. 262

Proposed Regulations:

REG-139633-08, 2017-31 I.R.B. 175REG-128483-15, 2017-32 I.R.B. 191REG-136118-15, 2017-28 I.R.B. 9REG-105004-16, 2017-41 I.R.B. 295REG-125374-16, 2017-41 I.R.B. 300

Revenue Procedures:

2017-41, 2017-29 I.R.B. 922017-42, 2017-29 I.R.B. 1242017-43, 2017-31 I.R.B. 1532017-44, 2017-35 I.R.B. 2162017-45, 2017-35 I.R.B. 2162017-47, 2017-38 I.R.B. 2332017-48, 2017-36 I.R.B. 2292017-50, 2017-37 I.R.B. 2302017-52, 2017-41 I.R.B. 2832017-53, 2017-40 I.R.B. 263

Revenue Rulings:

2017-14, 2017-27 I.R.B. 22017-15, 2017-32 I.R.B. 1762017-16, 2017-35 I.R.B. 2152017-17, 2017-36 I.R.B. 2222017-18, 2017-39 I.R.B. 2392017-19, 2017-40 I.R.B. 2572017-20, 2017-41 I.R.B. 273

Treasury Decisions:

9819, 2017-29 I.R.B. 859820, 2017-32 I.R.B. 1789821, 2017-32 I.R.B. 1819822, 2017-33 I.R.B. 1959823, 2017-33 I.R.B. 206

1A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2017–01 through 2017–26 is in Internal Revenue Bulletin2017–26, dated June 27, 2017.

October 10, 2017 Bulletin No. 2017–41ii

Finding List of Current Actions onPreviously Published Items1

Bulletin 2017–27 through 2017–41

Notices:

2015-77Amplified byNotice 2017-40, 2017-32 I.R.B. 190

Revenue Procedures:

2016-27Modified byRev. Proc. 2017-43, 2017-31 I.R.B. 153

2016-27Superseded byRev. Proc. 2017-43, 2017-31 I.R.B. 153

2016-48Superseded byRev. Proc. 2017-48, 2017-36 I.R.B. 232

1A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2017–01 through 2017–26 is in Internal Revenue Bulletin2017–26, dated June 27, 2017.

Bulletin No. 2017–41 October 10, 2017iii

INTERNAL REVENUE BULLETINThe Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue

Bulletins are available at www.irs.gov/irb/.

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