# Bulletin No. 2026–31

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/agency%3Airs%3A461c12e56528abd7

## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

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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INTERNAL REVENUE BULLETIN

The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue
Bulletins are available at www.irs.gov/irb/.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3A461c12e56528abd7. Public record. Not legal advice.