Bulletin No. 2021–17

HIGHLIGHTS

OF THIS ISSUE





Bulletin No. 2021–17

April 26, 2021

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be

relied upon as authoritative interpretations.

INCOME TAX

Notice 2021-25, page 1118.

This notice provides guidance regarding the temporary

100-percent deduction for expenses that are paid or incurred

after December 31, 2020, and before January 1, 2023, for

food or beverages provided by a restaurant. In particular, the

notice explains when the temporary 100-percent deduction

applies and when the 50-percent limitation continues to apply for purposes of § 274 of the Internal Revenue Code, as

amended by § 210 of the Taxpayer Certainty and Disaster

Tax Relief Act of 2020, enacted as Division EE of the Consolidated Appropriations Act, 2021, Pub. L. No. 116-260, 134

Stat. 1182 (December 27, 2020).

Finding Lists begin on page ii.

Rev. Proc. 2021-21, page 1118.

Generally, U.S. citizens or resident aliens living and working

abroad are taxed on their worldwide income. However, if

their tax home is in a foreign country and they meet either the

bona fide residence test or the physical presence test, they

can choose to exclude from their income a limited amount of

their foreign earned income ($107,600 for 2020). Both the

bona fide residence test and the physical presence test contain minimum time requirements. Revenue Procedure 202121 provides a waiver under section 911(d)(4) for the time

requirements for individuals electing to exclude their foreign

earned income who must leave a foreign country because of

war, civil unrest, or similar adverse conditions in that country.

Rev. Proc. 20221-21 adds Iraq to the list of waiver country

for tax year 2020 for which the minimum time requirements

are waived.

The IRS Mission

Provide America’s taxpayers top-quality service by helping

them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.

Introduction

The Internal Revenue Bulletin is the authoritative instrument

of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service

and for publishing Treasury Decisions, Executive Orders, Tax

Conventions, legislation, court decisions, and other items of

general interest. It is published weekly.

It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application

of the tax laws, including all rulings that supersede, revoke,

modify, or amend any of those previously published in the

Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements of

internal practices and procedures that affect the rights and

duties of taxpayers are published.

Revenue rulings represent the conclusions of the Service

on the application of the law to the pivotal facts stated in

the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices,

identifying details and information of a confidential nature are

deleted to prevent unwarranted invasions of privacy and to

comply with statutory requirements.

Rulings and procedures reported in the Bulletin do not have the

force and effect of Treasury Department Regulations, but they

may be used as precedents. Unpublished rulings will not be

relied on, used, or cited as precedents by Service personnel in

the disposition of other cases. In applying published rulings and

procedures, the effect of subsequent legislation, regulations,

court decisions, rulings, and procedures must be considered,

and Service personnel and others concerned are cautioned

against reaching the same conclusions in other cases unless

the 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

of the 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,

Legislation and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.

To the extent practicable, pertinent cross references to these

subjects are contained in the other Parts and Subparts. Also

included in this part are Bank Secrecy Act Administrative

Rulings. Bank Secrecy Act Administrative Rulings are issued

by the Department of the Treasury’s Office of the Assistant

Secretary (Enforcement).

Part IV.—Items of General Interest.

This part includes notices of proposed rulemakings, disbarment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative index

for the matters published during the preceding months. These

monthly indexes are cumulated on a semiannual basis, and are

published 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.

April 26, 2021 

Bulletin No. 2021–17

Part III

Temporary 100-Percent

Deduction for Business

Meal Expenses

Notice 2021-25

I. PURPOSE

This notice provides guidance regarding the temporary 100-percent deduction

for expenses that are paid or incurred after

December 31, 2020, and before January 1,

2023, for food or beverages provided by

a restaurant. In particular, the notice explains when the temporary 100-percent

deduction applies and when the 50-percent limitation continues to apply for purposes of § 274 of the Internal Revenue

Code (Code), as amended by § 210 of

the Taxpayer Certainty and Disaster Tax

Relief Act of 2020 (Act), enacted as Division EE of the Consolidated Appropriations Act, 2021, Pub. L. No. 116-260, 134

Stat. 1182 (December 27, 2020).

II. BACKGROUND

Section 274 generally limits or disallows deductions for certain meal and

entertainment expenses that otherwise

would be allowable under chapter 1 of the

Code (chapter 1). Section 274(a)(1) generally disallows deductions for expenses for

entertainment, amusement, or recreation.

Section 1.274-11 of the Income Tax Regulations provides that the disallowance

under section 274(a)(1) does not apply to

food or beverages provided at an entertainment activity if the food or beverages

are separately purchased from the entertainment activity or the cost of the food

or beverages is separately stated from the

cost of the entertainment in an invoice,

bill, or receipt. See § 1.274-11(b)(1)(ii).

Section 274(k) generally provides that

no deduction is allowed under chapter 1

for the expense of any food or beverage

unless: (1) such expense is not lavish or

extravagant under the circumstances; and

(2) the taxpayer (or an employee of the

taxpayer) is present at the furnishing of

such food or beverages. Section 274 provides additional rules that may apply to

April 26, 2021

the deduction of food or beverage expenses, depending on the circumstances.

Section 274(n)(1) provides that a deduction for any expense for food or beverages generally is limited to 50 percent

of the amount otherwise deductible under

chapter 1. Section 274(n)(2) provides exceptions to the 50-percent limitation of

deductions for food or beverage expenses.

Section 210(a) of the Act added § 274(n)

(2)(D) to the Code, which provides a temporary exception to the 50-percent limitation for expenses for food or beverages

provided by a restaurant. Section 274(n)

(2)(D) applies to amounts paid or incurred

after December 31, 2020, and before January 1, 2023. To provide certainty to taxpayers in determining whether § 274(n)(2)

(D) applies, this notice explains when the

temporary 100-percent deduction applies

and when the 50-percent limitation continues to apply.

III. APPLICATION OF § 274(n)(2)(D)

Pursuant to § 274(n)(2)(D), the 50-percent limitation of § 274(n)(1) does not apply to the amount of any deduction otherwise allowable to a taxpayer under chapter

1 for any expense paid or incurred after

December 31, 2020, and before January

1, 2023, for food or beverages provided

by a restaurant. For this purpose, the term

“restaurant” means a business that prepares and sells food or beverages to retail

customers for immediate consumption, regardless of whether the food or beverages

are consumed on the business’s premises.

However, a restaurant does not include a

business that primarily sells pre-packaged

food or beverages not for immediate consumption, such as a grocery store; specialty food store; beer, wine, or liquor store;

drug store; convenience store; newsstand;

or a vending machine or kiosk. The 50-percent limitation of § 274(n)(1) continues

to apply to the amount of any deduction

otherwise allowable to the taxpayer under

chapter 1 for any expense paid or incurred

for food or beverages acquired from such

a business (unless another exception in §

274(n)(2) applies to such expense).

In addition, an employer may not treat

as a restaurant for purposes of § 274(n)

(2)(D), (1) any eating facility located on

1118

the business premises of the employer and

used in furnishing meals excluded from

an employee’s gross income under § 119,

or (2) any employer-operated eating facility treated as a de minimis fringe under

§ 132(e)(2), even if such eating facility is

operated by a third party under contract

with the employer as described in § 1.1327(a)(3).

IV. EFFECTIVE DATE

This notice is effective for amounts

paid or incurred after December 31, 2020,

and before January 1, 2023.

V. DRAFTING INFORMATION

The principal author of this notice

is Deena Devereux of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information regarding this notice contact Ms. Devereux at

(202) 317-4602 or Patrick Clinton at (202)

317-4651 (not toll-free numbers).

26 CFR 1.911-2: Qualified Individuals (Also: Part

I, §§911; 1.911-2.)

Rev. Proc. 2021-21

SECTION 1. PURPOSE

This revenue procedure provides information to any individual who failed

to meet the eligibility requirements of

section 911(d)(1) of the Internal Revenue

Code (Code) for 2020 because adverse

conditions in a foreign country precluded

the individual from meeting those requirements.

SECTION 2. BACKGROUND

.01 Section 911 allows a “qualified individual,” as defined in section 911(d)(1),

to elect to exclude from gross income the

foreign earned income and to exclude or

deduct the housing cost amount of such

individual.

.02 Section 911(d)(1) of the Code defines the term “qualified individual” as an

individual whose tax home is in a foreign

country and who is (A) a citizen of the

Bulletin No. 2021–17

United States and establishes to the satisfaction of the Secretary of the Treasury

that the individual has been a bona fide

resident of a foreign country or countries

for an uninterrupted period that includes

an entire taxable year, or (B) a citizen or

resident of the United States who, during

any period of 12 consecutive months, is

present in a foreign country or countries

during at least 330 full days.

.03 In addition, section 911(d)(4) of the

Code provides that an individual will be

treated as a qualified individual with respect to a period in which the individual

was a bona fide resident of, or was present in, a foreign country if the individual

left the country during a period for which

the Secretary of the Treasury, after consultation with the Secretary of State, determines that individuals were required

to leave because of war, civil unrest, or

similar adverse conditions that precluded

the normal conduct of business. An individual must establish that but for those

conditions the individual could reasonably

have been expected to meet the eligibility

requirements.

.04 The Internal Revenue Service previously has listed countries for which the

eligibility requirements of section 911(d)

(1) of the Code are waived under section

911(d)(4) because of adverse conditions

in those countries. See Rev. Proc. 202014, 2020-16 I.R.B. 661. In addition to this

revenue procedure, for 2020, the Secretary of the Treasury, in consultation with

the Secretary of State, determined that the

global health emergency caused by the

Bulletin No. 2021–17

COVID-19 virus is an adverse condition

that precludes the normal conduct of business, and certain relief was provided, as

described in Rev. Proc. 2020-27, 2020-20

I.R.B. 803.

physically present or established residency in Iraq after March 25, 2020, are not

eligible to qualify for the exception provided in section 911(d)(4) of the Code for

2020.

SECTION 3. APPLICATION

SECTION 4. EFFECT ON OTHER

DOCUMENTS

.01 For 2020, the Secretary of the Treasury, in consultation with the Secretary

of State, has determined that war, civil

unrest, or similar adverse conditions precluded the normal conduct of business in

the following country beginning on the

specified date:

Country

Iraq

Date of Departure On or After

March 25, 2020

For example, for purposes of section

911 of the Code, an individual who left

Iraq on or after March 25, 2020, will be

treated as a qualified individual with respect to the period during which that individual was present in, or was a bona

fide resident of, Iraq if the individual

establishes a reasonable expectation that

he or she would have met the requirements of section 911(d) but for those

conditions.

.02 To qualify for relief under section

911(d)(4) of the Code, an individual must

have established residency, or have been

physically present, in the foreign country

on or before the date that the Secretary of

the Treasury determines that individuals

were required to leave the foreign country.

For example, individuals who were first

1119

Previously issued revenue procedures

under section 911(d)(4) remain in full

force and effect. However, Rev. Proc.

2020-14, 2020-16 I.R.B. 661, and Rev.

Proc. 2020-2027, 2020-20 I.R.B. 803, are

supplemented.

SECTION 5. INQUIRIES

A taxpayer who needs assistance on

how to claim this exclusion, or on how to

file an amended return, should consult the

section under the heading Foreign Earned

Income Exclusion at https://www.irs.gov/

individuals/international-taxpayers/us-citizens-and-resident-aliens-abroad; consult

the section under the heading How to Get

Tax Help at the same web address; or contact a local IRS office.

SECTION 6. DRAFTING

INFORMATION

The principal author of this revenue

procedure is Kate Y. Hwa of the Office

of Associate Chief Counsel (International). For further information regarding this

revenue procedure, contact Ms. Hwa on

(202) 317-5001 (not a toll-free number).

April 26, 2021

Definition of Terms

Revenue rulings and revenue procedures

(hereinafter referred to as “rulings”) that

have an effect on previous rulings use the

following defined terms to describe the

­effect:

Amplified describes a situation where

no change is being made in a prior published position, but the prior position is

being extended to apply to a variation of

the fact situation set forth therein. Thus, if

an earlier ruling held that a principle applied to A, and the new ruling holds that

the same principle also applies to B, the

earlier ruling is amplified. (Compare with

modified, below).

Clarified is used in those instances

where the language in a prior ruling is being made clear because the language has

caused, or may cause, some confusion. It

is not used where a position in a prior ruling is being changed.

Distinguished describes a situation

where a ruling mentions a previously published ruling and points out an essential

difference between them.

Modified is used where the substance

of a previously published position is being

changed. Thus, if a prior ruling held that a

principle applied to A but not to B, and the

new ruling holds that it applies to both A

and B, the prior ruling is modified because

it corrects a published position. (Compare

with amplified and clarified, above).

Obsoleted describes a previously published ruling that is not considered determinative with respect to future transactions.

This term is most commonly used in a ruling

that lists previously published rulings that

are obsoleted because of changes in laws or

regulations. A ruling may also be obsoleted

because the substance has been included in

regulations subsequently adopted.

Revoked describes situations where the

position in the previously published ruling

is not correct and the correct position is

being stated in a new ruling.

Superseded describes a situation where

the new ruling does nothing more than

restate the substance and situation of a

previously published ruling (or rulings).

Thus, the term is used to republish under

the 1986 Code and regulations the same

position published under the 1939 Code

and regulations. The term is also used

when it is desired to republish in a single

ruling a series of situations, names, etc.,

that were previously published over a

period of time in separate rulings. If the

new ruling does more than restate the substance of a prior ruling, a combination of

terms is used. For example, modified and

superseded describes a situation where the

substance of a previously published ruling

is being changed in part and is continued

without change in part and it is desired to

restate the valid portion of the previously published ruling in a new ruling that is

self contained. In this case, the previously

published ruling is first modified and then,

as modified, is superseded.

Supplemented is used in situations in

which a list, such as a list of the names of

countries, is published in a ruling and that

list is expanded by adding further names

in subsequent rulings. After the original

ruling has been supplemented several

times, a new ruling may be published that

includes the list in the original ruling and

the additions, and supersedes all prior rulings in the series.

Suspended is used in rare situations to

show that the previous published rulings

will not be applied pending some future

action such as the issuance of new or

amended regulations, the outcome of cases in litigation, or the outcome of a Service study.

Abbreviations

The following abbreviations in current use

and formerly used will appear in material

published in the Bulletin.

A—Individual.

Acq.—Acquiescence.

B—Individual.

BE—Beneficiary.

BK—Bank.

B.T.A.—Board of Tax Appeals.

C—Individual.

C.B.—Cumulative Bulletin.

CFR—Code of Federal Regulations.

CI—City.

COOP—Cooperative.

Ct.D.—Court Decision.

CY—County.

D—Decedent.

DC—Dummy Corporation.

DE—Donee.

Del. Order—Delegation Order.

DISC—Domestic International Sales Corporation.

DR—Donor.

E—Estate.

EE—Employee.

E.O.—Executive Order.

ER—Employer.

Bulletin No. 2021–17

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.

i

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.

April 26, 2021

Numerical Finding List1

Bulletin 2021–17

AOD:

2021-1, 2021-15 I.R.B. 985

Announcements:

2021-01, 2021-04 I.R.B. 506

2021-02, 2021-08 I.R.B. 892

2021-03, 2021-08 I.R.B. 892

2021-04, 2021-09 I.R.B. 895

2021-05, 2021-13 I.R.B. 965

2021-06, 2021-15 I.R.B. 1011

2021-07, 2021-15 I.R.B. 1061

Notices:

2021-01, 2021-02 I.R.B. 315

2021-03, 2021-02 I.R.B. 316

2021-04, 2021-02 I.R.B. 319

2021-02, 2021-03 I.R.B. 478

2021-05, 2021-03 I.R.B. 479

2021-07, 2021-03 I.R.B. 482

2021-09, 2021-05 I.R.B. 678

2021-06, 2021-06 I.R.B. 822

2021-08, 2021-06 I.R.B. 823

2021-11, 2021-06 I.R.B. 827

2021-12, 2021-06 I.R.B. 828

2021-13, 2021-06 I.R.B. 832

2021-10, 2021-07 I.R.B. 888

2021-15, 2021-10 I.R.B. 898

2021-16, 2021-10 I.R.B. 907

2021-18, 2021-11 I.R.B. 911

2021-19, 2021-11 I.R.B. 920

2021-20, 2021-11 I.R.B. 922

2021-17, 2021-14 I.R.B. 984

2021-21, 2021-15 I.R.B. 986

2021-22, 2021-15 I.R.B. 987

2021-23, 2021-16 I.R.B. 1113

2021-25, 2021-17 I.R.B. 1118

Revenue Procedures:—Continued

2021-10, 2020-04 I.R.B. 503

2021-12, 2020-05 I.R.B. 681

2021-11, 2020-06 I.R.B. 833

2021-15, 2020-08 I.R.B. 891

2021-17, 2020-15 I.R.B. 991

2021-18, 2020-15 I.R.B. 1007

2021-19, 2020-15 I.R.B. 1008

2021-21, 2020-17 I.R.B. 1118

Revenue Rulings:

2021-01, 2021-02 I.R.B. 294

2021-02, 2021-04 I.R.B. 495

2021-03, 2021-05 I.R.B. 674

2021-04, 2021-06 I.R.B. 724

2021-05, 2021-10 I.R.B. 896

2021-06, 2021-12 I.R.B. 946

2021-07, 2021-14 I.R.B. 982

Treasury Decisions:

9925, 2021-02 I.R.B. 296

9940, 2021-02 I.R.B. 311

9932, 2021-03 I.R.B. 345

9939, 2021-03 I.R.B. 376

9941, 2021-03 I.R.B. 396

9942, 2021-03 I.R.B. 450

9937, 2021-04 I.R.B. 495

9936, 2021-05 I.R.B. 508

9943, 2021-05 I.R.B. 577

9945, 2021-05 I.R.B. 627

9946, 2021-06 I.R.B. 726

9947, 2021-06 I.R.B. 748

9948, 2021-06 I.R.B. 801

9938, 2021-07 I.R.B. 838

9944, 2021-16 I.R.B. 1062

Proposed Regulations:

REG-130081-19, 2021-02 I.R.B. 321

REG-114615-16, 2021-03 I.R.B. 489

REG-111950-20, 2021-05 I.R.B. 683

REG-115057-20, 2021-05 I.R.B. 714

Revenue Procedures:

2021-01, 2020-01 I.R.B. 1

2021-02, 2020-01 I.R.B. 116

2021-03, 2020-01 I.R.B. 140

2021-04, 2020-01 I.R.B. 157

2021-05, 2020-01 I.R.B. 250

2021-07, 2020-01 I.R.B. 290

2021-09, 2020-03 I.R.B. 485

2021-08, 2020-04 I.R.B. 502

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2020–27 through 2020–52 is in Internal Revenue Bulletin

2020–52, dated December 27, 2020.

1

April 26, 2021

ii

Bulletin No. 2021–17

Finding List of Current Actions on

Previously Published Items1

Bulletin 2021–17

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2020–27 through 2020–52 is in Internal Revenue Bulletin

2020–52, dated December 27, 2020.

1

Bulletin No. 2021–17

iii

April 26, 2021

Internal Revenue Service

Washington, DC 20224

Official Business

Penalty for Private Use, $300

INTERNAL REVENUE BULLETIN

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

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

We Welcome Comments About the Internal Revenue Bulletin

If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it,

we would be pleased to hear from you. You can email us your suggestions or comments through the IRS Internet Home Page

www.irs.gov) or write to the Internal Revenue Service, Publishing Division, IRB Publishing Program Desk, 1111 Constitution Ave.

NW, IR-6230 Washington, DC 20224.