Bulletin No. 2009-14

Bulletin No. 2009-14

April 6, 2009

HIGHLIGHTS

OF THIS ISSUE

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be

relied upon as authoritative interpretations.

INCOME TAX

Rev. Rul. 2009–9, page 735.

Tax treatment of losses. This ruling addresses the tax

treatment of losses from criminally fraudulent investment

arrangements that take the form of “Ponzi” schemes. Rev.

Rul. 71–381 obsoleted in part.

purposes pursuant to changes made by the Worker, Retiree,

and Employer Recovery Act of 2008, Public Law 110–458

(WRERA). This notice also provides automatic approval for a

change in asset valuation method for plan years beginning

during 2009 to adopt any permissible asset valuation method.

EXEMPT ORGANIZATIONS

Rev. Rul. 2009–10, page 738.

Federal rates; adjusted federal rates; adjusted federal

long-term rate and the long-term exempt rate. For purposes of sections 382, 642, 1274, 1288, and other sections

of the Code, tables set forth the rates for April 2009.

Announcement 2009–25, page 755.

Rev. Proc. 2009–19, page 747.

Announcement 2009–26, page 755.

This procedure provides guidance to taxpayers on electing the

3, 4, or 5-year carryback of net operating losses of small businesses under section 1211 of the American Recovery and Reinvestment Tax Act of 2009.

This announcement invites public comments on the implementation and content of the Exempt Organization Academic Institution Initiative.

This announcement invites public comments on how to improve

the Internal Revenue Service’s Exempt Organizations website

(www.irs.gov/eo).

Rev. Proc. 2009–20, page 749.

This procedure provides an optional safe harbor method for

eligible taxpayers to deduct theft losses from criminally fraudulent investment arrangements that take the form of “Ponzi”

schemes.

EMPLOYEE PLANS

Notice 2009–22, page 741.

Asset valuation under section 430(g)(3)(B) as amended

by WRERA. This notice provides interim rules regarding asset valuation methods that are permitted to be used by single

employer defined benefit pension plans for minimum funding

(Continued on the next page)

Finding Lists begin on page ii.

Announcement 2009–27, page 756.

The IRS has revoked it determination that Rocky Mountain Big

Horn Sheep Foundation of Red River, MN; Skippers Learning

Center of Lake City, SC; Reliable Cash Management Association of Buffalo Grove, IL; Pecan Park Learning Center of Jackson, MS; Brucker Charitable Foundation of Mountain Home, TX;

N. U. Yoga Ashrama in America of Winter, WI; Housing Development Group of Denver, CO; National Business Fellowship Foundation of Raeford, NC; GIK Foundation of Bellevue, WA; Debt

Free Foundation, Inc., of Provo, UT; Urban Light Community Development of Houston, TX; Sweet Life Program of Las Vegas,

NV; Ladoras Family Services, Inc., of Compton, CA; Robert and

Donna Herbolich Charitable Supporting of Hudson, OH; Three

Point Volunteer Fire Department, Inc., of Williamsburg, KY; Advance Practice Foundation, Inc., of Basking Ridge, NJ; Goodwill

Industries of Greater Cleveland, Inc., of Cleveland, OH; World

Project, Inc., of Temecula, CA; Sandton Lifestyles of Los Angeles, CA; Dunn-Mason Foundation of Farmington Hills, MI; and

Walter E & Romell A King Foundation of Gary, IN; qualify as

organizations described in sections 501(c)(3) and 170(c)(2) of

the Code.

ADMINISTRATIVE

Announcement 2009–29, page 757.

This announcement provides notice of a public hearing on proposed regulations (REG-158747–06, 2009–4 I.R.B. 362) relating to withholding under section 3402(t) of the Code. The regulations reflect changes in the law made by the Tax Increase

Prevention and Reconciliation Act of 2005 that require Federal, State, and local government entities to withhold income

tax when making payments to persons providing property or

services. The regulations provide guidance to assist the government entities in complying with section 3402(t). The regulations also provide certain guidance to persons receiving payments for property or services from government entities. The

public hearing is scheduled for April 16, 2009.

April 6, 2009

2009–14 I.R.B.

The IRS Mission

Provide America’s taxpayers top quality service by helping them

understand and meet their tax responsibilities and by applying

the tax 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 and may be obtained from the

Superintendent of Documents on a subscription basis. Bulletin

contents are compiled semiannually into Cumulative Bulletins,

which are sold on a single-copy basis.

It is the policy of the Service to publish in the Bulletin all 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.

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

2009–14 I.R.B.

April 6, 2009

April 6, 2009

2009–14 I.R.B.

Part I. Rulings and Decisions Under the Internal Revenue Code

of 1986

Section 42.—Low-Income

Housing Credit

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month

of April 2009. See Rev. Rul. 2009-10, page 738.

Section 165.—Losses.

26 CFR 1.165–8: Theft losses.

(Also: §§ 63, 67, 68, 172, 1311, 1312, 1313, 1314,

1341.)

Tax treatment of losses. This ruling addresses the tax treatment of losses

from criminally fraudulent investment arrangements that take the form of “Ponzi”

schemes. Rev. Rul. 71–381 obsoleted in

part.

Rev. Rul. 2009–9

ISSUES

(1) Is a loss from criminal fraud or embezzlement in a transaction entered into for

profit a theft loss or a capital loss under

§ 165 of the Internal Revenue Code?

(2) Is such a loss subject to either the

personal loss limits in § 165(h) or the limits

on itemized deductions in §§ 67 and 68?

(3) In what year is such a loss deductible?

(4) How is the amount of such a loss

determined?

(5) Can such a loss create or increase a

net operating loss under § 172?

(6) Does such a loss qualify for the computation of tax provided by § 1341 for

the restoration of an amount held under a

claim of right?

(7) Does such a loss qualify for the application of §§ 1311–1314 to adjust tax liability in years that are otherwise barred by

the period of limitations on filing a claim

for refund under § 6511?

FACTS

A is an individual who uses the cash

receipts and disbursements method of accounting and files federal income tax returns on a calendar year basis. B holds

himself out to the public as an investment

advisor and securities broker.

2009–14 I.R.B.

In Year 1, A, in a transaction entered

into for profit, opened an investment account with B, contributed $100x to the account, and provided B with power of attorney to use the $100x to purchase and sell

securities on A’s behalf. A instructed B to

reinvest any income and gains earned on

the investments. In Year 3, A contributed

an additional $20x to the account.

B periodically issued account statements to A that reported the securities purchases and sales that B purportedly made

in A’s investment account and the balance

of the account. B also issued tax reporting

statements to A and to the Internal Revenue Service that reflected purported gains

and losses on A’s investment account. B

also reported to A that no income was

earned in Year 1 and that for each of the

Years 2 through 7 the investments earned

$10x of income (interest, dividends, and

capital gains), which A included in gross

income on A’s federal income tax returns.

At all times prior to Year 8 and part way

through Year 8, B was able to make distributions to investors who requested them.

A took a single distribution of $30x from

the account in Year 7.

In Year 8, it was discovered that B’s

purported investment advisory and brokerage activity was in fact a fraudulent investment arrangement known as a “Ponzi”

scheme. Under this scheme, B purported

to invest cash or property on behalf of each

investor, including A, in an account in the

investor’s name. For each investor’s account, B reported investment activities and

resulting income amounts that were partially or wholly fictitious. In some cases,

in response to requests for withdrawal, B

made payments of purported income or

principal to investors. These payments

were made, at least in part, from amounts

that other investors had invested in the

fraudulent arrangement.

When B’s fraud was discovered in Year

8, B had only a small fraction of the funds

that B reported on the account statements

that B issued to A and other investors. A

did not receive any reimbursement or other

recovery for the loss in Year 8. The period

of limitation on filing a claim for refund

under § 6511 has not yet expired for Years

735

5 through 7, but has expired for Years 1

through 4.

B’s actions constituted criminal fraud or

embezzlement under the law of the jurisdiction in which the transactions occurred.

At no time prior to the discovery did A

know that B’s activities were a fraudulent

scheme. The fraudulent investment arrangement was not a tax shelter as defined

in § 6662(d)(2)(C)(ii) with respect to A.

LAW AND ANALYSIS

Issue 1. Theft loss.

Section 165(a) allows a deduction for

losses sustained during the taxable year

and not compensated by insurance or otherwise. For individuals, § 165(c)(2) allows a deduction for losses incurred in

a transaction entered into for profit, and

§ 165(c)(3) allows a deduction for certain

losses not connected to a transaction entered into for profit, including theft losses.

Under § 165(e), a theft loss is sustained in

the taxable year the taxpayer discovers the

loss. Section 165(f) permits a deduction

for capital losses only to the extent allowed

in §§ 1211 and 1212. In certain circumstances, a theft loss may be taken into account in determining gains or losses for a

taxable year under § 1231.

For federal income tax purposes,

“theft” is a word of general and broad

connotation, covering any criminal appropriation of another’s property to the use

of the taker, including theft by swindling,

false pretenses and any other form of

guile. Edwards v. Bromberg, 232 F.2d 107

(5th Cir. 1956); see also § 1.165–8(d)

of the Income Tax Regulations (“theft”

includes larceny and embezzlement). A

taxpayer claiming a theft loss must prove

that the loss resulted from a taking of

property that was illegal under the law

of the jurisdiction in which it occurred

and was done with criminal intent. Rev.

Rul. 72–112, 1972–1 C.B. 60. However,

a taxpayer need not show a conviction for

theft. Vietzke v. Commissioner, 37 T.C.

504, 510 (1961), acq., 1962–2 C.B. 6.

The character of an investor’s loss related to fraudulent activity depends, in

part, on the nature of the investment. For

example, a loss that is sustained on the

April 6, 2009

worthlessness or disposition of stock acquired on the open market for investment

is a capital loss, even if the decline in

the value of the stock is attributable to

fraudulent activities of the corporation’s

officers or directors, because the officers

or directors did not have the specific intent

to deprive the shareholder of money or

property. See Rev. Rul. 77–17, 1977–1

C.B. 44.

In the present situation, unlike the situation in Rev. Rul. 77–17, B specifically

intended to, and did, deprive A of money

by criminal acts. B’s actions constituted a

theft from A, as theft is defined for § 165

purposes. Accordingly, A’s loss is a theft

loss, not a capital loss.

Issue 2. Deduction limitations.

Section 165(h) imposes two limitations

on casualty loss deductions, including

theft loss deductions, for property not connected either with a trade or business or

with a transaction entered into for profit.

Section 165(h)(1) provides that a deduction for a loss described in § 165(c)(3)

(including a theft) is allowable only to the

extent that the amount exceeds $100 ($500

for taxable years beginning in 2009 only).

Section 165(h)(2) provides that if personal casualty losses for any taxable year

(including theft losses) exceed personal

casualty gains for the taxable year, the

losses are allowed only to the extent of

the sum of the gains, plus so much of the

excess as exceeds ten percent of the individual’s adjusted gross income.

Rev. Rul. 71–381, 1971–2 C.B. 126,

concludes that a taxpayer who loans

money to a corporation in exchange for

a note, relying on financial reports that

are later discovered to be fraudulent, is

entitled to a theft loss deduction under

§ 165(c)(3). However, § 165(c)(3) subsequently was amended to clarify that the

limitations applicable to personal casualty

and theft losses under § 165(c)(3) apply

only to those losses that are not connected

with a trade or business or a transaction

entered into for profit. Tax Reform Act of

1984, Pub. L. No. 98–369, § 711 (1984).

As a result, Rev. Rul. 71–381 is obsolete

to the extent that it holds that theft losses

incurred in a transaction entered into for

profit are deductible under § 165(c)(3),

rather than under § 165(c)(2).

April 6, 2009

In opening an investment account with

B, A entered into a transaction for profit.

A’s theft loss therefore is deductible under § 165(c)(2) and is not subject to the

§ 165(h) limitations.

Section 63(d) provides that itemized deductions for an individual are the allowable deductions other than those allowed

in arriving at adjusted gross income (under § 62) and the deduction for personal

exemptions. A theft loss is not allowable

under § 62 and is therefore an itemized deduction.

Section 67(a) provides that miscellaneous itemized deductions may be deducted only to the extent the aggregate

amount exceeds two percent of adjusted

gross income. Under § 67(b)(3), losses

deductible under § 165(c)(2) or (3) are

excepted from the definition of miscellaneous itemized deductions.

Section 68 provides an overall limit on

itemized deductions based on a percentage

of adjusted gross income or total itemized

deductions. Under § 68(c)(3), losses deductible under § 165(c)(2) or (3) are excepted from this limit.

Accordingly, A’s theft loss is an itemized deduction that is not subject to the

limits on itemized deductions in §§ 67 and

68.

Issue 3. Year of deduction.

Section 165(e) provides that any

loss arising from theft is treated as sustained during the taxable year in which

the taxpayer discovers the loss. Under

§§ 1.165–8(a)(2) and 1.165–1(d), however, if, in the year of discovery, there

exists a claim for reimbursement with

respect to which there is a reasonable

prospect of recovery, no portion of the loss

for which reimbursement may be received

is sustained until the taxable year in which

it can be ascertained with reasonable certainty whether or not the reimbursement

will be received, for example, by a settlement, adjudication, or abandonment of the

claim. Whether a reasonable prospect of

recovery exists is a question of fact to be

determined upon examination of all facts

and circumstances.

A may deduct the theft loss in Year 8,

the year the theft loss is discovered, provided that the loss is not covered by a claim

for reimbursement or other recovery as to

which A has a reasonable prospect of re-

736

covery. To the extent that A’s deduction

is reduced by such a claim, recoveries on

the claim in a later taxable year are not includible in A’s gross income. If A recovers a greater amount in a later year, or an

amount that initially was not covered by

a claim as to which there was a reasonable prospect of recovery, the recovery is

includible in A’s gross income in the later

year under the tax benefit rule, to the extent the earlier deduction reduced A’s income tax. See § 111; § 1.165–1(d)(2)(iii).

Finally, if A recovers less than the amount

that was covered by a claim as to which

there was a reasonable prospect of recovery that reduced the deduction for theft in

Year 8, an additional deduction is allowed

in the year the amount of recovery is ascertained with reasonable certainty.

Issue 4. Amount of deduction.

Section 1.165–8(c) provides that the

amount deductible in the case of a theft

loss is determined consistently with the

manner described in § 1.165–7 for determining the amount of a casualty loss,

considering the fair market value of the

property immediately after the theft to be

zero. Under these provisions, the amount

of an investment theft loss is the basis of

the property (or the amount of money) that

was lost, less any reimbursement or other

compensation.

The amount of a theft loss resulting

from a fraudulent investment arrangement

is generally the initial amount invested in

the arrangement, plus any additional investments, less amounts withdrawn, if any,

reduced by reimbursements or other recoveries and reduced by claims as to which

there is a reasonable prospect of recovery.

If an amount is reported to the investor as

income in years prior to the year of discovery of the theft, the investor includes the

amount in gross income, and the investor

reinvests the amount in the arrangement,

this amount increases the deductible theft

loss.

Accordingly, the amount of A’s theft

loss for purposes of § 165 includes A’s

original Year 1 investment ($100x) and additional Year 3 investment ($20x). A’s loss

also includes the amounts that A reported

as gross income on A’s federal income tax

returns for Years 2 through 7 ($60x). A’s

loss is reduced by the amount of money

distributed to A in Year 7 ($30x). If A has

2009–14 I.R.B.

a claim for reimbursement with respect to

which there is a reasonable prospect of recovery, A may not deduct in Year 8 the portion of the loss that is covered by the claim.

Issue 5. Net operating loss.

Section 172(a) allows as a deduction for

the taxable year the aggregate of the net

operating loss carryovers and carrybacks

to that year. In computing a net operating

loss under § 172(c) and (d)(4), nonbusiness deductions of noncorporate taxpayers are generally allowed only to the extent of nonbusiness income. For this purpose, however, any deduction for casualty

or theft losses allowable under § 165(c)(2)

or (3) is treated as a business deduction.

Section 172(d)(4)(C).

Under § 172(b)(1)(A), a net operating

loss generally may be carried back 2 years

and forward 20 years. However, under

§ 172(b)(1)(F), the portion of an individual’s net operating loss arising from casualty or theft may be carried back 3 years

and forward 20 years.

Section 1211 of the American

Recovery and Reinvestment Act of

2009, Pub. L. No. 111–5, 123 Stat.

115 (February 17, 2009), amends

§ 172(b)(1)(H) of the Internal Revenue

Code to allow any taxpayer that is an

eligible small business to elect either a 3, 4,

or 5-year net operating loss carryback for

an “applicable 2008 net operating loss.”

Section 172(b)(1)(H)(iv) provides that

the term “eligible small business” has

the same meaning given that term by

§ 172(b)(1)(F)(iii), except that § 448(c)

is applied by substituting “$15 million”

for “$5 million” in each place it appears.

Section 172(b)(1)(F)(iii) provides that a

small business is a corporation or partnership that meets the gross receipts test of

§ 448(c) for the taxable year in which the

loss arose (or in the case of a sole proprietorship, that would meet such test if the

proprietorship were a corporation).

Because § 172(d)(4)(C) treats any

deduction for casualty or theft losses allowable under § 165(c)(2) or (3) as a

business deduction, a casualty or theft

loss an individual sustains after December 31, 2007, is considered a loss from

a “sole proprietorship” within the meaning of § 172(b)(1)(F)(iii). Accordingly,

an individual may elect either a 3, 4, or

5-year net operating loss carryback for

2009–14 I.R.B.

an applicable 2008 net operating loss,

provided the gross receipts test provided

in § 172(b)(1)(H)(iv) is satisfied. See

Rev. Proc. 2009–19, 2009–14 I.R.B. 747

(April 6, 2009).

To the extent A’s theft loss deduction

creates or increases a net operating loss in

the year the loss is deducted, A may carry

back up to 3 years and forward up to 20

years the portion of the net operating loss

attributable to the theft loss. If A’s loss is

an applicable 2008 net operating loss and

the gross receipts test in § 172(b)(1)(H)(iv)

is met, A may elect either a 3, 4, or 5-year

net operating loss carryback for the applicable 2008 net operating loss.

Issue 6. Restoration of amount held under

claim of right.

Section 1341 provides an alternative tax

computation formula intended to mitigate

against unfavorable tax consequences that

may arise as a result of including an item in

gross income in a taxable year and taking a

deduction for the item in a subsequent year

when it is established that the taxpayer did

not have a right to the item. Section 1341

requires that: (1) an item was included in

gross income for a prior taxable year or

years because it appeared that the taxpayer

had an unrestricted right to the item, (2) a

deduction is allowable for the taxable year

because it was established after the close

of the prior taxable year or years that the

taxpayer did not have a right to the item or

to a portion of the item, and (3) the amount

of the deduction exceeds $3,000. Section

1341(a)(1) and (3).

If § 1341 applies, the tax for the taxable year is the lesser of: (1) the tax for the

taxable year computed with the current deduction, or (2) the tax for the taxable year

computed without the deduction, less the

decrease in tax for the prior taxable year or

years that would have occurred if the item

or portion of the item had been excluded

from gross income in the prior taxable year

or years. Section 1341(a)(4) and (5).

To satisfy the requirements of

§ 1341(a)(2), a deduction must arise

because the taxpayer is under an obligation to restore the income. Section

1.1341–1(a)(1)–(2); Alcoa, Inc. v. United

States, 509 F.3d 173, 179 (3d Cir. 2007);

Kappel v. United States, 437 F.2d 1222,

1226 (3d Cir.), cert. denied, 404 U.S. 830

(1971).

737

When A incurs a loss from criminal

fraud or embezzlement by B in a transaction entered into for profit, any theft loss

deduction to which A may be entitled does

not arise from an obligation on A’s part to

restore income. Therefore, A is not entitled

to the tax benefits of § 1341 with regard to

A’s theft loss deduction.

Issue 7. Mitigation provisions.

The

mitigation

provisions

of

§§ 1311–1314 permit the Service or a taxpayer in certain circumstances to correct

an error made in a closed year by adjusting

the tax liability in years that are otherwise barred by the statute of limitations.

O’Brien v. United States, 766 F.2d 1038,

1041 (7th Cir. 1995). The party invoking

these mitigation provisions has the burden

of proof to show that the specific requirements are satisfied. Id. at 1042.

Section 1311(a) provides that if a determination (as defined in § 1313) is described in one or more of the paragraphs

of § 1312 and, on the date of the determination, correction of the effect of the error

referred to in § 1312 is prevented by the

operation of any law or rule of law (other

than §§ 1311–1314 or § 7122), then the effect of the error is corrected by an adjustment made in the amount and in the manner specified in § 1314.

Section 1311(b)(1) provides in relevant

part that an adjustment may be made under

§§ 1311–1314 only if, in cases when the

amount of the adjustment would be credited or refunded under § 1314, the determination adopts a position maintained by

the Secretary that is inconsistent with the

erroneous prior tax treatment referred to in

§ 1312.

A cannot use the mitigation provisions

of §§ 1311–1314 to adjust tax liability in

Years 2 through 4 because there is no inconsistency in the Service’s position with

respect to A’s prior inclusion of income in

Years 2 through 4. See § 1311(b)(1). The

Service’s position that A is entitled to an

investment theft loss under § 165 in Year

8 (as computed in Issue 4, above), when

the fraud loss is discovered, is consistent

with the Service’s position that A properly

included in income the amounts credited

to A’s account in Years 2 through 4. See

§ 1311(b)(1)(A).

April 6, 2009

HOLDINGS

(1) A loss from criminal fraud or embezzlement in a transaction entered into for

profit is a theft loss, not a capital loss, under § 165.

(2) A theft loss in a transaction entered into for profit is deductible under

§ 165(c)(2), not § 165(c)(3), as an itemized deduction that is not subject to the personal loss limits in § 165(h), or the limits

on itemized deductions in §§ 67 and 68.

(3) A theft loss in a transaction entered

into for profit is deductible in the year the

loss is discovered, provided that the loss is

not covered by a claim for reimbursement

or recovery with respect to which there is

a reasonable prospect of recovery.

(4) The amount of a theft loss in a transaction entered into for profit is generally

the amount invested in the arrangement,

less amounts withdrawn, if any, reduced

by reimbursements or recoveries, and reduced by claims as to which there is a reasonable prospect of recovery. Where an

amount is reported to the investor as income prior to discovery of the arrangement

and the investor includes that amount in

gross income and reinvests this amount in

the arrangement, the amount of the theft

loss is increased by the purportedly reinvested amount.

(5) A theft loss in a transaction entered

into for profit may create or increase a net

operating loss under § 172 that can be carried back up to 3 years and forward up to

20 years. An eligible small business may

elect either a 3, 4, or 5-year net operating

loss carryback for an applicable 2008 net

operating loss.

(6) A theft loss in a transaction entered

into for profit does not qualify for the computation of tax provided by § 1341.

(7) A theft loss in a transaction entered

into for profit does not qualify for the application of §§ 1311–1314 to adjust tax liability in years that are otherwise barred by

the period of limitations on filing a claim

for refund under § 6511.

DISCLOSURE OBLIGATION UNDER

§ 1.6011–4

§ 4.03(1) of Rev. Proc. 2004–66, 2004–2

C.B. 966.

EFFECT ON OTHER DOCUMENTS

Rev. Rul. 71–381 is obsoleted to the

extent that it holds that a theft loss incurred

in a transaction entered into for profit is

deductible under § 165(c)(3) rather than

§ 165(c)(2).

DRAFTING INFORMATION

The principal author of this revenue

ruling is Andrew M. Irving of the Office

of Associate Chief Counsel (Income Tax

& Accounting). For further information

regarding this revenue ruling, contact

Mr. Irving at (202) 622–5020 (not a

toll-free call.)

Section 280G.—Golden

Parachute Payments

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month

of April 2009. See Rev. Rul. 2009-10, page 738.

Section 482.—Allocation

of Income and Deductions

Among Taxpayers

Federal short-term, mid-term, and long-term rates

are set forth for the month of April 2009. See Rev.

Rul. 2009-10, page 738.

Section 483.—Interest on

Certain Deferred Payments

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month

of April 2009. See Rev. Rul. 2009-10, page 738.

Federal short-term, mid-term, and long-term rates

are set forth for the month of April 2009. See Rev.

Rul. 2009-10, page 738.

Section 642.—Special

Rules for Credits and

Deductions

Section 382.—Limitation

on Net Operating Loss

Carryforwards and Certain

Built-in Lossess Following

Ownership Change

Federal short-term, mid-term, and long-term rates

are set forth for the month of April 2009. See Rev.

Rul. 2009-10, page 738.

The adjusted applicable federal long-term rate is

set forth for the month of April 2009. See Rev. Rul.

2009-10, page 738.

Section 412.—Minimum

Funding Standards

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month

of April 2009. See Rev. Rul. 2009-10, page 738.

Section 467.—Certain

Payments for the Use of

Property or Services

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month

of April 2009. See Rev. Rul. 2009-10, page 738.

Section 807.—Rules for

Certain Reserves

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month

of April 2009. See Rev. Rul. 2009-10, page 738.

Section 846.—Discounted

Unpaid Losses Defined

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month

of April 2009. See Rev. Rul. 2009-10, page 738.

Section 1274.—Determination of Issue Price in the

Case of Certain Debt Instruments Issued for Property

(Also Sections 42, 280G, 382, 412, 467, 468, 482,

483, 642, 807, 846, 1288, 7520, 7872.)

Federal rates; adjusted federal rates;

adjusted federal long-term rate and the

long-term exempt rate. For purposes of

sections 382, 642, 1274, 1288, and other

sections of the Code, tables set forth the

rates for April 2009.

A theft loss in a transaction entered

into for profit that is deductible under

§ 165(c)(2) is not taken into account in

determining whether a transaction is a loss

transaction under § 1.6011–4(b)(5). See

April 6, 2009

Section 468.—Special

Rules for Mining and Solid

Waste Reclamation and

Closing Costs

738

2009–14 I.R.B.

Rev. Rul. 2009–10

This revenue ruling provides various prescribed rates for federal income

tax purposes for April 2009 (the current

month). Table 1 contains the short-term,

mid-term, and long-term applicable federal rates (AFR) for the current month

for purposes of section 1274(d) of the

Internal Revenue Code. Table 2 contains

the short-term, mid-term, and long-term

percentage for non-federally subsidized

new buildings placed in service after July

30, 2008, and before December 31, 2013,

shall not be less than 9%. Finally, Table

5 contains the federal rate for determining

the present value of an annuity, an interest

for life or for a term of years, or a remainder or a reversionary interest for purposes

of section 7520.

adjusted applicable federal rates (adjusted

AFR) for the current month for purposes

of section 1288(b). Table 3 sets forth the

adjusted federal long-term rate and the

long-term tax-exempt rate described in

section 382(f). Table 4 contains the appropriate percentages for determining the

low-income housing credit described in

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

service during the current month. However, under section 42(b)(2), the applicable

REV. RUL. 2009–10 TABLE 1

Applicable Federal Rates (AFR) for April 2009

Period for Compounding

Annual

Semiannual

Quarterly

Monthly

.83%

.91%

1.00%

1.08%

.83%

.91%

1.00%

1.08%

.83%

.91%

1.00%

1.08%

.83%

.91%

1.00%

1.08%

2.15%

2.36%

2.59%

2.80%

3.24%

3.79%

2.14%

2.35%

2.57%

2.78%

3.21%

3.75%

2.13%

2.34%

2.56%

2.77%

3.20%

3.73%

2.13%

2.34%

2.56%

2.76%

3.19%

3.72%

3.67%

4.04%

4.42%

4.79%

3.64%

4.00%

4.37%

4.73%

3.62%

3.98%

4.35%

4.70%

3.61%

3.97%

4.33%

4.68%

Short-term

AFR

110% AFR

120% AFR

130% AFR

Mid-term

AFR

110% AFR

120% AFR

130% AFR

150% AFR

175% AFR

Long-term

AFR

110% AFR

120% AFR

130% AFR

Short-term adjusted

AFR

Mid-term adjusted AFR

Long-term adjusted

AFR

2009–14 I.R.B.

Annual

.87%

2.39%

4.61%

REV. RUL. 2009–10 TABLE 2

Adjusted AFR for April 2009

Period for Compounding

Semiannual

.87%

2.38%

4.56%

739

Quarterly

.87%

Monthly

.87%

2.37%

4.53%

2.37%

4.52%

April 6, 2009

REV. RUL. 2009–10 TABLE 3

Rates Under Section 382 for April 2009

Adjusted federal long-term rate for the current month

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

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

4.61%

5.27%

REV. RUL. 2009–10 TABLE 4

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

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

30, 2008, and before December 31, 2013, shall not be less than 9%.

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

7.67%

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

3.29%

REV. RUL. 2009–10 TABLE 5

Rate Under Section 7520 for April 2009

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

or a remainder or reversionary interest

2.6%

Section 1288.—Treatment

of Original Issue Discount

on Tax-Exempt Obligations

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month

of April 2009. See Rev. Rul. 2009-10, page 738.

Section 6411.—Tentative

Carryback and Refund

Adjustments

small businesses under section 1211 of the American Recovery and Reinvestment Tax Act of 2009 by

filing Form 1045, Application for Tentative Refund,

or Form 1139, Corporation Application for Tentative

Refund. See Rev. Proc. 2009-19, page 747.

Section 7520.—Valuation

Tables

Section 7872.—Treatment

of Loans With Below-Market

Interest Rates

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month

of April 2009. See Rev. Rul. 2009-10, page 738.

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month

of April 2009. See Rev. Rul. 2009-10, page 738.

Guidance is provided for taxpayers to elect the

3, 4, or 5-year carryback of net operating losses of

April 6, 2009

740

2009–14 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous

Asset Valuation under Section

430(g)(3)(B) as amended by

WRERA

Notice 2009–22

I. PURPOSE

This notice provides interim rules

regarding asset valuation methods that

are permitted to be used by single employer defined benefit pension plans for

minimum funding purposes pursuant to

changes made by the Worker, Retiree, and

Employer Recovery Act of 2008, Public

Law 110–458 (WRERA). This notice also

provides automatic approval for a change

in asset valuation method for plan years

beginning during 2009 to adopt any permissible asset valuation method.

II. BACKGROUND

Section 412 of the Internal Revenue

Code (the Code) provides minimum funding requirements that generally apply for

defined benefit pension plans. Section

412(d)(1) provides that any change in

funding method is permitted to take effect

only if it is approved by the Secretary.

A change in the plan’s funding method

includes a change in the method for determining the value of the plan’s assets, a

change in the method for determining the

plan’s liabilities, or a change in the plan’s

valuation date.

Section 430, which was added by the

Pension Protection Act of 2006, Public

Law 109–280 (PPA ’06), provides rules

for the determination of the minimum required contribution applicable to single

employer pension plans (including multiple employer plans) pursuant to § 412.

Section 430 is generally effective for plan

years beginning on or after January 1,

2008.

Section 430(g)(1) provides that all determinations made under § 430 for a plan

year must be made as of the plan’s valuation date. Section 430(g)(2) provides

that the valuation date for a plan year must

be the first day of the plan year, except

in the case of a plan with 100 or fewer

participants (determined as provided in

§ 430(g)(2)(B) and (C)).

2009–14 I.R.B.

Section 430(g)(3) provides rules regarding the determination of the value of

plan assets for purposes of § 430. Under § 430(g)(3)(A), except as provided in

§ 430(g)(3)(B), the fair market value of

plan assets must be used for this purpose.

As an alternative to the use of fair market

value, § 430(g)(3)(B) permits the use of

an actuarial value of assets based on the

average of fair market values, but only

if such method is permitted under regulations prescribed by the Secretary, does

not provide for averaging of such values

over more than the period beginning on

the last day of the 25th month preceding

the month in which the valuation date occurs and ending on the valuation date (or

a similar period in the case of a valuation

date that is not the 1st day of a month), and

does not result in a determination of the

actuarial value of plan assets that, at any

time, is lower than 90 percent or greater

than 110 percent of the fair market value

of plan assets as of the valuation date.

Section 436 provides certain limitations

on a defined benefit plan that are based on

the funded status of the plan. For this purpose, the funding status of the plan is based

on the adjusted funding target attainment

percentage, which in turn is based in part

on the value of plan assets as determined

under § 430.

Prior to amendment by WRERA, the

last sentence of § 430(g)(3)(B) provided

that any averaging under § 430(g)(3)(B)

must be adjusted for contributions and distributions (as provided by the Secretary).

Section 121(b) of WRERA amended the

last sentence of § 430(g)(3)(B) to provide

that any averaging under § 430(g)(3)(B)

must be adjusted for contributions, distributions, and expected earnings (as

determined by the plan’s actuary on the

basis of an assumed earnings rate specified by the actuary, but not in excess of

the third segment rate applicable under

§ 430(h)(2)(C)(iii)), as specified by the

Secretary. This WRERA change is effective for the same periods as the PPA ’06

provision that it amends.

On December 31, 2007, proposed regulations under §§ 430(d), 430(g), 430(h),

and 430(i) were published in the Federal

Register (REG–139236–07, 2008–9 I.R.B.

491 [72 FR 74215]) (the proposed regu-

741

lations). Section 1.430(g)–1(c)(2) of the

proposed regulations provides rules for a

permissible asset valuation method based

on the average of fair market values of plan

assets, in accordance with § 430(g)(3)(B),

prior to amendment by WRERA. Under

this asset valuation method, the actuarial value of assets is the average of the

fair market value of assets on the valuation date and the adjusted fair market value

of assets determined as of one or more

earlier determination dates. The adjusted

fair market value of assets as of a determination date is the fair market value

of plan assets on that date, increased for

contributions included in the plan’s asset

balance on the valuation date that were

not included in the plan’s asset balance

on the determination date, and decreased

for benefits and administrative expenses

paid from plan assets between that determination date and the valuation date. Because the proposed regulations were issued

prior to the enactment of WRERA, the proposed regulations do not provide for an

adjustment for expected earnings in determining the adjusted fair market value as

of an earlier determination date. Section

1.430(g)–1(f)(4) of the proposed regulations provides that any change in a plan’s

valuation date or asset valuation method

that is made for the first plan year for

which § 430 applies to the plan and that

is not inconsistent with the requirements

of § 430 is treated as having been approved by the Commissioner and does not

require the Commissioner’s specific prior

approval.

The proposed regulations are proposed

to be effective for plan years beginning

on or after January 1, 2009. The preamble of the proposed regulations provides

that plans may rely on the proposed regulations for plan years beginning during

2008. Notice 2008–21, 2008–7 I.R.B. 431,

states generally that the Service will not

challenge a reasonable interpretation of an

applicable statutory provision under § 430

or § 436 for plan years beginning during

2008, but noted that the use of averaging methods in determining the value of

plan assets under § 430(g)(3)(B) is permitted only in accordance with a method prescribed in regulations.

April 6, 2009

Part III of this notice describes the

rules expected to be incorporated in future regulations for adjusting asset values for expected earnings, pursuant to

§ 430(g)(3)(B), as amended by WRERA,

using an assumed rate of return. Taxpayers may rely on the rules described in Part

III of this notice for plan years beginning

during 2008 and 2009.

The rules in Part III of this notice modify the determination of the adjusted fair

market value of plan assets for a prior determination date that is used in determining the average of fair market values under

§ 430(g)(3)(B) as provided in the proposed

regulations. The other rules for the asset

valuation method under § 430(g)(3)(B) set

forth in the proposed regulations continue

to apply. For example, the period of time

between each of the determination dates

(treating the valuation date as a determination date) must be equal and the method

of determining the value of plan assets (including the selection of the determination

dates) is part of the plan’s funding method.

The guidance provided in this notice

with respect to § 430(g)(3)(B) of the Code

also applies for purposes of the parallel

provision in section 303(g)(3)(B) of the

Employee Retirement Income Security

Act of 1974, as amended (ERISA). (Under section 101 of the Reorganization

Plan No. 4 of 1978 (43 FR 47713), the

Secretary of the Treasury has interpretive

authority over the subject matter addressed

in this notice for purposes of ERISA, as

well as the Code.)

III. INTERIM RULES FOR

APPLICATION OF NEW ASSET

VALUATION METHOD

A. Adjustment for expected earnings.

The adjustment for expected earnings

that is made to the fair market value of plan

assets for a determination date is the sum

of the expected earnings separately determined for each period between the determination date and the valuation date. The

expected earnings for a period that is 12

months in length is equal to the product

of the assumed rate of return for the 12

months and the fair market value of assets as of the determination date that is

the beginning of the period, adjusted to reflect any contributions, benefits, and administrative expenses paid during the pe-

April 6, 2009

riod (other than contributions for a plan

year that ends with or prior to the determination date). If the period for which expected earnings is being determined is less

than 12 months, then the expected earnings

must be reduced to reflect the length of the

shorter period. The fair market value of

assets as of a determination date includes

any contribution for a plan year that ends

with or prior to the determination date that

is receivable as of the determination date

(provided that the contribution is actually

made within 81/2 months after the end of

the applicable plan year). If the contribution that is receivable as of a determination

date is for a plan year beginning on or after January 1, 2008, then only the present

value as of that determination date (determined using the effective interest rate for

the plan year for which the contribution is

made) is included in the fair market value

of assets. The adjustment to the calculation of expected earnings for a period to reflect any other contributions, and to reflect

benefits and administrative expenses paid

during the period must take into account

the timing of those contributions, benefits,

and expenses.

The assumed rate of return for a period

must be the actuary’s best estimate of the

anticipated annual rate of return on plan assets from the valuation date until all benefits are expected to be paid, limited so that

the assumed rate of return does not exceed

the interest rate limitation determined under section III.B or III.C of this notice, as

applicable for the plan year that contains

the period. If the period between one determination date and the next includes portions of more than one plan year, then the

limitation on the assumed rate of return is

the lower of the applicable limitations for

those plan years.

B. Determination of the limitation on

the assumed rate of return for periods

within plan years for which either the

funding target or the target normal cost

is determined using the three segment

interest rates under § 430(h)(2)(C).

If either the funding target or target normal cost for a plan year is determined (either for purposes of determining minimum

required contributions under § 430 or for

purposes of the disclosure requirement under section 101(f) of ERISA) using the

three segment interest rates described in

742

§ 430(h)(2)(C) (determined with or without the application of the transition rule under § 430(h)(2)(G)), then the assumed rate

of return applicable for periods within the

plan year must be limited so that it does

not exceed the third segment interest rate

used in that determination. This rule does

not apply when the full yield curve is used

to determine the funding target and target normal cost, but the rule does apply in

most other cases with respect to periods in

plan years beginning on or after January 1,

2008.

C. Determination of the limitation

on the assumed rate of return for

periods within plan years for which

neither the funding target nor the

target normal cost is determined using

the three segment interest rates under

§ 430(h)(2)(C).

If neither the funding target nor the

target normal cost for a plan year is determined using the three segment interest

rates described in § 430(h)(2)(C) (determined with or without the application of

the transition rule under § 430(h)(2)(G)),

then the limitation on the assumed rate of

return applicable for periods within the

plan year cannot be determined using the

rules described in section III.B of this notice. This is the case, for example, when:

(1) the plan year which contains the period

for which expected earnings are being determined begins before January 1, 2008;

(2) the funding target and target normal

cost are determined using the full yield

curve described in § 430(h)(2)(D)(ii); or

(3) in the case of a plan with respect to

which an election has been made under

section 402(a)(1) of PPA ’06 (which is

generally available only for the pension

plan of a commercial passenger airline

under which accruals are frozen), the minimum required contribution is determined

under section 402(e) of PPA ’06.

If the limitation on the assumed rate

of return applicable for periods within the

plan year cannot be determined using the

rules described in section III.B of this notice, then the assumed rate of return for periods within the plan year generally must

be limited so that it does not exceed the

average of the third segment rates for the

24-month period ending with the month

preceding the month that contains the valuation date for the plan year. However, if

2009–14 I.R.B.

the Service has not published the 24-month

average of the third segment rate for the

month preceding the month that contains

the valuation date for the plan year (i.e.,

the 24-month period ends before August

2007), then the spot third segment rate for

the month preceding the month that contains the valuation date is used as the limitation on the assumed rate of return for the

plan year.

D. Application of the 90 to 110 percent

corridor.

The rules for accounting for contribution receipts under § 430(g)(4) are applied

prior to the application of the 90 to 110

percent corridor under § 430(g)(3)(B)(iii).

Thus, for example, in the case of a plan

with a calendar plan year, a contribution

receivable for the 2008 plan year which is

made in 2009 will increase the upper end

of the 90 to 110 percent corridor by 110%

of the present value, determined as of January 1, 2009, of that contribution receivable.

E. Special rule for plan years beginning

during 2008.

The actuarial value of plan assets for

a plan year that begins during 2008 is

Fair market value Jan. 1:

Assets in trust as of Jan. 1 . . . . . . . . . . . . . .

Contribution for prior

plan year paid Sept. 15 . . . . . . . . . . . . . . .

Effective interest rate

for prior plan year . . . . . . . . . . . . . . . . . . .

Discounted prior plan year

contribution receivable

as of Jan. 1. . . . . . . . . . . . . . . . . . . . . . . . .

Fair market value as of Jan. 1

including contrib. receivable. . . . . . . . . . .

An actuarial valuation is performed as of January

1, 2009. The fair market value of assets, plan contri-

permitted to be determined using an asset

averaging method that complies with the

rules described in § 1.430(g)–1(f)(4) of

the proposed regulations (notwithstanding that this determination results in a

lower value of plan assets than under

§ 430(g)(3)(B) as amended by WRERA).

Accordingly, no adjustment for expected

earnings is required to be applied for purposes of determining the actuarial value of

assets under § 430(g)(3)(B) for a plan year

that begins during 2008. Thus, for a plan

year that begins in 2008, no retroactive

changes to the actuarial value of assets

need be made to comply with the amendments to § 430(g)(3)(B) made by WRERA

in the case of a plan that has complied

with applicable requirements for that plan

year (such as quarterly contribution requirements under § 430(j) and benefit

restrictions under § 436) based on the asset averaging method permitted before the

enactment of WRERA.

For a plan year that begins in 2008,

a plan for which the actuarial value of

plan assets for purposes of §§ 430 and

436 was determined based on the proposed regulations is permitted to have

the actuarial value of plan assets redetermined pursuant to § 430(g)(3)(B), as

amended by WRERA. However, plans

should take into account the risk that

any such redetermination may result in

plan operations for the plan year having

been inconsistent with the requirements

of section 206(g) of ERISA (the provision

that parallels § 436 of the Code).

F. Examples.

The following examples illustrate the

application of this section III:

Example 1 — Actuarial value of assets calculated

as of January 1, 2009, using the average of the

value on the valuation date and the two prior valuation dates

Facts

All assets of Plan A are invested in a trust fund,

the plan year is the calendar year, and the valuation

date is January 1. The actuarial value of assets is determined by averaging the fair market value as of the

valuation date and the adjusted fair market values as

of the preceding two valuation dates. Benefit payments and administrative expenses are paid evenly

throughout the year, and accordingly are assumed to

be made mid-year. The plan is not required to make

quarterly contributions, and contributions for a plan

year are made on September 15 following each plan

year.

The fair market value of assets in trust and the

contribution amounts are summarized below:

2007

2008

2009

$135,500

$176,000

$162,000

$ 61,000

$ 62,000

$ 68,781

N/A

N/A

$ 61,000

$ 62,000

$ 66,000

$196,500

$238,000

$228,000

butions, benefit payments, and other relevant items

Fair market value January 1 including contributions receivable . . . . . . . . . . . . . . . . . .

Contributions for current year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Benefit payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interest and dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net realized gains (losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balancing item . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fair market value: Dec. 31. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.00%

for January 1, 2007 through January 1, 2009 are as

follows:

2007

2008

$196,500

$ 62,000

$ (24,000)

$ (7,000)

$ 7,500

$ 6,000

$ (3,000)

$238,000

$238,000

$ 66,000*

$ (25,000)

$ (7,500)

$ 7,000

$ (8,500)

$ (42,000)

$228,000

*Present value as of January 1, 2009

2009–14 I.R.B.

743

April 6, 2009

Computation of expected earnings

The plan sponsor elects to determine present

values and other computations under § 430 using the

24-month average of segment rates for the fourth

month preceding the month that contains the valuation date, without applying the transition rules in

§ 430(h)(2)(G). The actuary’s best estimate of the

anticipated rate of return on plan assets is 6.25% for

2007 and is 6.25% for 2008. However, the assumed

rate of return used for determining expected earnings

for each of these plan years is equal to the lesser of

the anticipated rate of return on assets for the plan

year and the applicable limitation for the plan year.

The January 1, 2007 valuation was performed

based on the funding rules in effect prior to

PPA ’06, and therefore did not use the segment rates.

Accordingly, the limitation on the assumed rate of

return for 2007 is determined under section III.C of

this notice. Furthermore, the Service did not publish

the 24-month average of the third segment rates for

the 24-month period that ended with the month prior

to the valuation date (December 2006). Therefore,

in accordance with section III.C of this notice, the

assumed rate of return applicable for periods in 2007

is limited so that it does not exceed the spot third

segment rate for the month prior to the valuation

date (December 2006), or 6.09% (per Table II of

Notice 2007–81, 2007–2 C.B. 899). Because this

rate is lower than the actuary’s best estimate of the

anticipated rate of return on plan assets for 2007, the

assumed rate of return for 2007 is limited to 6.09%.

0

(1/2)

-1)] = $11,037

0

(1/2)

-1)] = $13,875

2007: ($196,500 x .0609) + [$62,000 x (1.0609 - 1)] - [($24,000 + $7,000) x (1.0609

2008: ($238,000 x .0625) + [$66,000 x (1.0625 - 1)] - [($25,000 + $7,500) x (1.0625

For 2008, the third segment rate used to limit the

assumed rate of return is the rate used for the January 1, 2008 valuation. Because the plan sponsor has

elected to use the segment rates for the fourth month

preceding the valuation date (September 2007) without transition, the third segment rate is 6.38%. Because this rate is higher than the actuary’s best estimate of the anticipated rate of return on plan assets for

2008, the assumed rate of return for 2008 is equal to

6.25% (the actuary’s best estimate of the anticipated

rate of return on plan assets).

Expected earnings are calculated as follows for

each year:

Computation of adjusted fair market value of assets

The adjusted fair market values of assets for the

January 1, 2007 and January 1, 2008 determination

dates are computed as follows:

Adjusted values

2007

2008

Fair market value January 1:

Net adjustments:

Contributions for 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Contributions for 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Benefit payments for 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Benefit payments for 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Expenses for 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Expenses for 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Expected earnings for 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Expected earnings for 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$196,500

$238,000

$ 62,000

$ 66,000*

$ (24,000)

$ (25,000)

$ (7,000)

$ (7,500)

$ 11,037

$ 13,875

n/a

$ 66,000*

n/a

$ (25,000)

n/a

$ (7,500)

n/a

$ 13,875

Adjusted fair market value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$285,912

$285,375

*Present value as of January 1, 2009

Computation of actuarial value of assets

Average of adjusted fair market value at earlier

determination dates and fair market value at valuation

date:

($285,912 + $285,375 + $228,000) ÷ 3 = $266,429

This preliminary average as of January 1, 2009

must be limited so that it satisfies the 90–110 percent corridor rules under § 430(g)(3)(B)(iii). Because 110% of $228,000 equals $250,800, the actuarial value of assets for Plan A must be limited to

$250,800 (rather than $266,429). Thus, the actuarial value of assets as of January 1, 2009 is $250,800.

April 6, 2009

Algebraically equivalent determination of actuarial value of assets

return for each year as described above and a smoothing period of three years. This equivalency is demonstrated as follows:

Note that the above calculation of the preliminary

average as of January 1, 2009 is algebraically equivalent to the method under Approval 15 of Rev. Proc.

2000–40, 2000–2 C.B. 357, using the assumed rate of

744

2009–14 I.R.B.

Actual earnings:

Interest and dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net realized gains (losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balancing item. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total actual earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Expected earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Gain (loss) equal to actual earnings minus expected earnings . . . . . . . . . . . . . . . . . . . .

2007

2008

$ 7,500

$ 6,000

$ (3,000)

$ 10,500

$ 11,037

$ (537)

$ 7,000

$ (8,500)

$ (42,000)

$ (43,500)

$ 13,875

$ (57,375)

Preliminary actuarial value of assets as of January 1, 2009 equals:

$228,000 + one-third of the 2007 loss (1/3 x $537) + two-thirds of the 2008 loss (2/3 x $57,375) = $266,429

As noted above, this preliminary actuarial value

of assets must be limited so that the actuarial value

of assets as of January 1, 2009 satisfies the 90–110

percent corridor rules under § 430(g)(3)(B)(iii). Because the preliminary actuarial value of assets exceeds 110% of the fair market value of plan assets as

of the valuation date, the actuarial value of assets as

of January 1, 2009 is $250,800.

Example 2 — Actuarial value of assets calculated

as of January 1, 2010, using the average of the

value on the valuation date and four earlier quarterly determination dates

Quarter beginning

Fair market value:

Assets in trust at beginning

of quarter . . . . . . . . . . . . . . . . . . . . .

Contributions receivable for

prior plan year . . . . . . . . . . . . . . . . .

Effective interest rate for

prior plan year . . . . . . . . . . . . . . . . .

Discounted prior plan year

contributions receivable

at beginning of quarter . . . . . . . . . .

Total fair market value at

beginning of quarter,

including contributions

receivable. . . . . . . . . . . . . . . . . . . . .

Facts

The facts are the same as in Example 1, except

that the actuarial value of assets is calculated by averaging the fair market value as of the current valuation date and adjusted fair market values as of the beginning of the four preceding calendar quarters. Two

contributions are made for the 2009 plan year—a contribution of $10,000 made on May 1, 2009, and a contribution of $60,000 made on September 15, 2010.

The effective interest rate for the 2009 plan year is

th

6.10%. Benefits are paid on the 15 day of each

month, and so benefits for the quarter are assumed

to be made at the midpoint of each quarter. During

1/1/2009

4/1/2009

7/1/2009

10/1/2009

1/1/2010

$162,000

$143,232

$153,649

$215,300

$216,900

$ 68,781

$ 68,781

$ 68,781

$

$ 60,000

6.00%

6.00%

6.00%

0

6.00%

6.10%

$ 66,000

$ 66,968

$ 67,951

$

0

$ 57,536

$228,000

$210,200

$221,600

$215,300

$274,436

The fair market value of assets, plan contributions, benefit payments, and other relevant items for

the four quarters of 2009 are shown in the table below:

Quarter beginning

Total fair market value at beginning of quarter,

including contributions receivable . . . . . . . . . . . . . . . . . . . . .

Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Benefit payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interest and dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net realized gains (losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balancing item* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fair market value at end of quarter, including

contributions receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2009–14 I.R.B.

2009, administrative expenses are paid at the beginning of each quarter.

An actuarial valuation is performed as of January

1, 2010. For each determination date for which the

contribution of $68,781 paid on September 15, 2009

is a contribution receivable for the 2008 plan year, the

contribution receivable is discounted to the determination date using the 2008 effective interest rate of

6.00%. The contribution of $60,000 paid on September 15, 2010 for the 2009 plan year is reflected in the

fair market value of assets as of January 1, 2010, discounted to that date using the 2009 effective interest

(8.5/12)

= $57,536), as

rate of 6.1% ($60,000 ÷ 1.061

illustrated in the table below:

1/1/2009

4/1/2009

7/1/2009

10/1/2009

$228,000

$210,200

$221,600

$215,300

$

0

$ (6,000)

$ (2,100)

$ 2,300

$ 3,000

$ (15,000)

$ 10,000

$ (6,500)

$ (1,900)

$ 1,800

$ 3,000

$ 5,000

$

0

$ (6,300)

$ (2,300)

$ 2,000

$ 3,000

$ (2,700)

$ 57,536**

$ (6,400)

$ (1,800)

$ 2,800

$ 3,000

$ 4,000

$210,200

$221,600

$215,300

$274,436

745

April 6, 2009

* Includes the change in discounted value of the contribution receivable.

** Discounted value of contribution receivable for the 2009 plan year, paid after the end of the 2009 plan year. This discounted amount is treated as if it is paid on

December 31, 2009, for the purpose of calculating the fair market value and the average value of assets.

Computation of expected earnings

The plan sponsor elects to determine present values and other computations under § 430 using the

24-month segment rates for the fourth month preceding the month that contains the valuation, without

applying the transition rules in § 430(h)(2)(G). The

actuary’s best estimate of the anticipated rate of return on plan assets is 6.25% for 2009. This rate is

compared with the third segment rate for the 2009

plan year of 6.56% (based on the rates published for

September 2008); because the third segment rate is

higher than the actuary’s best estimate of the antici-

pated rate of return on plan assets, the actuary’s assumed rate of return is not restricted.

Expected earnings are calculated for each quarter, taking into account the timing of contributions,

benefit payments, and administrative expenses during each quarter, as follows:

Quarter beginning 1/1/2009:

(3/12)

(1.5/12)

(3/12)

-1)] - [$6,000 x (1.0625

-1)] - [$2,100 x (1.0625

-1)] = $3,404

[$228,000 x (1.0625

Quarter beginning 4/1/2009:

(3/12)

(2/12)

(1.5/12)

(3/12)

-1)] + [$10,000 x (1.0625

-1)] - [$6,500 x (1.0625

-1)] - [$1,900 x (1.0625

-1)] = $3,233

[$210,200 x (1.0625

Quarter beginning 7/1/2009:

(3/12)

(1.5/12)

(3/12)

-1)] - [$6,300 x (1.0625

-1)] - [$2,300 x (1.0625

-1)] = $3,301

[$221,600 x (1.0625

Quarter beginning 10/1/2009:

(3/12)

0

(1.5/12)

(3/12)

-1)] + [$57,536 x (1.0625 -1)] - [$6,400 x (1.0625

-1)] - [$1,800 x (1.0625

-1)] = $3,212

[$215,300 x (1.0625

Computation of average value of assets

The average value of assets as of January 1, 2010,

is computed as follows:

Determination date

Total fair market value at beginning of quarter, including

contributions receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net adjustments*

Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Benefit payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Expected earnings:

1/1/2009 - 3/31/2009 . . . . . . . . . . . . . . . . . . . . . . . . .

4/1/2009 - 6/30/2009 . . . . . . . . . . . . . . . . . . . . . . . . .

7/1/2009 - 9/30/2009 . . . . . . . . . . . . . . . . . . . . . . . . .

10/2009 - 12/31/2009 . . . . . . . . . . . . . . . . . . . . . . . . .

Adjusted fair market value . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1/1/2009

4/1/2009

7/1/2009

10/1/2009

$228,000

$210,200

$221,600

$215,300

$ 67,536

$ (25,200)

$ (8,100)

$ 67,536

$ (19,200)

$ (6,000)

$ 57,536

$ (12,700)

$ (4,100)

$ 57,536*

$ (6,400)

$ (1,800)

$

$

$

$

$

$

$

N/A

3,233

3,301

3,212

N/A

N/A

3,301

3,212

N/A

N/A

N/A

3,212

3,404

3,233

3,301

3,212

$275,386

$

$

$262,282

$268,849

$

$267,848

* Entries reflect the sum of the amounts for the current and later quarters, as illustrated for expected earnings.

Average of adjusted fair market value of assets at earlier determination dates and fair market value at valuation date:

($275,386 + $262,282 + $268,849 + $267,848 + $274,436) ÷ 5 = $269,760

This average must be limited so that the actuarial value of assets as of January 1, 2010 satisfies the 90–110 percent corridor rules under

§ 430(g)(3)(B)(iii). Because the average of adjusted

fair market values of $269,760 falls between 90%

and 110% of $274,436, the actuarial value of assets

as of January 1, 2010 is $269,760.

April 6, 2009

IV. AUTOMATIC APPROVAL FOR

CHANGE IN ASSET VALUATION

METHOD

This notice provides approval by the

Commissioner for a change in a plan’s

asset valuation method to adopt an asset

valuation method that is permitted under

§ 430(g)(3), as amended by WRERA, that

is made for a plan year that begins during

2009. In addition, the approval that would

apply under the proposed regulations for a

746

change in funding method for a plan year

that begins during 2008 will apply to a

change in a plan’s asset valuation method

made to adopt the asset valuation method

permitted by § 430(g)(3)(B), as amended

by WRERA, that is made for such a plan

year.

V. DRAFTING INFORMATION

The principal authors of this notice

are Carolyn Zimmerman of the Employee

2009–14 I.R.B.

Plans, Tax Exempt and Government Entities Division, and Michael P. Brewer

and Linda S. F. Marshall of the Office

of the Division Counsel/Associate Chief

Counsel (Tax Exempt and Government

Entities). For further information regarding this notice, please contact the Employee Plans taxpayer assistance answering service at 1–877–829–5500 (a toll-free

number), Mr. Brewer or Ms. Marshall

at (202) 622–6090 (not a toll-free

number), or e-mail Ms. Zimmerman, at

RetirementPlanQuestions@irs.gov.

26 CFR 601.105: Examination of returns and claims

for refund, credit or abatement; determination of correct tax liability.

(Also Part I, §§ 172, 6411.)

Rev. Proc. 2009–19

SECTION 1. PURPOSE

.01 This revenue procedure provides

guidance under § 1211 of the American

Recovery and Reinvestment Tax Act of

2009, Div. B of Pub. L. No. 111–5,

123 Stat. 115 (February 17, 2009) (the

Act). Section 1211 of the Act amends

§ 172(b)(1)(H) of the Internal Revenue

Code to allow any taxpayer that is an eligible small business (ESB) to elect a 3, 4,

or 5-year net operating loss (NOL) carryback for a taxable year ending after 2007.

.02 Specifically, this revenue procedure

provides guidance to taxpayers as to the

time and manner for making an election

under § 172(b)(1)(H), including the election of a 3, 4, or 5-year carryback period

and an election to apply § 172(b)(1)(H)

to an NOL for a taxable year beginning

in 2008, instead of an NOL for a taxable

year ending in 2008. This revenue procedure provides guidance on when and how

to elect § 172(b)(1)(H) if the taxpayer previously filed an election under § 172(b)(3)

to forgo the NOL carryback period.

.03 This revenue procedure also provides guidance on how a taxpayer makes

the election if the taxpayer is a partner of

an ESB that is a partnership, a shareholder

of an ESB that is an S corporation, or a sole

proprietor.

SECTION 2. BACKGROUND

.01 Section 172(a) allows a deduction

equal to the aggregate of the NOL carry-

2009–14 I.R.B.

overs and carrybacks to the taxable year.

Section 172(b)(1)(A)(i) provides that an

NOL for any taxable year generally must

be carried back to each of the 2 years

preceding the taxable year of the NOL.

Section 172(b)(3) provides that any taxpayer entitled to a carryback period under

§ 172(b)(1) may make an irrevocable election to relinquish the carryback period with

respect to an NOL for any taxable year.

.02 Section 6411(a) provides that a taxpayer may file an application for a tentative carryback adjustment of the tax for

the prior taxable year affected by an NOL

carryback from any taxable year. Section

6411(a) also provides that the application

must be filed on or after the date of filing for the return for the taxable year of

the NOL from which the carryback results

and within a period of 12 months after that

taxable year or, with respect to any portion

of a business credit carryback attributable

to an NOL from a subsequent taxable year,

within a period of 12 months from the end

of the subsequent taxable year. Section

6411(b) provides a 90-day period during

which the Internal Revenue Service will

make a limited examination of the application to discover omissions and errors of

computation and determine the amount of

the decrease in tax attributable to the carryback. The Service may disallow, without further action, any application that contains errors of computation that cannot be

corrected within the 90-day period or that

contains material omissions. The decrease

in tax attributable to the carryback will

be applied against unpaid amounts of tax.

Any remainder of the decrease will, within

the 90-day period, be credited or refunded.

.03 Section 172(b)(1)(H) permits an

ESB to carry back its applicable 2008

NOL to 3, 4, or 5 years preceding the taxable year of the NOL, as the ESB elects.

.04 Section 172(b)(1)(H)(iv) provides

that the term “eligible small business” has

the meaning given by § 172(b)(1)(F)(iii),

except that § 448(c) is applied by substituting “$15 million” for “$5 million” each

place it appears. Section 172(b)(1)(F)(iii)

provides that a small business is a corporation or partnership that meets the gross receipts test of § 448(c) for the taxable year

in which the loss arose (or in the case of a

sole proprietorship, that would meet such

test if the proprietorship were a corporation).

747

.05 Section 448 generally prohibits certain taxpayers from using the cash receipts

and disbursements method of accounting.

Section 448(b)(3) provides an exception to

this requirement in the case of any corporation or partnership if, for all prior taxable

years beginning after December 31, 1985,

the entity (or any predecessor) met the $5

million gross receipts test of § 448(c). Section 448(c)(1) provides that a corporation

or partnership meets the $5 million gross

receipts test for any prior taxable year if

the average annual gross receipts of the entity for the 3-taxable-year period ending

with that prior taxable year does not exceed $5 million. Section 448(c)(2) (aggregation rules) generally provides that all

persons treated as a single employer under

subsection (a) or (b) of § 52 or subsection

(m) or (o) of § 414 are treated as one person for purposes of § 448(c)(1).

.06 The $5 million gross receipts test

of § 448(c) is applied to a taxpayer’s prior

taxable year by determining the average annual gross receipts for the 3-year

period that ends with that prior taxable

year. Under §172(b)(1)(F)(iii), in order

to be a small business, a taxpayer must

meet the gross receipts test of § 448(c)

for the taxable year in which the NOL

arose. Consequently, to determine if a

taxpayer is a small business for purposes

of § 172(b)(1)(F)(iii), the taxable year in

which the NOL arose is the last taxable

year of the 3-year period to which the test

is applied.

.07 Section 172(b)(1)(H)(ii)(I) provides

that the term “applicable 2008 net operating loss” means the taxpayer’s NOL for

any taxable year ending in 2008. However,

under § 172(b)(1)(H)(ii)(II), the taxpayer

may elect instead to have the term mean

the taxpayer’s NOL for any taxable year

beginning in 2008.

.08 Section 172(b)(1)(H)(iii) provides

that any election under § 172(b)(1)(H) is

required to be made in such a manner as

may be prescribed by the Secretary, and

must be made by the due date (including

extension of time) for filing the taxpayer’s

return for the taxable year of the NOL. The

election is irrevocable and may be made

only for one taxable year.

.09 Section 1211(d)(2) of the Act provides that in the case of an applicable 2008

NOL for a taxable year ending before the

date of enactment of the Act (February 17,

2009), (A) a previous election made un-

April 6, 2009

der § 172(b)(3) for the NOL may be revoked on or before April 17, 2009; (B)

the § 172(b)(1)(H) election for the NOL

is treated as timely if made on or before

April 17, 2009; and (C) an application under § 6411(a) with respect to the NOL is

treated as timely if filed on or before April

17, 2009.

SECTION 3. SCOPE

This revenue procedure applies to any

taxpayer that is an ESB, a partner of a partnership that is an ESB, a shareholder in an

S corporation that is an ESB, or a sole proprietor of a business that is an ESB, and

that incurred an NOL for any taxable year

ending in 2008 or beginning in 2008.

SECTION 4. APPLICATION

.01 Eligible small businesses that have

not filed a return for the applicable 2008

NOL taxable year.

(1) A taxpayer within the scope of this

revenue procedure that has not filed a return for the taxable year in which the applicable 2008 NOL arises makes the election

under § 172(b)(1)(H) by attaching a statement to the taxpayer’s federal income tax

return for the taxable year in which the applicable 2008 NOL arises. The statement

must—

(a) Clearly state that the taxpayer is

electing to apply §172(b)(1)(H);

(b) Describe the length of the NOL carryback period elected by the taxpayer (3,

4, or 5 years); and

(c) If applicable, state that the taxpayer

is electing to apply § 172(b)(1)(H) to

the taxpayer’s taxable year that begins in

2008.

(2) The taxpayer’s return must be filed

by the due date (including extensions of

time) for filing the taxpayer’s return for

the taxable year of the applicable 2008

NOL. In the case of a late election, relief

may be available under § 301.9100–2(b)

of the Procedure and Administration Regulations. Notwithstanding this due date,

an election to apply § 172(b)(1)(H) to an

applicable 2008 NOL for a taxable year

ending before February 17, 2009, will be

treated as timely if the election is filed on

or before April 17, 2009.

.02 Eligible small businesses that have

filed a return for the applicable 2008 NOL

April 6, 2009

taxable year and did not elect to forgo the

NOL carryback period.

(1) A taxpayer within the scope of this

revenue procedure that previously filed a

return for the applicable 2008 NOL taxable

year and did not elect to forgo the NOL carryback period under § 172(b)(3) makes the

election under § 172(b)(1)(H) as follows:

(a) What to file.

(i) The taxpayer must file the appropriate form including a statement of the carryback period the taxpayer elects (3, 4, or

5 years). The appropriate form is—

(A) For corporations, Form 1139, Corporation Application for Tentative Refund,

or Form 1120X, Amended U.S. Corporation Income Tax Return;

(B) For individuals, Form 1045, Application for Tentative Refund, or Form

1040X, Amended U.S. Individual Income

Tax Return; and

(C) For estates or trusts, Form 1045,

or amended Form 1041, U.S. Income Tax

Return for Estates and Trusts.

(ii) A taxpayer that makes the election

by filing an amended return must file the

return for the earliest taxable year to which

the taxpayer is carrying back the applicable 2008 NOL. The taxpayer should not

file an amended return for the applicable

2008 NOL taxable year.

(b) Labels. The taxpayer should type or

print across the top of the appropriate form

“2008 NOL Carryback Election Pursuant

to Rev. Proc. 2009–19.” If the taxpayer

previously filed an application for a tentative carryback adjustment or an amended

return applying an NOL carryback period that did not qualify for the election

under § 172(b)(1)(H), the taxpayer also

should type or print across the top of the

appropriate form “Amended NOL Carryback Election Pursuant to Rev. Proc.

2009–19.” In addition to the labels listed

above, a taxpayer that elects pursuant to

§ 172(b)(1)(H)(ii)(II) to treat its NOL arising in a taxable year beginning in 2008 as

the applicable 2008 NOL, must include a

statement that the taxpayer is electing to

apply § 172(b)(1)(H) to a taxable year that

begins in 2008.

(c) When to file. The taxpayer must file

the appropriate form by the later of the date

that is 6 months after the due date (excluding extensions) for filing the taxpayer’s return for the taxable year of the applicable

2008 NOL, or on or before April 17, 2009.

748

(2) If a taxpayer makes the election

under § 172(b)(1)(H) by filing an applicable form that amends a prior refund

claim, the amendment also will apply to

a carryback of any alternative tax NOL

for the same taxable year. In the case of

an amended application for a tentative

carryback adjustment, the 90-day period

described in § 6411(b) will begin on the

date the amended application is filed.

.03 Eligible small businesses that

elected to forgo the NOL carryback period under § 172(b)(3). A taxpayer within

the scope of this revenue procedure that

previously elected under § 172(b)(3) to

forgo the carryback period for an applicable 2008 NOL for a taxable year ending

before February 17, 2009, may revoke

that election and make the election under

§ 172(b)(1)(H). Any revocation of the

election to forgo the NOL carryback period also will apply to a carryback of any

alternative tax NOL for the same taxable

year. The taxpayer makes the revocation

and election by following the procedures

of section 4.02 of this revenue procedure.

However, instead of the label required in

section 4.02(1)(b) of this revenue procedure, the taxpayer should type or print

across the top of the appropriate form

“2008 NOL Carryback Election and Revocation of NOL Carryback Waiver Pursuant

to Rev. Proc. 2009–19.” The taxpayer

must file the revocation and new election

under § 172(b)(1)(H) on or before April

17, 2009.

.04 Partnerships, S corporations, and

sole proprietorships.

(1) If the taxpayer is a partner in a

partnership that qualifies as an ESB, the

taxpayer may make the § 172(b)(1)(H)

election for its distributive share of the

qualifying ESB partnership income, gain,

loss, and deduction that is both allocable

to the taxpayer under § 704 and allowed in

calculating the taxpayer’s applicable 2008

NOL.

(2) If the taxpayer is a shareholder in

an S corporation that qualifies as an ESB,

the taxpayer may make the § 172(b)(1)(H)

election for its pro rata share of the qualifying ESB S corporation income, gain,

loss, and deduction under § 1366 that is allowed in calculating the shareholder’s applicable 2008 NOL.

(3) If the taxpayer is an owner of a sole

proprietorship that qualifies as an ESB,

the taxpayer may make the § 172(b)(1)(H)

2009–14 I.R.B.

election for the qualifying ESB sole proprietorship income, gain, loss, and deduction that is allowed in calculating the taxpayer’s applicable 2008 NOL.

(4) In determining whether a partnership, S corporation, or sole proprietorship

qualifies as an ESB, the gross receipts test

applies at the partnership, corporate, or

sole proprietorship level. The aggregation rules of § 448(c)(2) apply to determine whether the partnership, S corporation, or sole proprietorship meets the gross

receipts test of § 448(c).

(5) The amount of the taxpayer’s applicable 2008 NOL that the taxpayer may

carry back under §172(b)(1)(H) is limited

to the lesser of:

(a) The taxpayer’s items of income,

gain, loss or deduction that are allowed

in calculating the taxpayer’s applicable

2008 NOL and are from one or more

partnerships, S corporations or sole proprietorships that qualify as ESBs, or

(b) The taxpayer’s applicable 2008

NOL.

(6) Examples.

(a) Example 1. Partnerships A, B, and C have

average annual gross receipts of $10 million, $12

million, and $14 million, respectively. Partner T

owns a 40% interest in each partnership. None of

the partnerships is required to be aggregated with

any other entity for purposes of the aggregation

rules of § 448(c)(2). Subject to the limitations in

section 4.04(5) of this revenue procedure, Partner T

may apply its election under § 172(b)(1)(H) to the

portion of its applicable 2008 NOL attributable to

its distributive share of the income, gain, loss, and

deduction of each of Partnerships A, B, and C.

(b) Example 2. The facts are the same as in Example 1, except that Partnerships A and B are under

common control within the meaning of § 52(b)(1).

Accordingly, Partnerships A and B are treated as one

person under the aggregation rules of § 448(c)(2).

Because the aggregated average annual gross receipts

of Partnerships A and B exceed $15 million, Partnerships A and B do not qualify as ESBs. Partner

T may not apply its election under § 172(b)(1)(H) to

the portion of its applicable 2008 NOL attributable

to its distributive share of the income, gain, loss, and

deduction of Partnerships A and B. However, subject

to the limitations in section 4.04(5) of this revenue

procedure, Partner T may apply its election under

§ 172(b)(1)(H) to the portion of its applicable 2008

NOL attributable to its distributive share of income,

gain, loss, and deduction of Partnership C.

SECTION 5. EFFECTIVE DATE

This revenue procedure is effective for

NOLs arising in taxable years ending after

December 31, 2007.

SECTION 6. PAPERWORK

REDUCTION ACT

The collection of information contained in this revenue procedure has been

reviewed and approved by the Office

of Management and Budget in accordance with the Paperwork Reduction Act

(44 U.S.C. 3507) under the following

control numbers: 1545–0074 Form 1040

(U.S. Individual Income Tax Return) and

Form 1040X (Amended U.S. Individual

Income Tax Return); 1545–0123 Form

1120 (U.S. Corporation Income Tax

Return);

1545–0132 Form 1120X

(Amended U.S. Corporation Income Tax

Return); 1545–0092 Form 1041 (U.S.

Income Tax Return for Estates and Trusts);

1545–0098 Form 1045 (Application for

Tentative Refund); 1545–0582 Form 1139

(Corporation Application for Tentative

Refund). For further information, please

refer to the Paperwork Reduction Act

statements accompanying these forms.

DRAFTING INFORMATION

The principal author of this revenue

procedure is Seoyeon Park of the Office of

the Associate Chief Counsel (Income Tax

and Accounting). For further information

regarding this notice, contact Ms. Park at

(202) 622–4960 (not a toll-free call).

26 CFR 601.105: Examination of returns and claims

for refund, credit or abatement; determination of correct tax liability.

(Also Part I, §§ 165; 1.165–8(c).)

Rev. Proc. 2009–20

SECTION 1. PURPOSE

This revenue procedure provides an optional safe harbor treatment for taxpayers

that experienced losses in certain investment arrangements discovered to be criminally fraudulent. This revenue procedure

also describes how the Internal Revenue

Service will treat a return that claims a deduction for such a loss and does not use the

safe harbor treatment described in this revenue procedure.

SECTION 2. BACKGROUND

.01 The Service and Treasury Department are aware of investment arrange-

2009–14 I.R.B.

749

ments that have been discovered to be

fraudulent, resulting in significant losses

to taxpayers. These arrangements often take the form of so-called “Ponzi”

schemes, in which the party perpetrating

the fraud receives cash or property from

investors, purports to earn income for the

investors, and reports to the investors income amounts that are wholly or partially

fictitious. Payments, if any, of purported

income or principal to investors are made

from cash or property that other investors

invested in the fraudulent arrangement.

The party perpetrating the fraud criminally

appropriates some or all of the investors’

cash or property.

.02 Rev. Rul. 2009–9, 2009–14 I.R.B.

735 (April 6, 2009), describes the proper

income tax treatment for losses resulting

from these Ponzi schemes.

.03 The Service and Treasury Department recognize that whether and when investors meet the requirements for claiming

a theft loss for an investment in a Ponzi

scheme are highly factual determinations

that often cannot be made by taxpayers

with certainty in the year the loss is discovered.

.04 In view of the number of investment arrangements recently discovered to

be fraudulent and the extent of the potential losses, this revenue procedure provides an optional safe harbor under which

qualified investors (as defined in § 4.03 of

this revenue procedure) may treat a loss as

a theft loss deduction when certain conditions are met. This treatment provides

qualified investors with a uniform manner

for determining their theft losses. In addition, this treatment avoids potentially difficult problems of proof in determining how

much income reported in prior years was

fictitious or a return of capital, and alleviates compliance and administrative burdens on both taxpayers and the Service.

SECTION 3. SCOPE

The safe harbor procedures of this revenue procedure apply to taxpayers that are

qualified investors within the meaning of

section 4.03 of this revenue procedure.

SECTION 4. DEFINITIONS

The following definitions apply solely

for purposes of this revenue procedure.

April 6, 2009

.01 Specified fraudulent arrangement.

A specified fraudulent arrangement is an

arrangement in which a party (the lead

figure) receives cash or property from

investors; purports to earn income for

the investors; reports income amounts to

the investors that are partially or wholly

fictitious; makes payments, if any, of

purported income or principal to some investors from amounts that other investors

invested in the fraudulent arrangement;

and appropriates some or all of the investors’ cash or property. For example,

the fraudulent investment arrangement described in Rev. Rul. 2009–9 is a specified

fraudulent arrangement.

.02 Qualified loss. A qualified loss is a

loss resulting from a specified fraudulent

arrangement in which, as a result of the

conduct that caused the loss—

(1) The lead figure (or one of the lead

figures, if more than one) was charged by

indictment or information (not withdrawn

or dismissed) under state or federal law

with the commission of fraud, embezzlement or a similar crime that, if proven,

would meet the definition of theft for purposes of § 165 of the Internal Revenue

Code and § 1.165–8(d) of the Income Tax

Regulations, under the law of the jurisdiction in which the theft occurred; or

(2) The lead figure was the subject of

a state or federal criminal complaint (not

withdrawn or dismissed) alleging the commission of a crime described in section

4.02(1) of this revenue procedure, and either—

(a) The complaint alleged an admission

by the lead figure, or the execution of an affidavit by that person admitting the crime;

or

(b) A receiver or trustee was appointed

with respect to the arrangement or assets

of the arrangement were frozen.

.03 Qualified investor. A qualified investor means a United States person, as defined in § 7701(a)(30) —

(1) That generally qualifies to deduct

theft losses under § 165 and § 1.165–8;

(2) That did not have actual knowledge

of the fraudulent nature of the investment

arrangement prior to it becoming known to

the general public;

(3) With respect to which the specified

fraudulent arrangement is not a tax shelter,

as defined in § 6662(d)(2)(C)(ii); and

(4) That transferred cash or property

to a specified fraudulent arrangement. A

April 6, 2009

qualified investor does not include a person that invested solely in a fund or other

entity (separate from the investor for federal income tax purposes) that invested

in the specified fraudulent arrangement.

However, the fund or entity itself may be a

qualified investor within the scope of this

revenue procedure.

.04 Discovery year. A qualified investor’s discovery year is the taxable year

of the investor in which the indictment, information, or complaint described in section 4.02 of this revenue procedure is filed.

.05 Responsible group. Responsible

group means, for any specified fraudulent

arrangement, one or more of the following:

(1) The individual or individuals (including the lead figure) who conducted the

specified fraudulent arrangement;

(2) Any investment vehicle or other entity that conducted the specified fraudulent

arrangement, and employees, officers, or

directors of that entity or entities;

(3) A liquidation, receivership, bankruptcy or similar estate established with respect to individuals or entities who conducted the specified fraudulent arrangement, in order to recover assets for the benefit of investors and creditors; or

(4) Parties that are subject to claims

brought by a trustee, receiver, or other

fiduciary on behalf of the liquidation, receivership, bankruptcy or similar estate described in section 4.05(3) of this revenue

procedure.

.06 Qualified investment.

(1) Qualified investment means the excess, if any, of —

(a) The sum of —

(i) The total amount of cash, or the basis

of property, that the qualified investor invested in the arrangement in all years; plus

(ii) The total amount of net income with

respect to the specified fraudulent arrangement that, consistent with information received from the specified fraudulent arrangement, the qualified investor included

in income for federal tax purposes for all

taxable years prior to the discovery year,

including taxable years for which a refund

is barred by the statute of limitations; over

(b) The total amount of cash or property that the qualified investor withdrew in

all years from the specified fraudulent arrangement (whether designated as income

or principal).

(2) Qualified investment does not include any of the following—

750

(a) Amounts borrowed from the responsible group and invested in the specified

fraudulent arrangement, to the extent the

borrowed amounts were not repaid at the

time the theft was discovered;

(b) Amounts such as fees that were paid

to the responsible group and deducted for

federal income tax purposes;

(c) Amounts reported to the qualified

investor as taxable income that were not

included in gross income on the investor’s

federal income tax returns; or

(d) Cash or property that the qualified

investor invested in a fund or other entity

(separate from the qualified investor for

federal income tax purposes) that invested

in a specified fraudulent arrangement.

.07 Actual recovery. Actual recovery

means any amount a qualified investor actually receives in the discovery year from

any source as reimbursement or recovery

for the qualified loss.

.08 Potential insurance/SIPC recovery.

Potential insurance/SIPC recovery means

the sum of the amounts of all actual or

potential claims for reimbursement for a

qualified loss that, as of the last day of the

discovery year, are attributable to—

(1) Insurance policies in the name of the

qualified investor;

(2) Contractual arrangements other

than insurance that guaranteed or otherwise protected against loss of the qualified

investment; or

(3) Amounts payable from the Securities Investor Protection Corporation

(SIPC), as advances for customer claims

under 15 U.S.C. § 78fff–3(a) (the Securities Investor Protection Act of 1970), or by

a similar entity under a similar provision.

.09 Potential direct recovery. Potential

direct recovery means the amount of all actual or potential claims for recovery for a

qualified loss, as of the last day of the discovery year, against the responsible group.

.10 Potential third-party recovery. Potential third-party recovery means the

amount of all actual or potential claims

for recovery for a qualified loss, as of the

last day of the discovery year, that are not

described in section 4.08 or 4.09 of this

revenue procedure.

SECTION 5. APPLICATION

.01 In general. If a qualified investor

follows the procedures described in section 6 of this revenue procedure, the Ser-

2009–14 I.R.B.

vice will not challenge the following treatment by the qualified investor of a qualified loss—

(1) The loss is deducted as a theft loss;

(2) The taxable year in which the theft

was discovered within the meaning of

§ 165(e) is the discovery year described

in section 4.04 of this revenue procedure;

and

(3) The amount of the deduction is the

amount specified in section 5.02 of this

revenue procedure.

.02 Amount to be deducted. The amount

specified in this section 5.02 is calculated

as follows—

(1) Multiply the amount of the qualified

investment by—

(a) 95 percent, for a qualified investor

that does not pursue any potential thirdparty recovery; or

(b) 75 percent, for a qualified investor

that is pursuing or intends to pursue any

potential third-party recovery; and

(2) Subtract from this product the sum

of any actual recovery and any potential

insurance/SIPC recovery.

The amount of the deduction calculated

under this section 5.02 is not further reduced by potential direct recovery or potential third-party recovery.

.03 Future recoveries. The qualified

investor may have income or an additional deduction in a year subsequent to

the discovery year depending on the actual amount of the loss that is eventually

recovered. See § 1.165–1(d); Rev. Rul.

2009–9.

SECTION 6. PROCEDURE

.01 A qualified investor that uses the

safe harbor treatment described in section

5 of this revenue procedure must—

(1) Mark “Revenue Procedure

2009–20” at the top of the Form 4684, Casualties and Thefts, for the federal income

tax return for the discovery year. The

taxpayer must enter the “deductible theft

loss” amount from line 10 in Part II of

Appendix A of this revenue procedure on

line 34, section B, Part I, of the Form 4684

and should not complete the remainder of

section B, Part I, of the Form 4684;

(2) Complete and sign the statement

provided in Appendix A of this revenue

procedure; and

(3) Attach the executed statement provided in Appendix A of this revenue proce-

2009–14 I.R.B.

dure to the qualified investor’s timely filed

(including extensions) federal income tax

return for the discovery year. Notwithstanding the preceding sentence, if, before

April 17, 2009, the taxpayer has filed a return for the discovery year or an amended

return for a prior year that is inconsistent

with the safe harbor treatment provided by

this revenue procedure, the taxpayer must

indicate this fact on the executed statement

and must attach the statement to the return

(or amended return) for the discovery year

that is consistent with the safe harbor treatment provided by this revenue procedure

and that is filed on or before May 15, 2009.

.02 By executing the statement provided in Appendix A of this revenue

procedure, the taxpayer agrees—

(1) Not to deduct in the discovery year

any amount of the theft loss in excess of

the deduction permitted by section 5 of this

revenue procedure;

(2) Not to file returns or amended returns to exclude or recharacterize income

reported with respect to the investment arrangement in taxable years preceding the

discovery year;

(3) Not to apply the alternative computation in § 1341 with respect to the theft

loss deduction allowed by this revenue

procedure; and

(4) Not to apply the doctrine of equitable recoupment or the mitigation provisions in §§ 1311–1314 with respect to

income from the investment arrangement

that was reported in taxable years that are

otherwise barred by the period of limitations on filing a claim for refund under

§ 6511.

SECTION 7. EFFECTIVE DATE

This revenue procedure applies to

losses for which the discovery year is a

taxable year beginning after December 31,

2007.

SECTION 8. TAXPAYERS THAT

DO NOT USE THE SAFE HARBOR

TREATMENT PROVIDED BY THIS

REVENUE PROCEDURE

.01 A taxpayer that chooses not to apply

the safe harbor treatment provided by this

revenue procedure to a claimed theft loss

is subject to all of the generally applicable provisions governing the deductibility

of losses under § 165. For example, a tax-

751

payer seeking a theft loss deduction must

establish that the loss was from theft and

that the theft was discovered in the year

the taxpayer claims the deduction. The

taxpayer must also establish, through sufficient documentation, the amount of the

claimed loss and must establish that no

claim for reimbursement of any portion of

the loss exists with respect to which there

is a reasonable prospect of recovery in the

taxable year in which the taxpayer claims

the loss.

.02 A taxpayer that chooses not to apply

the safe harbor treatment of this revenue

procedure to a claimed theft loss and that

files or amends federal income tax returns

for years prior to the discovery year to

exclude amounts reported as income to the

taxpayer from the investment arrangement

must establish that the amounts sought to

be excluded in fact were not income that

was actually or constructively received by

the taxpayer (or accrued by the taxpayer,

in the case of a taxpayer using an accrual

method of accounting). However, provided a taxpayer can establish the amount

of net income from the investment arrangement that was reported and included

in the taxpayer’s gross income consistent

with information received from the specified fraudulent arrangement in taxable

years for which the period of limitation

on filing a claim for refund under § 6511

has expired, the Service will not challenge

the taxpayer’s inclusion of that amount in

basis for determining the amount of any

allowable theft loss, whether or not the

income was genuine.

.03 Returns claiming theft loss deductions from fraudulent investment arrangements are subject to examination by the

Service.

SECTION 9. PAPERWORK

REDUCTION ACT

The collection of information contained in this revenue procedure has been

reviewed and approved by the Office

of Management and Budget in accordance with the Paperwork Reduction Act

(44 U.S.C. 3507) under the following

control numbers: 1545–0074 Form 1040

(Individual Income Tax Return) and Form

1040X (Amended U.S. Individual Income

Tax Return); 1545–0123 Form 1120

(U.S. Corporation Income Tax Return);

1545–0132 Form 1120X (Amended

April 6, 2009

U.S. Corporation Income Tax Return);

1545–0092 Form 1041 (U.S. Income Tax

Return for Estates and Trusts); 1545–0099

Form 1065 (U.S. Return of Partnership

Income); 1545–0130 Form 1120S (U.S.

Income Tax Return for an S Corporation).

Please refer to the Paperwork Reduction

April 6, 2009

Act statements accompanying these forms

for further information.

DRAFTING INFORMATION

of Associate Chief Counsel (Income Tax

& Accounting). For further information

regarding this revenue procedure, contact

Ms. Rotunno at (202) 622–7900.

The principal author of this revenue

procedure is Norma Rotunno of the Office

752

2009–14 I.R.B.

APPENDIX A

Statement by Taxpayer Using the Procedures in Rev. Proc. 2009–20 to Determine a Theft Loss

Deduction Related to a Fraudulent Investment Arrangement

Part 1. Identification

1. Name of Taxpayer

2. Taxpayer Identification Number

Part II. Computation of deduction

(See Rev. Proc. 2009–20 for the definitions of the terms used in this worksheet.)

Line

Computation of Deductible Theft Loss Pursuant to Rev. Proc. 2009–20

1

Initial investment

2

Plus: Subsequent investments

3

Plus: Income reported in prior years

4

Less: Withdrawals

5

Total qualified investment (combine lines 1 through 4)

6

Percentage of qualified investment

(95% of line 5 for investors with no potential third-party recovery; 75% of line 5 for investors with

potential third-party recovery)

7

Actual recovery

8

Potential insurance/SIPC recovery

9

Total recoveries (add lines 7 and 8)

10

Deductible theft loss (line 6 minus line 9)

(

)

(

)

Part III. Required statements and declarations

1. I am claiming a theft loss deduction pursuant to Rev. Proc. 2009–20 from a specified fraudulent arrangement conducted by the

following individual or entity (provide the name, address, and taxpayer identification number (if known)).

2. I have written documentation to support the amounts reported in Part II of this document.

3. I am a qualified investor as defined in § 4.03 of Rev. Proc. 2009–20.

4. If I have determined the amount of my theft loss deduction under § 5.02(1)(a) of Rev. Proc. 2009–20, I declare that I have not

pursued and do not intend to pursue any potential third-party recovery, as that term is defined in § 4.10 of Rev. Proc. 2009–20.

5. If I have already filed a return or amended return that does not satisfy the conditions in § 6.02 of Rev. Proc 2009–20, I agree to

all adjustments or actions that are necessary to comply with those conditions. The tax year or years for which I filed the return(s)

or amended return(s) and the date(s) on which they were filed are as follows:

2009–14 I.R.B.

753

April 6, 2009

Part IV. Signature

I make the following agreements and declarations:

1. I agree to comply with the conditions and agreements set forth in Rev. Proc. 2009–20 and this document.

2. Under penalties of perjury, I declare that the information provided in Parts I-III of this document is, to the best of my

knowledge and belief, true, correct and complete.

Your signature here

Your spouse’s signature here

Date signed:

Date signed:

Corporate Name

Corporate Officer’s signature

Title

Date signed

Entity Name

S-corporation, Partnership, Limited Liability Company, Trust

Entity Officer’s signature

Date signed

Signature of executor

Date signed

April 6, 2009

754

2009–14 I.R.B.

Part IV. Items of General Interest

Request for Public

Comments Regarding Exempt

Organizations Division Web

Site

Announcement 2009–25

Purpose

This Announcement invites public

comments on how to improve the Internal

Revenue Service’s Exempt Organizations

Division Web site (www.irs.gov/eo).

Background

The Customer Education and Outreach

(CE&O) function of the Exempt Organizations Division (EO), Internal Revenue Service (IRS), is responsible for managing the

EO Web site (www.irs.gov/eo). CE&O has

found that, as the site has grown, displaying information in a logical and easy-touse format has become challenging.

In an effort to improve the Web site, the

IRS is seeking comments from the public

in two specific areas:

• Do you use the More Topics page?

• Do you use the Charities & Non-Profits Topics listed on the navigation bar

at the left side of the page? If not, are

there other topics that should be substituted?

• What types of audience or role would

be the most helpful to you for organizing information?

• Level of sophistication (i.e., new

organizations and established organizations)

• Practitioners

• Managers and executives

• Types of tax-exempt organizations

• What do you come to the irs.gov website to do?

• Find general information on staying tax-exempt

• Find a specific publication or

brochure

• Find step-by-step filing instructions

• Reorganizing existing information to • What topics or type of content should

•

make it easier to find.

Adding content that serve the needs of

tax-exempt organizations.

The public should consider the following questions when making comments:

• How do you access the irs.gov web

site?

• Type in irs.gov as the URL

• Via a search engine (Google,

Yahoo, etc.)

• Through a bookmark, favorites, or

history view to reach a specific

page

• Do you have another preferred site

entry page? If so, what is it?

• How do you find material on the site?

• Do you use the irs.gov search en•

•

•

gine?

Do you go directly to the Charities

and Non-Profits page to browse?

Do you use the Frequently Asked

Questions for Exempt Organizations?

Do you use any of our Life Cycle

pages?

2009–14 I.R.B.

Courier’s Desk

Internal Revenue Service

1111 Constitution Ave., N.W.

Washington, DC 20224

Attn: Amelia Henchey

CE&O, T:EO:CEO (3B6)

Comments may be submitted electronically to:

EO.Web.Comments@irs.gov. Please include Announcement 2009–25 in the subject line of any electronic communications.

All comments will be available for public inspection and copying in their entirety.

Consideration will be given to any written

public comments that are received by May

25, 2009. EO regrets that it will be unable to respond individually to comments

or drafts.

Drafting Information

The principal author of this announcement is Amelia Henchey of Exempt

Organizations. For further information

regarding this announcement, contact

Amelia Henchey at 202–283–8856 (not a

toll-free call).

be available to suit your needs?

• Do you subscribe to the EO Update

electronic newsletter? If not, why? If

so:

• How did you learn about it?

• How can we expand our readership?

• What other content should be included?

Request for Comments

Members of the public may submit

comments by electronic message, by mail,

or by hand delivery. All comments should

refer to Announcement 2009–25, and may

be mailed to:

Internal Revenue Service

Attn: Amelia Henchey

CE&O, T:EO:CEO (3B6)

1111 Constitution Avenue, N.W.

Washington, DC 20224

Hand-delivered items may be delivered

Monday through Friday between the hours

of 8:00 a.m. and 5:00 p.m. to:

755

Request for Public Comments

on New Academic Institution

Initiative

Announcement 2009–26

The Customer Education and Outreach

(CE&O) function of the Exempt Organization division of the Internal Revenue Service (IRS) was established in 2000 to develop the strategic direction of the nationwide education and outreach programs for

exempt organizations. Specifically, this

office develops and delivers programs and

products designed to assist exempt organizations to better understand their tax responsibilities that are required by the Internal Revenue Code.

Many academic institutions offer degree programs that develop, cultivate, and

promote professionals who shape the exempt organization sector. The student populations of these academic institutions may

one day be the leaders and managers of the

exempt organizations that makeup the nonprofit sector. Hence, CE&O believes that

April 6, 2009

the students of these academic institutions

are an important audience to reach with education and outreach programs.

Therefore, CE&O is in the process of

developing a new academic program initiative that will reach out directly to academic institutions that offer degrees related to the non-profit sector. Through

the use of our existing tools and the possible development of additional resources,

CE&O proposes to collaborate with these

institutions to promote the education of exempt organization tax law.

The IRS invites comments and suggestions for the implementation and content

of the proposed initiative. First, the IRS is

requesting general responses to this initiative. Second, the IRS is seeking individuals and/or institution volunteers willing

to provide more extensive input into and

feedback on the proposed initiative. While

the IRS might not be able to accommodate

all volunteers, it will take steps to ensure

that a diverse range of viewpoints are represented.

The IRS invites interested members of

the public to submit written suggestions

to help shape this initiative. All submissions will be available for public inspection and copying in their entirety. Members of the public may submit suggestions

or drafts by email, mail, or hand-delivery.

All comments should refer to Announcement 2009–26, and may be mailed to:

Internal Revenue Service

Attn: Pilar Oberwetter

CE&O, T:EO:CEO (3D1)

1111 Constitution Avenue

Washington, DC 20224

Hand delivered items may be delivered

Monday through Friday between the hours

of 8:00 a.m. and 5:00 p.m., to:

Courier’s Desk

Internal Revenue Service

1111 Constitution Avenue, N.W.

Washington, D.C. 20224

Attn: Pilar Oberwetter

CE&O, T:EO:CEO (3D1)

Comments may be submitted electronically to: academic.initiative@irs.gov.

Please include Announcement 2009–26 in

the subject line of any electronic communications.

Exempt Organizations regrets that it

will be unable to respond individually

April 6, 2009

to suggestions or drafts. All comments

should be received by June 6, 2009.

DRAFTING INFORMATION

The principal author of this announcement is Pilar Oberwetter of Exempt

Organizations. For further information

regarding this announcement, contact

Pilar Oberwetter at (202) 283–8946 (not a

toll-free call).

Deletions From Cumulative

List of Organizations

Contributions to Which

are Deductible Under Section

170 of the Code

Announcement 2009–27

The Internal Revenue Service has revoked its determination that the organizations listed below qualify as organizations described in sections 501(c)(3) and

170(c)(2) of the Internal Revenue Code of

1986.

Generally, the Service will not disallow

deductions for contributions made to a

listed organization on or before the date

of announcement in the Internal Revenue

Bulletin that an organization no longer

qualifies. However, the Service is not

precluded from disallowing a deduction

for any contributions made after an organization ceases to qualify under section

170(c)(2) if the organization has not timely

filed a suit for declaratory judgment under

section 7428 and if the contributor (1) had

knowledge of the revocation of the ruling

or determination letter, (2) was aware that

such revocation was imminent, or (3) was

in part responsible for or was aware of the

activities or omissions of the organization

that brought about this revocation.

If on the other hand a suit for declaratory judgment has been timely filed, contributions from individuals and organizations described in section 170(c)(2) that

are otherwise allowable will continue to

be deductible. Protection under section

7428(c) would begin on April 6, 2009, and

would end on the date the court first determines that the organization is not described

in section 170(c)(2) as more particularly

set forth in section 7428(c)(1). For individual contributors, the maximum deduction protected is $1,000, with a husband

756

and wife treated as one contributor. This

benefit is not extended to any individual, in

whole or in part, for the acts or omissions

of the organization that were the basis for

revocation.

Rocky Mountain Big Horn Sheep

Foundation

Red River, MN

Skippers Learning Center

Lake City, SC

Reliable Cash Management Association

Buffalo Grove, IL

Pecan Park Learning Center

Jackson, MS

Brucker Charitable Foundation

Mountain Home, TX

N. U. Yoga Ashrama in America

Winter, WI

Housing Development Group

Denver, CO

National Business Fellowship Foundation

Raeford, NC

GIK Foundation

Bellevue, WA

Debt Free Foundation, Inc.

Provo, UT

Urban Light Community Development

Houston, TX

Sweet Life Program

Las Vegas, NV

Ladoras Family Services Inc

Compton, CA

Robert and Donna Herbolich Charitable

Supporting

Hudson, OH

Three Point Volunteer Fire Department,

Inc.

Williamsburg, KY

Advance Practice Foundation, Inc.

Basking Ridge, NJ

Goodwill Industries of Greater Cleveland,

Inc.

Cleveland, OH

World Project Inc.

Temecula, CA

Sandton Lifestyles

Los Angeles, CA

Dunn-Mason Foundation

Farmington Hills, MI

Walter E & Romell A King Foundation

Gary, IN

2009–14 I.R.B.

Withholding Under Internal

Revenue Code Section

3402(t); Hearing

Announcement 2009–29

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Notice of public hearing on proposed rulemaking.

SUMMARY: This document provides

notice of public hearing on a notice of

proposed rulemaking (REG–158747–06,

2009–4 I.R.B. 362) relating to withholding under section 3402(t) of the Internal

Revenue Code. The proposed regulations

reflect changes in the law made by the Tax

Increase Prevention and Reconciliation

Act of 2005 that require Federal, State,

and local government entities to withhold

income tax when making payments to

persons providing property or services.

These proposed regulations provide guidance to assist the government entities in

complying with section 3402(t). The regulations also provide certain guidance to

persons receiving payments for property

or services from government entities.

DATES: The public hearing is being held

on April 16, 2009, at 10 a.m. The IRS must

receive outlines of the topics to be discussed at the hearing by March 25, 2009.

2009–14 I.R.B.

ADDRESSES: The public hearing is being

held in the auditorium, Internal Revenue

Building, 1111 Constitution Avenue, NW,

Washington, DC. Send submissions to:

CC:PA:LPD:PR (REG–158747–06), room

5203, Internal Revenue Service, P.O. Box

7604, Ben Franklin Station, Washington, DC 20044. Submissions may be

hand-delivered Monday through Friday

between the hours of 8 a.m. and 4 p.m.

to CC:PA:LPD:PR (REG–158747–06),

Courier’s Desk, Internal Revenue Service,

1111 Constitution Avenue, NW, Washington, DC. Alternatively, taxpayers may

submit electronic outlines of oral comments via the Federal eRulemaking Portal

at http://www.regulations.gov.

FOR

FURTHER

INFORMATION

CONTACT: Concerning these proposed regulations, Jean Casey, (202)

622–6040; concerning submissions of

comments, the hearing, and/or to be

placed on the building access list to attend the hearing, Richard A. Hurst at

Richard.A.Hurst@irscounsel.treas.gov or

(202) 622–7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

The subject of the public hearing is

the notice of proposed rulemaking

(REG–158747–06) that was published in

the Federal Register on Friday, December 5, 2008 (73 FR 74082).

Persons, who wish to present oral comments at the hearing that submitted writ-

757

ten comments, must submit an outline of

the topics to be discussed and the amount

of time to be devoted to each topic (signed

original and eight (8) copies) by March 25,

2009.

A period of 10 minutes is allotted to

each person for presenting oral comments.

After the deadline for receiving outlines has passed, the IRS will prepare an

agenda containing the schedule of speakers. Copies of the agenda will be made

available, free of charge, at the hearing or

in the Freedom of Information Reading

Room (FOIA RR) (Room 1621) which

is located at the 11th and Pennsylvania

Avenue NW entrance, 1111 Constitution

Avenue, NW, Washington, DC.

Because of access restrictions, the IRS

will not admit visitors beyond the immediate entrance area more than 30 minutes

before the hearing starts. For information about having your name placed on the

building access list to attend the hearing,

see the FOR FURTHER INFORMATION

CONTACT section of this document.

LaNita Van Dyke,

Chief, Publications and

Regulations Branch,

Legal Processing Division,

Associate Chief Counsel

(Procedure and Administration).

(Filed by the Office of the Federal Register on March 18,

2009, 8:45 a.m., and published in the issue of the Federal

Register for March 19, 2009, 74 F.R. 11699)

April 6, 2009

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.

ER—Employer.

ERISA—Employee Retirement Income Security Act.

EX—Executor.

F—Fiduciary.

FC—Foreign Country.

FICA—Federal Insurance Contributions Act.

FISC—Foreign International Sales Company.

FPH—Foreign Personal Holding Company.

F.R.—Federal Register.

FUTA—Federal Unemployment Tax Act.

FX—Foreign corporation.

G.C.M.—Chief Counsel’s Memorandum.

GE—Grantee.

GP—General Partner.

GR—Grantor.

IC—Insurance Company.

I.R.B.—Internal Revenue Bulletin.

LE—Lessee.

LP—Limited Partner.

LR—Lessor.

M—Minor.

Nonacq.—Nonacquiescence.

O—Organization.

P—Parent Corporation.

PHC—Personal Holding Company.

PO—Possession of the U.S.

PR—Partner.

PRS—Partnership.

PTE—Prohibited Transaction Exemption.

Pub. L.—Public Law.

REIT—Real Estate Investment Trust.

Rev. Proc.—Revenue Procedure.

Rev. Rul.—Revenue Ruling.

S—Subsidiary.

S.P.R.—Statement of Procedural Rules.

Stat.—Statutes at Large.

T—Target Corporation.

T.C.—Tax Court.

T.D. —Treasury Decision.

TFE—Transferee.

TFR—Transferor.

T.I.R.—Technical Information Release.

TP—Taxpayer.

TR—Trust.

TT—Trustee.

U.S.C.—United States Code.

X—Corporation.

Y—Corporation.

Z —Corporation.

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.

April 6, 2009

i

2009–14 I.R.B.

Numerical Finding List1

Notices— Continued:

Treasury Decisions— Continued:

Bulletins 2009–1 through 2009–14

2009-22, 2009-14 I.R.B. 741

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

Announcements:

Proposed Regulations:

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

REG-144615-02, 2009-7 I.R.B. 561

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

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

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

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

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

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

9441, 2009-7 I.R.B. 460

2009-4, 2009-8 I.R.B. 597

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

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

2009-5, 2009-8 I.R.B. 569

REG-116699-07, 2009-13 I.R.B. 727

9443, 2009-8 I.R.B. 564

2009-6, 2009-9 I.R.B. 643

REG-138326-07, 2009-9 I.R.B. 638

9444, 2009-9 I.R.B. 603

2009-7, 2009-10 I.R.B. 663

REG-143686-07, 2009-8 I.R.B. 579

9445, 2009-9 I.R.B. 635

2009-8, 2009-8 I.R.B. 598

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

9446, 2009-9 I.R.B. 607

2009-9, 2009-9 I.R.B. 643

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

9447, 2009-12 I.R.B. 694

2009-10, 2009-9 I.R.B. 644

REG-147636-08, 2009-9 I.R.B. 641

2009-11, 2009-10 I.R.B. 663

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

2009-12, 2009-11 I.R.B. 686

Revenue Procedures:

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

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

2009-13, 2009-11 I.R.B. 686

2009-14, 2009-11 I.R.B. 687

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

2009-15, 2009-11 I.R.B. 687

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

2009-16, 2009-11 I.R.B. 691

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

2009-17, 2009-12 I.R.B. 714

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

2009-18, 2009-12 I.R.B. 714

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

2009-19, 2009-12 I.R.B. 715

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

2009-20, 2009-12 I.R.B. 716

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

2009-21, 2009-13 I.R.B. 730

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

2009-22, 2009-13 I.R.B. 731

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

2009-23, 2009-13 I.R.B. 731

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

2009-24, 2009-13 I.R.B. 732

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

2009-25, 2009-14 I.R.B. 755

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

2009-26, 2009-14 I.R.B. 755

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

2009-27, 2009-14 I.R.B. 756

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

2009-29, 2009-14 I.R.B. 757

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

Notices:

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

2009-17, 2009-7 I.R.B. 517

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

2009-18, 2009-11 I.R.B. 670

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

2009-19, 2009-14 I.R.B. 747

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

2009-20, 2009-14 I.R.B. 749

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

Revenue Rulings:

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

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

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

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

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

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

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

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

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

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

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

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

2009-6, 2009-12 I.R.B. 694

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

2009-7, 2009-13 I.R.B. 717

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

2009-8, 2009-10 I.R.B. 645

2009-14, 2009-7 I.R.B. 516

2009-9, 2009-14 I.R.B. 735

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

2009-10, 2009-14 I.R.B. 738

2009-16, 2009-8 I.R.B. 572

Tax Conventions:

2009-17, 2009-8 I.R.B. 575

2009-18, 2009-10 I.R.B. 648

2009-5, 2009-8 I.R.B. 569

2009-19, 2009-10 I.R.B. 660

Treasury Decisions:

2009-20, 2009-12 I.R.B. 711

2009-21, 2009-13 I.R.B. 724

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

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

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

2008–52, dated December 29, 2008.

2009–14 I.R.B.

ii

April 6, 2009

Finding List of Current Actions on

Previously Published Items1

Bulletins 2009–1 through 2009–14

Notices:

Proposed Regulations— Continued:

Revenue Procedures— Continued:

REG-148326-05

2008-65

Corrected by

Amplified and supplemented by

Ann. 2009-14, 2009-11 I.R.B. 687

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

REG-158747-06

2008-68

99-35

Hearing scheduled by

Amplified and superseded by

Obsoleted by

Ann. 2009-29, 2009-14 I.R.B. 757

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

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

Revenue Procedures:

Revenue Rulings:

2007-17

65-286

Superseded by

Obsoleted by

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

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

2007-68

71-381

Superseded by

Obsoleted in part by

Rev. Proc. 2009-17, 2009-7 I.R.B. 517

Rev. Rul. 2009-9, 2009-14 I.R.B. 735

2007-71

76-54

Modified by

Obsoleted by

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

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

2008-1

92-19

Superseded by

Supplemented by

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

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

2008-2

2008-19

Superseded by

Modified by

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

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

2008-3

Treasury Decisions:

2001-55

Modified by

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

2002-27

Modified by

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

2005-74

Obsoleted by

T.D. 9446, 2009-9 I.R.B. 607

2007-26

Modified by

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

2007-54

Obsoleted by

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

2008-11

Obsoleted by

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

2008-12

Obsoleted by

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

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

Superseded by

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

Corrected by

2008-4

Ann. 2009-15, 2009-11 I.R.B. 687

Superseded by

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

9439

Corrected by

2008-13

2008-5

Obsoleted by

Superseded by

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

List of forms modified and superseded by

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

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

Modified and clarified by

Superseded by

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

9436

Ann. 2009-12, 2009-11 I.R.B. 686

9441

Corrected by

2008-6

Ann. 2009-18, 2009-12 I.R.B. 714

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

9442

Corrected by

2008-7

Ann. 2009-13, 2009-11 I.R.B. 686

Ann. 2009-20, 2009-12 I.R.B. 716

2008-46

Superseded by

Obsoleted by

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

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

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

2008-8

Corrected by

Superseded by

Ann. 2009-23, 2009-13 I.R.B. 731

2008-100

Amplified and superseded by

Notice 2009-14, 2009-7 I.R.B. 516

9446

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

2008-9

Superseded by

Proposed Regulations:

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

REG-144615-02

2008-17

Corrected by

Obsoleted in part by

Ann. 2009-19, 2009-12 I.R.B. 715

Rev. Proc. 2009-18, 2009-11 I.R.B. 670

REG-149519-03

2008-61

Withdrawn by

Superseded by

Ann. 2009-4, 2009-8 I.R.B. 597

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

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

2008.

April 6, 2009

iii

2009–14 I.R.B.

INTERNAL REVENUE BULLETIN

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

Bulletin is sold on a yearly subscription basis by the Superintendent of Documents. Current subscribers are notified by the Superintendent of Documents when their subscriptions must be renewed.

CUMULATIVE BULLETINS

The contents of this weekly Bulletin are consolidated semiannually into a permanent, indexed, Cumulative Bulletin. These are

sold on a single copy basis and are not included as part of the subscription to the Internal Revenue Bulletin. Subscribers to the weekly

Bulletin are notified when copies of the Cumulative Bulletin are available. Certain issues of Cumulative Bulletins are out of print

and are not available. Persons desiring available Cumulative Bulletins, which are listed on the reverse, may purchase them from the

Superintendent of Documents.

ACCESS THE INTERNAL REVENUE BULLETIN ON THE INTERNET

You may view the Internal Revenue Bulletin on the Internet at www.irs.gov. Select Businesses. Under Businesses Topics, select

More Topics. Then select Internal Revenue Bulletins.

INTERNAL REVENUE BULLETINS ON CD-ROM

Internal Revenue Bulletins are available annually as part of Publication 1796 (Tax Products CD-ROM). The CD-ROM can be

purchased from National Technical Information Service (NTIS) on the Internet at www.irs.gov/cdorders (discount for online orders)

or by calling 1-877-233-6767. The first release is available in mid-December and the final release is available in late January.

HOW TO ORDER

Check the publications and/or subscription(s) desired on the reverse, complete the order blank, enclose the proper remittance,

detach entire page, and mail to the Superintendent of Documents, P.O. Box 371954, Pittsburgh PA, 15250–7954. Please allow two to

six weeks, plus mailing time, for delivery.

WE WELCOME COMMENTS ABOUT THE INTERNAL

REVENUE BULLETIN

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

would be pleased to hear from you. You can email us your suggestions or comments through the IRS Internet Home Page (www.irs.gov)

or write to the IRS Bulletin Unit, SE:W:CAR:MP:T:T:SP, Washington, DC 20224.

Internal Revenue Service

Washington, DC 20224

Official Business

Penalty for Private Use, $300