Bulletin No. 2026–31

HIGHLIGHTS

OF THIS ISSUE





Bulletin No. 2026–31

July 27, 2026

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.

ADMINISTRATIVE, INCOME TAX

Rev. Proc. 2026-26, page 131.

This revenue procedure provides indexing adjustments to

the applicable percentage table in § 36B(b)(3)(A)(i) of the

Code for taxable years beginning in calendar year 2027.

This table is used to calculate an individual’s premium tax

credit under § 36B. The revenue procedure also provides

the indexing adjustment for the required contribution percentage in § 36B(c)(2)(C)(i)(II) for plan years beginning in

calendar year 2027. This percentage is used to determine

whether an individual is eligible for affordable employer-sponsored minimum essential coverage under § 36B.

TD 10051, page 118.

This document contains final regulations that identify certain charitable remainder annuity trust (CRAT) transactions

and substantially similar transactions as listed transactions,

a type of reportable transaction. Material advisors and certain participants in these listed transactions are required to

file disclosures with the IRS and will be subject to penalties

Finding Lists begin on page ii.

for failure to disclose. The final regulations affect participants in these transactions as well as material advisors

but provide that certain organizations whose only role or

interest in the transaction is as a charitable remainderman

will not be treated as participants in the transaction or as

parties to a prohibited tax shelter transaction subject to

excise taxes and disclosure requirements.

INCOME TAX

TD 10052, page 121.

This document contains final regulations providing guidance

on the application of the transfer for valuable consideration

rules and associated information reporting requirements for

reportable policy sales of interests in life insurance contracts

to exchanges of life insurance contracts qualifying for nonrecognition of gain or loss and certain acquisitions of interests in life insurance contracts in transactions that qualify as

corporate reorganizations. The final regulations affect parties

involved in these life insurance contract transactions, including with respect to payments of reportable death benefits.

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.

July 27, 2026 

Bulletin No. 2026–31

Part I

26 CFR 1.6050K-1: Returns relating to sales or

exchanges of certain partnership interests.

TD 10051

DEPARTMENT OF

TREASURY

Internal Revenue Service

26 CFR Part 1

Charitable Remainder

Annuity Trust Listed

Transaction

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Final rule.

SUMMARY: This document contains

final regulations that identify certain

charitable remainder annuity trust

(CRAT) transactions and substantially

similar transactions as listed transactions, a type of reportable transaction.

Material advisors and certain participants in these listed transactions are

required to file disclosures with the IRS

and will be subject to penalties for failure to disclose. The final regulations

affect participants in these transactions

as well as material advisors but provide

that certain organizations whose only

role or interest in the transaction is as

a charitable remainderman will not be

treated as participants in the transaction

or as parties to a prohibited tax shelter

transaction subject to excise taxes and

disclosure requirements.

DATES: Effective date: These regulations

are effective on July 9, 2026.

Applicability date: For applicability

date, see § 1.6011-15(e).

FOR FURTHER INFORMATION

CONTACT: Concerning the final regulations, Charles D. Wien of the Office of

Associate Chief Counsel (Passthroughs,

Trusts & Estates) (202) 317-5279 (not a

toll-free number).

July 27, 2026

SUPPLEMENTARY INFORMATION:

Authority

This document amends the Income Tax

Regulations (26 CFR part 1) by adding

final regulations under section 6011 of the

Internal Revenue Code (Code) to identify

certain CRAT transactions as listed transactions, a type of reportable transaction

(final regulations).

Section 6001 of the Code provides an

express delegation of authority to the Secretary of the Treasury or his delegate (Secretary) to require, either by notice served

or by regulations, every taxpayer to keep

the records, render the statements, make

the returns, and comply with the rules and

regulations that the Secretary deems necessary to demonstrate tax liability.

Section 6011(a) of the Code provides

an express delegation of authority to the

Secretary to require every taxpayer to

“make a return or statement according to

the forms and regulations prescribed by

the Secretary” and “include therein the

information required by such forms or

regulations.”

Section 6707A(c) of the Code confirms the Secretary’s authority to identify

transactions as “reportable transactions”

and as “listed transactions” and to require

reporting of information relating to such

transactions pursuant to the authority conferred by section 6011. Section 6707A(c)

(1) defines the term “reportable transaction” to mean “any transaction with

respect to which information is required

to be included with a return or statement

because, as determined under regulations

prescribed under section 6011, such transaction is of a type which the Secretary

determines as having a potential for tax

avoidance or evasion.” In addition, section 6707A(c)(2) defines the term “listed

transaction” to mean a reportable transaction that is “the same as, or substantially

similar to, a transaction specifically identified by the Secretary as a tax avoidance

transaction for purposes of section 6011.”

The final regulations also are issued

under the express delegation of authority

under section 7805(a) of the Code, which

authorizes the Secretary to “prescribe

all needful rules and regulations for the

118

enforcement of [the Code], including all

rules and regulations as may be necessary

by reason of any alteration of law in relation to internal revenue.”

Background

On March 25, 2024, the Department

of Treasury (Treasury Department) and

the IRS published a notice of proposed

rulemaking (REG-108761-22) in the Federal Register (89 FR 20569) proposing

regulations at new § 1.6011-15 (proposed

§ 1.6011-15) that would identify certain

CRAT transactions and substantially similar transactions as “listed transactions” for

purposes of § 1.6011-4 and sections 6111

and 6112 of the Code (proposed regulations). The Treasury Department and the

IRS received one comment in response

to the proposed regulations that are the

subject of this final rulemaking. The comment is available for public inspection

at https://www.regulations.gov or upon

request. No public hearing was held on the

proposed regulations because there were

no requests to speak.

Summary of and Response to

Comment

The one comment received supports

the proposed regulations and agrees that

the transactions described in the proposed

regulations miscomprehend the operation

of the tier structure under section 664 that

governs the characterization and taxation

of distributions from CRATs. In addition,

the commenter noted that the CRATs

described in the proposed regulations

have other technical flaws that would prevent the purported CRATs from qualifying

as CRATs under section 664(d)(1).

The commenter also agreed with the

proposal that an organization described

in section 170(c) of the Code that the purported CRAT designates as a recipient of

the remainder interest is not treated as (1)

a participant under § 1.6011-4(c)(3)(i)(A)

in the transaction, or (2) as a party to the

transaction for purposes of section 4965

of the Code solely by reason of its status

as a recipient of the remainder interest

described in section 664(d)(1). Further,

the commenter pointed out that the char-

Bulletin No. 2026–31

itable remainder beneficiary often is not

even aware of the existence of its remainder interest until the charitable organization receives a distribution from the trust.

The proposed regulations requested

comments concerning whether a charitable remainder beneficiary could be a

material advisor under section 6111(b)(1)

(A), and asked, in particular, whether the

charitable remainder beneficiary ever provides material aid, assistance, or advice

with respect to transactions described in

proposed § 1.6011-15(b), the nature of

the services being provided, and what

fees the charitable remainder beneficiary

would receive for providing such material

aid, assistance, or advice. In response to

this request for comments, the commenter

stated that, based on its experience, charitable remainder beneficiaries rarely provide material aid, assistance, or advice,

and that any material aid, assistance, or

advice is most often provided by the promoters of the transaction. Additionally,

the commenter stated it is not aware of

cases in which charitable remainder beneficiaries have received fees, either directly

or indirectly, for providing material aid,

assistance, or advice.

However, the commenter noted that

it is possible that a charity would provide general information about a CRAT

to a participant in the listed transaction.

Specifically, it would not be unusual for

a charity to suggest consideration of a

CRAT to a potential charitable donor or

to explain to that potential donor the elements and operation of a trust that qualifies as a CRAT. The commenter requested

that the final regulations make clear that

a charitable remainder beneficiary will

not be considered to provide material aid,

assistance, or advice unless the charitable

remainder beneficiary provides information that specifically endorses the abusive interpretation of the applicability and

operation of the tier structure under which

CRAT distributions are taxed by section

664(b).

Section 301.6111-3(b)(1) provides that

a person is a material advisor with respect

to a transaction if the person provides any

material aid, assistance, or advice with

respect to organizing, managing, promoting, selling, implementing, insuring, or

carrying out any reportable transaction

and directly or indirectly derives gross

Bulletin No. 2026–31

income in excess of the threshold amount

provided in § 301.6111-3(b)(3). Section

301.6111-3(b)(2)(i) provides that a person provides material aid, assistance, or

advice if the person makes or provides a

tax statement to or for the benefit of any

person described in § 301.6111-3(b)(2)

(i). Section 301.6111-3(b)(2)(ii) generally provides that a tax statement is any

statement (including another person’s

statement), oral or written, that relates to

a tax aspect of a transaction that causes

the transaction to be a reportable transaction.

A description of the effect of section 664(b) that includes, or a statement

endorsing, the abusive interpretation of

the application or operation of the tier

structure under section 664(b) would be

considered a tax statement as defined in §

301.6111-3(b)(2)(ii) as noted by the commenter, as would other statements regarding other elements of the transaction

described in these final regulations, such

as the validity of the terms of a CRAT

used in the structure. However, a mere

suggestion or description of a trust qualifying as a CRAT would not be a statement relating to a tax aspect of the transaction that causes the transaction to be a

reportable transaction. As a result, as was

discussed by the commenter, simply suggesting a donor’s consideration of the creation of, or providing general information

regarding, a trust qualifying as a CRAT

would not be a tax statement that would

result in the charity being a material advisor. Furthermore, to be a material advisor,

the charitable remainderman must receive

gross income (such as a fee) at least equal

to the thresholds in § 301.6111-3(b)(3),

and the commenter noted that it was not

aware of charitable remaindermen receiving fees for providing material aid, assistance, or advice.

Because the application of rules governing who is considered a material

adviser seem sufficiently clear in this

context, the Treasury Department and

IRS have determined that it is unnecessary to address the issue in the regulatory

text. Thus, the Treasury Department and

IRS decline to adopt the proposed change

recommended by the commenter in finalizing the proposed regulations, and the

proposed regulations are adopted as final

without change.

119

Special Analyses

I. Regulatory Planning and Review

These regulations are not subject to

review under section 6(b) of Executive

Order 12866 pursuant to the Memorandum of Agreement (July 4, 2025) between

the Treasury Department and the Office of

Management and Budget (OMB) regarding review of tax regulations. Therefore,

a regulatory impact assessment is not

required.

II. Paperwork Reduction Act

The estimated number of taxpayers

impacted by these final regulations is

between 50 to 100 per year. No burden

on these taxpayers is imposed by these

final regulations. Instead, the collection of

information contained in these final regulations is reflected in the collection of

information for Form 8886, Reportable

Transaction Disclosure Statement, and

Form 8918, Material Advisor Disclosure

Statement, that have been reviewed and

approved by the OMB in accordance with

the Paperwork Reduction Act (44 U.S.C.

3507(c)) under control numbers 15451800 and 1545-0865.

To the extent there is a change in burden as a result of these regulations, the

change in burden will be reflected in the

updated burden estimates for Forms 8886

and 8918. The requirement to maintain

records to substantiate information on

Forms 8886 and 8918 already is contained

in the burden associated with the control numbers for the forms and remains

unchanged.

An agency may not conduct or sponsor,

and a person is not required to respond

to, a collection of information unless the

collection of information displays a valid

OMB control number.

III. Regulatory Flexibility Act

The Regulatory Flexibility Act (5

U.S.C. chapter 6) (RFA) requires the

agency to “prepare and make available

for public comment an initial regulatory

flexibility analysis” which will “describe

the impact of the proposed rule on small

entities.” 5 U.S.C. 603(a). The term

“small entities” is defined in 5 U.S.C.

July 27, 2026

601(6) to mean “small business,” “small

organization,” and “small governmental

jurisdiction,” which also are defined in 5

U.S.C. 601(3) through (5). Small business

size standards define whether a business

is “small” and have been established for

types of economic activities, or industry, generally under the North American

Industry Classification System (NAICS).

See title 13, part 121 of the Code of Federal

Regulations (titled “Small Business Size

Regulations”). The size standards look at

various factors, including annual receipts,

number of employees, and amount of

assets, to determine whether the business

is small. See title 13, part 121.201 of the

Code of Federal Regulations for the Small

Business Size Standards by NAICS Industry.

Section 605 of the Act allows an

agency to certify a rule if the rulemaking

is not expected to have a significant economic impact on a substantial number of

small entities. The Treasury Department

and the IRS hereby certify that these final

regulations will not have a significant economic impact on a substantial number of

small entities. This certification is based

on the fact that the majority of the effect

of the final regulations falls on individuals

and trusts. Further, the Treasury Department and the IRS expect that the reporting

burden is low; the information sought is

necessary for regular annual return preparation and ordinary recordkeeping.

For the reasons stated, a regulatory

flexibility analysis under the RFA is not

required. Pursuant to section 7805(f) of

the Code, the proposed rule preceding this

rulemaking was submitted to the Chief

Counsel for the Office of Advocacy of the

Small Business Administration for comment on its impact on small business and

no comments were received.

IV. Unfunded Mandates Reform Act

Section 202 of the Unfunded Mandates

Reform Act of 1995 (UMRA) requires

that agencies assess anticipated costs and

benefits and take certain other actions

before issuing a final rule that includes any

Federal mandate that may result in expenditures in any one year by a State, local,

or Tribal government, in the aggregate,

or by the private sector, of $100 million

(updated annually for inflation). This final

July 27, 2026

rule does not include any Federal mandate

that may result in expenditures by State,

local, or Tribal governments, or by the private sector in excess of that threshold.

V. Executive Order 13132: Federalism

Executive Order 13132 (Federalism)

prohibits an agency from publishing any

rule that has federalism implications if

the rule either imposes substantial, direct

compliance costs on State and local governments, and is not required by statute,

or preempts State law, unless the agency

meets the consultation and funding requirements of section 6 of the Executive order.

This final rule does not have federalism

implications and does not impose substantial direct compliance costs on State and

local governments or preempt State law

within the meaning of the Executive order.

Drafting Information

The principal author of these final

regulations is Charles D. Wien, Office of

Associate Chief Counsel (Passthroughs,

Trusts, & Estates). However, other personnel from the IRS and the Treasury

Department participated in the development of these regulations.

List of Subjects in 26 CFR Part 1

Income taxes, Reporting and recordkeeping requirements.

Adoption of Amendments to the

Regulations

Accordingly, the Treasury Department

and the IRS amend 26 CFR part 1 as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation

for part 1 is amended by adding an entry

for § 1.6011-15 in numerical order to read,

in part, as follows:

Authority: 26 U.S.C. 7805 * * *

*****

Section 1.6011-15 also issued under 26

U.S.C. 6001 and 26 U.S.C. 6011.

*****

Par. 2. Section 1.6011-15 is added to

read as follows:

120

§1.6011-15 Charitable remainder

annuity trust listed transaction.

(a) In general. Transactions that are

the same as, or substantially similar to, a

transaction described in paragraph (b) of

this section are identified as listed transactions for purposes of § 1.6011-4(b)(2).

(b) Charitable remainder annuity

trusts. A transaction is described in this

paragraph (b) if:

(1) The grantor creates a trust purporting to qualify as a charitable remainder

annuity trust under section 664(d)(1) of

the Internal Revenue Code (Code);

(2) The grantor funds the trust with

property having a fair market value in

excess of its basis (contributed property);

(3) The trustee sells the contributed

property;

(4) The trustee uses some or all of the

proceeds from the sale of the contributed

property to purchase an annuity; and

(5) On a Federal income tax return, the

beneficiary of the trust treats the annuity amount payable from the trust as if it

were, in whole or in part, an annuity payment subject to section 72 of the Code,

instead of as carrying out to the beneficiary amounts in the ordinary income and

capital gain tiers of the trust in accordance

with section 664(b).

(c) Participation—(1) In general. A

taxpayer has participated in a transaction

identified as a listed transaction in paragraph (a) of this section if the taxpayer’s

tax return reflects tax consequences or a

tax strategy described in this section as

provided under § 1.6011-4(c)(3)(i)(A).

These tax consequences include those tax

consequences that would affect any gift

tax return, whether or not such gift tax

return was filed. See § 25.6011-4 of this

chapter.

(2) Treatment of charitable remainderman. An organization described in

section 170(c) of the Code that the purported charitable remainder annuity trust

designates as a recipient of the remainder

interest described in section 664(d)(1) is

not treated as a participant under § 1.60114(c)(3)(i)(A) in the transaction described

in this section solely by reason of its status as a recipient of the remainder interest

described in section 664(d)(1).

(d) Treatment of charitable remainderman under section 4965. A tax-exempt

Bulletin No. 2026–31

entity (as defined in section 4965 of the

Code) that is an organization described

in section 170(c) and that the purported

charitable remainder annuity trust designates as a recipient of the remainder

interest described in section 664(d)(1) is

not treated as a party to the transaction

described in this section for purposes of

section 4965 solely by reason of its status as a recipient of the remainder interest

described in section 664(d)(1).

(e) Applicability date. This section’s

identification of transactions that are the

same as, or substantially similar to, the

transaction described in paragraph (b) of

this section as listed transactions for purposes of § 1.6011-4(b)(2) is effective on

July 9, 2026.

Frank J. Bisignano,

Chief Executive Officer.

Approved: April 15, 2026

ACTION: Final rule.

SUMMARY: This document contains

final regulations providing guidance on

the application of the transfer for valuable consideration rules and associated

information reporting requirements for

reportable policy sales of interests in life

insurance contracts to exchanges of life

insurance contracts qualifying for nonrecognition of gain or loss and certain

acquisitions of interests in life insurance

contracts in transactions that qualify as

corporate reorganizations. The final regulations affect parties involved in these life

insurance contract transactions, including

with respect to payments of reportable

death benefits.

DATES: Effective date: These regulations

are effective on July 9, 2026.

Applicability dates: For dates of applicability, see §§ 1.101-6 and 1.6050Y-1(b).

Kenneth J. Kies.

Assistant Secretary of the Treasury

(Tax Policy).

FOR FURTHER INFORMATION

CONTACT: Allan H. Sakaue, (202) 3176995 (not a toll-free number).

(Filed by the Office of the Federal Register July 8,

2026, 8:45 a.m., and published in the issue of the

Federal Register for July 9, 2026, 91 FR 42353)

SUPPLEMENTARY INFORMATION:

26 CFR §§ 1.101-1, 1.101-6, 1.6050Y-1, 1.6050Y-2,

1.6050Y-3, 1.6050Y-4

TD 10052

DEPARTMENT OF THE

TREASURY

Internal Revenue Service

26 CFR Part 1

Information Reporting

and Transfer for Valuable

Consideration Rules for

Section 1035 Exchanges of

Life Insurance and Certain

Other Life Insurance

Contract Transactions

AGENCY: Internal Revenue Service

(IRS), Treasury.

Bulletin No. 2026–31

Authority

This document contains amendments

to 26 CFR part 1 under sections 101 and

6050Y of the Internal Revenue Code

(Code) issued pursuant to the express delegations of authority to the Secretary of

the Treasury or his delegate (Secretary)

provided under sections 6050Y(a) through

(c), and 7805(a) of the Code (final regulations).

Section 6050Y provides express delegations of authority to the Secretary to prescribe the time and manner to file information returns and furnish statements setting

forth certain information specified therein

by the following persons: (1) an acquirer

of a life insurance contract or any interest in a life insurance contract in a reportable policy sale during any taxable year

(section 6050Y(a)); (2) an issuer of a life

insurance contract in connection with a

reportable policy sale (section 6050Y(b));

and (3) a payor of death benefits during

any taxable year under a life insurance

contract transferred in a reportable policy

sale (section 6050Y(c)).

121

Section 7805(a) authorizes the Secretary to “prescribe all needful rules and regulations for the enforcement of [the Code],

including all rules and regulations as may

be necessary by reason of any alteration of

law in relation to internal revenue.”

Background

These final regulations amend regulations under sections 101 and 6050Y published in the Federal Register (TD 9879,

84 FR 58460) on October 31, 2019, as

corrected (84 FR 68042) on December 13,

2019 (2019 final regulations).

The Department of the Treasury (Treasury Department) and the IRS published

proposed regulations under sections 101

and 6050Y (REG-108054-21) in the Federal Register (88 FR 30058) on May 10,

2023 (2023 proposed regulations). The

2023 proposed regulations were published

in response to concerns raised following

publication of the 2019 final regulations

regarding the application of sections 101

and 6050Y to exchanges to which section

1035 of the Code applies (section 1035

exchanges) and to transfers of contracts

occurring in corporate reorganizations

under section 368 of the Code. The Treasury Department and the IRS received

written comments on the 2023 proposed

regulations and held a public hearing on

September 28, 2023.

After consideration of the written

comments and comments received at the

hearing, this Treasury Decision adopts the

2023 proposed regulations as final regulations with modifications, as described in

the Summary of Comments and Explanation of Revisions.

Summary of Comments and

Explanation of Revisions

This Summary of Comments and

Explanation of Revisions section discusses the comments received on the 2023

proposed regulations and explains the

revisions adopted in the final regulations

in response to those comments.

1. Comments Relating to Section 1035

Exchanges

As described in the preamble to the

2023 proposed regulations, the pro-

July 27, 2026

posed changes relating to section 1035

exchanges are intended to correct an unintended change effected by the 2019 final

regulations to the treatment under section

101 of a life insurance contract issued to a

policyholder in a section 1035 exchange,

while continuing to address the concerns

that prompted the inclusion of rules for

section 1035 exchanges in the 2019 final

regulations. These concerns include: (1)

that the reporting of death benefits paid

under section 6050Y(c) could be avoided

by exchanging a contract transferred in a

reportable policy sale (reportable policy

sale (RPS) contract) for a new contract

in a section 1035 exchange and (2) that

a policyholder could attempt to avoid the

limitation on the excludability of death

benefits resulting from the application of

the “transfer for value” rule set forth in

section 101(a)(2) through a section 1035

exchange. The 2023 proposed regulations

would accomplish these objectives in four

ways: (1) by removing the reference to

section 1035 exchanges in the definition

of a “transfer of an interest in a life insurance contract” (§ 1.101-1(e)(2) of the

2023 proposed regulations); (2) by adding a new rule on how to determine the

amount of the proceeds attributable to an

interest in a life insurance contract issued

in a section 1035 exchange that is excludable from gross income under section

101(a) (§ 1.101-1(b)(2)(iv) of the 2023

proposed regulations); (3) by modifying

the definition of “reportable policy sale” to

address section 1035 exchanges (§ 1.1011(c)(3) of the 2023 proposed regulations);

and (4) by making conforming modifications to §§ 1.6050Y-1 through 1.6050Y-4

of the 2019 final regulations. Regarding

conforming modifications to the reporting requirements under section 6050Y,

because section 1035 exchanges of RPS

contracts would no longer be required to

be reported under § 1.6050Y-2 of the 2019

final regulations, the 2023 proposed regulations would modify the reporting rules

under §§ 1.6050Y-3 and 1.6050Y-4 of the

2019 final regulations to ensure proper

reporting of reportable death benefits paid

under contracts issued in section 1035

exchanges.

Commenters generally expressed support for the 2023 proposed regulations

under section 101 regarding the treatment

of section 1035 exchanges. However, two

July 27, 2026

commenters requested clarification of

certain issues related to these provisions.

Additionally, one commenter requested

changes to the 2023 proposed regulations

under section 6050Y related to tracking

and information reporting requirements

for section 1035 exchanges of contracts

that have been transferred in reportable

policy sales.

These comments are addressed in

detail in parts 1.A through 1.D of this

Summary of Comments and Explanation

of Revisions.

A. Comments supporting the 2023

proposed regulations

Comments supporting the 2023 proposed regulations under section 101

regarding the treatment of section 1035

exchanges included comments from a

commenter that agreed with the determination in the 2023 proposed regulations

to exclude the issuance of a life insurance

contract to a policyholder, without qualification, from the events treated as a transfer

of an interest in a life insurance contract.

The commenter specifically supported the

proposed modification of § 1.101-1(e)(2)

of the 2019 final regulations to delete the

phrase “other than the issuance of a policy

in an exchange pursuant to section 1035”

from the last clause of that section. The

commenter noted that it is well understood

that a section 1035 exchange does not

transfer the beneficial rights of life insurance coverage to a different policyholder/

beneficiary, but, rather, is an exchange of

an existing life insurance coverage for

new life insurance coverage without any

material change. The commenter also

stated that it is well-settled in past IRS

rulings that a section 1035 exchange does

not change the tax attributes of the relinquished contract. Accordingly, the commenter reasoned, when an RPS contract is

relinquished in a section 1035 exchange,

the contract received in exchange should

be treated as an RPS contract.

Another commenter agreed that the

2023 proposed regulations correctly conclude that a section 1035 exchange, in and

of itself, is not a “transfer” of the newly

issued contract received in the exchange.

In support of the approach adopted in

the 2023 proposed regulations, the commenter observed that issuing a contract is

122

not a “transfer,” as a transfer of property

presupposes the existence of property that

can be transferred, and the new contract

received in a section 1035 exchange does

not exist until it is issued. The commenter

also explained that the 2019 final regulations create a conundrum by treating all

section 1035 exchanges as transfers for

valuable consideration for which the carryover basis exception is never available to

undo that treatment, regardless of whether

the policyholder has a substantial relationship with the insured when the exchange

occurs. The commenter remarked that,

if left uncorrected, the 2019 final regulations would effect a major change in the

Federal income tax treatment of contract

exchanges, as section 1035 exchanges

never triggered the transfer for value

rule before the 2019 final regulations.

The commenter applauded the Treasury

Department and the IRS for recognizing

that such a change in law is not warranted

or appropriate, for announcing a correction in the 2023 proposed regulations,

and for extending the correction retroactively to eliminate any doubt for taxpayers regarding the Federal income tax

treatment of contract exchanges they may

have completed in prior years. In further

support of the 2023 proposed regulations,

the commenter also noted that the regulations should not subvert the intent of section 1035, which is to ensure that policyholders are able to exchange existing life

insurance contracts for new ones better

suited to their needs without having to recognize gain, and that the 2019 final regulations inappropriately subvert the intent of

section 1035 by applying the transfer for

value rule merely because a life insurance

contract is exchanged for a new one. The

commenter further expressed agreement

with the preamble to the 2023 proposed

regulations that the provisions therein

are not inconsistent with section 101(j),

which concerns the treatment of certain

employer-owned life insurance contracts.

No comments received on the 2023 proposed regulations expressed an opposing

view on this point.

Consistent with these comments supporting the 2023 proposed regulations

under section 101 regarding the treatment

of section 1035 exchanges, the final regulations retain those provisions with clarifying changes to address the treatment of

Bulletin No. 2026–31

boot in a section 1035 exchange. These

include clarifying changes to the description of a “section 1035 exchange” in §§

1.101-1(a)(1) and 1.6050Y-1(a)(1) of the

2023 proposed regulations. Additionally,

clarifying changes are made to § 1.1011(b)(2)(iv)(B) of the 2023 proposed regulations. As clarified, § 1.101-1(b)(2)(iv)

(B) of the final regulations provides that,

in certain circumstances, the amount of

boot received tax-free in a section 1035

exchange will reduce the amount of proceeds attributable to the old interest that is

excludable from gross income under section 101(a) and will therefore also reduce

the amount of proceeds attributable to the

new interest that is excludable from gross

income under section 101(a). This clarification is consistent with the rules in §

1.101-1(b)(3) of the 2019 final regulations

and section 1031(d).

B. Request for clarification regarding

State insurable interest laws

Two of the commenters remarked on

the requirement in section 7702(a) of the

Code that a contract must be a “life insurance contract under the applicable law”

to qualify as a life insurance contract for

purposes of the Code. The commenters

observed that a contract issued in a purported section 1035 exchange does not

qualify as a life insurance contract for purposes of the Code if the contract violates

applicable State insurance law, including

State “insurable interest” laws, which the

commenters described as generally requiring that a policyholder have a substantial

family, business, or financial relationship

with the insured individual other than the

life insurance contract. The commenters

noted that, in such a case, section 101

would not apply to exclude the death benefit under the contract from gross income.

One of the commenters expressed the

view that it is not necessary to retain the

significant expansion of the transfer for

value rule that was reflected in the 2019

final regulations in order to discourage

or prevent section 1035 exchanges if the

exchange would violate State insurable

interest laws because current and longstanding Federal income tax rules and

potential adverse consequences under

State law already provide an incentive to

comply with such State laws. Consistent

Bulletin No. 2026–31

with this comment, the final regulations

adopt, as proposed, the provisions of the

2023 proposed regulations reversing the

expansion of the transfer for value rule

with respect to section 1035 exchanges

reflected in the 2019 final regulations.

The other commenter noted that the

2023 proposed regulations may have the

unintended effect of creating some confusion in the marketplace about whether

the “applicable law” requirement of section 7702(a) continues to apply. The

commenter suggested that the Treasury

Department and the IRS clarify as part

of the process of finalizing the 2023 proposed regulations that a contract issued as

part of a purported section 1035 exchange

remains subject to other requirements of

the Code, such as the requirement in section 7702(a) that the contract issued in an

exchange constitute a life insurance contract under the Code, which would require

that it be treated as a life insurance contract under applicable State law.

Regardless of whether a contract is

issued in a section 1035 exchange, it must

be described in section 7702(a) to be considered a life insurance contract under

section 101. Section 7702(a) requires,

among other things, that a contract be a

“life insurance contract under the applicable law,” State or foreign law, as applicable. The 2023 proposed regulations under

sections 101 and 6050Y address the consequences under sections 101 and 6050Y

in cases in which a life insurance contract

is issued in a section 1035 exchange. The

2023 proposed regulations do not affect

the application of other Code sections,

including, for instance, sections 1035 and

7702. The 2023 proposed regulations,

consequently, do not affect the determination of whether a contract issued in a

purported section 1035 exchange qualifies as a life insurance contract under section 7702(a) for purposes of the Code or

whether an exchange of contracts qualifies

as a section 1035 exchange. The same is

true of the final regulations.

A third commenter applauded the Treasury Department for proposing to modify

the 2019 final regulations to allow employers to pursue section 1035 exchanges of

contracts covering the lives of persons

who are no longer actively employed. This

comment could be read as suggesting that,

with respect to section 1035 exchanges,

123

the 2023 proposed regulations change the

requirement under section 7702(a) that

a contract be a “life insurance contract

under the applicable law” to qualify as a

life insurance contract for purposes of the

Code. However, this is not the case. Neither the 2023 proposed regulations nor the

final regulations change this requirement.

C. Requests for clarification regarding

other rules and guidance

One commenter requested confirmation that the circumstances described in

Notice 2009-48, 2009-24 I.R.B. 1085,

Q&As 14 and 15, do not give rise to a

material change in employer-owned life

insurance contracts for purposes of applying section 101(j). This commenter also

requested clarification that a forgiveness

of loaned policy cash value or distribution of cash or other property as a result

of an exchange would be recognized as

taxable gain under section 1031(b) of the

Code, but an enhancement of policy cash

value by the new carrier to offset a loss of

the exchanged value from the old policy

would not be treated as a taxable event.

The requests for clarification regarding

sections 101(j) and 1031 are not limited

to situations involving life insurance contracts acquired in reportable policy sales

and are beyond the scope of these regulations, which address the application of

sections 101(a) and 6050Y to life insurance contracts acquired in reportable policy sales.

This commenter also remarked that the

2023 proposed regulations do not address

Rev. Rul. 2011-9, 2011-12 I.R.B. 554. This

revenue ruling concerns the application to

section 1035 exchanges of life insurance

contracts of section 264(f)(1) of the Code,

which disallows any deduction for the

portion of a taxpayer’s “interest expense”

that is allocable to unborrowed policy

cash values of life insurance contracts and

annuity and endowment contracts. The

commenter expressed the understanding

that the 2023 proposed regulations render the employee exception in Rev. Rul.

2011-9 moot and requested that this point

be clarified. However, the section 264

issue addressed in Rev. Rul. 2011-9 is also

outside the scope of these final regulations

under sections 101 and 6050Y. Neither the

2023 proposed regulations nor the final

July 27, 2026

regulations affect Rev. Rul. 2011-9 or the

conclusion set forth therein.

D. Request for changes to information

reporting obligations and procedures

As described in the preamble to the

2023 proposed regulations, to ensure

proper reporting of reportable death benefits paid under contracts issued in section

1035 exchanges, § 1.6050Y-3(a) of the

2023 proposed regulations would require

reporting by each “6050Y(b) issuer” that

is a “section 1035 issuer” with respect to

each “seller” at the time of the exchange.

The 2023 proposed regulations would

generally impose a reporting obligation

on both the issuer of the old interest (old

issuer) and the issuer of the new interest

(new issuer) in a section 1035 exchange if

the policyholder (seller) is exchanging an

interest in a life insurance contract that has

been transferred in an RPS. The preamble

to the 2023 proposed regulations indicated

that it is anticipated that this reporting will

be completed on Form 1099-SB, Seller’s

Investment in Life Insurance Contract,

and the information to be provided would

include the policy number and identification of the transaction as a section 1035

exchange.

One commenter agreed with the Treasury Department and the IRS that modifying the information reporting rules is

the right way to address the concern that

prompted the inclusion of the section

1035 exchange rules in the 2019 final

regulations, which related to the possibility that a contract transferred in an RPS

subsequently could be exchanged for a

new contract pursuant to section 1035

and the death benefits under the new contract might not be reported under section

6050Y(c). The commenter recommended

that the Treasury Department and the

IRS finalize the information reporting

requirements in a manner that takes into

account public comments that may simplify or clarify such requirements or otherwise reduce the administrative burdens

imposed on the taxpayers charged with

implementing them. The commenter did

not, however, make any specific burden

reduction recommendations.

Another commenter suggested changes

to the provisions of the 2023 proposed

regulations related to tracking and infor-

July 27, 2026

mation reporting requirements for section

1035 exchanges of RPS contracts. The

commenter noted that the 2023 proposed

regulations would (1) track the RPS status

of a contract in an exchange by the policy

owner, (2) assure the death benefits paid

on such a contract are reported for tax

purposes, and (3) be consistent with the

remainder of the section 6050Y tax reporting regime. The commenter suggested

that these goals could be achieved with

less risk of confusion for policyholders

and less administrative burden on insurers than under the 2023 proposed regulations. While expressing appreciation for

the need to track the RPS tax attribute of

a life insurance contract more formally,

the commenter asserted that the requirement in § 1.6050Y-3(a) of the 2023 proposed regulations that the old issuer and

new issuer file an information return with

the IRS with respect to the section 1035

exchange is not necessary to accomplish

the desired compliance goals and should

therefore be removed. The commenter

also suggested removing the requirement

in § 1.6050Y-3(d)(1) of the 2023 proposed

regulations that section 6050Y(b) issuers

furnish a statement to sellers (policyholders) who make a section 1035 exchange.

Additionally, the commenter expressed

concerns regarding the anticipated use of

Form 1099-SB for reporting section 1035

exchanges of RPS contracts.

The commenter noted that insurers

involved in a section 1035 exchange typically share relevant information, including

cost basis, without the use of an official

IRS form. See, e.g., § 35.3405-1(T), Q&A

(E-8), of the Employment Tax Regulations. The commenter stated that the existing process established for companies to

share critical information about contracts

exchanged is effective and that the RPS

tax attribute could be incorporated in this

reliable and established practice. The commenter suggested modifying § 1.6050Y-3

of the 2019 final regulations to require

the issuer of the existing RPS contract

to furnish a statement to the issuer of a

new contract received in exchange for the

RPS contract in a section 1035 exchange.

Also, because the old issuer already

must use Form 1099-R, Distributions

From Pensions, Annuities, Retirement or

Profit-Sharing Plans, IRAs, Insurance

Contracts, etc., to report section 1035

124

exchanges, the commenter recommended

adding a new distribution code for Box 7

of Form 1099-R that would indicate that

the section 1035 exchange being reported

is an exchange of an RPS contract. Insurance companies currently report section

1035 exchanges of life insurance contracts

on Form 1099-R with a distribution code

“6” in Box 7, which identifies the distribution as a tax-free section 1035 exchange.

After consideration of the comments

received on the provisions of the 2023

proposed regulations relating to information reporting obligations and procedures,

the Treasury Department and the IRS have

determined that the filing of information

returns with the IRS by the old issuer and

new issuer with respect to section 1035

exchanges of RPS contracts is not necessary to accomplish the desired compliance goals. These goals can be addressed

through the old issuer’s Form 1099-R

reporting of the section 1035 exchange

and the related exchange of information

between the old issuer and the new issuer.

Accordingly, the following modifications to the proposed information reporting rules set forth in the 2023 proposed

regulations are made in the final regulations: (1) the definition of “issuer” in §

1.6050Y-1(a)(8) of the 2019 final regulations is not expanded to include “section

1035 issuers”; (2) no change is made to §§

1.6050Y-1(a)(14) and (18) and 1.6050Y3(c) of the 2019 final regulations because

the changes proposed in the 2023 proposed regulations are no longer necessary;

(3) the requirement under § 1.6050Y3(a) of the 2023 proposed regulations

for section 1035 issuers (both old issuers

described in § 1.6050Y-1(a)(8)(v)(A) of

the 2023 proposed regulations and new

issuers described in § 1.6050Y-1(a)(8)(v)

(B) of the 2023 proposed regulations) to

file information returns is not adopted; (4)

the exception from reporting set forth in

§ 1.6050Y-4(e)(3) of the 2023 proposed

regulations is modified and clarified;

and (5) the reporting requirements under

§ 1.6050Y-3(a) and (d) of the 2023 proposed regulations for section 1035 issuers to furnish statements are not adopted

and reporting with respect to section 1035

exchanges is instead required under new §

1.6050Y-3(h). Section 1.6050Y-3(h) of the

final regulations applies to section 1035

exchanges that are treated as the transfer

Bulletin No. 2026–31

of an interest in a life insurance contract in

a reportable policy sale under § 1.101-1(c)

(3) of the final regulations, but only if the

new issuer is not the old issuer. To ensure

proper reporting when a reportable death

benefit is paid under the new contract, the

old issuer will provide certain information

to the new issuer, including the policyholder’s investment in the contract with

respect to the old interest and a statement

indicating whether the old issuer would

have reported a payment of reportable

death benefits under § 1.6050Y-4 of the

final regulations had it paid death benefits attributable to the old interest on the

date of the section 1035 exchange. The old

issuer may use any reasonable method to

provide this information to the new issuer.

Although issuers will have no obligation to furnish statements to policyholders making a section 1035 exchange

under the final regulations, issuers may

still have an obligation to furnish statements to policyholders with respect to

a section 1035 exchange under other

Code sections or regulations. See section

6047(d); Rev. Proc. 92-26, 1992-1 C.B.

744. The final regulations do not require

additional reporting on the Form 1099-R,

but it is anticipated that, as suggested by

one of the commenters, a new distribution

code for Box 7 of Form 1099-R will be

added to indicate that the section 1035

exchange being reported is an exchange

of an RPS contract. Such reporting will

not be required before the IRS publishes

both a final Form 1099-R reflecting such

a requirement and final instructions for

completing such form.

2. Comments Relating to the De Minimis

Exception for Ordinary Course Mergers

and Acquisitions

As described in the preambles to the

2019 final regulations and the 2023 proposed regulations, the 2019 final regulations include provisions that effectively

exclude from the definition of RPS certain

acquisitions of life insurance contracts, or

interests therein, in ordinary course business transactions in which one trade or

business acquires another trade or business that owns life insurance. Following

the publication of the 2019 final regulations in the Federal Register, the Treasury Department and the IRS received a

Bulletin No. 2026–31

letter requesting the addition of an exception from the RPS rules for acquisitive

transactions involving entities that own

a de minimis amount of life insurance

(for example, as a proportion of the total

value of the transaction). More specifically, the author proposed that the Treasury Department and the IRS consider a

further exception for transactions in which

the amount of life insurance acquired as

a result of an acquisitive transaction (and

any related acquisitions) is five percent

or less of the value of the acquired stock,

assets, or both.

Section 1.101-1(c)(2)(v) of the 2023

proposed regulations provides an exception from the definition of “reportable

policy sale” for direct acquisitions of

interests in life insurance contracts from

a C corporation by a C corporation if (1)

the acquisition results from a transaction

that qualifies as a reorganization under

section 368(a); (2) immediately before

the acquisition, (i) the interest is held by

a C corporation that conducts an active

trade or business within the meaning of

§ 1.367(a)-2(d)(2) and (3), (ii) the C corporation does not engage in a trade or

business of investing in interests in life

insurance contracts, and (iii) no more

than 5 percent of the gross value of the

assets of the C corporation consists of life

insurance contracts; and (3) immediately

after the acquisition, (i) the acquiring C

corporation does not engage in a trade or

business of investing in interests in life

insurance contracts, and (ii) not more than

5 percent of the gross value of the assets of

the C corporation consists of life insurance

contracts. The two comments received on

the de minimis exception for ordinary

course mergers and acquisitions set forth

in § 1.101-1(c)(2)(v) of the 2023 proposed

regulations agreed that the transactions

covered by proposed § 1.101-1(c)(2)(v)

should not be reportable policy sales but

also requested certain expansions of the

exception. Both commenters urged that

the de minimis exception be expanded to

cover certain taxable transactions, rather

than just transactions that qualify as taxfree reorganizations under section 368(a)

as provided by § 1.101-1(c)(2)(v)(D) of

the 2023 proposed regulations.

One commenter asserted that this limitation is unnecessary and potentially confusing because it could result in disparate

125

treatment of taxpayers engaged in very

similar ordinary course business acquisitions that are structured differently for

non-tax business reasons with no clear

policy reason for why these transactions

should have different results under section

101. This commenter also recommended

removing the requirement in § 1.101-1(c)

(2)(v)(A) of the 2023 proposed regulations

that the interest in a life insurance contract

be held, immediately before acquisition,

by a C corporation that conducts an active

trade or business within the meaning of

§ 1.367(a)-2(d)(2) and (3) because it is

unnecessarily restrictive. The commenter

noted that acquisitive transactions often

occur at the holding company level as

opposed to the operating subsidiary level

and a holding company may not technically meet the “active trade or business”

standard even though the holding company owns operating subsidiaries that are

engaged in active trades or businesses.

The commenter made an alternative recommendation of modifying § 1.101-1(c)

(2)(v)(A) of the 2023 proposed regulations to permit the interest to be held

by a C corporation that is engaged in an

active trade or business or is a member

of an affiliated group that includes one or

more members engaged in an active trade

or business. The commenter asserted that

this approach would be consistent with

section 355(b)(3) and the regulations promulgated thereunder, upon which the section 367 regulations appear to have been

originally based and which, pursuant to

subsequent revisions that were made after

the release of the relevant section 367 regulations, test the active conduct of a trade

or business on an affiliated group level.

The other commenter similarly urged

that the de minimis exception should not

be limited to transactions that qualify as

a tax-free reorganization under section

368(a), and further, that it should also

apply to acquisitive transactions of non-C

corporation targets. This commenter

highlighted the acknowledgement in the

preamble to the 2023 proposed regulations that “C corporations are not frequently used as vehicles for investing in

life insurance contracts covering insureds

with respect to which the corporation does

not have a substantial business, financial,

or family relationship at the time the contract is issued because a corporate level

July 27, 2026

income tax applies to corporate earnings

in addition to income tax on distributions

at the shareholder level” and asserted that

other types of business entities also “are

not frequently used as vehicles for investing in life insurance contracts covering

insureds with respect to which the corporation does not have a substantial business, financial, or family relationship at

the time the contract is issued.” This commenter also remarked that it is concerning that transactions with identical (or

nearly identical) economic substance may

have divergent outcomes with respect to

whether the transaction gives rise to an

RPS depending on the transaction’s form.

This commenter further asserted that

there are a number of legal, economic,

and business reasons why it is highly

unlikely that ordinary course business

acquisitions involving meager amounts

of life insurance contracts can simply be

restructured to meet the form-driven rules

of either the 2023 proposed regulations

or the 2019 final regulations, but that

negative outcomes with respect to these

incidentally transferred insurance contracts do have significant consequences

to a variety of stakeholders. Finally, the

commenter expressed concern that since

the issuance of the 2019 final regulations,

the life insurance industry has continued

to see a number of circumstances where

transactions that are wholly unrelated to

the transfer of life insurance contracts

have unclear outcomes under the RPS

rules. For these reasons, the commenter

urged that the de minimis exception be

expanded to entities other than C corporations and regardless of the type of acquisitive transaction involved.

After consideration of the comments

received on the de minimis exception for

ordinary course mergers and acquisitions

set forth in § 1.101-1(c)(2)(v) of the 2023

proposed regulations, the final regulations

adopt this provision without change. The

Treasury Department and the IRS will

continue to consider the possibility of proposing a rule broader than the one set forth

in the 2023 proposed regulations, but will

not delay the adoption of the 2023 proposed regulations supported by commenters while studying the issue. The Treasury

Department and the IRS invite additional

comments regarding the scope of the de

minimis exception.

July 27, 2026

3. Comments Relating to the Applicability

Date

In general, the 2023 proposed regulations would apply to certain transactions

occurring on or after the date the 2023

proposed regulations are finalized. See

§§ 1.101-6(c) and 1.6050Y-1(b)(2) of

the 2023 proposed regulations. The commenter requesting changes to the information reporting provisions of the 2023 proposed regulations discussed in part 1.D of

this Summary of Comments and Explanation of Revisions also requested transition

relief from the reporting obligations if the

proposed reporting changes suggested by

the commenter were not adopted. Because

the final regulations adopt the commenter’s suggested reporting changes, no transition relief is provided in the final regulations. The applicability date provisions in

the 2023 proposed regulations are adopted

in the final regulations. See §§ 1.101-6(c)

and 1.6050Y-1(b)(2) of the final regulations. However, for administrative reasons, § 1.6050Y-1(b) is republished in its

entirety in the final regulations to reflect

all changes to § 1.6050Y-1(b), including

the ministerial changes set out in the 2023

proposed regulations to address the addition of § 1.6050Y-1(b)(2).

Special Analyses

I. Regulatory Planning and Review—

Economic Analysis

These final regulations are not subject

to review under section 6(b) of Executive

Order 12866 pursuant to the Memorandum of Agreement (July 4, 2025) between

the Treasury Department and the Office of

Management and Budget (OMB) regarding review of tax regulations.

II. Paperwork Reduction Act

The additional collection of information

relating to the final regulations has been

reviewed and approved by OMB in accordance with the Paperwork Reduction Act

of 1995 (44 U.S.C. 3507(d)) under OMB

Control Number 1545-0119. In general,

the additional collection of information is

required for purposes of enforcing section

6050Y. When an interest in a life insurance

contract that was previously transferred,

126

or is treated as having been previously

transferred, in an RPS (old contract) is

exchanged by a policyholder under section

1035 for a new life insurance contract (new

contract), § 1.6050Y-3(h) of the final regulations requires the issuer of the old contract (old issuer) to notify the issuer of the

new contract (new issuer) of the status of

the old contract as a contract transferred,

or treated as having been transferred, in an

RPS and to provide the investment in the

contract for the old contract. This information is necessary to carry out the purpose of

section 6050Y(c), which requires a payor

of reportable death benefits to report certain information about payments of reportable death benefits.

The additional collection of information in § 1.6050Y-3(h) of the final regulations was suggested by commenters on

the proposed regulations as a simpler and

less burdensome alternative to the collection of information rules in the proposed

regulations, especially because most old

issuers routinely provide new issuers with

relevant information about the contract

being exchanged, including relevant RPS

information. Because the additional collection of information would achieve the

goal of providing the information necessary for the proper reporting of reportable

death benefits, the final regulations eliminate the reporting obligations that would

have been imposed by § 1.6050Y-3 of the

2023 proposed regulations on new issuers

with respect to section 1035 exchanges

and reduce the reporting obligations that

would have been imposed by § 1.6050Y-3

of the 2023 proposed regulations on

old issuers with respect to section 1035

exchanges.

The likely respondents to the collection

of information are life insurance companies.

The burden for the additional collection of information contained in §

1.6050Y-3 of the final regulations will be

reflected on Form 1099-R, Distributions

From Pensions, Annuities, Retirement or

Profit-Sharing Plans, IRAs, Insurance

Contracts, etc., when the burden is revised

to reflect the additional collection of information in § 1.6050Y-3. The burden also

will be revised when a new distribution

code for Box 7 of Form 1099-R is added

to indicate that the section 1035 exchange

being reported is an exchange of an RPS

Bulletin No. 2026–31

contract. The OMB Control Number for

Form 1099-R is 1545-0119. The final regulations eliminate the burden on policyholders making section 1035 exchanges of

RPS contracts imposed by § 1.6050Y-2 of

the 2019 final regulations. The burden on

Form 1099-LS, Reportable Life Insurance

Sale, will accordingly be reduced when

the burden is revised. The OMB Control

Number for Form 1099-LS is 1545-2281.

III. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA)

requires agencies to “prepare and make

available for public comment an initial

regulatory flexibility analysis,” which will

“describe the impact of the proposed rule

on small entities.” 5 U.S.C. 603(a). Section

605(b) of the RFA allows an agency to certify a rule, in lieu of preparing an analysis,

if the proposed rulemaking is not expected

to have a significant economic impact on a

substantial number of small entities.

Pursuant to the RFA, it is hereby certified that the final regulations will not have

a significant economic impact on a substantial number of small entities, because

any effect on small entities by the rules

finalized in this document flows directly

from section 13520 of Public Law 115-97,

131 Stat. 2054, 2148, 2151 (2017), commonly known as the Tax Cuts and Jobs

Act (TCJA). In addition, it is anticipated

that requirements in the final regulations,

which implement the statutory requirements under section 13520 of the TCJA,

will fall primarily on financial and insurance firms with annual receipts greater

than $47 million and, therefore, on no

small entities. Therefore, the Secretary of

the Treasury hereby certifies that the final

regulations will not have a significant economic impact on a substantial number of

small entities.

Pursuant to section 7805(f) of the Code,

the notice of proposed rulemaking preceding the final regulations was submitted to

the Chief Counsel for the Office of Advocacy of the Small Business Administration

for comment on its impact on small business, and no comments were received.

IV. Unfunded Mandates Reform Act

Section 202 of the Unfunded Mandates

Reform Act of 1995 (UMRA) requires

Bulletin No. 2026–31

that agencies assess anticipated costs and

benefits and take certain other actions

before issuing a final rule that includes

any Federal mandate that may result in

expenditures in any one year by a State,

local, or Tribal government, in the aggregate, or by the private sector, of $100 million in 1995 dollars, updated annually for

inflation. This rule does not include any

Federal mandate that may result in expenditures by State, local, or Tribal governments, or by the private sector in excess of

that threshold.

Bulletin) and is available from the Superintendent of Documents, U.S. Government Publishing Office, Washington, DC

20402, or by visiting the IRS website at

https://www.irs.gov.

V. Executive Order 13132: Federalism

Accordingly, the Treasury Department

and IRS amend 26 CFR part 1 as follows:

Executive Order 13132 (Federalism)

prohibits an agency from publishing any

rule that has federalism implications if

the rule either imposes substantial, direct

compliance costs on State and local governments, and is not required by statute,

or preempts State law, unless the agency

meets the consultation and funding

requirements of section 6 of the Executive

order. These final regulations do not have

federalism implications and do not impose

substantial direct compliance costs on

State and local governments or preempt

State law within the meaning of the Executive order.

VI. Congressional Review Act

Pursuant to the Congressional Review

Act (5 U.S.C. 801 et seq.), the Office of

Information and Regulatory Affairs has

designated this rule as not a “major rule,”

as defined by 5 U.S.C. 804(2).

Drafting Information

The principal author of these regulations is Allan H. Sakaue, Office of Associate Chief Counsel (Financial Institutions and Products), IRS. However, other

personnel from the Treasury Department

and the IRS participated in their development.

Statement of Availability of IRS

Documents

Any IRS Revenue Procedure, Revenue Ruling, Notice, or other guidance

cited in this document is published in the

Internal Revenue Bulletin (or Cumulative

127

List of Subjects in 26 CFR Part 1

Income taxes, Reporting and recordkeeping requirements.

Adoption of Amendments to the

Regulations

PART 1--INCOME TAXES

Paragraph 1. The authority citation

for part 1 continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * *

Par. 2. Section 1.101-1 is amended by:

1. Adding a heading to paragraph (a)

and a sentence after the fourth sentence of

paragraph (a)(1);

2. Revising the headings to paragraph

(b) introductory text and paragraph (b)(2);

3. Adding paragraph (b)(2)(iv);

4. Adding a sentence at the end of paragraph (c)(1);

5. Revising paragraph (c)(2)(v);

6. Adding paragraph (c)(3);

7. In the last sentence of paragraph (e)

(2), removing the language “, other than

the issuance of a policy in an exchange

pursuant to section 1035”;

8. Adding two sentences after the

fourth sentence of paragraph (g)(11); and

9. Adding paragraphs (g)(17) through

(19).

The additions and revisions read as follows:

§ 1.101-1 Exclusion from gross income

of proceeds of life insurance contracts

payable by reason of death.

(a) Exclusion from gross income--(1)

In general. * * * The extent to which

this exclusion applies in cases in which

life insurance policies have been gratuitously transferred or issued in an

exchange to which section 1035(a) or

section 1031 (to the extent it relates to

section 1035(a)) applies (section 1035

July 27, 2026

exchange) is stated in paragraph (b)(2)

of this section. * * *

*****

(b) Transfers and exchanges of life

insurance policies. * * *

*****

(2) Other transfers and exchanges. * *

*

*****

(iv) Section 1035 exchanges. When an

interest in a life insurance contract (old

interest) is exchanged in a section 1035

exchange for an interest in a newly issued

life insurance contract (new interest),

except as otherwise provided by this section with respect to any portion of the new

interest that is transferred or exchanged

subsequent to the section 1035 exchange,

the amount of the proceeds attributable to

the new interest that is excludable from

gross income under section 101(a) is

determined under either paragraph (b)(2)

(iv)(A) or paragraph (b)(2)(iv)(B) of this

section.

(A) If, at the time of the exchange, the

entire amount of the proceeds attributable to the old interest would have been

excludable from gross income under section 101(a), the entire amount of the proceeds attributable to the new interest is

excludable from gross income.

(B) If, at the time of the exchange,

less than the entire amount of the proceeds attributable to the old interest would

have been excludable from gross income

under section 101(a), the amount of the

proceeds attributable to the new interest

that is excludable from gross income is

limited to the sum of the amount of the

proceeds attributable to the old interest

that would have been excludable at the

time of the exchange and the premiums

and other amounts paid with respect to the

new interest by the policyholder, reduced

(but not below zero) by amounts received

by the policyholder under the new life

insurance contract that are not received as

an annuity, to the extent excludable from

gross income under section 72(e). For

purposes of this paragraph (b)(2)(iv)(B),

the amount of the proceeds attributable

to the old interest that would have been

excludable at the time of the exchange is

decreased by the amount of any money

and the fair market value of any other

property received by the policyholder in

the exchange and increased by the amount

July 27, 2026

of gain to the policyholder that was recognized on such exchange.

*****

(c) * * *

(1) * * * See paragraph (c)(3) of this

section for special rules applicable to section 1035 exchanges.

(2) * * *

*****

(v) The direct acquisition of an interest

in a life insurance contract by a C corporation if:

(A) Immediately before the acquisition,

the interest is held by another C corporation (target C corporation) that actively

conducts a trade or business within the

meaning of § 1.367(a)-2(d)(2) and (3);

(B) Immediately before the acquisition,

the target C corporation does not engage

in a trade or business of investing in interests in life insurance contracts;

(C) Immediately before the acquisition, no more than 5 percent of the gross

value of the assets (as determined under

paragraph (f)(4) of this section) of the

target C corporation consists of life insurance contracts;

(D) The acquisition results from a

transaction that qualifies as a reorganization under section 368(a) with respect to

which the target C corporation and the

acquiring C corporation each is a party to

the reorganization (within the meaning of

section 368(b));

(E) Immediately after the acquisition,

the acquiring C corporation does not

engage in a trade or business of investing

in interests in life insurance contracts; and

(F) Immediately after the acquisition,

no more than 5 percent of the gross value

of the assets (as determined under paragraph (f)(4) of this section) of the acquiring C corporation consists of life insurance contracts.

(3) Section 1035 exchanges. This

paragraph (c)(3) applies if an interest in

a life insurance contract (old interest) is

exchanged in a section 1035 exchange for

an interest in a newly issued life insurance

contract (new interest), and the old interest previously was transferred for valuable

consideration in a reportable policy sale

under paragraph (c)(1) of this section or

is treated as an interest in a life insurance

contract that previously was transferred

for valuable consideration in a reportable policy sale under this paragraph (c)

128

(3). For purposes of this section, the new

interest is treated as an interest in a life

insurance contract that previously was

transferred for valuable consideration in a

reportable policy sale. For purposes of §§

1.6050Y-3(h) and 1.6050Y-4, the section

1035 exchange is treated as the transfer of

an interest in the life insurance contract in

a reportable policy sale.

*****

(g) * * *

(11) * * * Also, the exception in paragraph (c)(2)(v) of this section applies, provided Corporation X satisfies the requirements of paragraphs (c)(2)(v)(A) through

(C) of this section immediately before the

acquisition by Corporation Y, and Corporation Y satisfies the requirements of

paragraphs (c)(2)(v)(E) and (F) of this

section immediately after the acquisition.

This would be the case even if A were no

longer employed by Corporation X at the

time of the transfer. * * *

*****

(17) Example 17. The facts are the

same as in paragraph (g)(4) of this section

(Example 4), except that, before A’s death,

C exchanges the policy on A’s life for a

new policy on A’s life in a section 1035

exchange. The amount of the proceeds C

may exclude from C’s gross income under

this section is limited under paragraph (b)

(2)(iv)(B) of this section to $6,000 plus

any premiums and other amounts paid by

C with respect to the original policy subsequent to the transfer and any premiums

and other amounts paid by C with respect

to the new policy.

(18) Example 18. The facts are the

same as in paragraph (g)(17) of this section (Example 17), except that, before A’s

death, C sells the new policy to A for fair

market value. A’s estate receives the proceeds of $100,000 on A’s death. Under

paragraph (b)(1)(ii)(B)(3)(i) of this section, the amount of the proceeds A’s

estate may exclude from gross income is

not limited by paragraph (b) of this section.

(19) Example 19. A is the initial policyholder of a $100,000 insurance policy on A’s life. A transfers the policy for

$6,000, its fair market value, to an individual, C, who does not have a substantial family, business, or financial relationship with A at the time of the transfer.

The transfer from A to C is a reportable

Bulletin No. 2026–31

policy sale. C also is the initial policyholder of a $200,000 insurance policy on

A’s life. Before A’s death, C exchanges

the two policies on A’s life for a single

new policy on A’s life in a section 1035

exchange. C receives the proceeds from

the new policy on A’s death. The entire

amount of the proceeds attributable to

the interest in the new policy that was

issued in exchange for the policy originally issued to C is excludable from gross

income under paragraph (b)(2)(iv)(A)

of this section. The amount of the proceeds attributable to the interest in the

new policy that was issued in exchange

for the policy originally issued to A that

is excludable from gross income is limited under paragraph (b)(2)(iv)(B) of this

section to $6,000 plus any premiums and

other amounts paid by C with respect to

the policy originally issued to A subsequent to the transfer and any premiums

and other amounts paid by C with respect

to the interest in the new policy that was

issued in exchange for the policy originally issued to A.

Par. 3. Section 1.101-6 is amended by

revising the section heading and adding

paragraph (c) to read as follows:

§ 1.101-6 Applicability date.

*****

(c) Notwithstanding paragraphs (a)

and (b) of this section, § 1.101-1(b)(2)

(iv) and (c)(3) apply to any interest in a

life insurance contract issued in a section

1035 exchange occurring on or after July

9, 2026, and § 1.101-1(c)(2)(v) applies

to any acquisition of an interest in a life

insurance contract occurring on or after

July 9, 2026. Taxpayers may also choose

to apply the rules in § 1.101-1(b)(2)(iv),

(c)(2)(v), and (c)(3) to all exchanges and

acquisitions occurring after December 31,

2017.

Par. 4. Section 1.6050Y-1 is amended

by:

1. Adding a sentence at the end of paragraph (a)(1);

2. Revising and republishing paragraph

(a)(2);

3. Removing the last sentence in paragraph (a)(8)(ii);

4. Adding the language “under § 1.1011(c)(1) or (3)” at the end of paragraph

(a)(12); and

Bulletin No. 2026–31

5.

Revising and republishing paragraph

(b).

The additions and revisions read as follows:

§ 1.6050Y-1 Information reporting for

reportable policy sales, transfers of life

insurance contracts to foreign persons,

and reportable death benefits.

(a) * * *

(1) * * * For purposes of determining

the buyer under paragraph (a)(2) of this

section, the term acquirer also includes

any person to whom an interest in a life

insurance contract (new interest) is issued

in an exchange to which section 1035(a)

or section 1031 (to the extent it relates

to section 1035(a)) applies (section 1035

exchange) that is treated as the transfer of

an interest in the life insurance contract in

a reportable policy sale under § 1.101-1(c)

(3).

(2) Buyer. The term buyer means, with

respect to any interest in a life insurance

contract that has been transferred in a

reportable policy sale under § 1.101-1(c)

(1) or treated as such an interest under

§ 1.101-1(c)(3), the person that was the

most recent acquirer of that interest in a

reportable policy sale as of the date reportable death benefits are paid under the contract.

*****

(b) Applicability dates--(1) In general.

Except as otherwise provided in paragraph (b)(2) of this section, this section

and §§ 1.6050Y-2 through 1.6050Y-3

apply to reportable policy sales made

after December 31, 2018. Except as otherwise provided in paragraph (b)(2) of

this section, this section and § 1.6050Y-4

apply to reportable death benefits paid

after December 31, 2018. This section

and § 1.6050Y-3 apply to any notice of a

transfer to a foreign person received after

December 31, 2018. However, for reportable policy sales and payments of reportable death benefits occurring after December 31, 2018, and on or before December

31, 2019, and any notice of a transfer to

a foreign person received after December

31, 2018, and on or before December 31,

2019, transition relief is provided as follows:

(i) Statements required to be furnished

to issuers under section 6050Y(a)(2) and

129

§ 1.6050Y-2(d)(2)(i) must be furnished

by the later of the applicable deadline set

forth in § 1.6050Y-2(d)(2)(ii) or December 30, 2019.

(ii) Statements required to be furnished

to reportable policy sale payment recipients under section 6050Y(a)(2) and §

1.6050Y-2(d)(1)(i) must be furnished by

the later of the applicable deadline set

forth in § 1.6050Y-2(d)(1)(ii) or February

28, 2020.

(iii) Statements required to be furnished

to sellers under section 6050Y(b)(2) and §

1.6050Y-3(d)(1) must be furnished by the

later of the applicable deadline set forth in

§ 1.6050Y-3(d)(2) or February 28, 2020.

(iv) Statements required to be furnished to reportable death benefits payment recipients under section 6050Y(c)(2)

and § 1.6050Y-4(c)(1) must be furnished

by the later of the applicable deadline set

forth in § 1.6050Y-4(c)(2) or February 28,

2020.

(v) Returns required to be filed under

section 6050Y(a)(1) and § 1.6050Y-2(a),

section 6050Y(b)(1) and § 1.6050Y-3(a),

and section 6050Y(c)(1) and § 1.6050Y-4

must be filed by the later of the applicable deadline set forth in § 1.6050Y-2(c),

§ 1.6050Y-3(c), and § 1.6050Y-4(b) or

February 28, 2020.

(2) Section 1035 exchanges. Sections

1.6050Y-1, 1.6050Y-2, and 1.6050Y-3

apply to any life insurance contract

acquired in a section 1035 exchange that

occurs on or after July 9, 2026. Section

1.6050Y-4 applies to reportable death

benefits paid with respect to an interest in

a life insurance contract issued in a section

1035 exchange if the exchange occurs on

or after July 9, 2026.

§ 1.6050Y-2 [Amended]

Par. 5. Section 1.6050Y-2 is amended

by removing paragraph (f)(3).

Par. 6. Section 1.6050Y-3 is amended

by:

1. In paragraph (f) introductory text,

removing the language “paragraph (f)

(1), (2), or (3) of this section applies”

at the end of the paragraph and adding in its place “paragraph (f)(1) or

(2) of this section applies”;

2. Removing paragraph (f)(3); and

3. Adding paragraph (h).

The addition reads as follows:

July 27, 2026

§ 1.6050Y-3 Information reporting by

6050Y(b) issuers for reportable policy

sales and transfers of life insurance

contracts to foreign persons.

*****

(h) Information to be provided by old

issuer to new issuer for certain section

1035 exchanges--(1) Scope. This paragraph

(h)(1) applies to a section 1035 exchange in

which an interest in a life insurance contract (old interest) is exchanged by a policyholder for an interest in a newly issued

life insurance contract (new interest), and

the old interest previously was transferred

for valuable consideration in a reportable policy sale under § 1.101-1(c)(1) or

is treated as an interest in a life insurance

contract that previously was transferred for

valuable consideration in a reportable policy sale under § 1.101-1(c)(3). However,

this paragraph (h)(1) does not apply if the

issuer of the old interest (old issuer) and the

issuer of the new interest (new issuer) are

the same.

(2) Provision of information. If paragraph (h)(1) of this section applies to a

section 1035 exchange, the old issuer will

provide to the new issuer the information

necessary to ensure proper reporting of

reportable death benefits under § 1.6050Y-

July 27, 2026

4. This information includes the policyholder’s investment in the contract with respect

to the old interest and a statement indicating

whether the old issuer would have reported

a payment of reportable death benefits

under § 1.6050Y-4 had it paid death benefits

attributable to the old interest on the date of

the section 1035 exchange. For example, if

the old issuer had received, or had knowledge of another issuer having received, a

statement described in § 1.6050Y-2(d)(2),

the old issuer would include a statement

that it would have reported a payment of

reportable death benefits. Similarly, if the

old issuer had other information indicating that the old interest previously was

transferred for valuable consideration in a

reportable policy sale under § 1.101-1(c)

(1) or was treated as having been so transferred under § 1.101-1(c)(3), the old issuer

would include a statement that it would

have reported a payment of reportable

death benefits.

(3) Reasonable method. For purposes

of paragraph (h)(2) of this section, the old

issuer may use any reasonable method to

provide the information described in paragraph (h)(2) of this section to the new issuer.

Par. 7. Section 1.6050Y-4 is amended

by adding a sentence at the end of paragraph (e)(3) to read as follows:

130

§ 1.6050Y-4 Information reporting by

payors for reportable death benefits.

*****

(e) * * *

(3) * * * Additionally, if the reportable

death benefits are paid with respect to an

interest in a life insurance contract issued

in a section 1035 exchange, the payor

never received, and has no knowledge of

any issuer having received, information

indicating that the interest was issued in

exchange for an interest in a life insurance

contract that previously was transferred

for valuable consideration in a reportable

policy sale or was treated as so transferred

under § 1.101-1(c)(3).

*****

Frank J. Bisignano,

Chief Executive Officer.

Approved: June 11, 2026

Kevin M. Salinger

Assistant Secretary of the Treasury

(Tax Policy).

(Filed by the Office of the Federal Register July 8,

2026, 8:45 a.m., and published in the issue of the

Federal Register for July 9, 2026, 91 FR 42345)

Bulletin No. 2026–31

Part III

26 CFR 601.105: Examination of returns and claims

for refund, credit, or abatement; determination of

correct tax liability.

(Also Part 1, §§ 36B, 1.36B-2, 1.36B-3.)

Rev. Proc. 2026-26

SECTION 1. PURPOSE

This revenue procedure provides

indexing adjustments to the applicable

percentage table (Applicable Percentage

Table) in § 36B(b)(3)(A)(i) of the Internal Revenue Code (Code)1 for taxable

years beginning in calendar year 2027.

This table is used to calculate an individual’s premium tax credit under § 36B.

This revenue procedure also provides the

indexing adjustment for the required contribution percentage (Required Contribution Percentage) in § 36B(c)(2)(C)(i)(II)

for plan years beginning in calendar year

2027. This percentage is used to determine whether an individual is eligible for

affordable employer-sponsored minimum

essential coverage under § 36B.

For plan years beginning in calendar

year 2027, the Applicable Percentage

Table and the Section 36B Required Contribution Percentage indexing adjustments

are based on the most recent projections of

premium growth and income growth.2 See

§§ 1.36B-2(c)(3)(v)(C) and 1.36B-3(g).

In addition, the additional adjustment

provided in § 36B(b)(3)(A)(ii)(II) is not

required for plan years beginning in 2027

because the Department of the Treasury

(Treasury Department) and the Internal

Revenue Service (IRS) have determined

that the failsafe exception described in

§ 36B(b)(3)(A)(ii)(III) applies for plan

years beginning in calendar year 2027.

SECTION 2. CHANGE

TO PREMIUM GROWTH

ADJUSTMENT METHODOLOGY

The Applicable Percentage Table and

the Section 36B Required Contribution

Percentage indexing adjustments are computed using the methodology described in

section 4 of Rev. Proc. 2014-37, 2014-33

I.R.B. 363, and in guidance issued by the

Department of Health and Human Services (HHS). For 2025 and a number of

years prior to 2025, the rate of premium

growth was based on per enrollee spend-

Household income percentage of Federal poverty line:

Less than 133%

At least 133% but less than 150%

At least 150% but less than 200%

At least 200% but less than 250%

At least 250% but less than 300%

At least 300% but not more than 400%

.02 Required Contribution Percentage

for 2027. For plan years beginning in calendar year 2027, the Required Contribution Percentage for purposes of § 36B(c)

(2)(C)(i)(II) and § 1.36B-2(c)(3)(v)(C) is

10.22%.

Initial percentage

2.15%

3.23%

4.3%

6.78%

8.66%

10.22%

SECTION 4. EFFECT ON OTHER

DOCUMENTS

Rev. Proc. 2014-37 is supplemented.

SECTION 5. EFFECTIVE DATE

This revenue procedure is effective for

taxable years and plan years beginning in

calendar year 2027.

ing for employer-sponsored insurance as

published in the National Health Expenditure Account. However, beginning in

calendar year 2026, HHS guidance provided a new premium growth measure

that captures increases in individual market premiums in addition to increases in

employer-sponsored insurance premiums

for purposes of calculating the premium

adjustment percentage for the 2026 benefit year and beyond. See HHS Marketplace Integrity and Affordability rule, 90

Fed. Reg. 27074 (June 25, 2025). For taxable year 2027, the Treasury Department

and the IRS will use the premium growth

measure provided in the 2026 HHS Marketplace Integrity and Affordability rule

for purposes of the Applicable Percentage Table and the Section 36B Required

Contribution Percentage indexing adjustments.

SECTION 3. ADJUSTED ITEMS

.01 Applicable Percentage Table for

2027. For taxable years beginning in calendar year 2027, the Applicable Percentage Table for purposes of § 36B(b)(3)(A)

(i) and § 1.36B-3(g) is:

Final percentage

2.15%

4.3%

6.78%

8.66%

10.22%

10.22%

SECTION 6. DRAFTING

INFORMATION

The principal author of this revenue

procedure is Mia Romano of the Office

of Associate Chief Counsel (Income Tax

and Accounting). For further information

regarding this revenue procedure, contact

Ms. Romano at (202) 317-4718 (not a tollfree number).

Unless otherwise specified, all “section” or “§” references are to sections of the Code or the Income Tax Regulations (26 CFR part 1).

The rate of premium growth and the rate of income growth are calculated using the NHEA Projections, 2025-2034, available at: https://www.cms.gov/Research-Statistics-Data-and-Systems/

Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProjected.

1

2

Bulletin No. 2026–31

131

July 27, 2026

Definition of Terms

Revenue rulings and revenue procedures

(hereinafter referred to as “rulings”) that

have an effect on previous rulings use the

following defined terms to describe the

­effect:

Amplified describes a situation where

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

being extended to apply to a variation of

the fact situation set forth therein. Thus,

if an earlier ruling held that a principle

applied to A, and the new ruling holds that

the same principle also applies to B, the

earlier ruling is amplified. (Compare with

modified, below).

Clarified is used in those instances

where the language in a prior ruling is

being made clear because the language

has caused, or may cause, some confusion. It is not used where a position in a

prior ruling is being changed.

Distinguished describes a situation

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

difference between them.

Modified is used where the substance

of a previously published position is being

changed. Thus, if a prior ruling held that a

principle applied to A but not to B, and the

new ruling holds that it applies to both A

and B, the prior ruling is modified because

it corrects a published position. (Compare

with amplified and clarified, above).

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

This term is most commonly used in a ruling

that lists previously published rulings that

are obsoleted because of changes in laws or

regulations. A ruling may also be obsoleted

because the substance has been included in

regulations subsequently adopted.

Revoked describes situations where the

position in the previously published ruling

is not correct and the correct position is

being stated in a new ruling.

Superseded describes a situation where

the new ruling does nothing more than

restate the substance and situation of a

previously published ruling (or rulings).

Thus, the term is used to republish under

the 1986 Code and regulations the same

position published under the 1939 Code

and regulations. The term is also used

when it is desired to republish in a single

ruling a series of situations, names, etc.,

that were previously published over a

period of time in separate rulings. If the

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

terms is used. For example, modified and

superseded describes a situation where the

substance of a previously published ruling

is being changed in part and is continued

without change in part and it is desired to

restate the valid portion of the previously

published ruling in a new ruling that is

self contained. In this case, the previously

published ruling is first modified and then,

as modified, is superseded.

Supplemented is used in situations in

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

countries, is published in a ruling and that

list is expanded by adding further names

in subsequent rulings. After the original

ruling has been supplemented several

times, a new ruling may be published that

includes the list in the original ruling and

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

Suspended is used in rare situations

to show that the previous published rulings will not be applied pending some

future action such as the issuance of new

or amended regulations, the outcome of

cases in litigation, or the outcome of a

Service study.

Abbreviations

The following abbreviations in current

use and formerly used will appear in

material published in the Bulletin.

A—Individual.

Acq.—Acquiescence.

B—Individual.

BE—Beneficiary.

BK—Bank.

B.T.A.—Board of Tax Appeals.

C—Individual.

C.B.—Cumulative Bulletin.

CFR—Code of Federal Regulations.

CI—City.

COOP—Cooperative.

Ct.D.—Court Decision.

CY—County.

D—Decedent.

DC—Dummy Corporation.

DE—Donee.

Del. Order—Delegation Order.

DISC—Domestic International Sales Corporation.

DR—Donor.

E—Estate.

EE—Employee.

E.O.—Executive Order.

ER—Employer.

Bulletin No. 2026–31

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.

July 27, 2026

Numerical Finding List1

Bulletin 2026–31

Announcements:

2026-11, 2026-29 I.R.B. 49

2026-12, 2026-29 I.R.B. 50

Notices:

2026-39, 2026-27 I.R.B. 1

2026-38, 2026-28 I.R.B. 30

2026-40, 2026-28 I.R.B. 33

2026-41, 2026-29 I.R.B. 39

2026-42, 2026-29 I.R.B. 41

2026-43, 2026-29 I.R.B. 42

2026-21, 2026-30 I.R.B. 51

Revenue Procedures:

2026-25, 2026-29 I.R.B. 45

2026-18, 2026-30 I.R.B. 53

2026-26, 2026-31 I.R.B. 131

Revenue Rulings:

2026-12, 2026-28 I.R.B. 27

Treasury Decisions:

10051, 2026-31 I.R.B. 118

10052, 2026-31 I.R.B. 121

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2026–27 through 2026–52 is in Internal Revenue Bulletin

2025–52, dated December 21, 2025.

1

July 27, 2026

ii

Bulletin No. 2026–31

Finding List of Current Actions on

Previously Published Items1

Bulletin 2026–31

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2026–27 through 2026–52 is in Internal Revenue Bulletin

2025–52, dated December 21, 2025.

1

Bulletin No. 2026–31

iii

July 27, 2026

Internal Revenue Service

Washington, DC 20224

Official Business

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