Bulletin No. 2009-6 February 9, 2009 HIGHLIGHTS OF THIS ISSUE · of February 2009. See Rev. Rul. 2009-5, page 432. Section 467.—Certain Payments for the Use of Property or Services

Bulletin No. 2009-6February 9, 2009

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. 2009–5, page 432.Federal rates; adjusted federal rates; adjusted federallong-term rate and the long-term exempt rate. For pur-poses of sections 382, 642, 1274, 1288, and other sectionsof the Code, tables set forth the rates for February 2009.

T.D. 9442, page 434.Final regulations under section 1502 of the Code provide guid-ance regarding the treatment of transactions involving debtobligations and securities between members of a consolidatedgroup.

Notice 2009–12, page 446.Allocation of homebuyer credit between unmarriedco-purchasers of a principal residence. This noticeexplains how to allocate the first-time homebuyer credit undersection 36 of the Code between unmarried co-purchasers ofa principal residence.

Notice 2009–13, page 447.This notice provides interim guidance regarding section 7216of the Code and regulations section 301.7216–2(o), relating tothe ability of a tax return preparer to disclose and use statisticalcompilations of anonymous tax return information in support ofthe preparer’s tax return preparation business without the con-sent of the preparer’s taxpayer clients. The notice expands,during 2009 only, the ability of tax return preparers to disclosestatistical compilations, subject to specific requirements to en-sure anonymity and other restrictions.

Notice 2009–15, page 449.This notice sets forth the manner in which the Treasury Depart-ment and the Service will determine and announce the creditrates for certain tax credit bonds for purposes of sections54, 54A, 1400N(l) of the Code, and similar provisions. No-tice 99–35 obsoleted. Notice 2007–26 modified.

Rev. Proc. 2009–16, page 449.Section 168(k)(4) guidance. This procedure provides addi-tional guidance with respect to new section 168(k)(4) of theCode, which was added by section 3081(a) of the Housingand Economic Recovery Act of 2008 (the “Housing Act”). Thisprocedure provides guidance regarding the time and mannerfor making the section 168(k)(4) election, the allocation of thecredit limitation increases allowed by this election among mem-bers of a controlled group, the effect of the election on partner-ships with corporate partners that make the section 168(k)(4)election, the application of section 168(k)(4) to S corporations,and the election under section 3081(b) of the Housing Act bycertain automotive partnerships. Rev. Proc. 2008–65 ampli-fied and supplemented.

EXEMPT ORGANIZATIONS

Announcement 2009–3, page 459.The IRS has revoked its determination that the Hoodland Com-munity Childrens Center of Welches, OR, qualifies as an or-ganization described in sections 501(c)(3) and 170(c)(2) of theCode.

Finding Lists begin on page ii.

The IRS MissionProvide America’s taxpayers top quality service by helping themunderstand and meet their tax responsibilities and by applying

the tax 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 and may be obtained from theSuperintendent of Documents on a subscription basis. Bulletincontents are compiled semiannually into Cumulative Bulletins,which are sold on a single-copy basis.

It is the policy of the Service to publish in the Bulletin all sub-stantive rulings necessary to promote a uniform application ofthe tax laws, including all rulings that supersede, revoke, mod-ify, or amend any of those previously published in the Bulletin.All published rulings apply retroactively unless otherwise indi-cated. Procedures relating solely to matters of internal man-agement are not published; however, statements of internalpractices and procedures that affect the rights and duties oftaxpayers are published.

Revenue rulings represent the conclusions of the Service on theapplication of the law to the pivotal facts stated in the revenueruling. In those based on positions taken in rulings to taxpayersor technical advice to Service field offices, identifying detailsand information of a confidential nature are deleted to preventunwarranted invasions of privacy and to comply with statutoryrequirements.

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 cautionedagainst 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,Tax Conventions and Other Related Items, and Subpart B, Leg-islation 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 Secre-tary (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 indexfor the 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.

For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402.

February 9, 2009 2009–6 I.R.B.

Part I. Rulings and Decisions Under the Internal Revenue Codeof 1986Section 38.—GeneralBusiness Credit

Section 168(k)(4) allows corporations to make anelection to forgo additional first year depreciation andinstead to increase their business credit limitation un-der section 38(c) (including the research credit deter-mined under section 41) or alternative minimum taxcredit limitation under section 53(c). See Rev. Proc.2009-16, page 449.

Section 41.—Credit forIncreasing ResearchActivities


Section 42.—Low-IncomeHousing Credit

The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the monthof February 2009. See Rev. Rul. 2009-5, page 432.

Section 52.—Special RulesAll corporations which are treated as a single em-

ployer under section 52(a) (generally any controlledgroup of corporations within the meaning of section1563(a), determined by substituting “more than 50percent” for “more than 80 percent” each place itappears in that section) shall be treated as one tax-payer for purposes of section 168(k)(4) and as havingelected to apply section 168(k)(4) if any such corpo-ration so elects. See Rev. Proc. 2009-16, page 449.

Section 53.—Credit forPrior Year MinimumTax Liability


Section 54.—Credit toHolders of Clean RenewableEnergy Bonds

A notice sets forth the manner in which the Trea-sury Department and the Internal Revenue Servicewill determine and announce the credit rates for cer-tain tax credit bonds for purposes of sections 54, 54A,1400N(l), and similar provisions. See Notice 2009-15, page 449.

Section 54A.—Credit toHolders of Qualified TaxCredit Bonds


Section 168.—AcceleratedCost Recovery System


Section 280G.—GoldenParachute Payments

Federal short-term, mid-term, and long-term ratesare set forth for the month of February 2009. See Rev.Rul. 2009-5, page 432.

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 February 2009. See Rev.Rul. 2009-5, page 432.

Section 383.—SpecialLimitations on CertainExcess Credits, Etc.

The increases in the business credit limitation un-der section 38(c) and AMT credit limitation under

section 53(c) that result from a section 168(k)(4) elec-tion do not allow a taxpayer to utilize credit carryfor-wards that are otherwise limited by section 383. SeeRev. Proc. 2009-16, page 449.

Section 412.—MinimumFunding Standards


Section 467.—CertainPayments for the Use ofProperty or Services


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


Section 482.—Allocationof Income and DeductionsAmong Taxpayers


Section 483.—Interest onCertain Deferred Payments


Section 642.—SpecialRules for Credits andDeductions


2009–6 I.R.B. 431 February 9, 2009

Section 702.—Income andCredits for Partner

If a corporation makes the section 168(k)(4)election and is a partner in a partnership (electingcorporate partner), the partnership must provide theelecting corporate partner with sufficient informationto apply section 168(k)(4)(G)(ii) in determining itsdistributive share of partnership items under section702 relating to any eligible qualified property placedin service by the partnership during the taxableyear. This information must be provided in the timeand manner required by section 6031(b) and sec-tion 1.6031(b)–IT(a)(3)(ii) and (b). See Rev. Proc.2009-16, page 449.

Section 807.—Rules forCertain Reserves


Section 846.—DiscountedUnpaid Losses Defined


Section 1274.—Determi-nation of Issue Price in theCase of Certain Debt Instru-ments Issued for Property(Also Sections 42, 280G, 382, 412, 467, 468, 482,483, 642, 807, 846, 1288, 7520, 7872.)

Federal rates; adjusted federal rates;adjusted federal long-term rate and thelong-term exempt rate. For purposes ofsections 382, 642, 1274, 1288, and othersections of the Code, tables set forth therates for February 2009.

Rev. Rul. 2009–5

This revenue ruling provides variousprescribed rates for federal income taxpurposes for February 2009 (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 (adjustedAFR) for the current month for purposesof section 1288(b). Table 3 sets forth the

adjusted federal long-term rate and thelong-term tax-exempt rate described insection 382(f). Table 4 contains the ap-propriate percentages for determining thelow-income housing credit described insection 42(b)(1) for buildings placed inservice during the current month. How-ever, under section 42(b)(2), the applicablepercentage for non-federally subsidizednew buildings placed in service after July30, 2008, and before December 31, 2013,shall not be less than 9%. Finally, Table5 contains the federal rate for determiningthe present value of an annuity, an interestfor life or for a term of years, or a remain-der or a reversionary interest for purposesof section 7520.

REV. RUL. 2009–5 TABLE 1

Applicable Federal Rates (AFR) for February 2009

Period for Compounding

Annual Semiannual Quarterly Monthly

Short-term

AFR .60% .60% .60% .60%110% AFR .66% .66% .66% .66%120% AFR .72% .72% .72% .72%130% AFR .78% .78% .78% .78%

Mid-term

AFR 1.65% 1.64% 1.64% 1.63%110% AFR 1.81% 1.80% 1.80% 1.79%120% AFR 1.98% 1.97% 1.97% 1.96%130% AFR 2.14% 2.13% 2.12% 2.12%150% AFR 2.48% 2.46% 2.45% 2.45%175% AFR 2.89% 2.87% 2.86% 2.85%

Long-term

AFR 2.96% 2.94% 2.93% 2.92%110% AFR 3.26% 3.23% 3.22% 3.21%120% AFR 3.56% 3.53% 3.51% 3.50%130% AFR 3.86% 3.82% 3.80% 3.79%

February 9, 2009 432 2009–6 I.R.B.


Adjusted AFR for February 2009

Period for Compounding

Annual Semiannual Quarterly Monthly

Short-term adjustedAFR

1.50% 1.49% 1.49% 1.49%

Mid-term adjusted AFR 2.83% 2.81% 2.80% 2.79%

Long-term adjustedAFR

5.27% 5.20% 5.17% 5.14%


Rates Under Section 382 for February 2009

Adjusted federal long-term rate for the current month 5.27%

Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjustedfederal long-term rates for the current month and the prior two months.) 5.49%


Appropriate Percentages Under Section 42(b)(1) for February 2009

Note: Under Section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after July30, 2008, and before December 31, 2013, shall not be less than 9%.

Appropriate percentage for the 70% present value low-income housing credit 7.53%

Appropriate percentage for the 30% present value low-income housing credit 3.23%


Rate Under Section 7520 for February 2009

Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years,or a remainder or reversionary interest 2.0%

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


Section 1374.—TaxImposed on CertainBuilt-In Gains

Under section 1374(b)(3)(B), an S corporation isallowed as a credit against the section 1374(a) tax anybusiness and AMT credit carryforwards that arose ina taxable year in which the corporation was a C cor-poration. The section 168(k)(4) election does not in-crease the S corporation’s section 1374(b)(3)(B) lim-

itations and, therefore, if the section 168(k)(4) elec-tion is made an S corporation may not claim businesscredits or AMT credits in excess of its section 1374(a)tax for the taxable year. Any credits allowed as a re-sult of the increases in the business or AMT creditlimitations, which may be used only as an additionalcredit against the section 1374(a) tax, are not refund-able to the S corporation. See Rev. Proc. 2009-16,page 449.

Section 1400N.—TaxBenefits for GulfOpportunity Zone


Section 1502.—RegulationsIf all members of a controlled group are members

of an affiliated group of corporations that file a con-solidated return (hereinafter, a “consolidated group”),the common parent (within the meaning of section1.1502–77(a)(1)(i)) of the consolidated group makesthe section 168(k)(4) election on behalf of all mem-bers of the consolidated group. A section 168(k)(4)election (or the lack of a section 168(k)(4) election)made by a consolidated group (or a controlled groupin which the consolidated group is a member) appliesto any eligible qualified property placed in service bya member of the consolidated group during a consoli-dated return year, even if such member is not a mem-ber of the consolidated group on the date that con-trolled group membership is determined under thisrevenue procedure. See Rev. Proc. 2009-16, page449.

2009–6 I.R.B. 433 February 9, 2009

26 CFR 1.1502–13: Intercompany transactions.

T.D. 9442

DEPARTMENT OF THETREASURYInternal Revenue Service26 CFR Part 1

Consolidated Returns;Intercompany Obligations

AGENCY: Internal Revenue Service(IRS), Treasury.

ACTION: Final regulations.

SUMMARY: This document contains finalregulations under section 1502 of the In-ternal Revenue Code (Code). The regula-tions provide guidance regarding the treat-ment of transactions involving obligationsbetween members of a consolidated group.These final regulations will affect affili-ated groups of corporations filing consoli-dated returns.

DATES: Effective Date: These regulationsare effective on December 24, 2008.

Applicability Date: For dates of ap-plicability, see §§1.1502–13(g)(8) and1.1502–28(d).

FOR FURTHER INFORMATIONCONTACT: Frances Kelly, (202)622–7770 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

On September 28, 2007, the IRS and theTreasury Department published a notice ofproposed rulemaking (REG–107592–00,2007–44 I.R.B. 908) in the Federal Reg-ister (72 FR 55139) (the 2007 ProposedRegulations) which proposed to amend§1.1502–13(g) (regarding the treatmentof transactions involving obligations be-tween members of a consolidated group)and to add §1.1502–13(e)(2)(ii)(C) (re-garding the treatment of certain trans-actions involving the provision of in-surance between members of a con-solidated group). The 2007 ProposedRegulations replaced an earlier pro-posal (REG–105964–98, 1999–1 C.B. 22[63 FR 70354]), published in the Federal

Register on December 21, 1998, whichwas withdrawn.

On February 25, 2008, the IRS and theTreasury Department published a notice(Announcement 2008–25, 2008–14 I.R.B.732) in the Federal Register (73 FR 9972)withdrawing the portion of the 2007 Pro-posed Regulations relating to the treatmentof intercompany insurance transactions.No public hearing regarding the remainingportion of the 2007 Proposed Regulationswas requested or held. However, written,electronic, and oral comments were re-ceived. After consideration of all of thecomments, the 2007 Proposed Regulationsare adopted as revised by this Treasurydecision. The principal comments andchanges are discussed in this preamble.

Explanation of Provisions

Former Regulations Under §1.1502–13(g)(the Former Regulations)

An intercompany obligation is gen-erally defined as an obligation betweenmembers of a consolidated group, butonly for the period during which both thecreditor and debtor are members of thegroup. The Former Regulations under§1.1502–13(g) (the 1995 regulations andthe 1998 proposed regulations, as in effectbefore these final regulations), prescriberules relating to the treatment of trans-actions involving such obligations, andapply generally to three broad categoriesof transactions; transactions in which anobligation between a group member anda nonmember becomes an intercompanyobligation (inbound transactions), transac-tions in which an intercompany obligationceases to be an intercompany obligation(outbound transactions), and transactionsin which an intercompany obligation isassigned or extinguished within the con-solidated group (intragroup transactions).

For all three types of transactions, theintercompany obligation is treated as sat-isfied and, if it remains outstanding, reis-sued as a new obligation (the deemed sat-isfaction-reissuance model).

Significant Changes Made by the 2007Proposed Regulations

The 2007 Proposed Regulations makeseveral significant changes to the FormerRegulations, principally with respect to in-tragroup and outbound transactions.

First, the 2007 Proposed Regulationssimplify the mechanics of the deemed sat-isfaction-reissuance model by separatingthe deemed transactions from the actualtransaction. In general, the new modeldeems the following sequence of eventsto occur immediately before, and indepen-dently of, the actual transaction: (i) thedebtor is deemed to satisfy the obligationfor a cash amount equal to the obligation’sfair market value, and (ii) the debtor isdeemed to immediately reissue the obliga-tion to the original creditor for that samecash amount. The parties are then treatedas engaging in the actual transaction butwith the new obligation.

Second, the 2007 Proposed Regulationsprovide that for transactions where it isappropriate to require a deemed satisfac-tion and reissuance, the intercompany obli-gation generally should be deemed satis-fied and reissued for its fair market value(rather than issue price determined underthe original issue discount principles ofsections 1273 and 1274).

Third, the 2007 Proposed Regulationsnarrow the scope of intragroup and out-bound transactions that trigger the deemedsatisfaction-reissuance model by provid-ing a number of exceptions to its appli-cation. A deemed satisfaction and reis-suance generally is not required for theseexcepted transactions either because it isnot necessary to apply the deemed satis-faction-reissuance model to carry out thepurposes of §1.1502–13(g) or because theburdens associated with valuing the obli-gation or applying the mechanics of thedeemed satisfaction-reissuance model out-weigh the benefits achieved by its applica-tion.

Finally, the 2007 Proposed Regulationsinclude two anti-abuse rules, the “materialtax benefit rule” and the “off-market is-suance rule,” which are intended to preventdistortions of consolidated taxable incomeresulting from the shifting of built-in itemsfrom intercompany obligations, or fromthe issuance of obligations at a materiallyoff-market rate of interest through the ma-nipulation of a member’s tax attributes orstock basis. These rules are aimed at in-tragroup transactions otherwise exceptedfrom the deemed satisfaction-reissuancemodel (to ensure that the exceptions can-not be used to distort consolidated taxableincome through intragroup transactions)and similar direct lending transactions.

February 9, 2009 434 2009–6 I.R.B.

General Comments

In general, commentators have beensupportive of the 2007 Proposed Regu-lations, particularly with respect to thesimplified mechanics of the deemed sat-isfaction-reissuance model and the avail-ability of exceptions to its application.However, concerns have been raised re-garding the application of the material taxbenefit rule and the off-market issuancerule. The principal comments made withrespect to these rules and other significantprovisions, as well as the changes made inthe final regulations in response to thesecomments, are discussed in this preamble.

A. Anti-Abuse Rules

As proposed, the material tax benefitrule generally applies to an intragroup as-signment or extinguishment otherwise ex-cepted from the deemed satisfaction-reis-suance model. Under this rule, if, at thetime of the assignment or extinguishment,it is reasonably foreseeable that the shift-ing of built-in items from an intercompanyobligation between members will securea material tax benefit, the intercompanytransaction will be subject to the deemedsatisfaction-reissuance model.

The proposed off-market issuance rulegenerally applies if an intercompany obli-gation is issued at a materially off-marketrate of interest, and at the time of issuance,it is reasonably foreseeable that the shift-ing of built-in items from the obligationwill secure a material tax benefit. In suchcases, the intercompany obligation will betreated as originally issued for its fair mar-ket value, and any difference between theamount loaned and the fair market valueof the obligation will be treated as trans-ferred between the creditor member andthe debtor member, as appropriate (for ex-ample, as a distribution or a contribution tocapital).

While acknowledging certain benefitsof the “reasonably foreseeable” test, com-mentators believed that it would be dif-ficult to apply because the results of thetest would not be easily determined. Thesecommentators suggested that, for purposesof determining the applicability of eachof the rules, the “reasonably foreseeable”test be replaced with a test that placedmore emphasis on the intent of the par-ties at the time of the transaction (or is-

suance). Specifically, they recommendedthat the rules apply if “a principal pur-pose” of the transaction (or the issuance)was to secure a material tax benefit. Ifsuch a test were adopted, the commen-tators also thought it appropriate to pro-vide certain pro-government presumptionsin cases where the facts surrounding thetransaction suggested such intent.

These final regulations adopt the com-mentators’ suggestions that the rulesshould be “intent-based.” However, con-sistent with other consolidated returnanti-abuse rules, these final regulationsprovide that the rules’ application will bedetermined based upon a “with a view”standard and eliminate the requirementthat the tax benefit to be secured by thetransaction (or issuance) be material. Inaddition, because the IRS and the Trea-sury Department remain concerned aboutdistortions that could result from transfersof intercompany obligations in section351 exchanges that are excepted from thedeemed satisfaction and reissuance model,these final regulations also adopt morespecific rules regarding such transfers (de-scribed in part C.3.a. of this Preamble).

B. Deemed Satisfaction and Reissuancefor Fair Market Value

Commentators were generally support-ive of the 2007 Proposed Regulations’use of fair market value as the amountfor which an intercompany obligation isdeemed satisfied and reissued. However,commentators also noted the difficulty invaluing intercompany obligations. Basedupon these comments, the IRS and theTreasury Department are continuing tostudy whether it is appropriate to includecertain simplifying presumptions in deter-mining value, and comments are requestedin this regard.

C. Exceptions and Related Provisions

1. Overlap of Exceptions and DeemedExchanges under §1.1001–3

The 2007 Proposed Regulations pro-vide a number of special rules for trans-actions in which intercompany debt is ex-changed for newly issued intercompanydebt. With respect to these intragroupdebt-for-debt exchanges, the newly issuedobligation generally is treated as issued for

its fair market value, and the intercompanydebt is deemed satisfied and reissued for itsfair market value.

Commentators questioned whether thislatter rule applied only in cases in whichthe intragroup debt-for-debt exchange in-volved a single issuer or also in cases inwhich the obligations had different issuers.The requirement is intended to apply inboth such cases. Because the languageof the 2007 Proposed Regulations encom-passes both of these situations, this rule hasbeen retained without change.

However, the 2007 Proposed Regu-lations also contain an exception to thedeemed satisfaction-reissuance model forcertain routine debt modifications involv-ing a single issuer (the routine modifica-tion exception). This exception applies ifall of the rights and obligations under anintercompany obligation are extinguishedin an exchange (or deemed exchange under§1.1001–3) for a newly issued intercom-pany obligation, and the issue price of thenew obligation equals both the adjustedissue price and basis of the extinguishedobligation.

In addition to the routine modificationexception, the 2007 Proposed Regulationsexcept from the deemed satisfaction-reis-suance model many transactions thatinvolve the assumption of a debtor mem-ber’s obligations under an intercompanyobligation (for example, an assumptionof an intercompany obligation in connec-tion with an intercompany nonrecognitiontransaction). A number of commentatorsnoted that, in some cases, these assump-tion transactions also may be a significantmodification of the instrument resulting ina deemed exchange under §1.1001–3. Insuch cases, commentators questioned howthe deemed exchange interacted with thevarious exceptions to the deemed satisfac-tion-reissuance model.

The IRS and the Treasury Departmentbelieve that a deemed exchange under§1.1001–3 that results from an assump-tion transaction should be subject to thesame set of rules and exceptions as applyto an actual two-party exchange of a debtinstrument. Thus, even if the assumptiontransaction is excepted from the deemedsatisfaction-reissuance model, any deemedexchange resulting from the assumptionwould be a triggering transaction poten-tially subject to the model. However, inmost such cases the deemed exchange will

2009–6 I.R.B. 435 February 9, 2009

generally qualify for the routine modifi-cation exception and thus not require adeemed satisfaction-reissuance.

Accordingly, these final regulationsclarify that the routine modification ex-ception applies to a deemed exchange ofintercompany debt for intercompany debtthat occurs under §1.1001–3 as a result ofan assumption transaction. Specifically,these final regulations provide that, solelyfor purposes of this exception, a newly is-sued intercompany obligation will includean obligation that is issued (or deemedissued) by a member other than the origi-nal debtor if such other member assumesthe original debtor’s obligations in cer-tain excepted transactions (intercompanynonrecognition exchanges or intercom-pany taxable assumption transactions),and the assumption results in a significantmodification and deemed exchange under§1.1001–3.

2. Exception for Intercompany TaxableAssumption Transactions

The 2007 Proposed Regulations pro-vide an exception to the application of thedeemed satisfaction-reissuance model forcertain intercompany sales or dispositionsof assets where intercompany obligationsare assumed as part of the transaction. Thisexception was intended to apply only inthe case of a taxable sale (or other tax-able disposition) of assets. Commenta-tors noted, however, that the 2007 Pro-posed Regulations may be read to apply tononrecognition transactions as well as tax-able transactions. The IRS and the Trea-sury Department agree with the commen-tators and have revised the regulation to re-flect its intended scope. However, as dis-cussed in this preamble, these final regula-tions also clarify that the exception for cer-tain section 351 nonrecognition exchangesis available for transactions in which adebtor’s obligation is assumed.

3. Intercompany NonrecognitionExchange Exceptions

The 2007 Proposed Regulations pro-vide an exception to the deemed satisfac-tion-reissuance model for intercompanyexchanges to which section 332 or 361apply if neither the creditor nor the debtorrecognize an amount of income, gain, de-duction, or loss in the transaction, or inintercompany exchanges to which section

351 applies if no such amount is recog-nized by the creditor.

a. Section 351 Exception

Commentators questioned whether theexception for section 351 exchanges isavailable only for transactions in which acreditor assigns an intercompany obliga-tion or if it also is available for transactionsin which a debtor’s obligation under anintercompany obligation is assumed. Theexception is intended to apply to both suchtransactions. Consistent with the excep-tion for intercompany exchanges undersection 332 and section 361, these finalregulations revise the exception for inter-company exchanges under section 351 byproviding that it will apply only if neitherthe creditor nor the debtor recognizes anamount.

In addition, because the IRS and theTreasury Department believe that the as-signment by a creditor of an intercompanyobligation in an intercompany section 351exchange presents significant potential fordistortion, these final regulations limit theavailability of the exception for certainof these section 351 transactions. Thesetransactions generally involve exchangeswhere the transferor or transferee memberhas a unique tax attribute or special sta-tus, where the transferee member issuespreferred stock in the exchange, or wherethe stock of the transferee member (or thestock of a direct or indirect owner of thetransferee member) is disposed of within ashort period after the exchange.

b. Scope of Exception under Section 332

With respect to intercompany ex-changes under section 332, commentatorsrequested clarification as to the scope ofthe exception, particularly with respect tothe requirement that no amount be rec-ognized in the exchange. Accordingly,these final regulations revise the exceptionto provide that it applies to exchanges towhich both section 332 and section 337(a)apply in which no amount is recognizedby either the creditor or debtor member.

c. Gain or Loss With Respect to anIntercompany Obligation

The exception to the deemed satisfac-tion-reissuance model for intercompanyexchanges under sections 332, 351, and

361 generally is available if no amount ofincome, gain, deduction or loss is recog-nized. Commentators questioned whetherthis exception was available only wherethe amount recognized was with respect tothe intercompany obligation. The require-ment that no amount be recognized in theexchange applies to amounts recognizedwith respect to all assets. In exchangeswhere amounts are recognized, the fairmarket value of all assets (including theintercompany obligation) must be deter-mined. In such cases, the IRS and theTreasury Department do not believe it isunduly burdensome to require a deemedsatisfaction and reissuance. Accordingly,these final regulations retain the languageof the 2007 Proposed Regulations.

4. Outbound Exception for IntercompanyObligations Newly-Issued in aReorganization

The 2007 Proposed Regulations pro-vide an exception to the deemed satisfac-tion-reissuance model for the outboundtransfer of an intercompany obligation thatis newly issued in an intragroup reorga-nization and pursuant to the plan of reor-ganization, is distributed to a nonmembershareholder or creditor in a transaction towhich section 361(c) applies. Commenta-tors generally supported this exception butalso suggested that, under similar circum-stances, an exception be added to apply tocertain intercompany distributions of anintercompany obligation if the obligationis transferred outside of the group withina relatively short period of time.

The IRS and the Treasury Departmentare continuing to study the effects of thedeemed satisfaction-reissuance model onsuch intercompany distributions in con-junction with a broader study regarding theinteraction of section 361 and the inter-company transaction rules. Accordingly,these final regulations do not include thesuggested exception. However, the IRSand the Treasury Department request fur-ther comments in this regard.

5. Exceptions to the Application of Section108(e)(4)

The 2007 Proposed Regulations retainthe exceptions in the Former Regulationsfor transactions involving an obligationthat becomes (in the context of an inboundtransaction) or became (in the context of

February 9, 2009 436 2009–6 I.R.B.

an intragroup or outbound transaction), anintercompany obligation by reason of anevent described in §1.108–2(e). In gen-eral, these events are: (1) acquisitions ofindebtedness with a stated maturity datewithin one year of the acquisition date ifthe indebtedness is retired on or before thatdate (the “short-term debt exception”);and (2) acquisitions of indebtedness by adealer that acquires and disposes of theindebtedness in the ordinary course ofits business of dealing in securities (the“dealer exception”).

The short-term debt exception ispremised upon the view that imposition ofthe deemed satisfaction-reissuance modelis unwarranted because the indebtednesswould be retired within the short term byits own terms (and the retirement wouldproduce the same results as that of thedeemed satisfaction and reissuance). Withrespect to the dealer exception, becausethe indebtedness’ status as an intercom-pany obligation is likely transitory, theburden associated with the deemed satis-faction-reissuance model does not warrantits application.

One commentator questioned whetherthe short-term debt exception is appropri-ate because the intragroup retirement ofthe instrument may produce items that dif-fer in character from those that would beobtained if the instrument were subject tothe deemed satisfaction-reissuance modelupon entering the group. For example, if adepreciated obligation is deemed satisfiedand reissued immediately after it enters thegroup, the attributes of the creditor’s lossand the debtor’s discharge of indebtednessincome are determined on a separate entitybasis. However, if the instrument is ex-cepted from the deemed satisfaction-reis-suance model when it enters the group,the subsequent retirement of the note mayresult, arguably, in a character match ofthe creditor’s and debtor’s items. In caseswhere the adjusted issue price and basisof the note differ in amount, the potentialfor differing results is amplified. There-fore, the IRS and the Treasury Departmentagree that the short term debt exceptionsfor both inbound and intragroup transac-tions should be eliminated in these finalregulations. The dealer exception has beenretained in these final regulations.

Consistent with the Former Regula-tions’ treatment of inbound transactions,the 2007 Proposed Regulations treat the

attributes of the debtor and creditor mem-ber’s items from the deemed satisfactionon a separate entity basis. The IRS and theTreasury Department continue to believethat separate entity treatment is appropri-ate for such inbound transactions.

Special Analyses

It has been determined that this Trea-sury decision is not a significant regula-tory action as defined in Executive Order12866. Therefore, a regulatory assessmentis not required. It is hereby certified thatthese regulations do not have a significanteconomic impact on a substantial numberof small entities. This certification is basedon the fact that these regulations primarilyaffect affiliated groups of corporations thathave elected to file consolidated returns,which tend to be larger businesses, and,moreover, that any burden on taxpayers isminimal. Therefore, a Regulatory Flexi-bility Analysis under the Regulatory Flex-ibility Act (5 U.S.C. chapter 6) is not re-quired. Pursuant to section 7805(f) of theInternal Revenue Code, the notice of pro-posed rulemaking preceding these regula-tions was submitted to the Chief Counselfor Advocacy of the Small Business Ad-ministration for comment on its impact onsmall business.

Drafting Information

The principal author of these regula-tions is Frances Kelly, Office of Asso-ciate Chief Counsel (Corporate). How-ever, other personnel from the IRS and theTreasury Department participated in theirdevelopment.

* * * * *

Adoption of Amendments to theRegulations

Accordingly, 26 CFR part 1 is amendedas follows:

PART 1—INCOME TAXES

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

Authority: 26 U.S.C. 7805. * * *Sections 1.1502–13 and 1.1502–28 also

issued under 26 U.S.C. 1502. * * *Par. 2. Section 1.1502–13 is amended

by:

1. Revising the heading and the en-tries for §1.1502–13(g)(5) in paragraph(a)(6)(ii).

2. Revising the first sentence of para-graph (e)(2)(i).

3. Revising paragraph (g).4. Removing paragraph (j)(9) Example

(5)(c).The revisions read as follows:

§1.1502–13 Intercompany transactions.

(a) * * *(6) * * *(ii) * * *

Obligations of members.(§1.1502–13(g)(7)(ii))

Example 1. Interest on intercompanyobligation.

Example 2. Intercompany obligationbecomes nonintercompany obligation.

Example 3. Loss or bad debt deductionwith respect to intercompany obligation.

Example 4. Intercompany nonrecogni-tion transactions.

Example 5. Assumption of intercom-pany obligation.

Example 6. Extinguishment of inter-company obligation.

Example 7. Exchange of intercompanyobligations.

Example 8. Tax benefit rule.Example 9. Issuance at off-market rate

of interest.Example 10. Nonintercompany obliga-

tion becomes intercompany obligation.Example 11. Notional principal con-

tracts.

* * * * *(e) * * *(2) * * * (i) * * * Except as provided

in paragraph (g)(4)(v) of this section (de-ferral of items from an intercompany obli-gation), a member’s addition to, or reduc-tion of, a reserve for bad debts that is main-tained under section 585 is taken into ac-count on a separate entity basis. * * *

* * * * *(g) Obligations of members—(1) In

general. In addition to the general rules ofthis section, the rules of this paragraph (g)apply to intercompany obligations.

(2) Definitions. For purposes of thissection, the following definitions apply—

(i) Obligation of a member is a debt orsecurity of a member.

2009–6 I.R.B. 437 February 9, 2009

(A) Debt of a member is any obliga-tion of the member constituting indebted-ness under general principles of Federalincome tax law (for example, under non-statutory authorities, or under section 108,section 163, or §1.1275–1(d)), but not anexecutory obligation to purchase or pro-vide goods or services.

(B) Security of a member is any se-curity of the member described in sec-tion 475(c)(2)(D) or (E), and any com-modity of the member described in sec-tion 475(e)(2)(A), (B), or (C), but not if thesecurity or commodity is a position withrespect to the member’s stock. See para-graphs (f)(4) and (f)(6) of this section forspecial rules applicable to positions withrespect to a member’s stock.

(ii) Intercompany obligation is an obli-gation between members, but only for theperiod during which both parties are mem-bers.

(iii) Intercompany obligation subgroupis comprised of two or more members thatinclude the creditor and debtor on an in-tercompany obligation if the creditor anddebtor bear the relationship described insection 1504(a)(1) to each other through anintercompany obligation subgroup parent.

(iv) Intercompany obligation subgroupparent is the corporation (including eitherthe creditor or debtor) that bears the samerelationship to the other members of the in-tercompany obligation subgroup as a com-mon parent bears to the members of a con-solidated group. Any reference to an in-tercompany obligation subgroup parent in-cludes, as the context may require, a ref-erence to a predecessor or successor. Forthis purpose, a predecessor is a transferorof assets to a transferee (the successor) ina transaction to which section 381(a) ap-plies.

(v) Tax benefit is the benefit of, for Fed-eral tax purposes, a net reduction in incomeor gain, or a net increase in loss, deduc-tion, credit, or allowance. A tax benefitincludes, but is not limited to, the use ofa built-in item or items from an intercom-pany obligation to reduce gain or increaseloss on the sale of member stock, or to cre-ate or absorb a tax attribute of a member orsubgroup.

(vi) Eighty-percent chain is a chainof two or more corporations in whichstock meeting the requirements of section1504(a)(2) of each lower-tier member is

held directly by a higher-tier member ofsuch chain.

(3) Deemed satisfaction and reissuanceof intercompany obligations in triggeringtransactions—(i) Scope—(A) Triggeringtransactions. For purposes of this para-graph (g)(3), a triggering transaction in-cludes the following:

(1) Assignment and extinguishmenttransactions. Any intercompany trans-action in which a member realizes anamount, directly or indirectly, from theassignment or extinguishment of all orpart of its remaining rights or obligationsunder an intercompany obligation or anycomparable transaction in which a mem-ber realizes any such amount, directly orindirectly, from an intercompany obliga-tion (for example, a mark to fair marketvalue of an obligation or a bad debt deduc-tion). However, a reduction of the basisof an intercompany obligation pursuantto §1.1502–36(d) (attribute reduction toprevent duplication of loss), or pursuantto sections 108 and 1017 and §1.1502–28(basis reductions upon the exclusion fromgross income of discharge of indebted-ness) or any other provision that adjuststhe basis of an intercompany obligation asa substitute for income, gain, deduction,or loss, is not a comparable transaction.

(2) Outbound transactions. Any trans-action in which an intercompany obliga-tion becomes an obligation that is not anintercompany obligation.

(B) Exceptions. Except as providedin paragraph (g)(3)(i)(C) of this section,a transaction is not a triggering transac-tion as described in paragraph (g)(3)(i)(A)of this section if any of the exceptionsin this paragraph (g)(3)(i)(B) apply. Inmaking this determination, if a creditoror debtor realizes an amount in a trans-action in which a creditor assigns all orpart of its rights under an intercompanyobligation to the debtor, or a debtor as-signs all of or part of its obligations underan intercompany obligation to the creditor,the transaction will be treated as an extin-guishment and will be excepted from thedefinition of “triggering transaction” onlyif either of the exceptions in paragraphs(g)(3)(i)(B)(5) or (6) of this section apply.The exceptions are as follows.

(1) Intercompany section 361, 332,or 351 exchange. The transaction is anintercompany exchange to which section361(a), sections 332 and 337(a), or (except

as provided in the following sentence)section 351 applies in which no amountof income, gain, deduction or loss is rec-ognized by the creditor or debtor. Theassignment of an intercompany obligationby a creditor member in an intercompanyexchange to which section 351 applies isa triggering transaction, notwithstandingthe preceding sentence, if a member ofthe group is described in, or engages in atransaction that is described in, any of thefollowing paragraphs.

(i) The transferor or transferee memberhas a loss subject to a limitation (for ex-ample, a loss from a separate return lim-itation year that is subject to limitationunder §1.1502–21(c), or a dual consoli-dated loss that is subject to limitation under§1.1503(d)–4), but only if the other mem-ber is not subject to a comparable limita-tion;

(ii) The transferor or transferee mem-ber has a special status within the meaningof §1.1502–13(c)(5) (for example, a bankdefined in section 581, or a life insurancecompany subject to tax under section 801)that the other member does not also pos-sess;

(iii) A member of the group realizes dis-charge of indebtedness income that is ex-cluded from gross income under section108(a) within the same taxable year as thatof the exchange, and the tax attributes at-tributable to either the transferor or thetransferee member are reduced under sec-tions 108, 1017, and §1.1502–28 (except ifthe attribute reduction results solely fromthe application of §1.1502–28(a)(4) (re-duction of certain tax attributes attribut-able to other members));

(iv) The transferee member has a non-member shareholder;

(v) The transferee member issues pre-ferred stock to the transferor member inexchange for the assignment of the inter-company obligation; or

(vi) The stock of the transferee mem-ber (or a higher-tier member other than ahigher-tier member of an 80-percent chainthat includes the transferee) is disposedof within 12 months from the assignmentof the intercompany obligation, unless atthe time of the assignment, the transferormember, transferee member (or in the caseof successive section 351 exchanges, eachtransferor and transferee member) and thedebtor member are all in the same 80-per-cent chain; and all of the stock of the trans-

February 9, 2009 438 2009–6 I.R.B.

feree (or in the case of successive section351 exchanges, the lowest-tier transferee)held by members of the group is disposedof as part of the same plan or arrangement,either directly or indirectly, to persons thatare not members of the group.

(2) Intercompany assumption transac-tion. All of the debtor’s obligations underan intercompany obligation are assumed inconnection with the debtor’s sale or otherdisposition of property (other than solelymoney) in an intercompany transaction inwhich gain or loss is recognized under sec-tion 1001.

(3) Exception to the application of sec-tion 108(e)(4). The obligation became anintercompany obligation by reason of anevent described in §1.108–2(e)(2) (excep-tion to the application of section 108(e)(4)in the case of acquisitions by securitiesdealers).

(4) Reserve accounting. The amountrealized is from reserve accounting undersection 585 (see paragraph (g)(4)(v) of thissection for special rules).

(5) Intercompany extinguishment trans-action. All or part of the rights and obli-gations under the intercompany obligationare extinguished in an intercompany trans-action (other than an exchange or deemedexchange of an intercompany obligationfor a newly issued intercompany obliga-tion), the adjusted issue price of the obli-gation is equal to the creditor’s basis in theobligation, and the debtor’s correspond-ing item and the creditor’s intercompanyitem (after taking into account the specialrules of paragraph (g)(4)(i)(C) of this sec-tion) with respect to the obligation offsetin amount.

(6) Routine modification of intercom-pany obligation. All of the rights andobligations under the intercompany obli-gation are extinguished in an intercom-pany transaction that is an exchange (ordeemed exchange) for a newly issuedintercompany obligation, and the issueprice of the newly issued obligation equalsboth the adjusted issue price of the extin-guished obligation and the creditor’s basisin the extinguished obligation. Solelyfor purposes of the preceding sentence,a newly issued intercompany obligationincludes an obligation that is issued (ordeemed issued) by a member other thanthe original debtor if such other memberassumes the original debtor’s obligationsunder the original obligation in a transac-

tion that is described in either paragraph(g)(3)(i)(B)(1) or (g)(3)(i)(B)(2) of thissection and the assumption results in asignificant modification of the originalobligation under §1.1001–3(e)(4) and adeemed exchange under §1.1001–3(b).

(7) Outbound distribution of newly is-sued intercompany obligation. The inter-company obligation becomes an obliga-tion that is not an intercompany obligationin a transaction in which a member thatis a party to the reorganization exchangesproperty in pursuance of the plan of re-organization for a newly issued intercom-pany obligation of another member thatis a party to the reorganization and dis-tributes such intercompany obligation toa nonmember shareholder or nonmembercreditor in a transaction to which section361(c) applies.

(8) Outbound subgroup exception. Theintercompany obligation becomes an obli-gation that is not an intercompany obliga-tion in a transaction in which the membersof an intercompany obligation subgroupcease to be members of a consolidatedgroup, neither the creditor nor the debtorrecognize any income, gain, deduction, orloss with respect to the intercompany obli-gation, and such members constitute anintercompany obligation subgroup of an-other consolidated group immediately af-ter the transaction.

(C) Tax benefit rule. If an assignmentor extinguishment of an intercompanyobligation in an intercompany transactionis otherwise excepted from the definitionof triggering transaction under paragraph(g)(3)(i)(B)(1), (2), (5), or (6) of thissection (and not also under paragraph(g)(3)(i)(B)(3) or (4) of this section), andthe assignment or extinguishment is en-gaged in with a view to shift items ofbuilt-in gain, loss, income, or deductionfrom the obligation from one member toanother member in order to secure a taxbenefit (as defined in paragraph (g)(2)(v)of this section) that the group or its mem-bers would not otherwise enjoy in a con-solidated or separate return year, then theassignment or extinguishment will be atriggering transaction to which paragraph(g)(3)(ii) of this section applies.

(ii) Application of deemed satisfactionand reissuance. This paragraph (g)(3)(ii)applies if a triggering transaction occurs.

(A) General rule. If the intercompanyobligation is debt of a member, then (ex-

cept as provided in the following sentence)the debt is treated for all Federal incometax purposes as having been satisfied bythe debtor for cash in an amount equal toits fair market value, and then as havingbeen reissued as a new obligation (with anew holding period but otherwise identi-cal terms) for the same amount of cash,immediately before the triggering trans-action. However, if the creditor realizesan amount with respect to the debt in thetriggering transaction that differs from thedebt’s fair market value, and the triggeringtransaction is not an exchange (or deemedexchange) of debt of a member for newlyissued debt of a member, then the debt istreated for all Federal income tax purposesas having been satisfied by the debtor forcash in an amount equal to such amountrealized, and reissued as a new obliga-tion (with a new holding period but other-wise identical terms) for the same amountof cash, immediately before the triggeringtransaction. If the triggering transactionis a mark to fair market value under sec-tion 475, then the intercompany obligationwill be deemed satisfied and reissued forits fair market value (as determined un-der section 475 and applicable regulations)and section 475 will not otherwise applywith respect to that triggering transaction.If the intercompany obligation is a securityof a member, similar principles apply (withappropriate adjustments) to treat the secu-rity as having been satisfied and reissuedimmediately before the triggering transac-tion.

(B) Treatment as separate transaction.The deemed satisfaction and deemed reis-suance are treated as transactions separateand apart from the triggering transaction.The deemed satisfaction and reissuance ofa member’s debt will not cause the debt tobe recharacterized as other than debt forFederal income tax purposes.

(4) Special rules—(i) Timing and at-tributes. For purposes of applying thematching rule and the acceleration ruleto a transaction involving an intercom-pany obligation (other than a transactionto which paragraph (g)(5) of this sectionapplies)—

(A) Paragraph (c)(6)(i) of this section(treatment of intercompany items if cor-responding items are excluded or non-deductible) will not apply to exclude anyamount of income or gain attributable to areduction of the basis of the intercompany

2009–6 I.R.B. 439 February 9, 2009

obligation pursuant to §1.1502–36(d),or pursuant to sections 108 and 1017and §1.1502–28 or any other provisionthat adjusts the basis of an intercompanyobligation as a substitute for income orgain;

(B) Paragraph (c)(6)(ii) of this section(limitation on treatment of intercompanyincome or gain as excluded from gross in-come) does not apply to prevent any in-tercompany income or gain from the inter-company obligation from being excludedfrom gross income;

(C) Any income, gain, deduction, orloss from the intercompany obligationis not subject to section 108(a), section354, section 355(a)(1), section 1091, or,in the case of an extinguishment of an in-tercompany obligation in a transaction inwhich the creditor transfers the obligationto the debtor in exchange for stock in suchdebtor, section 351(a); and

(D) Section 108(e)(7) does not applyupon the extinguishment of an intercom-pany obligation.

(ii) Newly issued obligation in inter-company exchange. If an intercompanyobligation is exchanged (or is deemed ex-changed) for a newly issued intercompanyobligation and the exchange (or deemedexchange) is not a routine modification ofan intercompany obligation (as describedin paragraph (g)(3)(i)(B)(6) of this sec-tion), then the newly issued obligation willbe treated for all Federal income tax pur-poses as having an issue price equal to itsfair market value.

(iii) Off-market issuance. If an inter-company obligation is issued at a rate ofinterest that is materially off-market (off-market obligation) with a view to shiftitems of built-in gain, loss, income, ordeduction from the obligation from onemember to another member in order to se-cure a tax benefit (as defined in paragraph(g)(2)(v) of this section), then the inter-company obligation will be treated, for allFederal income tax purposes, as originallyissued for its fair market value, and any dif-ference between the amount loaned and thefair market value of the obligation will betreated as transferred between the creditorand the debtor at the time the obligation isissued. For example, if S lends $100 to Bin return for an off-market B note valuedat $130, and the note is issued with a viewto shift items from the note to secure a taxbenefit, then the B note will be treated as

issued for $130. The $30 difference willbe treated as a distribution or capital con-tribution between S and B (as appropriate)at the time of issuance, and this amountwill be reflected in future payments on thenote as bond issuance premium. An ad-justment to an off-market obligation un-der this paragraph (g)(4)(iii) will be madewithout regard to the application of, and inlieu of any adjustment under, section 467(certain payments for the use of propertyor services), 482 (allocations among com-monly controlled taxpayers), 483 (intereston certain deferred payments), 1274 (de-termination of issue price for certain debtinstruments issued for property), or 7872(treatment of loans with below-market in-terest rates).

(iv) Deferral of loss or deduction withrespect to nonmember indebtedness ac-quired in certain debt exchanges. If a cred-itor transfers an intercompany obligationto a nonmember (former intercompanyobligation) in exchange for newly issueddebt of a nonmember (nonmember debt),and the issue price of the nonmember debtis not determined by reference to its fairmarket value (for example, the issue priceis determined under section 1273(b)(4) or1274(a) or any other provision of appli-cable law), then any loss of the creditorotherwise allowable on the subsequentdisposition of the nonmember debt, or anycomparable tax benefit that would other-wise be available in any other transactionthat directly or indirectly results from thedisposition of the nonmember debt, is de-ferred until the date the debtor retires theformer intercompany obligation.

(v) Bad debt reserve. A member’s de-duction under section 585 for an additionto its reserve for bad debts with respectto an intercompany obligation is not takeninto account, and is not treated as realizedfor purposes of paragraph (g)(3)(i)(A)(1)of this section, until the intercompany obli-gation is extinguished or becomes an obli-gation that is not an intercompany obliga-tion.

(5) Deemed satisfaction and reissuanceof obligations becoming intercompanyobligations—(i) Application of deemedsatisfaction and reissuance—(A) In gen-eral. This paragraph (g)(5) applies if anobligation that is not an intercompanyobligation becomes an intercompany obli-gation.

(B) Exceptions. This paragraph (g)(5)does not apply to an intercompany obliga-tion if either of the following exceptionsapply.

(1) Exception to the application of sec-tion 108(e)(4). The obligation becomes anintercompany obligation by reason of anevent described in §1.108–2(e)(2) (excep-tion to the application of section 108(e)(4)in the case of acquisitions by securitiesdealers); or

(2) Inbound subgroup exception. Theobligation becomes an intercompany obli-gation in a transaction in which the mem-bers of an intercompany obligation sub-group cease to be members of a consol-idated group, neither the creditor nor thedebtor recognize any income, gain, de-duction, or loss with respect to the inter-company obligation, and such membersconstitute an intercompany obligation sub-group of another consolidated group im-mediately after the transaction.

(ii) Deemed satisfaction and reis-suance—(A) General rule. If the inter-company obligation is debt of a member,then the debt is treated for all Federalincome tax purposes, immediately afterit becomes an intercompany obligation,as having been satisfied by the debtorfor cash in an amount determined underthe principles of §1.108–2(f), and then ashaving been reissued as a new obligation(with a new holding period but otherwiseidentical terms) for the same amount ofcash. If the intercompany obligation isa security of a member, similar princi-ples apply (with appropriate adjustments)to treat the security, immediately after itbecomes an intercompany obligation, assatisfied and reissued by the debtor forcash in an amount equal to its fair marketvalue.

(B) Treatment as separate transaction.The deemed satisfaction and deemed reis-suance are treated as transactions separateand apart from the transaction in which thedebt becomes an intercompany obligation,and the tax consequences of the transac-tion in which the debt becomes an inter-company obligation must be determinedbefore the deemed satisfaction and reis-suance occurs. (For example, if the debtbecomes an intercompany obligation in atransaction to which section 351 applies,any limitation imposed by section 362(e)on the basis of the intercompany obliga-tion in the hands of the transferee member

February 9, 2009 440 2009–6 I.R.B.

is determined before the deemed satisfac-tion and reissuance.) The deemed satisfac-tion and reissuance of a member’s debt willnot cause the debt to be recharacterized asother than debt for Federal income tax pur-poses.

(6) Special rules—(i) Timing and at-tributes. If paragraph (g)(5) of this sectionapplies to an intercompany obligation—

(A) Section 108(e)(4) does not apply;(B) The attributes of all items taken into

account from the satisfaction of the inter-company obligation are determined on aseparate entity basis, rather than by treat-ing S and B as divisions of a single corpo-ration; and

(C) Any intercompany gain or loss real-ized by the creditor is not subject to section354 or section 1091.

(ii) Waiver of loss carryovers from sep-arate return limitation years. Solely forpurposes of §1.1502–32(b)(4) and the ef-fect of any election under that provision,any loss taken into account under para-graph (g)(5) of this section by a corpo-ration that becomes a member as a re-sult of the transaction in which the obliga-tion becomes an intercompany obligationis treated as a loss carryover from a sepa-rate return limitation year.

(iii) Deduction of repurchase premiumin certain debt exchanges. If an obliga-tion to which paragraph (g)(5) of this sec-tion applies is acquired in exchange for theissuance of an obligation to a nonmem-ber and the issue price of this newly is-sued obligation is not determined by ref-erence to its fair market value (for exam-ple, the issue price is determined undersection 1273(b)(4) or 1274(a) or any otherprovision of applicable law), then, underthe principles of §1.163–7(c), any repur-chase premium from the deemed satisfac-tion of the intercompany obligation underparagraph (g)(5)(ii) of this section will beamortized by the debtor over the term ofthe obligation issued to the nonmember inthe same manner as if it were original is-sue discount and the obligation to the non-member had been issued directly by thedebtor.

(7) Examples—(i) In general. For pur-poses of the examples in this paragraph (g),unless otherwise stated, interest is qual-ified stated interest under §1.1273–1(c),and the intercompany obligations are capi-tal assets and are not subject to section 475.

(ii) The application of this section toobligations of members is illustrated by thefollowing examples:

Example 1. Interest on intercompany obligation.(i) Facts. On January 1 of year 1, B borrows $100from S in return for B’s note providing for $10 of in-terest annually at the end of each year, and repaymentof $100 at the end of year 5. B fully performs its obli-gations. Under their separate entity methods of ac-counting, B accrues a $10 interest deduction annuallyunder section 163, and S accrues $10 of interest in-come annually under section 61(a)(4) and §1.446–2.

(ii) Matching rule. Under paragraph (b)(1) of thissection, the accrual of interest on B’s note is an in-tercompany transaction. Under the matching rule, Stakes its $10 of income into account in each of years1 through 5 to reflect the $10 difference between B’s$10 of interest expense taken into account and the $0recomputed expense. S’s income and B’s deductionare ordinary items. (Because S’s intercompany itemand B’s corresponding item would both be ordinaryon a separate entity basis, the attributes are not rede-termined under paragraph (c)(1)(i) of this section.)

(iii) Original issue discount. The facts are thesame as in paragraph (i) of this Example 1, exceptthat B borrows $90 (rather than $100) from S in re-turn for B’s note providing for $10 of interest annu-ally and repayment of $100 at the end of year 5. Theprinciples described in paragraph (ii) of this Example1 for stated interest also apply to the $10 of originalissue discount. Thus, as B takes into account its cor-responding expense under section 163(e), S takes intoaccount its intercompany income under section 1272.S’s income and B’s deduction are ordinary items.

(iv) Tax-exempt income. The facts are the sameas in paragraph (i) of this Example 1, except that B’sborrowing from S is allocable under section 265 toB’s purchase of state and local bonds to which sec-tion 103 applies. The timing of S’s income is thesame as in paragraph (ii) of this Example 1. Un-der paragraph (c)(4)(i) of this section, the attributesof B’s corresponding item of disallowed interest ex-pense control the attributes of S’s offsetting intercom-pany interest income. Paragraph (c)(6) of this sectiondoes not prevent the redetermination of S’s intercom-pany item as excluded from gross income becausesection 265(a)(2) permanently and explicitly disal-lows B’s corresponding deduction and because, un-der paragraph (g)(4)(i)(B) of this section, paragraph(c)(6)(ii) of this section does not apply to prevent anyintercompany income from the B note from being ex-cluded from gross income. Accordingly, S’s inter-company income is treated as excluded from grossincome.

Example 2. Intercompany obligation becomesnonintercompany obligation. (i) Facts. On January1 of year 1, B borrows $100 from S in return forB’s note providing for $10 of interest annually atthe end of each year, and repayment of $100 at theend of year 5. As of January 1 of year 3, B has paidthe interest accruing under the note and S sells B’snote to X for $70, reflecting an increase in prevailingmarket interest rates. B is never insolvent within themeaning of section 108(d)(3).

(ii) Deemed satisfaction and reissuance. Becausethe B note becomes an obligation that is not an in-tercompany obligation, the transaction is a trigger-ing transaction under paragraph (g)(3)(i)(A)(2) of this

section. Under paragraph (g)(3)(ii) of this section,B’s note is treated as satisfied and reissued for its fairmarket value of $70 immediately before S’s sale toX. As a result of the deemed satisfaction of the notefor less than its adjusted issue price, B takes into ac-count $30 of discharge of indebtedness income under§1.61–12. On a separate entity basis, S’s $30 losswould be a capital loss under section 1271(a)(1). Un-der the matching rule, however, the attributes of S’sintercompany item and B’s corresponding item mustbe redetermined to produce the same effect as if thetransaction had occurred between divisions of a sin-gle corporation. Under paragraph (c)(4)(i) of this sec-tion, the attributes of B’s $30 of discharge of indebt-edness income control the attributes of S’s loss. Thus,S’s loss is treated as ordinary loss. B is also treatedas reissuing, immediately after the satisfaction, a newnote to S with a $70 issue price, a $100 stated redemp-tion price at maturity, and a $70 basis in the hands ofS. S is then treated as selling the new note to X for the$70 received by S in the actual transaction. BecauseS has a basis of $70 in the new note, S recognizes nogain or loss from the sale to X. After the sale, the newnote held by X is not an intercompany obligation, ithas a $70 issue price, a $100 stated redemption priceat maturity, and a $70 basis. The $30 of original issuediscount will be taken into account by B and X undersections 163(e) and 1272.

(iii) Creditor deconsolidation. The facts are thesame as in paragraph (i) of this Example 2, exceptthat P sells S’s stock to X (rather than S selling B’snote to X). Because the B note becomes an obligationthat is not an intercompany obligation, the trans-action is a triggering transaction under paragraph(g)(3)(i)(A)(2) of this section. Under paragraph(g)(3)(ii) of this section, B’s note is treated as sat-isfied and reissued for its $70 fair market valueimmediately before S becomes a nonmember. Thetreatment of S’s $30 of loss and B’s $30 of dischargeof indebtedness income is the same as in paragraph(ii) of this Example 2. The new note held by S upondeconsolidation is not an intercompany obligation, ithas a $70 issue price, a $100 stated redemption priceat maturity, and a $70 basis. The $30 of originalissue discount will be taken into account by B and Sunder sections 163(e) and 1272.

(iv) Debtor deconsolidation. The facts are thesame as in paragraph (i) of this Example 2, exceptthat P sells B’s stock to X (rather than S selling B’snote to X). The results to S and B are the same as inparagraph (iii) of this Example 2.

(v) Subgroup exception. The facts are the sameas in paragraph (i) of this Example 2, except that Powns all of the stock of S, S owns all of the stock ofB, and P sells all of the S stock to X, the parent ofanother consolidated group. Because B and S, mem-bers of an intercompany obligation subgroup, ceaseto be members of the P group in a transaction thatdoes not cause either member to recognize an itemwith respect to the B note, and such members con-stitute an intercompany obligation subgroup in the Xgroup, P’s sale of S stock is not a triggering transac-tion under paragraph (g)(3)(i)(B)(8) of this section,and the note is not treated as satisfied and reissuedunder paragraph (g)(3)(ii) of this section. After thesale, the note held by S has a $100 issue price, a $100stated redemption price at maturity, and a $100 basis.The results are the same if the S stock is sold to anindividual and the S-B affiliated group elects to file

2009–6 I.R.B. 441 February 9, 2009

a consolidated return for the period beginning on theday after S and B cease to be members of the P group.

(vi) Section 338 election. The facts are the sameas paragraph (i) of this Example 2, except that P sellsS’s stock to X and a section 338 election is made withrespect to the stock sale. Under section 338, S istreated as selling all of its assets to new S, includingthe B note, at the close of the acquisition date. Theaggregate deemed sales price (within the meaning of§1.338–4) allocated to the B note is $70. Because theB note becomes an obligation that is not an intercom-pany obligation, the transaction is a triggering trans-action under paragraph (g)(3)(i)(A)(2) of this section.Under paragraph (g)(3)(ii) of this section, B’s note istreated as satisfied and reissued immediately beforeS’s deemed sale to new S for $70, the amount realizedwith respect to the note (the aggregate deemed salesprice allocated to the note under §1.338–6). The re-sults to S and B are the same as in paragraph (ii) ofthis Example 2.

(vii) Appreciated note. The facts are the sameas in paragraph (i) of this Example 2, except that Ssells B’s note to X for $130 (rather than $70), reflect-ing a decline in prevailing market interest rates. Be-cause the B note becomes an obligation that is notan intercompany obligation, the transaction is a trig-gering transaction under paragraph (g)(3)(i)(A)(2) ofthis section. Under paragraph (g)(3)(ii) of this sec-tion, B’s note is treated as satisfied and reissued forits fair market value of $130 immediately before S’ssale to X. As a result of the deemed satisfaction ofthe note for more than its adjusted issue price, Btakes into account $30 of repurchase premium under§1.163–7(c). On a separate entity basis, S’s $30 gainwould be a capital gain under section 1271(a)(1). Un-der the matching rule, however, the attributes of S’sintercompany item and B’s corresponding item mustbe redetermined to produce the same effect as if thetransaction had occurred between divisions of a sin-gle corporation. Under paragraph (c)(4)(i) of this sec-tion, the attributes of B’s premium deduction controlthe attributes of S’s gain. Accordingly, S’s gain istreated as ordinary income. B is also treated as reis-suing, immediately after the satisfaction, a new noteto S with a $130 issue price, $100 stated redemptionprice at maturity, and $130 basis in the hands of S. S isthen treated as selling the new note to X for the $130received by S in the actual transaction. Because S hasa basis of $130 in the new note, S recognizes no gainor loss from the sale to X. After the sale, the new noteheld by X is not an intercompany obligation, it has a$130 issue price, a $100 stated redemption price atmaturity, and a $130 basis. The treatment of B’s $30of bond issuance premium under the new note is de-termined under §1.163–13.

(viii) Deferral of loss or deduction with respect tononmember indebtedness acquired in debt exchange.The facts are the same as in paragraph (i) of thisExample 2, except that S sells B’s note to X for anon-publicly traded X note with an issue price andface amount of $100 and a fair market value of $70,and that, subsequently, S sells the X note for $70. Be-cause the B note becomes an obligation that is notan intercompany obligation, the transaction is a trig-gering transaction under paragraph (g)(3)(i)(A)(2) ofthis section. Under paragraph (g)(3)(ii) of this sec-tion, B’s note is treated as satisfied and reissued im-mediately before S’s sale to X for $100, the amountrealized with respect to the note (determined under

section 1274). As a result of the deemed satisfaction,neither S nor B take into account any items of income,gain, deduction, or loss. S is then treated as selling thenew B note to X for the X note received by S in theactual transaction. Because S has a basis of $100 inthe new note, S recognizes no gain or loss from thesale to X. After the sale, the new B note held by Xis not an intercompany obligation, it has a $100 issueprice, a $100 stated redemption price at maturity, anda $100 basis. S also holds an X note with a basis of$100 but a fair market value of $70. When S disposesof the X note, S’s loss on the disposition is deferredunder paragraph (g)(4)(iv) of this section, until B re-tires its note (the former intercompany obligation inthe hands of X).

Example 3. Loss or bad debt deduction with re-spect to intercompany obligation. (i) Facts. On Jan-uary 1 of year 1, B borrows $100 from S in return forB’s note providing for $10 of interest annually at theend of each year, and repayment of $100 at the endof year 5. On January 1 of year 3, the fair marketvalue of the B note has declined to $60 and S sellsthe B note to P for property with a fair market valueof $60. B is never insolvent within the meaning ofsection 108(d)(3). The B note is not a security withinthe meaning of section 165(g)(2).

(ii) Deemed satisfaction and reissuance. BecauseS realizes an amount of loss from the assignment ofthe B note, the transaction is a triggering transactionunder paragraph (g)(3)(i)(A)(1) of this section. Un-der paragraph (g)(3)(ii) of this section, B’s note istreated as satisfied and reissued for its fair marketvalue of $60 immediately before S’s sale to P. As aresult of the deemed satisfaction of the note for lessthan its adjusted issue price ($100), B takes into ac-count $40 of discharge of indebtedness income under§1.61–12. On a separate entity basis, S’s $40 losswould be a capital loss under section 1271(a)(1). Un-der the matching rule, however, the attributes of S’sintercompany item and B’s corresponding item mustbe redetermined to produce the same effect as if thetransaction had occurred between divisions of a sin-gle corporation. Under paragraph (c)(4)(i) of this sec-tion, the attributes of B’s $40 of discharge of indebt-edness income control the attributes of S’s loss. Thus,S’s loss is treated as ordinary loss. B is also treatedas reissuing, immediately after the satisfaction, a newnote to S with a $60 issue price, $100 stated redemp-tion price at maturity, and $60 basis in the hands of S.S is then treated as selling the new note to P for the$60 of property received by S in the actual transac-tion. Because S has a basis of $60 in the new note, Srecognizes no gain or loss from the sale to P. After thesale, the note is an intercompany obligation, it has a$60 issue price and a $100 stated redemption price atmaturity, and the $40 of original issue discount will betaken into account by B and P under sections 163(e)and 1272.

(iii) Partial bad debt deduction. The facts arethe same as in paragraph (i) of this Example 3, ex-cept that S claims a $40 partial bad debt deductionunder section 166(a)(2) (rather than selling the noteto P). Because S realizes a deduction from a trans-action comparable to an assignment of the B note,the transaction is a triggering transaction under para-graph (g)(3)(i)(A)(1) of this section. Under para-graph (g)(3)(ii) of this section, B’s note is treated assatisfied and reissued for its fair market value of $60immediately before section 166(a)(2) applies. The

treatment of S’s $40 loss and B’s $40 of discharge ofindebtedness income are the same as in paragraph (ii)of this Example 3. After the reissuance, S has a basisof $60 in the new note. Accordingly, the applicationof section 166(a)(2) does not result in any additionaldeduction for S. The $40 of original issue discounton the new note will be taken into account by B andS under sections 163(e) and 1272.

(iv) Insolvent debtor. The facts are the same asin paragraph (i) of this Example 3, except that B isinsolvent within the meaning of section 108(d)(3) atthe time that S sells the note to P. As explained inparagraph (ii) of this Example 3, the transaction isa triggering transaction and the B note is treated assatisfied and reissued for its fair market value of $60immediately before S’s sale to P. On a separate entitybasis, S’s $40 loss would be capital, B’s $40 incomewould be excluded from gross income under section108(a), and B would reduce attributes under section108(b) or section 1017 (see also §1.1502–28). How-ever, under paragraph (g)(4)(i)(C) of this section, sec-tion 108(a) does not apply to characterize B’s incomeas excluded from gross income. Accordingly, the at-tributes of S’s loss and B’s income are redeterminedin the same manner as in paragraph (ii) of this Exam-ple 3.

Example 4. Intercompany nonrecognition trans-actions. (i) Facts. On January 1 of year 1, B borrows$100 from S in return for B’s note providing for $10of interest annually at the end of each year, and re-payment of $100 at the end of year 5. As of January1 of year 3, B has fully performed its obligations, butthe note’s fair market value is $130, reflecting a de-cline in prevailing market interest rates. On January1 of year 3, S transfers the note and other assets to anewly formed corporation, Newco, for all of Newco’scommon stock in an exchange to which section 351applies.

(ii) No deemed satisfaction and reissuance. Be-cause the assignment of the B note is an exchange towhich section 351 applies and S recognizes no gainor loss, the transaction is not a triggering transactionunder paragraph (g)(3)(i)(B)(1) of this section, andthe note is not treated as satisfied and reissued underparagraph (g)(3)(ii) of this section.

(iii) Receipt of other property. The facts are thesame as in paragraph (i) of this Example 4, exceptthat the other assets transferred to Newco have a ba-sis of $100 and a fair market value of $260, and Sreceives, in addition to Newco common stock, $15 ofcash. Because S would recognize $15 of gain undersection 351(b), the assignment of the B note is a trig-gering transaction under paragraph (g)(3)(i)(A)(1) ofthis section. Under paragraph (g)(3)(ii) of this sec-tion, B’s note is treated as satisfied and reissued forits fair market value of $130 immediately before thetransfer to Newco. As a result of the deemed satisfac-tion of the note for more than its adjusted issue price,B takes into account $30 of repurchase premium un-der §1.163–7(c). On a separate entity basis, S’s $30gain would be a capital gain under section 1271(a)(1).Under the matching rule, however, the attributes ofS’s intercompany item and B’s corresponding itemmust be redetermined to produce the same effect asif the transaction had occurred between divisions of asingle corporation. Under paragraph (c)(4)(i) of thissection, the attributes of B’s premium deduction con-trol the attributes of S’s gain. Accordingly, S’s gain istreated as ordinary income. B is also treated as reis-

February 9, 2009 442 2009–6 I.R.B.

suing, immediately after the satisfaction, a new noteto S with a $130 issue price, $100 stated redemptionprice at maturity, and $130 basis in the hands of S. Sis then treated as transferring the new note to Newcofor the Newco stock and cash received by S in the ac-tual transaction. Because S has a basis of $130 in thenew B note, S recognizes no gain or loss with respectto the transfer of the note in the section 351 exchange,and S recognizes $10 of gain with respect to the trans-fer of the other assets under section 351(b). After thetransfer, the note has a $130 issue price and a $100stated redemption price at maturity. The treatment ofB’s $30 of bond issuance premium under the new noteis determined under §1.163–13.

(iv) The facts are the same as in paragraph (i)of this Example 4, except that T is a member witha loss from a separate return limitation year that issubject to limitation under §1.1502–21(c) (a SRLYloss), and on January 1 of year 3, S transfers the as-sets and the B note to T in an exchange to whichsection 351 applies. Because the transferee, T, hasa loss that is subject to a limitation, the assignment ofthe B note is a triggering transaction under paragraph(g)(3)(i)(A)(1) of this section (the exception in para-graph (g)(3)(i)(B)(1) of this section does not apply).Under paragraph (g)(3)(ii) of this section, B’s noteis treated as satisfied and reissued for its fair marketvalue, immediately before S’s transfer to T. As a re-sult of the deemed satisfaction of the note for morethan its adjusted issue price, B takes into account $30of repurchase premium under §1.163–7(c). On a sep-arate entity basis, S’s $30 gain would be a capitalgain under section 1271(a)(1). Under the matchingrule, however, the attributes of S’s intercompany itemand B’s corresponding item must be redetermined toproduce the same effect as if the transaction had oc-curred between divisions of a single corporation. Un-der paragraph (c)(4)(i) of this section, the attributes ofB’s premium deduction control the attributes of S’sgain. Accordingly, S’s gain is treated as ordinary in-come. B is also treated as reissuing, immediately af-ter the satisfaction, a new note to S with a $130 issueprice, $100 stated redemption price at maturity, and$130 basis in the hands of S. The treatment of B’s$30 of bond issuance premium under the new noteis determined under §1.163–13. S is then treated astransferring the new note to T as part of the section351 exchange. Because T will have a fair marketvalue basis in the reissued B note immediately afterthe exchange, T’s intercompany item from the sub-sequent retirement of the B note will not reflect anyof S’s built-in gain (and the amount of T’s SRLY lossthat may be absorbed by such item will be limited toany appreciation in the B note accruing after the ex-change).

(v) Intercompany obligation transferred in sec-tion 332 transaction. The facts are the same as inparagraph (i) of this Example 4, except that S transfersthe B note to P in complete liquidation under section332. Because the transaction is an exchange to whichsection 332 and section 337(a) applies, and neither Snor B recognize gain or loss, the transaction is not atriggering transaction under paragraph (g)(3)(i)(B)(1)of this section, and the note is not treated as satisfiedand reissued under paragraph (g)(3)(ii) of this section.

Example 5. Assumption of intercompany obliga-tion. (i) Facts. On January 1 of year 1, B borrows$100 from S in return for B’s note providing for $10of interest annually at the end of each year, and repay-

ment of $100 at the end of year 5. The note is fullyrecourse and is incurred for use in Business Z. As ofJanuary 1 of year 3, B has fully performed its obliga-tions, but the note’s fair market value is $110 reflect-ing a decline in prevailing market interest rates. Busi-ness Z has a fair market value of $95. On January 1 ofyear 3, B transfers all of the assets of Business Z and$15 of cash (substantially all of B’s assets) to memberT in exchange for the assumption by T of all of B’sobligations under the note in a transaction in whichgain or loss is recognized under section 1001. Theterms and conditions of the note are not modified inconnection with the sales transaction, the transactiondoes not result in a change in payment expectations,and no amount of income, gain, loss, or deduction isrecognized by S, B, or T with respect to the note.

(ii) No deemed satisfaction and reissuance. Be-cause all of B’s obligations under the B note are as-sumed by T in connection with the sale of the Busi-ness Z assets, the assignment of B’s obligations un-der the note is not a triggering transaction under para-graph (g)(3)(i)(B)(2) of this section, and the note isnot treated as satisfied and reissued under paragraph(g)(3)(ii) of this section.

Example 6. Extinguishment of intercompany obli-gation. (i) Facts. On January 1 of year 1, B borrows$100 from S in return for B’s note providing for $10of interest annually at the end of each year, and re-payment of $100 at the end of year 20. The note isa security within the meaning of section 351(d)(2).As of January 1 of year 3, B has fully performed itsobligations, but the fair market value of the B note is$130, reflecting a decline in prevailing market inter-est rates, and S transfers the note to B in exchange for$130 of B stock in a transaction to which both section351 and section 354 applies.

(ii) No deemed satisfaction and reissuance. As aresult of the satisfaction of the note for more than itsadjusted issue price, B takes into account $30 of re-purchase premium under §1.163–7(c). Although thetransfer of the B note is a transaction to which bothsection 351 and section 354 applies, under paragraph(g)(4)(i)(C) of this section, any gain or loss from theintercompany obligation is not subject to either sec-tion 351(a) or section 354, and therefore, S has a $30gain under section 1001. Because the note is extin-guished in a transaction in which the adjusted issueprice of the note is equal to the creditor’s basis in thenote, and the debtor’s and creditor’s items offset inamount, the transaction is not a triggering transactionunder paragraph (g)(3)(i)(B)(5) of this section, andthe note is not treated as satisfied and reissued underparagraph (g)(3)(ii) of this section. On a separate en-tity basis, S’s $30 gain would be a capital gain undersection 1271(a)(1). Under the matching rule, how-ever, the attributes of S’s intercompany item and B’scorresponding item must be redetermined to producethe same effect as if the transaction had occurred be-tween divisions of a single corporation. Under para-graph (c)(4)(i) of this section, the attributes of B’spremium deduction control the attributes of S’s gain.Accordingly, S’s gain is treated as ordinary income.Under paragraph (g)(4)(i)(D) of this section, section108(e)(7) does not apply upon the extinguishment ofthe B note, and therefore, the B stock received by Sin the exchange will not be treated as section 1245property.

Example 7. Exchange of intercompany obliga-tions. (i) Facts. On January 1 of year 1, B borrows

$100 from S in return for B’s note providing for $10of interest annually at the end of each year, and re-payment of $100 at the end of year 20. As of Jan-uary 1 of year 3, B has fully performed its obligationsand, pursuant to a recapitalization to which section368(a)(1)(E) applies, B issues a new note to S in ex-change for the original B note. The new B note has anissue price, stated redemption price at maturity, andstated principal amount of $100, but contains termsthat differ sufficiently from the terms of the originalB note to cause a realization event under §1.1001–3.The original B note and the new B note are both se-curities (within the meaning of section 354(a)(1)).

(ii) No deemed satisfaction and reissuance. Be-cause the original B note is extinguished in exchangefor a newly issued B note and the issue price of thenew B note is equal to both the adjusted issue priceof the original B note and S’s basis in the originalB note, the transaction is not a triggering transactionunder paragraph (g)(3)(i)(B)(6) of this section, andthe note is not treated as satisfied and reissued un-der paragraph (g)(3)(ii) of this section. B has neitherincome from discharge of indebtedness under sec-tion 108(e)(10) nor a deduction for repurchase pre-mium under §1.163–7(c). Although the exchange ofthe original B note for the new B note is a transac-tion to which section 354 applies, under paragraph(g)(4)(i)(C) of this section, any gain or loss from theintercompany obligation is not subject to section 354.Under section 1001, S has no gain or loss from the ex-change of notes.

Example 8. Tax benefit rule. (i) Facts. On Jan-uary 1 of year 1, B borrows $100 from S in returnfor B’s note providing for $10 of interest annually atthe end of each year, and repayment of $100 at theend of year 5. As of January 1 of year 3, B has fullyperformed its obligations, but the note’s fair marketvalue has depreciated, reflecting an increase in pre-vailing market interest rates. On that date, S trans-fers the B note to member T as part of an exchangefor T common stock which is intended to qualify fornonrecognition treatment under section 351 but witha view to sell the T stock at a reduced gain. On Feb-ruary 1 of year 4, all of the stock of T is sold at areduced gain.

(ii) Deemed satisfaction and reissuance. Be-cause the assignment of the B note does not occurwithin 12 months of the sale of T stock, paragraph(g)(3)(i)(B)(1)(vi) of this section does not applyto treat the assignment as a triggering transaction.However, because the assignment of the B note wasengaged in with a view to shift built-in loss fromthe obligation in order to secure a tax benefit thatthe group or its members would not otherwise en-joy, under paragraph (g)(3)(i)(C) of this section, theassignment of the B note is a triggering transactionto which paragraph (g)(3)(ii) of this section applies.Under paragraph (g)(3)(ii) of this section, B’s noteis treated as satisfied and reissued for its fair marketvalue, immediately before S’s transfer to T. As aresult of the deemed satisfaction of the note for lessthan its adjusted issue price, B takes into accountdischarge of indebtedness income and S has a cor-responding loss which is treated as ordinary loss.B is also treated as reissuing, immediately after thedeemed satisfaction, a new note to S with an issueprice and basis equal to its fair market value. S isthen treated as transferring the new note to T as partof the section 351 exchange. Because S’s basis in

2009–6 I.R.B. 443 February 9, 2009

the T stock received with respect to the transferredB note is equal to its fair market value, S’s gainwith respect to the T stock will not reflect any of thebuilt-in loss attributable to the B note. (This exampledoes not address common law doctrines or otherauthorities that might apply to recharacterize thetransaction or to otherwise affect the tax treatment ofthe transaction.)

Example 9. Issuance at off-market rate of interest.(i) Facts. T is a member with a SRLY loss. T’s soleshareholder, P, borrows an amount of cash from T inreturn for a P note that provides for a materially abovemarket rate of interest. The P note is issued with aview to generate additional interest income to T overthe term of the note to facilitate the absorption of T’sSRLY loss.

(ii) With a view. Because the P note is issuedwith a view to shift interest income from the off-mar-ket obligation in order to secure a tax benefit that thegroup or its members would not otherwise enjoy, un-der paragraph (g)(4)(iii) of this section, the intercom-pany obligation is treated, for all Federal income taxpurposes, as originally issued for its fair market valueso T is treated as purchasing the note at a premium.The difference between the amount loaned and thefair market value of the obligation is treated as trans-ferred from P to T as a capital contribution at the timethe note is issued. Throughout the term of the note, Ttakes into account interest income and bond premiumand P takes into account interest deduction and bondissuance premium under generally applicable InternalRevenue Code sections. The adjustment under para-graph (g)(4)(iii) of this section is made without regardto the application of, and in lieu of any adjustment un-der, section 482 or 1274.

Example 10. Nonintercompany obligation be-comes intercompany obligation. (i) Facts. OnJanuary 1 of year 1, B borrows $100 from X in returnfor B’s note providing for $10 of interest annually atthe end of each year, and repayment of $100 at theend of year 5. As of January 1 of year 3, B has fullyperformed its obligations, but the note’s fair marketvalue is $70, reflecting an increase in prevailingmarket interest rates. On January 1 of year 3, P buysall of X’s stock. B is solvent within the meaning ofsection 108(d)(3).

(ii) Deemed satisfaction and reissuance. Underparagraph (g)(5)(ii) of this section, B’s note is treatedas satisfied for $70 (determined under the principlesof §1.108–2(f)(2)) immediately after it becomes anintercompany obligation. Both X’s $30 capital loss(under section 1271(a)(1)) and B’s $30 of dischargeof indebtedness income (under §1.61–12) are takeninto account in determining consolidated taxable in-come for year 3. Under paragraph (g)(6)(i)(B) of thissection, the attributes of items resulting from the sat-isfaction are determined on a separate entity basis.But see section 382 and §1.1502–15 (as appropriate).B is also treated as reissuing a new note to X. Thenew note is an intercompany obligation, it has a $70issue price and $100 stated redemption price at ma-turity, and the $30 of original issue discount will betaken into account by B and X in the same manner asprovided in paragraph (iii) of Example 1 of this para-graph (g)(7).

(iii) Amortization of repurchase premium. Thefacts are the same as in paragraph (i) of this Exam-ple 10, except that on January 1 of year 3, the B notehas a fair market value of $130 and rather than P pur-

chasing the X stock, P purchases the B note from X byissuing its own note. The P note has an issue price,stated redemption price at maturity, stated principalamount, and fair market value of $130. Under para-graph (g)(5)(ii) of this section, B’s note is treated assatisfied for $130 (determined under the principles of§1.108–2(f)(1)) immediately after it becomes an in-tercompany obligation. As a result of the deemedsatisfaction of the note, P has no gain or loss andB has $30 of repurchase premium. Under paragraph(g)(6)(iii) of this section, B’s $30 of repurchase pre-mium from the deemed satisfaction is amortized by Bover the term of the newly issued P note in the samemanner as if it were original issue discount and thenewly issued P note had been issued directly by B. Bis also treated as reissuing a new note to P. The newnote is an intercompany obligation, it has a $130 is-sue price and $100 stated redemption price at matu-rity, and the treatment of B’s $30 of bond issuancepremium under the new B note is determined under§1.163–13.

(iv) Election to file consolidated returns. Assumeinstead that B borrows $100 from S during year 1,but the P group does not file consolidated returns un-til year 3. Under paragraph (g)(5)(ii) of this section,B’s note is treated as satisfied and reissued as a newnote immediately after the note becomes an intercom-pany obligation. The satisfaction and reissuance aredeemed to occur on January 1 of year 3, for the fairmarket value of the obligation (determined under theprinciples of §1.108–2(f)(2)) at that time.

Example 11. Notional principal contracts. (i)Facts. On April 1 of year 1, M1 enters into a contractwith counterparty M2 under which, for a term of fiveyears, M1 is obligated to make a payment to M2 eachApril 1, beginning in year 2, in an amount equal tothe London Interbank Offered Rate (LIBOR), as de-termined by reference to LIBOR on the day each pay-ment is due, multiplied by a $1,000 notional principalamount. M2 is obligated to make a payment to M1each April 1, beginning in year 2, in an amount equalto 8 percent multiplied by the same notional principalamount. LIBOR is 7.80 percent on April 1 of year 2,and therefore, M2 owes $2 to M1.

(ii) Matching rule. Under §1.446–3(d), the netincome (or net deduction) from a notional principalcontract for a taxable year is included in (or deductedfrom) gross income. Under §1.446–3(e), the ratabledaily portion of M2’s obligation to M1 as of Decem-ber 31 of year 1 is $1.50 ($2 multiplied by 275/365).Under the matching rule, M1’s net income for year1 of $1.50 is taken into account to reflect the differ-ence between M2’s net deduction of $1.50 taken intoaccount and the $0 recomputed net deduction. Simi-larly, the $.50 balance of the $2 of net periodic pay-ments made on April 1 of year 2 is taken into ac-count for year 2 in M1’s and M2’s net income andnet deduction from the contract. In addition, the at-tributes of M1’s intercompany income and M2’s cor-responding deduction are redetermined to producethe same effect as if the transaction had occurredbetween divisions of a single corporation. Underparagraph (c)(4)(i) of this section, the attributes ofM2’s corresponding deduction control the attributesof M1’s intercompany income. (Although M1 is theselling member with respect to the payment on April1 of year 2, it might be the buying member in a sub-sequent period if it owes the net payment.)

(iii) Dealer. The facts are the same as in para-graph (i) of this Example 11, except that M2 is adealer in securities, and the contract with M1 is notinventory in the hands of M2. Under section 475,M2 must mark its securities to fair market value atyear-end. Assume that under section 475, M2’s lossfrom marking to fair market value the contract withM1 is $10. Because M2 realizes an amount of lossfrom the mark to fair market value of the contract,the transaction is a triggering transaction under para-graph (g)(3)(i)(A)(1) of this section. Under para-graph (g)(3)(ii) of this section, M2 is treated as mak-ing a $10 payment to M1 to terminate the contract im-mediately before a new contract is treated as reissuedwith an up-front payment by M1 to M2 of $10. M1’s$10 of income from the termination payment is takeninto account under the matching rule to reflect M2’sdeduction under §1.446–3(h). The attributes of M1’sintercompany income and M2’s corresponding de-duction are redetermined to produce the same effectas if the transaction had occurred between divisionsof a single corporation. Under paragraph (c)(4)(i) ofthis section, the attributes of M2’s corresponding de-duction control the attributes of M1’s intercompanyincome. Accordingly, M1’s income is treated as or-dinary income. Under §1.446–3(f), the deemed $10up-front payment by M1 to M2 in connection withthe issuance of a new contract is taken into accountover the term of the new contract in a manner reflect-ing the economic substance of the contract (for ex-ample, allocating the payment in accordance with theforward rates of a series of cash-settled forward con-tracts that reflect the specified index and the $1,000notional principal amount). (The timing of takingitems into account is the same if M1, rather thanM2, is the dealer subject to the mark-to-market re-quirement of section 475 at year-end. However inthis case, because the attributes of the correspondingdeduction control the attributes of the intercompanyincome, M1’s income from the deemed terminationpayment from M2 might be ordinary or capital). Un-der paragraph (g)(3)(ii)(A) of this section, section 475does not apply to mark the notional principal contractto fair market value after its deemed satisfaction andreissuance.

(8) Effective/applicability date. Therules of this paragraph (g) apply to transac-tions involving intercompany obligationsoccurring in consolidated return years be-ginning on or after December 24, 2008.

* * * * *Par. 3. Section 1.1502–28 is amended

by:1. Revising paragraph (b)(5)(i).2. Revising the last sentence of para-

graph (b)(5)(ii).3. Adding a sentence to the end of para-

graph (d).The revisions and addition reads as fol-

lows:

§1.1502–28 Consolidated section 108.

* * * * *(b) * * *

February 9, 2009 444 2009–6 I.R.B.

(5) Reduction of basis of intercompanyobligations and former intercompany obli-gations—(i) Intercompany obligationsthat cease to be intercompany obligations.If excluded COD income is realized in aconsolidated return year in which an inter-company obligation becomes an obliga-tion that is not an intercompany obligationbecause the debtor or creditor becomesa nonmember, or because the assets ofthe debtor or the creditor are acquired bya nonmember in a transaction to whichsection 381 applies, then the basis of suchintercompany obligation (or new obli-gation if the intercompany obligation isdeemed reissued under §1.1502–13(g)(3))is available for reduction in respect ofsuch excluded COD income pursuant tosections 108 and 1017 and this section.

(ii) * * * See §1.1502–13(g)(3)(i)(A)(1)and (g)(4)(i)(A).

* * * * *(d) * * * Paragraph (b)(5)(i) of this

section and the last sentence of paragraph(b)(5)(ii) of this section applies to trans-actions occurring in consolidated returnyears beginning on or after December 24,2008.

Linda E. Stiff,Deputy Commissioner forServices and Enforcement.

Approved December 18, 2008.

Eric Solomon,Assistant Secretary of

the Treasury (Tax Policy).

(Filed by the Office of the Federal Register on December 24,2008, 8:45 a.m., and published in the issue of the FederalRegister for December 29, 2008, 73 F.R. 79324)

Section 6031.—Return ofPartnership Income

If a corporation makes the section 168(k)(4)election and is a partner in a partnership (electingcorporate partner), the partnership must provide theelecting corporate partner with sufficient informationto apply section 168(k)(4)(G)(ii) in determining itsdistributive share of partnership items under section702 relating to any eligible qualified property placedin service by the partnership during the taxableyear. This information must be provided in the timeand manner required by section 6031(b) and sec-tion 1.6031(b)–IT(a)(3)(ii) and (b). See Rev. Proc.2009-16, page 449.

Section 6401.—AmountsTreated as Overpayments

To the extent that taxpayer is allowed the busi-ness credit or alternative minimum tax credit in anamount allocable to the aggregate increases in thebusiness credit limitation and the alternative mini-mum tax credit limitation that result from the sec-tion 168(k)(4) election, such amounts(s) are treated asoverpayments within the meaning of section 6041(b)that are refundable to the taxpayer See Rev. Proc.2009-16, page 449.

Section 7520.—ValuationTables


Section 7872.—Treatmentof Loans With Below-MarketInterest Rates


2009–6 I.R.B. 445 February 9, 2009

Part III. Administrative, Procedural, and MiscellaneousAllocation of Section 36First-Time Homebuyer CreditBetween Taxpayers Who AreNot Married

Notice 2009–12

PURPOSE

This notice provides guidance under§ 36(b)(1)(C) of the Internal RevenueCode (Code) for allocating the first-timehomebuyer credit between taxpayers whoare not married.

LAW

Section 36 was added to the Code bysection 3011 of the Housing and Eco-nomic Recovery Act of 2008, Pub. L. No.110–289, 122 Stat. 2654, 2888 (2008).Section 36(a) provides that a taxpayer who

is a first-time homebuyer of a principalresidence (as defined in § 121) may claima credit on the taxpayer’s income tax re-turn equal to 10 percent of the purchaseprice of the residence. Section 36(c)(1)defines “first-time homebuyer” as any in-dividual (and if married, the individual’sspouse) who has not had an ownershipinterest in any principal residence duringthe three-year period ending on the dateof the purchase of the principal residence.Section 36(c)(3) defines “purchase” asany acquisition, but only if (i) the taxpayerdid not acquire the property from a relatedperson, and (ii) the taxpayer’s basis in theproperty is not determined, in whole orin part, by reference to the adjusted basisof the property in the hands of the per-son from whom the taxpayer acquired theproperty, or determined under § 1014(a)(relating to property acquired from adecedent). For purposes of § 36(c)(3)(i),

§ 36(c)(5) provides that a person is treatedas related to another person if the rela-tionship would result in the disallowanceof losses under § 267 or § 707, exceptthat members of a family of an individualinclude only the individual’s spouse, an-cestors, and lineal descendants.

Pursuant to § 36(h), the first-timehomebuyer credit applies to a home pur-chased on or after April 9, 2008, and be-fore July 1, 2009. The maximum amountof the credit is $7,500 ($3,750 for a mar-ried taxpayer filing a separate return), asprovided in § 36(b)(1)(A) and (B). Un-der § 36(b)(2), the credit begins to phaseout for a taxpayer whose modified ad-justed gross income (MAGI ) is $75,000($150,000 for married taxpayers filing ajoint return) (“MAGI threshold”). Theallowable credit is reduced by an amountequal to:

Maximum Allowable x MAGI in excess of $75,000 ($150,000 for married filing jointly).Credit $20,000

The credit is completely phased out for a taxpayer whose MAGI is $95,000 ($170,000 for married taxpayers filing a jointreturn) (“MAGI cap”).

Section 36(f) generally requires a tax-payer who claims the first-time homebuyercredit to repay the credit allowed in 15equal annual installments beginning withthe second taxable year after the taxableyear in which the taxpayer claims thecredit. This repayment obligation maybe accelerated or forgiven under certainexceptions as provided in § 36(f).

For eligible purchases in 2008, a tax-payer claims the credit by attaching Form5405, “First-Time Homebuyer Credit,” tothe taxpayer’s 2008 tax return. For eligiblepurchases in 2009, a taxpayer may elect toclaim the credit for 2008 or 2009 by attach-ing Form 5405 to the taxpayer’s original oramended 2008 tax return or 2009 tax re-turn.

APPLICATION

Section 36(b)(1)(C) provides that theSecretary may prescribe the manner inwhich the first-time homebuyer credit isallocated between two or more taxpayerswho are not married and who purchase aprincipal residence. The total credit allo-

cated between the taxpayers cannot exceed$7,500. For purposes of § 36(b)(1)(C),if two or more taxpayers who are notmarried purchase (within the meaning of§ 36(c)(3)) a principal residence and oth-erwise satisfy the requirements of § 36,the first-time homebuyer credit may beallocated between the taxpayers using anyreasonable method. A reasonable methodis any method that does not allocate anyportion of the credit to a taxpayer not eli-gible to claim that portion. A reasonablemethod includes allocating the credit be-tween taxpayers who are eligible to claimthe credit based on (1) the taxpayers’ con-tributions towards the purchase price of aresidence as tenants in common or jointtenants, or (2) the taxpayers’ ownershipinterests in a residence as tenants in com-mon.

EXAMPLES

The examples illustrate how the first-time homebuyer credit may be allocatedwhen A and B purchase a principal resi-dence as tenants in common. The rules

illustrated in the examples also apply ina similar manner to taxpayers who pur-chase a principal residence as joint tenants.Unless otherwise indicated, assume that ineach example A and B (i) purchase a prin-cipal residence on May 1, 2008, (ii) arenot married to each other, (iii) do not haveMAGI in excess of the MAGI threshold,and (iv) are first-time homebuyers whootherwise satisfy the requirements of § 36.

Example 1.A contributes $45,000 and B contributes $15,000

towards the $60,000 purchase price of a residence.Each owns a one-half interest in the residence astenants in common. Under § 36(a), the allowablecredit is limited to 10 percent of the purchase price,or $6,000. A and B may allocate the allowable $6,000credit three-fourths to A and one-fourth to B basedon their contributions toward the purchase price ofthe residence, one-half to each based on their own-ership interests in the residence, or using any otherreasonable method (for example, the entire credit toA or B because both A and B are eligible to claim theentire allowable credit).

Example 2.A contributes $10,000 for a down payment to-

wards the $100,000 purchase price of a residence, andA and B obtain and are jointly liable for a $90,000mortgage for the remainder of the purchase price.

February 9, 2009 446 2009–6 I.R.B.

Each owns a one-half interest in the residence as ten-ants in common. Under § 36(b)(1)(A), the allow-able credit is not $10,000 (10 percent of the purchaseprice) but is limited to $7,500. A and B may allocatethe allowable $7,500 credit 55 percent to A and 45percent to B based on their contributions toward thepurchase price, one-half to each based on their own-ership interests in the residence, or using any otherreasonable method (for example, the entire credit toA or B because both A and B are eligible to claim theentire allowable credit).

Example 3.On April 15, 2008, A pays the entire $100,000

purchase price of a residence and is the sole owner.Under § 36(b)(1)(A), the allowable credit is not$10,000 (10 percent of the purchase price) but islimited to $7,500. On May 12, 2008, A transfersa one-half interest in the residence to B as a tenantin common for $10,000. A may claim the entireallowable $7,500 credit. Because B acquired B’sinterest in the residence from A in part by gift, B’sbasis in the residence is determined under § 1015 byreference to A’s basis in the residence. Therefore, Bdid not purchase an interest in the residence withinthe meaning of § 36(c)(3), and no portion of thecredit may be allocated to B because B is not eligibleto claim any portion of the credit.

Example 4.A and B each contributes $50,000 towards the

$100,000 purchase price of a residence and owns aone-half interest in the residence as tenants in com-mon. Under § 36(b)(1)(A), the allowable credit is not$10,000 (10 percent of the purchase price) but is lim-ited to $7,500. However, B is not a first-time home-buyer within the meaning of § 36(c)(1). Therefore, noportion of the credit may be allocated to B because Bis not eligible to claim any portion of the credit. Amay claim the entire allowable $7,500 credit.

Example 5.A contributes $75,000 and B contributes $25,000

towards the $100,000 purchase price of a residence,and each owns a one-half interest in the residenceas tenants in common. Under § 36(b)(1)(A), the al-lowable credit is not $10,000 (10 percent of the pur-chase price) but is limited to $7,500. A’s MAGI is$100,000 and B’s MAGI is $60,000. Because A’sMAGI exceeds the $95,000 MAGI cap, any portionof the credit allocated to A would be reduced to $0.A and B may allocate the entire allowable $7,500credit to B because B’s MAGI is less than the $75,000MAGI threshold and, therefore, B is eligible to claimthe entire allowable credit.

Example 6.A and B each contributes $50,000 towards the

$100,000 purchase price of a residence and owns aone-half interest in the residence as tenants in com-mon. Under § 36(b)(1)(A), the allowable credit is not$10,000 (10 percent of the purchase price) but is lim-ited to $7,500. A’s MAGI is $80,000 and B’s MAGIis $60,000. Because A’s MAGI exceeds the $75,000MAGI threshold by $5,000, any portion of the allow-able credit allocated to A will be reduced by one-quar-ter, $5,000 (MAGI in excess of $75,000) / $20,000.A and B may allocate the allowable $7,500 creditone-half to A and one-half to B ($3,750 each) basedon their contributions toward the purchase price ofthe residence or their ownership interests in the res-idence. However, A’s $3,750 portion of the creditis limited by § 36(b)(2) and is reduced by one-quar-

ter ($3,750 x .25 = $937.50) to $2,812.50 ($3,750- 937.50). Alternatively, A and B may allocate theallowable $7,500 credit using any other reasonablemethod (for example, the entire credit to B becauseB’s MAGI is less than the $75,000 MAGI thresholdand, therefore, B is eligible to claim the entire allow-able credit).

Example 7.A and B, who are sisters, each contributes $50,000

towards the $100,000 purchase price of a residenceand each owns a one-half interest as tenants in com-mon. Under § 36(b)(1)(A), the allowable credit is not$10,000 (10 percent of the purchase price) but is lim-ited to $7,500. A and B purchase the residence fromtheir cousin, C. A, B, and C are not related personswithin the meaning of § 36(c)(5). Therefore, A and Bmay allocate the allowable $7,500 credit one-half to Aand one-half to B based on their contributions towardthe purchase price of the residence or their ownershipinterests in the residence. Alternatively, A and B mayallocate the allowable $7,500 credit using any otherreasonable method (for example, the entire credit toA or B because both A and B are eligible to claim theentire allowable credit).

DRAFTING INFORMATION

The principal author of this noticeis Christina M. Glendening of the Of-fice of Associate Chief Counsel (IncomeTax & Accounting). For further infor-mation regarding this notice, contactMs. Glendening at (202) 622–4920 (not atoll-free call).

Disclosure of StatisticalCompilations of AnonymousTax Return Information UnderSection 7216

Notice 2009–13

PURPOSE

This notice provides interim guidancerelating to the ability of a tax return pre-parer to disclose and use statistical compi-lations of anonymous tax return informa-tion (i.e., information in a form that cannotbe associated with, or otherwise identify,directly or indirectly, a particular taxpayer)described in § 301.7216–1(b)(3)(i)(B) insupport of a tax return preparer’s tax returnpreparation business. This notice providesguidance on the tax return information atax return preparer may use to compileanonymous statistical information that thetax return preparer may disclose withouttaxpayer consent. The ability of a tax re-turn preparer to disclose and use statisticalcompilations of tax return information that

contain any taxpayer identifying informa-tion is not addressed in this notice and con-tinues to be governed by § 301.7216–2(o).

BACKGROUND

On January 3, 2008, the Treasury De-partment and IRS issued final regulationsunder section 7216 (T.D. 9375, 2008–5I.R.B. 344) applicable to disclosures oruses of tax return information occurringon or after January 1, 2009. The finalregulations replaced previously issuedfinal regulations that remained applica-ble to disclosures or uses of tax returninformation occurring prior to January1, 2009. The final regulations included§ 301.7216–1(b)(3)(i)(B) which, for dis-closures and uses of tax return informationoccurring on or after January 1, 2009, pro-vides that tax return information includesstatistical compilations of tax return infor-mation, including information in a formthat cannot be associated with, or other-wise identify, directly or indirectly, a par-ticular taxpayer. The final regulations alsoincluded the addition of § 301.7216–2(o),which provides limited purposes for whena tax return preparer may use tax returninformation to produce statistical compi-lations and for when it may use or disclosethe produced statistical compilation. Sec-tion 301.7216–2(o) currently allows a taxreturn preparer to use statistical compi-lations if such use directly supports thetax return preparer’s tax return prepara-tion business. However, § 301.7216–2(o)also currently prohibits the disclosureof all statistical compilations, both tax-payer-identifying and anonymous, unlessthe disclosure is made in order to complywith financial accounting or regulatoryreporting requirements or occurs in con-junction with the sale or other dispositionof the compiler’s tax return preparationbusiness. This notice provides interimguidance with respect to the ability of atax return preparer to disclose and usestatistical compilations of anonymous taxreturn information data in support of itstax return preparation business.

The Treasury Department and IRShave become aware that, under current§ 301.7216–2(o), tax return preparers maynot disclose anonymous statistical compi-lations for other purposes that may providebenefits to taxpayers generally or to thepublic as a whole. Anonymous statistical

2009–6 I.R.B. 447 February 9, 2009

data disclosed within the constraints pro-vided by the interim guidance describedin this notice may be used by tax returnpreparers to assist taxpayers in makinginformed choices about filing options andtax return preparers. The availability ofanonymous statistical data can be usefulfrom a public policy perspective, as theavailability of such data can assist law-makers, academics, non-profits and otheragencies in the facilitation of sound taxpolicy analysis and decisions. In addition,volunteer tax return preparers that pro-vide free tax return preparation services tolow- and moderate-income taxpayers andfamilies would be able to demonstrate theimpact of their efforts in order to obtainand administer funding necessary for theircontinued operation.

The interim guidance provides thattax return preparers may use and dis-close, without taxpayer consent, statisticalcompilations of tax return information tosupport the tax return preparer’s tax returnpreparation business, but any disclosureof a statistical compilation must be in aform which cannot be associated with, orotherwise identify, directly or indirectly,a particular taxpayer. To further ensureanonymity, this interim guidance prohibitsthe disclosure of statistical compilationswith cells containing data from fewer thantwenty-five tax returns. Finally, the saleor exchange for value of all or any partof an anonymous statistical compilation isprohibited except if the sale occurs in con-junction with the transfer of assets madepursuant to the sale or other disposition ofthe tax return preparer’s tax return prepa-ration business.

This interim guidance continues to pro-hibit disclosure of anonymous statisticalcompilations of average refund, credit,or rebate amounts, or a part thereof, forpurposes of advertising or marketing. TheTreasury Department and IRS are con-cerned that advertising and marketingthat discloses average refund, credit, orrebate amounts could create inaccurateexpectations on the part of taxpayers andimproper incentives on the part of taxreturn preparers to meet those expecta-tions at the expense of tax return accuracy.Accordingly, in the case of the use or dis-closure in advertising and marketing ofstatistical compilations of average refund,credit, or rebate amounts, this interimguidance retains the existing rules gov-

erning the use and disclosure of statisticalcompilations found in § 301.7216–2(o).In addition, the IRS will continue to relyon all existing enforcement powers to ad-dress concerns regarding advertising andmarketing claims by tax return preparers.

The Treasury Department and the IRSbelieve that this interim guidance ap-propriately balances concerns regardingsafeguarding the confidentiality of tax re-turn information against the tax industry’s(public, private, and governmental) needto evaluate and use anonymous tax returninformation. The Treasury Departmentand the IRS will apply the rules set forthin this notice during 2009 while devot-ing further consideration, including theconsideration of any public comments inresponse to this notice, to whether thisinterim guidance should be adopted byregulations or further modified.

INTERIM GUIDANCE UNDERSECTION 7216

A tax return preparer may use taxreturn information to produce a statis-tical compilation of data described in§ 301.7216–1(b)(3)(i)(B). The purposeand use of the statistical compilation mustrelate directly to the internal managementor support of the tax return preparer’stax return preparation business. A taxreturn preparer who produces a statis-tical compilation of data described in§ 301.7216–1(b)(3)(i)(B) may not dis-close the compilation, or any part thereof,to any other person unless disclosure ofthe statistical compilation is anonymousas to taxpayer identity, does not disclosecells containing data from fewer thantwenty-five tax returns, and is in directsupport of the tax return preparer’s taxreturn preparation business. A statisticalcompilation is anonymous as to taxpayeridentity for purposes of this interim guid-ance if it is in a form which cannot beassociated with, or otherwise identify, di-rectly or indirectly, a particular taxpayer.For purposes of this interim guidance,marketing and advertising is in directsupport of the tax return preparer’s taxreturn preparation business as long as themarketing and advertising is not false,misleading, or unduly influential. How-ever, this interim guidance does not applyto the use or disclosure in marketing oradvertising of statistical compilations con-

taining or reflecting average amounts ofrefund, credit, or rebate, which use anddisclosure will continue to be governedby the provisions of § 301.7216–2(o).Fundraising activities conducted by Vol-unteer Income Tax Assistance programsand other organizations described in sec-tion 501(c) of the Internal Revenue Codein direct support of their tax return prepa-ration services are not marketing andadvertising under this interim guidance.For purposes of this interim guidance, “taxreturn preparation business” includes bonafide research or public policy discussionsconcerning state or federal taxation or re-quiring data acquired during the tax returnpreparation process. Except as providedin this interim guidance, the provisionsof § 301.7216–2(o) apply to the use anddisclosure of statistical compilations oftax return information.

A tax return preparer may notsell or exchange for value a statisti-cal compilation of data described in§ 301.7216–1(b)(3)(i)(B), in whole or inpart, except in conjunction with the trans-fer of assets made pursuant to the saleor other disposition of the tax return pre-parer’s tax return preparation business.

EXAMPLES

The interim guidance described by thisnotice may be illustrated by the followingexamples.

Example 1. Preparer A is a tax return preparer asdefined by § 301.7216–1(b)(2)(i)(A). In 2008, A usedtax return information to produce a statistical compi-lation of data for both internal management purposesand to support A’s tax return preparation business.The statistical compilation included a cell containingthe information that A prepared thirty-two S corpora-tion tax returns in 2008. In 2009, A decides to embarkupon a new marketing campaign emphasizing its ex-perience preparing small business tax returns. In thecampaign, A discloses the cell containing the num-ber of S corporation tax returns prepared in 2008. A’sdisclosure does not include any information that canbe associated with or that can identify any specifictaxpayers. A may disclose the anonymous statisti-cal compilation without taxpayer consent because itcomplies with the interim guidance described in thisnotice.

Example 2. Preparer B is a tax return prepareras defined by § 301.7216–1(b)(2)(i)(A). In 2009, insupport of B’s tax preparation business, B advertisesthat the average tax refund obtained for its clients in2008 was $2,800. B may not disclose this informationbecause it contains a statistical compilation reflectingaverage refund amounts.

Example 3. Preparer C is a tax return prepareras defined by § 301.7216–1(b)(2)(i)(A) and is a Vol-unteer Income Tax Assistance program. In 2009, in

February 9, 2009 448 2009–6 I.R.B.

support of C’s tax preparation business, C makes agrant request to a charitable foundation to fund C’soperations providing free tax preparation services tolow- and moderate-income families. In support of C’srequest, C includes anonymous statistical data show-ing that, in 2008, C provided services to 500 taxpay-ers, that 95% of the taxpayer population served by Creceived the Earned Income Tax Credit (EITC), andthat the average amount of the EITC received was$3,300. C may disclose this information because itcontains an anonymous statistical compilation, is indirect support of their tax return preparation services,and is consistent with this interim guidance.

Example 4. Preparer D is a tax return prepareras defined by § 301.7216–1(b)(2)(i)(A). In Decem-ber 2007, D produced an anonymous statistical com-pilation of tax return information obtained during the2007 filing season. In 2009, D discloses portions ofthe anonymous statistical compilation in connectionwith the marketing of its financial advisory and assetplanning services. D is required to receive taxpayerconsent under § 301.7216–3 before disclosing the taxreturn information contained in the anonymous statis-tical compilation because the disclosure is not beingmade in support of the tax return preparation busi-ness.

EFFECTIVE DATE

This interim guidance applies to dis-closures of anonymous statistical compi-lations of tax return information occurringon or after February 9, 2009. This interimguidance expires on the earlier of the datethat it is superseded or December 31, 2009.

REQUESTS FOR COMMENTS

Interested parties are invited to submitcomments on this notice and modifica-tions to § 301.7216–2(o) by May 10, 2009.Comments should be submitted to: In-ternal Revenue Service, CC:PA:LPD:PR(Notice 2009–13), Room 5203, P.O. Box7604, Ben Franklin Station, Washing-ton, DC 20224. Alternatively, commentsmay be hand-delivered Monday throughFriday between the hours of 8:00 a.m.to 4:00 p.m. to: CC:PA:LPD:PR (No-tice 2009–13), Courier’s Desk, Inter-nal Revenue Service, 1111 ConstitutionAvenue, N.W., Washington, DC. Com-ments may also be submitted electron-ically via the following e-mail address:[email protected] include Notice 2009–13 in thesubject line of any electronic submission.

DRAFTING INFORMATION

The principal author of this notice isMolly K. Donnelly, Office of the Associate

Chief Counsel (Procedure and Administra-tion). For further information regardingthis notice, contact Molly K. Donnelly at(202) 622–4940 (not a toll-free call).

Credit Rates on Tax CreditBonds

Notice 2009–15

SECTION 1. Purpose

This notice provides guidance regard-ing how the Treasury Department and theInternal Revenue Service (IRS) will deter-mine and announce credit rates on certaintax credit bonds described in this notice.

SECTION 2. Background

Section 54A provides for the issuanceof certain qualified tax credit bonds inwhich investors are eligible to receiveFederal tax credits in lieu of the paymentof all or a portion of the interest on the taxcredit bonds. Qualified tax credit bondsunder § 54A include qualified forestryconservation bonds, new clean renewableenergy bonds, qualified energy conserva-tion bonds, and qualified zone academybonds. Section 54A(b)(3) provides thatthe applicable credit rate for a qualified taxcredit bond is the rate which the Secretaryof the Treasury estimates will permit theissuance of the qualified tax credit bondwith a specified maturity or redemptiondate without discount and without inter-est cost to the qualified issuer. Section54A(b)(3) further provides that the ap-plicable credit rate with respect to anyqualified tax credit bond shall be deter-mined as of the first day on which there isa binding written contract for the sale orexchange of the bond. In addition, §§ 54and 1400N(l) provide for the issuance ofcertain tax credit bonds known as cleanrenewable energy bonds and Midwest-ern tax credit bonds, respectively, whichhave similar credit rate-setting procedures.Unless otherwise provided, references inthis notice to tax credit bonds includequalified tax credit bonds under § 54A,clean renewable energy bonds under § 54,and Midwestern tax credit bonds under§ 1400N(l).

SECTION 3. Credit Rates

Pending further notice in a mannerdescribed in this notice, the Treasury De-partment will determine and announcecredit rates for tax credit bonds daily forpurposes of §§ 54, 54A, 1400N(l), andother similar provisions, based on its es-timate of the yields on outstanding bondsfrom market sectors selected by the Trea-sury Department in its discretion that havean investment grade rating of betweenA and BBB for bonds of a similar ma-turity for the business day immediatelypreceding the sale date of the tax creditbonds. The applicable credit rate for a taxcredit bond on its sale date is the creditrate published for that date by the Bu-reau of Public Debt on its Internet site forState and Local Government Series secu-rities at: https://www.treasurydirect.gov.The Treasury Department and the IRSwill set forth future refinements in themanner for determining credit rates ontax credit bonds in regulations, publicnotices, forms, instructions, or publicnotice directly on the above-referencedInternet site on which credit rates on taxcredit bonds presently are published.

SECTION 4. Effect on OtherDocuments

Notice 99–35, 1999–2 C.B. 26 (July12, 1999) is obsoleted. Notice 2007–26,2007–14 C.B. 870 (April 2, 2007) is mod-ified.

SECTION 5. Effective Date.

This notice is effective as of January 22,2009.

26 CFR 1.168(k)–1: Additional first year deprecia-tion deduction.(Also: §§ 38, 41, 52, 53, 168, 383, 702, 1374,1502,6031, 6401.)

Rev. Proc. 2009–16

SECTION 1. PURPOSE

This revenue procedure supplementsRev. Proc. 2008–65, 2008–44 I.R.B.1082, to provide additional guidance under§ 3081 of the Housing and Economic Re-covery Act of 2008, Pub. L. No. 110–289,

2009–6 I.R.B. 449 February 9, 2009

122 Stat. 2654 (July 30, 2008) (HousingAct). Section 3081(a) of the Housing Actamends § 168(k) of the Internal RevenueCode by adding § 168(k)(4), allowing cor-porations to elect not to claim the 50-per-cent additional first year depreciation forcertain new property acquired after March31, 2008, and placed in service generallybefore January 1, 2009, and instead toincrease their business credit limitationunder § 38(c) and alternative minimumtax (AMT) credit limitation under § 53(c).Section 3081(b) of the Housing Act al-lows certain automotive partnerships toelect to be treated as making a refundabledeemed payment of income tax in a certainamount. Rev. Proc. 2008–65 providesguidance regarding the effects of mak-ing the § 168(k)(4) election, the propertyeligible for this election, and the computa-tion of the amount by which the businesscredit limitation and AMT credit limita-tion may be increased if the § 168(k)(4)election is made. This revenue procedureprovides guidance regarding the time andmanner for making the § 168(k)(4) elec-tion, the allocation of the credit limitationincreases allowed by this election amongmembers of a controlled group, the effectof the election on partnerships with cor-porate partners that make the § 168(k)(4)election, the application of § 168(k)(4)to S corporations, and the election under§ 3081(b) of the Housing Act by certainautomotive partnerships.

SECTION 2. BACKGROUND

.01 Section 168(k), amended by § 103of the Economic Stimulus Act of 2008,Pub. L. No. 110–185, 122 Stat. 613(February 13, 2008) (Stimulus Act), al-lows a 50-percent additional first year de-preciation deduction (Stimulus additionalfirst year depreciation deduction) for cer-tain new property acquired by a taxpayerafter 2007 and placed in service by the tax-payer before 2009 (before 2010 in the caseof property described in § 168(k)(2)(B) or(C)).

.02 Section 3081(a) of the HousingAct added § 168(k)(4) to the Code. If acorporation elects to apply § 168(k)(4),§ 168(k)(4)(A) provides that, for the cor-poration’s first taxable year ending afterMarch 31, 2008, and for any subsequenttaxable year, the corporation forgoes theStimulus additional first year deprecia-

tion deduction allowable under § 168(k)for eligible qualified property placed inservice by the taxpayer and increases thelimitations described in § 38(c) (relatingto the general business credit) and § 53(c)(relating to the AMT credit). As a result,the corporation will be able to claim un-used credits from taxable years beginningbefore January 1, 2006, that are allocableto research expenditures or AMT liabili-ties. Rev. Proc. 2008–65 clarifies whichdepreciable property is eligible qualifiedproperty for purposes of the § 168(k)(4)election and clarifies the effects of makingthe § 168(k)(4) election.

.03 In general, the amount by whichthe § 168(k)(4) election increases the busi-ness credit limitation under § 38(c) andthe AMT credit limitation under § 53(c)is the bonus depreciation amount. See§ 168(k)(4)(A)(iii). Except as providedbelow, the bonus depreciation amount gen-erally is equal to 20 percent of the excess ofthe aggregate amount of depreciation thatwould be allowable for eligible qualifiedproperty if the Stimulus additional firstyear depreciation deduction applied to allsuch property, over the aggregate amountof depreciation that would be allowablefor all such property if the Stimulus addi-tional first year depreciation deduction didnot apply. See § 168(k)(4)(C)(i). How-ever, the bonus depreciation amount forany taxable year must not exceed the max-imum increase amount reduced by thesum of the bonus depreciation amountsdetermined for all prior taxable years. See§ 168(k)(4)(C)(ii). In general, the maxi-mum increase amount is equal to the lesserof $30 million, or 6 percent of the sumof the unexpired and unused pre–2006business credit carryforwards allocable tothe research credit and AMT credit carry-forwards to the current taxable year. See§ 168(k)(4)(C)(iii). For any taxable year,the bonus depreciation amount allocatedto either the business credit limitationor AMT credit limitation must not ex-ceed the amount of unexpired and unusedpre–2006 business credit carryforwardsallocable to the research credit or AMTcredit carryforwards less bonus deprecia-tion amounts allocated to each limitation,respectively, for all prior taxable years.See § 168(k)(4)(E)(ii). To the extent thata taxpayer is allowed the business creditor AMT credit in an amount allocable tothe aggregate increases in the business

credit limitation or AMT credit limitationthat result from the § 168(k)(4) election,such amount(s) are treated as overpay-ments within the meaning of § 6401(b)that are refundable to the taxpayer. See§ 168(k)(4)(F).

.04 Rev. Proc. 2008–65 states that theInternal Revenue Service (IRS) and Trea-sury Department intend to publish sepa-rate guidance on the time and manner formaking the § 168(k)(4) election and forspecifying the allocation of the bonus de-preciation amount to increase the businessand AMT credit limitations under, respec-tively, §§ 38(c) and 53(c). This revenueprocedure provides the time and mannerfor making the § 168(k)(4) election (seesection 3 of this revenue procedure) andprovides guidance on making and report-ing the allocation of the bonus depreciationamount to increase the business and AMTcredit limitations (see section 4 of this rev-enue procedure).

.05 Section 168(k)(4)(C)(iv) providesthat all corporations that are treated asa single employer under § 52(a) (gen-erally any controlled group of corpora-tions within the meaning of § 1563(a),determined by substituting “more than50 percent” for “more than 80 percent”each place it appears in § 1563(a)(1))(hereinafter such group of corporations isreferred to as a “controlled group”) aretreated as one taxpayer for purposes of§ 168(k)(4) and as having elected to ap-ply § 168(k)(4) if any member of suchcontrolled group so elects. This revenueprocedure provides guidance regardingthe allocation of the bonus depreciationamount to increase the business and AMTcredit limitations among members of acontrolled group (see section 4.02 of thisrevenue procedure).

.06 Under § 168(k)(4)(G)(ii), if a cor-poration that makes the § 168(k)(4) elec-tion is a partner in a partnership, the elect-ing corporate partner’s distributive shareof partnership items under § 702 for any el-igible qualified property placed in serviceby the partnership must be computed byusing the straight line method and withoutclaiming the Stimulus additional first yeardepreciation deduction. This revenue pro-cedure provides guidance regarding part-nerships with corporate partners that makethe § 168(k)(4) election (see section 5 ofthis revenue procedure).

February 9, 2009 450 2009–6 I.R.B.

.07 Except as provided in § 3081(b) ofthe Housing Act, only a corporation mayelect to apply § 168(k)(4). Some S cor-porations and their shareholders are uncer-tain about whether § 168(k)(4) applies tothem. This revenue procedure clarifies theapplication of § 168(k)(4) to S corpora-tions and their shareholders (see section 6of this revenue procedure).

.08 Section 3081(b)(1) of the HousingAct provides that an applicable partnershipmay elect to be treated as making a refund-able deemed payment of income tax in acertain amount. This revenue procedureprovides guidance regarding this election(see section 7 of this revenue procedure).

.09 Section 168(k)(4) does not modifythe rules under §§ 383 and 1502. Sec-tion 383 limitations do not affect the creditamounts that a taxpayer takes into con-sideration in calculating its maximum in-crease amount under section 5.04 of Rev.Proc. 2008–65. However, the increases inthe business credit limitation under § 38(c)and AMT credit limitation under § 53(c)that result from a § 168(k)(4) election donot allow a taxpayer to utilize credit car-ryforwards that are otherwise limited by§ 383.

SECTION 3. TIME AND MANNERFOR MAKING THE § 168(k)(4)ELECTION

.01 In General. Except as provided insections 3.02 and 3.03 of this revenue pro-cedure, a corporate taxpayer must makethe § 168(k)(4) election by the due date (in-cluding extensions) of the federal incometax return for the taxpayer’s first taxableyear ending after March 31, 2008. Even ifthe taxpayer does not place in service anyeligible qualified property during its firsttaxable year ending after March 31, 2008,the taxpayer must make the § 168(k)(4)election for that taxable year if the tax-payer wishes to apply the election to eli-gible qualified property placed in servicein subsequent taxable years. If a taxpayeris not a member of a controlled group, thetaxpayer makes the § 168(k)(4) electionin the manner provided in either sections3.02, 3.03, or 3.04 of this revenue pro-cedure. If a taxpayer is a member of acontrolled group, the taxpayer makes the§ 168(k)(4) election in the manner pro-vided in section 3.05 of this revenue pro-cedure. Failure to comply with any of the

reporting or notification requirements pro-vided by this section 3 will nullify a tax-payer’s attempted § 168(k)(4) election.

.02 Taxpayer’s First Taxable Year End-ing After March 31, 2008, Ends Before De-cember 31, 2008.

(1) In general. Except as provided insection 3.03 of this revenue procedure, ifa taxpayer’s first taxable year ending afterMarch 31, 2008, ends before December31, 2008, and:

(a) If the taxpayer has not filed its orig-inal federal income tax return for such tax-able year on or before March 11, 2009, thetaxpayer makes the § 168(k)(4) election:

(i) Either:(I) By claiming the Stimulus additional

first year depreciation deduction for anyeligible qualified property placed in ser-vice by the taxpayer during such taxableyear on its timely-filed federal income taxreturn for such taxable year. Such propertymust not be property in a class for whichthe taxpayer elects out of the Stimulus ad-ditional first year depreciation deductionunder § 168(k)(2)(D)(iii); or

(II) By filing with its timely-filed fed-eral income tax return for such taxableyear the 2007 Form 4562, Depreciationand Amortization (Including Informationon Listed Property), indicating that thetaxpayer used the straight line method anddid not claim the Stimulus additional firstyear depreciation deduction for all eligiblequalified property. Taxpayers that chooseto follow this section 3.02(1)(a)(i)(II)must not claim a refundable credit on theiroriginal federal income tax return. Toclaim the refundable credit, see section3.02(1)(a)(ii).

(ii) By filing an amended federal in-come tax return for such taxable year in themanner described in section 3.02(2) on orbefore the due date (without regard to ex-tensions) of the taxpayer’s federal incometax return for the succeeding taxable year;and

(iii) If the taxpayer is a partner in a part-nership, by notifying the partnership in ac-cordance with section 5.02 of this revenueprocedure.

(b) If the taxpayer has filed its originalfederal income tax return for such taxableyear on or before March 11, 2009, the tax-payer makes the § 168(k)(4) election byfollowing the procedures set forth in sec-tion 3.02(1)(a)(ii) and (iii) of this revenueprocedure.

(2) Special rules for filing amended re-turn. If the taxpayer filing the amendedfederal income tax return under section3.02(1)(a)(ii) of this revenue procedure:

(a) is not an S corporation, the taxpayer(i) includes the amount of the refundablecredit allowed by the § 168(k)(4) electionon Line 5g of the Form 1120X, AmendedU.S. Corporation Income Tax Return, (ii)makes appropriate adjustments to Lines 2,3, and 4 of the Form 1120X to reflect therequirements of § 168(k)(4)(A) (requiringthat the depreciation deduction for all eli-gible qualified property be determined byusing the straight line method and by notclaiming the Stimulus additional first yeardepreciation deduction), and (iii) indicatesin Part II of the Form 1120X that the tax-payer is making the § 168(k)(4) election.The taxpayer should refer to the instruc-tions to the 2008 Form 1120, U.S. Corpo-ration Income Tax Return, the 2008 Form3800, General Business Credit, and the2008 Form 8827, Credit for Prior YearMinimum Tax — Corporations, for guid-ance regarding computation of the refund-able credit and allocation of the bonus de-preciation amount between the businessand AMT credit limitations; or

(b) is an S corporation, the taxpayer(i) makes appropriate adjustments to Line22b of the amended Form 1120S, U.S.Income Tax Return for an S Corpora-tion, to reflect the results described insection 6.02 of this revenue procedurefrom making the § 168(k)(4) election,(ii) makes appropriate adjustments on theamended Form 1120S to reflect the re-quirements of § 168(k)(4)(A) (requiringthat the depreciation deduction for all eli-gible qualified property be determined byusing the straight line method and by notclaiming the Stimulus additional first yeardepreciation deduction), and (iii) attachesa statement to the amended Form 1120Sindicating that the taxpayer is making the§ 168(k)(4) election and a statement show-ing the computation of the increases to thebusiness credit and AMT credit limitationsunder, respectively, §§ 38(c) and 53(c)resulting from making the § 168(k)(4)election. The S corporation also shouldfollow the instructions to the Form 1120Sfor filing an amended return.

.03 Special Rules for Taxpayers WhoseFirst Taxable Year Ending After March 31,2008, Ends Before December 31, 2008.

2009–6 I.R.B. 451 February 9, 2009

(1) If a taxpayer described in sec-tion 3.02(1)(b) of this revenue proceduremakes the § 168(k)(4) election on itstimely-filed original federal income taxreturn and receives a refundable creditattributable to the § 168(k)(4) electionmade on such return, such taxpayer mustnot file the amended federal income taxreturn required by section 3.02(1)(a)(ii)and 3.02(1)(b) of this revenue proce-dure. However, such taxpayer must followthe notification procedures described insection 3.02(1)(a)(iii) of this revenue pro-cedure.

(2) If a taxpayer described in section3.02(1) of this revenue procedure wishesto make the § 168(k)(4) election but hasnot placed in service any eligible quali-fied property during its first taxable yearending after March 31, 2008, the taxpayermakes the § 168(k)(4) election by attach-ing a statement to its timely-filed federalincome tax return for that taxable year,indicating that the taxpayer is makingthe § 168(k)(4) election. If a taxpayerdescribed in section 3.02(1)(b) of thisrevenue procedure wishes to make the§ 168(k)(4) election but has not placedin service any eligible qualified propertyduring its first taxable year ending afterMarch 31, 2008, and did not attach a state-ment to its original federal income taxreturn for such taxable year indicating thatthe taxpayer is making the § 168(k)(4)election, the taxpayer must attach suchstatement to the amended federal incometax return required by section 3.02(1)(a)(ii)and 3.02(1)(b) of this revenue procedureand follow the notification proceduresdescribed in section 3.02(1)(a)(iii) of thisrevenue procedure.

.04 Taxpayer’s First Taxable Year End-ing After March 31, 2008, Ends on or AfterDecember 31, 2008.

(1) C corporations. Except as providedin section 3.04(3) of this revenue proce-dure, if a taxpayer’s first taxable year end-ing after March 31, 2008, ends on or af-ter December 31, 2008, a C corporationmakes the § 168(k)(4) election by:

(a) Claiming the refundable credit onLine 32g of the 2008 Form 1120;

(b) Filing the 2008 Form 3800 or Form8827, or both, as applicable. Taxpayersshould refer to the applicable instructionsto the 2008 Forms 3800 and 8827 for guid-ance regarding computation of the refund-able credit and allocation of the bonus de-

preciation amount between the businesscredit limitation and AMT credit limita-tion;

(c) Filing the 2008 Form 4562, Depre-ciation and Amortization (Including Infor-mation on Listed Property), indicating thatthe taxpayer used the straight line methodand did not claim the Stimulus additionalfirst year depreciation deduction for all el-igible qualified property; and

(d) Notifying any partnership in whichthe C corporation is a partner, in accor-dance with section 5.02 of this revenueprocedure.

(2) S corporations. Except as providedin section 3.04(3) of this revenue proce-dure, if a taxpayer’s first taxable year end-ing after March 31, 2008, ends on or af-ter December 31, 2008, an S corporationmakes the § 168(k)(4) election by:

(a) Making appropriate adjustments toLine 22b of the 2008 Form 1120S to re-flect the results described in section 6.02of this revenue procedure from making the§ 168(k)(4) election;

(b) Attaching to the Form 1120S astatement indicating that the taxpayer ismaking the § 168(k)(4) election and astatement showing the computation ofthe increases to the business credit andAMT credit limitations under, respec-tively, §§ 38(c) and 53(c) resulting frommaking the § 168(k)(4) election;

(c) Filing the 2008 Form 4562 indicat-ing that the taxpayer used the straight linemethod and did not claim the Stimulus ad-ditional first year depreciation deductionfor all eligible qualified property; and

(d) Notifying any partnership in whichthe S corporation is a partner, in accor-dance with section 5.02 of this revenueprocedure.

(3) No eligible qualified propertyplaced in service during first taxable yearending after March 31, 2008, ending on orafter December 31, 2008. If a taxpayer’sfirst taxable year ending after March 31,2008, ends on or after December 31, 2008,and the taxpayer has not placed in ser-vice any eligible qualified property duringsuch taxable year, the taxpayer makes the§ 168(k)(4) election by attaching a state-ment to its timely-filed federal income taxreturn for that taxable year, indicating thatthe taxpayer is making the § 168(k)(4)election.

.05 Controlled Groups.

(1) Determination of Controlled GroupMembers.

(a) First taxable year ending afterMarch 31, 2008. For purposes of applying§ 168(k)(4) and this revenue procedure forthe first taxable year ending after March31, 2008, § 168(k)(4)(C)(iv) is appliedto determine the members of a controlledgroup (as defined in section 2.05 of thisrevenue procedure) on December 31,2008, and all such members on that dateare treated as a controlled group and asone taxpayer. However, if the first taxableyear ending after March 31, 2008, ends onthe same date for all members of a con-trolled group (as defined in section 2.05 ofthis revenue procedure), all members onsuch ending date are treated as a controlledgroup and as one taxpayer for purposesof applying § 168(k)(4) and this revenueprocedure for the first taxable year endingafter March 31, 2008.

(b) Subsequent taxable years. Forpurposes of applying § 168(k)(4) andthis revenue procedure for any taxableyear subsequent to a taxpayer’s first tax-able year ending after March 31, 2008,§ 168(k)(4)(C)(iv) is applied to determinethe members of a controlled group (asdefined in section 2.05 of this revenueprocedure) on December 31. However,if a taxable year subsequent to the firsttaxable year ending after March 31, 2008,ends on the same date for all membersof a controlled group (as defined in sec-tion 2.05 of this revenue procedure), allmembers on such ending date are treatedas a controlled group and as one taxpayerfor purposes of applying § 168(k)(4) andthis revenue procedure for that subsequenttaxable year.

(2) Time and manner of making the§ 168(k)(4) election.

(a) In general. A § 168(k)(4) electionmade by any member of a controlled group(as determined under section 3.05(1)(a) ofthis revenue procedure) is binding on allother members of the controlled group forall members’ first taxable year ending afterMarch 31, 2008. If in a subsequent tax-able year, a controlled group determinedunder section 3.05(1)(b) of this revenueprocedure (the second controlled group)includes 2 or more members of a con-trolled group determined under 3.05(1)(a)of this revenue procedure (the first con-trolled group), all members of the secondcontrolled group that were members of the

February 9, 2009 452 2009–6 I.R.B.

first controlled group are deemed to havemade (or not made, as the case may be) the§ 168(k)(4) election of the first controlledgroup. Whether members of the secondcontrolled group that were not members ofthe first controlled group are bound by a§ 168(k)(4) election made by the first con-trolled group (or bound by the first con-trolled group’s lack of a § 168(k)(4) elec-tion) is determined under the rules of sec-tion 3.05(2)(d) of this revenue procedure.

(b) All members of a controlled groupconstitute a single consolidated group.If all members of a controlled group aremembers of an affiliated group of cor-porations that file a consolidated return(hereinafter, a “consolidated group”), thecommon parent (within the meaning of§ 1.1502–77(a)(1)(i)) of the consolidatedgroup makes the § 168(k)(4) election onbehalf of all members of the consolidatedgroup. The common parent makes thiselection within the time and in the mannerprovided in sections 3.01, 3.02, 3.03, or3.04 of this revenue procedure, as applica-ble.

(c) All members of a controlled groupdo not constitute a single consolidatedgroup.

(i) In general. This section 3.05(2)(c)applies when separate federal income taxreturns are filed by some or all members ofa controlled group. If a controlled groupincludes, but is not limited to, membersof a consolidated group, the consolidatedgroup is treated as a single member of thecontrolled group. A member of the con-trolled group makes the § 168(k)(4) elec-tion by:

(I) Following the procedures in section3.05(2)(c)(ii) or (iii) of this revenue proce-dure, as applicable; and

(II) Notifying all other members ofthe controlled group that the § 168(k)(4)election has been made. This notificationmust be made before the due date (exclud-ing extensions) of the member’s federalincome tax return for the first taxableyear ending after March 31, 2008. If theelecting member makes the § 168(k)(4)election by filing an amended return un-der sections 3.02(1)(a)(ii) or 3.03(2) ofthis revenue procedure, as applicable, theelecting member must notify the othermembers no later than the date it files anamended return containing the § 168(k)(4)election. If the electing member is de-scribed in section 3.03(1) of this revenue

procedure, the electing member must no-tify the other members on or before March11, 2009.

(ii) Controlled group member’s firsttaxable year ending after March 31, 2008,ends before December 31, 2008. If a con-trolled group member’s first taxable yearending after March 31, 2008, ends beforeDecember 31, 2008, that member makesthe § 168(k)(4) election within the timeand in the manner provided in sections3.02 or 3.03(2) of this revenue procedure,as applicable. In addition, the membermust attach to the amended federal incometax return:

(I) a statement describing the com-putation of the group bonus depreci-ation amount (as provided in section4.02(3)(b)(ii) of this revenue procedure);and

(II) Schedule O (Form 1120X), Con-sent Plan and Apportionment Schedule fora Controlled Group, and indicating in col-umn (f) of Part IV that the controlled grouphas made the § 168(k)(4) election and theportion of the group bonus depreciationamount allocated to the member (as pro-vided in section 4.02 of this revenue pro-cedure).

(iii) Controlled group member’s firsttaxable year ending after March 31, 2008,ends on or after December 31, 2008. Ifa controlled group member’s first tax-able year ending after March 31, 2008,ends on or after December 31, 2008, thatmember makes the § 168(k)(4) electionwithin the time provided in section 3.01 ofthis revenue procedure and in the mannerprovided in section 3.04 of this revenueprocedure. In addition, the member mustattach to the federal income tax return:

(I) a statement describing the com-putation of the group bonus depreci-ation amount (as provided in section4.02(3)(b)(ii) of this revenue procedure);and

(II) Schedule O (Form 1120) and indi-cating in column (f) of Part IV that thecontrolled group has made the § 168(k)(4)election and the portion of the group bonusdepreciation amount allocated to the mem-ber (as provided in section 4.02 of this rev-enue procedure).

(d) Effect of § 168(k)(4) election formembers entering or leaving a controlledgroup.

(i) Member leaves controlled group thatmade § 168(k)(4) election. If a taxpayer

is a member of a controlled group thatmakes the § 168(k)(4) election (the oldgroup), and in a subsequent taxable yearbecomes a member of another controlledgroup that has not made the § 168(k)(4)election (the new group), the § 168(k)(4)election of the old group is not binding onthe new group. The taxpayer, however,continues to be treated as having madethe § 168(k)(4) election and must continueto apply §§ 167(f)(1) and 168 as if the§ 168(k)(4) election was made. Similarly,if a taxpayer is a member of a controlledgroup that makes the § 168(k)(4) election(the old group), and in a subsequent tax-able year leaves the old group and does notbecome a member of another controlledgroup, the taxpayer continues to be treatedas having made the § 168(k)(4) electionand must continue to apply §§ 167(f)(1)and 168 as if the § 168(k)(4) election wasmade.

(ii) Taxpayer becomes a member of acontrolled group after § 168(k)(4) electionis made. If a taxpayer was not a memberof any controlled group when the tax-payer made the § 168(k)(4) election andin a subsequent taxable year becomes amember of a controlled group that didnot make the § 168(k)(4) election, thetaxpayer’s election is not binding on thecontrolled group. The taxpayer, however,continues to be treated as having madethe § 168(k)(4) election and must con-tinue to apply §§ 167(f)(1) and 168 asif the § 168(k)(4) election was made. Ifa taxpayer neither made the § 168(k)(4)election nor was a member of a controlledgroup that made the § 168(k)(4) election,and in a subsequent taxable year becomesa member of a controlled group that madethe § 168(k)(4) election, the controlledgroup’s election does not apply to the tax-payer.

(iii) Special rule for consolidatedgroups. Notwithstanding section3.05(2)(d)(i) and (ii) of this revenue pro-cedure, a § 168(k)(4) election (or the lackof a § 168(k)(4) election) made by a con-solidated group (or a controlled group inwhich the consolidated group is a member)applies to any eligible qualified propertyplaced in service by a member of theconsolidated group during a consolidatedreturn year, even if such member is nota member of the consolidated group onthe date that controlled group membership

2009–6 I.R.B. 453 February 9, 2009

is determined under section 3.05(1)(a) ofthis revenue procedure.

(iv) Special rule for new taxpayers. Ifa taxpayer was not in existence for thefirst taxable year for which the § 168(k)(4)election is made by a controlled group(as defined in section 3.05(1)(a) of thisrevenue procedure), immediately afterthe taxpayer’s formation the taxpayer isa member of that controlled group, andthe taxpayer is a member of that con-trolled group as determined under section3.05(1)(b) of this revenue procedure, thatcontrolled group’s § 168(k)(4) election,if any election is made, applies to thetaxpayer. For example, if a controlledgroup makes the § 168(k)(4) election andsubsequently transfers eligible qualifiedproperty to a newly formed member of thesame controlled group (on the day of itsformation and on the determination dateunder section 3.05(1)(b) of this revenueprocedure), such property remains eligiblequalified property to which the § 168(k)(4)election applies and must be depreciatedusing the straight line method.

(v) Overlapping groups. For purposesof this revenue procedure, for any tax-able year a taxpayer will not be consid-ered a member of more than one controlledgroup. A taxpayer is considered a memberof a single controlled group in accordancewith the principles of § 1.1563–1T(c) ofthe temporary Income Tax Regulations.

.06 Limited Relief for Late Election.(1) Automatic 6-Month Extension. Pur-

suant to § 301.9100–2(b) of the Proce-dure and Administration Regulations, anautomatic extension of 6 months from thedue date of the federal tax return (exclud-ing extensions) for the taxpayer’s first tax-able year ending after March 31, 2008, isgranted to make the § 168(k)(4) election,provided the taxpayer timely filed the tax-payer’s federal tax return for the taxpayer’sfirst taxable year ending after March 31,2008, and the taxpayer satisfies the re-quirements in § 301.9100–2(c) and (d).

(2) Other Extensions. A taxpayer thatfails to make the § 168(k)(4) election forthe taxpayer’s first taxable year ending af-ter March 31, 2008, as provided in sec-tion 3.01, 3.02, 3.03, 3.04, 3.05, or 3.06(1)of this revenue procedure but wants to doso must file a request for an extension oftime to make the election under the rulesin § 301.9100–3.

SECTION 4. ALLOCATION OF THEBONUS DEPRECIATION AMOUNT

.01 In General. A taxpayer allocatesthe bonus depreciation amount betweenthe business credit limitation under § 38(c)and the AMT credit limitation under§ 53(c) by the due date (including exten-sions) of the taxpayer’s federal incometax return for the taxable year. Except asprovided in section 4.02 of this revenueprocedure, the taxpayer specifies this al-location by reporting the amounts on theappropriate lines of the Forms 3800 and8827. However, if a taxpayer’s first tax-able year ending after March 31, 2008,ends before December 31, 2008, the tax-payer makes and specifies the allocationfor such taxable year on the amendedfederal income tax return filed pursuantto section 3.02(1)(a)(ii) or 3.03(2) of thisrevenue procedure. A different allocationmay be used for different taxable years.

.02 Controlled Groups.(1) In general. If a taxpayer is a mem-

ber of a controlled group (as determinedunder section 3.05(1) of this revenue pro-cedure) and any member of the controlledgroup makes the § 168(k)(4) election, theallocation of the group bonus depreciationamount to each member of the controlledgroup must be determined in accordancewith section 4.02(2) or 4.02(3) of this rev-enue procedure, as applicable. This al-location of the group bonus depreciationamount for any taxable year is reportedon Schedule O (Form 1120) (or a similarstatement) that is attached to the federalincome tax return or amended federal in-come tax return for that taxable year, asthe case may be, filed by each member ofthe controlled group within the time pro-vided in section 4.01 of this revenue pro-cedure. However, if a member of a con-trolled group does not have the informa-tion necessary to allocate the group bonusdepreciation amount for a taxable year onor before the due date (including exten-sions) of the member’s federal income taxreturn for the taxable year, the membermust make and specify the allocation forthat taxable year on an amended federal in-come tax return for that taxable year thatis filed on or before the due date (includ-ing extensions) of the member’s federal in-come tax return for the succeeding taxableyear. The allocation described in this sec-tion 4.02 of this revenue procedure applies

to all controlled group members who havemade a section 168(k)(4) election or whoare treated as having made such an elec-tion pursuant to section 3.05 of this rev-enue procedure.

(2) All members of a controlled groupconstitute a single consolidated group.If all members of a controlled group aremembers of a consolidated group (as de-fined in section 3.05(2)(b) of this revenueprocedure), the consolidated group deter-mines its bonus depreciation amount inaccordance with section 5 of Rev. Proc.2008–65, treating the consolidated groupas a single taxpayer. The allocation ofthe bonus depreciation amount amongthe members of the consolidated groupmust be pursuant to an allocation by thecommon parent in accordance with theprinciples of § 1502 and its accompanyingregulations.

(3) All members of a controlled groupdo not constitute a single consolidatedgroup.

(a) In general. This section 4.02(3)applies when separate federal income taxreturns are filed by some or all members ofa controlled group. If a controlled groupincludes, but is not limited to, membersof a consolidated group, the consolidatedgroup is treated as a single member ofthe controlled group. The allocation ofthe bonus depreciation amount among themembers of the controlled group must bemade pursuant to section 4.02(3)(b) or (c)of this revenue procedure, as applicable.Any group bonus depreciation amountallocated to a consolidated group underthis section 4.02(3) is allocated amongthe members of the consolidated grouppursuant to an allocation by the commonparent in accordance with the principles of§ 1502 and its accompanying regulations.

(b) Allocation of group bonus depreci-ation amount.

(i) In general. The bonus depreciationamount allocable to a member of a con-trolled group is determined by arriving ateach member’s proportionate share of thegroup bonus depreciation amount, unlessall members of the group agree to an alter-native allocation under section 4.02(3)(c)of this revenue procedure.

(ii) Computation of group bonus depre-ciation amount. The group bonus depreci-ation amount is computed as follows:

(A) First, calculate the bonus deprecia-tion amount in the manner provided in sec-

February 9, 2009 454 2009–6 I.R.B.

tions 5.01 and 5.02 of Rev. Proc. 2008–65treating the controlled group as a singletaxpayer. To calculate this amount, the eli-gible qualified property placed in serviceby each member of the controlled groupduring the taxable year is taken into ac-count. However, if some or all members ofthe controlled group have different taxableyears, the eligible qualified property to betaken into account is such property placedin service by each member of the con-trolled group after March 31, 2008, and be-fore January 1, 2009 (or, for taxable yearsending in 2009 or thereafter, during suchcalendar year);

(B) Second, calculate the maximumincrease amount in section 5.04 of Rev.Proc. 2008–65, the business credit in-crease amount in section 5.05 of Rev.Proc. 2008–65, and the AMT credit in-crease amount in section 5.06 of Rev.Proc. 2008–65 by taking into account thesum of all member’s pre–2006 unexpiredand unused research credits and AMTcredits as of the last day of the taxable year.However, if the taxable years of some orall members of the controlled group endon different dates, the sum of all members’pre–2006 unexpired and unused researchcredits and AMT credits as of the last dayof each member’s last taxable year endingon or before December 31 (determined foreach calendar year) are taken into account;and

(C) Finally, calculate the maximumamount in section 5.03 of Rev. Proc.2008–65 to arrive at the group bonus de-preciation amount for the taxable year.

(iii) Member’s proportionate share ofgroup bonus depreciation amount. Eachmember’s proportionate share of the groupbonus depreciation amount is equal tothe group bonus depreciation amount de-termined under section 4.02(3)(b)(ii)(C)of this revenue procedure multiplied bya fraction, the numerator of which isthe amount such member contributedto the total computed under section4.02(3)(b)(ii)(A) of this revenue procedureand the denominator of which is the totalcomputed under section 4.02(3)(b)(ii)(A)of this revenue procedure. If the taxableyears of some or all members of the con-trolled group end on different dates, all (ifany) of a member’s proportionate shareof group bonus depreciation amount mustbe claimed by such member in the taxableyear of the member to which such share

relates (determined by reference to the eli-gible qualified property’s placed in servicedate).

(c) Allocation agreement. In lieu ofthe method provided in section 4.02(3)(b)of this revenue procedure, the controlledgroup may allocate the group bonus depre-ciation amount (computed as provided insection 4.02(3)(b)(ii) of this revenue pro-cedure) to any member in any proportionthat all members of the controlled groupagree. Any agreement, and the amountsallocated to all members pursuant to suchagreement, must be shown on ScheduleO (Form 1120) (or a similar statement)within the time and in the manner pro-vided in section 4.02(1) of this revenueprocedure. A subsequent agreement maybe filed (shown on Schedule O (or simi-lar statement) within the time and in themanner provided in section 4.01(1) of thisrevenue procedure) that varies the groupbonus depreciation amounts allocated tocontrolled group members in taxable yearsafter the group’s first taxable year endingafter March 31, 2008.

.04 Example 1. A, B, and C are corporations that,on December 31, 2008, are the only members of theABC controlled group. A’s first taxable year endingafter March 31, 2008, ends on June 30, 2008. B andC’s first taxable year ending after March 31, 2008,ends on December 31, 2008. As of June 30, 2008, Ahas $300 million of unexpired and unused pre–2006research and AMT credit carryforwards. As of De-cember 31, 2008, B and C each have $300 million ofunexpired and unused pre–2006 research and AMTcredit carryforwards. Therefore, as of December 31,2008, the ABC controlled group has $900 million ofunexpired and unused pre–2006 research and AMTcredit carryforwards.

On May 1, 2008, A and B each placed in ser-vice eligible qualified property that costs $50 millionand is 5-year property under § 168(e). On Septem-ber 1, 2008, A also placed in service eligible qual-ified property that costs $100 million and is 5-yearproperty under § 168(e). A, B, and C depreciatetheir 5-year property using the optional depreciationtable that corresponds with the general depreciationsystem, the 200-percent declining balance method, a5-year recovery period, and the half-year convention.For each of the properties placed in service on May1, 2008, the difference between the aggregate amountof depreciation that would be allowable for the prop-erty if the Stimulus additional first year depreciationdeduction applied over the aggregate amount of de-preciation that would be allowable for the property ifthe Stimulus additional first year depreciation deduc-tion did not apply is $20 million. That amount forthe property placed in service by A on September 1,2008, is $40 million.

For its taxable year ending June 30, 2008, Amakes the § 168(k)(4) election by filing an amendedfederal income tax return (Form 1120X) on Jan-uary 15, 2009, in the manner provided by section

3.05(2)(c)(ii) of this revenue procedure. At the timeA’s Form 1120X is filed, A, B, and C have not en-tered into any agreement regarding the allocation ofthe bonus depreciation amount among them.

(1) Under section 4.02(3)(b)(ii) of this revenueprocedure, the ABC controlled group’s group bonusdepreciation amount is 20 percent of $80 million, or$16 million. Under section 4.02(3)(b)(ii) of this rev-enue procedure, because $16 million is less than (i)$30 million and (ii) 6 percent of the ABC controlledgroup aggregate unexpired and unused pre–2006 re-search and AMT credits (.06 X $900 million, or $54million), the ABC controlled group is not limited bythe maximum increase amount. Thus, under section4.02(3)(b)(ii)(C) of this revenue procedure, the ABCcontrolled group’s group bonus depreciation amountfor the period ending on December 31, 2008, is $16million.

(2) Under section 4.02(3)(b)(iii) of this revenueprocedure, A’s proportionate share of the group bonusdepreciation amount is $12 million ($16 million X($60 million/$80 million)). For its taxable year end-ing June 30, 2008, A may increase its business creditand AMT credit limitations under, respectively,§§ 38(c) and 53(c) by, and claim a refundable creditof, $4 million ($12 million X ($20 million/$60 mil-lion)) on its Form 1120X. For its taxable year endingJune 30, 2009, A may increase its business credit andAMT credit limitations by $8 million ($12 millionX ($40 million/$60 million)) (plus any group bonusdepreciation amount calculated for the group andallocated to A for the period January 1, 2009, throughDecember 31, 2009). In addition, B’s proportionateshare of the group bonus depreciation amount is $4million ($16 million X ($20 million/$80 million)).B may increase its business credit and AMT creditlimitations under, respectively, §§ 38(c) and 53(c)by, and claim a refundable credit of, $4 million on itsoriginal federal income tax return for its taxable yearending December 31, 2008. The ABC controlledgroup then has a maximum amount of $14 millionof bonus depreciation amount ($30 million less the$16 million allocated to A and B) remaining to beused for eligible qualified property placed in serviceby the ABC controlled group after December 31,2008 (e.g., long-lived property or certain aircraft).The result of this Example is the same if, insteadof a single corporation, A represents a consolidatedgroup of corporations, except the $12 million ofgroup bonus depreciation amount allocated to A isreallocated within the A consolidated group pursuantto an allocation by the common parent in accordancewith the principles of § 1502 and its accompanyingregulations.

(b) Example 2. The facts are the same as in Ex-ample 1, except A has no pre–2006 business creditor AMT credit carryforwards as of the last day of itsJune 30, 2008, taxable year and C has $600 millionof pre–2006 research credit and AMT credit carry-forwards as of December 31, 2008. Although A mayincrease its §§ 38(c) and 53(c) credit limitations forits taxable year ending June 30, 2008, A has no creditcarryforwards that A may use to claim a refundablecredit. Absent an allocation agreement, B and C maynot be allocated any portion of the bonus deprecia-tion amount that was allocated to A under section4.02(3)(b)(iii) of this revenue procedure. The ABCcontrolled group, therefore, has $26 million of groupbonus depreciation ($30 million less the $4 million

2009–6 I.R.B. 455 February 9, 2009

allocated to B) remaining to be used for eligible quali-fied property placed in service by the ABC controlledgroup after December 31, 2008.

(c) Example 3. The facts are the same as Exam-ple 2, except A, B, and C have entered into an agree-ment regarding the allocation of the group bonus de-preciation amount. The agreement provides that Cwill be allocated all of the group bonus depreciationamount. C, therefore, may increase its business andAMT credit limitations under, respectively, §§ 38(c)and 53(c) by, and claim a refundable credit of, $16million on its original income tax return for its tax-able year ending December 31, 2008. Neither A norB may claim the refundable credit for their taxableyears ending June 30, 2008, and December 31, 2008,respectively. The ABC controlled group has a max-imum amount of $14 million of bonus depreciationamount ($30 million less the $16 million allocated toC) remaining to be used for eligible qualified prop-erty placed in service by the ABC controlled groupafter December 31, 2008.

SECTION 5. PARTNERSHIPS WITHCORPORATE PARTNERS THAT MAKETHE § 168(k)(4) ELECTION

.01 Partnership’s Information to Part-ner.

(1) In general. If a corporation makesthe § 168(k)(4) election and is a partner ina partnership (electing corporate partner),the partnership must provide the electingcorporate partner with sufficient informa-tion to apply § 168(k)(4)(G)(ii) in deter-mining its distributive share of partner-ship items under § 702 relating to any el-igible qualified property placed in serviceby the partnership during the taxable year.This information must be provided in thetime and manner required by § 6031(b)and § 1.6031(b)–1T(a)(3)(ii) and (b). Ifthe partnership has filed its federal tax re-turn for its first taxable year ending afterMarch 31, 2008, on or before February 9,2009, and did not provide the electing cor-porate partner with sufficient informationto apply § 168(k)(4)(G)(ii), the partnershipmust provide such information to the elect-ing corporate partner by the later of May11, 2009, or 90 calendar days after receiv-ing the corporate partner’s notification asrequired by section 5.02 of this revenueprocedure.

(2) Determination of Electing Cor-porate Partner’s Distributive Share. Apartnership must compute an electingcorporate partner’s distributive share ofdepreciation and make other correla-tive adjustments attributable to eligiblequalified property placed in service bythe partnership using any reasonable

method that is consistent with the intentof § 168(k)(4)(G)(ii). For example, thepartnership may apply principles similarto those in § 743(b) and the regulationsthereunder to the extent appropriate tomake adjustments to the basis of the eli-gible qualified property and the electingcorporate partner’s distributive share ofdepreciation attributable to such property.

.02 Electing Corporate Partner’s Noti-fication to Partnership. An electing corpo-rate partner must notify the partnership, inwriting, that the corporate partner is mak-ing the § 168(k)(4) election. This notifi-cation must be made on or before the duedate (including extensions) of the electingcorporate partner’s federal income tax re-turn for its first taxable year ending afterMarch 31, 2008. If the electing corpo-rate partner makes the § 168(k)(4) elec-tion by filing an amended return under sec-tions 3.02(1)(a)(ii) or 3.03(2) of this rev-enue procedure, as applicable, the elect-ing corporate partner must notify the part-nership on or before the date it files anamended return containing the § 168(k)(4)election. If the electing corporate part-ner is described in section 3.03(1) of thisrevenue procedure, the electing corporatepartner must notify the partnership on orbefore March 11, 2009. Failure to com-ply with the notification requirement pro-vided by this section 5.02 will nullify a tax-payer’s attempted § 168(k)(4) election.

SECTION 6. APPLICATION OF§ 168(k)(4) TO S CORPORATIONSAND THEIR SHAREHOLDERS

.01 In General. An S corporation isallowed to make the § 168(k)(4) elec-tion. However, any business or AMTcredit limitation increases that result froma § 168(k)(4) election are applied at thecorporate level and not at the shareholderlevel. Thus, a shareholder of an S corpo-ration must not increase the shareholder’sbusiness or AMT credit limitations under,respectively, §§ 38(c) and 53(c) by thebonus depreciation amount that resultsfrom a § 168(k)(4) election made by theS corporation.

.02 Applicability to S Corporations.Under § 1374(a), an S corporation is sub-ject to tax on its recognized built-in gainsduring its taxable year. In general, un-der § 1374(b)(3)(B), an S corporation isallowed as a credit against the § 1374(a)

tax any business and AMT credit carryfor-wards that arose in a taxable year in whichthe corporation was a C corporation. Thecredits allowed by § 1374(b)(3)(B) aresubject to three limitations: the businesscredit limitation in § 38(c), the AMT creditlimitation in § 53(c), and the amount ofthe § 1374(a) tax. Sections 1374(b)(3)(B)and 1.1374–6(b). If an S corporationmakes the § 168(k)(4) election, the S cor-poration calculates its bonus depreciationamount as provided in section 5 of Rev.Proc. 2008–65, increases its business andAMT credit limitations, uses the straightline method for depreciating its eligiblequalified property, and must not claim theStimulus additional first year depreciationdeduction for such property. However, the§ 168(k)(4) election does not increase theS corporation’s § 1374(b)(3)(B) limita-tion. Therefore, if the § 168(k)(4) electionis made, an S corporation may not claimbusiness credits or AMT credits in ex-cess of its § 1374(a) tax for the taxableyear. Any credits allowed as a result ofthe increase in the business or AMT creditlimitations, which may be used only as anadditional credit against the § 1374(a) tax,are not refundable to the S corporation.

.03 Time and Manner for Making the§ 168(k)(4) Election. An S corporationmakes the § 168(k)(4) election within thetime and in the manner provided in section3 of this revenue procedure.

SECTION 7. APPLICATION OF§ 3081(b) OF THE HOUSING ACT

.01 In General. Section 3081(b)(1)of the Housing Act allows an applica-ble partnership to elect to be treated asmaking a deemed payment of income tax(the “deemed payment”) in the amountdetermined under section 7.03 of this rev-enue procedure. This election applies toany taxable year during which eligiblequalified property is placed in service bythe applicable partnership. See section3 of Rev. Proc. 2008–65 for determin-ing which depreciable property qualifiesas eligible qualified property. Notwith-standing any other provision of the Code,the deemed payment is refundable to theapplicable partnership and may not betreated as an offset or credit against anytax liability of the applicable partnershipor any partner. Section 3081(b)(2)(A) ofthe Housing Act.

February 9, 2009 456 2009–6 I.R.B.

.02 Definition of Applicable Partner-ship. An applicable partnership is a do-mestic partnership that was formed effec-tive on August 3, 2007, and will producein excess of 675,000 automobiles duringthe period beginning on January 1, 2008,and ending on June 30, 2008. Section3081(b)(4)(A) of the Housing Act.

.03 Computation of the Deemed Pay-ment. Pursuant to § 3081(b)(1)(A) and(b)(3) of the Housing Act, the amount ofthe deemed payment for the taxable yearis equal to the lesser of:

(1) 20 percent of the excess (if any) ofthe aggregate amount of depreciation thatwould be allowable for eligible qualifiedproperty placed in service by the applica-ble partnership during the taxable year ifthe Stimulus additional first year depreci-ation deduction applied to all such prop-erty, over the aggregate amount of depreci-ation that would be allowable for all eligi-ble qualified property placed in service bythe applicable partnership during the tax-able year if the Stimulus additional firstyear depreciation deduction did not applyto any such property. For purposes of com-puting this amount, the rules in section5.02 of Rev. Proc. 2008–65 apply;

(2) the applicable partnership’s researchcredit (determined under § 41) for the tax-able year; or

(3) $30 million less any deemed pay-ments made by the applicable partnershipunder § 3081(b) of the Housing Act for allprior taxable years.

.04 Effect of Making Election under§ 3081(b) of the Housing Act. If an ap-plicable partnership makes the election toapply § 3081(b) of the Housing Act (the“§ 3081(b) Housing Act election”), theapplicable partnership (1) must determinethe depreciation deduction for any eligiblequalified property placed in service bythe partnership during the taxable yearby using the straight line method and bynot claiming the Stimulus additional firstyear depreciation deduction, and (2) mustreduce the amount of its research creditfor the taxable year by the amount of thedeemed payment for the taxable year. Sec-tion 3081(b)(1)(B) and (C).

.05 Time and Manner of Making§ 3081(b) Housing Act Election.

(1) Time for making election. An appli-cable partnership must make the § 3081(b)Housing Act election by the due date (in-cluding extensions) of the Form 1065, U.S.

Return of Partnership Income, for the part-nership’s first taxable year ending afterMarch 31, 2008. Even if an applicablepartnership does not place in service anyeligible qualified property during its firsttaxable year ending after March 31, 2008,the partnership must make the § 3081(b)Housing Act election for that taxable yearif the partnership wishes to apply the elec-tion to eligible qualified property placed inservice in subsequent taxable years.

(2) Manner of making election. An ap-plicable partnership makes the § 3081(b)Housing Act election by making the fol-lowing statement (printed legibly or typed)on its timely-filed Form 1065 for the firsttaxable year ending after March 31, 2008,in the space below the signature section ofthe Form 1065: “A refund in the amountof $[Insert Amount] is requested pursuantto Section 3081(b)(1) of P. L. 110–289, theHousing and Economic Recovery Act of2008.”

(3) Limited Relief for Late Election.(a) Automatic 6-Month Extension. Pur-

suant to § 301.9100–2(b) of the Procedureand Administration Regulations, an auto-matic extension of 6 months from the duedate of the federal tax return (excluding ex-tensions) for the applicable partnership’sfirst taxable year ending after March 31,2008, is granted to make the § 3081(b)Housing Act election, provided the appli-cable partnership timely filed its federaltax return for its first taxable year end-ing after March 31, 2008, and the applica-ble partnership satisfies the requirementsin § 301.9100–2(c) and (d).

(b) Other Extensions. An applicablepartnership that fails to make the § 3081(b)Housing Act election for the applicablepartnership’s first taxable year ending af-ter March 31, 2008, as provided in section7.05(1) and (2) of this revenue procedureor in section 7.05(3)(a) of this revenue pro-cedure but wants to do so must file a re-quest for an extension of time to make theelection under the rules in § 301.9100–3.

.06 Filing of Form 1065.(1) In general. For the taxable year in

which the § 3081(b) Housing Act electionis made (the “year of election”) and for anysubsequent taxable year in which an appli-cable partnership is claiming a refundabledeemed payment under § 3081(b) of theHousing Act, the partnership’s Form 1065and related forms and schedules (includ-ing Schedules K–1) must not be filed

electronically. Further, the applicablepartnership must mail the Form 1065 andrelated forms and schedules (includingSchedules K–1) to: Internal Revenue Ser-vice, 1973 N. Rulon White Blvd., Attn:Audrey Martinez Mail Stop 1120, Ogden,UT 84201.

(2) Taxable years subsequent to the yearof election. If the applicable partnershipclaims a refundable deemed payment un-der § 3081(b) of the Housing Act for anytaxable year subsequent to the year of elec-tion, the partnership must make the follow-ing statement (printed legibly or typed) onits Form 1065 for that taxable year in thespace below the signature section of theForm 1065: “A refund in the amount of$[Insert Amount] is requested pursuant toSection 3081(b)(1) of P. L. 110–289, theHousing and Economic Recovery Act of2008.”

SECTION 8. EFFECT ON OTHERDOCUMENTS

Rev. Proc. 2008–65 is amplified andsupplemented.

SECTION 9. PAPERWORKREDUCTION ACT

The collections of information con-tained in this revenue procedure havebeen reviewed and approved by the Officeof Management and Budget in accor-dance with the Paperwork Reduction Act(44 U.S.C. 3507) under control number1545–2133. An agency may not conductor sponsor, and a person is not required torespond 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, 4, 5,and 7. This information is necessary andwill be used to determine whether the tax-payer is eligible to make the § 168(k)(4)election and the amount by which the elec-tion increases the taxpayer’s applicablecredit limitations. The collections of in-formation are required for the taxpayer tomake the § 168(k)(4) election. The likelyrespondents are the following: businessand other for-profit institutions.

The estimated total annual reportingand/or recordkeeping burden is 2,700hours.

2009–6 I.R.B. 457 February 9, 2009

The estimated annual burden per re-spondent/recordkeeper varies from 0.25hours to 1 hour, depending on individualcircumstances, with an estimated averageof 0.5 hours. The estimated number of re-spondents is 5,400. The estimated annualfrequency of responses is on occasion.

SECTION 10. EFFECTIVE DATE

This revenue procedure is effective Jan-uary 23, 2009.

SECTION 11. DRAFTINGINFORMATION

The principal author of this revenueprocedure is Jeffrey T. Rodrick of the Of-

fice of Associate Chief Counsel (IncomeTax & Accounting). For further infor-mation regarding this revenue procedure,contact Mr. Rodrick at (202) 622–4930(not a toll-free call).

February 9, 2009 458 2009–6 I.R.B.

Part IV. Items of General InterestDeletions From CumulativeList of OrganizationsContributions to Whichare Deductible Under Section170 of the Code

Announcement 2009–3

The Internal Revenue Service has re-voked its determination that the organi-zations listed below qualify as organiza-tions described in sections 501(c)(3) and170(c)(2) of the Internal Revenue Code of1986.

Generally, the Service will not disallowdeductions for contributions made to alisted organization on or before the date

of announcement in the Internal RevenueBulletin that an organization no longerqualifies. However, the Service is notprecluded from disallowing a deductionfor any contributions made after an or-ganization ceases to qualify under section170(c)(2) if the organization has not timelyfiled a suit for declaratory judgment undersection 7428 and if the contributor (1) hadknowledge of the revocation of the rulingor determination letter, (2) was aware thatsuch revocation was imminent, or (3) wasin part responsible for or was aware of theactivities or omissions of the organizationthat brought about this revocation.

If on the other hand a suit for declara-tory judgment has been timely filed, con-tributions from individuals and organiza-

tions described in section 170(c)(2) thatare otherwise allowable will continue tobe deductible. Protection under section7428(c) would begin on February 9, 2009,and would end on the date the court firstdetermines that the organization is not de-scribed in section 170(c)(2) as more partic-ularly set forth in section 7428(c)(1). Forindividual contributors, the maximum de-duction protected is $1,000, with a hus-band and wife treated as one contributor.This benefit is not extended to any indi-vidual, in whole or in part, for the acts oromissions of the organization that were thebasis for revocation.

Hoodland Community Childrens CenterWelches, OR

2009–6 I.R.B. 459 February 9, 2009

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

Amplified describes a situation whereno change is being made in a prior pub-lished position, but the prior position is be-ing extended to apply to a variation of thefact situation set forth therein. Thus, ifan earlier ruling held that a principle ap-plied to A, and the new ruling holds that thesame principle also applies to B, the earlierruling is amplified. (Compare with modi-fied, below).

Clarified is used in those instanceswhere the language in a prior ruling is be-ing made clear because the language hascaused, or may cause, some confusion.It is not used where a position in a priorruling 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 than re-state the substance and situation of a previ-ously published ruling (or rulings). Thus,the term is used to republish under the1986 Code and regulations the same po-sition published under the 1939 Code andregulations. The term is also used whenit is desired to republish in a single rul-ing a series of situations, names, etc., thatwere previously published over a period oftime in separate rulings. If the new rul-ing does more than restate the substance

of a prior ruling, a combination of termsis used. For example, modified and su-perseded 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 is selfcontained. In this case, the previously pub-lished ruling is first modified and then, asmodified, 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 names insubsequent rulings. After the original rul-ing has been supplemented several times, anew ruling may be published that includesthe list in the original ruling and the ad-ditions, and supersedes all prior rulings inthe 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 of casesin litigation, or the outcome of a Servicestudy.

AbbreviationsThe following abbreviations in current useand formerly used will appear in materialpublished 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.

February 9, 2009 i 2009–6 I.R.B.

Numerical Finding List1

Bulletins 2009–1 through 2009–6

Announcements:

2009-1, 2009-1 I.R.B. 242

2009-2, 2009-5 I.R.B. 424

2009-3, 2009-6 I.R.B. 459

Notices:

2009-1, 2009-2 I.R.B. 250

2009-2, 2009-4 I.R.B. 344

2009-3, 2009-2 I.R.B. 250

2009-4, 2009-2 I.R.B. 251

2009-5, 2009-3 I.R.B. 309

2009-6, 2009-3 I.R.B. 311

2009-7, 2009-3 I.R.B. 312

2009-8, 2009-4 I.R.B. 347

2009-9, 2009-5 I.R.B. 419

2009-10, 2009-5 I.R.B. 419

2009-11, 2009-5 I.R.B. 420

2009-12, 2009-6 I.R.B. 446

2009-13, 2009-6 I.R.B. 447

2009-15, 2009-6 I.R.B. 449

Proposed Regulations:

REG-148568-04, 2009-5 I.R.B. 421

REG-160872-04, 2009-4 I.R.B. 358

REG-158747-06, 2009-4 I.R.B. 362

REG-150670-07, 2009-4 I.R.B. 378

REG-113462-08, 2009-4 I.R.B. 379

REG-150066-08, 2009-5 I.R.B. 423

Revenue Procedures:

2009-1, 2009-1 I.R.B. 1

2009-2, 2009-1 I.R.B. 87

2009-3, 2009-1 I.R.B. 107

2009-4, 2009-1 I.R.B. 118

2009-5, 2009-1 I.R.B. 161

2009-6, 2009-1 I.R.B. 189

2009-7, 2009-1 I.R.B. 226

2009-8, 2009-1 I.R.B. 229

2009-9, 2009-2 I.R.B. 256

2009-10, 2009-2 I.R.B. 267

2009-11, 2009-3 I.R.B. 313

2009-12, 2009-3 I.R.B. 321

2009-13, 2009-3 I.R.B. 323

2009-14, 2009-3 I.R.B. 324

2009-15, 2009-4 I.R.B. 356

2009-16, 2009-6 I.R.B. 449

Revenue Rulings:

2009-1, 2009-2 I.R.B. 248

2009-2, 2009-2 I.R.B. 245

2009-3, 2009-5 I.R.B. 382

2009-4, 2009-5 I.R.B. 408

Revenue Rulings— Continued:

2009-5, 2009-6 I.R.B. 432

Treasury Decisions:

9434, 2009-4 I.R.B. 339

9435, 2009-4 I.R.B. 333

9436, 2009-3 I.R.B. 268

9437, 2009-4 I.R.B. 341

9438, 2009-5 I.R.B. 387

9439, 2009-5 I.R.B. 416

9440, 2009-5 I.R.B. 409

9442, 2009-6 I.R.B. 434

1 A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2008–27 through 2008–52 is in Internal Revenue Bulletin2008–52, dated December 29, 2008.

2009–6 I.R.B. ii February 9, 2009

Finding List of Current Actions onPreviously Published Items1

Bulletins 2009–1 through 2009–6

Notices:

99-35

Obsoleted by

Notice 2009-15, 2009-6 I.R.B. 449

2001-55

Modified by

Notice 2009-1, 2009-2 I.R.B. 250

2002-27

Modified by

Notice 2009-9, 2009-5 I.R.B. 419

2007-26

Modified by

Notice 2009-15, 2009-6 I.R.B. 449

2007-54

Obsoleted by

T.D. 9436, 2009-3 I.R.B. 268

2008-11

Obsoleted by

T.D. 9436, 2009-3 I.R.B. 268

2008-12

Obsoleted by

T.D. 9436, 2009-3 I.R.B. 268Rev. Proc. 2009-11, 2009-3 I.R.B. 313

2008-13

Obsoleted by

T.D. 9436, 2009-3 I.R.B. 268

List of forms modified and superseded by

Rev. Proc. 2009-11, 2009-3 I.R.B. 313

Modified and clarified by

Notice 2009-5, 2009-3 I.R.B. 309

2008-46

Obsoleted by

T.D. 9436, 2009-3 I.R.B. 268Rev. Proc. 2009-11, 2009-3 I.R.B. 313

Revenue Procedures:

2007-17

Superseded by

Rev. Proc. 2009-14, 2009-3 I.R.B. 324

2007-71

Modified by

Notice 2009-3, 2009-2 I.R.B. 250

2008-1

Superseded by

Rev. Proc. 2009-1, 2009-1 I.R.B. 1

2008-2

Superseded by

Rev. Proc. 2009-2, 2009-1 I.R.B. 87

Revenue Procedures— Continued:

2008-3

Superseded by

Rev. Proc. 2009-3, 2009-1 I.R.B. 107

2008-4

Superseded by

Rev. Proc. 2009-4, 2009-1 I.R.B. 118

2008-5

Superseded by

Rev. Proc. 2009-5, 2009-1 I.R.B. 161

2008-6

Superseded by

Rev. Proc. 2009-6, 2009-1 I.R.B. 189

2008-7

Superseded by

Rev. Proc. 2009-7, 2009-1 I.R.B. 226

2008-8

Superseded by

Rev. Proc. 2009-8, 2009-1 I.R.B. 229

2008-9

Superseded by

Rev. Proc. 2009-9, 2009-2 I.R.B. 256

2008-61

Superseded by

Rev. Proc. 2009-3, 2009-1 I.R.B. 107

2008-65

Amplified and supplemented by

Rev. Proc. 2009-16, 2009-6 I.R.B. 449

2008-68

Amplified and superseded by

Rev. Proc. 2009-15, 2009-4 I.R.B. 356

Revenue Rulings:

65-286

Obsoleted by

T.D. 9435, 2009-4 I.R.B. 333

76-54

Obsoleted by

T.D. 9435, 2009-4 I.R.B. 333

92-19

Supplemented by

Rev. Rul. 2009-3, 2009-5 I.R.B. 382

2008-19

Modified by

Rev. Rul. 2009-3, 2009-5 I.R.B. 382

1 A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2008–27 through 2008–52 is in Internal Revenue Bulletin 2008–52, dated December 29,2008.

February 9, 2009 iii 2009–6 I.R.B.

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