Bulletin No. 2023–10

HIGHLIGHTS

OF THIS ISSUE





Bulletin No. 2023–10

March 6, 2023

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.

EXCISE TAX

AOD 2023-1, page 502.

Acquiescence to the holding that § 4611(b)(1)(A) imposes a

tax on exports in violation of the Export Clause of the United

States Constitution, U.S. Const. art. I, § 9, cl. 5. Although

the Service disagrees with the decision, in the interest of

sound tax administration, it will follow the decision in all

circuits.

INCOME TAX

Notice 2023-17, page 505.

This notice establishes the program to allocate environmental justice solar and wind capacity limitation, as required

under § 48(e) of the Internal Revenue Code. This notice also

provides initial program guidance for potential applicants

for allocations of calendar year 2023 capacity limitation.

This initial guidance provides the general eligibility requirements, a description of the four statutory facility categories for which an eligible facility may request an allocation,

amounts of capacity limitation reserved for each facility

category, a general description of the program design and

goals, the application review process, and the proposed

timeline for opening two 60-day application periods in 2023

based on project categories.

Notice 2023-18, page 508.

The notice establishes the section 48C(e) program to allocate $10 billion of section 48C credits ($4 billion of which

Finding Lists begin on page ii.

may only be allocated to projects located in certain energy

communities census tracts) and provides initial program

guidance. The Department of Treasury (Treasury Department) and the Internal Revenue Service (IRS) anticipate allocating $4 billion of section 48C credits in the first allocation

round, with approximately $1.6 billion of these credits to be

allocated to projects located in certain energy communities

census tracts. The Treasury Department and the IRS will allocate the remaining credits in future allocation rounds. This

notice also provides the general rules for determining the

section 48C credit, definitions of qualifying advanced energy projects, and the procedures for allocating the credits.

Notice 2023-20, page 523.

This notice provides interim guidance to insurance companies and certain other taxpayers related to their determination of adjusted financial statement income (AFSI) for purposes of the corporate alternative minimum tax, as added

to the Code by the Inflation Reduction Act of 2022. This notice provides interim guidance for the determination of AFSI

as it relates to (1) variable contracts and similar contracts,

(2) funds withheld reinsurance and modified coinsurance

agreements, and (3) the basis of certain assets held by

certain previously tax-exempt entities that received a “fresh

start” basis adjustment.

Rev. Rul. 2023-5, page 503.

Federal rates; adjusted federal rates; adjusted federal longterm rate, and the long-term tax exempt rate. For purposes

of sections 382, 1274, 1288, 7872 and other sections of

the Code, tables set forth the rates for March 2023.

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.

March 6, 2023 

Bulletin No. 2023–10

Actions Relating to Court

Decisions

It is the policy of the Internal Reve­

nue Service to announce at an early date

whether it will follow the holdings in cer­

tain cases. An Action on Decision is the

document making such an announcement.

An Action on Decision will be issued at

the discretion of the Service only on un­

appealed issues decided adverse to the

government. Generally, an Action on De­

cision is issued where its guidance would

be helpful to Service personnel working

with the same or similar issues. Unlike a

Treasury Regulation or a Revenue Ruling,

an Action on Decision is not an affirma­

tive statement of Service position. It is not

intended to serve as public guidance and

may not be cited as precedent.

Actions on Decisions shall be relied

upon within the Service only as conclu­

sions applying the law to the facts in the

particular case at the time the Action on

Decision was issued. Caution should be

exercised in extending the recommenda­

tion of the Action on Decision to similar

cases where the facts are different. More­

over, the recommendation in the Action

on Decision may be superseded by new

legislation, regulations, rulings, cases, or

Actions on Decisions.

Prior to 1991, the Service published

acquiescence or nonacquiescence only in

certain regular Tax Court opinions. The

Service has expanded its acquiescence

program to include other civil tax cases

where guidance is determined to be help­

ful. Accordingly, the Service now may

acquiesce or nonacquiesce in the holdings

of memorandum Tax Court opinions, as

well as those of the United States District

Courts, Claims Court, and Circuit Courts

of Appeal. Regardless of the court decid­

ing the case, the recommendation of any

Action on Decision will be published in

the Internal Revenue Bulletin.

The recommendation in every Action

on Decision will be summarized as ac­

quiescence, acquiescence in result only,

or nonacquiescence. Both “acquiescence”

and “acquiescence in result only” mean

that the Service accepts the holding of the

court in a case and that the Service will

follow it in disposing of cases with the

same controlling facts. However, “acqui­

escence” indicates neither approval nor

disapproval of the reasons assigned by the

court for its conclusions; whereas, “acqui­

escence in result only” indicates disagree­

ment or concern with some or all of those

reasons. “Nonacquiescence” signifies that,

although no further review was sought,

the Service does not agree with the hold­

ing of the court and, generally, will not

follow the decision in disposing of cases

involving other taxpayers. In reference to

an opinion of a circuit court of appeals, a

“nonacquiescence” indicates that the Ser­

vice will not follow the holding on a na­

tionwide basis. However, the Service will

recognize the precedential impact of the

opinion on cases arising within the venue

of the deciding circuit.

The Commissioner DOES AC­

QUIESCE in the following decision:

Trafigura Trading LLC v. United

States, 29 F.4th 286 (5th Cir. 2022)1

1

Acquiescence to the holding that § 4611(b)(1)(A) imposes a tax on exports in violation of the Export Clause of the United States Constitution, U.S. Const. art. I, § 9, cl. 5. Although the

Service disagrees with the decision, in the interest of sound tax administration, it will follow the decision in all circuits.

March 6, 2023

502

Bulletin No. 2023–10

Part I

Section 1274.—

Determination of Issue

Price in the Case of Certain

Debt Instruments Issued for

Property

(Also Sections 42, 280G, 382, 467, 468, 482, 483,

1288, 7520, 7872.)

Rev. Rul. 2023-5

This revenue ruling provides various

prescribed rates for federal income tax

Annual

AFR

110% AFR

120% AFR

130% AFR

4.50%

4.96%

5.41%

5.87%

AFR

110% AFR

120% AFR

130% AFR

150% AFR

175% AFR

3.70%

4.08%

4.45%

4.83%

5.59%

6.52%

AFR

110% AFR

120% AFR

130% AFR

3.74%

4.12%

4.50%

4.88%

Short-term adjusted AFR

Mid-term adjusted AFR

Long-term adjusted AFR

Bulletin No. 2023–10

purposes for March 2023 (the current

month). Table 1 contains the shortterm, mid-term, and long-term applica­

ble federal rates (AFR) for the current

month for purposes of section 1274(d)

of the Internal Revenue Code. Table 2

contains the short-term, mid-term, and

long-term adjusted applicable federal

rates (adjusted AFR) for the current

month for purposes of section 1288(b).

Table 3 sets forth the adjusted feder­

al long-term rate and the long-term

tax-exempt rate described in section

382(f). Table 4 contains the appropri­

ate percentages for determining the

low-income housing credit described in

section 42(b)(1) for buildings placed in

service during the current month. How­

ever, under section 42(b)(2), the appli­

cable percentage for non-federally sub­

sidized new buildings placed in service

after July 30, 2008, shall not be less

than 9%. Finally, Table 5 contains the

federal rate for determining the present

value of an annuity, an interest for life

or for a term of years, or a remainder or

a reversionary interest for purposes of

section 7520.

REV. RUL. 2023-5 TABLE 1

Applicable Federal Rates (AFR) for March 2023

Period for Compounding

Semiannual

Quarterly

Short-term

4.45%

4.43%

4.90%

4.87%

5.34%

5.30%

5.79%

5.75%

Mid-term

3.67%

3.65%

4.04%

4.02%

4.40%

4.38%

4.77%

4.74%

5.51%

5.47%

6.42%

6.37%

Long-term

3.71%

3.69%

4.08%

4.06%

4.45%

4.43%

4.82%

4.79%

Annual

3.41%

2.81%

2.84%

REV. RUL. 2023-5 TABLE 2

Adjusted AFR for March 2023

Period for Compounding

Semiannual

3.38%

2.79%

2.82%

503

Quarterly

3.37%

2.78%

2.81%

Monthly

4.41%

4.85%

5.28%

5.72%

3.64%

4.01%

4.36%

4.72%

5.45%

6.34%

3.68%

4.05%

4.41%

4.77%

Monthly

3.36%

2.77%

2.80%

March 6, 2023

REV. RUL. 2023-5 TABLE 3

Rates Under Section 382 for March 2023

Adjusted federal long-term rate for the current month

Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted federal

long-term rates for the current month and the prior two months.)

2.84%

2.92%

REV. RUL. 2023-5 TABLE 4

Appropriate Percentages Under Section 42(b)(1) for March 2023

Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after

July 30, 2008, shall not be less than 9%.

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

7.86%

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

3.37%

REV. RUL. 2023-5 TABLE 5

Rate Under Section 7520 for March 2023

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

Section 42.—Low-Income

Housing Credit

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

March 2023. See Rev. Rul. 2023-5, page 503.

Section 280G.—Golden

Parachute Payments

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

March 2023. See Rev. Rul. 2023-5, page 503.

Section 382.—Limitation

on Net Operating Loss

Carryforwards and

Certain Built-In Losses

Following Ownership

Change

The adjusted applicable federal long-term rate

is set forth for the month of March 2023. See Rev.

Rul. 2023-5, page 503.

Section 467.—Certain

Payments for the Use of

Property or Services

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

March 2023. See Rev. Rul. 2023-5, page 503.

Section 468.—Special

Rules for Mining and Solid

Waste Reclamation and

Closing Costs

The applicable federal short-term rates are set

forth for the month of March 2023. See Rev. Rul.

2023-5, page 503.

Section 482.—Allocation

of Income and Deductions

Among Taxpayers

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

March 2023. See Rev. Rul. 2023-5, page 503.

4.40%

Section 483.—Interest on

Certain Deferred Payments

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

March 2023. See Rev. Rul. 2023-5, page 503.

Section 1288.—Treatment

of Original Issue Discount

on Tax-Exempt Obligations

The adjusted applicable federal short-term,

mid-term, and long-term rates are set forth for the

month of March 2023. See Rev. Rul. 2023-5, page

503.

Section 7520.—Valuation

Tables

The applicable federal mid-term rates are set

forth for the month of March 2023. See Rev. Rul.

2023-5, page 503.

Section 7872.—Treatment

of Loans With BelowMarket Interest Rates

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

March 2023. See Rev. Rul. 2023-5, page 503.

March 6, 2023

504

Bulletin No. 2023–10

Part III

Initial Guidance

Establishing Program to

Allocate Environmental

Justice Solar and Wind

Capacity Limitation Under

Section 48(e)

Notice 2023-17

SECTION 1. PURPOSE

This notice establishes the program un­

der § 48(e) of the Internal Revenue Code

(Code)1 to allocate amounts of environ­

mental justice solar and wind capacity

limitation (Capacity Limitation) to quali­

fied solar and wind facilities eligible for

the energy investment credit determined

under § 48 (Low-Income Communities

Bonus Credit Program). In addition, this

notice provides initial guidance regarding

the overall program design, the applica­

tion process, and additional criteria that

will be considered in determining which

applicants will receive an allocation of

Capacity Limitation in calendar year 2023

under the Low-Income Communities Bo­

nus Credit Program. The Department of

the Treasury (Treasury Department) and

the Internal Revenue Service (IRS) will

issue further guidance (forthcoming guid­

ance) outlining the specific application

procedures, additional criteria, applicable

definitions, and other information neces­

sary to submit an application to request an

allocation of Capacity Limitation for cal­

endar year 2023 under the Low-Income

Communities Bonus Credit Program.

After the 2023 allocation process be­

gins, the Treasury Department and IRS

will monitor and assess whether to im­

plement any modifications to the Low-In­

come Communities Bonus Credit Pro­

gram for calendar year 2024 allocations of

Capacity Limitation.

SECTION 2. BACKGROUND

.01 Overview. The amount of the en­

ergy investment credit determined under

1

§ 48(a) (§ 48 credit) for a taxable year is

generally calculated by multiplying the

basis of each energy property placed in

service during that taxable year by the

energy percentage (as defined in § 48(a)).

Section 13103 of Public Law 117-169,

136 Stat. 1818 (August 16, 2022), com­

monly known as the Inflation Reduction

Act of 2022 (IRA), amended § 48, in part,

to add new § 48(e) to potentially increase

the amount of the § 48 credit with respect

to eligible property that is part of a quali­

fied solar and wind facility.

.02 Eligible Property. The term eligible

property is defined in § 48(e)(3) to mean

energy property (including energy storage

technology described in § 48(a)(3)(A)(ix)

installed in connection with such energy

property) that (i) is part of a wind facility

described in § 45(d)(1) for which an elec­

tion to treat the facility as energy property

was made under § 48(a)(5) (wind facility),

or (ii) is solar energy property described

in § 48(a)(3)(A)(i) (solar energy property)

or qualified small wind energy property

described in § 48(a)(3)(A)(vi) (small wind

energy property).

.03 Qualified Solar and Wind Facility.

The term qualified solar and wind facility

is defined in § 48(e)(2) to mean any facili­

ty (i) that generates electricity solely from

a wind facility, solar energy property, or

small wind energy property; (ii) that has a

maximum net output of less than 5 mega­

watts (as measured in alternating current);

and (iii) that is described in at least one of

the following four categories described in

§ 48(e)(2)(A)(iii):

(1) Category 1: The facility is located

in a low-income community described in

section 3.01 of this notice.

(2) Category 2: The facility is located

on Indian land described in section 3.02

of this notice.

(3) Category 3: The facility is part of a

qualified low-income residential building

project described in section 3.03 of this

notice.

(4) Category 4: The facility is part of

a qualified low-income economic benefit

project described in section 3.04 of this

notice.

.04 Increase in Section 48 Credit. Sec­

tion 48(e) provides for an increase in the

energy percentage used to calculate the

amount of the § 48 credit (§ 48(e) In­

crease) in the case of qualified solar and

wind facilities that receive an allocation

of Capacity Limitation. Depending on

the category of the facility, the § 48(e)

Increase is either 10 percentage points

or 20 percentage points. Section 48(e)(1)

(A)(i) provides for a § 48(e) Increase of

10 percentage points for eligible property

that is part of a Category 1 facility or a

Category 2 facility that is not also a Cate­

gory 3 facility or Category 4 facility. See

the rules in section 3.01 and section 3.02

in this notice concerning facilities that

are described in multiple categories. Sec­

tion 48(e)(1)(A)(ii) provides for a § 48(e)

Increase of 20 percentage points for eli­

gible property that is part of a Category 3

facility or a Category 4 facility. Section 3

of this notice provides additional infor­

mation regarding the four categories for

qualified solar and wind facilities. Sec­

tion 48(e)(1)(B) provides that the § 48(e)

Increase for any taxable year for all prop­

erty that is part of a qualified solar and

wind facility cannot exceed the amount

that bears the same ratio to the amount

of the § 48 Increase as the Capacity Lim­

itation allocated to such facility bears to

the total megawatt nameplate capacity of

such facility, as measured in direct cur­

rent.

.05 Placed in Service Deadline. To be

eligible for the § 48(e) Increase, § 48(e)

(4)(E) requires that the property must be

placed in service within four years after

the date the applicant was notified of the

allocation of Capacity Limitation to the

facility of which such property is a part.

Any Capacity Limitation that is allocated

but expires because property is not placed

in service within four years is taken into

account as an excess, or increase in ex­

cess, under the carryover rules in § 48(e)

(4)(D). See section 2.07(2) of this notice.

.06 Placed in Service.

(1) In general. Eligible property is con­

sidered placed in service in the earlier of

the following taxable years:

Unless otherwise specified, all “section” or “§” references are to sections of the Code.

Bulletin No. 2023–10

505

March 6, 2023

(A) The taxable year in which, under

the taxpayer’s depreciation practice, the

period for depreciation with respect to

such eligible property begins; or

(B) The taxable year in which the eli­

gible property is placed in a condition or

state of readiness and availability for a

specifically assigned function, whether in

a trade or business or in the production of

income.

(2) Eligible property subject to § 1.484 election to treat lessee as purchaser.

Eligible property with respect to which

an election is made under § 1.48-4 of the

Income Tax Regulations (26 C.F.R. part

1) to treat the lessee as having purchased

such energy property is considered placed

in service by the lessor in the taxable year

in which possession is transferred to such

lessee.

.07 Establishment of Allocation Program.

(1) In general. Section 48(e)(4) directs

the Secretary of the Treasury or her del­

egate (Secretary) to establish a program,

within 180 days of enactment of the IRA,

to allocate amounts of Capacity Limita­

tion to qualified solar and wind facilities.

(2) Annual Capacity Limitation. Under

§ 48(e)(4)(C), the total annual Capaci­

ty Limitation is 1.8 gigawatts of direct

current capacity for each of the calendar

years 2023 and 2024. Under § 48(e)(4)

(D), if the annual Capacity Limitation for

any calendar year exceeds the aggregate

amount allocated for such year, the excess

is carried forward to the next year, but not

beyond calendar year 2024. Any excess

from calendar year 2024 may be carried

forward and applied to the Capacity Lim­

itation for calendar year 2025 under new

§ 48E(h)(4)(D)(ii).2

SECTION 3. FACILITY

CATEGORIES

.01 Category 1: Located in a Low-Income Community. Under § 48(e)(2)(A)

(iii)(I), the term low-income community is generally defined under § 45D(e)

(1), with certain modifications described

elsewhere in § 45D(e), as any population

census tract if the poverty rate for such

tract is at least 20 percent, or, in the case

of a tract not located within a metropol­

itan area, the median family income for

such tract does not exceed 80 percent of

statewide median family income, or in

the case of a tract located within a met­

ropolitan area, the median family income

for such tract does not exceed 80 percent

of the greater of statewide median family

income or the metropolitan area medi­

an family income. A qualified solar and

wind facility that is described in this sec­

tion 3.01 and also in section 3.03 or 3.04

of this notice is considered a Category 3

facility or Category 4 facility (as appli­

cable).

.02 Category 2: Located on Indian Land. Section 48(e)(2)(A)(iii)(I)

provides that Indian land is defined in

§ 2601(2) of the Energy Policy Act of

1992 (25 U.S.C. 3501(2)). A qualified

solar and wind facility that is described

in this section 3.02 and also in section

3.03 or 3.04 of this notice is considered a

Category 3 facility or Category 4 facility

(as applicable).

.03 Category 3: Qualified Low-Income

Residential Building Project.

(1) Section 48(e)(2)(B) provides that a

facility will be treated as part of a qualified low-income residential building project if such facility is installed on a resi­

dential rental building which participates

in an affordable housing program, and the

financial benefits of the electricity pro­

duced by such facility are allocated equi­

tably among the occupants of the dwelling

units of such building.

(2) An affordable housing program in­

cludes any of the following:

(A) A covered housing program (as

defined in § 41411(a) of the Violence

Against Women Act of 1994 (34 U.S.C.

12491(a)(3)).

(B) A housing assistance program ad­

ministered by the Department of Agricul­

ture under title V of the Housing Act of

1949.

(C) A housing program administered

by a tribally designated housing entity (as

defined in § 4(22) of the Native American

Housing Assistance and Self-Determina­

tion Act of 1996 (25 U.S.C. 4103(22)).

(D) Such other affordable housing pro­

grams as the Secretary may provide.

(3) For a qualified low-income resi­

dential building project, § 48(e)(2)(D)

provides that electricity acquired at a

below-market rate will be considered a

financial benefit. The forthcoming guid­

ance will further clarify the parameters of

financial benefit.

.04 Category 4: Qualified Low-Income

Economic Benefit Project.

(1) Section 48(e)(2)(C) provides that a

facility will be treated as part of a qualified

low-income economic benefit project if at

least 50 percent of the financial benefits of

the electricity produced by such facility

are provided to households with income

of less than 200 percent of the poverty

line (as defined in § 36B(d)(3)(A)) appli­

cable to a family of the size involved, or

less than 80 percent of area median gross

income (as determined under § 142(d)(2)

(B)).

(2) For a qualified low-income eco­

nomic benefit project, § 48(e)(2)(D)

provides that electricity acquired at a

below-market rate will be considered a

financial benefit. The forthcoming guid­

ance will further clarify the parameters of

financial benefit.

SECTION 4. DESIGN AND

IMPLEMENTATION OF

LOW-INCOME COMMUNITIES

BONUS CREDIT PROGRAM

.01 In general. Consistent with the stat­

utory references in § 48(e) to low-income

communities and environmental justice as

well as the statute’s four categories, the

allocation program’s broad goals are to in­

crease adoption of and access to renewable

energy facilities in low-income and other

communities with environmental justice

concerns; encourage new market partic­

ipants; and provide social and economic

benefits to individuals and communities

that have been historically overburdened

with pollution, adverse human health or

environmental effects, and marginalized

from economic opportunities.

.02 Facility Category Allocations.

For calendar year 2023, the total annu­

Section 13702(a) of the IRA also enacted § 48E(h), which generally provides for a program similar to the Low-Income Communities Bonus Credit Program for calendar years after 2024.

Section 48E(i) directs the Secretary to issue guidance regarding the implementation of § 48E not later than January 1, 2025.

2

March 6, 2023

506

Bulletin No. 2023–10

al Capacity Limitation of 1.8 gigawatts

of direct current capacity will be divid­

ed among the four categories described

in section 3. The allocation of Capacity

Category 1: Located in a Low-Income Community

Category 2: Located on Indian Land

Category 3: Qualified Low-Income Residential Building Project

Category 4: Qualified Low-Income Economic Benefit Project

See section 4.04 of this notice (relating to

allocations of excess Capacity Limitation

reserved for categories). As described in

section 2.07(2) of this notice, if the annu­

al Capacity Limitation for calendar year

2023 exceeds the aggregate amount allo­

cated for calendar year 2023, the excess

will be carried forward to calendar year

2024 pursuant to § 48(e)(4)(D).

.03 Additional Criteria. To further

the overall program goals, the program

will incorporate additional criteria in

determining how to allocate the Capac­

ity Limitation reserved for each facili­

ty category among eligible applicants.

These criteria may include a focus on

facilities that are (i) owned or developed

by community-based organizations and

mission-driven entities, (ii) have an im­

pact on encouraging new market partici­

pants, (iii) provide substantial benefits to

low-income communities and individuals

marginalized from economic opportu­

nities, and (iv) have a higher degree of

commercial readiness. The forthcoming

guidance will fully describe these addi­

tional criteria.

.04 Allocation Process. If selected ap­

plications for facilities with a collective

total megawatt nameplate capacity exceed

the Capacity Limitation reserved for each

category, then a lottery or other processes

may be used to allocate the Capacity Lim­

itation to applicants. In the event a facility

category has excess Capacity Limitation,

such excess may be reallocated between

the categories to maximize 2023 calendar

year allocations.

.05 Placed in Service Prior to Allocation Award. Facilities placed in service

prior to being awarded an allocation of

Capacity Limitation are not eligible to re­

ceive an allocation.

Bulletin No. 2023–10

.06 Eligible Applicant. Only the owner

of a facility may apply for an allocation

of Capacity Limitation. For each facility

owned by an applicant, the applicant may

apply for an allocation of Capacity Lim­

itation in only one category for calendar

year 2023. Applicants that do not receive

an allocation of Capacity Limitation will

be permitted to apply for future alloca­

tions after calendar year 2023. There will

be no waitlist created from calendar year

2023 applications that did not receive an

allocation of Capacity Limitation.

.07 Phased Approach. Applications

will be accepted in a phased approach

for calendar year 2023, during 60-day

application windows. First, the Treasury

Department and IRS anticipate that ap­

plications will be accepted for Category

3 facilities, as defined in section 3.03 of

this notice, and Category 4 facilities, as

defined in section 3.04 of this notice, in

the third calendar quarter of 2023. Next,

the Treasury Department and IRS antici­

pate that applications will be accepted for

Category 1 facilities, as defined in section

3.01 of this notice, and Category 2 facili­

ties, as defined in section 3.02 of this no­

tice, thereafter. Forthcoming guidance on

the application process and facility eligi­

bility for all categories will be provided.

.08 Program Administration. The De­

partment of Energy (DOE) will provide

administration services for the Low-In­

come Communities Bonus Credit Pro­

gram. DOE will review the applications

for statutory eligibility and additional

criteria as will be set out in forthcoming

guidance and will provide recommenda­

tions to the IRS regarding the selection of

applications for an allocation of Capaci­

ty Limitation. DOE will also perform the

lottery or other process for allocation, de­

507

Limitation reserved for each facility cate­

gory for calendar year 2023 is as follows:

700 megawatts

200 megawatts

200 megawatts

700 megawatts

scribed in section 4.04 of this notice, as

needed. Based on DOE’s recommendation

and the process for allocation, described

in section 4.04 of this notice, the IRS will

accept or reject the applicant’s request for

an allocation of Capacity Limitation and

notify the applicant of its decision. An ac­

ceptance notification will state the amount

of Capacity Limitation allocated to the

applicant. The amount of Capacity Lim­

itation allocated will not exceed the name­

plate capacity of the facility (as measured

in direct current) and will not be prorated.

As required by § 48(e)(4)(E), applicants

have four years from the date of the ac­

ceptance notification to place the property

in service.

.09 Effect of an Allocation. The alloca­

tion of an amount of Capacity Limitation

by the IRS under the Low-Income Com­

munities Bonus Credit Program is not a

determination that the facility will qualify

for the § 48(e) Increase or the § 48 cred­

it generally. This notice does not alter the

rules regarding the determination and el­

igibility to claim a § 48 credit, including

any § 48(e) Increase in energy percentage

attributable to the Low-Income Commu­

nities Bonus Credit Program.

SECTION 5. DRAFTING

INFORMATION

The principal author of this notice

is the Office of Associate Chief Coun­

sel (Passthroughs & Special Industries).

However, other personnel from the Trea­

sury Department and the IRS participated

in its development. For further informa­

tion regarding this notice, call the energy

security guidance contact number at (202)

317-5254 (not a toll-free number).

March 6, 2023

Initial Guidance

Establishing Qualifying

Advanced Energy Project

Credit Allocation Program

Under Section 48C(e)

Notice 2023-18

SECTION 1. PURPOSE

.01 This notice establishes the program

under § 48C(e)(1) of the Internal Reve­

nue Code (Code)1 to allocate $10 billion

of credits ($4 billion of which may be

allocated only to projects located in cer­

tain energy communities) for qualified in­

vestments in eligible qualifying advanced

energy projects (§ 48C(e) program). The

goal of the § 48C(e) program is to ex­

pand U.S. manufacturing capacity and

quality jobs for clean energy technologies

(including production and recycling), to

reduce greenhouse gas emissions in the

U.S. industrial sector, and to secure do­

mestic supply chains for critical materials

(including specified critical minerals) that

serve as inputs for clean energy technolo­

gy production.

.02 This notice and its appendices pro­

vide the initial program guidance for the

§ 48C(e) program. The Department of the

Treasury (Treasury Department) and the

Internal Revenue Service (IRS) intend to

issue a supplemental notice and appendi­

ces (additional § 48C(e) program guid­

ance) by May 31, 2023.

.03 The Treasury Department and the

IRS anticipate providing at least two

allocation rounds under the § 48C(e)

program. For the first allocation round

(Round 1) of the § 48C(e) program,

which will begin on May 31, 2023, the

Treasury Department and the IRS antic­

ipate allocating $4 billion of qualifying

advanced energy project credits (§ 48C

credits) with approximately $1.6 billion

in § 48C credits to be allocated to proj­

ects located in certain energy communi­

ties. Although the Treasury Department

and the IRS intend to allocate a total of

$10 billion of § 48C credits with not less

than $4 billion of § 48C credits to proj­

1

ects located in certain energy commu­

nities over the duration of the § 48C(e)

program, depending upon applications

received, the Treasury Department and

the IRS may not allocate exactly 40 per­

cent of the total § 48C credits allocated

in Round 1 to projects located in certain

energy communities. To be considered

for an allocation of § 48C credits in the

§ 48C(e) program for Round 1, taxpayers

must submit concept papers to the De­

partment of Energy (DOE) by July 31,

2023. Following submission of a concept

paper, DOE will encourage or discourage

taxpayers from submitting a joint appli­

cation for DOE recommendation and for

IRS § 48C(e) certification (§ 48C(e) ap­

plication).

SECTION 2. BACKGROUND

.01 For purposes of the § 38 gener­

al business credit, § 46 provides that the

amount of the investment credit for any

taxable year is the sum of the credits list­

ed in § 46. That list includes the § 48C

credit, which was originally enacted by

§ 1302(b) of the American Recovery and

Reinvestment Act of 2009 (2009 Act),

Public Law 111-5, Division B, Title I,

Subtitle D, 123 Stat. 115, 345 (February

17, 2009), to provide an allocated credit

for qualified investments in qualifying ad­

vanced energy projects.

.02 In addition to certain amendments

made by the Tax Increase Prevention Act

of 2014, Public Law 113-295, 128 Stat.

4010 (December 19, 2014), § 48C was

most recently amended by § 13501 of Pub­

lic Law 117-169, 136 Stat. 1818 (August

16, 2022), commonly known as the Infla­

tion Reduction Act of 2022 (IRA). Sec­

tion 13501(a) of the IRA added § 48C(e)

to the Code to extend the § 48C credit and

to provide an additional credit allocation

of $10 billion. Section 13501(b) of the

IRA modified the definition of a “quali­

fying advanced energy project” contained

in § 48C(c)(1)(A). Section 13501(c) and

(d) of the IRA made conforming amend­

ments to § 48C(c)(2)(A) and (f). The

amendments made by § 13501 of the IRA

became effective on January 1, 2023. See

§ 13501(e) of the IRA.

.03 Section 48C(a) provides that the

§ 48C credit for any taxable year is an

amount equal to a certain percentage of

the qualified investment (as defined in

§ 48C(b)) for such taxable year with re­

spect to any qualifying advanced energy

project (as defined in § 48C(c)(1) and

section 3.01 of this notice) of the taxpay­

er. The § 48C credit generally is allowed

in the taxable year in which the eligible

property (as defined in § 48C(c)(2) and

section 3.03 of this notice) is placed in

service (as defined in section 3.04 of this

notice). For purposes of § 48C credit al­

locations under the § 48C(e) program,

§ 48C(e)(4)(A) provides a base credit rate

of 6 percent of the qualified investment.

In the case of any project which satisfies

the requirements of § 48C(e)(5)(A) and

(6) (prevailing wage and apprenticeship

requirements), § 48C(e)(4)(B) provides

an alternative rate of 30 percent of the

qualified investment. See section 4 of this

notice.

.04 Section 48C(b)(1) provides that

the qualified investment for any taxable

year is the basis of eligible property that

is placed in service by the taxpayer during

such taxable year and is part of a qualify­

ing advanced energy project.

.05 Section 48C(b)(3) provides that

the amount which is treated as the quali­

fied investment for all taxable years with

respect to any qualified advanced energy

project must not exceed the amount des­

ignated by the Secretary as eligible for the

§ 48C credit.

.06 Section 48C(e)(1) directs the Secre­

tary of the Treasury or her delegate (Sec­

retary) to establish the § 48C(e) program

to consider and award certifications for

qualified investments eligible for § 48C

credits to qualifying advanced energy

project sponsors.

.07 Section 48C(e)(2) provides that the

total amount of § 48C credits which may

be allocated under the § 48C(e) program

may not exceed $10 billion, of which not

greater than $6 billion may be allocated to

qualified investments which are not locat­

ed within census tracts that-(1) Prior to August 16, 2022 (the date

of enactment of § 48C(e)), had no project

that received a certification and allocation

Unless otherwise specified, all “section” or “§” references are to sections of the Code.

March 6, 2023

508

Bulletin No. 2023–10

of credits under the § 48C(d) allocation

program established under the 2009 Act,

and

(2) Are described in § 45(b)(11)(B)(iii)

as one of the following:

(a) a census tract in which a coal mine

has closed after December 31, 1999;

(b) a census tract in which a coal-fired

electric generating unit has been retired

after December 31, 2009; or

(c) a census tract directly adjoining a

census tract described in section 2.07(2)

(a) or (b) of this notice.

.08 Section 48(C)(e)(3)(A) provides

that each applicant for certification must

submit an application at such time and

containing such information as the Secre­

tary may require.

.09 Section 48C(e)(3)(B) provides that

each applicant for certification has 2 years

from the date of acceptance by the Sec­

retary of the § 48C(e) application during

which to provide to the Secretary evidence

that the requirements of the certification

have been met.

.10 Section 48C(e)(3)(C) provides that

an applicant who receives a certification

has 2 years from the date of issuance of

the certification to place the project in ser­

vice and to notify the Secretary that such

project has been so placed in service. If

the project is not placed in service within

the 2-year period, then the certification is

no longer valid. If any certification is re­

voked under § 48C(e)(3), the total amount

of the credits that may be allocated under

§ 48C(e)(2) is increased by the amount of

§ 48C credits with respect to such revoked

certification.

.11 Section 48C(e)(3)(D) provides that

in the case of an applicant which receives

a certification, if the Secretary determines

that the project has been placed in service

at a location that is materially different

than the location specified in the § 48C(e)

application for such project, the certifica­

tion is no longer valid.

.12 The at-risk rules provided by § 49,

the credit recapture and other special rules

provided in § 50, and pursuant to § 48C(b)

(2), rules regarding qualified progress ex­

penditures (similar to the rules of § 46(c)

(4) and (d) (as in effect on the day before

the enactment of the Revenue Reconcili­

ation Act of 1990)) apply for purposes of

the § 48C credit.

Bulletin No. 2023–10

SECTION 3. DEFINITIONS

The following definitions apply solely

for purposes of the § 48C(e) program:

.01 Qualifying Advanced Energy Project. The term qualifying advanced energy

project means a project that meets the fol­

lowing requirements:

(1) the project:

(a) re-equips, expands or establishes an

industrial or a manufacturing facility (as

defined in sections 3.05 and 3.06 of this

notice) for the production or recycling of

specified advanced energy property (as

defined in section 3.02 of this notice) (see

Appendix A for more information regard­

ing these definitions);

(b) re-equips any industrial or manufac­

turing facility, with equipment designed to

reduce greenhouse gas emissions by at least

20 percent through the installation of—

(i) low- or zero-carbon process heat

systems;

(ii) carbon capture, transport, utiliza­

tion and storage systems;

(iii) energy efficiency and reduction in

waste from industrial processes; or

(iv) any other industrial technology

designed to reduce greenhouse gas emis­

sions, as determined by the Secretary (see

Appendix A for more information regard­

ing these definitions); or

(c) re-equips, expands or establishes an

industrial facility for the processing, refin­

ing or recycling of critical materials (as

defined in § 7002(a) of the Energy Act of

2020) (see Appendix A for more informa­

tion regarding these definitions);

(2) the Secretary has certified pursuant

to § 48C(e)(3) that part or all of the quali­

fied investment in the qualifying advanced

energy project is eligible for a § 48C cred­

it; and

(3) the project does not include any

portion of a project for the production of

any property that is used in the refining or

blending of any transportation fuels (other

than renewable fuels).

.02 Specified Advanced Energy Property. The term specified advanced energy

property means any of the following:

(1) property designed for use in the

production of energy from the sun, wa­

ter, wind, geothermal deposits (within the

meaning of § 613(e)(2)), or other renew­

able resources;

509

(2) fuel cells, microturbines, or energy

storage systems and components;

(3) electric grid modernization equip­

ment or components;

(4) property designed to capture, re­

move, use, or sequester carbon oxide

emissions;

(5) equipment designed to refine, elec­

trolyze, or blend any fuel, chemical, or

product which is renewable, or low-car­

bon and low-emission;

(6) property designed to produce ener­

gy conservation technologies (including

residential, commercial, and industrial ap­

plications);

(7) light-, medium-, or heavy-duty

electric or fuel cell vehicles, as well as

technologies, components, or materials

for such vehicles, and associated charging

or refueling infrastructure;

(8) hybrid vehicles with a gross vehi­

cle weight rating of not less than 14,000

pounds as well as technologies, compo­

nents, or materials for such vehicles; or

(9) other advanced energy property

designed to reduce greenhouse gas emis­

sions as may be determined by the Sec­

retary.

See Appendix A for more information

regarding these definitions.

.03 Eligible Property. The term eligible

property means any property that meets

the following requirements:

(1) the property is necessary for the pro­

duction or recycling of specified advanced

energy property described in § 48C(c)(1)

(A)(i) (and section 3.02 of this notice),

re-equipping an industrial or manufactur­

ing facility described in § 48C(c)(1)(A)(ii)

(and section 3.01(1)(b) of this notice), or

re-equipping, expanding, or establishing

an industrial facility described in § 48C(c)

(1)(A)(iii) (and section 3.01(1)(c) of this

notice).

(2) the property is:

(a) tangible personal property; or

(b) other tangible property (not includ­

ing a building or its structural compo­

nents) that is used as an integral part of the

qualifying advanced energy project.

(3) depreciation (or amortization in lieu

of depreciation) is allowable with respect

to the property.

.04 Placed In Service. (1) In general.

Eligible property (as defined in § 48C(c)

(2) and section 3.03 of this notice) is

March 6, 2023

placed in service in the earlier of the fol­

lowing taxable years:

(A) The taxable year in which, under

the taxpayer’s depreciation practice, the

period for depreciation with respect to

such eligible property begins; or

(B) The taxable year in which the eli­

gible property is placed in a condition or

state of readiness and availability for a

specifically assigned function, whether in

a trade or business or in the production of

income.

.05 Industrial Facility. The term industrial facility means a facility that produc­

es, processes, or refines materials or prod­

ucts from raw or manufactured inputs.

.06 Manufacturing Facilities. The term

manufacturing facility means a facility

that makes or processes raw materials into

finished products (or accomplishes any in­

termediate stage in that process).

.07 Recycling Facility. The term recycling facility means a facility that:

(1) reclaims, recovers, or otherwise

processes waste materials (including, but

not limited to, property and components

of property at end-of-service), the result of

which is a useful product or material for

use in the manufacture of a useful prod­

uct; or

(2) performs an activity or series of ac­

tivities in the processes described in sec­

tion 3.07(1) of this notice.

SECTION 4. PREVAILING

WAGE AND APPRENTICESHIP

REQUIREMENTS

.01 Prevailing Wage Requirement

(1) Pursuant to § 48C(e)(5)(A), to

meet the prevailing wage requirements,

a taxpayer must ensure that any laborers

and mechanics employed by the taxpay­

er or any contractor or subcontractor in

the re-equipping, expansion, or estab­

lishment of a manufacturing facility that

is part of a qualifying advanced energy

project are paid wages at rates not less

than the prevailing rates for construc­

tion, alteration, or repair of a similar

character in the locality in which such

project is located as most recently de­

termined by the Secretary of Labor. See

section 3 of Notice 2022-61, 87 F.R.

73580 (Nov. 30, 2022), for additional

information regarding the prevailing

wage requirements.

March 6, 2023

(2) In accordance with § 48C(e)(5)(B),

a taxpayer that fails to satisfy the prevail­

ing wage requirements for any laborer

or mechanic employed by the taxpayer

or any contractor or subcontractor in the

re-equipping, expansion, or establishment

of a manufacturing facility that is part of

a qualifying advanced energy project will

be deemed to have satisfied the prevailing

wage requirement if the taxpayer:

(a) makes a payment to any such labor­

er or mechanic employed by the taxpayer

or any contractor or subcontractor in the

re-equipping, expansion, or establishment

of a manufacturing facility in an amount

equal to the sum of the difference between

the amount of wages paid to such labor­

er or mechanic and the amount of wages

required to be paid to such laborer or me­

chanic (three times the sum of back wages

due in the case of intentional disregard),

plus interest on such difference at the un­

derpayment rate established under § 6621

(substituting “6 percentage points” for “3

percentage points” in § 6621(a)(2)) and

(b) makes a payment to the Secretary

of $5,000 ($10,000 in the case of inten­

tional disregard) multiplied by the number

of laborers and mechanics who were paid

wages below the prevailing wage for any

period during such year.

.02 Apprenticeship Requirements

(1) In accordance with § 48C(e)(6) and

rules similar to § 45(b)(8), to meet the

apprenticeship requirements, taxpayers

must ensure that not less than 10 percent,

12.5 percent, or 15 percent (depending

on the beginning of construction date)

of the total labor hours for the construc­

tion, alteration or repair work must be

performed by qualified apprentices. The

labor hours requirement is subject to the

apprentice-to-journey worker ratios of the

Department of Labor or applicable State

apprenticeship agency. In addition, each

taxpayer, contractor, or subcontractor who

employs 4 or more individuals to perform

construction, alteration or repair work

related to re-equipping, expanding, or es­

tablishing an industrial or manufacturing

facility must employ 1 or more qualified

apprentices to perform the work. See sec­

tion 4 of Notice 2022-61 for additional

information about the apprenticeship re­

quirements.

(2) A taxpayer will not be treated as

failing to satisfy the apprenticeship re­

510

quirements if the taxpayer satisfies either

of the following:

(a) The taxpayer pays a penalty to the

Secretary in the amount of $50 ($500 if

the failure is due to intentional disregard)

multiplied by the total labor hours for

which the taxpayer failed to meet the ap­

prenticeship requirements, or

(b) The taxpayer made a good faith

effort in accordance with section 4.01 of

Notice 2022-61.

.03 Credit Rate Conditioned Upon Prevailing Wage and Apprenticeship Requirements.

(1) A taxpayer that satisfies the prevail­

ing wage and apprenticeship requirements

may claim a credit that is equal to 30 per­

cent of the taxpayer’s qualified investment

for such taxable year with respect to any

qualified energy project.

(2) A taxpayer that fails to satisfy the

prevailing wage and apprenticeship re­

quirements generally may only claim a

credit equal to 6 percent of the taxpayer’s

qualified investment for such taxable with

respect to any qualified advanced energy

project. However, such a taxpayer may

claim a credit equal to 30 percent of the

taxpayer’s qualified investment for such

taxable year with respect to any qualified

advanced energy project if:

(a) In the event the taxpayer failed to

meet the prevailing wage requirements, it

pays the correction and penalty amounts

related to such failure to satisfy the pre­

vailing wage requirements as described in

section 4.01(2) of this notice; or

(b) In the event the taxpayer failed to

meet the apprenticeship requirements, it

pays the penalty amount related to such

failure to satisfy the apprenticeship re­

quirements or meets the good faith effort

exception described in section 4.02(2) of

this notice.

(3) See section 5.07 of this notice for

information regarding when an applicant

must declare whether it will meet the pre­

vailing wage and apprenticeship require­

ments for § 48C.

SECTION 5. SECTION 48C(e)

PROGRAM

.01 In General. The IRS will consider

a project under the § 48C(e) program only

if DOE provides a recommendation and

ranking for the project (DOE recommen­

Bulletin No. 2023–10

dation) to the IRS. DOE will provide a

recommendation and ranking only if it de­

termines that the project has a reasonable

expectation of commercial viability and

merits a recommendation based on the cri­

teria provided in the additional § 48C(e)

program guidance. See section 5.03(3) of

this notice for additional information re­

garding DOE recommendations.

.02 Program Timeline. Generally, the

§ 48C(e) program will proceed as follows:

(1) A taxpayer submits a concept paper

to DOE through the eXCHANGE por­

tal, an online application portal used by

DOE available at https://infrastructure-ex­

change.energy.gov/ (or any successor

interface) (eXCHANGE portal). See Ap­

pendix B for additional information.

(2) DOE reviews the concept paper

and sends the taxpayer a letter encour­

aging or discouraging the submission of

a § 48C(e) application. After receiving a

letter of encouragement or discourage­

ment from DOE, the taxpayer determines

whether to submit a § 48C(e) application.

All taxpayers who submit concept papers

are eligible to submit a § 48C(e) applica­

tion, regardless of DOE’s response to its

concept paper.

(3) Taxpayers submit § 48C(e) applica­

tions through the eXCHANGE portal. See

Appendix B for additional information.

(4) DOE reviews the § 48C(e) applica­

tions for compliance with eligibility and

other threshold requirements.

(5) If the § 48C(e) application complies

with all eligibility and threshold require­

ments, DOE conducts a technical review

of the application to form a DOE recom­

mendation.

(6) DOE provides a recommendation

to the IRS regarding the acceptance or re­

jection of each § 48C(e) application and a

ranking of the applications.

(7) The IRS makes a decision regard­

ing the acceptance or rejection of each

§ 48C(e) application based on DOE’s

recommendation and ranking and notifies

each taxpayer that submitted a § 48C(e)

application of the outcome by sending a

letter allocating § 48C credits in the case

of an acceptance (Allocation Letter) or

letter denying the requested allocation in

the case of a rejection (Denial Letter). In

the case of an acceptance, the amount of

§ 48C credits allocated to a project will

also be based on the taxpayer’s qualified

Bulletin No. 2023–10

investment in the qualifying advanced

energy project and whether the taxpayer

intends to apply for and receive an allo­

cation of § 48C credits calculated at the

30 percent credit rate (see section 5.07

of this notice). A taxpayer that receives a

Denial Letter may be eligible to request a

debriefing in accordance with the criteria

set forth in section 5.03(9) of this notice.

(8) Within 2 years of receiving an Allo­

cation Letter, a taxpayer must notify DOE

that the certification requirements have

been met by submitting this information

through the eXCHANGE portal. See Ap­

pendix B for additional information.

(9) DOE notifies the taxpayer and the

IRS that it has received the taxpayer’s

notification that the certification require­

ments have been met.

(10) The IRS certifies the project by

sending a letter (Certification Letter).

(11) Within 2 years of receiving the

Certification Letter, the taxpayer notifies

DOE that the project has been placed in

service by submitting such information

through the eXCHANGE portal. See Ap­

pendix B for additional information. A

taxpayer that does not notify DOE that it

has placed the project in service within the

required 2-year period will forfeit § 48C

credits allocated to the taxpayer for such

project.

(12) DOE notifies the taxpayer and the

IRS that it has received the taxpayer’s no­

tification that the project has been placed

in service or notification that the taxpayer

will not place the project in service within

the required 2-year period.

(13) If the taxpayer has placed the proj­

ect in service within the required 2-year

period and has notified DOE, the taxpay­

er claims the § 48C credit on its income

tax return for the taxable year in which

the project was placed in service. If the

taxpayer has not placed the project in ser­

vice within the required 2-year period or

has not notified DOE that the project has

been placed in service within the required

2-year period, then the § 48C credit allo­

cated to the taxpayer’s project is forfeited.

.03 Program Specifications.

(1) For each project that a taxpayer

sponsors, the taxpayer must submit the

following to request a credit allocation:

(a) A concept paper for DOE consider­

ation;

(b) A § 48C(e) application.

511

(2) A taxpayer must submit a concept

paper as specified in section 6 of this no­

tice through the eXCHANGE portal. See

Appendix B for additional information.

This portal will allow applicants to se­

curely input their data and information for

review by DOE and the IRS.

A taxpayer that receives a letter of dis­

couragement in response to a submitted

concept paper may still submit a § 48C(e)

application in accordance with the addi­

tional § 48C(e) program guidance. Re­

ceiving such a letter does not disqualify a

taxpayer from submitting a § 48C(e) ap­

plication but represents DOE’s feedback

that the project is unlikely to receive a

recommendation based on the information

provided in the concept paper.

(3) DOE’s recommendation provid­

ed to the IRS will include a ranking of

projects in descending order (that is, first,

second, third, etc.). See section 5.06 of

this notice for additional information

regarding DOE recommendations with

respect to projects located in § 48C(e)

Energy Communities Census Tracts (as

defined in section 5.06 of this notice).

The amount of credit allocated to a proj­

ect reduces the amount of credit available

to the remaining pool of recommended

projects. The IRS will make allocations

to successive projects according to DOE

recommendations and ranking until the

amount available for allocation is ex­

hausted. The amount of § 48C credits

allocated to a project will be based on

the taxpayer’s qualified investment in the

qualifying advanced energy project and

whether the taxpayer intends to apply for

and receive an allocation of § 48C cred­

its calculated at the 30 percent credit rate

(see section 5.07 of this notice). DOE

will recommend and rank projects only

to the extent necessary to exhaust the

amount available for allocation in each

§ 48C(e) program allocation round.

(4) For Round 1 of the § 48C(e) pro­

gram, the application period begins on

May 31, 2023, and ends on the date by

which § 48C(e) applications must be sub­

mitted as specified in additional § 48C(e)

program guidance (end of the application

period). Any § 48C(e) application submit­

ted through the eXCHANGE portal after

May 31, 2023, and on or before the date

that ends the application period will be

deemed to be submitted by the taxpayer

March 6, 2023

on the date that ends the application pe­

riod.

(5) For Round 1 of the § 48C(e) pro­

gram, a concept paper for DOE consider­

ation must be submitted by July 31, 2023.

The § 48C(e) application (as defined in

section 5.02(3) of this notice) must be sub­

mitted by the date specified in additional

§ 48C(e) program guidance. If a project

meets the preliminary compliance review

criteria (as specified in section 6.01 of this

notice), DOE will determine the merits of

the project and (for projects determined to

be meritorious) provide DOE recommen­

dation to the IRS

(6) Each applicant will receive an

electronically generated confirmation of

receipt upon submission of (a) the con­

cept paper and (b) the § 48C(e) applica­

tion. The timeliness of submission of the

§ 48C(e) application will be determined

by the submittal date and time shown on

the confirmation of receipt.

(7) For Round 1 of the § 48C(e) pro­

gram, the IRS will send each applicant an

Allocation Letter in the case of an accep­

tance or a Denial Letter in the case of a

rejection and will also notify DOE.

(8) If the taxpayer’s § 48C(e) applica­

tion is accepted, the IRS will determine the

amount of the § 48C credit allocated to the

project and the Allocation Letter will state

the amount of the credit allocated to the

project. The date of the Allocation Letter

will be treated as the date of acceptance by

the Secretary of the taxpayer’s § 48C(e)

application for purposes of establishing

the time to meet criteria for certification

as required by § 48C(e)(3)(B).

(9) Upon request, DOE will offer a de­

briefing to an applicant that submitted a

§ 48C(e) application (after submitting a

concept paper and being encouraged to

submit such § 48C(e) application) and

subsequently, was not allocated a cred­

it in Round 1 of the § 48C(e) program.

Debriefings will not be available to ap­

plicants that receive a letter of discour­

agement. Debriefings will be held by

DOE after the application period ends.

Requests for a debriefing must be re­

ceived by DOE no later than 30 business

days from the date of the Denial Letter

issued to the applicant. The sole purpose

of the debriefing is to provide DOE’s im­

pression of the strengths and weaknesses

of the rejected § 48C(e) application to

March 6, 2023

enable applicants to improve § 48C(e)

applications for future rounds of the

§ 48C(e) program or § 48C credit alloca­

tion programs.

(10) The Allocation Letter applies only

to the taxpayer who requested it. Any suc­

cessor in interest may request that the IRS,

by letter, transfer the credit allocation for

the project to the successor in interest.

The due date for making this request with

the IRS is no later than 30 days prior to

the due date (including extensions) of the

successor in interest’s Federal income tax

return for the taxable year in which the

transfer occurs.

The successor’s letter must be signed

by a person who meets the requirements

of section 7.02(2) of this notice. The suc­

cessor’s letter should provide:

(a) the name of the transferor and its

TIN;

(b)the name and TIN of the successor’s

parent (if any) if the successor files a re­

turn as a member of a consolidated group;

(c) DOE control number, and project

name and location;

(d) the successor’s tax name and its

TIN;

(e) the successor’s contact telephone

number; and

(f) copy of binding contract of the

transfer;

(g) a statement that there is no signifi­

cant change from the application informa­

tion provided by the transferor, including

that the project has not been placed in

service at a location which is materially

different than the location specified in the

application for such project.

The successor’s letter must include a

signed attestation using the language from

section 7.02(1) of this notice (replacing

“submission” with “letter”), be signed by

a person who meets the requirements of

section 7.02(2) of this notice, and should

include the name, title, and contact infor­

mation (address, phone number, fax num­

ber (if available), and email address) of

the signer.

The successor in interest must submit

the letter through the eXCHANGE portal.

The IRS will review the taxpayer’s re­

quest and determine whether to transfer

the project’s allocation to the successor

in interest and will notify the successor in

interest by letter of its decision. If the proj­

ect’s credit allocation is not transferred to

512

the successor in interest, the following

rules apply:

(a) In the case of an interest acquired at

or before the time the qualifying advanced

energy project is placed in service, any

credit allocated to the project will be fully

forfeited (and rules similar to the recap­

ture rules of § 50(a) apply with respect to

qualified progress expenditures); and

(b) In the case of an interest acquired

after the qualifying advanced energy proj­

ect is placed in service, the project ceases

to be investment credit property and the

recapture rules of § 50(a) (and similar

rules with respect to qualified progress ex­

penditures) apply.

(11) The additional § 48C(e) program

guidance will provide further details of

the information required to be submitted

to DOE in an application for DOE rec­

ommendation. The additional § 48C(e)

program guidance will also provide addi­

tional details regarding the process for ap­

plying for DOE recommendation and the

instructions for filing concept papers and

applications for DOE recommendation.

.04 Limitation on Qualified Investment. A taxpayer’s qualified investment

in a qualified advanced energy property is

limited to the basis of eligible property (as

defined in § 48C(c)(2) and section 3.03 of

this notice).

.05 Denial of Double Benefit.

(1) In general. Section 48C(f) provides

that a credit is not allowed under § 48C for

any qualified investment for which a cred­

it is allowed under §§ 48, 48A, 48B, 48E,

45Q, or 45V. If the IRS determines a credit

has been claimed for that same investment

under §§ 48, 48A, 48B, 48E, 45Q, or 45V,

the IRS will not allocate the § 48C credit

and any previously sent Allocation Letter

is void.”

(2) Coordination with § 45X credit.

Additionally, property is not an “eligible

component” for purposes of the credit un­

der § 45X (§ 45X credit) if it is produced

at a facility and the basis of any proper­

ty included in such facility is taken into

account for purposes of § 48C after Au­

gust 16, 2022. See § 45X(c)(1)(B). For

purposes of § 48C, a facility includes all

eligible property included in a qualify­

ing advanced energy project for which a

taxpayer receives an allocation of § 48C

credits and claims such credits after Au­

gust 16, 2022. Guidance regarding wheth­

Bulletin No. 2023–10

er property has been produced at a facility

the basis of which has been taken into ac­

count for purposes of § 48C will be pro­

vided in additional guidance regarding the

§ 45X credit.

(3) Required taxpayer certification. A

taxpayer must certify under penalties of

perjury that the taxpayer did not claim a

credit for that same investment under any

of §§ 45X, 48, 48A, 48B, 48E, 45Q, or

45V.

“Under penalties of perjury, I declare

that I have examined the information con­

tained in this affirmative statement and

the documents that substantiate this affir­

mative statement, and to the best of my

knowledge and belief, it is true, correct,

and complete.”

Additionally, the person signing the

penalty of perjury statement must also

certify the following:

“I further declare that I have authori­

ty to sign this document on behalf of the

taxpayer.”

A taxpayer must provide this certifica­

tion statement with (1) its § 48C(e) appli­

cation and (2) at the time it notifies DOE

that the project has been placed in service.

.06 Section 48C(e) Energy Communities Census Tracts. Section 48C(e)(2)

limits the total amount of § 48C credits

that the Secretary may allocate under the

§ 48C(e) program to $10 billion. Of that

amount, the Secretary must allocate at

least $4 billion of § 48C credits to projects

located in certain energy communities (as

described in § 45(b)(11)(B)(iii)) that did

not have a project that received a certifi­

cation and allocation of credits under the

§ 48C(e) allocation program (§ 48C(e)

Energy Communities Census Tracts). Ac­

cordingly, as part of DOE’s recommenda­

tions, DOE will determine which projects

are in § 48C(e) Energy Communities Cen­

sus Tracts and are therefore eligible for

an allocation of the $4 billion of § 48C

credits that are available only for projects

located in those census tracts. Because of

the limitation in § 48C(e)(2) on alloca­

tions with respect to projects that are not

in § 48C(e) Energy Communities Census

Tracts, whether a project is in a § 48C(e)

Energy Communities Census Tract may

impact DOE’s recommendation with re­

spect to a project. An applicant will be

able to determine whether its project is

located in a § 48C(e) Energy Communi­

Bulletin No. 2023–10

ties Census Tract using the mapping tool

that will be referenced in the additional

§ 48C(e) program guidance. The determi­

nation of whether a project is located in

a § 48C(e) Energy Communities Census

Tract will be made at the time that DOE

provides recommendations to the IRS and

will not be redetermined.

.07 Certification for Prevailing Wage

and Apprenticeship Requirements. As part

of a § 48C(e) application (as described in

section 6 of this notice), an applicant who

intends to apply for and receive an allo­

cation of § 48C credits calculated at the

30 percent credit rate must confirm that it

intends to satisfy the prevailing wage and

apprenticeship requirements described

in section 4 of this notice (Initial PWA

Confirmation). When the taxpayer noti­

fies DOE that it has placed the project in

service (pursuant to section 5.09 of this

notice), such taxpayer must also confirm

that it satisfied the requirements in section

4 of this notice (Final PWA Confirmation).

If a taxpayer does not provide an Initial

and Final PWA Confirmation at the times

described in this paragraph, such taxpayer

will be required to claim the § 48C cred­

it at the 6 percent credit rate and the re­

mainder of § 48C credits allocated to such

project, if any, will be forfeited and avail­

able for reallocation in a future § 48C(e)

program allocation round. Nothing in this

paragraph prevents the IRS from deter­

mining during an examination that a tax­

payer did not satisfy the requirements in

section 4 of this notice.

.08 IRS Issuance of Certification. A

taxpayer whose application is accepted

and who received an Allocation Letter

from the IRS pursuant to section 5.02(8)

of this notice must obtain a Certification

Letter pursuant to section 7 of this notice

to be eligible to claim the § 48C credit

specified in its Allocation Letter.

.09 Notification that Project is Placed

In Service.

(1) A taxpayer has 2 years from the date

of the Certification Letter (as described in

section 5.08 and section 7 of this notice)

to place the project in service. See section

3.04 of this notice for the definition of

placed in service. A taxpayer must notify

DOE when the project is placed in service

by submitting such notification through

the eXCHANGE portal. DOE will accept

a taxpayer’s notification that the project

513

was placed in service and send an ac­

knowledgement letter.

(2) If a taxpayer fails to place a project

in service within 2 years from the date of

the Certification Letter, a taxpayer must

promptly notify DOE and the IRS within

60 days of the date that is 2 years from

the date of the Certification Letter by sub­

mitting such notification through the eX­

CHANGE portal. Under § 48C(e)(3)(C),

any certification is void if the project is

not placed in service within 2 years from

the date of the Certification Letter.

SECTION 6. CONCEPT PAPERS

AND § 48C(e) APPLICATIONS

.01 In General. A taxpayer must sub­

mit for each project for which it seeks a

§ 48C allocation for Round 1 (1) by July

31, 2023, a concept paper for DOE con­

sideration and (2) by the date specified in

the additional § 48C(e) program guidance,

the § 48C(e) application. If an application

for DOE recommendation does not (1)

propose an eligible project or (2) include

all of the information required in this no­

tice and the additional § 48C(e) program

guidance (referred to herein as compliance review criteria), DOE may decline

to consider the application, or DOE may

request an applicant resubmit its applica­

tion with the missing information. If DOE

does not provide a recommendation for

the application, the IRS will not consider

§ 48C(e) application.

.02 Information Required in the § 48C

Application. By submitting an application

through the eXCHANGE portal, an ap­

plicant is submitting a joint application

for DOE recommendation and an appli­

cation for § 48C(e) certification. The eX­

CHANGE portal will prompt an applicant

to enter necessary information and will

provide corresponding instructions re­

garding the requirements for the § 48C(e)

application. This information will include:

(1) The name, address, federal employ­

er identification number, and unique enti­

ty identifier number of the taxpayer (more

information on unique entity identifier

numbers at https://www.gsa.gov/aboutus/organization/federal-acquisition-ser­

vice/technology-transformation-services/

office-of-systems-management/integrat­

ed-award-environment-iae/iae-systems-in­

formation-kit/unique-entity-id-is-here?_

March 6, 2023

ga=2.5445299.1413902251.16759764442019528746.1671035291). If the taxpayer

is a member of an affiliated group filing

consolidated returns, the taxpayer must

also provide the name, address, and TIN

of the common parent of the group.

(2) The name, telephone number, and

email address of a contact person.

(3) The census tract where the taxpayer

will locate the project.

(4) Whether the taxpayer will satisfy

the prevailing wage and apprenticeship

requirements and seeks a credit allocation

in an amount that is 30 percent of the qual­

ified investment. If the taxpayer intends to

comply with the prevailing wage and ap­

prenticeship requirement, the application

should include the Initial PWA Confirma­

tion. See section 5.07 of this notice.

(5) The information requested in Ap­

pendix B of this notice and additional

information specified in the additional

§ 48C(e) program guidance.

SECTION 7. ISSUANCE OF

CERTIFICATION

.01 In General. Section 48C(e)(3)(B)

provides that a taxpayer has 2 years from

the date of acceptance by the Secretary of

the § 48C(e) application during which to

provide evidence that the requirements of

the certification have been met in accor­

dance with section 7.02 of this notice. If

such evidence is not timely received, the

allocated § 48C credits will be forfeited.

Section 48C(e)(3)(C) provides that a tax­

payer that receives a certification has an

additional 2-year period beginning from

the date of issuance of the certification to

place the project in service and to notify

the Secretary that such project has been

placed in service. If such project is not

placed in service by that time period, then

the certification is no longer valid.

.02 Satisfaction of Requirements for

Certification. A project is eligible for cer­

tification only if the taxpayer has received

all permits from federal, state, tribal, and

local governmental bodies for construc­

tion of the project at the planned location,

including environmental authorization or

reviews necessary to commence construc­

tion of the project. The Secretary may

conduct additional allocation rounds for

applications for certification if the Secre­

tary determines that: (1) there is an insuf­

March 6, 2023

ficient quantity of qualifying applications

for certification pending at the time of

the review, or (2) any certification made

pursuant to § 48C(e)(2) has been revoked

pursuant to § 48C(e)(2)(B) because the

project subject to the certification has

been delayed as a result of third-party op­

position or litigation.

The taxpayer must submit to DOE

through the eXCHANGE portal evidence

establishing that it has met all require­

ments necessary to commence construc­

tion of the project.

(1) The documentation establishing

that the certification requirements of sec­

tion 7.01 of this notice are satisfied must

be accompanied by a letter that includes

the following written declaration: “I de­

clare that I am authorized to legally bind

[name of taxpayer]. Under penalties of

perjury, I declare that I have examined this

submission, including any accompanying

documents, and, to the best of my knowl­

edge and belief, all of the facts contained

herein are true, correct, and complete.”

(2) The taxpayer’s submission (the let­

ter including the perjury declaration and

documentation) must be signed and dated

by the taxpayer. The person signing for

the taxpayer must have personal knowl­

edge of the facts. Further, the submission

must be signed by a person authorized

under state law to bind the taxpayer, such

as an officer on behalf of a corporation, a

general partner of a state law partnership,

a member-manager on behalf of a limited

liability company, a trustee on behalf of a

trust, or the proprietor in the case of a sole

proprietorship. If the taxpayer is a mem­

ber of an affiliated group filing consoli­

dated returns, the submission also must be

signed by a duly authorized officer of the

common parent of the group.

.03 DOE Notification. Upon receipt of

the evidence described in section 7.02 of

this notice that the taxpayer has satisfied

the requirements for certification, DOE

will notify the IRS and will send an ac­

knowledgment to the taxpayer.

.04 IRS Action on Certification. After

receiving the notification from DOE de­

scribed in section 7.03 of this notice, the

IRS will notify the taxpayer, by letter, of

the IRS’s decision regarding certification.

The date of the Certification Letter is the

date of issuance of the certification for

purposes of § 48C(e)(3)(C).

514

SECTION 8. OTHER

REQUIREMENTS

.01 Significant Change in Plans. The

taxpayer must inform DOE and the IRS if

the plans for the project change in any sig­

nificant respect from the plans set forth in

the concept paper and the § 48C(e) appli­

cation. The additional § 48C(e) program

guidance will provide the procedures for

notifying DOE and the IRS. A significant

change is any change that a reasonable

person would conclude might have in­

fluenced DOE in recommending or rank­

ing the project or the IRS in issuing the

Allocation Letter had the person known

about the change when considering the

§ 48C(e) application. Moving the project

to a census tract different than the tract

stated in the concept paper and § 48C(e)

application is a significant change. Failure

to satisfy the prevailing wage and appren­

ticeship requirements is not a significant

change. See section 4.03 of this notice.

Any significant change to the plans set

forth in the § 48C(e) application will have

the following effects:

(1) If the IRS is informed of the change

after the date on which the final appli­

cations for DOE recommendation were

due for Round 1 of the § 48C(e) program

under section 5.02(3) of this notice and

before the IRS sends the Allocation or

Denial Letter, see section 5.02(7) of this

notice, the IRS and DOE will not consider

the project during Round 1 of the § 48C(e)

program; and

(2) If the IRS is informed of the change

after the Allocation Letter is sent to the

taxpayer, any allocation or certification

based on that acceptance is void.

.02 Effect of an Acceptance, Allocation, or Certification. An acceptance, allo­

cation, or certification under this notice is

not a determination that a project is eligi­

ble for the § 48C credit or that any prop­

erty that is part of the project is eligible

property under § 48C(c)(2). The IRS may,

upon examination (and after any appro­

priate consultation with DOE), determine

that the project does not qualify for the

§ 48C credit or that the property is not el­

igible property for purposes of this credit.

.03 Reduction or Forfeiture of Allocated Credits. The § 48C credits allocated un­

der section 5 of this notice may be reduced

or forfeited in certain situations. A taxpay­

Bulletin No. 2023–10

er must notify the IRS of the amount of

any reduction or forfeiture as required

by this notice through the eXCHANGE

portal. The amount of any reduction or

forfeiture of the allocated credits will be

returned and included in the aggregate

credit remaining in the § 48C(e) program

and under the procedures prescribed pur­

suant to section 9.02 of this notice

SECTION 9. FUTURE ALLOCATION

ROUNDS

.01 Future Allocation Rounds. After

Round 1 of the § 48C(e) program, the

IRS will conduct one or more additional

allocation rounds for the § 48C(e) pro­

gram. Guidance issued subsequent to the

additional § 48C(e) program guidance

(subsequent § 48C(e) program guidance)

will prescribe the procedures applicable

to future allocation rounds of the § 48C(e)

program.

.02 Review and Redistribution of Credits. Under § 48C(e), credits available un­

der § 48C(e)(2) may be reallocated if any

certification made pursuant to § 48C(e)(3)

has been revoked pursuant to § 48C(e)(3)

(C). If credits under § 48C(e) are available

for reallocation, the IRS may conduct an

additional allocation program. Subsequent

§ 48C(e) program guidance will prescribe

the procedures applicable to any addition­

al program.

SECTION 10. QUALIFIED

PROGRESS EXPENDITURES

.01 Section 48C(b)(2) provides that

rules similar to the rules of § 46(c)(4)

and (d) (as in effect on the day before

the enactment of the Revenue Reconcili­

ation Act of 1990) apply for purposes of

§ 48C. Former § 46(c)(4) and (d) provided

the rules for claiming the investment tax

credit on qualified progress expenditures

(as defined in former § 46(d)(3)) made

by a taxpayer during the taxable year for

the construction of progress expenditure

property (as defined in former § 46(d)(2)).

.02 In the case of self-constructed

property (as defined in former § 46(d)

(5)(A)), former § 46(d)(3)(A) defined

qualified progress expenditures to mean

the amount that is properly chargeable

(during the taxable year) to the capital ac­

count with respect to that property. With

Bulletin No. 2023–10

respect to a qualifying advanced energy

project that is self-constructed property,

amounts paid or incurred are chargeable

to the capital account at the time and to

the extent they are properly includible

in computing basis under the taxpayer’s

method of accounting (for example, af­

ter applying the requirements of § 461,

including the economic performance re­

quirement of § 461(h)).

.03 To claim the § 48C credit with

respect to the qualified progress expen­

ditures paid or incurred by a taxpayer

during the taxable year for construction of

a qualifying advanced energy project, the

taxpayer must make an election (Qualified

Progress Expenditures Election) under

the rules set forth in § 1.46-5(o) of the In­

come Tax Regulations (26 C.F.R. part 1).

A taxpayer may not make the Qualified

Progress Expenditures Election for a qual­

ifying advanced energy project until the

taxpayer has received a Certification Let­

ter for the project under section 5.02(10)

of this notice.

.04 If a taxpayer makes a Qualified

Progress Expenditures Election pursuant

to section 10.03 of this notice, rules sim­

ilar to the recapture rules in § 50(a)(2)

(A) through (D) apply. In addition to the

cessation events listed in § 50(a)(2)(A),

examples of other events that will cause

the project to cease being a qualifying ad­

vanced energy project are:

(1) Failure to place the project in ser­

vice within 2 years from the date of the

Certification Letter; or

(2) A significant change to the plans

for the project as set forth in the § 48C(e)

application if, under section 8.01 of this

notice, the allocation is void as a result of

the change.

SECTION 11. DISCLOSURE OF

INFORMATION

Section 48C(e)(7) provides that upon

making a certification under § 48C(e),

the Secretary is required to disclose pub­

licly the identity of the applicant and the

amount of the credit certified with respect

to such applicant. Accordingly, the IRS

will publish the results of Round 1 of the

§ 48C(e) program and will disclose the

identity of the taxpayer and the amount of

the § 48C credits allocated to the taxpayer

with respect to projects that have been al­

515

located a § 48C credit and have received

a certification.

SECTION 12. EFFECTIVE DATE

This notice is effective on February 13,

2023.

SECTION 13 PAPERWORK

REDUCTION ACT

The collection of information con­

tained in this notice has been submitted

to the Office of Management and Budget

(OMB) in accordance with the Paperwork

Reduction Act (44 U.S.C. § 3507) under

control number 1545-2151 and approval

is pending. An agency may not conduct

or sponsor, and a person is not required to

respond to, a collection of information un­

less the collection of information displays

a valid OMB control number.

The collections of information in this

notice are in sections 5, 6, 7, 8 and Appen­

dix B of this notice. This information is

required to obtain an allocation of § 48C

credits. The IRS will use this information

to verify that the taxpayer is eligible for

the § 48C credits. The collection of infor­

mation is required to obtain a benefit. The

likely respondents are business or other

for-profit institutions.

The estimated total annual reporting

burden is 275,000 hours.

The estimated annual burden per re­

spondent varies from 70 to 150 hours, de­

pending on individual circumstances, with

an estimated average of 110 hours. The es­

timated number of respondents is between

2000 to 3000.

The estimated annual frequency of re­

sponses is on occasion.

Books or records relating to a collec­

tion of information must be retained as

long as their contents may become mate­

rial in the administration of any internal

revenue law. Generally, tax returns and

return information are confidential, as re­

quired by 26 U.S.C. § 6103.

SECTION 14. DRAFTING

INFORMATION

The principal author of this notice is

John M. Deininger of the Office of As­

sociate Chief Counsel (Passthroughs &

Special Industries). For further infor­

March 6, 2023

mation regarding this notice contact Mr.

Deininger on (202) 317-6853 (not a tollfree call). Any questions or comments

regarding the non-tax aspects of this no­

tice can be submitted to the Department

of Energy at 48CQuestions@hq.doe.gov.

DOE may post questions and answers

March 6, 2023

related to this notice on Infrastructure

eXCHANGE at https://infrastructure-ex­

change.energy.gov (select 48C from the

list of options to view questions and an­

swers specific to notice). Any questions

or comments received under this notice

are subject to public release pursuant to

516

the Freedom of Information Act. DOE

is under no obligation to respond to, or

acknowledge receipt of, any questions

or comments submitted under this no­

tice and any responses provided do not

constitute legal advice provided by either

DOE or the IRS.

Bulletin No. 2023–10

APPENDIX A

Qualifying Advanced Energy Projects

For the purposes of determining eligibility for the § 48C tax credit, a qualifying advanced energy project means:

1. Clean Energy Manufacturing and Recycling Projects

A qualifying advanced energy project in this category re-equips, expands, or establishes an industrial or manufacturing facility for

the production or recycling of:

a. Property designed to be used to produce energy from the sun, water, wind, geothermal deposits (within the meaning of 26 U.S.C.

§ 613(e)(2)), or other renewable resources.

(i) Examples of eligible property include solar panels and their specialized support structures; wind turbines, towers, floating offshore platforms, and related

equipment; power electronics designed for use with eligible solar or wind property; equipment to concentrate sunlight to generate heat for industrial processes or to

convert it to electricity; geothermal turbines and heat pumps; hydropower turbines; and other products directly used to generate electrical and/or thermal energy from

renewable resources, as well as the specialized components, subcomponents, and materials incorporated into any such eligible property, including equipment for

sensing communication, and control.

(ii) Examples of ineligible property include equipment for applications other than the conversion of energy from renewable resources for delivering electricity,

building heat, or industrial process heat such as a gas turbine generator set which burns natural gas, or building that houses a boiler to heat water from fossil fuel.

b. Fuel cells, microturbines, or energy storage systems and components.

(i) Examples of eligible property include stationary batteries; stationary hydrogen fuel cells; hydrogen storage vessels; microturbines for combined heat and pow­

er systems; pumps and turbines for pumped hydropower storage systems; and the specialized components of any such equipment, including equipment for sensing

communication, and control.

(ii) Examples of ineligible property include heavy gas turbines. For electric vehicle batteries and fuel cells for vehicles see the “light-, medium-, or heavy-duty

electric or fuel cell vehicles” project class.

c. Electric grid modernization equipment or components.

(i) Examples of eligible property include grid equipment for electricity delivery; power flow, control, and conversion, such as transformers, power electronics,

advanced cables and conductors, advanced meters, breakers, switchgears, composite poles, converters, MVDC and HVDC lines, grid enhancing technologies, and

electrical steel or alloys used in transformer cores. Examples of eligible property also include the specialized components of any such grid modernization equipment,

including components for sensing communication, and control.

(ii) Electric vehicle supply equipment qualifies under the “light-, medium-, or heavy-duty electric or fuel cell vehicles” project class. Storage technologies for grid

applications qualify under the “fuel cells, microturbines, or energy storage systems and components” project class.

d. Property designed to capture, transport, remove, use, or sequester carbon oxide emissions.

(i) Examples of eligible property include carbon capture equipment necessary to compress, treat, process, liquefy, pump or perform some other physical action to

capture carbon oxides, including solvents; membranes; sorbents; chemical processing equipment; compressors; monitoring equipment; and injection equipment; and

well components such as packers, casing strings, steel tubulars, well head, valves, and sensors suitable for use in Underground Injection Control (UIC) Class VI wells.

Eligible property also includes transportation equipment, as in a system of gathering and distribution pipelines, including pipelines that collect carbon oxide captured

from an industrial facility or multiple facilities for the purpose of transporting that carbon oxide.

(ii) Examples of ineligible property include scrubbers for conventional air pollutants (except those that are required to remove pollutants upstream of carbon

capture equipment for technical performance reasons); energy generation equipment, (except as related to energy recovery at carbon capture systems); and refining

equipment.

e. Equipment designed to refine, electrolyze, or blend any fuel, chemical, or product which is renewable, or low-carbon and lowemission. For the purposes of Round 1 of the § 48C(e) program, such renewable, and low-carbon, low-emission fuels, chemicals,

and products include:

(i) Renewable transportation fuel which:

(A) is suitable for use as a fuel in a vehicle, marine vessel, or aircraft,

(B) is derived from or co-processed with:

(I) a biomass feedstock, or

(II) hydrogen produced from renewable energy and inputs, and

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(C) is not derived from palm fatty acid distillates or fossil fuels, including coal, natural gas, and petroleum.

A qualifying advanced energy project does not include any portion of a project for the production of any property which is used in

the refining or blending of any transportation fuel (other than renewable fuels, as described herein).

(ii) Clean hydrogen produced with a well-to-gate carbon intensity of less than 4kgCO2e/kgH2, in accordance with the definition

of qualified clean hydrogen under the § 45V tax credit program.

(iii) Other fuel which:

(A) is derived from or co-processed with a renewable feedstock or achieves at least a 50 percent lifecycle greenhouse gas emis­

sions reduction in comparison with the conventional alternative,

(I) is not a transportation fuel, and

(II) is not derived from palm fatty acid distillates or fossil fuels, including coal, natural gas, and petroleum.

(iv) Product or chemical which:

(A) is derived from or co-processed with a renewable feedstock or achieves at least a 50 percent lifecycle greenhouse gas emis­

sions reduction in comparison with the conventional alternative,

(B) is suitable for use as an industrial feedstock, and

(C) is not derived from palm fatty acid distillates or fossil fuels, including coal, natural gas, and petroleum.

(v) Examples of eligible property include electrolyzers; mixing devices; pumps; separation devices; bioprocessing equipment; biomass preprocessing equipment;

and reactors, so long as they are intended for use to produce eligible fuels, chemical, and products, as demonstrated through engineering specifications or offtake

agreements.

(vi) Examples of eligible fuels, chemicals, and products produced by eligible equipment include hydrogen produced through electrolysis powered by low- or

zero-emissions energy; low-emissions ammonia; renewable biofuels, including sustainable aviation fuel and fuels intended to displace petroleum fuel in on-road and

off-road applications; and low-emissions chemicals, basic organic chemicals, and polymer resins.

(vii) Examples of ineligible fuels and chemicals would include those derived solely from fossil resources produced through conventional petroleum and natural

gas refining.

Instructions for calculating well-to-gate carbon intensity of clean hydrogen and lifecycle emissions rates will be provided in additional § 48C(e) program guidance.

f. Property designed to produce energy conservation technologies (including residential, commercial, and industrial applications)

(i) Examples of eligible energy conservation property include technologies and grid-interactive devices eligible for residential or commercial efficiency im­

provements for purposes of the § 25C credit or the § 179D tax deduction, as well as equipment that directly reduces net energy use in industrial applications, such as

ultra-efficient heat pumps, insulation, ultra-efficient hot water systems, sensors, controls, and similar advanced efficiency technologies.

(ii) Examples of ineligible energy conservation property include those that reduce electricity usage by increasing direct natural gas or other fossil fuel use and/or

lead to increased system-level emissions.

g. Light-, medium-, or heavy-duty electric or fuel cell vehicles, as well as technologies, components, or materials for such vehicles,

and associated charging or refueling infrastructure.

(i) Examples of eligible property include battery electric, plug-in hybrid electric, or fuel cell cars, trucks, and buses, as well as the specialized components of those

vehicles, such as batteries, electric drive systems, fuel cells, and the materials and subcomponents therein.

(ii) Examples of eligible charging or refueling infrastructure include electric vehicle supply equipment (EVSE), components from the grid connection to the

vehicle, bidirectional charging equipment, and components used in hydrogen refueling stations (e.g., hydrogen compressors, pumps, storage vessels, and dispensing

equipment).

(iii) Examples of ineligible equipment include internal combustion engine vehicles of all sizes, non-plug-in hybrid vehicles of less than 14,000 pounds gross vehi­

cle weight rating, and their components, as well as associated refueling infrastructure, such as petroleum gas, liquefied or compressed natural gas, or ethanol refueling

stations. Examples of ineligible equipment also include components of charging or refueling stations, such as signage, that are not directly involved in the transfer of

fuel or power to the vehicle.

h. Hybrid vehicles with a gross vehicle weight rating of not less than 14,000 pounds, as well as technologies, components, or

materials for such vehicles.

(i) Examples of eligible property include traction batteries, converters, power electronics, and assembled hybrid vehicles themselves, but components and materials

must be designed for large hybrid vehicles with a gross vehicle weight rating of not less than 14,000 pounds, as demonstrated through engineering specifications and/

or offtake agreements.

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i. Other advanced energy property designed to reduce greenhouse gas emissions as may be determined by the Secretary.

(i) Examples of eligible advanced energy property include specialized components and equipment for nuclear power reactors or their fuels, and equipment used to

reduce the emissions of industrial processes. Property may be determined to be designed to reduce greenhouse gas emissions either through published guidance or in

the letter notifying a taxpayer that the IRS has accepted the taxpayer’s application for §48C certification with respect to the property.

2. Greenhouse Gas Emission Reduction Projects

A qualifying advanced energy project in this category re-equips an industrial or manufacturing facility, including energy-intensive

manufacturing sectors, such as cement, iron and steel, aluminum, and chemicals, with equipment designed to reduce greenhouse gas

emissions by at least 20 percent through the installation of one of more of the following:

a. Low- or zero-carbon process heating systems.​

(i) Examples of eligible equipment include electric heat pumps, combined heat and power (CHP) systems, and heating systems based on electricity, clean hydro­

gen, biomass, or waste heat recovery.

b. Carbon capture, transport, utilization, and storage systems.​

(i) Examples of eligible equipment include carbon capture equipment necessary to compress, treat, process, liquify, pump, or perform some other physical action

to capture carbon oxides, and specialized equipment and materials needed for the storage of carbon oxide including carbon dioxide pipelines; monitoring equipment;

and injection equipment and well components such as packers; casing strings; steel tubulars; well head; valves; and sensors suitable for use in UIC Class VI wells.

(ii) Examples of ineligible property include scrubbers for conventional air pollutants, except those that are required to remove pollutants upstream of carbon capture

equipment for technical performance reasons; energy generation equipment, except as related to energy recovery at carbon capture systems; and refining equipment.

c. Energy efficiency and reduction in waste from industrial processes.

(i) Examples of eligible equipment include technologies that reduce direct fuel use, electricity use, or waste in industrial applications, such as industrial heat pumps,

combined heat and power (CHP) systems, insulation, sensors, controls, advanced recycling approaches, smart energy management, and similar advanced efficiency

technologies.

d. Any other industrial technology designed to reduce greenhouse gas emissions, as determined by the Secretary.

(i) Examples of other eligible industrial technologies include electrification of direct fuel use processes, adoption of renewable or low-emissions fuels and

feedstocks, and other equipment replacement or process redesigns that reduce fuel or process-related emissions or otherwise contribute to reducing greenhouse gas

emissions by at least 20 percent.

Instructions for calculating and demonstrating an emissions reduction of 20 percent will be provided in the additional § 48C(e) program guidance.

3. Critical Material Projects

A qualifying advanced energy project in this category re-equips, expands, or establishes an industrial facility for the processing,

refining, or recycling of critical materials (as defined in § 7002(a) of the Energy Act of 2020 (30 U.S.C. § 1606(a)). For purposes of

this Phase I, critical materials will consist of:

a. The currently effective final list of critical minerals as determined by the U.S. Geological Survey (see 2022 Final List of Crit­

ical Minerals for the list published in 2022 available at: https://www.federalregister.gov/documents/2022/02/24/2022-04027/2022

-final-list-of-critical-minerals); and

b. Any additional critical materials as determined by the Secretary of Energy and posted on the http://www.energy.gov/criticalm­

aterials by July 31, 2023.

Examples of eligible projects in this project category include industrial facilities that process raw ore, brines, mine tailings, end-of-life products, waste streams,

and other source materials into critical materials.

Examples of ineligible projects under this project category include facilities that process critical materials into derivative products, such as metals processing.

However, facilities of this latter type may be eligible under the Clean Energy Manufacturing and Recycling Projects category.

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APPENDIX B

DOE APPLICATION PROCESS

I. DOE Review Process

A two-stage technical evaluation process will be used for submissions:

• Stage 1 – Concept Paper

• Stage 2 – § 48C(e) Application

A. Concept Paper

The first stage requires taxpayers to submit concept papers describing the proposed project. Concept papers will be evaluated against

criteria that may include eligibility requirements, definitions for qualifying advanced energy projects, reasonable expectation of

commercial viability, and other factors described in the additional § 48C(e) program guidance. Following this preliminary review,

taxpayers will receive a letter either encouraging them to submit a § 48C(e) application or discouraging them from submitting a

§ 48C(e) application. DOE will begin accepting concept papers when the additional § 48C(e) program guidance is issued on

May 31, 2023, and concept papers must be submitted to DOE no later than July 31, 2023.

A taxpayer that receives a discouragement letter may still submit a § 48C(e) application in accordance with the § 48C(e) program

guidance. Receiving a discouragement letter in response to a submitted concept paper does not disqualify a taxpayer from submitting

a § 48C(e) application but represents DOE’s feedback that the project, as proposed, is unlikely to receive a recommendation

based on the information provided in the concept paper.

B. § 48C(e) Application

The second evaluation stage will consist of a review of § 48C(e) applications submitted after the concept paper stage. Taxpayers may

not submit § 48C(e) applications unless they submitted concept papers by the specified deadline.

DOE will review applications for DOE recommendation for compliance to determine that (1) the application meets the eligibility

requirements, (2) the information required by the additional § 48C(e) program guidance has been submitted, (3) the taxpayer filed a

timely concept paper, and (4) all mandatory requirements of the additional § 48C(e) program guidance are satisfied. The review will

also include a thorough, consistent, and objective examination of applications for DOE recommendation based on technical review

criteria and program policy factors outlined in the additional § 48C(e) program guidance.

II. Application Evaluation Information

A. Technical Review Criteria

Applications for DOE recommendation will be evaluated based on technical review criteria to be described in the additional § 48C(e)

program guidance. These criteria will include selection criteria described in § 48C(d)(3) and additional criteria that further the goals

of the program.

As part of the technical review criteria to be described in the additional § 48C(e) program guidance, DOE anticipates evaluating

applications for DOE recommendation based on the net impact of the qualifying project in avoiding or reducing greenhouse gases

emissions, as described in the additional § 48C(e) program guidance. DOE also anticipates evaluating applications for DOE recom­

mendation based on the community benefits of the proposed qualifying advanced energy projects, which may include community and

labor engagement and commitment to high quality and accessible jobs and workforce pathways.

B. Program Policy Factors

In addition to technical review criteria, DOE may consider one or more policy factors in determining which applications for DOE

recommendation submitted during Round 1 of the § 48C(e) program to recommend to the IRS for certification.

To achieve maximum benefits to strengthen U.S. industrial competitiveness and clean energy supply chains as well as to promote

high quality jobs and community benefits, DOE may consider giving priority to qualifying advanced energy projects not eligible for

support from other DOE financial assistance programs funded by the Infrastructure Investment and Jobs Act (Public Law 117-58) or

the Inflation Reduction Act of 2022 (Public Law 117-169).

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In some cases, benefits towards the program’s goals may be enhanced if a project receiving a credit under § 48C also receives com­

plementary assistance from other programs. For taxpayers seeking assistance from other programs for the same proposed qualifying

advanced energy project, DOE may consider whether the application for DOE recommendation sufficiently justifies the need for and

benefits of receiving assistance from multiple programs. Complementary assistance may also affect the tax treatment of property for

which a taxpayer receives an allocation under the § 48C(e) program.

C. Strengthening Secure, Domestic, Clean Energy Supply Chains

To help build more resilient, diverse, and secure U.S. clean energy supply chains, DOE may consider whether proposed projects

address specific gaps, vulnerabilities, or risks in the domestic production of clean energy products. The additional § 48C(e) program

guidance will indicate specific priority technologies that would address these gaps, vulnerabilities, and risks to relevant domestic

supply chains.

To further ensure the § 48C(e) program supports these goals to the greatest extent possible, DOE may conduct a review to determine

if an applicant has a connection with a foreign country of risk that could frustrate the achievement of these goals. To ensure trans­

parency of foreign connections, DOE anticipates requiring applicants to provide certain information regarding, for example, board

membership, ownership structure, and foreign relationships, as well as sources of, and any plans to export, critical minerals.

III. Submission and Registration Requirements for DOE Recommendation Process

This section describes DOE’s submission and registration requirements for applicants. An application for DOE recommendation will

not be considered in Round 1 of the § 48C(e) program unless the concept paper is received by the concept paper deadline, and the

§ 48C(e) application is received by the end of the application period.

A. Submission of Application

All § 48C(e) application materials must be submitted through the eXCHANGE portal at https://infrastructure-exchange.energy.gov to

be considered. Taxpayers will not be able to submit a § 48C(e) application through the eXCHANGE portal unless registered. Please

read the registration requirements below carefully and start the registration process immediately. If you have problems completing the

registration process, send an email to the eXCHANGE portal helpdesk at https://infrastructure-exchange.energy.gov. Section 48C(e)

applications submitted by any other means will not be accepted.

B. Registration Process Requirements

Taxpayers that wish to participate in the § 48C(e) program must register and create an account on the eXCHANGE portal at: https://

infrastructure-exchange.energy.gov. This account will allow the user to apply to any open Funding Opportunity Announcements

(FOA) that are currently the eXCHANGE portal. It is recommended that each business unit use only one account as the appropriate

contact point for each submission.

Potential applicants will be required to have a Login.gov account to access the eXCHANGE portal. As part of the eXCHANGE portal

registration process, new users will be directed to create an account in Login.gov. Please note that the email address associated with

Login.gov must match the email address associated with the eXCHANGE portal account. For more information, refer to the Infra­

structure eXCHANGE Login Guide in the Manuals section of the eXCHANGE portal at https://infrastructure-exchange.energy.gov/

Manuals.aspx.

C. Electronic Authorization of Applications

Submission of § 48C(e) application materials through electronic systems used by DOE, including the eXCHANGE portal, will con­

stitute the authorized representative’s approval and electronic signature.

D. Markings of Confidential Information

If elements of a § 48C(e) application contain information the taxpayer considers to be trade secrets, confidential, privileged or oth­

erwise exempt from disclosure under the Freedom of Information Act (FOIA, 5 U.S.C. § 552), the taxpayer may assert a claim of

exemption at the time of application by placing the following text on the first page of the § 48C(e) application, and specifying the

page or pages of the § 48C(e) application to be restricted:

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“ Pages [list applicable pages] of this document may contain trade secrets, confidential, proprietary, or privileged information that

is exempt from public disclosure. Such information shall be used or disclosed only for evaluation purposes or in accordance with

a financial assistance or loan agreement between the submitter and the Government. The Government may use or disclose any

information that is not appropriately marked or otherwise restricted, regardless of source. [End of Notice]”

The header and footer of every page that contains confidential, proprietary, or privileged information must be marked as follows:

“Contains Trade Secrets, Confidential, Proprietary, or Privileged Information Exempt from Public Disclosure.” In addition, each

line or paragraph containing proprietary, privileged, or trade secret information must be clearly marked with double brackets or

highlighting.

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Interim Guidance

Regarding Certain

Insurance Related Issues

for the Determination

of Adjusted Financial

Statement Income under

Section 56A of the Internal

Revenue Code

Notice 2023-20

SECTION 1. OVERVIEW

This notice provides the additional in­

terim guidance described in section 1 of

Notice 2023-7, 2023-3 I.R.B. 390, that

is intended to help avoid substantial un­

intended adverse consequences to the in­

surance industry from the application of

the new corporate alternative minimum

tax (CAMT), as added to the Internal

Revenue Code (Code)1 by the enactment

of § 10101 of Public Law 117-169, 136

Stat. 1818, 1818-1828 (August 16, 2022),

commonly referred to as the Inflation Re­

duction Act of 2022 (IRA). In addition to

announcing that the Department of the

Treasury (Treasury Department) and the

Internal Revenue Service (IRS) intend to

issue proposed regulations (forthcoming

proposed regulations) addressing the ap­

plication of the CAMT, sections 3 through

7 of Notice 2023-7 provided interim

guidance regarding certain time-sensitive

CAMT issues that taxpayers may rely

on until the issuance of the forthcoming

proposed regulations. Notice 2023-7 also

stated that the Treasury Department and

the IRS intended to issue additional inter­

im guidance expected to address, among

other issues, certain issues related to the

treatment under the CAMT of life insur­

ance company separate account assets that

are marked to market for financial state­

ment purposes, the treatment of certain

items reported in other comprehensive

income (OCI), and the treatment of em­

bedded derivatives arising from certain

reinsurance contracts. Sections 3 through

5 of this notice provide additional interim

1

guidance regarding these and other issues

intended to be addressed by the forthcom­

ing proposed regulations. Taxpayers may

rely on the guidance provided in sections

3 through 5 of this notice until the issuance

of the forthcoming proposed regulations.

Section 2 of this notice provides a

summary of relevant law and other infor­

mation underlying the rules described in

sections 3 through 5 of this notice. Sec­

tion 3 of this notice describes rules that

address certain CAMT issues regarding

variable contracts and similar contracts.

Section 4 of this notice describes rules that

address certain CAMT issues regarding

funds withheld reinsurance and modified

coinsurance agreements. Section 5 of this

notice describes rules that address certain

issues that arise under the CAMT for cer­

tain formerly tax-exempt entities whose

exemption from Federal income taxation

was repealed by statute and as to which

Congress provided special rules for de­

termining the Federal income tax basis in

their assets held when the repeal of their

exemption became effective. Section 6 of

this notice describes the anticipated appli­

cability dates of the forthcoming proposed

regulations. Section 7 of this notice re­

quests comments on the issues addressed

in this notice. Section 8 of this notice pro­

vides drafting and contact information.

SECTION 2. BACKGROUND

.01 CAMT under the Inflation Reduction Act.

(1) Overview. Section 10101 of the IRA

amended § 55 to impose the new CAMT

based on the “adjusted financial statement

income” (AFSI) of an applicable corpora­

tion for taxable years beginning after De­

cember 31, 2022. In general, a corporation

is an applicable corporation subject to the

CAMT for a taxable year if it meets an

average annual AFSI test for one or more

taxable years that (i) are before that tax­

able year and (ii) end after December 31,

2021. See section 2.01 of Notice 2023-7

for a general description of the CAMT.

(2) AFSI under § 56A.

(a) General definition of AFSI. For pur­

poses of §§ 55 through 59, the term AFSI

means, with respect to any corporation for

any taxable year, the net income or loss

of the taxpayer set forth on the taxpayer’s

applicable financial statement (AFS) for

that taxable year, adjusted as provided in

§ 56A. See § 56A(a).

(b) General definition of AFS. For pur­

poses of § 56A, the term AFS means, with

respect to any taxable year, an AFS, as de­

fined in § 451(b)(3) or as specified by the

Secretary of the Treasury or her delegate

(Secretary) in regulations or other guid­

ance, that covers that taxable year. See

§ 56A(b).

(c) General adjustments to AFSI. Sec­

tion 56A(c) provides general adjustments

to be made to AFSI, several of which are

described in section 2.01(3)(c) of Notice

2023-7. Section 56A(c)(2) provides spe­

cial rules that take into account the rela­

tionship between entities.

(d) Treatment of dividends and other

amounts. Section 56A(c)(2)(C) provides

that in the case of a corporation that is not

included on a consolidated return with a

taxpayer, the taxpayer’s AFSI with respect

to such other corporation is determined by

taking into account only the dividends

received from such other corporation (re­

duced to the extent provided by the Secre­

tary) and other amounts that are includible

in gross income or deductible as a loss

under chapter 1 of the Code (other than

amounts required to be included under

§§ 951 and 951A or such other amounts as

provided by the Secretary) with respect to

such other corporation.

(e) AFSI of partners and partnerships.

Section 56A(c)(2)(D)(i) provides that, ex­

cept as provided by the Secretary, if the

taxpayer is a partner in a partnership, the

taxpayer’s AFSI with respect to such part­

nership is adjusted to take into account

only the taxpayer’s distributive share of

such partnership’s AFSI. Section 56A(c)

(2)(D)(ii) provides that, for purposes of

§§ 55 through 59, a partnership’s AFSI

is the partnership’s net income or loss set

forth on that partnership’s AFS (adjusted

under rules similar to the rules set forth in

§ 56A).

(f) Authority of the Secretary to provide

necessary adjustments. Section 56A(c)

Unless otherwise specified, all “section” or “§” references are to sections of the Code.

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(15) authorizes the Secretary to issue reg­

ulations or other guidance to provide for

such adjustments to AFSI as the Secretary

determines necessary to carry out the pur­

poses of § 56A, including adjustments to

AFSI to prevent the omission or duplica­

tion of any item.

(g) General authority of the Secretary.

Section 56A(e) authorizes the Secretary

to provide such regulations and other

guidance as necessary to carry out the

purposes of § 56A, including regulations

and other guidance relating to the effect of

the rules of § 56A on partnerships with in­

come taken into account by an applicable

corporation.

.02 Variable Contracts under § 817

and Similar Contracts.

(1) Variable contracts accounted for

under § 817. Some insurance companies

issue variable contracts (as defined in

§ 817(d)). In general, variable contracts

are life insurance and annuity contracts

under which the amount of the insur­

ance company’s obligation depends, at

least in part, on the value of the assets

held in a separate account that is segre­

gated from the general asset accounts of

the insurance company. Provided certain

requirements are met, under § 817(c), an

insurance company that issues variable

contracts (as defined in § 817(d)) must

separately account for the various income,

exclusion, deduction, asset, reserve, and

other liability items properly attributable

to such variable contracts. As a general

matter, § 807 provides that increases in the

life insurance reserves of a life insurance

company are deductible and decreases in

the life insurance reserves are includible

in income. However, § 817(a) provides

that for purposes of determining the net

decrease or increase in reserves under

§ 807(a) or (b), amounts subtracted from

or added to separate account reserves by

reason of the depreciation or appreciation

of separate account assets (whether or not

realized) are disregarded. Under § 817(a),

deductions for items described in § 805(a)

(1) and (6), which include claims and ben­

efits accrued and losses incurred during

the taxable year on insurance and annui­

ty contracts, are similarly adjusted for the

depreciation or appreciation of separate

account assets. Additionally, § 817(b) pro­

vides that the basis of each separate ac­

count asset is decreased by the amount of

March 6, 2023

depreciation, or increased by the amount

of appreciation, of separate account assets

(whether or not realized), to the extent

separate account reserves are adjusted for

such depreciation or appreciation under

§ 817(a). Generally, the result is a perma­

nent elimination of any effects on compa­

ny-level taxable income that would other­

wise result from the change in the value of

the separate account assets.

(2) Contracts similar to variable contracts. Like variable contracts accounted

for under § 817, the value of certain oth­

er contracts similarly depends directly,

at least in part, on the value of the assets

supporting those contracts.

(a) Closed block contracts. When a

mutual insurance company engages in a

“demutualization” process to convert to

a stock insurance company, the company

may create a “closed block” for the benefit

of holders of certain insurance contracts

issued by the mutual insurance company.

Generally, when a closed block is creat­

ed, the company allocates assets to the

closed block in an amount such that the

assets, together with future revenue from

the closed block, are expected to provide

sufficient cash flow for future policy ben­

efits, certain expenses, and policyholder

dividends determined in a manner consis­

tent with the manner in which they were

determined prior to the demutualization.

The closed block assets and the revenue

from the closed block benefit only holders

of the policies in the closed block.

(b) Other similar contracts. A for­

eign insurance company may issue con­

tracts that are regulated as life insurance

or annuity contracts in the jurisdiction

in which they are issued and for which

the insurance company’s obligations to

the contract holders (and the company’s

corresponding reserves) must reflect (in

whole or in part) the change in the value

of a designated pool of investments sup­

porting the contract.

(3) U.S. GAAP and IFRS accounting

for variable contracts and similar contracts. The contracts described in sections

2.02(1), 2.02(2)(a), and 2.02(2)(b) of this

notice generally have the same accounting

treatment under U.S. generally accepted

accounting principles (U.S. GAAP) and

international financial reporting standards

(IFRS). For example, under an AFS pre­

pared according to either U.S. GAAP or

524

IFRS, unrealized gain or loss on the sup­

porting assets is included in the net income

or loss set forth on the AFS, and there is

an offsetting adjustment to certain liabil­

ities to reflect the resulting change in the

company’s contractual obligations to con­

tract holders, which is also included in the

net income or loss set forth on the AFS.

However, unrealized gain or loss on some

categories of the supporting assets, but not

the offsetting adjustment to liabilities, is

required to be disregarded under § 56A(c)

(2)(C) or (D)(i) for purposes of determin­

ing AFSI, resulting in a mismatch that

could significantly overstate or understate

AFSI relative to taxable income.

.03 Funds Withheld Reinsurance and

Modified Coinsurance Agreements.

(1) Overview. Insurance companies

regularly engage in reinsurance transac­

tions in which one insurance company

transfers all or part of its risk under an

insurance contract to another insurance

company. The insurance company that

issues the underlying insurance contract

and transfers the risk is called the ceding

company, and the insurance company to

which the risk is transferred is called the

reinsurer. If the reinsurer in turn transfers

all or part of the reinsured risk to another

reinsurer, the transaction is called a retro­

cession.

(2) Funds withheld reinsurance and

modified coinsurance agreements. In a

conventional reinsurance transaction, the

ceding company transfers to the reinsur­

er both the risk of the reinsured business

(represented by the reserves) and the

assets supporting the reserves. In funds

withheld reinsurance and modified co­

insurance agreements, from a legal title

and financial accounting perspective, the

ceding company retains the supporting

assets (Withheld Assets) as security for

the reinsurer’s obligations under the re­

insurance agreement. See Credit for Re­

insurance Model Law (MO-785), NAIC

Model Laws, Regulations, Guidelines, &

Other Resources, § 3 (2019). The ceding

company records a liability (Withheld As­

sets Payable) to the reinsurer to reflect the

assets it has retained. Under U.S. GAAP

and IFRS, the unrealized gains and losses

from certain of the Withheld Assets are

generally accounted for as part of the ced­

ing company’s OCI. However, any relat­

ed change in the Withheld Assets Payable,

Bulletin No. 2023–10

which is generally equal to the unrealized

gains and losses included in OCI, is ac­

counted for as part of the net income or

loss of the ceding company, as set forth in

the ceding company’s AFS, and is not off­

set by the unrealized gains and losses that

are included in OCI. The reinsurer has

a corresponding asset (Withheld Assets

Receivable) and the unrealized gains and

losses on the Withheld Assets are general­

ly accounted for as part of the net income

or loss of the reinsurer that is set forth on

the reinsurer’s AFS. Financial accounting

guidance states that the ceding company’s

Withheld Assets Payable and the reinsur­

er’s Withheld Assets Receivable include

an embedded derivative. See, for example,

FASB ASC paragraphs 815-15-55-107 to

109.

The Treasury Department and the IRS

understand that, in some circumstances,

each of the ceding company and the rein­

surer may be able to make certain types

of “fair value” elections for AFS purpos­

es to change the accounting treatment of

one or more items relevant to its funds

withheld reinsurance or modified coinsur­

ance agreement such that both offsetting

items related to the unrealized change in

Withheld Assets value run through OCI

or both run through the net income or loss

set forth on the AFS. For example, under

U.S. GAAP, the ceding company may be

able to make a “fair value option” election

that would move the unrealized gains or

losses on certain of the Withheld Assets

into the net income or loss set forth on its

AFS, which would offset the changes in

its Withheld Assets Payable to the rein­

surer that are reflected in the net income

or loss set forth on the ceding company’s

AFS. However, such fair value elections

may be made only at the time a relevant

asset is acquired or when the reinsurance

agreement is entered into and also may be

undesirable for business reasons.

.04 Respecting Congressional “Fresh

Start” Basis Rules.

(1) Section 177 of the Deficit Re­

duction Act of 1984 (1984 Act), Public

Law 98-369, 98 Stat. 494, 709 (1984),

amended § 303(d) of the Federal Home

Loan Mortgage Corporation Act (then

12 U.S.C. 1452(d)) to repeal the exemp­

tion “from all taxation now or hereafter

imposed by the United States” (includ­

ing taxation under subtitle A of the Code

Bulletin No. 2023–10

(subtitle A)) for the Federal Home Loan

Mortgage Corporation, effective January

1, 1985. Section 177(d)(2)(A) of the 1984

Act provides special rules for determining

the adjusted basis of any asset of the Fed­

eral Home Loan Mortgage Corporation

held on January 1, 1985, for purposes of

determining any gain or loss under sub­

title A. Section 177(d)(2)(B) of the 1984

Act provides special rules for determining

the adjusted basis of certain tangible de­

preciable property held by Federal Home

Loan Mortgage Corporation on January 1,

1985.

(2) Section 1012(a) of the Tax Reform

Act of 1986 (1986 Act), Public Law 99514, 100 Stat. 2085, 2390-94 (1986), add­

ed § 501(m) to the Code, which generally

provides that an organization described

in § 501(c)(3) or (4) is exempt under

§ 501(a) from taxation under subtitle A

only if no substantial part of its activities

consists of providing “commercial-type

insurance” (as defined in § 501(m)(3)).

As a result of § 1012(a), “existing Blue

Cross or Blue Shield organizations” (as

defined in § 833(c)(2)) lost their Federal

income tax exemption (subtitle A exemp­

tion). Section 1012(c)(1) provides that the

amendments made by § 1012 of the 1986

Act were effective for taxable years begin­

ning after December 31, 1986. In the case

of any existing Blue Cross or Blue Shield

organization, § 1012(c)(3) of the 1986 Act

provided that for purposes of determining

gain or loss under subtitle A, the adjusted

basis of any asset held on the first day of

its first taxable year beginning after De­

cember 31, 1986, was treated as equal to

the asset’s fair market value on such day.

In addition, § 1012(c)(4)(A) and (B)

of the 1986 Act provided that the amend­

ments made by § 1012 of the 1986 Act did

not apply to repeal the subtitle A exemp­

tion with respect to the pension businesses

of Mutual of America and the Teachers

Insurance Annuity Association-College

Retirement Equities Fund (pension busi­

ness entities). For this purpose, “pension

business” was defined as the administra­

tion of any plan described in § 401(a) that

includes a trust exempt from tax under

§ 501(a), any plan under which amounts

are contributed by an individual’s em­

ployer for an annuity contract described

in § 403(b), any individual retirement

plan described in § 408, and any eligi­

525

ble deferred compensation plan to which

§ 457(a) applies.

(3) Section 1042(a) of the Taxpayer

Relief Act of 1997 (1997 Act), Public Law

105-34, 111 Stat. 788, 939 (1997), termi­

nated the subtitle A exemption provided

under § 1012(c)(4)(A) and (B) of the 1986

Act for the pension business of each pen­

sion business entity for any taxable year

beginning after December 31, 1997. In

the case of a pension business entity that,

under § 501(m), became subject to taxa­

tion under subtitle A solely by reason of

§ 1042(a) of the 1997 Act, § 1042(b)(2) of

the 1997 Act provided that for purposes of

determining gain or loss under subtitle A,

the adjusted basis of any asset held on the

first day of its first taxable year beginning

after December 31, 1997, was treated as

equal to its fair market value on such day.

.05 Additional Defined Terms. For pur­

poses of this notice:

(1) Covered Insurance Company. The

term Covered Insurance Company means

(i) a company subject to tax under sub­

chapter L of the Code or (ii) a foreign

company that is subject to regulation as an

insurance (or reinsurance) company by its

home country and is licensed, authorized,

or regulated by the applicable insurance

regulatory body for its home country to

sell insurance, reinsurance or annuity con­

tracts.

(2) Covered Variable Contract. The

term Covered Variable Contract means a

contract described in section 2.02(1), sec­

tion 2.02(2)(a), or section 2.02(2)(b) of

this notice.

(3) Covered Investment Pool. The term

Covered Investment Pool means a pool of

investment assets designated to support

one or more Covered Variable Contracts.

(4) Covered Obligations. The term

Covered Obligations means the financial

accounting liabilities, including contract

reserves and claims or benefits payable,

that reflect a Covered Insurance Compa­

ny’s obligations under one or more Cov­

ered Variable Contracts and are taken into

account in determining Net Income.

(5) Covered Reinsurance Agreement.

The term Covered Reinsurance Agreement means a funds withheld reinsurance

or modified coinsurance agreement de­

scribed in section 2.03(2) of this notice

and any retrocession of all or part of the

risk under such agreement.

March 6, 2023

(6) Fresh Start Entity. The term Fresh

Start Entity means any formerly tax-ex­

empt entity the repeal of whose subtitle A

exemption is described in section 2.04(1)

through (3) of this notice.

(7) Net Income. The term Net Income

means the net income or loss as set forth

on the AFS.

SECTION 3. AFSI ADJUSTMENTS

FOR COVERED VARIABLE

CONTRACTS

.01 Purpose. The Treasury Department

and the IRS anticipate that the forthcom­

ing proposed regulations will be consistent

with the guidance provided in this section

3. The Treasury Department and the IRS

are providing this interim guidance to as­

sist taxpayers in determining AFSI with

respect to Covered Variable Contracts pri­

or to the issuance of the forthcoming pro­

posed regulations.

.02 Covered Variable Contracts.

(1) AFSI adjustments for Covered Variable Contracts. For purposes of determin­

ing AFSI of a Covered Insurance Compa­

ny issuing Covered Variable Contracts, to

the extent (i) a change in the value of the

Covered Investment Pool for such Covered

Variable Contract(s) results in a change

to the amount of the Covered Insurance

Company’s obligations to the holders of

such Covered Variable Contract(s) by rea­

son of law, regulation, or the terms of one

or more such Covered Variable Contracts,

and (ii) such change in the amount of the

obligation is reflected in the Covered Obli­

gations, then such change in the amount of

the Covered Obligations for a taxable year

is disregarded to the extent of the § 56A(c)

(2) exclusion amount for that taxable year.

For purposes of the preceding sentence, the

§ 56A(c)(2) exclusion amount for Covered

Obligations for a taxable year is equal to

the amount of financial accounting gains

and losses in the Covered Investment Pool

for the Covered Variable Contract(s) to

which the Covered Obligations relate that

is (i) taken into account in Net Income of

the Covered Insurance Company for the

taxable year and (ii) disregarded under

§ 56A(c)(2)(C) or (D)(i) for purposes of

determining AFSI of the Covered Insur­

ance Company for that taxable year.

(2) Example. The following example illustrates

the rule set forth in section 3.02(1) of this notice.

March 6, 2023

(a) Facts. A is a life insurance company subject

to tax under subchapter L of the Code and has a tax­

able year and accounting period that is based on the

calendar year. A uses U.S. GAAP to prepare its AFS.

On January 1 of Year 1, A issues a variable life insur­

ance contract (as described in § 817) to an individual,

X. A owns assets that support A’s contractual obliga­

tion to X and holds those assets in a separate account

that is segregated from the general asset accounts

of A. A accounts for its contractual obligations to X

in its Net Income. The separate account assets are

stock in unrelated corporations. At the end of Year

1, no assets that support X’s variable contract have

been sold, and the fair market value of such assets

has increased by $10x. Pursuant to the terms of the

variable life insurance contract, the increase in the

value of the assets supporting X’s variable contract

caused A’s contractual obligation to X to increase by

$10x. On A’s AFS, the $10x increase in the value of

the assets supporting the variable contract is includ­

ed in Net Income and offsets the $10x increase in

A’s contractual obligation to X (which reduces A’s

Net Income).

(b) Analysis. A is a Covered Insurance Compa­

ny as defined in section 2.05(1) of this notice, and

the variable life insurance contract that A issued to

X is a Covered Variable Contract described in sec­

tion 2.05(2) of this notice. The assets in the sepa­

rate account that A holds to support its contractual

obligations to X constitute a Covered Investment

Pool as described in section 2.05(3) of this notice,

and A’s contractual obligation to X is reflected in A’s

Covered Obligations as defined in section 2.05(4)

of this notice. Pursuant to § 56A(c)(2)(C), although

the $10x unrealized gain in the Covered Invest­

ment Pool is taken into account in Net Income on

A’s AFS, it is not included in A’s AFSI because it is

not a dividend from another corporation and is not

includible in the gross income of A under chapter 1

of the Code. The $10x increase in the Covered Ob­

ligations is taken into account in Net Income on A’s

AFS. Pursuant to section 3.02(1) of this notice, for

purposes of determining A’s AFSI, the change in the

amount of the Covered Obligations for the taxable

year is disregarded to the extent of the § 56A(c)(2)

exclusion amount for the taxable year. The relevant

§ 56A(c)(2) exclusion amount for the taxable year

is equal to the $10x unrealized gain in the Covered

Investment Pool because such $10x unrealized gain

is taken into account in A’s Net Income for the tax­

able year and is disregarded under § 56A(c)(2)(C)

for purposes of determining A’s AFSI for that taxable

year. Accordingly, the $10x increase in the Covered

Obligations is also disregarded in determining A’s

AFSI for the taxable year. Thus, both the unrealized

gain and offsetting change in the Covered Obliga­

tions are disregarded for purposes of determining A’s

AFSI, which eliminates what would otherwise be a

difference between A’s AFSI and A’s life insurance

company taxable income.

SECTION 4. AFSI ADJUSTMENTS

FOR COVERED REINSURANCE

AGREEMENTS

.01 Purpose. The Treasury Department

and the IRS anticipate that the forthcom­

526

ing proposed regulations will be consis­

tent with the guidance provided in this

section 4. The Treasury Department and

the IRS are providing this interim guid­

ance to assist taxpayers in determining

AFSI with respect to Covered Reinsur­

ance Agreements prior to the issuance of

the forthcoming proposed regulations.

.02 Covered Reinsurance Agreements.

(1) Generally. For a Covered Insur­

ance Company that is a party to a Covered

Reinsurance Agreement, the following

changes accounted for separately in the

AFS with respect to each such agreement

are excluded from AFSI:

(a) For the ceding company holding the

Withheld Assets, changes in Net Income

as a result of changes in the amount of the

Withheld Assets Payable to the reinsurer

that correspond to the unrealized gains

and losses in the Withheld Assets to the

extent such unrealized gains and losses

are not included in AFSI.

(b) For the reinsurer, changes in Net In­

come as a result of changes in the amount

of the Withheld Assets Receivable from

the ceding company that correspond to the

unrealized gains and losses in the With­

held Assets; provided, however, that such

exclusion will be reduced to the extent the

reinsurer’s Withheld Assets Receivable is

offset and the changes in its Net Income

are reduced as a result of accounting for a

retrocession of the reinsured risk.

(2) Fair value election. The exclusion

provided in section 4.02(1) of this notice

will not apply to the extent that: (a) the

Covered Insurance Company elects to

account for one or more items relevant to

the Covered Reinsurance Agreement (off­

setting item) at fair value on its AFS and

(b) the election results in changes in the

fair value of the Withheld Assets Payable

(for the ceding company) or the Withheld

Assets Receivable (for the reinsuring

company) and changes in the fair value of

the offsetting item both being accounted

for either through Net Income or through

OCI on the AFS of the Covered Insurance

Company.

(3) Example. The following example

illustrates the rules set forth in section

4.02(1) of this notice.

(a) Example – Funds Withheld Reinsurance--(i)

Facts. Each of A and B is a life insurance company

subject to tax under subchapter L of the Code and

has a taxable and accounting year that is based on

the calendar year. Each of A and B uses U.S. GAAP

Bulletin No. 2023–10

for purposes of preparing its AFS. On January 1 of

Year 1, A, the ceding company, enters into a funds

withheld reinsurance agreement with B, the rein­

surer. B does not retrocede any risk covered by the

funds withheld reinsurance agreement. Pursuant to

the terms of the agreement, from a legal title and

financial accounting perspective, A retains the as­

sets supporting the reinsured contracts (the With­

held Assets). A has a liability to B with respect to

the Withheld Assets (the Withheld Assets Payable).

A reflects all the unrealized gains and losses in the

Withheld Assets in OCI on its AFS, and A accounts

for the corresponding changes in the Withheld Assets

Payable as part of its Net Income. B records an as­

set that corresponds to A’s Withheld Assets Payable

(the Withheld Assets Receivable), and B accounts for

changes in the Withheld Assets Receivable as part of

its Net Income.

At the end of Year 1, no Withheld Assets have

been sold, and the fair market value of the Withheld

Assets has increased by $10x. On A’s AFS, it in­

cludes the $10x unrealized gain in OCI and records

the effect of the $10x increase in its Withheld Assets

Payable in its Net Income. B records the effect of a

corresponding $10x increase in its Withheld Assets

Receivable in its Net Income.

(ii) Analysis. Each of A and B is a Covered Insur­

ance Company as defined in section 2.05(1) of this

notice. The funds withheld reinsurance contract is a

Covered Reinsurance Agreement as defined in sec­

tion 2.05(5) of this notice. The $10x of unrealized

gain in the Withheld Assets is included in OCI on A’s

AFS. Pursuant to section 4.02(1)(a) of this notice, to

the extent the $10x of unrealized gain is not included

in A’s AFSI, the amount included in A’s Net Income

as a result of the $10x increase in A’s Withheld As­

sets Payable is excluded from A’s AFSI.

The amount included in B’s Net Income as a

result of the $10x increase in B’s Withheld Assets

Receivable corresponds to the unrealized gain in the

Withheld Assets. Pursuant to section 4.02(1)(b) of

this notice, this $10x increase is excluded from B’s

AFSI.

rules provided in § 177(d)(2) of the 1984

Act apply with respect to any asset held

by the Fresh Start Entity since January 1,

1985.

(2) For purposes of determining AFSI

of a Fresh Start Entity described in sec­

tion 2.04(2) or (3) of this notice (and any

successor(s) under § 381), the gain or loss

(but not depreciation, amortization, or

other amounts) for any asset held by the

Fresh Start Entity since the first day of its

first taxable year beginning after the test­

ing date is determined using its adjusted

tax basis for such asset. For purposes of

the previous sentence, the term testing

date means December 31, 1986, in the

case of a Fresh Start Entity described in

section 2.04(2) of this notice, and Decem­

ber 31, 1997, in the case of a Fresh Start

Entity described in section 2.04(3) of this

notice.

SECTION 5. AFSI DETERMINATION

RESPECTS CONGRESSIONAL

“FRESH START”

.01 Comments Regarding Guidance

Provided in this Notice. The Treasury

Department and the IRS request com­

ments on any questions arising from the

interim guidance set forth in this notice.

Commenters are encouraged to specify

the issues on which additional guidance

(including additional interim guidance) is

needed most quickly, as well as the most

important issues on which guidance is

needed. In addition to general comments

regarding the provisions of this notice, the

Treasury Department and the IRS request

comments to address the following specif­

ic questions:

(1) AFSI adjustments for variable contracts and similar contracts (section 3 of

the notice).

(a) Should a rule similar to that in sec­

tion 3.02 of this notice apply to any con­

.01 Purpose. The Treasury Department

and the IRS anticipate that the forthcom­

ing proposed regulations will be consistent

with the guidance provided in this section

5. The Treasury Department and the IRS

are providing this interim guidance to as­

sist the Fresh Start Entities in applying the

CAMT to certain transactions occurring

prior to the issuance of the forthcoming

proposed regulations.

.02 Respecting Congressional “Fresh

Start” for Determining AFSI.

(1) For purposes of determining AFSI

of a Fresh Start Entity described in sec­

tion 2.04(1) of this notice (and any suc­

cessor(s) under § 381), the adjusted basis

Bulletin No. 2023–10

SECTION 6. APPLICABILITY DATES

It is anticipated that the forthcoming

proposed regulations will provide that

rules consistent with the rules described in

sections 3 through 5 of this notice apply

for taxable years beginning after Decem­

ber 31, 2022. Prior to the issuance of the

forthcoming proposed regulations, tax­

payers may rely on the rules in sections 3

through 5 of this notice.

SECTION 7. REQUEST FOR

COMMENTS

527

tracts other than those described in sec­

tions 2.02(1), 2.02(2)(a), and 2.02(2)(b)

of this notice?

(b) Can the result of the rule in section

3.02(1) of this notice be achieved in a

more easily administered manner?

(c) In what situations and for what rea­

sons would assets be transferred between

a Covered Investment Pool and a Covered

Insurance Company’s general account?

Should there be additional adjustments

beyond those described in this notice with

respect to such assets?

(2) AFSI adjustments for covered reinsurance agreements (section 4 of the notice).

(a) Does the notice accurately describe

the financial accounting for funds with­

held reinsurance and modified coinsur­

ance agreements? Does the rule described

in section 4.02(1) of this notice adequately

address the issue?

(b) Should the definition of Covered

Reinsurance Agreement in section 2.05(5)

of this notice be revised or expanded?

(c) Would it be useful to more specif­

ically describe the fair value elections

available under U.S. GAAP and IFRS?

If so, how should the elections be de­

scribed?

(d) Does the rule in section 4.02(2) of

this notice appropriately adjust the rule

in section 4.02(1) of this notice when fair

value elections are made?

(e) Should the rule in section 4.02(1)

of this notice reference the “embedded

derivative”? If so, how should such rule

reference the embedded derivative, and

how should “embedded derivative” be

defined?

(3) Respecting “fresh start” for determining AFSI (section 5 of the notice).

(a) Are there other formerly tax-ex­

empt entities the repeal of whose subtitle

A exemption was associated with special

statutory “fresh start” basis rules similar

to those applicable to any Fresh Start En­

tity?

(b) Should a rule similar to that in sec­

tion 5.02 of this notice apply to any other

entities?

.02 Procedures for Submitting Comments.

(1) Deadline. Written comments should

be submitted by April 3, 2023. Consid­

eration will be given, however, to any

written comment submitted after April 3,

March 6, 2023

2023, if such consideration will not delay

the issuance of the forthcoming proposed

regulations.

(2) Form and manner. The subject line

for the comments should include a refer­

ence to Notice 2023-20. All commenters

are strongly encouraged to submit com­

ments electronically. However, comments

may be submitted in one of two ways:

(a) Electronically via the Federal

eRulemaking Portal at www.regulations.

gov (type IRS-2023-0005 in the search

March 6, 2023

field on the regulations.gov homepage to

find this notice and submit comments);

or

(b) By mail to: Internal Revenue Ser­

vice, CC:PA:LPD:PR (Notice 2023-20),

Room 5203, P.O. Box 7604, Ben Franklin

Station, Washington, D.C., 20044.

(3) Publication of comments. The Trea­

sury Department and the IRS will publish

for public availability any comment sub­

mitted electronically and on paper to its

public docket on regulations.gov.

528

SECTION 8. DRAFTING AND

CONTACT INFORMATION

The principal author of this notice is

Ian Follansbee of the Office of the Asso­

ciate Chief Counsel (Financial Institutions

and Products). Other personnel from the

Treasury Department and the IRS par­

ticipated in its development. For further

information regarding this notice, please

contact Mr. Follansbee at 312-368-8238

(not a toll-free number).

Bulletin No. 2023–10

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 pub­

lished 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 ap­

plied 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 be­

ing made clear because the language has

caused, or may cause, some confusion. It

is not used where a position in a prior rul­

ing is being changed.

Distinguished describes a situation

where a ruling mentions a previously pub­

lished 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 pub­

lished ruling that is not considered deter­

minative 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 sub­

stance 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 previous­

ly 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 rul­

ings 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 cas­

es in litigation, or the outcome of a Ser­

vice 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. 2023–10

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.

March 6, 2023

Numerical Finding List1

Bulletin 2023–10

Announcements:

2023-2, 2023-2 I.R.B. 344

2023-1, 2023-3 I.R.B. 422

2023-3, 2023-5 I.R.B. 447

2023-4, 2023-7 I.R.B. 470

2023-5, 2023-9 I.R.B. 499

2023-6, 2023-9 I.R.B. 501

Revenue Rulings:

2023-1, 2023-2 I.R.B. 309

2023-3, 2023-6 I.R.B. 448

2023-4, 2023-9 I.R.B. 480

2023-5, 2023-10 I.R.B. 503

Treasury Decisions:

9970, 2023-2 I.R.B. 311

9771, 2023-3 I.R.B. 346

AOD:

2023-1, 2023-10 I.R.B. 502

Notices:

2023-4, 2023-2 I.R.B. 321

2023-5, 2023-2 I.R.B. 324

2023-6, 2023-2 I.R.B. 328

2023-8, 2023-2 I.R.B. 341

2023-1, 2023-3 I.R.B. 373

2023-2, 2023-3 I.R.B. 374

2023-3, 2023-3 I.R.B. 388

2023-7, 2023-3 I.R.B. 390

2023-9, 2023-3 I.R.B. 402

2023-10, 2023-3 I.R.B. 403

2023-11, 2023-3 I.R.B. 404

2023-12, 2023-6 I.R.B. 450

2023-13, 2023-6 I.R.B. 454

2023-16, 2023-8 I.R.B. 479

2023-17, 2023-10 I.R.B. 505

2023-18, 2023-10 I.R.B. 508

2023-20, 2023-10 I.R.B. 523

Proposed Regulations:

REG-100442-22, 2023-3 I.R.B. 423

REG-146537-06, 2023-3 I.R.B. 436

REG-114666-22, 2023-4 I.R.B. 437

Revenue Procedures:

2023-1, 2023-1 I.R.B. 1

2023-2, 2023-1 I.R.B. 120

2023-3, 2023-1 I.R.B. 144

2023-4, 2023-1 I.R.B. 162

2023-5, 2023-1 I.R.B. 265

2023-7, 2023-1 I.R.B. 305

2023-8, 2023-3 I.R.B. 407

2023-10, 2023-3 I.R.B. 411

2023-11, 2023-3 I.R.B. 417

2023-14, 2023-6 I.R.B. 466

2023-9, 2023-7 I.R.B. 471

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2022–27 through 2022–52 is in Internal Revenue Bulletin

2022–52, dated December 27, 2022.

1

March 6, 2023

ii

Bulletin No. 2023–10

Finding List of Current Actions on

Previously Published Items1

Bulletin 2023–10

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2022–27 through 2022–52 is in Internal Revenue Bulletin

2022–52, dated December 27, 2022.

1

Bulletin No. 2023–10

iii

March 6, 2023

Internal Revenue Service

Washington, DC 20224

Official Business

Penalty for Private Use, $300

INTERNAL REVENUE BULLETIN

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