Bulletin No. 2020–41

HIGHLIGHTS

OF THIS ISSUE





Bulletin No. 2020–41

October 5, 2020

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be

relied upon as authoritative interpretations.

ADMINISTRATIVE

Announcement 2020-12, page 893.

This document is an announcement that lenders who make

paycheck protection program (PPP) loans that are later forgiven under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) do not need to and should not file

information returns or furnish payee statements to report the

forgiveness under section 6050P of the Code.

Rev. Proc. 2020-42, page 891.

This procedure publishes the amounts of unused housing

credit carryovers allocated to qualified states under section

42(h)(3)(D) of the Code for calendar year 2020.

INCOME TAX

Rev. Rul. 2020-20, page 880.

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

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

the Code, tables set forth the rates for October 2020.

Rev. Rul. 2020-21, page 882.

Fringe benefits aircraft valuation formula. For purposes of

section 1.61-21(g) of the Income Tax Regulations, relating to

the rule for valuing non-commercial flights on employer-provided aircraft, the Standard Industry Fare Level (SIFL) centsper-mile rates and terminal charge in effect for the second

half of 2020 are set forth.

T.D. 9915, page 882.

These final regulations provide guidance regarding allocation

of the rehabilitation credit over a 5-year period, as the rehabili-

Finding Lists begin on page ii.

tation credit is no longer fully allowed in the taxable year that a

qualified rehabilitated building is placed in service. These final

regulations include rules to coordinate with the other special

rules for investment credit property. These final regulations

affect taxpayers that claim the rehabilitation credit. This guidance relates to changes made to the applicable law by the

Tax Cuts and Jobs Act, which was enacted on December 22,

2017

Notice 2020-73, page 886.

This Notice announces that the Department of the Treasury

(Treasury Department) and the Internal Revenue Service (IRS)

intend to amend the regulations under section 987 to defer

the applicability date of the final regulations under section

987, as well as certain related final regulations, by one additional year. The applicability date of these regulations has

been deferred under prior notices to taxable years beginning

after December 7, 2020. The Treasury Department and the

IRS intend to amend §§1.861-9T, 1.985-5, 1.987-11, 1.9881, 1.988-4, and 1.989(a)-1 of the 2016 final regulations and

§§1.987-2 and 1.987-4 of the 2019 final regulations (the

related 2019 final regulations) to provide that the 2016 final

regulations and the related 2019 final regulations apply to

taxable years beginning after December 7, 2021. The Notice also states that taxpayers may rely on certain related

proposed regulations that cross-reference temporary regulations which have expired.

Notice 2020-74, page 887.

This notice explains the circumstances under which the fouryear replacement period under section 1033(e)(2) is extended for livestock sold on account of drought. The Appendix

to this notice contains a list of counties that experienced exceptional, extreme, or severe drought conditions during the

12-month period ending August 31, 2020. Taxpayers may

use this list to determine if any extension is available.

The IRS Mission

Provide America’s taxpayers top-quality service by helping

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

Introduction

The Internal Revenue Bulletin is the authoritative instrument

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

and for publishing Treasury Decisions, Executive Orders, Tax

Conventions, legislation, court decisions, and other items of

general interest. It is published weekly.

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

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

modify, or amend any of those previously published in the

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

internal practices and procedures that affect the rights and

duties of taxpayers are published.

Revenue rulings represent the conclusions of the Service

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

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

identifying details and information of a confidential nature are

deleted to prevent unwarranted invasions of privacy and to

comply with statutory requirements.

Rulings and procedures reported in the Bulletin do not have the

force and effect of Treasury Department Regulations, but they

may be used as precedents. Unpublished rulings will not be

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

the disposition of other cases. In applying published rulings and

procedures, the effect of subsequent legislation, regulations,

court decisions, rulings, and procedures must be considered,

and Service personnel and others concerned are cautioned

against reaching the same conclusions in other cases unless

the facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.

This part includes rulings and decisions based on provisions

of the Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation.

This part is divided into two subparts as follows: Subpart A,

Tax Conventions and Other Related Items, and Subpart B,

Legislation and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.

To the extent practicable, pertinent cross references to these

subjects are contained in the other Parts and Subparts. Also

included in this part are Bank Secrecy Act Administrative

Rulings. Bank Secrecy Act Administrative Rulings are issued

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

Secretary (Enforcement).

Part IV.—Items of General Interest.

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

The last Bulletin for each month includes a cumulative index

for the matters published during the preceding months. These

monthly indexes are cumulated on a semiannual basis, and are

published in the last Bulletin of each semiannual period.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

October 5, 2020 

Bulletin No. 2020–41

Part I

Section 1274.—

Determination of Issue

Price in the Case of Certain

Debt Instruments Issued for

Property

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

1288, 7520, 7872.)

Rev. Rul. 2020-20

This revenue ruling provides various

prescribed rates for federal income tax

Annual

AFR

110% AFR

120% AFR

130% AFR

0.14%

0.15%

0.17%

0.18%

AFR

110% AFR

120% AFR

130% AFR

150% AFR

175% AFR

0.38%

0.42%

0.46%

0.49%

0.57%

0.67%

AFR

110% AFR

120% AFR

130% AFR

1.12%

1.23%

1.34%

1.47%

Short-term adjusted AFR

Mid-term adjusted AFR

Long-term adjusted AFR

October 5, 2020

purposes for October 2020 (the current

month). Table 1 contains the shortterm, 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 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 appro-

priate 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 percentage for non-federally subsidized new buildings placed in service

after July 30, 2008, shall not be less

than 9%. Finally, Table 5 contains the

federal rate for determining the present

value of an annuity, an interest for life

or for a term of years, or a remainder or

a reversionary interest for purposes of

section 7520.

REV. RUL. 2020-20 TABLE 1

Applicable Federal Rates (AFR) for October 2020

Period for Compounding

Semiannual

Quarterly

Short-term

0.14%

0.14%

0.15%

0.15%

0.17%

0.17%

0.18%

0.18%

Mid-term

0.38%

0.38%

0.42%

0.42%

0.46%

0.46%

0.49%

0.49%

0.57%

0.57%

0.67%

0.67%

Long-term

1.12%

1.12%

1.23%

1.23%

1.34%

1.34%

1.46%

1.46%

Annual

0.11%

0.29%

0.85%

REV. RUL. 2020-20 TABLE 2

Adjusted AFR for October 2020

Period for Compounding

Semiannual

0.11%

0.29%

0.85%

880

Monthly

0.14%

0.15%

0.17%

0.18%

0.38%

0.42%

0.46%

0.49%

0.57%

0.67%

1.12%

1.23%

1.34%

1.46%

Quarterly

0.11%

0.29%

0.85%

Monthly

0.11%

0.29%

0.85%

Bulletin No. 2020–41

REV. RUL. 2020-20 TABLE 3

Rates Under Section 382 for October 2020

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.)

.85%

.85%

REV. RUL. 2020-20 TABLE 4

Appropriate Percentages Under Section 42(b)(1) for October 2020

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

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

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

7.17%

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

3.07%

REV. RUL. 2020-20 TABLE 5

Rate Under Section 7520 for October 2020

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

a term of years, or a remainder or reversionary interest

Section 42.—Low-Income

Housing Credit

The applicable federal short-term, mid-term,

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

October 2020. See Rev. Rul. 2020-20, page 880.

Section 280G.—Golden

Parachute Payments

The applicable federal short-term, mid-term,

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

October 2020. See Rev. Rul. 2020-20, page 880.

Section 382.—Limitation

on Net Operating Loss

Carryforwards and

Certain Built-In Losses

Following Ownership

Change

The adjusted applicable federal long-term rate

is set forth for the month of October 2020. See

Rev. Rul. 2020-20, page 880.

Section 467.—Certain

Payments for the Use of

Property or Services

The applicable federal short-term, mid-term,

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

October 2020. See Rev. Rul. 2020-20, page 880.

Section 468.—Special

Rules for Mining and Solid

Waste Reclamation and

Closing Costs

The applicable federal short-term rates are set

forth for the month of October 2020. See Rev. Rul.

2020-20, page 880.

Section 482.—Allocation

of Income and Deductions

Among Taxpayers

The applicable federal short-term, mid-term,

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

October 2020. See Rev. Rul. 2020-20, page 880.

.4%

Section 483.—Interest on

Certain Deferred Payments

The applicable federal short-term, mid-term,

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

October 2020. See Rev. Rul. 2020-20, page 880.

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 October 2020. See Rev. Rul. 2020-20, page 880.

Section 7520.—Valuation

Tables

The applicable federal mid-term rates are set

forth for the month of October 2020. See Rev. Rul.

2020-20, page 880.

Section 7872.—Treatment

of Loans With BelowMarket Interest Rates

The applicable federal short-term, mid-term,

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

October 2020. See Rev. Rul. 2020-20, page 880.

Bulletin No. 2020–41

881

October 5, 2020

Section 61. Gross Income

Defined

26 CFR 1.61-21: Taxation of fringe benefits.

Rev. Rul. 2020-21

For purposes of the taxation of fringe

benefits under section 61 of the Internal RevPeriod During Which

the Flight Is Taken

enue Code, section 1.61-21(g) of the Income

Tax Regulations provides a rule for valuing

noncommercial flights on employer-provided aircraft. Section 1.61-21(g)(5) provides

an aircraft valuation formula to determine

the value of such flights. The value of a

flight is determined under the base aircraft

valuation formula (also known as the Standard Industry Fare Level formula or SIFL)

by multiplying the SIFL cents-per-mile rates

Terminal

Charge

applicable for the period during which the

flight was taken by the appropriate aircraft

multiple provided in section 1.61-21(g)(7)

and then adding the applicable terminal

charge. The SIFL cents-per-mile rates in the

formula and the terminal charge are calculated by the Department of Transportation

and are reviewed semi-annually.

The following chart sets forth the terminal charge and SIFL mileage rates:

SIFL Mileage

Rates

7/1/20 - 12/31/20

$42.62

Up to 500 miles

= $.2331 per mile

501-1500 miles

= $.1778 per mile

Over 1500 miles

= $.1709 per mile

DRAFTING INFORMATION

The principal author of this revenue

ruling is Kathleen Edmondson of the Office of Associate Chief Counsel (Employee Benefits, Exempt Organizations and

Employment Taxes). For further information regarding this revenue ruling, contact

Ms. Edmondson at (202) 317-6798 (not a

toll-free number).

T.D. 9915

DEPARTMENT OF THE

TREASURY

Internal Revenue Service

26 CFR Part 1

Rehabilitation Credit

Allocated Over a 5-Year

Period

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Final regulations.

October 5, 2020

SUMMARY: This document contains final regulations concerning the rehabilitation credit, including rules to coordinate

the new 5-year period over which the

credit may be claimed with other special

rules for investment credit property. These

final regulations affect taxpayers that

claim the rehabilitation credit.

DATES: Effective Date: These regulations

are effective on September 18, 2020.

Applicability Date: For date of applicability, see §1.47-7(f).

FOR FURTHER INFORMATION CONTACT: Barbara J. Campbell, (202) 3174137.

SUPPLEMENTARY INFORMATION:

Background

This document amends the Income

Tax Regulations (26 CFR part 1) to finalize rules under section 47 of the Internal

Revenue Code (Code). On May 22, 2020,

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

a notice of proposed rulemaking (REG124327-19) in the Federal Register (85

FR 31096) (proposed regulations). The

proposed regulations were necessary to

882

address the amendments to section 47 by

section 13402 of Public Law 115-97, 131

Stat. 2054 (2017), commonly referred

to as the Tax Cuts and Jobs Act (TCJA).

The proposed regulations provide that

the rehabilitation credit is properly determined in the year the qualified rehabilitated building (QRB) is placed in service

but allocated ratably over the 5-year period beginning in such year as required

by the TCJA, rather than being allocated

entirely to the taxable year the QRB is

placed in service as under section 47 prior to the TCJA. The proposed regulations

add §1.47–7(a) through (f) and include: a

general rule for calculating the rehabilitation credit; definitions of ratable share

and rehabilitation credit determined; and

a rule coordinating the changes to section

47 with the special rules in section 50.

The proposed regulations also contain

examples, including examples illustrating the interaction of section 47 with

rules in section 50(a) (recapture in case

of dispositions, etc.), section 50(c) (basis adjustment to investment credit property), and section 50(d)(5) (relating to

certain leased property when the lessee is

treated as owner and subject to an income

inclusion requirement). The preamble to

the proposed regulations contains a detailed explanation regarding the amend-

Bulletin No. 2020–41

ment of section 47 by the TCJA and the

addition of §1.47-7(a) through (f).

The Treasury Department and the IRS

received three written comments on the

proposed regulations. No requests for a

public hearing were made, and no public hearing was held. After consideration

of the comments, this Treasury decision

adopts the proposed regulations without

modification.

Summary of Comments

The three comments submitted in response to the proposed regulations are

available at www.regulations.gov or upon

request.

Two of the comments were supportive

of the proposed regulations and did not

provide any suggested revisions or additions. This summary of comments does

not further address those comments.

The other comment did not disagree

with or suggest revision to any of the

rules in the proposed regulations. The

comment raised issues that the commenter believes the proposed regulations did

not address. These include the potential

impact of the new 5-year period on a

partner’s capital account under §1.7041 (partner’s distributive share) when a

partnership directly owns the property,

whether and how the partnership allocates the rehabilitation credit to partners,

potential reporting obligations by a partnership on Schedule K-1 (Form 1065), the

treatment of the remaining ratable share

when a partner sells a partnership interest

within the 5-year credit period, and the

interaction of §1.704-1 with §1.50-1 (lessee’s income inclusion following election

of lessor of investment credit property to

treat lessee as acquirer).

With respect to the potential impact of

the new 5-year period on a partner’s capital

account under §1.704-1 when the partnership directly owns the QRB, the comment

concluded that for partners “there would

be a capital account effect that would not

take into account the 5-year allocation of

the credit.” Partnership capital accounting

rules are addressed in the regulations to

section 704, and therefore are not included in these final regulations. However, for

clarification, the Treasury Department and

the IRS agree that there would be a capital account adjustment that would not take

Bulletin No. 2020–41

into account the 5-year credit period. In

other words, the full amount of the capital account adjustment under §1.704-1 is

reflected in a partner’s capital account in

the year the rehabilitation credit is determined.

With respect to whether and how the

partnership allocates the rehabilitation

credit to partners, the comment specifically asked “whether the partners are allocated 20 percent of the credit each year although all of the credit basis is reduced in

the first year when the property is placed in

service or whether, after the first year, the

remaining four years over which the credit

is spread is taken into account and applied

solely at the partner level over those remaining years, consistent with the section

1.50-1 regulations.” Partnership allocation rules of general business credits are

specifically addressed in the regulations to

section 704, and therefore are not included in these final regulations. However, for

clarification, the rehabilitation credit is

not allocated by the partnership, but is calculated at the partner level and claimed by

the partner ratably over the 5-year credit

period. As under section 47 prior to the

TCJA, the partnership allocates qualified

rehabilitation expenditures (QREs) to its

partners. Under section 47(b), QREs with

respect to any QRB are taken into account

for the taxable year in which the QRB is

placed in service.

By way of further explanation, the

calculation of the rehabilitation credit at

the partner level is made as part of calculating the investment credit under section 46, which is listed as a current year

general business credit under section 38.

Section 1.704-1(b)(4)(ii), which requires

allocations with respect to the investment

tax credit provided by section 38 to be

made in accordance with the partners’

interests in the partnership, provides

that allocations of cost or qualified investment (as opposed to the investment

credit itself, which is not determined at

the partnership level) that are made in accordance with §1.46-3(f) shall be deemed

to be made in accordance with the partners’ interests in the partnership. For

purposes of the investment credit, part

of those allocations to partners would

include QREs to calculate the rehabilitation credit. Partners then compute the investment credit at the partner level based

883

on partner level limitations. See also TD

9872 (84 FR 34775) and TD 9776 (81 FR

47701) (these Treasury decisions relate

to §1.50-1 and both preambles contain

relevant descriptions of how the rehabilitation credit is calculated in the context

of passthrough entities, including that the

calculation is done at the partner level in

the case of partnerships and the S corporation shareholder level in the case of

subchapter S corporations).

Lastly, addressing issues related to potential reporting obligations by a partnership on Schedule K-1, the sale of a partnership interest within the 5-year credit

period, and the interaction of §1.7041 with §1.50-1 (including amending

§1.704-1 as recommended in the comment) is beyond the scope of the final

regulations.

Applicability Date

These final regulations apply to taxable

years beginning on or after September 18,

2020. However, taxpayers may choose

to apply these final regulations for QREs

paid or incurred after December 31, 2017,

in taxable years beginning before September 18, 2020, provided the taxpayers

apply the final regulations in their entirety

and in a consistent manner. See section

7805(b)(7).

Special Analyses

This regulation is not subject to review

under section 6(b) of Executive Order

12866 pursuant to the Memorandum of

Agreement (April 11, 2018) between the

Treasury Department and the Office of

Management and Budget regarding review of tax regulations.

In accordance with the Regulatory

Flexibility Act (5 U.S.C. chapter 6), it is

hereby certified that these final regulations

will not have a significant economic impact on a substantial number of small entities. Although the rules may affect small

entities, data are not readily available

about the number of taxpayers affected.

The economic impact of these regulations

is not likely to be significant, however,

because these final regulations substantially incorporate statutory changes made

to section 47 by the TCJA that have been

effective for QREs paid or incurred after

October 5, 2020

December 31, 2017. The final regulations

will assist taxpayers in understanding the

changes to section 47 and make it easier

for taxpayers to comply with those changes and section 50, which was not changed

by the TCJA.

Pursuant to section 7805(f) of the Internal Revenue Code, these regulations

were submitted to the Chief Counsel for

Advocacy of the Small Business Administration for comment on their impact on

small business. No comments were received from the Small Business Administration.

Drafting Information

The principal author of these final

regulations is Barbara J. Campbell, Office of the Associate Chief Counsel

(Passthroughs and Special Industries),

IRS. However, other personnel from the

Treasury Department and the IRS participated in their development.

List of Subjects in 26 CFR Part 1

Income taxes, Reporting and recordkeeping requirements.

Amendments to the Regulations

Accordingly, 26 CFR part 1 is amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation for

part 1 continues to read in part as follows:

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

Par. 2. Section 1.47-7 is added to read

as follows:

§1.47-7 Rehabilitation credit allocated

over a 5-year period.

(a) In general. For purposes of section 46, for any taxable year during the

5-year period beginning in the taxable

year in which a qualified rehabilitated

building, as defined in section 47(c)(1)

and §1.48-12(b), is placed in service,

the rehabilitation credit for the taxable

year is an amount equal to the ratable

share for the taxable year, provided the

requirements of section 47 are satisfied.

October 5, 2020

Except as provided by section 13402(c)

(2) of Public Law 115-97, 131 Stat. 2054

(2017), this section applies with respect

to qualified rehabilitation expenditures,

as defined in section 47(c)(2) and §1.4812(c), paid or incurred after December

31, 2017.

(b) Ratable share. For purposes of

paragraph (a) of this section, the term

ratable share means, for any taxable year

during the 5-year period described in such

paragraph, the amount equal to 20 percent

of the rehabilitation credit determined

with respect to the qualified rehabilitated

building, allocated ratably to each year

during such period.

(c) Rehabilitation credit determined.

The term rehabilitation credit determined

means the amount equal to 20 percent

of the qualified rehabilitation expenditures, as defined in section 47(c)(2) and

§1.48-12(c), taken into account under

section 47(b)(1) for the taxable year in

which the qualified rehabilitated building

is placed in service. However, if the taxpayer claims the additional first year depreciation for the qualified rehabilitation

expenditures pursuant to §1.168(k)-2(g)

(9), the term rehabilitation credit determined means the amount equal to 20 percent of the remaining rehabilitated basis,

as defined in §1.168(k)-2(g)(9)(i)(B), of

the qualified rehabilitated building for

the taxable year in which such building is

placed in service.

(d) Coordination with section 50. For

purposes of section 50 and §1.50-1, the

amount of the rehabilitation credit determined is the amount defined in paragraph

(c) of this section.

(e) Examples. The provisions of paragraphs (a) through (d) of this section are

illustrated by the following examples.

Assume that the additional first year depreciation deduction provided by section

168(k) is not allowed or allowable for the

qualified rehabilitation expenditures.

(1) Example 1: Rehabilitation Credit Determined

and Ratable Share. Between February 1, 2021 and

October 1, 2021, X, a calendar year C corporation,

incurred qualified rehabilitation expenditures of

$200,000 with respect to a qualified rehabilitated

building. X placed the building in service on October 15, 2021. X’s rehabilitation credit determined in

2021 under paragraph (c) of this section is $40,000

($200,000 x 0.20). For purposes of section 46, for

each taxable year during the 5-year period beginning

in 2021, the ratable share allocated under paragraph

884

(b) of this section for the year is $8,000 ($40,000 x

0.20).

(2) Example 2: Coordination with section 50(c).

The facts are the same as in paragraph (e)(1) of this

section (Example 1). For purposes of determining

the amount of X’s basis adjustment in 2021 under

section 50(c), the amount of the rehabilitation credit determined under paragraph (c) of this section is

$40,000.

(3) Example 3: Coordination with section 50(a).

The facts are the same as in paragraph (e)(1) of this

section (Example 1). In 2021 and 2022, X claimed

the full amount of the ratable share allowed under

section 46, or $8,000 per taxable year. X’s total

allowable ratable share for 2023 through 2025 is

$24,000 ($8,000 allowable per taxable year). On

November 1, 2023, X disposes of the qualified rehabilitated building. Under section 50(a)(1)(B)(iii),

because the period of time between when the qualified rehabilitated building was placed in service is

more than two, but less than 3 full years, the applicable recapture percentage is 60%. Based on these

facts, X has an increase in tax of $9,600 under section 50(a) ($16,000 of credit claimed in 2021 and

2022 x 0.60) and has $3,200 of credits remaining in

each of 2023 through 2025, after forgoing $4,800

in credits in each of the years 2023 through 2025

($8,000 x 0.60).

(4) Example 4: Coordination with section 50(d)

(5) and §1.50-1; C corporation lessee. X, a calendar year C corporation, leases nonresidential real

property from Y. The property is a qualified rehabilitated building that is placed in service on October 15, 2021. Under paragraph (c) of this section,

the amount of the rehabilitation credit determined

is $100,000. Y elects under §1.48-4 to treat X as

having acquired the property. The shortest recovery

period that could be available to the property under

section 168 is 39 years. Because Y has elected to

treat X as having acquired the property, Y does not

reduce its basis in the property under section 50(c).

Instead, pursuant to section 50(d)(5) and §1.50-1,

X, the lessee of the property, must include ratably

in gross income over 39 years an amount equal to

the rehabilitation credit determined with respect to

such property.

(5) Example 5: Coordination with section 50(d)

(5) and §1.50-1; partnership lessee. A and B, calendar year taxpayers, form a partnership, the AB partnership, that leases nonresidential real property from

Y. The property is a qualified rehabilitated building

that is placed in service on October 15, 2021. Under

paragraph (c) of this section, the amount of the rehabilitation credit determined is $200,000. Y elects

under §1.48-4 to treat the AB partnership as having

acquired the property. The shortest recovery period

that could be available to the property under section

168 is 39 years. Because Y has elected to treat the

AB partnership as having acquired the property, Y

does not reduce its basis in the building under section

50(c). Instead, A and B, the ultimate credit claimants, as defined in §1.50-1(b)(3)(ii), must include the

amount of the rehabilitation credit determined under

paragraph (c) of this section with respect to A and B

ratably in gross income over 39 years, the shortest

recovery period available with respect to such property.

Bulletin No. 2020–41

(f) Applicability date.

This section applies to taxable years

beginning on or after September 18, 2020.

Taxpayers may choose to apply this section for taxable years beginning before

September 18, 2020, provided the taxpayer applies this section in its entirety and in

a consistent manner.

Bulletin No. 2020–41

Sunita Lough,

Deputy Commissioner for Services

and Enforcement.

Approved: September 4, 2020.

885

David J. Kautter,

Assistant Secretary of the Treasury

(Tax Policy).

(Filed by the Office of the Federal Register on September 16, 2020, 4:15 p.m., and published in the issue of the Federal Register for September 18, 2020,

85 F.R. 58266)

October 5, 2020

Part III

Deferred Applicability

Dates for Foreign Currency

Guidance

Notice 2020-73

SECTION 1. PURPOSE

This Notice announces that the Department of the Treasury (Treasury Department) and the Internal Revenue Service

(IRS) intend to amend the regulations

under section 987 to defer the applicability date of certain final regulations under

section 987 and certain related final regulations by one additional year.

On December 8, 2016, the Treasury

Department and the IRS published Treasury Decision 9794 (81 Fed. Reg. 88806),

which contained final regulations under

section 987 and amendments to existing

regulations under sections 861, 985, 988,

and 989. See §§1.861-9T(g)(2)(ii)(A)(1)

and (g)(2)(vi); 1.985-5; 1.987-0 through

1.987-11; 1.988-0; 1.988-1(a)(4), (a)(10)

(ii), and (i); 1.988-4(b)(2); and 1.989(a)1(b)(2)(i), (b)(4), (d)(3), and (d)(4) (the

2016 final regulations). The same day,

the Treasury Department and the IRS also

published Treasury Decision 9795 (81

Fed. Reg. 88854), which contained temporary regulations under sections 987 and

988 (the temporary regulations), and concurrently published a notice of proposed

rulemaking by cross-reference to the temporary regulations (the proposed regulations). See REG-128276-12, 81 Fed. Reg.

88882.

On May 13, 2019, the Treasury Department and the IRS published Treasury Decision 9857 (84 Fed. Reg. 20790), which

adopted in final form §§1.987-2T(c)(9),

1.987-4T(c)(2) and (f), and 1.987-12T and

withdrew §1.987-7T. The other temporary

regulations expired on December 6, 2019.

The proposed regulations that were not finalized in 2019 remain outstanding.

Earlier notices deferred the applicability dates of the 2016 final regulations,

§§1.987-1T (other than §§1.987-1T(g)(2)

(i)(B) and (g)(3)(i)(H)) through 1.9874T, 1.987-6T, 1.987-7T, 1.988-1T, and

October 5, 2020

1.988-2T(i) of the temporary regulations

(the related temporary regulations), and

§§1.987-2(c)(9) and 1.987-4(c)(2) and (f)

of the 2019 final regulations (the related

2019 final regulations). Most recently,

on December 23, 2019, Notice 2019-65,

2019-52 I.R.B. 1507 announced that future guidance would defer the applicability date of the 2016 final regulations and

the related 2019 final regulations by one

additional year to taxable years beginning

after December 7, 2020.

SECTION 2. AMENDED

APPLICABILITY DATE

The Treasury Department and the IRS

intend to amend the applicability dates in

§§1.861-9T, 1.985-5, 1.987-11, 1.988-1,

1.988-4, and 1.989(a)-1 of the 2016 final

regulations and §§1.987-2 and 1.987-4 of

the related 2019 final regulations to provide that the 2016 final regulations and

the related 2019 final regulations apply to

taxable years beginning after December

7, 2021 (the amended applicability date).

See §§1.861-9T(g)(2)(vi); 1.985-5(g);

1.987-2(e)(2); 1.987-4(h)(2); 1.987-11(a);

1.988-1(i); 1.988-4(b)(2)(ii); 1.989(a)1(b)(4); 1.989(a)-1(d)(4). Thus, following

the amendments described in this Notice,

the 2016 final regulations and the related

2019 final regulations would apply to the

taxable year beginning on January 1, 2022

for calendar-year taxpayers. The Treasury

Department and the IRS do not intend to

amend the applicability date of §1.987-12.

See §1.987-12(j).

A taxpayer may choose to apply the 2016

final regulations, the related temporary regulations (until they were revoked on May

13, 2019 or expired on December 6, 2019,

as applicable), and the related 2019 final

regulations (beginning on May 13, 2019)

to taxable years beginning after December

7, 2016 and before the amended applicability date provided the taxpayer consistently applies those regulations to such taxable years with respect to all section 987

QBUs directly or indirectly owned by the

taxpayer on the transition date as well as

all section 987 QBUs directly or indirectly

owned on the transition date by members

that file a consolidated return with the tax-

886

payer or by any controlled foreign corporation, as defined in section 957, in which

a member owns more than 50 percent of

the voting power or stock value, as determined under section 958(a) (collectively,

related parties). A taxpayer and its related

parties are not, however, required to apply

§1.987-7T of the related temporary regulations to any part of a taxable year ending

on or after May 13, 2019. For example, a

calendar-year taxpayer applying the regulations in accordance with this paragraph

is not required to apply §1.987-7T to the

period beginning on January 1, 2019 and

ending on May 13, 2019 (when §1.987-7T

was revoked).

The transition date is the first day of

the first taxable year to which §§1.9871 through 1.987-10 are applicable with

respect to a taxpayer under §1.987-11.

Section 1.987-11(c). Therefore, if a taxpayer chooses to apply §§1.987-1 through

1.987-10 to a taxable year beginning before the amended applicability date, the

transition date is the first day of the first

taxable year in which the taxpayer chooses to apply §§1.987-1 through 1.987-10.

For periods following the expiration of

the temporary regulations, a taxpayer may

rely on §§1.987-1 (other than §§1.9871(g)(2)(i)(B) and (g)(3)(i)(H)), 1.987-3,

1.987-6, 1.988-1, and 1.988-2(i) of the

proposed regulations, provided that the

taxpayer and its related parties consistently follow those proposed regulations

in their entirety and apply the 2016 final

regulations and the related 2019 final

regulations for the same taxable year. In

addition, a taxpayer may rely on §§1.9871(g)(2)(i)(B) and (g)(3)(i)(H) and 1.9878 of the proposed regulations, provided

that the taxpayer and its related parties

consistently follow those proposed regulations in their entirety. A taxpayer may

rely on §1.987-7 or 1.988-2(b)(16) of the

proposed regulations, provided that the

taxpayer and its related parties consistently follow each section of those proposed

regulations on which it relies.

SECTION 3. TAXPAYER RELIANCE

Before the regulations under section

987 are amended as described in section 2

Bulletin No. 2020–41

of this Notice, taxpayers may rely on the

provisions of this Notice.

SECTION 4. DRAFTING

INFORMATION

The principal author of this Notice is

Raphael J. Cohen of the Office of Associate Chief Counsel (International). For

further information regarding this Notice,

contact Raphael J. Cohen at (202) 3176938 (not a toll-free number).

Extension of Replacement

Period for Livestock Sold

on Account of Drought

Notice 2020-74

SECTION 1. PURPOSE

This notice provides guidance regarding an extension of the replacement period

under § 1033(e) of the Internal Revenue

Code for livestock sold on account of

drought in specified counties.

SECTION 2. BACKGROUND

.01 Nonrecognition of Gain on Involuntary Conversion of Livestock. Section

1033(a) generally provides for nonrecognition of gain when property is involuntarily converted and replaced with property that is similar or related in service

or use. Section 1033(e)(1) provides that

a sale or exchange of livestock (other

than poultry) held by a taxpayer for draft,

breeding, or dairy purposes in excess of

the number that would be sold following

the taxpayer’s usual business practices is

treated as an involuntary conversion if the

livestock is sold or exchanged solely on

account of drought, flood, or other weather-related conditions.

.02 Replacement Period. Section

1033(a)(2)(A) generally provides that gain

from an involuntary conversion is recognized only to the extent the amount realized on the conversion exceeds the cost of

replacement property purchased during the

1

replacement period. If a sale or exchange of

livestock is treated as an involuntary conversion under § 1033(e)(1) and is solely on

account of drought, flood, or other weather-related conditions that result in the area

being designated as eligible for assistance

by the federal government, § 1033(e)(2)(A)

provides that the replacement period ends

four years after the close of the first taxable

year in which any part of the gain from the

conversion is realized. Section 1033(e)(2)

(B) provides that the Secretary may extend

this replacement period on a regional basis

for such additional time as the Secretary

determines appropriate if the weather-related conditions that resulted in the area being

designated as eligible for assistance by the

federal government continue for more than

three years. Section 1033(e)(2) is effective

for any taxable year with respect to which

the due date (without regard to extensions)

for a taxpayer’s return is after December

31, 2002.

SECTION 3. EXTENSION OF

REPLACEMENT PERIOD UNDER §

1033(e)(2)(B)

Notice 2006-82, 2006-2 C.B. 529,

provides for extensions of the replacement period under § 1033(e)(2)(B). If a

sale or exchange of livestock is treated as

an involuntary conversion on account of

drought and the taxpayer’s replacement

period is determined under § 1033(e)(2)

(A), the replacement period will be extended under § 1033(e)(2)(B) and Notice

2006-82 until the end of the taxpayer’s

first taxable year ending after the first

drought-free year for the applicable region. For this purpose, the first droughtfree year for the applicable region is the

first 12-month period that (1) ends August

31; (2) ends in or after the last year of the

taxpayer’s four-year replacement period

determined under § 1033(e)(2)(A); and

(3) does not include any weekly period

for which exceptional, extreme, or severe

drought is reported for any location in the

applicable region. The applicable region

is the county that experienced the drought

conditions on account of which the livestock was sold or exchanged and all counties that are contiguous to that county.

A taxpayer may determine whether exceptional, extreme, or severe drought is

reported for any location in the applicable

region by reference to U.S. Drought Monitor maps that are produced on a weekly

basis by the National Drought Mitigation

Center. U.S. Drought Monitor maps are

archived at http://droughtmonitor.unl.edu/

Maps/MapArchive.aspx.

In addition, Notice 2006-82 provides

that the Internal Revenue Service will

publish in September of each year a list of

counties1 for which exceptional, extreme,

or severe drought was reported during the

preceding 12 months. Taxpayers may use

this list instead of U.S. Drought Monitor

maps to determine whether exceptional,

extreme, or severe drought has been reported for any location in the applicable

region.

The Appendix to this notice contains

the list of counties for which exceptional,

extreme, or severe drought was reported

during the 12-month period ending August 31, 2020. Under Notice 2006-82,

the 12-month period ended on August 31,

2020, is not a drought-free year for an applicable region that includes any county

on this list. Accordingly, for a taxpayer

who qualified for a four-year replacement

period for livestock sold or exchanged on

account of drought and whose replacement period is scheduled to expire at the

end of 2020 (or, in the case of a fiscal

year taxpayer, at the end of the taxable

year that includes August 31, 2020), the

replacement period will be extended under § 1033(e)(2) and Notice 2006-82 if the

applicable region includes any county on

this list. This extension will continue until

the end of the taxpayer’s first taxable year

ending after a drought-free year for the applicable region.

SECTION 4. DRAFTING

INFORMATION

The principal author of this notice

is Lewis Saideman of the Office of Associate Chief Counsel (Income Tax &

Accounting). For further information

regarding this notice, please contact Mr.

Saideman at (202) 317-7006 (not a tollfree number).

The term “counties” in this notice includes boroughs, census areas, counties, islands, municipalities, or parishes.

Bulletin No. 2020–41

887

October 5, 2020

APPENDIX

Alabama

Counties of Autauga, Baldwin, Barbour,

Bibb, Bullock, Butler, Chambers, Cherokee, Chilton, Clay, Coffee, Conecuh,

Coosa, Covington, Crenshaw, Dale, Dallas, DeKalb, Elmore, Escambia, Geneva,

Henry, Houston, Jackson, Jefferson, Lee,

Limestone, Lowndes, Macon, Madison,

Marshall, Mobile, Montgomery, Pike,

Randolph, Russell, Shelby, Talladega, and

Tallapoosa.

Alaska

Municipality of Anchorage. Boroughs

of Kenai Peninsula, Ketchikan Gateway,

Kodiak Island, Lake and Peninsula, and

Matanuska-Susitna. Census Areas of

Prince of Wales-Outer Ketchikan, Valdez-Cordova, and Wrangell-Petersburg.

Jackson, Jefferson, Kiowa, Kit Carson,

Lake, La Plata, Larimer, Las Animas,

Lincoln, Logan, Mesa, Mineral, Moffat,

Montezuma, Montrose, Morgan, Otero,

Ouray, Park, Phillips, Pitkin, Prowers,

Pueblo, Rio Blanco, Rio Grande, Routt,

Saguache, San Juan, San Miguel, Sedgwick, Summit, Teller, Washington, Weld,

and Yuma.

Connecticut

Counties of Hartford, Litchfield, Middlesex, New Haven, New London, Tolland,

and Windham.

Delaware

Counties of Kent and New Castle.

District of Columbia

District of Columbia.

cock, Gordon, Grady, Greene, Gwinnett,

Habersham, Hall, Hancock, Harris, Hart,

Heard, Henry, Houston, Irwin, Jackson,

Jasper, Jeff Davis, Jefferson, Jenkins,

Johnson, Jones, Lamar, Lanier, Laurens,

Lee, Liberty, Lincoln, Long, Lowndes,

Lumpkin, McDuffie, Macon, Madison,

Marion, Meriwether, Miller, Mitchell,

Monroe, Montgomery, Morgan, Murray,

Muscogee, Newton, Oconee, Oglethorpe,

Paulding, Peach, Pickens, Pierce, Pike,

Polk, Pulaski, Putnam, Quitman, Rabun,

Randolph, Rockdale, Schley, Screven,

Seminole, Spalding, Stephens, Stewart, Sumter, Talbot, Taliaferro, Tattnall,

Taylor, Telfair, Terrell, Thomas, Tift,

Toombs, Towns, Treutlen, Troup, Turner,

Twiggs, Union, Upson, Walker, Walton,

Ware, Warren, Washington, Wayne, Webster, Wheeler, White, Whitfield, Wilcox,

Wilkes, Wilkinson, and Worth.

Hawaii

Arizona

Florida

Counties of Hawaii, Kalawao, and Maui.

Counties of Apache, Cochise, Coconino,

Gila, Graham, Greenlee, La Paz, Maricopa, Mohave, Navajo, Pima, Pinal, Santa

Cruz, and Yavapai.

Counties of Alachua, Baker, Bay, Bradford, Broward, Calhoun, Charlotte, Citrus, Clay, Collier, Columbia, Duval,

Escambia, Flagler, Franklin, Gadsden,

Glades, Gulf, Hamilton, Hardee, Hendry,

Hernando, Hillsborough, Holmes, Jackson, Jefferson, Lake, Lee, Leon, Levy,

Liberty, Madison, Manatee, Marion, Miami-Dade, Monroe, Nassau, Okaloosa,

Orange, Pasco, Pinellas, Polk, Putnam,

Saint Johns, Santa Rosa, Sarasota, Seminole, Sumter, Suwannee, Taylor, Union,

Volusia, Wakulla, Walton, and Washington.

Idaho

Arkansas

Counties of Ashley, Bradley, Calhoun,

Columbia, Lafayette, Miller, Nevada,

Ouachita, and Union.

California

Counties of Alameda, Butte, Colusa, Contra Costa, Del Norte, Glenn, Humboldt,

Lake, Lassen, Marin, Mendocino, Modoc,

Napa, Nevada, Placer, Plumas, Sacramento, San Bernardino, San Francisco, San

Joaquin, San Mateo, Santa Clara, Shasta,

Sierra, Siskiyou, Solano, Sonoma, Sutter,

Tehama, Trinity, Yolo, and Yuba.

Colorado

Counties of Adams, Alamosa, Arapahoe,

Archuleta, Baca, Bent, Boulder, Broomfield, Chaffee, Cheyenne, Clear Creek,

Conejos, Costilla, Crowley, Custer, Delta, Denver, Dolores, Douglas, Eagle, Elbert, El Paso, Fremont, Garfield, Gilpin,

Grand, Gunnison, Hinsdale, Huerfano,

October 5, 2020

Georgia

Counties of Appling, Atkinson, Bacon,

Baker, Baldwin, Banks, Barrow, Bartow, Ben Hill, Berrien, Bibb, Bleckley,

Brantley, Brooks, Bryan, Bulloch, Burke,

Butts, Calhoun, Camden, Candler, Carroll, Catoosa, Charlton, Chatham, Chattahoochee, Chattooga, Cherokee, Clarke,

Clay, Clayton, Clinch, Cobb, Coffee,

Colquitt, Columbia, Cook, Coweta,

Crawford, Crisp, Dade, Dawson, Decatur, DeKalb, Dodge, Dooly, Dougherty,

Douglas, Early, Echols, Effingham, Elbert, Evans, Fannin, Fayette, Floyd,

Forsyth, Franklin, Fulton, Gilmer, Glas-

888

Counties of Blaine, Butte, Camas, and

Custer.

Illinois

Counties of Gallatin, Hardin, and White.

Indiana

Counties of Clark, Crawford, Dubois,

Floyd, Harrison, Jefferson, Perry, Posey,

Scott, Spencer, Switzerland, Vanderburgh,

and Warrick.

Iowa

Counties of Adair, Adams, Audubon,

Benton, Boone, Buena Vista, Calhoun,

Carroll, Cass, Cherokee, Clay, Crawford, Dallas, Emmet, Franklin, Greene,

Grundy, Guthrie, Hamilton, Hardin,

Harrison, Humboldt, Ida, Iowa, Jasper, Keokuk, Kossuth, Lyon, Madison,

Mahaska, Marshall, Mills, Monona,

Montgomery, O’Brien, Palo Alto, Plymouth, Pocahontas, Polk, Pottawattamie,

Poweshiek, Sac, Shelby, Sioux, Story,

Tama, Warren, Webster, Woodbury, and

Wright.

Bulletin No. 2020–41

Kansas

Massachusetts

New Mexico

Counties of Cheyenne, Clark, Ellis, Finney, Gove, Grant, Gray, Greeley, Hamilton, Harvey, Haskell, Hodgeman, Kearny,

Kingman, Lane, Logan, McPherson, Marion, Meade, Morton, Ness, Pawnee, Rawlins, Reno, Rush, Scott, Sedgwick, Seward,

Sherman, Stanton, Stevens, Trego, Wallace, and Wichita.

Counties of Barnstable, Berkshire, Bristol,

Dukes, Essex, Hampden, Middlesex, Nantucket, Norfolk, Plymouth, and Worcester.

County of Aitkin, Carlton, Cass, Crow

Wing, Itasca, Lake, and Saint Louis.

Counties of Bernalillo, Catron, Chaves,

Cibola, Colfax, Curry, DeBaca, Dona

Ana, Eddy, Grant, Guadalupe, Harding,

Hidalgo, Lea, Lincoln, Los Alamos, Luna,

McKinley, Mora, Otero, Quay, Rio Arriba, Roosevelt, Sandoval, San Juan, San

Miguel, Santa Fe, Sierra, Taos, Torrance,

Union, and Valencia.

Kentucky

Mississippi

New York

Counties of Adair, Barren, Bell, Bourbon,

Boyle, Breathitt, Breckinridge, Bullitt,

Butler, Carroll, Casey, Christian, Clark,

Clay, Clinton, Crittenden, Cumberland,

Daviess, Edmonson, Estill, Fayette,

Floyd, Gallatin, Garrard, Grayson, Green,

Hancock, Hardin, Harlan, Hart, Henderson, Henry, Hopkins, Jackson, Jefferson,

Jessamine, Johnson, Knott, Knox, Larue,

Laurel, Lawrence, Lee, Leslie, Letcher, Lincoln, Logan, McCreary, McLean,

Madison, Magoffin, Marion, Martin, Meade, Menifee, Mercer, Metcalfe, Monroe,

Morgan, Muhlenberg, Nelson, Ohio, Oldham, Owen, Owsley, Perry, Pike, Powell,

Pulaski, Rockcastle, Russell, Scott, Shelby, Taylor, Todd, Trimble, Union, Warren,

Washington, Wayne, Webster, Whitley,

Wolfe, and Woodford.

Counties of Adams, Claiborne, George,

Hancock, Harrison, Jackson, Jefferson,

and Stone.

Counties of Franklin and Saint Lawrence.

Missouri

Counties of Alexander, Avery, Burke,

Caldwell, Catawba, Cherokee, Clay,

Cleveland, Davie, Forsyth, Gaston, Graham, Granville, Haywood, Henderson,

Iredell, Jackson, Lincoln, Macon, Madison, Mecklenburg, Mitchell, Person, Polk,

Rowan, Stokes, Surry, Union, Vance, Warren, Watauga, Wilkes, Yadkin, and Yancey.

Louisiana

Parishes of Assumption, Avoyelles, Bienville, Bossier, Caddo, Caldwell, Catahoula, Claiborne, Concordia, Franklin,

Jefferson, Lafourche, La Salle, Madison,

Plaquemines, Rapides, Richland, Saint

Bernard, Saint Charles, Saint James, Saint

John the Baptist, Saint Tammany, Tensas,

Terrebonne, Union, and Webster.

Maine

Counties of Aroostook, Penobscot, Piscataquis, Somerset, Washington, and York.

Maryland

City of Baltimore. Counties of Anne Arundel, Baltimore, Calvert, Caroline, Carroll,

Cecil, Charles, Dorchester, Harford, Howard, Kent, Montgomery, Prince George’s,

Queen Anne’s, Saint Mary’s, and Talbot.

Bulletin No. 2020–41

Minnesota

Counties of Christian, Douglas, Greene,

Lawrence, Stone, and Webster.

Montana

Counties of Beaverhead, Broadwater,

Gallatin, Jefferson, Madison, and Powder

River.

Nebraska

Counties of Adams, Arthur, Banner, Box

Butte, Buffalo, Burt, Cass, Cheyenne,

Clay, Colfax, Cuming, Dakota, Dawes,

Deuel, Dodge, Douglas, Dundy, Garden,

Grant, Hall, Hitchcock, Kearney, Keith,

Kimball, Madison, Morrill, Perkins,

Phelps, Pierce, Platte, Sarpy, Saunders,

Scotts Bluff, Sheridan, Sioux, Stanton,

Thurston, Washington, and Wayne.

Nevada

Counties of Churchill, Clark, Douglas,

Elko, Esmeralda, Eureka, Humboldt,

Lander, Lincoln, Lyon, Mineral, Nye,

Pershing, Storey, Washoe, and White Pine.

New Hampshire

Counties of Belknap, Carroll, Grafton,

Hillsborough, Merrimack, Rockingham,

Strafford, and Sullivan.

New Jersey

County of Salem.

889

North Carolina

North Dakota

Counties of Benson, Burleigh, Morton,

Oliver, and Pierce.

Oklahoma

Counties of Alfalfa, Atoka, Beaver, Beckham, Blaine, Caddo, Choctaw, Cimarron,

Comanche, Cotton, Creek, Custer, Dewey, Ellis, Garfield, Grady, Grant, Greer,

Harmon, Harper, Jackson, Jefferson, Kay,

Kingfisher, Kiowa, Lincoln, Logan, McCurtain, Major, Noble, Osage, Pawnee,

Payne, Pushmataha, Roger Mills, Stephens, Texas, Tillman, Tulsa, Washita,

and Woodward.

Oregon

Counties of Benton, Clackamas, Columbia, Coos, Crook, Curry, Deschutes,

Douglas, Gilliam, Grant, Harney, Jackson, Jefferson, Josephine, Klamath, Lake,

Lane, Lincoln, Linn, Malheur, Marion,

Morrow, Multnomah, Polk, Sherman,

Umatilla, Wasco, Washington, Wheeler,

and Yamhill.

October 5, 2020

Rhode Island

Counties of Bristol, Kent, Newport, Providence, and Washington.

South Carolina

Counties of Abbeville, Aiken, Allendale,

Anderson, Bamberg, Barnwell, Calhoun,

Cherokee, Chester, Colleton, Dorchester,

Fairfield, Greenville, Greenwood, Hampton, Jasper, Kershaw, Lancaster, Laurens,

Lexington, McCormick, Oconee, Orangeburg, Pickens, Richland, Spartanburg,

Sumter, Union, and York.

South Dakota

Counties of Bennett, Fall River, Lincoln,

Oglala Lakota, and Union.

Tennessee

Counties of Anderson, Bledsoe, Bradley,

Campbell, Cannon, Carter, Cheatham,

Claiborne, Clay, Cocke, Cumberland, Davidson, DeKalb, Dickson, Franklin, Giles,

Greene, Grundy, Hamblen, Hamilton,

Hickman, Jefferson, Johnson, Lincoln,

Loudon, McMinn, Marion, Marshall,

Maury, Meigs, Monroe, Morgan, Pickett,

Polk, Putnam, Rhea, Roane, Rutherford,

Scott, Sequatchie, Sullivan, Unicoi, Van

Buren, Warren, Washington, White, Williamson, and Wilson.

Texas

Counties of Anderson, Andrews, Aransas,

Archer, Armstrong, Atascosa, Austin, Bailey, Bandera, Bastrop, Baylor, Bee, Bell,

Bexar, Blanco, Borden, Bosque, Bowie, Brazoria, Brazos, Brewster, Briscoe,

Brooks, Brown, Burleson, Burnet, Caldwell, Calhoun, Callahan, Cameron, Camp,

Carson, Cass, Castro, Cherokee, Childress,

Clay, Cochran, Coke, Coleman, Collin,

Collingsworth, Colorado, Comal, Comanche, Concho, Coryell, Cottle, Crane,

Crockett, Crosby, Culberson, Dallam, Dallas, Dawson, Deaf Smith, Denton, DeWitt,

Dickens, Dimmit, Donley, Duval, Eastland, Ector, Edwards, Ellis, Erath, Falls,

Fayette, Fisher, Floyd, Foard, Fort Bend,

Franklin, Freestone, Frio, Gaines, Galveston, Garza, Gillespie, Glasscock, Goliad,

Gonzales, Gray, Gregg, Grimes, Guada-

October 5, 2020

lupe, Hale, Hall, Hansford, Hardeman,

Harris, Harrison, Hartley, Haskell, Hays,

Hemphill, Henderson, Hidalgo, Hill, Hockley, Hood, Houston, Howard, Hudspeth,

Hunt, Hutchinson, Irion, Jack, Jackson,

Jeff Davis, Jim Hogg, Jim Wells, Johnson,

Jones, Karnes, Kaufman, Kendall, Kenedy, Kent, Kerr, Kimble, King, Kinney,

Kleberg, Knox, Lamb, Lampasas, La Salle, Lavaca, Lee, Leon, Liberty, Limestone,

Lipscomb, Live Oak, Llano, Loving, Lubbock, Lynn, McCulloch, McLennan, McMullen, Madison, Marion, Martin, Mason,

Matagorda, Maverick, Medina, Menard,

Midland, Milam, Mills, Mitchell, Moore,

Morris, Motley, Nacogdoches, Navarro,

Nolan, Nueces, Ochiltree, Oldham, Palo

Pinto, Parker, Parmer, Pecos, Potter, Presidio, Rains, Randall, Reagan, Real, Red

River, Reeves, Refugio, Roberts, Robertson, Rockwall, Runnels, Rusk, San Patricio, San Saba, Schleicher, Scurry, Shackelford, Sherman, Smith, Somervell, Starr,

Stephens, Sterling, Stonewall, Sutton,

Swisher, Tarrant, Taylor, Terrell, Terry,

Throckmorton, Titus, Tom Green, Travis,

Trinity, Upshur, Upton, Uvalde, Val Verde,

Van Zandt, Victoria, Walker, Waller, Ward,

Washington, Webb, Wharton, Wheeler,

Wichita, Wilbarger, Willacy, Williamson,

Wilson, Winkler, Wise, Wood, Yoakum,

Young, Zapata, and Zavala.

Utah

Counties of Beaver, Box Elder, Cache,

Carbon, Daggett, Davis, Duchesne, Emery, Garfield, Grand, Iron, Juab, Kane,

Millard, Morgan, Piute, Rich, Salt Lake,

San Juan, Sanpete, Sevier, Summit,

Tooele, Uintah, Utah, Wasatch, Washington, Wayne, and Weber.

William, Pulaski, Roanoke, Rockbridge,

Spotsylvania, Stafford, Tazewell, Wise,

and Wythe.

Washington

Counties of Adams, Benton, Chelan, Clallam, Clark, Cowlitz, Douglas, Franklin,

Grant, Grays Harbor, Jefferson, King, Kittitas, Klickitat, Lewis, Mason, Okanogan,

Pacific, Pierce, San Juan, Skagit, Snohomish, Thurston, Wahkiakum, Walla Walla,

Whatcom, and Yakima.

West Virginia

Counties of Boone, Clay, Fayette, Greenbrier, Kanawha, Lincoln, Logan, McDowell, Mercer, Mingo, Monroe, Nicholas,

Pocahontas, Putnam, Raleigh, Summers,

Wayne, and Wyoming.

Wisconsin

County of Douglas.

Wyoming

Counties of Albany, Big Horn, Campbell,

Carbon, Converse, Fremont, Goshen, Hot

Springs, Johnson, Laramie, Natrona, Niobrara, Platte, Sheridan, Sweetwater, Uinta,

and Washakie.

Guam

Island of Guam.

Commonwealth of the Northern Mariana

Islands

Islands of Rota and Saipan.

Virginia

Commonwealth of Puerto Rico

Cities of Alexandria, Bedford, Buena Vista, Fairfax, Falls Church, Richmond, and

Roanoke. Counties of Alleghany, Amelia, Amherst, Arlington, Bath, Bedford,

Bland, Botetourt, Buchanan, Buckingham, Caroline, Charlotte, Chesterfield,

Craig, Culpeper, Cumberland, Dickenson, Dinwiddie, Fairfax, Fauquier, Floyd,

Franklin, Giles, Goochland, Halifax, Hanover, Henrico, Henry, Lee, Loudoun,

Louisa, Mecklenburg, Nottoway, Orange,

Patrick, Powhatan, Prince Edward, Prince

Municipalities of Adjuntas, Aguas Buenas, Aibonito, Arroyo, Barranquitas, Cabo

Rojo, Caguas, Canovanas, Carolina, Cayey, Cidra, Coamo, Guanica, Guayama,

Guayanilla, Guaynabo, Gurabo, Humacao, Juana Diaz, Juncos, Lajas, Las Piedras, Loiza, Maricao, Maunabo, Naguabo,

Patillas, Penuelas, Ponce, Rio Grande,

Sabana Grande, Salinas, San German, San

Juan, San Lorenzo, Santa Isabel, Trujillo Alto, Vieques, Villalba, Yabucoa, and

Yauco.

890

Bulletin No. 2020–41

United States Virgin Islands

Islands of Saint Croix, Saint John, and

Saint Thomas.

Rev. Proc. 2020-42

SECTION 1. PURPOSE

This revenue procedure publishes the

amounts of unused housing credit carry-

overs allocated to qualified states under §

42(h)(3)(D) of the Internal Revenue Code

for calendar year 2020.

SECTION 2. BACKGROUND

Rev. Proc. 2019-45, 2019-48 I.R.B.

524, provides guidance to state housing

credit agencies of qualified states on the

procedure for requesting an allocation of

unused housing credit carryovers under

§ 42(h)(3)(D). Section 5.04 of Rev. Proc.

2019-45 provides that the Internal Revenue Service will publish in the Internal

Qualified State

Alabama

Arizona

California

Connecticut

Delaware

Florida

Georgia

Idaho

Illinois

Kentucky

Maine

Maryland

Massachusetts

Michigan

Minnesota

Missouri

Montana

Nebraska

New Jersey

New Mexico

New York

North Carolina

North Dakota

Oklahoma

Pennsylvania

Rhode Island

South Dakota

Texas

Vermont

Virginia

Washington

West Virginia

Wisconsin

Bulletin No. 2020–41

Revenue Bulletin the amount of unused

housing credit carryovers allocated to

qualified states for a calendar year from

a national pool of unused credit authority

(the National Pool). This revenue procedure publishes these amounts for calendar

year 2020.

SECTION 3. PROCEDURE

The unused housing credit carryover

amount allocated from the National Pool

by the Secretary to each qualified state for

calendar year 2020 is as follows:

Amount Allocated

58,538

86,900

471,731

42,565

11,626

256,420

126,760

21,336

151,287

53,339

16,048

72,179

82,289

119,232

67,331

73,274

12,760

23,095

106,043

25,034

232,253

125,216

9,098

47,242

152,841

12,648

10,562

346,178

7,450

101,904

90,913

21,396

69,513

891

October 5, 2020

EFFECTIVE DATE

DRAFTING INFORMATION

This revenue procedure is effective

for allocations of housing credit dollar

amounts attributable to the National Pool

component of a qualified state’s housing

credit ceiling for calendar year 2020.

The principal author of this revenue

procedure is YoungNa Lee of the Office

of Associate Chief Counsel (Passthroughs

and Special Industries). For further information regarding this revenue procedure,

contact Ms. Lee at (202) 317-4137 (not a

toll-free number).

Section 42 — Low-Income

Housing Credit.

26 CFR 1.42-14. Allocation rules for post-1989

State housing credit ceiling

amounts.

Guidance is provided to state housing credit agencies of qualified states that request an allocation

of unused housing credit carryover under section

42(h)(3)(D) of the Internal Revenue Code. See

Rev. Proc. 2020-42

October 5, 2020

892

Bulletin No. 2020–41

Part IV

Information Reporting

Requirements for Paycheck

Protection Program Loans

Forgiven under the CARES

Act

Announcement 2020-12

This announcement notifies lenders

that they should not file information returns or furnish payee statements under

section 6050P of the Internal Revenue

Code (Code) to report the amount of qualifying forgiveness with respect to covered

loans made under the Paycheck Protection

Program (PPP) administered by the Small

Business Administration (SBA), in consultation with the Department of the Treasury, under Title I of the Coronavirus Aid,

Relief, and Economic Security Act, Pub.

L. No. 116-136, 134 Stat. 281 (March 27,

2020), as amended by the Paycheck Protection Program Flexibility Act of 2020,

Pub. L. No. 116-142, 134 Stat. 641 (June

5, 2020) (collectively, CARES Act).

Section 1102 of the CARES Act established the PPP, which allowed qualifying

Bulletin No. 2020–41

small businesses (eligible recipients) to

obtain loans guaranteed by the SBA under

section 7(a)(36) of the Small Business Act

(15 U.S.C. § 636(a)(36)) (covered loans).

Under section 1106 of the CARES Act, an

eligible recipient is eligible for forgiveness of indebtedness for all or a portion

of the stated principal amount of a covered loan if certain conditions are satisfied

(qualifying forgiveness). Under section

1106(i) of the CARES Act, for purposes

of the Code, any amount that (but for section 1106(i)) would be includible in gross

income of the eligible recipient by reason

of the qualifying forgiveness is excluded

from gross income.

Generally, section 6050P of the

Code and §§ 1.6050P-1 and 1.6050P-2

of the Income Tax Regulations require

an applicable entity (as defined in section 6050P(c)(1) of the Code) that discharges at least $600 of a borrower’s

indebtedness to file a Form 1099-C,

Cancellation of Debt, with the Internal

Revenue Service (IRS), and to furnish

a payee statement to the borrower. For

purposes of this reporting requirement,

§ 1.6050P-1(c) provides that “indebtedness” means any amount owed to an

893

applicable entity, including stated principal, fees, stated interest, penalties, administrative costs, and fines.

When all or a portion of the stated principal amount of a covered loan is forgiven because the eligible recipient satisfies

the forgiveness requirements under section 1106 of the CARES Act, an applicable entity is not required to, for federal

income tax purposes only, and should not,

file a Form 1099-C information return with

the IRS or provide a payee statement to

the eligible recipient under section 6050P

of the Code as a result of the qualifying

forgiveness. The filing of such information returns with the IRS could result in

the issuance of underreporter notices (IRS

Letter CP2000) to eligible recipients, and

the furnishing of such payee statements to

eligible recipients could cause confusion.

This announcement is intended to prevent

any such confusion.

The principal author of this announcement is Marshall French of the Office of

the Associate Chief Counsel (Procedure

& Administration). For further information regarding this announcement, contact

Marshall French at (202) 317-5411 (not a

toll-free number).

October 5, 2020

Definition of Terms

Revenue rulings and revenue procedures

(hereinafter referred to as “rulings”) that

have an effect on previous rulings use the

following defined terms to describe the

­effect:

Amplified describes a situation where

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

being extended to apply to a variation of

the fact situation set forth therein. Thus, if

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

the same principle also applies to B, the

earlier ruling is amplified. (Compare with

modified, below).

Clarified is used in those instances

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

caused, or may cause, some confusion. It

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

Distinguished describes a situation

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

difference between them.

Modified is used where the substance

of a previously published position is being

changed. Thus, if a prior ruling held that a

principle applied to A but not to B, and the

new ruling holds that it applies to both A

and B, the prior ruling is modified because

it corrects a published position. (Compare

with amplified and clarified, above).

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

This term is most commonly used in a ruling

that lists previously published rulings that

are obsoleted because of changes in laws or

regulations. A ruling may also be obsoleted

because the substance has been included in

regulations subsequently adopted.

Revoked describes situations where the

position in the previously published ruling

is not correct and the correct position is

being stated in a new ruling.

Superseded describes a situation where

the new ruling does nothing more than

restate the substance and situation of a

previously published ruling (or rulings).

Thus, the term is used to republish under

the 1986 Code and regulations the same

position published under the 1939 Code

and regulations. The term is also used

when it is desired to republish in a single

ruling a series of situations, names, etc.,

that were previously published over a

period of time in separate rulings. If the

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

terms is used. For example, modified and

superseded describes a situation where the

substance of a previously published ruling

is being changed in part and is continued

without change in part and it is desired to

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

self contained. In this case, the previously

published ruling is first modified and then,

as modified, is superseded.

Supplemented is used in situations in

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

countries, is published in a ruling and that

list is expanded by adding further names

in subsequent rulings. After the original

ruling has been supplemented several

times, a new ruling may be published that

includes the list in the original ruling and

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

Suspended is used in rare situations to

show that the previous published rulings

will not be applied pending some future

action such as the issuance of new or

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

Abbreviations

The following abbreviations in current use

and formerly used will appear in material

published in the Bulletin.

A—Individual.

Acq.—Acquiescence.

B—Individual.

BE—Beneficiary.

BK—Bank.

B.T.A.—Board of Tax Appeals.

C—Individual.

C.B.—Cumulative Bulletin.

CFR—Code of Federal Regulations.

CI—City.

COOP—Cooperative.

Ct.D.—Court Decision.

CY—County.

D—Decedent.

DC—Dummy Corporation.

DE—Donee.

Del. Order—Delegation Order.

DISC—Domestic International Sales Corporation.

DR—Donor.

E—Estate.

EE—Employee.

E.O.—Executive Order.

ER—Employer.

Bulletin No. 2020–41

ERISA—Employee Retirement Income Security Act.

EX—Executor.

F—Fiduciary.

FC—Foreign Country.

FICA—Federal Insurance Contributions Act.

FISC—Foreign International Sales Company.

FPH—Foreign Personal Holding Company.

F.R.—Federal Register.

FUTA—Federal Unemployment Tax Act.

FX—Foreign corporation.

G.C.M.—Chief Counsel’s Memorandum.

GE—Grantee.

GP—General Partner.

GR—Grantor.

IC—Insurance Company.

I.R.B.—Internal Revenue Bulletin.

LE—Lessee.

LP—Limited Partner.

LR—Lessor.

M—Minor.

Nonacq.—Nonacquiescence.

O—Organization.

P—Parent Corporation.

PHC—Personal Holding Company.

PO—Possession of the U.S.

PR—Partner.

PRS—Partnership.

i

PTE—Prohibited Transaction Exemption.

Pub. L.—Public Law.

REIT—Real Estate Investment Trust.

Rev. Proc.—Revenue Procedure.

Rev. Rul.—Revenue Ruling.

S—Subsidiary.

S.P.R.—Statement of Procedural Rules.

Stat.—Statutes at Large.

T—Target Corporation.

T.C.—Tax Court.

T.D.—Treasury Decision.

TFE—Transferee.

TFR—Transferor.

T.I.R.—Technical Information Release.

TP—Taxpayer.

TR—Trust.

TT—Trustee.

U.S.C.—United States Code.

X—Corporation.

Y—Corporation.

Z—Corporation.

October 5, 2020

Numerical Finding List1

Bulletin 2020–41

Announcements:

2020-8, 2020-32 I.R.B. 244

2020-9, 2020-32 I.R.B. 244

2020-10, 2020-33 I.R.B. 385

2020-11, 2020-33 I.R.B. 385

2020-13, 2020-35 I.R.B. 492

2020-14, 2020-36 I.R.B. 549

2020-15, 2020-38 I.R.B. 577

2020-16, 2020-38 I.R.B. 578

2020-17, 2020-40 I.R.B. 794

2020-12, 2020-41 I.R.B. 893

Notices:

2020-43, 2020-27 I.R.B. 1

2020-45, 2020-27 I.R.B. 3

2020-46, 2020-27 I.R.B. 7

2020-47, 2020-27 I.R.B. 7

2020-49, 2020-27 I.R.B. 8

2020-50, 2020-28 I.R.B. 35

2020-48, 2020-29 I.R.B. 72

2020-51, 2020-29 I.R.B. 73

2020-52, 2020-29 I.R.B. 79

2020-53, 2020-30 I.R.B. 151

2020-54, 2020-31 I.R.B. 226

2020-56, 2020-32 I.R.B. 239

2020-57, 2020-32 I.R.B. 240

2020-58, 2020-34 I.R.B. 419

2020-55, 2020-35 I.R.B. 467

2020-61, 2020-35 I.R.B. 468

2020-62, 2020-35 I.R.B. 476

2020-63, 2020-35 I.R.B. 491

2020-60, 2020-36 I.R.B. 514

2020-64, 2020-36 I.R.B. 519

2020-65, 2020-38 I.R.B. 567

2020-68, 2020-38 I.R.B. 567

2020-69, 2020-39 I.R.B. 604

2020-59, 2020-40 I.R.B. 782

2020-66, 2020-40 I.R.B. 785

2020-71, 2020-40 I.R.B. 786

2020-72, 2020-40 I.R.B. 789

2020-73, 2020-41 I.R.B. 886

2020-74, 2020-41 I.R.B. 887

Proposed Regulations:—Continued

REG-112042-19, 2020-34 I.R.B. 422

REG-132766-18, 2020-34 I.R.B. 436

REG-132434-17, 2020-35 I.R.B. 508

REG-116475-19, 2020-37 I.R.B. 553

REG-107911-18, 2020-40 I.R.B. 795

Revenue Procedures:

2020-16, 2020-27 I.R.B. 10

2020-31, 2020-27 I.R.B. 12

2020-35, 2020-29 I.R.B. 82

2020-36, 2020-32 I.R.B. 243

2020-37, 2020-33 I.R.B. 381

2020-38, 2020-36 I.R.B. 522

2020-39, 2020-36 I.R.B. 546

2020-40, 2020-38 I.R.B. 575

2020-41, 2020-40 I.R.B. 793

2020-42, 2020-41 I.R.B. 891

Revenue Rulings:

2020-14, 2020-28 I.R.B. 33

2020-15, 2020-32 I.R.B. 233

2020-16, 2020-37 I.R.B. 550

2020-17, 2020-37 I.R.B. 552

2020-18, 2020-39 I.R.B. 584

2020-19, 2020-40 I.R.B. 611

2020-20, 2020-41 I.R.B. 880

2020-21, 2020-41 I.R.B. 882

Treasury Decisions:

9899, 2020-29 I.R.B. 62

9900, 2020-30 I.R.B. 143

9903, 2020-32 I.R.B. 235

9901, 2020-33 I.R.B. 266

9902, 2020-33 I.R.B. 349

9904, 2020-34 I.R.B. 413

9907, 2020-38 I.R.B. 559

9906, 2020-39 I.R.B. 579

9905, 2020-40 I.R.B. 614

9915, 2020-41 I.R.B. 882

Proposed Regulations:

REG-119307-19, 2020-28 I.R.B. 44

REG-112339-19, 2020-30 I.R.B. 155

REG-117589-18, 2020-30 I.R.B. 184

REG-125716-18, 2020-30 I.R.B. 197

REG-123027-19, 2020-31 I.R.B. 229

REG-130081-19, 2020-32 I.R.B. 246

REG-127732-19, 2020-33 I.R.B. 385

REG-111879-20, 2020-34 I.R.B. 421

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2019–27 through 2019–52 is in Internal Revenue Bulletin

2019–52, dated December 27, 2019.

1

October 5, 2020

ii

Bulletin No. 2020–41

Finding List of Current Actions on

Previously Published Items1

Bulletin 2020–41

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2019–27 through 2019–52 is in Internal Revenue Bulletin

2019–52, dated December 27, 2019.

1

Bulletin No. 2020–41

iii

October 5, 2020

Internal Revenue Service

Washington, DC 20224

Official Business

Penalty for Private Use, $300

INTERNAL REVENUE BULLETIN

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

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

We Welcome Comments About the Internal Revenue Bulletin

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

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

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

NW, IR-6230 Washington, DC 20224.